ACIT, NCC-2,, MADURAI vs. GANESAN ANBUSELVAM, THIRUTHANGAL

आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘B’ BENCH: CHENNAI

माननीय
ी मनु कुमार िगर, ाियक सद एवं माननीय
ी एस.आर.रघुनाथा ,लेखा सद के सम ।
BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No.3181/Chny/2024
िनधारण वष/Assessment Year: 2017-18

The Assistant Commissioner of Income Tax,
Non-Corporate Circle-2,
Madurai.

v.
Shri Ganesan Anbuselvam,
No.11-FA, Standard Colony,
Thiruthangal, Thiruthangal,
Tamil Nadu-626 130. [PAN: ADQPA9937R]

(अपीलाथ/Appellant)

( यथ/Respondent)

अपीलाथ क ओर से/ Appellant by :
Mr.S.Sridhar, Advocate
 यथ क ओर से /Respondent by :
Ms.Gouthami Manivasagam,
JCIT.
सुनवाईक तार!ख/Date of Hearing
:
03.07.2025
घोषणाक तार!ख /Date of Pronouncement
:
26.09.2025

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

This appeal is filed by the Revenue against the order of CIT(A),
NFAC, Delhi, dated 04.09.2024 for the Assessment Year-2017-18. 2. The facts of the case and reasons put-forth by the AO in making impugned additions/disallowances in order dated 26/12/2019 u/s 143(3) of Income Tax Act 1961 (hereinafter referred to as the 'Act') are summarized hereunder.
Shri Ganesan Anbuselvam
:: 2 ::

(i) The appellant, an Individual was engaged in the business of selling alcoholic beverages for human consumption under the name of Anbu
Wines Bar & e-filed his Return of Income for the AY 2017-18 on 31/03/2018 admitting a total income of Rs. 11,97,090/- and the same was processed u/s 143(1). Subsequently, the case was selected for complete scrutiny under CASS and notice u/s 143(2) dated 21/09/2018
was issued to the appellant. Subsequently notice u/s 142(1) was issued on 07/12/2019 through E-proceeding mode calling for details. In response, the appellant furnished the details.
(ii) During the financial year 206-17, the appellant had deposited cash in his bank accounts, of Rs.58,62,000/-
(Tamilnadu
Grama
Bank.
Thiruthangal) and Rs. 2,08,000/- (City Union bank, Srivilliputhur) in the form of SBN (Specified Bank Notes) or i.e. demonetized currencies on various dates during the period of 09/11/2016 to 30/11/2016. In the Cash
Transaction Report 2016, filed online by the appellant, he claimed that the nature of receipt was against cash sales.
During the assessment proceedings, appellant was given multiple opportunities by the AO through notices u/s 142(1) and hearing letters and submits evidences for the claim made by in such Cash Transaction
Report. The AO noted that till the date of this impugned order, no evidences were filed by the appellant. The AO also noted from the month wise cash deposits for FY 2015-16, 2016-17 and 2017-18 that deposits during November 2016 had shown unreasonable increase of sales if such claim of appellant was correct. Hence the above cash deposits in the form of SBNs was treated by the AO as unexplained income u/s 68 r.w.s.
115BBE of the Act.
(iii) From the bank statements, the AO also observed that the appellant had made purchases for Rs 3,79,18,870/- (DDs made to purchase alcohol from TASMAC) but in the Profit & Loss Account, he had reported only Rs.
1,63,52,620/- as sales and closing stock of Rs. 17,54,210/-. Thus, the AO
Shri Ganesan Anbuselvam
:: 3 ::

