DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI vs. APPASWAMY REAL ESTATES LIMITED, CHENNAI

ITA 2803/CHNY/2026Status: DisposedITAT Chennai28 September 2026AY 2024-2554 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the Ld. CIT(A) and dismissed the Revenue's appeal. Regarding the addition under Section 69C, the Tribunal found that the Revenue failed to establish the fundamental requirement of actual incurrence of expenditure by the assessee. The loose sheet and the third-party statement were insufficient to establish the nexus between the assessee and the alleged expenditure. The Tribunal noted that the document was recovered from Shri M. Gopal, not the assessee, and the statutory presumption under Sections 132(4A) and 292C could not be expanded to prove unexplained expenditure by another person without establishing the necessary nexus. The Tribunal also rejected the reliance on the B. Kishore Kumar case, as it involved a third-party allegation categorically denied by the assessee, and the allegation was not independently corroborated. The Tribunal further held that the alternative invocation of Section 69A was unsustainable as the assessee was never found to be the owner of the alleged money, nor was any such money found or seized from the assessee. The Tribunal concluded that the Ld. CIT(A) had correctly appreciated the evidentiary value of the material, the limited operation of statutory presumptions, the effect of the contemporaneous denial by the assessee, the absence of corroborative evidence, and the AO's failure to establish the foundational requirements of Section 69C. The Revenue failed to provide any material warranting interference with the Ld. CIT(A)'s order.

What were the facts?

The Revenue filed an appeal against the order of the CIT(A) for Assessment Year 2024-25. The appeal was filed 13 days late, and the Revenue sought condonation of the delay, which was granted by the Tribunal. The dispute arose from an addition of Rs. 1,00,00,000/- made by the Assessing Officer (AO) under Section 69C of the Income-tax Act, 1961. This addition was based on a loose sheet found during a search at the premises of Shri M. Gopal, a real estate broker, which mentioned a cash receipt of Rs. 1,00,00,000/- purportedly from the assessee, Appaswamy Real Estates Limited. Shri M. Gopal's statement on oath also corroborated this. However, the Managing Director of the assessee group denied any knowledge of this transaction when confronted.

What were the issues?

1. Whether the deletion of the addition of Rs. 1,00,00,000/- made under Section 69C of the Act by the Ld. CIT(A) is erroneous on facts and in law? 2. Whether the Ld. CIT(A) erred in allowing relief without giving adequate opportunity to the AO, considering a new methodology at the appellate stage? 3. Whether the Ld. CIT(A) erred in holding that seized material lacks evidentiary value by not taking cognizance of legal presumptions under Sections 132(4A) and 292C of the Act? 4. Whether the Ld. CIT(A) erred in granting relief by holding seized material as lacking evidentiary value, contrary to the High Court of Madras decision in Smt. N. Saroja? 5. Whether the Ld. CIT(A) erred in not considering that additions were based on sworn statements, contrary to the Supreme Court decision in B. Kishore Kumar? Assessee's Contentions: The assessee argued that the statement of Shri M. Gopal was vague, lacked specificity regarding the alleged payment by the assessee, and there was no corroborative material. The assessee also pointed out that its Managing Director had denied knowledge of the transaction during the search itself. Revenue's Contentions: The Revenue contended that the Ld. CIT(A) erred in deleting the addition. It argued that the statement of Shri M. Gopal under Section 132(4) constituted substantive evidence, and the loose sheet indicated an unaccounted cash transaction. The Revenue relied on the legal presumptions under Sections 132(4A) and 292C, the Madras High Court decision in Smt. N. Saroja, and the Supreme Court decision in B. Kishore Kumar.

Which sections of the Income-tax Act were involved?

Section 132,Section 132(4),Section 132(4A),Section 143(3),Section 142(1),Section 139(1),Section 69A,Section 69C,Section 292C

AI-generated summary — verify with the full judgment below

Before: SHRI S.S. VISWANETHRA RAVI & SHRI S.R. RAGHUNATHA

Hearing: 04.09.2026Pronounced: 28.09.2026

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

The present appeal of the Revenue is directed against the order dated 18.02.2026 of the Learned Commissioner of Income Tax (Appeals) – 19, Chennai (hereinafter referred to as the “Ld.CIT(A)”), arising out of the assessment order dated 03.11.2025 passed u/s.143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) by the Deput

The order continues below.

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