INCOME TAX OFFICER, DINDIGUL vs. KRISHNASAMY KARTHIKEYAN, DINDIGUL

आयकर अपीलीय अिधकरण, ’सी’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
सु
ी पावती. एस., लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND MS. PADMAVATHY. S, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No.2959/Chny/2025
िनधारणवष/Assessment Year: 2018-19

The ITO,
Ward-1,
Dindigul.

v.
Mr.Krishnasamy Karthikeyan,
6/208, Swaminathapuram,
Puspathur Palani,
Dindigul-624 001. [PAN: DLOPK 6618 C]
(अपीलाथ/Appellant)
(यथ/Respondent)

Department by :
Ms. R. Anitha, Addl.CIT
Assessee by :
Mr.Krishnasamy Karthikeyan
(assessee)
सुनवाईक तारीख/Date of Hearing
:
10.02.2026
घोषणाक तारीख /Date of Pronouncement
:
13.03.2026

आदेश / O R D E R
PER ABY T. VARKEY, JM:

This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 25.08.2025 for the Assessment Year (hereinafter referred to as "AY”) 2018-19. 2. The main grievance of the assessee is against the action of the Ld.CIT(A) deleting the addition without calling for Remand Report from the AO.
Krishnasamy Karthikeyan
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made addition of ₹1,09,80,930/- u/s.69A of the Act [unexplained money]
and ₹2,83,500/- u/s.69C of the Act [unexplained expenditure]. Thus, made a total addition of ₹1,17,08,540/- in place of Returned Income of ₹4,44,110/-. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who is noted to have issued various notices of hearing u/s.250
of the Act to the assessee and elicited response from the assessee which fact is discernable from reading of Para No.5 of the impugned order, and thereafter, the Ld.CIT(A) has found that the assessee is an un educated person who has studied only up to 8th standard and is engaged milk trading business in his Madutukulam Village and is a small businessman.
The Ld.CIT(A) found that the assessee used to purchase milk from farmers in & around his village and sell only milk & dairy products through his retail-outlet to customers on cash basis. The Ld.CIT(A) was of the view that the assessee didn’t file the return being an illiterate person.
Further, Ld CIT(A) noted that the assessee on receipt of notice u/s.148 of the Act had filed his return and also the statement of accounts for the period from 01.04.2017 to 31.03.2018, reflecting turnover of milk sales at ₹1,12,60,840/-, and declared net-profit of ₹5,14,110/- and paid tax on it, which net profit @4.5% of the turnover from sale of milk in rural area is reasonable. The Ld.CIT(A) has noted that the AO didn’t dispute the assessee’s claim that he is engaged in milk trading business and it is common knowledge that such business is carried out on cash basis, which Krishnasamy Karthikeyan
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assessee deposit regularly in the bank, which fact Ld.CIT(A) ascertained from perusal of the statement of accounts which assessee produced. The Ld.CIT(A) after perusal of relevant material, being satisfied with the explanation of the assesse, held that the assessee was in the business of retail milk trading; and that the source of cash deposits was from the retail sale of milk; and that assessee has shown reasonable net-profit from the milk business. In the back-drop of these factual finding, the Ld
CIT(A) held that assessee was able to prove the nature and source of the cash deposits as well as the withdrawals, and hence was of the view that additions made by the AO u/s.69A/69C of the Act was unwarranted in the given facts and circumstances of the case and directed deletion of the same.
4. Aggrieved, the Revenue is in appeal before this Tribunal.
5. Having heard the Ld.DR and the assessee ‘in-person’, we note that assessee is in the business of purchase and sale of milk and dairy products. The assessee didn’t file ITR for the relevant year. The AO received information that assessee had deposited cash including bearer- cheque in bank account maintained with State Bank of India (SBI) to the tune of ₹1,09,80,930/- and had withdrawn cash of ₹2,83,500/-. Hence the AO re-opened the assessment by issuing notice u/s.148 of the Act.
Pursuant to it, assessee filed ITR declaring ₹4,44,110/-. The AO asked the Krishnasamy Karthikeyan
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assessee to prove the nature and source of the cash deposits as well as withdrawal from the bank account maintained with SBI. And the assessee replied that he is into the business of trading milk which he purchases from farmers in & around Madutukulam Village and thereafter sells the same from his retail store and declared milk sale of ₹1,12,60,840/-, from which activity declared profit of ₹5,14,110/-. Thus the assessee explained that nature & source of deposit/withdrawals was from his business of trading in milk and dairy products. The AO was not satisfied with the reply of the assessee and held that the assessee failed explain the nature &
source of the cash deposits as well as the cash withdrawal. So he made addition of ₹1,09,80,930/- u/s.69A of the Act [unexplained money] and ₹2,83,500/- u/s.69C of the Act [unexplained expenditure]. Thus, made a total addition of ₹1,17,08,540/- in place of Returned Income of ₹4,44,110/-. On appeal, the Ld.CIT(A) is noted to have issued various notices u/s.250 of the Act to the assessee and elicited response from the assessee which fact is discernable from reading of Para No.5 of the impugned order, wherein, the Ld.CIT(A) is noted to have called for inter- alia proof of assessee’s business, and in response, the assessee has filed various details/documents called for by him including the statement of accounts for the period from 01.04.2017 to 31.03.2018 and thereafter, the Ld.CIT(A) has found that the assessee is an un educated person who has studied up to 8th standard and is a small businessman engaged in Krishnasamy Karthikeyan
:: 6 ::

