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

ITA 4299/CHNY/2026Status: DisposedITAT Chennai28 September 2026AY 2022-2377 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the additions made by the Assessing Officer (AO) towards alleged unaccounted cash receipts from the sale of flats were unsustainable. The CIT(A) was justified in deleting these additions. The Tribunal found that the additions were based on an estimation methodology comparing recorded sale consideration with assumed median selling rates, treating the differential as unaccounted cash receipts after a 5% discount. However, the AO did not provide independent or corroborative evidence to establish actual receipt of cash over and above the recorded amounts. The AO did not reject the assessee's books of account, nor did he demonstrate that the consideration recorded in sale deeds, agreements, or ERP records was incorrect. The Tribunal noted that the alleged undisclosed income was quantified by substituting recorded consideration with estimated rates without proving actual accrual or receipt. The Tribunal also found that the seized material, electronic communications, employee statements, and ERP records, along with the median-rate methodology and extrapolation adopted by the AO, lacked evidentiary value. The decision of a Coordinate Bench in the assessee's group company case for AY 2023-24, which was followed in the lead appeal, governed the substantive controversy. The Revenue failed to demonstrate any distinguishing factual feature or independent evidence. Therefore, the Tribunal upheld the CIT(A)'s order and dismissed the Revenue's grounds of appeal.

What were the facts?

These nine appeals by the Revenue challenge common orders of the CIT(A)-19, Chennai, which deleted additions made by the AO. The additions pertained to alleged undisclosed income from the sale of flats for assessment years 2017-18 to 2023-24 in the cases of Ivar Estates Private Limited and Appaswamy Real Estates Limited. The AO's additions were based on seized material and statements from search proceedings. The appeals were clubbed and heard together due to identical issues. The Revenue's appeals were found to be delayed, but the Tribunal condoned the delay, finding sufficient cause. The Tribunal decided to adjudicate the appeal for Ivar Estates Private Limited for AY 2017-18 as the lead case.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in deleting additions on account of business income for various assessment years, as per the Revenue's grounds of appeal. 2. Whether the Commissioner of Income Tax (Appeals) erred in allowing relief without giving the Assessing Officer adequate opportunity to examine seized documents and consider a new methodology at the appellate stage, specifically regarding undisclosed purchases, as argued by the Revenue. 3. Whether the Commissioner of Income Tax (Appeals) erred in holding that seized material lacks evidentiary value by not taking cognizance of legal presumptions under Section 132(4A) and Section 292C of the Income Tax Act, 1961, contrary to the High Court of Madras decision in T.C.A. Nos.1395 to 1401 of 2009, as contended by the Revenue. The Revenue argued that the CIT(A) erred in deleting additions based on seized material and statements, particularly by not giving due weight to presumptions under Sections 132(4A) and 292C, and by allowing relief without adequate opportunity for the AO. The Revenue relied on the High Court of Madras decision in Smt. N. Saroja Vs The Assistant Commissioner of Income Tax. The Assessee did not record specific arguments in the judgment, but their agreement to the lead case procedure implies their stance aligns with the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 132(4A),Section 292C

AI-generated summary — verify with the full judgment below

आयकर अपीलीय अिधकरण ‘ए’ "ायपीठ, चे"ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI "ी एस.एस. िव"ने" रिव, "ाियक सद" एवं "ी एस.आर. रघुनाथा, लेखा सद" के सम# BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER & SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. Nos. 2984, 2985, 3368, 3041 & 2838/Chny/2026 िनधा$रण वष$/Assessment Years: 2017-18, 2018-19, 2019-20, 2020-21, 2021-22 Central Circle -2(1), No.3, Mangesh Street, T.Nagar, Investigation Building, Chennai – 600 017. Ground Floor, Room No. B6, MG Road, Chennai - 600 034. [PAN: AAZFA-1878-M]

(अपीलाथ&/Appellant) ('(थ&/Respondent) आयकर अपील सं./I.T.A. Nos. 4297, 4298, 4299 & 4300/Chny/2026 िनधा$रण वष$/Assessment Years: 2017-18, 2021-22, 2022-23 & 2023-24 Central Circle -2(1), No.3, Mangesh Street, T.Nagar, Investigation Building, Chennai – 600 017. Ground Floor, Room No. B6, MG Road, Chennai - 600 034. [PAN: AACCA-8397-H]

(अपीलाथ&/Appellant) ('(थ&/Respondent) अपीलाथ& की ओर से / Appellant by : Ms. R. Anita, CIT '(थ& की ओर से/Respondent by Mr. R. Venkata Raman, CA : सुनवाई की त

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