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Facts
The assessee, a non-resident individual, filed an appeal against an assessment order that added Rs. 75,00,000 as unexplained cash deposits. The assessee claimed these deposits were refunds of advances made for property purchases that did not materialize.
Held
The Tribunal held that the assessee had provided sufficient evidence, including bank statements and confirmations from parties, to establish the genuineness of the transactions and the source of the cash deposits as refunds of earlier advances. The Revenue failed to disprove this evidence or conduct an independent enquiry.
Key Issues
Whether the cash deposits of Rs. 75,00,000 made by the assessee can be treated as unexplained money under Section 69A of the Income Tax Act, 1961.
Sections Cited
69A, 143(3), 144C(13), 131, 133(6)
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI S.S.VISWANETHRA RAVI & SHRI S.R.RAGHUNATHA
आदेश /O R D E R
PER S. R. RAGHUNATHA, AM :
This appeal filed by the assessee is directed against the assessment order dated 30.12.2024 passed by the ITO, International Taxation Ward, Coimbatore, u/s. 143(3) r.w.s. 144C (13) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2022-23 in pursuant to the directions of the Dispute Resolution Panel-2, Bengaluru vide order dated 27.12.2024.
:-2-: ITA. No:544/Chny/2025
The only issue raised by the assessee is that the AO has erred in making an addition of cash deposit u/s.69A of the Act as unexplained money which was confirmed by the DRP by various grounds in his appeal.
The brief facts of the case emanating from the records are that the assessee is an individual non-resident living in UAE and has been staying since last two decades. The assessee filed his return of income for the A.Y. 2022-23 (Financial year 2021-22) on 08.07.2022 declaring an income of Rs.6,37,474/- and claimed a refund of Rs.37,660/-. Based on the information received from CASS about the cash deposits made in Savings bank account and purchase of immovable property, the assessee’s case was selected for scrutiny to verify the same. Accordingly, the AO issued statutory notices to the assessee, and the assessee furnished the details and documents called for from time to time. On perusal of the details furnished by the assessee, the AO found that the source for cash deposits of Rs.75,00,000/- made during the A.Y. 2022-23 was not explained with proper evidence and hence proposed to make an addition u/s.69A of the Act, apart from the source for investment of Rs.1.23 Crores in immovable property u/s.69 of the Act by issuing a draft assessment order u/s.144C(1) of the Act dated 17.06.2023.
The assessee filed an objection against the draft assessment order of the AO, before the DRP – 2, Bengaluru on 22.04.2024. The DRP has rejected the objection in respect of source for cash deposit of Rs.75.00 Lakhs by issuing a direction u/s.144C(5) of the Act dated 27.12.2024 as detailed below: “2.1 Panel: The Assessee has stated before the Panel that the Assessing Officer proposed adjustments in his case without any basis. As the Assessee had claimed that no proper observation was carried out by Assessing officer during assessment proceedings and the assessee has also relied on some additional documents which were not placed before the Assessing Officer, therefore a Remand Report was called from the Assessing Officer in this case vide letter dated 21.10.2024. The Assessing Officer was directed to conduct an enquiry u/s 144(7) of the Act and also examine the Additional documents submitted.
2.2 The Report of the Assessing Officer was received vide letter dated 08.11.2024. The same is reproduced below for ready reference.
:-3-: ITA. No:544/Chny/2025
Sub Submission of Remand Report - in the case of Shri. Sridharan Shanmugam (PAN: BNOPS39848) for A.Y. 2022-23-Reg-
Ref: Email dated 21.10.2024 from bangalore.secretary.drp2@incometax.gov.in.
Kindly refer to the above.
The additional evidence relied upon by the assessee Sri. Sridharan Shanmugam(PAN: BNOPS3984B) before the Hon'ble Dispute Resolution panel (DRP) are discussed hereunder:-
Explanation on cash deposits of Rs. 75,00,000/-.
