VELMURGAN THENMOZHI,CUDDALORE vs. ITO, CUDDALORE

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ITA 2227/CHNY/2026Status: DisposedITAT Chennai21 October 2026AY 2019-204 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the authorities below had ignored certain facts that had a bearing on the issue. Specifically, while the assessee provided a receipt of Rs. 7 Lacs from Shri R. Manikandan, the receipt did not specify the date and mode of payment. Furthermore, no independent evidence like a registered sale agreement, bank trail, or buyer's confirmation specifying the date and mode of payment was furnished to establish that the amount was received on or before June 5, 2018 (the date of cash deposit). The Tribunal noted a document on page 20 of the Paper Book, which was a receipt issued by Mr. R. Manikandan for Rs. 7 Lacs, dated April 5, 2018, and a corresponding entry dated August 24, 2018, by the assessee, along with Mr. Manikandan's Aadhar Card. In view of these facts, to ensure substantial justice, the Tribunal restored the matter to the file of the AO for reconsideration. The AO was directed to re-examine the available documents and potentially seek further relevant documents from the assessee, providing a fresh opportunity of being heard. The assessee was directed to be vigilant and cooperative. The grounds raised by the assessee were allowed for statistical purposes.

What were the facts?

The assessee, Velmurugan Thenmozhi, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the Commissioner of Income Tax (Appeals) / NFAC, Delhi, dated January 19, 2026, for Assessment Year 2019-20. The assessee was a non-filer of return. Based on high-risk information, a notice under Section 148A of the Income Tax Act, 1961, was issued. The assessee filed a return declaring income under Section 44AD. The Assessing Officer (AO) made an addition of Rs. 10,27,900 under Section 69A, which was partly allowed by the CIT(A). The assessee's appeal to the ITAT was filed with a delay of 17 days, which was condoned. The dispute pertains to the source of a cash deposit of Rs. 10,27,900 in the assessee's bank account.

What were the issues?

1. Whether the addition of Rs. 10,27,900 made under Section 69A of the Income Tax Act, 1961, is justified, considering the assessee's explanation of the source of funds? (Question of law and fact) Assessee's Contention: The assessee argued that the cash deposit was partly from an advance of Rs. 7 Lacs received in cash from a prospective buyer for a property transaction and partly from cash withdrawals from her bank account. The advance was allegedly for repaying a loan to Equitas Small Finance Bank. The assessee claimed to have obtained confirmation for no dues and that the amount was withdrawn from her account after property sale registration. The tax practitioner's inadvertent reply led to the impugned order. The assessee relied on a confirmation letter from the buyer and proof of withdrawal from her account, which the CIT(A) allegedly missed appreciating. Revenue's Contention: The revenue, through the AO and CIT(A), made the addition under Section 69A. The judgment does not explicitly record separate arguments from the revenue before the ITAT, but their stance is reflected in the orders passed by the lower authorities.

Which sections of the Income-tax Act were involved?

Section 139,Section 148,Section 148A,Section 147,Section 144B,Section 69A,Section 44AD,Section 282

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: HONOURABLE GEORGE GEORGE K. & SHRI GAGAN GOYAL

Hearing: 24.08.2026Pronounced: 21.10.2026

आयकर अपीलीय अधिकरण ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री जॉजज जॉजज के., उपाध्यक्ष एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE GEORGE GEORGE K., VICE PRESIDENT AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2227/Chny/2026 ननिाारण वर्ा /Assessment Years: 2019-20 Velmurugan Thenmozhi v. Income Tax Officer, No.181 Kurinji Nagar, Velisemmandalam, Ward-1, Cuddalore Dist., Tamil Nadu-607 001. Cuddalore. [PAN: BIKPT1419D] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. D. Anand, Advocate, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. S. Manoj Prakash, JCIT. Ld. DR सुनवाईकीतारीख/Date of Hearing : 24.08.2026 घोषणाकीतारीख /Date of Pronouncement : 21.10.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’), Delhi dated 19.01.2026, for the Assessment Year (hereinafter referred as the ‘AY’) 2019-20.

GROUDS OF APPEAL 1. The order of the Hon'ble CIT (A) is Contrary to law and Facts and Circumstance of the case. 2. The appellant is not having proficiency in handling eportal hence could not reply to the notices by opening income tax portal and also her husband was also not able to handle. 3. The inadvertent reply to the assessment proceeding by the tax practitioner led to the impugned order whereas cash was deposited from his saving as well as from the temporary accommodation from buyer of the property who paid the amount in Equitas bank to take back the original document which was mortgaged. The confirmation for no due was also obtained. The said closure of Equitas bank loan amount was charged u/s 69A which is contested in appeal as the source is as mentioned in the beginning.

