DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), CHENNAI, CHENNAI V. ABDUL AZEEZ NAGOOR GANI, CHENNAI

ITA 278/CHNY/2025

AI Insights

The case revolves around an appeal by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) which had deleted the addition of Rs.2,00,00,000 made by the Assessing Officer (AO) as unaccounted income of the assessee, Abdul Azeez Nagoor Gani, for the Assessment Year 2020-21. The AO had treated the amount received by the assessee from M/s Jayapriya Company as commission income disguised as an advance for land purchase. However, the CIT(A) found that the amount was indeed an advance for a land deal that did not materialize, and the assessee had adjusted the advance against various projects with M/s Jayapriya Group. The Tribunal agreed with the CIT(A)'s findings, noting the lack of corroborative material from the Revenue to support their claim and dismissed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775265 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2020-2021
• Appeal Filed On: 30-01-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITHA
• Assessee Lawyers: G. BASKAR; P.M. KATHIR
• Keywords: Additional evidence; Income from undisclosed sources
• Section: 143(3); 132

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.278/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Year: 2020-21 The DCIT, Central Circle-2(2), Chennai. v. Abdul Azeez Nagoor Gani, 4, Kattukoddalur Road, Cuddalore, Viridhachalam-606 001. [PAN: AFCPN 7503 G] (अपीलाथ\u0014/Appellant) (\u0015\u0016यथ\u0014/Respondent) Department by : Ms. Anitha, Addl.CIT Assessee by : Mr. G. Baskar, Advocate & Mr. P.M. Kathir, Advocate सुनवाईक\u001aतारीख/Date of Hearing : 17.07.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 12.09.2025 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)- 19, Chennai (hereinafter referred to as ‘Ld.CIT(A)‘), dated 14.11.2024 for the Assessment Year (hereinafter referred to as ‘AY‘) 2020-21 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘). 2. The sole grievance of the Revenue in this appeal relates to the Ld. CIT(A)’s action of deleting the addition of Rs.2,00,00,000/- made by way Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 2 :: of unaccounted income of the assessee. Briefly stated, the facts of the case are that, the assessee is an individual who is carrying on business of real estate broking agency under the name & style of M/s National Estate. For the relevant AY 2020-21, the assessee had filed return of income declaring total income of Rs.9,12,880/-. In the meanwhile, a search action u/s 132 of the Act took place on the premises of M/s Jayapriya Company Group, in the course of which, the assessee was also searched u/s 132 of the Act. Accordingly, the case of the assessee was selected for compulsory scrutiny u/s 143(2) of the Act vide notice dated 29.06.2022. 3. From the material seized in the course of search, it was gathered that the assessee primarily mediates between potential buyers and the Jayapriya Group for which he derived commission income. The AO noticed that, the assessee had received sum of Rs.2,00,00,000/- from M/s Jayapriya Company through banking channel, but the same was not offered to tax in the return of income filed for AY 2020-21. The AO required the assessee to explain the same. In response, the assessee filed letter dated 23.09.2022 in which he explained that the impugned sum was received by way of advance towards the intended purchase of land at Ponneri, Village, Vridhachalam Taluk. Since the sale did not take place during the year, it was considered as an advance and was not offered as income in AY 2020-21. It is noted that, M/s Jayapriya Company had also filed their confirmation on 27.09.2022 before the AO, wherein they Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 3 :: affirmed that they had paid advance of Rs.2,00,00,000/- towards the property and also enclosed the ledger of the assessee as appearing in their books of accounts. The AO, however, disbelieved the explanation of the assessee as he was not able to satisfactorily explain as to whether the land deal materialized or not. According to AO, even the details of the land for which advance was given to assessee were not provided. The AO treated this advance to be a make believe arrangement and held it to be in the nature of commission income received from M/s Jayapriya Group. According to AO, the assessee had not disclosed commission income commensurate to the services rendered to M/s Jayapriya Group and that the assessee in connivance with M/s Jayapriya Group had disguised the commission income by way of land advance. The AO accordingly treated the receipt of Rs.2,00,00,000/- as the unaccounted commission income of the assessee. Aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to delete the same. Now the Revenue is in appeal before us. 4. Assailing the action of the Ld. CIT(A), the Ld. DR argued that the impugned receipt was actually commission income of the assessee which was given the guise of advance. According to her, the assessee was unable to show that the land sale ultimately materialized and that no details was furnished in relation to the development works which was carried on by the assessee on behalf of Jayapriya Group, against which Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 4 :: this advance was subsequently adjusted. She therefore vehemently supported the order of the AO. The Ld. DR further submitted that, the Ld. CIT(A) had examined the material furnished by the assessee in violation of Rule 46A of the Income-tax Rules, 1962 and without confronting the AO with the same. She thus urged that the impugned issue ought to be remanded back to the AO. 5. Per contra, the Ld. AR supported the findings recorded of the Ld. CIT(A). He particularly invited our attention to the paper book running into 62 pages which was filed before us and showed that no additional evidence was furnished before the Ld. CIT(A) and that the Ld. CIT(A) had decided the appeal on the basis of material which was already available on record with the AO. 6. We have heard both the parties and perused the material placed before us. It is seen that, the assessee was in receipt of Rs.2,00,00,000/- in the bank account, across several dates from M/s Jayapriya Company, which details as noted, are as follows:- Date In favour of Amount 04.12.2019 N. Mohammad Ashik Rs.30,00,000 04.12.2019 N. Mohammad Iqbal Rs.30,00,000 04.12.2019 A. Nagoor Gani Rs.40,00,000 19.03.2020 N. Mohammad Ashik Rs.20,00,000 19.03.2020 N. Mohammad Iqbal Rs.20,00,000 19.03.2020 A. Nagoorgani Rs.60,00,000 TOTAL Rs.2,00,00,000 Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 5 :: 7. The case of the Revenue is that, the impugned