The assessee has submitted that he had desired to acquire a property owned by one Kavitha through her agent Venkateswaran and had paid advance of Rs. 40,00,000/-and as the deal did not materialize the amount of Rs. 40,00,000/- was paid back in cash to the assessee. In After that instance, in order to purchase another property from one Sathya, he made online payment of Rs. 10,00,000/- which too did not materialize and was paid back in cash. Likewise, two more attempts to purchase property was made from Ms. Thangam and Mr. Venkateswaran to whom the assessee made online payment of Rs. 10,00,000/- and Rs. 15,00,000/- each. As per the claim of the assessee before the Hon'ble DRP, all these payments were returned to the assessee in cash and that was deposited into his account. The assessee was given an opportunity and the assessee's representative appeared. He could not submit any substantial evidence for his claim. Hence, the cash deposits of Rs. 75,00,000/- remains unexplained for want of evidence.
Source for the property purchase of Rs. 1,28,70,000/-
The assessed has also submitted the following in support of his claim Sl No Evidence produced Remarks 1 SBI NRO Home loan The evidence for the loan obtained on 09.02.2022 of Rs.75,00,000/- is sanctioned utilized Rs. submitted by the assessee and is 75,00,000 found to be in order 2 Debit of Rs.48,70,000 in SBI The SBI bank statement of the NRO SB on 09.02.2022 assessee in Account Number 00000040773867259 reflects the debit 09.02.2022 48,70,000/Hence the claim of the assessee is in order
2.3 Upon receipt of Remand Report from the Assessing Officer, the Assessee was again heard on 06.12.2024 where the Remand Report and the Assesse's contentions were discussed.
:-4-: ITA. No:544/Chny/2025
2.4 Cash deposit of Rs. 75,00,000/-: It is noted that the assessee has submitted the details before the Panel on which the comments of the assessing officer is received. On perusal of the remand report, it is noted that the assessee has submitted that he had desired to acquire a property owned by one Kavitha through her agent Venkateswaran and had paid advance of Rs. 40,00,000/- and as the deal did not materialize the amount of Rs. 40,00,000/- was paid back in cash to the assessee. Since, the assessee proceeded to purchase another property from one Sathya, he made online payment of Rs. 10,00,000/- which too did not materialize and was paid back in cash. Likewise, as per the assessee commented that two more attempts to purchase property was made from Ms. Thangam and Mr. Venkateswaran to whom the assessee made online payment of Rs. 10,00,000/- and Rs. 15,00,000/- each. The assessee has further explained that all these payments were returned to the assessee in cash and that was deposited into his account, However, the assessee could not submit any substantial evidence for his claim. Thus, it is our considered opinion, the assessee has no material evidence to prove the cash deposits even before us. We upheld the addition of the Rs. 75,00,000/- made by the assessing officer u/s 69A. Hence, objection of the assessee is hereby rejected.”
Pursuant to the Directions of the DRP, the AO passed a final assessment order u/s.143(3) r.w.s. 144C (13) of the Act dated 30.12.2024 by confirming the addition of Rs.75.00 Lakhs.