milk trading business in his Madutukulam Village; and that being an illiterate person he didn’t file his return. And the Ld CIT(A) noted that the assessee on receipt of notice u/s.148 of the Act had filed his return and also the statement of accounts for the period from 01.04.2017 to 31.03.2018, reflecting turnover of milk sales at ₹1,12,60,840/-, and declared net-profit of ₹5,14,110/- and paid tax on it. The Ld.CIT(A) is noted to have accepted that assessee is in to business of purchase & sale of milk & dairy products through his retail-outlet on cash basis and was of the view that net profit @4.5% of the turnover from the retail sale of milk in rural area, is reasonable. According to the Ld.CIT(A), the AO didn’t dispute the assessee’s claim that he was engaged in milk trading business and having ascertained that assessee is in to business of milk trading, he accepted that such business is cash based business and which involves daily cash collection from retail sales and corresponding deposit into the bank. Thus, the Ld.CIT(A) has found that the source of cash deposits in his SBI bank account was from the retail sale of milk & dairy products.
And in respect of the withdrawal, the Ld.CIT(A) has found that the same was from the cash deposits made in the SBI account, basis which the Ld
CIT(A) found that nature & source of cash deposit/withdrawals was from his trade/sale realization, which explanation of assessee is noted to be supported by relevant material produced by the assessee. Considering the material on record, we concur with the Ld CIT(A) that nature & source of Krishnasamy Karthikeyan
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cash deposit/withdrawals was from his trading activity of purchase & sale of milk & dairy products. The assessee is noted to have discharged the burden of proof to prove the nature & source of cash deposit/withdrawals.
Based on the material on record, we find merit in the Ld CIT(A) deleting the addition made u/s.69A of the Act, which action we uphold. Coming to the deletion of addition u/s 69C of the Act of an amount of ₹2,83,500/- , the Ld.CIT(A) has found that the same was from the cash deposits made in the SBI account, which fact couldn’t be countered by Revenue.
Moreover, it is not the case of the AO that the assessee has purchased anything other than milk or dairy products. In such a scenario, the action of the Ld.CIT(A) deleting addition u/s 69C of the Act of an amount of ₹2,83,500/- doesn’t call for any interference, which we concur.
6. In the light of the aforesaid discussion, we don’t find any infirmity or perversity in the impugned action of Ld CIT(A) warranting any interference. Hence, we confirm the action of Ld CIT(A) and dismiss the appeal of the Revenue.
7. Before parting, we observe that even though the Revenue contended that the Ld.CIT(A) ought to have called for Remand Report, but a reading of the impugned order doesn’t show that the assessee produced any new evidences which he hasn’t adduced before the AO.
Rather, a reading of the impugned order reveals that the Ld.CIT(A) has Krishnasamy Karthikeyan
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called for and has elicited information, documents, etc., which if the assessee adduced can’t attract Rule 46A of the Income Tax Rules, 1962
and therefore, such contention/ground of the Revenue is rejected.
8. In the result, appeal filed by the Revenue is dismissed.

Order pronounced on the 13th day of March, 2026, in Chennai. (पावती .एस)
(PADMAVATHY. S)
लेखा सदय/ACCOUNTANT MEMBER (एबी टी. वक
)
(ABY T. VARKEY)
याियक सदय/JUDICIAL MEMBER

चे ई/Chennai,
!दनांक/Dated: 13th March, 2026. TLN

आदेश क ितिलिप अ$ेिषत/Copy to:
1. अपीलाथ/Appellant
2.  थ/Respondent
3. आयकरआयु/CIT, Chennai / Madurai / Salem / Coimbatore.
4. िवभागीयितिनिध/DR
5. गाडफाईल/GF
TUMMALA
CHARLA
LAKSHMI
NARAYANA
Digitally signed by TUMMALACHARL
A LAKSHMI
NARAYANA
Date: 2026.03.16
12:01:56 +05'30'