noted that the appellant had made unaccounted purchases. Hence, the unaccounted purchases of Rs.2,27,76,680/-(3,79,18,870
less
1,51,42.190) was added by the AO to the income u/s 69C of the Act.
3. Additional evidences and remand report as noted by the ld.CIT(A):
6. Vide submissions dated03/02/2024, the appellant filed documentary evidences in support of his claims made in grounds of appeal. On 07/02/2024, this office asked the AO to send a remand report on submissions of the appellant. On 12/03/2024, the AO submitted his remand report which was sent to the appellant by this office on 20/03/2024 & the appellant filed rejoinder to remand report on 01/04/2024 & further submissions filed on 02/07/2024 &
09/08/2024 repeating the earlier submissions dated 01/04/2024. 6.1 In his remand report, the AO did not oppose admission of additional evidences. It is noted that the AO had provided adequate opportunities of hearing to the appellant during the assessment proceedings which the appellant did not respond to. However, considering that the additional evidences submitted by the appellant are crucial to decide the issues in this appeal, and in turn, to compute the actual income of the appellant, under the principles of natural justice and in view of the decisions of Hon'ble Courts in Alcon Resort Holding Ltd [2023] 151 taxmann.com 98 (Bombay),
Daljit Singh Sra [2017] 80 taxmann.com 271 (Punjab & Haryana),
Suretech Hospital & Research Centre Ltd. [2007] 164 ΤΑΧΜΑN 168
(BOM.) and Rankin
Infrastructure
(P.)
Ltd.
[2022]
142
taxmann.com
37
(Mumbai-Trib.), the additional evidences, submitted by the appellant are admitted in terms of Rule 46A of I.T
Rules 1962. The merits of the evidences & the report of the AO on merits of the issues shall be discussed while deciding grounds of appeal in subsequent paras of this order.
Shri Ganesan Anbuselvam
:: 4 ::

(i) The appellant had maintained bank account with Pandian Grama
Bank
(Tamilnadu
Grama
Bank) bearing account
No.
516901000004267. The appellant was also one of the main office bearers of Elan Thalir Recreation Club situated at 85, Chairman PKS
Arumugam Road, Sivakasi having PAN No. AAAAE3875A and Vennila
Recreation
Club situated at 50/51,
Main
Road.
Mamsapuram,
Srivilliputhur
(Tk)-626110
having
PAN
No.
AACTV2511M. The appellant was running the wine shop under the name and style of Hotel Anbu and Wines Bar situated at 140A, B, C and D, Main Road, Tiruthangal-626130. The purchases were made from his common bank account to all three concerns. For the above said two recreation clubs, the payments for purchases were affected through the above said Tamilnadu Grama Bank and other banks cash demand drafts. The appellant filed copies of statement from the Pandian Grama Bank wherein the details of payments made through the bank accounts for the respective recreation clubs along with date and DD Numbers were stated to be mentioned.
(ii) The payments from the said bank accounts related to the appellant and the above said two recreation club's purchases. The details of purchases made by the appellant and the recreation clubs as reflected in the Form 26AS were tabulated as under:

Name

PAN No.

Purchase amount as per Form 26AS
Ganesan
Anbuselvam
ADOPA9937R
Rs. 15142190
Vennila
Recreation
Club
AACTV2511M
Rs. 12449830
Elan
Thalir
Recreation
Club
AAAAE3875A
Rs.15145930. Total
Rs 42737950
The appellant also filed copies of Form 26AS and bank account statement of Tamilnadu Grama Bank, bank account of Elanthalir
Recreation
Club at Indian bank sivakasi branch,
Acc.No.6409295996 and Vennila Recreation club at Indian bank
Srivilliputhur branch, Acc. No. 6409642363. Shri Ganesan Anbuselvam
:: 6 ::

The appellant stated that from such bank statement, it could be found that there were no deposits on day-to-day basis made to effect purchases from Tasmac and the amount deposited in the recreation club was only to cover the annual renewal charges payable. It was submitted that the daily sales were not deposited and therefore, no amount was paid from the said recreation club to effect purchases from their bank accounts. From the statement of Pandian Grama Bank, it was stated that the sales of all the three concerns were deposited in the bank account belonging to the appellant and from the said bank account, purchases for all the three concerns' payments were affected. Details of Purchases and Sales of the above three concerns was also tabulated as under:

A.Y.

