SIVANANTHAM ANUSELVAN,TIRUVARUR vs. ITO, WARD-1,, TIRUVARUR

आयकरअपील�यअ�धकरण ’बी’ �यायपीठ,चे�नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI �ी मनुकुमारिग�र, �ाियक सद� एवं �ी एस. आर. रघुनाथा लेखासद� BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No. 1798/Chny/2026 �नधा�रण वष�/Assessment Year: 2017-18 Sivanantham Anbuselvan v. The Income Tax Officer, 4, Senbaga Rice Mill Road, Ward-1, Mannargudi, Tiruvarur, Tiruvarur-610001 Tamil Nadu, 614001 [PAN: AQSPA 6150 H] (अपीलाथ�\Appellant) (��यथ�\Respondent)

अपीलाथ� क ओर से/ Appellant by : Mr. N. Arjun Raj, Advocate ��यथ� क ओर से /Respondent by : Mr. E. Elango, JCIT सुनवाई क तार�ख/Date of Hearing : 13.08.2026 घोषणा क तार�ख /Date of : 14.10.2026 Pronouncement आदेश / O R D E R PER MANU KUMAR GIRI, JM:

The captioned appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the ld. CIT(A)”], dated 14.08.2025, for the Assessment Year (AY) 2017-18, whereby the ld. CIT(A) confirmed the addition made by the Assessing Officer (AO) u/s. 69A of the Income Tax Act, 1961 (hereinafter referred to as

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 2 :: “the Act”), in respect of cash deposits in the assessee’s bank account. 2. The grounds of appeal raised by the assessee are reproduced as under: 1. The order of the NFAC, Delhi dated 14.08.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1079629282(1) for the above- mentioned Assessment Year is contrary to law, fact and in circumstances of the case. 2. The NFAC, Delhi erred in sustaining the addition of Rs.1,38,52,202/- being the cash deposits made during the assessment year under consideration as unexplained money in terms of Section 69A of the Act in the computation of taxable total income without assigning proper reasons and justification. 3. The NFAC, Delhi failed to appreciate that the provisions of Section 69A r.w.s 115BBE of the Act had no application to the present facts and in circumstances of the case and ought to have appreciated that the pre- requisite conditions required for making an addition in terms of Section 69A r.w.s 115BBE of the Act were absent in the present case and in circumstances, there by negating the findings in relation there to. 4. The AU failed to appreciate that in any event provisions of Section 115BBE of the Act had no application in view of the law declared by the Madras High Court on its applicability from Assessment Year: 2018-19 only, there by negating the findings in relation there to. 5. The NFAC, Delhi failed to appreciate that having placed on record the source for the disputed cash deposits made during the ordinary course of business being a wholesale trade in Cavinkare products, the sustenance of the addition made on the disputed cash deposits should be reckoned as bad in law.

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 3 :: 6. The NFAC, Delhi failed to appreciate that in any event, having not independently examined the nature and source of the cash deposits made during the assessment year under consideration including the income component embedded there on, the assessment of the entire value of cash deposits as unexplained money of the appellant was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 7. The NFAC, Delhi failed to appreciate that the scrutiny assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 8. The NFAC, Delhi failed to appreciate that the entire re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 9. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential appellate order passed should be reckoned as bad in law. 10. The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 11. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3. The brief facts of the case are that the assessee had not filed the return of income within the prescribed time for the assessment year under consideration. During the course of the assessment proceedings, the AO noticed cash deposits in the assessee’s bank account, including deposits of specified bank notes during the demonetisation period. On the basis of the information available with the Department, cash deposits of

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 4 :: ₹19,26,440/- were initially noticed in the assessee’s account maintained with Lakshmi Vilas Bank, Mannargudi. The AO issued notice u/s. 142(1) of the Act dated 17.01.2018, stated to have been served on 20.01.2018. Thereafter, a letter dated 18.10.2019 was issued and served on 23.10.2019. Information obtained u/s. 133(6) of the Act revealed aggregate credits of ₹1,56,02,039/- in the bank account for the period from 01.04.2016 to 31.03.2017, including deposits of ₹19,62,440/- during the demonetisation period. The AO issued a show-cause notice dated 17.12.2019 requiring the assessee to explain the credits in the bank account and the source of the cash deposits. In response to the said show-cause notice, the assessee filed a return of income on 24.12.2019 declaring total income of ₹2,41,040/-. The AO treated the return as non-est on the ground that it was filed beyond the stipulated time. In the absence of an explanation considered satisfactory, the AO completed the assessment ex parte u/s. 144 of the Act and made an addition u/s. 69A of the Act. 4. Before the ld. CIT(A), the assessee contended that the deposits represented business receipts arising from its wholesale trading activity in Cavinkare products. The assessee referred to VAT returns, an audit report, Tally abstracts and bank statements. The ld. CIT(A), however, observed that the assessee had not furnished the underlying bills, invoices, vouchers and other supporting records necessary to establish a direct nexus between the cash deposits and the alleged sale

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 5 :: proceeds. The ld. CIT(A) further observed that the AO had afforded opportunities during the remand proceedings, but the requisite details were not furnished in response to the AO’s requisitions. After considering the material and the assessee’s explanation, the ld. CIT(A) held that the nature and source of the deposits remained unsubstantiated and sustained the addition u/s. 69A of the Act. 5. The principal issue before us is whether the assessee has demonstrated any infirmity in the action of the lower authorities in treating the cash deposits as unexplained money u/s. 69A of the Act and whether the impugned appellate order warrants interference on the facts and material placed on record. 6. We have heard the rival submissions and considered the facts recorded in the orders of the lower authorities and the grounds raised by the assessee. The assessee’s principal contention is that the cash deposits represent business receipts arising from its wholesale trading activity and, therefore, the addition made u/s. 69A of the Act is not sustainable. We are unable to accept the contention in the absence of adequate supporting evidence establishing the nature and source of the deposits. Section 69A of the Act provides for the treatment of money, bullion, jewellery or other valuable articles as deemed income where the statutory conditions prescribed therein are satisfied, including the absence of recording in the books of account, where maintained, and the failure to furnish a

