ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI vs. JEGATHESE RAMACHANDRAN, MADURAI

ITA 1769/CHNY/2026Status: DisposedITAT Chennai24 September 2026AY 2018-1910 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal. Regarding the disallowance of expenditure, the Tribunal noted that the AO had disallowed the entire Rs. 2,56,18,186/- expenditure claimed by the assessee for fish net trading, citing lack of supporting bills and vouchers. However, the AO had not provided specific material to prove the expenditure was bogus or for non-business purposes, while the assessee admitted deficiencies in record-keeping. The declared turnover of Rs. 2,62,25,555/- was not disputed. The CIT(A) had estimated the net profit at 5% of the turnover, which resulted in a business income of Rs. 13,11,278/-, sustaining a differential amount of Rs. 3,93,384/-. The Tribunal found this estimation reasonable, based on the assessee's past profit history and the lack of specific material from the Revenue to challenge the basis of estimation or past profit figures. The Tribunal also referred to the Supreme Court's decision in CIT v. S. Khader Khan Son, stating that a survey statement alone cannot be the sole basis for an addition. The ground regarding admission of additional evidence was dismissed as the assessee contended no such evidence was filed. The cross-objection filed by the assessee challenging the validity of reassessment proceedings due to improper approval under Section 151 was dismissed as infructuous, as the assessee stated they were not pressing the grounds if the Revenue's appeal was dismissed. The operative direction was to dismiss the Revenue's appeal and the assessee's cross-objection.

What were the facts?

The Revenue appealed against the order of the CIT(A) for Assessment Year 2018-19. The assessee, an individual engaged in fish net trading, had filed a return declaring an income of Rs. 8,67,890. A survey under section 133A was conducted, leading to reassessment proceedings under section 147. The Assessing Officer (AO) disallowed an expenditure of Rs. 2,56,18,186 claimed by the assessee, stating it was not supported by bills, vouchers, or bank statements, and thus not incurred wholly and exclusively for business purposes. The CIT(A) partly allowed the appeal, estimating business income at 5% of the declared turnover and sustaining a differential amount. The Revenue's appeal challenged the CIT(A)'s deletion of the addition and admission of new evidence. The assessee filed a cross-objection challenging the validity of reassessment proceedings due to improper approval.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs. 2,56,18,186/- on account of inflated expenditure, contrary to the findings of the Assessing Officer under Section 37 of the Income Tax Act, 1961? Revenue's Arguments: The CIT(A) erred in deleting the addition of Rs. 2,56,18,186/- on account of inflated expenditure. The CIT(A) also erred in allowing new evidence without satisfying the mandates of Rule 46A of IT Rules, 1962, and without giving the AO an opportunity to respond. Furthermore, the CIT(A) erred in holding that impounded material from a survey does not have evidentiary value, disregarding the legal presumptions under Section 132(4A) and Section 292C of the Act, and contradicting the Madras High Court's decision in Smt. N. Saroja vs. ACIT. Assessee's Arguments: No additional evidence was furnished before the CIT(A), making the Revenue's ground misconceived. While there were lapses in recording expenditure, these did not justify disallowing the entire amount. The AO should have estimated profit rather than disallowing the whole expenditure. The CIT(A) rightly estimated net profit at 5% of turnover based on past results. 2. Whether the reassessment proceedings were valid, given that the approval for the notice under Section 148A(d) was obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT) as required under Section 151 of the Income Tax Act, 1961? Assessee's Arguments: The approval for the order under Section 148A(d) was obtained from the PCIT, whereas the PCCIT was the competent authority under Section 151. This invalidates the approval and renders the reassessment proceedings void ab initio. Revenue's Arguments: Not recorded.

Which sections of the Income-tax Act were involved?

Section 37,Section 133A,Section 147,Section 148,Section 148A,Section 151,Section 250,Section 292C,Section 132(4A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO

Hearing: 22.09.2026Pronounced: 24.09.2026

Heard together (2 matters)

C.O. No.83/CHNY/2026
I.T.A.No.1769/CHNY/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER GEORGE GEORGE K, VICE PRESIDENT:

This appeal filed by the Revenue and the cross objection filed by the assessee are directed against the order of Commissioner of & CO No.83/CHNY/2026 Jegathese Ramachandran Income Tax (Appeals), Chennai-19 dated 22.01.2026, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’).

The order continues below.

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