Concern

Purchases as per
26AS
Sales

Gross
Profit
Net
Profit

2016-
2017
G Anbuselvam
1,51,42,190/-
1,63,52,620/-
12,77,780/-
7,04,556/-
2016-
2017
Vennila
Recreation
Club
1,24,49,830/-

1,40,93,435/-
15,03,973/-

2016-
2017
Elan
Thalir
Recreation
Club
1,51,45,930/-

1,71,62,060/-
16,97,040/-

Total
4.27.37.950/-
4,76,08,115/-

It was stated that above sales amount was partly deposited into Pandian
Grama
Bank,
Thiruthangal branch,
Acc.
No.
516901000004267 in the name of G. Anbuselvam.
Thus, it was submitted that the entire purchases should not be treated as the purchases of the appellant. The appellant also relied upon decisions in cases of Fancy wear [2017] 87 taxmann.com 183
(Mumbai-Trib.), Jagdish H Patel [2017] 84 taxmann.com 259
(Gujarat); Subarna Rice Mill (2018) 96 taxmann.com 286 (Cal) SLP dismissed by Hon'ble Supreme Court for low tax effect [2020] 114
taxmann.com 572 (SC), Tejua Rohit Kumar Kapadia ALP Diary No.
12670/2018 dated 20.06.2018 (SC), Haware Construction (P.) Ltd.
[2019] 101 taxmann.com 168) (Mumbai - Trib).
(iv) It was also submitted that the deposits made during the demonetization period represented only the business transactions.
Shri Ganesan Anbuselvam
:: 7 ::

Out of the sale proceeds of all the three concerns, the cash was deposited in the bank account which includes demonetized currency. From the withdrawal of the said bank account. money were utilized for making payments to Tasmac towards purchases.
The sale proceeds were utilized for making the deposits during the said period. The details of sales and purchases during the month of November and December of all the three concerns were tabulated by the appellant as under:
A) Details of purchases from 09/11/2016 to 30/12/2016:
Month
Anbuselvam
Vennilla recreation club
Elan Thalir recreation club
Total
09.11.2016 to 30.11.2016
10,50,495/-

19,19,747/-

11,30,399/-

41,00,641/-

9,80,633/-

9,30,123/-

28,75,719/-

Total
20,15,458/-
29,00,380/-
20,60,522/-
69,76,360/-
B) Details of sales from 09/11/2016 to 30/12/2016:
Month
Anbuselvam
Vennilla recreation club
Elan Thalir recreation club
Total
09 11.2016 to 30.11.2016
10 10.82,686/-
8,11,865/-

10,65,190/-

12,11,325/-

14,25,880/-

Total
25,52,494/-
20.23.190/-
24.91.070/-
70.66.754/-
Shri Ganesan Anbuselvam
:: 8 ::

Month
Anbusel vam
%
Vennila recreation club
%
Elan
Thalir recreation club
%
Total
April-2016
1336765

