SAMBATH NAIDU GUNASEKARAN,CHENNAI vs. ITO, NCC-22(1), CHENNAI

आयकरअपीलीयअधिकरण,‘B’ न्यायपीठ,चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI श्रीमनुकुमारगिरर, न्याययकसदस्यएवंश्रीएस.आर.रघुनाथा, लेखासदस्यकेसमक्ष BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.1792/Chny/2026 ननिाारणवर्ा / Assessment Year: 2013-14 Sambath Naidu Gunasekaran The Income Tax Officer No.4, 3rd Cross Street, IIT Colony vs. Non-Corporate Circle 22(1) Naryanapuram, Pallikaranai Chennai. Chennai – 601 302. [PAN: AGOPG8427D] (अपीलाथी/Appellant) (प्रत्यथी/Respondent) अपीलाथीकीओरसे/Appellant by : Shri. S.P.Chidambaram, Advocate प्रत्यथीकीओरसे/Respondent by : Shri. A.T.Krishnamoorthy, Addl.CIT सुनवाईकीतारीख/Date of Hearing : 06.08.2026 घोर्णाकीतारीख/Date of Pronouncement : 27.10.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax, NFAC, Delhi, [hereinafter “the Ld. CIT(A)”] dated 16.02.2026 arising out of the reassessment order dated 23.03.2022 passed u/s.147 of the Income-tax Act, 1961 (“the Act” hereinafter) by the Assessment Unit, NFAC, Delhi (hereinafter referred to as “the AO”), for the assessment year 2013-14. 2. The brief facts of the case are that the assessee is an Individual engaged in the business of real estate and construction. However, the assessee had not filed his return of income. The AO initiated reassessment proceedings by

:-2-: ITA. No.1792/Chny/2026 issuing Notice u/s.148 of the Act dated 31.03.2021. The reasoning for reopening was mentioned as non-disclosure of investment of Rs.2,12,00,000/- in immovable property during the F.Y.2012-13 relevant to A.Y.2013-14. In response the assessee had filed his return of income on 03.05.2021 by declaring total income of Rs.26,23,520/-. 3. The assessee has furnished a copy of the registered sale deed dated 31.01.2013, placed at page 25 of the Paper Book, and another registered sale deed dated 15.10.2022, placed at page 48. The assessee has also produced a copy of the sale agreement at page 64, along with copies of the bank statements, relevant ledger accounts and confirmation from Meera Homes (Proprietorship concern of Shri K. Sivakumar). These documents have been placed on record in support of the assessee’s explanation regarding the nature and source of the investments. It is pertinent to note that the identity of the persons concerned, the genuineness of the transactions, and the nature and source of the investments are not in dispute, as the Revenue has not disputed these aspects. On other hand the AO had provided his reason for making addition stating that evidence is not filed for availing loan and creditworthiness of lenders not proved. However, the AO has completed the reassessment by making an addition of Rs.2,25,98,190/- as unexplained investment by passing an order u/s.147 of the Act dated 23.03.2022. 4. Aggrieved by the order of the AO the assessee preferred an appeal before the ld.CIT(A) on 20.04.2022. The assessee filed the written submissions before the ld.CIT(A) which is also extracted in the appellate order and the same is reproduced hereunder:

“ On Merits: The appellant submits that he made investments in two immovable properties through registered documents for Rs.92,00,000/- on15.10.2012 and Rs.45,72,000/- on 31.01.2013 amounting to Rs.1,37,72,000/- as against Rs.2,12,00,000/- mentioned in reason for reopening the assessment as per annexure to the notice u/s.148 of the IT act dated 31.3.2021. One more investment made by the Assessee through unregistered agreement and power of Attorney for Rs.52,50,000/- plus additional expenses Rs.22,50,000/- amounting Rs.75,00,000 at Plot No.92, VGP Shanthi Nagar-IV, S.No.625/3, No.149, Pallikaranai Village was declared by the appellant in his financials.