ITA No.2227/Chny/2026 Velmurgan Thenmozhi 4. The buyer of the property gave confirmation letter in this regard and the same was paid after the sale deed is registered and amount was paid by withdrawal from appellant account which was so evident and proof was produced to Hon'ble CIT (A), but he missed to appreciate the fact and made a remark about the date was not mentioned in the confirmation letter and also the mode of payment were also mentioned, whereas all the information as available. 5. For these and other grounds that may be urged at the time of hearing, it is prayed the order of the Id CIT (Appeals) be quashed and penalty imposed is deleted and justice rendered.

2.

The brief facts of the case are that the assessee was amongst the non-filers of return u/s. 139 of the Act. As per the high risk CRIU/VRU information in insight portal the assessee has deposited cash of Rs. 10,27,900/- in his bank account. In view of this information a notice u/s. 148 of the Act was issued on 25.03.2023 after following the procedure as laid down in section 148A of the Act. In response to the same the assessee filed her return of income on 13.02.2024 declaring total income at Rs. 2,48,840/- under the head business calculated u/s. 44AD of the Act. Ultimately, the case of the assessee was assessed u/s. 147 r.w.s. 144B of the Act after making an addition of Rs. 10,27,900/- u/s. 69A of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT(A), who in turn partly allowed the appeal of the assessee. The assessee being further aggrieved with the same preferred the present appeal before us with a delay of 17 days, based on affidavit and application for condonation of delay, the delay in filing of the appeal is condoned. 3. We have gone through the order of the AO, order of the Ld. CIT(A) and submissions of the assessee alongwith grounds taken before us. It is observed that the assessee is an individual having small business of selling milk, deposited cash to the tune of Rs. 10,27,900/- in her bank account. The question before us pertains to adjudication of the issue related to deposit of Rs. 10,27,900/- in Equitas Small Finance Bank. As per the assessee the source of cash deposit was partly from an advance of Rs. 7 Lacs allegedly received in cash from a prospective buyer in connection with a property transaction and partly from cash withdrawals from her bank account. 4. To substantiate the sources mentioned (supra) the assessee has submitted a receipt of Rs. 7 Lacs from one Shri R. Manikandan and stating that the amount was

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ITA No.2227/Chny/2026 Velmurgan Thenmozhi intended for repayment of loan with Equitas Small Finance Bank. However, the same receipt does not specify the date and mode of payment. Further no independent evidence such as registered agreement for sale, bank trail or a confirmation from the buyer specifying the date and mode of payment has been furnished to establish that the amount was actually received on or before 05.06.2018, i.e. the date of cash deposit. On this issue, we have gone through the page no. 20 of the Paper Book, i.e. the receipt issued by Mr. R. Manikandan for paying the amount of Rs. 7 Lacs vide dated: 05.04.2018 by Mr. R. Manikandan and dated: 24.08.2018 by the assessee. This document also carried a copy of the Aadhar Card of Mr. R. Manikandan. 5. The facts mentioned (supra) has been ignored by the authorities below and certainly has a bearing on the issue under consideration. In view of this, to have a substantial justice in the matter, we deem it fit to restore the matter back to the file of the AO with a direction to reconsider the documents available with the assesses and may even ask for the documents relevant to settle the issue (which the assessee may not aware of) after giving a fresh opportunity of being heard as per the provisions of section 282 of the Act. The assessee is also directed to be vigilant and cooperative enough this time while participating in the proceedings before the AO without seeking any adjournment. Resultantly, grounds raised by the assessee are allowed for statistical purposes only. 6. In the result, the appeal of the assessee is allowed for statistical purposes only.

Order pronounced on the 21st day of October 2026, in Chennai.

Sd/- Sd/- (जॉजा जॉजा के.) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K.) लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष /VICE PRESIDENT चेन्नई/Chennai, ददनाांक/Dated: 21st October, 2026. KB

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ITA No.2227/Chny/2026 Velmurgan Thenmozhi आदेश की प्रततललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रतततनधि/DR 5. गार्ड फाईल/GF K Digitally signed by K BABU BABU Date: 2026.10.26 09:36:43 +05'30'

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