Aggrieved by the final assessment order of the AO, the assessee is in appeal before us, challenging the addition of Rs.75.00 Lakhs of cash deposit. Before us, the ld.AR submitted that both the AO as well as DRP have erred in rejecting the explanation of source of cash deposit of Rs.75.00 Lakhs. In support of the grounds of appeal
, the ld.AR filed a paper book containing 44 pages consisting of the assessee’s return of income, confirmation letter from Mr.Tangam, Mr.Venkateswaran and Ms.Sathya Priya, Bank statements of SBI (A/c.49953) and ICICI bank (A/c.No.01107) for the F.Y. 2021-22. The ld.AR submitted that these documents were submitted before the authorities and explained that the assessee had made advance payments to 3 different parties for purchase of plots. However, the purchase of plots did not materialise for various reasons and hence the site owners (recipients of advance) have returned the amounts taken as advance by directly depositing cash into assessee’s accounts. Further, the ld.AR stated that the assessee was not in :-5-: ITA. No:544/Chny/2025 India during the period of cash deposits made to his account. The ld.AR also stated that the assessee is not having any other source of income in India. The ld.AR drew our attention to the following transactions of advances paid to the parties through the assessee’s bank accounts and subsequent refunds by way of cash deposit into his Savings bank account in the paper book filed: “During the financial year 2021-22, the applicant had desired to acquire a property owned one Kavitha thro her agent Venkateswaran and had paid an advance of Rs 40,00,000 to the said Kavitha as instructed by the agent Venkateswaran, online from his ICICI Bank Limited NRO savings account number 6119012011107 details of payments of Rs 40,00,000 are as under PAYMENTS TO KAVITHA SL.NO: BANK DATE AMOUNT 1. ICICI 14-06-2021 10,000 2. ICICI 14-06-2021 10,000 3. ICICI 14-06-2021 9,90,000 4. ICICI 15-06-2021 9,90,000 5. ICICI 16-06-2021 10,00,000
6. ICICI 17-06-2021 10,00,000 TOTAL 40,00,000 (d) But for some strange reasons not known to me, the said vendor did not evince interest and the deal had to be called off. At the instance of the said Kavitha her agent Venkateswaran had remitted the entire sum of Rs 40.00,000 in CASH within five days of my online payment as under RECEIPTS FROM KAVITHA SL.NO: BANK DATE AMOUNT
1. ICICI 22-06-2021 40,00,000 TOTAL 40,00,000
(e) As the above deal failed at the instance of the same agent Venkateswaran I had an online payment of Rs 10,00,000 to one Sathya details of which are as under PAYMENTS TO SATHYA SL.NO: BANK DATE AMOUNT 1 ICICI 23-06-2021 10,000 2 ICICI 23-06-2021 9,90,000 TOTAL 10,00,000
(f) The applicant's temptation and inducement stood up and at the instance of the same agent Venkateswaran at or about the same time the applicant had an online payment of Rs 10,00,000 to one Thangam details of which are as under:
PAYMENTS TO THANGAM SL.NO: BANK DATE AMOUNT 1 ICICI 28-06-2021 10,000 :-6-: ITA. No:544/Chny/2025 2 ICICI 28-06-2021 9,90,000 TOTAL 10,00,000
(g)The application's temptation and inducement stood up and at the instance of the same agent Venkateswaran at or about the same time the applicant had an online payment of Rs 15,00,000 to Venkateswaran details of which are as under:
PAYMENTS TO VENKATESWARAN SL.NO: BANK DATE AMOUNT 1 ICICI 24-06-2021 5,00,000 2 ICICI 29-06-2021 10,00,000 TOTAL 10,00,000 h) As the applicant would have bad luck, the above deals too failed and the said persons thro the same agent Venkateswaran had returned nearly 100 days after the proposal by CASH Rs 10,00,000
RECEIPTS FROM SATHYA SL.NO: BANK DATE AMOUNT 1 ICICI 07-10-2021 10,00,000 TOTAL 10,00,000
(i) As the applicant felt that this deal will not go thro', the the applicant demanded refund of the said sum and the said Venkateswaran agent had taken responsibility to pay and has returned within two months, by way of cash in the NRO savings account with ICICI Bank Limited as under:
RECEIPTS FROM THANGAM Rs 10,00,000 and & VENKATESWARAN Rs 15,00,000 TOTAL Rs 25,00,000 SL.NO: BANK DATE AMOUNT 1 ICICI 27-08-2021 25,00,000 TOTAL 25,00,000
(j) Thus the said Venkateswaran had paid Rs 25,00,000 for himself Rs 15,00,000 and his principal THANGAM Rs 10,00,000.