:-3-: ITA. No.1792/Chny/2026

On specific objection raised for giving the details of the alleged Rs.2,12,00,000/- the appellant was not furnished with the details and the assessment was completed on the basis of submissions of financials filed along with the ITR a sum Rs.2,25,98,190/- was added u/s.69 without verifying the documents and sources furnished in the financials filed along with the ITR. The Appellant submits the following facts and particulars with reference to the investments made in immovable properties declared by him in his financials filed along with the ITR and also the sources declared in the financials are given below:

A. The investment in Plot no.92, VSP Shanthi Nagar measuring about 3000sqft was made through an agreement dated 09.08.2011 supported by Registered Power of Attorney Document No.1112/2012 dated 30.7.2012 For Rs.52,50,000/-only. A further sum of Rs.22,50,000/- was spent towards improvement expenses totalling to Rs.75,00,000/-. Though the information was not furnished in the NMS data the appellant declared the investments in his financials. .Further a sum of Rs.30,00,000/- was paid during earlier F.Y 2011-12 and not pertaining to the Asst.Year 2013- 14.

The details of payments and sources for above investments is given below: S.No. Details of Rs. Source Remarks payment made i) 10.08.2011-By 20,00,000 Paid by Chq Transaction related to earlier DD No.010368 through fin year 2011-12 and not drawn on ING regular pertaining to the Asst.Year Vysa Bank business 2013-14. Copy of the ,Madipakkam bank account highlighted portion of the Agreement and Power of Attorney is attached ii) 11.08.2011-By 10,00,000 Paid by Chq Transaction related to earlier DD No.666713 through fin year 2011-12 and not drawn on ING regular pertaining to the Asst.Year VysaBank,Madip business 2013-14. Copy of the akkam bank account highlighted portion of the Agreement and Power of Attorney is attached iii) 22.07.2012-By 1,00,000 Paid by Chq Copy of thehighlighted Chq 401489 ING through portion of the bank account Vysa Bank regular is attached ,Madipakkam business bank account iv) 30.07.2012-By 22,50,000 Advance Confirmation from Chq No.662805 received from K.Sivakumar Prop: ING K.Sivakumar- MeeraHomes is attached. VysaBank,Madip Meera akkam Homes on 15.07.2012 v) Amount spent on 21,50,000 Advance Confirmation from land received from K.Sivakumar Prop: K.Sivakumar- MeeraHomes is attached.

:-4-: ITA. No.1792/Chny/2026 development and Meera other expenses Homes on 15.07.2012 TOTAL 75,00,000

S.No. Details of Rs. Sources Remarks payments made 08.08.2012 1.08.08.2012 Advance from 1.Copy of the 10,00,000 chq No. HDFC Bank Limited as per highlighted i) 662809 ICICI Bank statement portion of the drawn on Rs.10,00,000/- ICICI Bank ICICI Bank statement is attached 16.10.2012 73,60,000 2.Advance received from Copy of the Amt paid by Mala Mohan on 28.09.2012 highlighted portion of ii) RTGS Rs.4000000/- the ICICI Bank is attached from ICICI 06.10.2012 -Rs.1800000/- Bank 15.10.2012-Advance fromKeerthi- HDFC Bank Copy of the Highlited Rs.790000/-Advance from portion of HDFC Keerthi 15.10.2012-ICICI bank account is Rs.710000 attached. 15.10.2012 8,40,000 Advance received from Copy of confirmation DD taken K.Sivakumar-Meera Homes from iii) from UCO Rs.10,00,000 on K.SivakumarProp:M Bank 15.10.2012 eera homes is attached. iv) 15.10.2012- 9,60,240 Advance received from Copy of confirmation Stamp & K.Sivakumar-Meera Homes fromK.Sivakumar,Pr registration Rs.10,00,000 on op:Meera homes is expenses 15.10.2012 attached etc

:-5-: ITA. No.1792/Chny/2026 registration charges Rs.365950/-.The Sale consideration was paid in earlier years through sale agreement but registered on 31.01.2013 by paying stamp and registration charges.