1439985

May-2016
1274411
7.79

1199730
8.51

1428275

1168000
8.29
1425490

3851114

July-2016
1255722

1240840

1442580

3939142

August-2016
1256835

1197391

1425510

3879736
September-
2016
1500267
9.17
1263574
8.97

1432980
8.35
4196821
October-2016
1432113
8.76

1159500

November-
2016
1405944

February-
2017
1303133

March-2017

1371375

Total
16352620

14093435

17162060

47608115
Shri Ganesan Anbuselvam
:: 9 ::

It was stated that as against the total sales effected during demonetization period of Rs. 70,66,754/ demonetized currency was deposited for Rs. 60,70,000/-, that the entire deposits were within the sales realisation. Further. it was stated that the said sales realisation deposits were utilized towards the purchase only. Thus, it was stated that these transactions represented business transactions which could not have been treated as unexplained credits.
The appellant also relied upon decisions in cases of Poona v.
Bhaichand H. Gandhi 141 ITR 67 (Bom.), Mehul V.Vyas [2017] 80
taxmann. Com 311 (Mumbai-Trib.), Smt. Manasi Mahendra Oitkar
[2016] 73 taxmann.com 68 (Mumbai Trib.), Smt.Madhu Raitani
[2011] 10 taxmann.com 206 (Gau.), Kamal Kumar Mishra [2013]
33 taxmann.com 610, Smt.Ramilaben B. Patel [2018] 100
taxmann.com 325 (Ahmedabad Trib.), Amitabh Bansal [2019] 102
taxmann.com 229 (Delhi - Trib.), Vineshmaheswari [2019] 103
taxmann.com 274 (Delhi-Trib).
(v) The appellant also filed copies of the statement obtained from Tasmac for date-wise purchases made along with DD numbers and DD amount for the appellant i.e. Hotel Anbu and Vennila Recreation
Club and Elan Thalir Recreation Club. From the common bank statements given by the Pandian Grama Bank, appellant also segregated the payments for the appellant and to the recreation clubs.
It was stated that in addition to the payments effected through
Pandian Grama Bank, the cash DDs were also made from the banks
& details of cash DDs we re also furnished for the concerned club and the appellant payment statements with the declaration from the above said two clubs confirming the deposits of their sales realization in the bank account of the appellant to make the payments to Tasmac.
The appellant also filed Ledger Copy of Month wise sales of Hotel
Anbu. Vennila recreation club and Elanthalir recreation club, Ledger
Copy of sales details on 09/11/2016
to 30/12/2016
(Demonetization Period) of Hotel Anbu, Vennila recreation club and Elanthalir recreation club, Copy of Profit and loss account of Hotel
Anbu, Vennila recreation club and Elanthalir recreation club.
7.2.2 On merits of the issues involved, the AO, in his remand report dated
12/03/2024, accepted the submissions of the appellant and stated as below:
Shri Ganesan Anbuselvam
:: 10 ::

road, Thiruthangal. The assessee has deposited all the sales amount of the above said three business premises in one and Demand Drafts were taken in the above said three business separately. The assessee has submitted that liquor purchase was made in the following three business which are reflected in the Form 26AS. The details are Name

PAN No.

Purchase amount as per
Form 26AS
Ganesan
Anbuselvam
ADOPA9937R

Rs. 1,51,42,190/-

Vennila
Recreation Club
AACTV2511M

Rs.1,24,49,830/-

Elan
Thalir
Recreation Club
AAAAE3875A

Rs. 1,51,45,930/-

Total
Rs. 4,27,37,950/-
The assessee has admitted copies of Form 26AS for Elan Thalir
Recreation Club(Pan- AAAAE3875A), Vennila Recreation Club(Pan-
AACTV2511M) also Form 26AS of the assessee which are verified.
The assessee has also submitted details in respect of Demand drafts paid to TASMAC for the purchase of liquor. It is verified from the details submitted by the assessee that demand drafts were taken for a sum of Rs.3,79,18,810/- towards the purchase of liquor in the name of the above said three concerns. The assessee has also submitted the copy of the affidavit for declaration of purchase and sale transaction of the clubs transacted to Pandian Grama Bank account in the name of G. Anbuselvam. The copy of the affidavits are given by Elanthalir Recreation club and Vennila recreation club
Hence it in confirmed that the entire amount of purchase of liquor is for the above said three concerns and the assessee has made a total purchase of Rs. 1,63.52.620/- and tax has been deducted as per provision of Section 200CA of the IT act of the amourit of Rs.
1,51,42,190/-and this amount is reflected in Form 26AS
The above remand report is forwarded herewith for kind approval of the Addi. Commissioner of Income-Tax, Non-Corporate Range-2. Madurai so as to submit the remand report to the Commissioner of Income-Tax (Appeal), NFAC, Delhi."
Shri Ganesan Anbuselvam
:: 12 ::

