Principal Commissioner of Income Tax vs. Mohamed Meera Wahitha

T.C.A.No.130 of 2026 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.08.2026 CORAM THE HONOURABLE MR. SUSHRUT ARVIND DHARMADHIKARI, CHIEF JUSTICE AND THE HONOURABLE MR. JUSTICE G.ARUL MURUGAN T. C.A.

No.

130 of 2026

Principal Commissioner of Income Tax Madurai Appellant(s) Vs Mohamed Meera Wahitha 13-3/12H, Bungalow Oorani Street, Puduvayal, Karaikudi Taluk, Sivangai-108. Respondent(s) PRAYER: Appeal filed under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, “A” Bench, Chennai, dated 22.10.2025 in ITA.No.1955/Chny/2025. For Appellant(s) : Mr.V.Mahalingam Page 1 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 JUDGMENT (Delivered by G.ARUL MURUGAN, J.) The Revenue has preferred this Tax Case Appeal under Section 260A of the Income Tax Act, 1961 (in short “the Act”), assailing the order dated 22.10.2025 passed by the Income Tax Appellate Tribunal (ITAT), ‘A’ Bench, Chennai, in ITA.No.1955/CHNY/ 2025. 2.1. The brief facts are that the assessee, an individual, carries on a rice mill business under the name and style of M/s.Ambal Modern Rice Mill in Puduvayal. The assessee filed his return of income for the assessment year 2017-18 on 29.10.2017, admitting total income of Rs.18,21,510/-. 2.2. Noting that a cash deposit to the tune of Rs.3,24,37,580/- had been made by the assessee during the period of demonetisation, the Assessing Officer conducted a survey at the premises of the assessee on 02.03.2017 under Section 133A of the Act. In the course of the survey, the statement of the assessee explaining the source of the cash deposits was recorded. Page 2 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 2.3. Not satisfied with the materials produced, the Assessing Officer treated a sum of Rs.3,14,15,030/- as unexplained money and made an addition under Section 69A of the Act. 2.4. The assessee challenged the additions made by the Assessing Officer by preferring an appeal before the Commissioner of Income Tax (Appeals). By an order dated 26.02.2025, the CIT(A) rejected the appeal, confirming the additions made by the Assessing Officer. Aggrieved, the assessee preferred an appeal before the ITAT. 2.5. The ITAT concluded that the assessee had offered a proper explanation for the cash deposits and produced a list of traders to whom money was advanced in the routine course of business, which was returned during demonetisation and subsequently deposited into the bank account. The Assessing Officer failed to examine the agents, except for one person. The Tribunal further found that, on a comparison with the cash deposits made in the preceding assessment years, there was not much difference. Page 3 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 2.6. Relying on the decision of the Tribunal in the case of Tamil Nadu State Marketing Corporation Ltd. vs. ACIT in ITA.No.431/Chny/ 2023, the Tribunal concluded that the additions made by the Assessing Officer under Section 69A of the Act were not justified and allowed the appeal. Challenging the deletion, the Revenue is before this Court on appeal. 3.1. Learned counsel appearing for the Revenue contended that except furnishing the list of persons to whom money was allegedly advanced, no materials were produced by the assessee to substantiate the source of deposit and further, when the cash deposit was completely abnormal, the Assessing Officer, on being dissatisfied with the explanation, rightly made the additions under Section 69A of the Act, which has been erroneously interfered with by the Tribunal. 3.2. Learned counsel further submitted that the Tribunal failed to take into account the express bar in transacting the business with effect from 09.11.2016 in Specified Bank Notes (SBNs), except for a few notified business transactions. It is contended that the Tribunal Page 4 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 was not right in relying on the decision in TASMAC (supra) in allowing the appeal. 4. We heard the learned counsel for the appellant and considered the materials available on record. 