S.No. Details of Payment Rs. Source Remarks made i) 31.01.2013- 45,72,000 26.01.2013 – Copy of Advance received Confirmation from ii) Stamp and other reg. 3,65,950 Rs.5000000/- from K.Sivakumar expenses Mr.K.Sivakumar Prop: Meera Prop: Meera Homes Homes is attached

It is further submitted that the AO has not considered the above said facts and documentary evidences available towards sources for investments made. Without considering the above said facts a AO has made entire total investments of Rs.2,25,98,190/- declared in the financials as addition u/s.69 of the IT act and raised a huge demand Of Rs.18491363/-.”

:-6-: ITA. No.1792/Chny/2026 ld.CIT(A) confirmed the balance addition of Rs.1,95,98,160/- by passing an order dated 16.02.2026. Aggrieved by the order of the ld.CIT(A) the assessee in appeal before us. 6. The Ld.AR for assessee has drawn our attention towards the confirmation letters, bank statements, ledgers etc., filed before the lower authority and detailed explanation filed by assessee before the ld.CIT(A).These communications made before lower authority are all not in dispute and the same is reflected in the ld.CIT(A) order.

:-7-: ITA. No.1792/Chny/2026 made in the immovable properties, together with the corresponding sources of funds. The assessee has produced copies of the registered sale deed dated 31.01.2013, placed at page 25 of the Paper Book, another registered sale deed dated 15.10.2022, placed at page 48, and the relevant sale agreement placed at page 64. The assessee has also furnished copies of bank statements, ledger accounts and confirmation from Meera Homes, a proprietorship concern of Shri K. Sivakumar. These documents were already available before the lower authorities and form part of the assessment and appellate records. No fresh material has been introduced before us. The assessee has further furnished a transaction-wise statement correlating the investments with the amounts appearing in the relevant agreements and explaining the nature and source of the funds received from Shri K.Sivakumar, Smt. Mala Mohan and Smt. Keerthi. 11. The assessee has explained that the investment in Plot No. 92, VGP Shanthi Nagar, Pallikaranai, aggregated to Rs.75,00,000/-, comprising Rs.52,50,000/- towards the consideration and Rs.22,50,000/- towards improvement and other expenses. The assessee has specifically demonstrated that Rs.30,00,000/- was paid during the financial year 2011-12 and, therefore, did not pertain to the assessment year under consideration. The remaining payments have been explained with reference to the regular business bank account and advances received from Shri K. Sivakumar, proprietor of Meera Homes. The relevant payment particulars and supporting documentary evidence were furnished before the lower authorities. 12. With regard to the vacant land situated at Ram Nagar, Pallikaranai, the assessee explained that the property was purchased for a consideration of Rs.92,00,000/- under the registered document dated 15.10.2012, bearing Document No.4858/2012. The total investment, including stamp duty, registration charges and other expenses, was stated to be Rs.1,01,60,240/-. The assessee explained that the payments were made through banking channels and were sourced from advances received from Smt.Mala Mohan, Smt. Keerthi and Shri K.Sivakumar. The relevant bank statements and