sum received from M/s Jayapriya Company was not an advance but commission income. We however note that, the payer vide their confirmation dated 01.04.2020 which was filed before the AO on 27.09.2022 had confirmed that they had paid the impugned advance of Rs.2,00,00,000/- towards purchase of land to the assessee & his sons. It is observed that, the payer had also submitted their signed ledger account, wherein it confirmed that the sum of Rs.2,00,00,000/- was outstanding in the name of the assessee as on 31.03.2020 and was due and recoverable from him. The Revenue has not been able to controvert the contents of this confirmation, which was available before the AO. It is also not the AO’s case that this advance payment was claimed as commission expenditure by the payer, M/s Jayapriya Company. On these given facts, we find that, there was no independent or corroborative material available with the AO basis which any prudent person could infer the impugned receipt by the assessee in his regular bank account, as his unaccounted commission income. The entire case of the Revenue hinges only on suspicion and surmise, which cannot be countenanced. We thus concur with the following findings rendered by the Ld. CIT(A) for deleting the impugned addition :- “6.1.4 The undersigned has carefully examined the issue under consideration. The contention of the appellant is that, the amount of Rs. 2,00,00,000/- received from M/s. Jayapriya group was in the nature of advance for sale of property. The contention of the appellant is that, the agreement was not materialised as a sale and more particularily, when the appellant is coordinating with M/s. Jayapriya Group towards various Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 6 :: projects undertaken by them M/s. Jayapriya group requested the appellant to adjust towards various projects pertaining to them. 6.1.5 In this regard, the appellant has produced confirmation letters from managing director of M/s. Jayapriya Group. The appellant was also able to produce the copy of the ledger accounts pertaining to the appellant as appearing the books of accounts of M/s. Jayapriya Group. As per the ledger account, the sum of Rs. 2,00,00,000/- is the closing balance as outstanding in the books of accounts of Jayapriya property developers for the FY 2019-20. Further, as per the ledger account, in the name of Nagoor Gani maintained by Jayapriya property developers, the amount of Rs. 2,00,00,000/- has been utilized for the various projects of Jayapriya group and the closing balance as on 31-03-2021 is Rs. 25,40,000/-. As per the ledger account furnished for the FY 2021-22, 2022-23 and 2023-24, the amount of Rs. 25,40,000/- is still outstanding. From the above it is clear that M/s Jayapriya property developers also shown in their books as advance to Shri Nagoor Gani as advance for land and not shown as purchase of land in their books. 6.1.6 The appellant's residence was subjected to search consequent to the search in the case of M/s. Jayapriya Group. The appellant's case as well as the Jayapriya group of concerns are assessed to tax by the same AO. When the appellant has claimed before the AO that the amount of Rs. 2,00,00,000/- received as advance from M/s. Jayapriya Group, the AO had not attempted to cross verify the same with the books of accounts of M/s. Jayapriya Group. Further, the AO has not confronted the issue with Shri. C R Jayashankar to confirm the issue with him. When the appellant has produced evidences by way of confirmation letter from the MD of M/s.Jayapriya Group and the relevant ledger extract, the undersigned is of the view that the amount of Rs. 2,00,00,000/- cannot be the income of the appellant. Further, as per the ledger account, the amount of Rs. 2,00,00,000/- was spent towards various projects of M/s. Jayapriya Group and the balance available with M/s. Jayapriya Group as on 31-03-2024 is Rs. 25,40,000/-. This being the position, there is no case to treat the amount of Rs. 2 crores as income of the appellant. Therefore, all the grounds raised by the appellant upon this issue are hereby treated as allowed and the AO is directed to delete the addition of Rs. 2 crores made as unaccounted income of the appellant for AY 2020-21. 7. In the result, this appeal is treated as partly allowed. 8. The Ld. DR had argued that, as the land deal did not ultimately materialize and the same was later on adjusted against some other dues/payables suggested that this advance was not genuine but an after- thought to disguise assessee’s commission income which was not offered to tax during the year. We find this argument to be based solely on suspicion and lacking any merit. The Ld. AR pointed out that, the assessee had initially intended to sell his land to M/s Jayapriya Company Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 7 :: but due to onset of COVID-19, the entire market scenario had changed and therefore the deal did not materialize. So far as the refund of advance was concerned, it was explained that, since the assessee was also donning the hat as Jayapriya Group’s agent in their real estate business, and was undertaking development works on their behalf, he had subsequently adjusted portion of the impugned advance against the same. According to us, the assessee’s contention relating to the subsequent adjustment of the advance(s) and genuineness of the development works carried out by the assessee in later year(s) cannot be a subject matter of dispute in the relevant year before us. The narrow issue before us is whether the impugned receipt during the year, was in the nature of advance or commission income. In view of the above discussions, we are of the view that the assessee has been able to discharge the burden upon him that the nature of the impugned receipt was advance, which was also confirmed by the payer. Moreover, there is no incriminating material found in the course of search which suggests otherwise. Now, if later on, this advance was adjusted against some payable(s) etc., which is being doubted by the Revenue, then any corresponding tax consequence has to be examined and seen in that later year and we cannot look into the same in the year impugned before us. Printed from counselvise.com ITA No.278/Chny/2025 (AY 2020-21) Abdul Azeez Nagoor Gani :: 8 :: 9. For the above reasons therefore, we uphold the order of Ld. CIT(A) deleting the impugned addition and dismiss all the grounds raised by the Revenue before us. 10. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on the 12th day of September, 2025, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, दनांक/Dated: 12th September, 2025. TLN आदेश क\u001a \u0015ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF Printed from counselvise.com "