SURESH, SALEM,SALEM vs. DCIT, CENTRALCIRCLE, SALEM

ITA 633/CHNY/2026Status: DisposedITAT Chennai06 October 2026AY 2015-167 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 55,50,000/- was not sustainable. The Tribunal noted that the advances claimed to have been recovered did not represent fresh transactions but were part of larger advances carried forward from earlier years. The source of these original advances, being additional income disclosed during a search in AY 2013-14, was not disputed by the AO in the years the advance was made. The Tribunal found that the assessee had furnished confirmation letters evidencing the recovery of advances. While summons could not be served on all parties, the Tribunal was of the view that the inability to serve summons alone could not be the sole ground for addition, especially when confirmations were provided and the source of the underlying advance was explained in earlier years. Therefore, the Tribunal concluded that the source of the investment to the extent of Rs. 55,50,000/- was explained as being from the recovery of advances traceable to the additional income disclosed during the search. The AO was directed to delete the addition made under Section 69 of the Act. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Suresh, is an individual. The assessment year in question is 2015-16. The appeal is against the order of the CIT(A) dated 19.09.2025, which upheld an addition of Rs. 55,50,000/- made by the Assessing Officer (AO). A search was conducted on the assessee's premises on 22.05.2015, followed by a notice under section 153A of the Income Tax Act, 1961. The AO treated Rs. 55,50,000/- as unexplained investment, representing the unverified portion of advances claimed to have been recovered by the assessee. The CIT(A) dismissed the assessee's appeal, confirming the addition.

What were the issues?

1. Whether the addition of Rs. 55,50,000/- as unexplained investment is sustainable, considering the assessee claimed recovery of advances as the source for investments, in light of Section 69 of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that the addition represented carried forward balances from earlier years, sourced from additional income offered during a search in AY 2013-14. The assessee contended that this constituted double taxation. The assessee relied on confirmation letters from agents and stated that the AO accepted advances from earlier years. The assessee also argued that Section 68 was not applicable. Revenue's Contention: The revenue argued that the AO made the addition because the parties from whom advances were allegedly recovered could not be traced. The revenue further submitted that the statements of accounts explaining the source of advances were unaudited and lacked proper verification and supporting evidence. The revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 68,Section 69,Section 153A,Section 250

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 Sharatwat, Addl. CIT

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Chennai-20 (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 19.09.2025 for Assessment Year (AY) 2015-16. 2. The assessee is an individual. There was a search conducted in the residential premises of the assessee on 22.05.2015 and a notice u/s. 153A of the Act was served on the assessee.

The order continues below.

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