:-8-: ITA. No.1792/Chny/2026 confirmation from Meera Homes were also furnished in support of the explanation. 13. Similarly, in respect of the vacant land situated at Plot No. 2, Vengaivasal Village, measuring approximately 2,540 square feet, covered by Document No. 9450/2013 and registered on 31.01.2013, the assessee explained that the sale consideration of Rs.45,72,000/- had been paid in an earlier period pursuant to the sale agreement, whereas the stamp duty and registration charges of Rs.3,65,950/- were incurred upon registration. The assessee correlated the payments with the advances received from Shri K. Sivakumar, proprietor of Meera Homes, and furnished the corresponding confirmation and supporting documentary evidence. 14. The principal objection of the lower authorities is that the assessee had not established the creditworthiness of the persons from whom the advances were received and had not satisfactorily proved the source of the funds in their hands. The ld.CIT(A) further observed that evidence in respect of Smt.Mala Mohan and Smt.Keerthi had not been furnished. However, on perusal of the written submissions reproduced in the impugned appellate order, we find that the assessee had furnished particulars demonstrating that the amounts received from these persons were transferred through RTGS, NEFT or other banking channels. The corresponding bank statements were also relied upon by the assessee. Thus, the observation that no evidence whatsoever was furnished in respect of these parties is not borne out by the material available on record. 15. The assessee has identified the persons from whom the funds were received, explained the purpose for which the funds were utilised and correlated the receipts with the corresponding payments made towards the acquisition of the properties. The registered sale deeds, sale agreement, bank statements, ledger accounts and confirmation from Meera Homes constitute relevant documentary evidence which required consideration collectively. In our view, the explanation furnished by the assessee cannot be rejected merely

:-9-: ITA. No.1792/Chny/2026 by referring to the absence of independent evidence regarding the source of funds in the hands of the persons who advanced the amounts, without adequately examining the evidence already placed on record. 16. Before proceeding further, it would be appropriate to refer to the provisions of section 69 of the Act, which read as under: “Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.”

:-10-: ITA. No.1792/Chny/2026 The relevant extract of the amendment, as reproduced in the submissions, reads as under:

“Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,— (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the AO aforesaid has been found to be satisfactory.” 19. The ld. AR contended that the aforesaid amendment is prospective in nature and cannot be applied retrospectively to transactions pertaining to the period under consideration. He further submitted that the assessee had discharged the burden by identifying the persons from whom the funds were received, explaining the nature of the transactions and producing the corresponding documentary evidence. According to the ld. AR, the assessee could not be expected to establish the source of the source in the absence of a statutory requirement applicable to the relevant year.

“The creditors have confirmed that they have advanced loan to the assessee. In most of the cases, transactions have been routed through bank account. Therefore, asking source of such deposits will amount to asking source of the source which is not permitted under the law as held by the Hon’ble High Court of

:-11-: ITA. No.1792/Chny/2026 Patna in the case of Sarogi Credit Corpn. vs. CIT 1975 CTR (Pat) 1 : (1976) 103 ITR 344 (Pat) and the decision of the Ahmedabad Bench of the Tribunal in the case of Rohini Builders vs. Dy. CIT (2002) 76 TTJ (Ahd) 521 : (2001) 117 Taxman 25 (Ahd)(Mag).” The Tribunal further observed:

“Once it is established that the amount has been invested by a particular person, be he is a family member or close relative then the responsibility of the assessee is over. The assessee cannot ask that person, who advanced the loan, whether money advanced is properly taxed or not.” “Thus, it had become fairly settled law that assessee is not required to satisfy the Assessing Authority of the source of source.” 22. The aforesaid decision was relied upon by the ld.AR to contend that the assessee's responsibility must be considered in the light of the evidence furnished by him and that the absence of independent proof regarding the source of the source, by itself, would not justify rejection of an otherwise supported explanation.

“Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof. It is within the range of these principles that such cases have to be decided.”

:-12-: ITA. No.1792/Chny/2026 25. The aforesaid principle emphasises that an explanation supported by evidence cannot be rejected arbitrarily or merely on the basis of suspicion. The Department is required to examine the evidence and demonstrate the deficiencies therein or rebut the explanation with material available to it. 26. Applying the aforesaid principle to the facts of the present case, we find that the assessee has furnished documentary evidence in support of the investments and has explained the sources of the funds. The AO has not adequately demonstrated any inherent defect in the explanation or effectively rebutted the documentary evidence furnished by the assessee. The adverse inference drawn by the AO, without properly addressing the evidence on record, cannot be sustained merely on the basis of suspicion or conjecture.