(k) As the applicant is absolutely ignorant of the requirements of law and that the fact that the period was under peak COVID, fed up with multiple unpleasant experiences, unable to bear the disappointment besides not able to come to India on account of COVID, the fear of recovery of my hard-earned money loomed with successive bad luck on me and this was very much in my mind, as I had no time to engage in litigation whatsoever resulting in acceptance of CASH from the relators. (l) I the applicant was not aware of the restrictions of cash receipts in bank savings account, fearing loss of the advance, as stressed unable to come to India on account of Covid and its post situation, doubtful of delayed realization if opted thro legal proceedings, was forced to accept cash which had been remitted by the said Venkateswaran on his own volition:
:-7-: ITA. No:544/Chny/2025
SL.NO: Party Payments Receipts 1 Kavitha 40,00,000 40,00,000 2 Sathya 10,00,000 10,00,000 3 Thangam 10,00,000 10,00,000 4 Venkateswaran 15,00,000 15,00,000 TOTAL 75,00,000 75,00,000
The ld.AR further took us through the bank statements (Page No.34 to 38 of SBI and Page No.39 to 44 of ICICI Bank in Paper book) of the assessee by correlating the advances paid as above and corresponding refunds by way of cash deposits from site owners / Brokers (commission agents). Further, the ld.AR also shown the confirmations given by Mr.Tangam, Mr.Venkateswaran and Ms.Sathya Priya (Page No.26 to 33 in Paper book) for having refunded the advance collected for proposed sale of sites. Therefore, the ld.AR stated that the cash deposits are made out of his own funds given earlier as advance and the assessee has provided the entire details of the refunds made by the parties by identity, PAN, Address, genuineness of the parties and bank statements of the assessee. The ld.AR in support of his arguments relied on the decision of the Chennai Tribunal in dated 24.02.2025 for the A.Y.2021-22, wherein the Tribunal in the similar set of facts has deleted the addition of cash deposits made by holding as under : “8. We have heard rival contentions, perused material available on record and gone through orders of the authorities below. Admittedly, the assessee is a salaried employee and filed his return of income for the AY 2021-22 by declaring his salary income. During the course of assessment proceedings, the assessee was asked to furnish details of credits to the tune of Rs.34,50,000/- by the AO. The assessee explained that said sum was received from his friend Mr. Sevugon, proprietor of M/s. Excellent Products of India to the tune of Rs.24,20,000/-, Rs.9,50,000/- has been transferred from his bank account held at Federal Bank and Rs.80,000/- was cash deposited. Further, it is noted that the assessee had filed confirmation letter to the tune of Rs.24,20,000/- from Mr. Sevugon quoting his PAN along with bank transfer details. However, the AO has made addition u/s.69A of the Act as unexplained money to the tune of Rs.24,20,000/- in the assessment order. The CIT(A) also confirmed the same. On perusal of records submitted by the assessee during the course of assessment and appellate proceedings, we note that the assessee had provided details of lender in the form of proving lender's identity, genuiness of transaction and creditworthiness of the lender i.e., PAN details, bank statement and GST return certificate. Since, the :-8-: ITA. No:544/Chny/2025
assessee has provided all the necessary details of the lender, we are of the view that the AO and that of the CIT(A) have erred in confirming the addition of Rs.24,20,000/- as unexplained money u/s.69A of the Act, is devoid of merit. Therefore, in the present facts and circumstances of the case, we are of the opinion that the assessee has proved genuineness of transaction along with identity and creditworthiness of the lender by furnishing necessary details and documents and hence, we are inclined to delete the addition made by the AO and confirmed by the CIT(A) amounting to Rs.24,20,000/- u/s. 69A of the Act.”
In light of the above arguments, the ld.AR prayed for deleting the additions made by the AO.
Per contra, the ld.DR for the revenue relied on the orders of the Authorities and submitted that the assessee has just given the confirmation of the broker to prove the cash deposits on behalf of refunds made by the site owners. Hence, prayed for confirming the order of the AO.
We have heard the rival submissions, perused the material available on record, including the paper book filed by the assessee, and carefully considered the orders of the AO and the directions of the DRP along with the paper book filed and the case laws relied upon. The sole issue involved in this appeal is whether the addition of Rs.75,00,000/- made by the AO u/s.69A of the Act, treating the cash deposits in the assessee’s bank account as unexplained money, and confirmed by the DRP, is sustainable in law and on facts.