5. The assessee, an individual carrying on business in the name of M/s.Ambal Modern Rice Mill, filed a return of income for the assessment year 2017-18, admitting his total income as Rs.18,21,510/-. The Assessing Officer, by noting cash deposits of Rs.3,24,37,580/- during the period of demonetisation, conducted a survey at the premises of the assessee on 02.03.2017 under Section 133A of the Act. 6. The statement of the assessee offering explanations was recorded and the Assessing Officer, not satisfied with the explanation, made additions to an extent of Rs.3,14,15,030/- under Section 69A of the Act. The assessee had explained before the Assessing Officer that in the business practice, the assessee used to give advance amounts to agents for procuring paddy from farmers. Page 5 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 7. In the routine course of business, these amounts were advanced to agents. However, following the announcement of demonetisation, the agents returned the advanced sums. Consequently, a total sum of Rs.1,30,00,000/- was returned to the assessee by 31 persons which was deposited in the bank account. Even though the assessee requested all 31 agents to appear before the Assessing Officer, ten agents were present. However, the Assessing Officer had summoned only one agent under Section 131 of the Act and recorded the statement on 06.03.2017. 8. The Tribunal observed that when the assessee had clearly stated the source of such cash deposits, as returned advances from 31 agents, as it was a trade practice followed in procurement of paddy, the Assessing Officer chose not to examine the remaining available agents except for one. When the Assessing Officer did not choose to examine the other available agents, the Tribunal noted that the Assessing Officer failed to bring any evidence on record to contradict the practice and return of money. 9. The statement recorded by the Assessing Officer from one of the agents reveals that the agent provided a detailed statement Page 6 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 regarding the business practice involved in paddy procurement and that the money was advanced to him for this purpose, but was returned to the assessee's husband due to the announcement of demonetisation. 10. The Tribunal further noted that the cash deposits were both from sales and old bank deposits in the bank every month and the cash book furnished before the Assessing Officer revealed the cash balance of Rs.2,11,75,341 as of 08.11.2016. Thereby, the assessee had afforded a proper explanation for the cash deposits made. The assessee had also placed on record the ITR acknowledgement, the balance sheet and the trading and profit and loss account. 11. The Assessing Officer had not rejected the books of accounts but added the entire cash deposits made during the period from 08.11.2016 and 22.12.2016, even ignoring non-SBN currency. The Tribunal had further analysed the summary of cash deposits made by the assessee in earlier years, along with a comparative summary of cash deposits made by the assessee for previous years. On such analysis, it was observed that the total cash deposits of assessment Page 7 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 years 2015-16, 2016-17 and 2017-18 were at Rs.9,37,86,989/-, Rs.8,91,30,581/- and Rs.10,41,26,321.97, respectively. 12. From the comparative analysis, it was noticed that the total cash deposits in all three preceding years, including the assessment year under consideration, were merely one and the same. However, in the month of November 2016, the cash deposits were Rs.3,52,43,430/- higher than in the other months and thereby, the Tribunal concluded that from the records it was evident that the assessee used to offer advance money to agents for the procurement of paddy from farmers and only in view of the return of amounts as recorded in the cash balance, the money came to be deposited and the source of deposit stands explained. 13. In such circumstances, the Tribunal, by relying on the decision in the case of TASMAC (supra), wherein it was held that in a case where the assessee explained the nature and source of income, an addition under Section 69A of the Act does not arise, allowed the appeal, deleting the additions. The Tribunal, on analysing the entire material, arrived at a factual finding that the assessee had explained the source of deposits made and thereby deleted the additions made Page 8 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 under Section 69A of the Act. 14. We do not see any infirmity or perversity in the finding arrived at by the Tribunal. No substantial question of law arises for consideration in the above appeal. Accordingly, the tax case appeal stands dismissed. There shall be no order as to costs. (SUSHRUT ARVIND DHARMADHIKARI, CJ.) (G.ARUL MURUGAN, J.) 25.08.2026 Index : Yes/No Neutral Citation : Yes/No gya To 1.The Assistant Registrar, Income Tax Appellate Tribunal, Chennai Benches, Chennai. 2.The Principal Commissioner of Income Tax, Madurai. Page 9 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm ) T.C.A.No.130 of 2026 THE HON'BLE CHIEF JUSTICE AND G.ARUL MURUGAN

, J.

gya T.C.A.No.130 of 2026 25.08.2026 Page 10 of 10 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/09/2026 05:47:08 pm )