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 6 :: satisfactory explanation regarding the nature and source of acquisition. 7. In the present case, the assessee has relied upon its alleged business activity as the source of the cash deposits. However, the mere assertion that deposits represent business receipts does not, by itself, establish the correctness of the explanation. The assessee was required to substantiate the claim through contemporaneous records demonstrating the actual conduct of business, the generation of cash receipts, the corresponding sales and the subsequent deposit of such cash into the bank account. The ld. CIT(A) has specifically recorded that, notwithstanding the references to VAT returns, the audit report, Tally abstracts and bank statements, the assessee failed to produce supporting bills, invoices, vouchers and other underlying records to establish the nexus between the cash deposits and the alleged sale proceeds. The assessee has not demonstrated, on the facts available in the impugned order, that the deposits can be reconciled with identifiable sales transactions or that the corresponding cash was available in the business records immediately before its deposit. The existence of a bank account and the fact that credits are reflected in the bank statement establish the movement of funds through the account; they do not, without more, establish the source of the funds. Similarly, a VAT return or an audit report, without reconciliation with the disputed deposits and supporting transactional records, cannot automatically

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 7 :: establish that the entire amount deposited represents explained business receipts. The burden of substantiating the explanation lies upon the assessee in the first instance. Where the assessee asserts that a substantial amount of cash represents receipts from its regular business, it is incumbent upon the assessee to furnish material that enables verification of the claim. The absence of such material cannot be cured merely by repeating the explanation that the assessee was engaged in wholesale trade. 8. We also find that the assessee was afforded opportunities during the assessment proceedings and the remand proceedings, as recorded by the ld. CIT(A). The assessee was required to furnish the relevant information and supporting documents, but the ld. CIT(A) found that the requisite evidence was not produced despite such opportunities. No cogent basis has been demonstrated in the material before us to displace that factual finding. 9. It is not sufficient for an assessee to contend that the lower authorities ought to have accepted its explanation without the evidence necessary to verify it. The statutory burden cannot be discharged merely by making a claim regarding the source of money. Where the explanation is not supported by verifiable material, the competent authority is entitled to evaluate the explanation in the light of the evidence actually available and the statutory conditions governing the proposed addition. We accordingly find no sufficient basis on the material placed

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 8 :: before us to interfere with the finding of the ld. CIT(A) that the assessee failed to substantiate the nature and source of the disputed cash deposits. The addition is therefore sustained u/s. 69A of the Act, subject to the precise quantum appearing in the operative assessment order and the computation of income. Ground Nos. 2, 3, 5 and 6 are accordingly dismissed. 10. Ground No. 7: Alleged invalidity of the assessment on limitation and jurisdiction The assessee has contended that the assessment was time- barred, invalid and passed without jurisdiction. However, we find that assessee had chance to challenge the assumption of jurisdiction u/s.147 of the Act by way of filing objection before the AO itself as per mandate of the landmark judgment of the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. v. Income Tax Officer ([2003] 259 ITR 19). Hence, at this belated stage we refrain from adjudicating the grounds relating to assumption of jurisdiction u/s.147 of the Act. 11. Ground No. 4: Applicability of section 115BBE The assessee has separately challenged the applicability of section 115BBE of the Act to the assessment year under consideration, relying upon the law declared by the Hon’ble Jurisdictional High Court in S.M.I.L.E. Microfinance Limited v. Assistant Commissioner of Income Tax (W.P.(MD) Nos. 2078 and 1742 of 2020, dated November 19, 2024), the Hon’ble High Court ruled that the enhanced 60% tax rate under Section 115BBE of the Income Tax Act applies prospectively to

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 9 :: transactions carried out on or after April 1, 2017, and cannot be applied retroactively to Assessment Year 2017–18. The applicability of the rate prescribed u/s. 115BBE is a distinct legal question from the sustainability of the addition u/s. 69A. The fact that an addition u/s. 69A is sustained does not dispense with the requirement to compute tax in accordance with the statutory provisions applicable to the relevant period and the binding judicial precedents governing the issue. Accordingly, while we uphold the addition u/s. 69A on the facts discussed above, the AO shall give effect to the binding jurisdictional precedent, while computing the tax liability u/s. 115BBE. Ground No. 4 is disposed of in the above terms. No other grounds pressed by the assessee. 12. Accordingly, the appeal is dismissed on the substantive challenge to the addition u/s. 69A of the Act. The issue relating to the applicable rate u/s. 115BBE shall be given effect to in accordance with paragraph 11 above. 13. In the result, appeal of the assessee is party allowed. Order pronounced in the open court on the 14th day of October, 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER

ITA No. 1798 /Chny/2026 (A Y 2017-18) Sivanantham Anbuselvan Vs ITO W-(1) :: 10 :: चे�नई/Chennai, +दनांक/Dated: 14th October 2026 SANDEEP Digitally signed by SNDP, Sr. PS SANDEEP KUMAR KUMAR Date: 2026.10.16 17:35:45 +05'30' आदेश क ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF