ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI V. ANTONYSAMY ANTONYXAVIER, PAVOORCHATRAM

ITA 2235/CHNY/2024

AI Insights

The case revolves around the seizure of 68,14,000 in cash from the assessee, Antonysamy Antonyxavier, who is the Correspondent of St. Assisi Matric Hr. Sec. School. The cash was seized during an election-related operation, and the Assessing Officer added this amount as unexplained money under section 69A of the Income Tax Act, 1961. The CIT(A) reversed this decision, leading to the Revenue's appeal to the ITAT. The ITAT upheld the CIT(A)'s decision, emphasizing the distinction between possession and ownership, and noting that the cash was part of the school's fee collections, thus not unexplained in the hands of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824528 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Appeal Filed On: 23-08-2024
• Other Referred Cases: K.K. Abdul Kareem [1996] 88 Taxman 323 (Kerala)
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. VENKATA RAMAN
• Assessee Lawyers: LATCHANA
• Keywords: Charitable institution
• Section: 131

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं सुŵी एस.पȧावती,, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Ms. S. Padmavathy, Accountant Member आयकर अपील सं./I.T.A. No.2235/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2019-20 The Assistant Commissioner of Income Tax, Central Circle 2, Madurai. Vs. Antonysamy Antonyxavier, St. Marys Nagar, MKVKG Saw Mill Road, Pavoorchatram, Tenkasi Taluk, Tirunelveli 627 808. [PAN: APZPA8722R] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri R. Venkata Raman, C.A. ŮȑथŎ की ओर से/Respondent by : Ms. Latchana, JCIT सुनवाई की तारीख/ Date of hearing : 18.12.2025 घोषणा की तारीख /Date of Pronouncement : 31.12.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 25.06.2024 passed by the ld. Commissioner of Income Tax (Appeals) 19, Chennai for the assessment year 2019-20. 2. The Appellant-Revenue raised 5 grounds of appeal challenging the action of the ld. CIT(A) in deleting the addition made by the Assessing Officer on account of unexplained money under section 69A of the Income Tax Act, 1961 [“Act” in short]. Printed from counselvise.com I.T.A. No.2235/Chny/25 2 3. It is noted from the record that the assessee is a Correspondent of St. Assisi Matric Hr. Sec. School at Pavoorchatram, Tirunelveli. According to the Assessing Officer, cash to an extent of ₹.68,14,000/- was seized on 12.03.2019 by the Assistant Election Returning Officer (District Inspecting Officer), Alangulam Assembly Constituency [223]. Further, basing on the statement recorded from Sister Telesphora Mary, Shri Meenakshi Sundara Moorthy of M/s. Atchaya Academy at Palayamkottai along with the statement of the assessee referred to in page 2 to 7 of the assessment order, wherein, the Assessing Officer held that the assessee has not furnished any details in respect of the source of seized cash and the same was added under section 69A of the Act in the hands of the assessee. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). Considering the submissions of the assessee, which are reproduced in pages 9 & 10 of the impugned order, the ld. CIT(A) deleted the addition made by the Assessing Officer as the addition is not maintainable as it was made upon by an inappropriate person. Aggrieved by the same, the Revenue is in appeal before the ITAT. 4. The ld. DR Ms. Latchana, JCIT submits that the ld. CIT(A) erred in holding that the Assessing Officer attempted to assess income in the Printed from counselvise.com I.T.A. No.2235/Chny/25 3 hands of the carried instead of the owner based on the sworn statement recorded under section 131 of the Act on 12.03.2019 without any corroborative documents/evidence establishing the nexus between the cash found and the school fees collected by the trust in question. She argued vehemently that the ld. CIT(A) erred in not taking note of the findings of the search and sworn statement recorded from Sister Telesphora Mary, Financial Administrator of M/s. Leo Charitable Trust under section 131 of the Act on 13.03.2019, wherein, it has been categorically stated that the average daily cash balance were only ₹.50,000/- per day and source for the cash seized remains unexplained. Further she submits that the ld. CIT(A) erred in allowing the appeal on the premise that the cash found in possession of the assessee belongs to St. Assisi Matriculation Hr. Sec. School by holding that the assessee was mere carrier without proving the burden that he is not the owner, is on the person who affirms that he is not the owner under section 110 of the Indian Evidence Act, 1872. She argued vehemently that the ld. CIT(A) erred in allowing the appeal without appreciating that the assessee did not discharge the burden of proving that the cash belongs to St. Assisi Matric Hr. Sec. School run by M/s. Leo Charitable Trust in the absence of production of cash book of M/s. Leo Charitable Trust. She submits that the assessee has not proved presumption under section 132(4A) of the Printed from counselvise.com I.T.A. No.2235/Chny/25 4 Act and argued vehemently that the assessee failed to show link and connection in possessing cash seized and relied on the order of the Assessing Officer. 5. The ld. AR Shri R. Venkata Raman, C.A. submits that right from the interception, to till date, the assessee was submitting that the physical cash found and seized, pertaining to the school fees collection of St. Assisi Matric Hr. Sec. School. He submits that the assessee is a Correspondent of the said school and the Assessing Officer failed to understand the difference between the possession and ownership. He drew our attention to para 6.7 of the impugned order and submits that the ld. CIT(A) by placing reliance in the case of K.K. Abdul Kareem [1996] 88 Taxman 323 (Kerala), which held that the assessee cannot be assessed merely because he was carrying cash on behalf of the owner of such cash. He supported the order passed by the ld. CIT(A). 6. Heard both the parties and perused the material available on record. It is noted from the record that the Static Surveillance Team of State Assembly Election seized a sum of ₹.68,14,000/- on 12.03.2019 in cash from a Ford Fiesta Car belonging to the assessee who is a correspondent of St. Assisi Matric Hr. Sec. School. The Assessing Officer asked the assessee whether he has any material evidence in respect of Printed from counselvise.com I.T.A. No.2235/Chny/25 5 cash seized and it was explained by the assessee that “I usually verify the summary statement of receipt and expenditure prepared by the Financial Administrator. On 11.03.2019, she has given ₹.68,14,000/- along with cash denominations slips. As of now, I do not have any material evidence in support. It is in the custody of Financial Administrator. I will submit it within two days”., which clearly supports the explanation of the assessee that he is a Correspondent of St. Assisi Matric Hr. Sec. School and managing trustee of Leo Charitable Trust. Further, it was explained that the cash belongs to St. Assisi Matric Hr. Sec. School and handing over such cash along with denomination slip to him by the Financial Administrator on 11.03.2019, which is previous day. Further, we find an answer to question No. 13 that “the cash collected from the school on Monday could not be deposited to Bank on the same date as I have to concentrate on the study of Plus Two students. It is for the safety that I had carried the money back to Tirunelveli with the intention to deposit the same the next day”, which clearly establishes that the seized cash pertain to the school, but not to the assessee. Further, the statement of Sister Telesphora Mary is also reproduced in page 3 to 6 of the assessment order. It is noted that her answer to question No. 7 that “Yes, I had handed over ₹.68,14,000/- on 11.03.2019 to deposit in bank account. This is the accumulated cash balance of the School for the period from Printed from counselvise.com I.T.A. No.2235/Chny/25 6 01.02.2019 to 11.03.2019. This includes ₹.48,57,000/- on account of NEET coaching fee (Bill book No. 9 & 24), van fees ₹.4,04,422/- (book No. 10), school fees ₹.26,42,342/- (book Nos. 20 & 21) as reduced by the school expenses”, which clearly establishes the contention of the assessee that he received cash of ₹.68,14,000/- from the Financial Administrator in response to Assessing Officer’s question, which is at page 2 of the assessment order. Further, we find that the said Financial Administrator has given break-up also as it was accumulated cash balance from 01.02.2019 to 11.03.2019 including fees on account of NEET, Van fees and School fees which amply proves that the said cash belongs to the school St. Assisi Matric Hr. Sec. School, but, not to the assessee, in this regard, we find no adverse finding by the Assessing Officer except stating that daily cash balance is only ₹.50,000/-, therefore, we find no force in the arguments of the ld. DR that there was no nexus and connection to the cash seized in respect of the statements of assessee and the Financial Administrator. 7. Further, the Assessing Officer reproduced the statement of Shri A Meenakshi Sundara Moorthy, who provides NEET coaching to the students of St. Assisi Matric Hr. Sec. School through his proprietor concern under the name and style of M/s. Atchaya Academy in Printed from counselvise.com I.T.A. No.2235/Chny/25 7 Palayamkottai at page 7 of the assessment order. On examination of the said statement, it is noted that “M/s Atchaya Academy has given the services of two teachers in Physics and Chemistry to M/s St. Assisi Matriculation Higher Secondary School, Pavoorchathiram to impart NEET coaching for their students during the academic year 2018-19. It was agreed that the school will pay ₹.600 per teaching hour completed during the year.He states that St. Assisi Matric Hr. Sec. School has to pay a maximum of ₹. 1,80,000/- for teachers who were deputed for a total of 250-300 hours along with some text material also provided in Xerox were also given totalling to approximately ₹.2,50,000/- for the entire services and test materials provided by the academy”. It is noted that Shri Meenakshi Sundara Moorthy only stated that he provide teaching services as well as text material to the assessee and in turn he receives remuneration from the school through banking channel. We find the statement of Shri Meenakshi Sundara Moorthy in no way support the Appellant-Revenue in making the addition in the hands of the assessee, wherein, he only categorically stated that he offered services to the assessee in turn he got remuneration. Therefore, we are of the opinion, reliance to the statement of Shri Meenakshi Sundara Moorthy to support in making the addition in the hands of the assessee is not justified. Printed from counselvise.com I.T.A. No.2235/Chny/25 8 8. After considering the submissions of the assessee and facts of the case, let us examine the observations of the ld. CIT(A) at paras 6.7 to 6.10, reproduced herein below for better understanding: 6.7 From the submission of the appellant it can be seen that, right from the commencement of the interception to till date the appellate proceedings that the physical cash found and seized from the Appellant pertain to the school fee collections of St. Assisi Matriculation School in which the appellant is a Correspondent. From the assessment order, it can be seen that the AO right from the beginning of the assessment proceedings has failed to understand the difference between the \"possession and ownership\". The Hon'ble Kerala High Court had an occasion to deal with the issue of \"possession and ownership\" in the case of CIT v. K.K. Abdul Kareem [1996] 88 Taxman 323 (Kerala), Wherein it was held that a courier cannot be assessed merely because he was carrying cash on behalf of the owner of such cash. The observations of the Court with regard to ownership and possession, extracted below, are squarely applicable to the present case at hand:- \"It is difficult to dispute that the concept of ownership is the superior-most legal right with regard to the title of any person with reference to any kind of property. These concepts of ownership and possession relate to the property in question in regard to which under the legal system the ownership is at the highest pinnacle point. This is not so with the concept of possession. The two concepts can be imagined only as two independent circles dissecting each other. The ownership in the context of difference can be appreciated in terms of duration as against the concept of possession. It is more permanent, ultimate and residuary in character, as distinguished from the concept of possession. There is yet another aspect to understand the difference. Possession is the source of legal rights with regard to the property depending on its nature. But such rights as flowing from the concept of possession can never be understood as of a permanent nature except as a bar for others to deal with them. At the other end ownership has its source in the system of law and rights in regard thereto are to be derived from the legal rules provided by the system. In the process of final analysis concept of ownership is understood in a system of law as against which the custom of possession has to be looked into with reference to the factual situation in regard thereto. In other words, the person connected with the rights of possession has to be understood with reference to the property in the context and also with reference to the members of the society at large, admittedly the relationship to be understood is not other than a factual relationship emerging from the concept. At the other end, the ownership gets traceable to a legal situation provided by a legal system and it is not a factual relationship but a relationship recognised, nurtured and accepted by the system of law of a person with reference to the property in question.\" Printed from counselvise.com I.T.A. No.2235/Chny/25 9 6.8 From the above observation of the Hon'ble High Court of Kerala, it can be seen that \"Possession' and 'control\"\" are the crucial words used in section 132(4A) and section 292C. The words are used disjunctively. The language used in these provisions denotes that possession and control of assets or books found in the course of search or survey need not be with the same person. There may be a case where possession is with one person while the searched party is another and the material may belong to him and he has control over the material. Consequently, a presumption cannot arise against the other person to assess him merely because he is in possession of the material or is a custodian of the material. In respect of assets, the party owning them would be assessed but not the party who possesses them. 6.9 In the instant case the AO has attempted to assess the income in the hands of the appellant who is happens to be only a carrier instead of the owner. On the date of cash seizure from the Appellant, in the statement recorded u/s 131 of the Act, the Appellant has categorically admitted that the cash found pertains to the fess collection of the school run by the Trust. On the next day of the cash seizure the Investigation Officer made direct enquires at the School premises and recorded a statement from the Financial Administrator Sister Telesphora Mary. In the statement recorded Sister Telesphora Mary also clarified the cash found in the hands of the Appellant were the fees collection of the school. From this it can be established that the source for the cash found with the Appellant stands duly explained. When the source is explained there exists no case for the AO to treat the physical cash amounting Rs. 68,14,000/- as unexplained in the hands of the Appellant. Thus, making addition in the hands of inappropriate person renders the addition impressionistic and lacks logic. 6.10 In view of the above discussions the undersigned is of the considered view that the addition contemplated by the AO is upon an inappropriate person and therefore is not inclined to sustain the addition contemplated by the AO. Accordingly, all the grounds raised by the Appellant are hereby treated as allowed and the AO is hereby directed to delete the addition of Rs. 68,14,000/- made as unexplained money u/s 69A of the Act for the AY 2019-20. 9. On perusal of the above, it is noted that the contention of the assessee, right from the commencement of the interception, to till date, the physical cash found and seized from the assessee pertain to the school fee collections of St. Assisi Matric Hr. Sec. School in which the assessee is a Correspondent. With regard to the difference between “possession” and “ownership”, by following the decision of the Hon’ble High Court of Kerala in the case of K.K. Abdul Kareem (supra), wherein, it Printed from counselvise.com I.T.A. No.2235/Chny/25 10 was held that the assessee cannot be assessed merely because of carrying cash on behalf of the owner of such cash. By following the above decision of the Hon’ble High Court, and considering the statement recorded from Sister Telesphora Mary, which clarifies the cash found in the hands of the assessee were the fees collection of the school, which establishes the source for the cash found with the assessee stands duly explained. Therefore, we find no infirmity in the order of the ld. CIT(A) in holding that when the source is explained there exists no case for the Assessing Officer to treat the physical cash seized amounting to ₹. 68,14,000/- as unexplained in the hands of the assessee. Thus, the ld. CIT(A) rightly directed the Assessing to delete the addition made in the hands of the assessee and it is justified. Thus, the grounds raised by the Appellant-Revenue are dismissed. 10. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 31st December, 2025 at Chennai. Sd/- Sd/- (S. PADMAVATHY) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 31.12.2025 Printed from counselvise.com I.T.A. No.2235/Chny/25 11 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. Printed from counselvise.com "