In rejoinder to remand report, the appellant stated that as the AO accepted his submissions and evidences, the additions may be deleted on both accounts of section 68 as well as section 69C of the Act. The appellant also stated as below:
"Amount of unaccounted purchases of Rs.2,27,76,680/- is purchases of Elanthalir Recreation Club and Vennila Recreation
Club. I am ready to file Income tax retums of Elanthalir and Vennila recreation Club during the period of assessment year 2017-2018. So, please delete the above additions."
7.2.3 Thus, the remand report of the AO, submitted after approval of Range head brings out that the additions made on account of unexplained credits of Rs. 60,70,000/- u/s 68 of the Act included sales made on behalf of other two assessees (the two clubs) also & unaccounted purchases of Rs. 2,27,76,680/- u/s 69C of the Act included purchases in the hands of the two clubs. The above also brings out that the sales & purchases made on behalf of the appellant had been disclosed by him in his own return of income and he undertook to file returns of the other two entities (the two clubs) also.
In view of the above discussion, the additions made by the AO, of Rs.
60,70,000/- u/s 68 of the Act & unaccounted purchases of Rs.
2,27,76,680/- u/s 69C of the Act, are hereby deleted. Ground no. 2 & 5 of appeal are allowed.
It is clarified here that the AO is free to take action, as deemed fit, in the hands of the other two assessees (Elanthalir Recreation Club & Vennilla
Recreation Club).
7.3 Ground no. 6 of appeal: It is a general ground of appeal and does not require any adjudication.
8. In effect, the appeal is to be treated as partly allowed.

•
Addition of ₹60,70,000/- u/s 68 on account of cash deposits during the demonetization period.
•
Addition of ₹2,27,76,680/- u/s 69C towards alleged unaccounted purchases.
The assessee, an individual engaged in the sale of alcoholic beverages, filed his return of income for AY 2017–18 declaring Rs.11,97,090/-. The case was selected for scrutiny, and assessment was completed u/s 143(3) with the above additions. The ld.CIT(A) admitted additional evidences under Rule 46A and called for a remand report from the AO. In the remand proceedings, the AO accepted the assessee’s explanations and evidences. The ld.CIT(A), based on the AO’s report and supporting material, deleted the additions.
7. Our findings on Addition of Rs.60,70,000/- u/s 68:
The assessee deposited cash in SBNs during the demonetization period. The source of the cash deposits was explained to be business sales from three entities viz; Hotel Anbu & Wines Bar (assessee’s business), Elanthalir Recreation
Club, Vennila Recreation Club. We note that all deposits were routed through the assessee’s bank account from which DDs were taken for purchases from TASMAC. The AO, in the remand report, acknowledged that deposits were consistent with business activity and there was no abnormal spike in sales during demonetization. Sales were substantiated with ledgers and bank statements. Hence, the addition u/s 68 was rightly deleted by the CIT(A).
8. Our findings on Addition of Rs.2,27,76,680/- u/s 69C:
The AO had considered the entire TASMAC purchase amount as pertaining to the assessee. However, the Form 26AS and PAN-wise purchases clearly showed:
Assessee: Rs.1.51 Cr
Vennila Club: Rs1.24 Cr
Elanthalir Club: Rs.1.51 Cr
Shri Ganesan Anbuselvam
:: 14 ::

The assessee submitted affidavits from the clubs and furnished reconciled ledgers. The AO, in the remand report, verified and accepted these facts and did not dispute the club purchases. Thus, the CIT(A) rightly held that purchases to the extent of ₹2.27 Cr could not be taxed in assessee’s hands.
9. On Rule 46A:
We find that the ld. CIT(A) properly admitted additional evidences in accordance with Rule 46A. Sufficient opportunity was granted to AO to rebut the evidences in remand. There was no procedural lapse or prejudice caused to the Revenue.
10. We find no infirmity in the well-reasoned and detailed order of the ld.CIT(A), which is supported by the AO’s own remand findings. The additions made by the AO were based on mistaken identity of transactions belonging to separate legal entities, which was clarified during appellate proceedings with proper evidence.
Accordingly, we uphold the order of the ld.CIT(A) and find no merit in the Revenue's appeal.
11. In result, appeal of the revenue is dismissed.
Order pronounced on the 26th day of September, 2025, in Chennai. (एस.आर.रघुनाथा)
(S. R. RAGHUNATHA)
लेखा सद(य/ACCOUNTANT MEMBER (मनु कुमार िगर)
(MANU KUMAR GIRI)
याियक सद(य/JUDICIAL MEMBER
चे नई/Chennai, )दनांक/Dated: 26th September, 2025. EDN/-
1. अपीलाथ/Appellant
2. थ/Respondent
3. आयकरआयु/CIT, Chennai / Madurai / Salem / Coimbatore.