THANGAVEL RAJAA,DINDIGUL vs. INCOME TAX OFFICER, WARD 1, DINDIGUL, DINDIGUL

ITA 1181/CHNY/2026Status: DisposedITAT Chennai06 October 2026AY 2020-215 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that addition cannot be made solely on bank credits without considering debits, which might represent contra-transactions. It also noted the assessee's sole income source is the onion business and the gross profit declared is between 2% to 3%. To resolve the dispute and account for potential income beyond the declared margin, the Tribunal decided to estimate the profit at 8% of the impugned addition (Rs. 1,43,02,512). This estimated profit of 8% is to be treated as the business income of the assessee, in lieu of further verification by the AO. The assessee's legal grounds were expressly left open as the appeal was decided on merits by estimating income. The operative direction is for the AO to treat 8% of the impugned addition as business income.

What were the facts?

The assessee, Thangavel Rajaa, an individual engaged in the wholesale onion business, filed a return of income for AY 2020-21 declaring Rs. 5,11,020. The Assessing Officer (AO) reopened the assessment under Section 148, noting that bank account credits of Rs. 4,01,92,846 were not commensurate with the declared turnover of Rs. 2,58,90,334. The difference of Rs. 1,43,02,512 was treated as unexplained money under Section 69A. The Commissioner of Income Tax (Appeals)/NFAC upheld the addition, rejecting the assessee's legal contention regarding non-compliance with Section 148A and the merits of the addition due to lack of evidence. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of Rs. 1,43,02,512 as unexplained money under Section 69A is sustainable when the AO considered only bank credits without examining debits, and the assessee's accounts are audited? (Question of law and fact, turns on Section 69A). Assessee's contentions: Accounts are audited; assessee is not well-educated and could not submit required details; AO considered only credits, not debits; the entire difference cannot be unexplained money; profit may be estimated to bring quietus. Revenue's contentions: Relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 250,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI SS VISWANETHRA RAVI & MS. PADMAVATHY.S

For Respondent: Ms. Anshu Sharawat, Addl. CIT

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 16.02.2026 for Assessment Year (AY) 2020-21. 2. The assessee is an individual and engaged in the wholesale business of onions. The assessee filed the return of income for AY 2020-

The order continues below.

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