:-13-: ITA. No.1792/Chny/2026 evidence of receipt through banking channels. The lower authorities have not adequately addressed the evidentiary value of these documents or demonstrated, through any effective enquiry or contrary material, that the transactions were not genuine. The absence of further verification by the AO assumes relevance in the factual context of the present case, particularly when the assessee had furnished the relevant particulars and supporting evidence. 30. We further observe that the ld. CIT(A) has accepted the assessee's explanation to the extent of Rs.30,00,000/- relating to payments made during the financial year 2011-12 and excluded the same from the addition sustained for the assessment year under consideration. This reinforces the requirement that the investments and payments must be examined with reference to the relevant previous year. An amount pertaining to an earlier financial year cannot be brought to tax in the assessment year under consideration merely because the property was subsequently registered or the transaction was reflected in the assessee's financial statements. 31. Further, the assessee has explained that, in respect of the property at Vengaivasal Village, the sale consideration had been paid in an earlier period pursuant to the sale agreement and that only the registration and other charges were incurred upon registration. This explanation, supported by the relevant documents, required examination in determining the actual investment attributable to the year under consideration. The addition u/s. 69 must be founded upon the investments satisfying the statutory conditions for the relevant financial year and cannot be sustained merely by aggregating the amounts appearing in the financial statements without properly examining their nature, timing and sources. 32. Having regard to the totality of the facts and circumstances, we are of the considered opinion that the assessee has furnished a detailed and transaction-wise explanation of the investments, supported by registered sale deeds, the relevant sale agreement, bank statements, ledger accounts and confirmations. The assessee has also correlated the advances received from

:-14-: ITA. No.1792/Chny/2026 the identified persons with the payments made towards acquisition of the properties and the associated expenses. These documents were available before the lower authorities and form part of the assessment and appellate records. 33. The objections raised by the Revenue primarily relate to the creditworthiness of the persons who advanced the funds and the alleged absence of evidence regarding the source of the funds in their hands. However, the explanation furnished by the assessee, together with the documentary evidence, has not been adequately rebutted by the lower authorities. In particular, the observation of the ld. CIT(A) that no evidence was furnished in respect of Smt. Mala Mohan and Smt. Keerthi is not consistent with the written submissions and the bank transaction particulars referred to in the impugned appellate order. 34. The decisions relied upon by the ld. AR, namely S.K. Jain v. ITO (2004) 2 SOT 579 (Agra), Shreelekha Banerjee v. CIT (49 ITR 112) and CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC), reinforce the requirement that the explanation and supporting evidence furnished by the assessee must be examined objectively and cannot be rejected merely on suspicion or by insisting upon further evidence without adequately addressing the material already placed on record. 35. In the facts of the present case, we find that the assessee has discharged the burden of explaining the nature and source of the investments through the documentary evidence available on record. The Revenue has not brought any cogent material on record to discredit the explanation or establish that the investments, as explained by the assessee, represent unexplained income assessable u/s. 69 of the Act. We accordingly hold that the addition sustained by the ld. CIT(A) cannot be upheld. 36. In view of the foregoing discussion, respectfully considering the judicial principles relied upon by the assessee and having regard to the documentary evidence available on record, we set aside the findings of the ld. CIT(A)

:-15-: ITA. No.1792/Chny/2026 sustaining the addition of Rs.1,95,98,160/- u/s. 69 of the Act and direct the AO to delete the said addition. The grounds raised by the assessee on this issue are accordingly allowed. 37. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 27th October, 2026 at Chennai. Sd/- Sd/- (मनुकुमारगिरर) (एस.आर.रघुनाथा) (MANU KUMAR GIRI) (S.R.RAGHUNATHA) न्याययकसदस्य/Judicial Member लेखासदस्य/Accountant Member चेन्नई/Chennai, ददनांक/Dated, the 27th October, 2026 MM आदेशकीप्रनतललपपअग्रेपर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकरआयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीयप्रनतननधि/DR 5. गार्ाफाईल/GF Digitally signed by DEVADAS DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.10.28 17:57:18 +05'30'