DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI vs. REVATHI READYMADES, CHENNAI

ITA 3041/CHNY/2025Status: DisposedITAT Chennai29 September 2026AY 2019-209 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal. The core issue was the deletion of an addition made on account of a sales discrepancy between a manual register and Tally software. The Tribunal noted that during search operations, the assessee had initially agreed to offer the difference of Rs. 4,42,95,135/- as income. However, the CIT(A), after calling for a remand report from the AO, accepted the assessee's reconciliation statement. The Tribunal specifically perused the remand report dated 21.07.2025, wherein the AO had not pointed out any defect in the assessee's reconciliation. The AO confirmed that the sales recorded in the manual register, after deducting cancelled invoices and discounts, amounted to Rs. 22,87,02,244/-, while total sales including GST as per Tally was Rs. 23,86,28,584/-, which was higher than the manual register sales. Since the CIT(A)'s order was based on this remand report, and the Revenue could not point out deficiencies in it, the Tribunal found no illegality or perversity in the CIT(A)'s findings and dismissed the grounds of appeal.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2019-20. During search and seizure operations on 29.01.2019, a discrepancy was found between sales recorded in a manual register and Tally software. The manual register showed sales of Rs. 26,90,72,763/-, while Tally showed Rs. 22,47,77,268/-, a difference of Rs. 4,42,95,135/-. The assessee initially agreed to offer this difference as income. However, in the Return of Income, this was not done, leading the Assessing Officer (AO) to add the difference. The assessee appealed to the CIT(A), arguing that the manual register figures were gross sales before discounts and cancellations, and that net sales were lower than Tally figures. The CIT(A), after a remand report from the AO, directed the deletion of the addition.

What were the issues?

1. Whether the CIT(A) erred in accepting the reconciled sales figure of Rs. 22,87,02,244/- from the manual sales register, as verified during remand proceedings, contrary to the AO's findings? 2. Whether the CIT(A) erred in accepting the reconciled sales figure when the AO reported a mismatch between the manual register and Tally, and the assessee had conceded to offer the difference as income? Assessee's Contentions: - The manual sales register figures were gross sales before considering discounts and cancelled invoices, and also reduced by GST. - The actual net sales were Rs. 22,87,02,244/-, which, after accounting for Tally sales and GST, was less than the sales shown in Tally. - The AO made the addition solely based on the statement recorded during search and seizure operations, without considering the assessee's submissions. - The CIT(A) granted relief after considering the reconciliation statement and obtaining a remand report from the AO, which was not disputed by the AO. - Reliance was placed on Smt. B. Jayalakshmi vs. ACIT (407 ITR 212). Revenue's Contentions: - The CIT(A) accepted the reconciliation statement without proper verification. - There was no evidence that the manual sales register excluded figures of cancelled invoices and discounts. - The assessee had conceded to offer the difference of Rs. 4,42,95,135/- as income during the search proceedings and did not raise the issue of sales cancellation and discounts at that time.

Which sections of the Income-tax Act were involved?

Section 132,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES,

Before: SHRI INTURI RAMA RAO & SHRI SS VISWANETHRA RAVI

Pronounced: 29.09.2026

PER INTURI RAMA RAO, ACCOUNTANT MEMBER :

This appeal filed by the Revenue directed against the order passed by learned Commissioner of Income Tax(Appeal), Chennai-18 dated 26.08.2025 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year 2019-20. 1 REVATHI READYMADES [D]

2.

The Revenue raised the following grounds of appeal : “(i) The Ld.CIT(A) has erred while accepting the reconciled sales figure of t

The order continues below.

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