The following facts are not in dispute that the assessee is a non-resident individual residing in UAE for over two decades. The assessee filed his return of income for A.Y. 2022-23 declaring income of Rs.6,37,474/-. The case was selected for scrutiny based on CASS information relating to Cash deposits of Rs.75,00,000/- in savings bank accounts and Investment in immovable property. The addition of Rs.75,00,000/- was made u/s.69A on account of alleged unexplained cash deposits. The assessee’s explanation before the AO and DRP was that he had paid advances to three parties for purchase of plots. The proposed purchases did not materialise and the advances were refunded
:-9-: ITA. No:544/Chny/2025 by the concerned parties by depositing cash into his bank accounts. Further, he was not present in India during the relevant period of cash deposits. The assessee furnished copies of bank statements of SBI and ICICI Bank and details of advances paid through banking channels. Furthermore, the confirmations from Mr.Tangam, Mr.Venkateswaran and Ms.Sathya Priya by correlation statement linking Advance payments made through bank, and Subsequent refunds received in cash.
On perusal of the bank statements, it is seen that the advances were originally paid through regular banking channels. The amounts refunded broadly correspond with the advances earlier paid and the confirmations contain names, addresses and PAN of the parties.
The Revenue has not brought on record any material to establish that the confirmations are false or the parties are non-existent and the earlier advances were not made. Further, revenue has not brought out that these deposits represent income from any undisclosed source of the assessee.
Section 69A can be invoked when the assessee is found to be the owner of money and such money is not recorded in the books and the assessee offers no explanation about the nature and source, or the explanation is not satisfactory. It is a settled legal position that once the assessee furnishes identity of the parties, genuineness of the transaction, and source of funds, the burden shifts to the Revenue to rebut the evidence with cogent material.
In the present case identity is established through confirmations and PAN. The genuineness is proved by showing the advances originally paid through bank with the correlation of each transaction. The Source is explained as refund of earlier advances paid. Therefore, mere suspicion cannot substitute evidence to bring the cash deposit into taxation.
:-10-: ITA. No:544/Chny/2025 The addition has been sustained primarily on the reasoning that the refunds were received in cash and only confirmations were filed. However, the AO has not conducted independent enquiry by issuing summons u/s 131 or notice u/s 133(6) to the confirming parties. Further, the AO has not disproved the earlier advance payments. Further, it is a relevant factor that the assessee is a non-resident and it has not been demonstrated that he had any other source of income in India generating unaccounted cash.
The ld. AR has relied upon the decision of the Chennai Bench of the Tribunal in dated 24.02.2025 for A.Y. 2021-22, wherein under similar circumstances, addition made towards cash deposits being refund of advances was deleted.
The facts of the present case are materially similar inasmuch as the advances paid through banking channels, refund of the same advances and the assessee has filed confirmations for having received the refund of earlier advances. It is pertinent to note that there is no contrary evidence brought by the Revenue.
Therefore, we are of the view that in the absence of distinguishing features brought on record by the Revenue, the ratio laid down therein supports the case of the assessee. Considering the totality of facts and circumstances of the case, we hold that the assessee has discharged the initial burden cast upon him by explaining the nature and source of cash deposits. Further to support his claim, has filed confirmations from the parties by correlating advances paid and amounts refunded in his bank statements. We also find that the Revenue has failed to disprove the documentary evidence or to conduct meaningful enquiry to establish that the deposits represent unexplained income. Accordingly, the addition of Rs.75,00,000/- made u/s.69A of the Act is not sustainable in law. Hence, the addition of Rs.75,00,000/- made by the Assessing Officer and confirmed by the DRP is hereby deleted.
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In the result the appeal of the assessee is allowed.
Order pronounced in the open court on 03rd March, 2026 at Chennai.
Sd/- Sd/- (एस. आर. रघुनाथा) (एस एस �व�वने� र�व) (S. R. RAGHUNATHA) (S.S. VISWANETHRA RAVI) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member