DEPUTY COMMISSIONER OF INCOME TAX, MADURAI V. SUBBIAH NADAR JEGATHEESAN, TIRUNELVELI

ITA 603/CHNY/2025

AI Insights

The case revolves around an appeal by the Deputy Commissioner of Income Tax, Central Circle -2, Madurai against Subbiah Nadar Jegatheesan concerning the assessment year 2017-18. The primary issues were the deletion of additions made as unexplained cash credit and unexplained money by the CIT(A) which were initially added by the Assessing Officer following a search and seizure operation. The CIT(A) found that the agricultural income and the sources of cash deposits were adequately substantiated by the assessee, leading to the deletion of the additions. The Tribunal's decision affirmed the CIT(A)'s findings, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706929 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 27-02-2025
• Other Referred Cases: S.R.Venkata Ratnam v. CIT, Smt. P.Padmavathi v. ITO, Jaya Aggarwal v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI; C.I.T
• Assessee Lawyers: R. VENKATA RAMAN
• Keywords: Set aside; Business income; Question of law; Corroborative evidences; Unexplained cash credit; Salary income; Rule of consistency; Onus to prove; Search and seizure; Assessment record
• Section: 143(3); 68

Judgement Text

" आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी जॉजŊ जॉजŊ क े, उपाȯƗ एवं ŵी एस.आर.रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:603/Chny/2025 िनधाŊरण वषŊ / Assessment Year: 2017-18 Deputy Commissioner of Income Tax, Central Circle -2, Madurai. vs. Subbiah Nadar Jegatheesan, 3, ML Theri Road, Keeraikaranthattu, Mahadevankulam, Tirunelveli – 627 657. (अपीलाथŎ/Appellant) [PAN:ABXPJ-7672-F] (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/Appellant by : Ms. E. Pavuna Sundari, C.I.T. ŮȑथŎ की ओर से/Respondent by : Shri. R. Venkata Raman, C.A. सुनवाई की तारीख/Date of Hearing : 03.06.2025 घोषणा की तारीख/Date of Pronouncement : 09.07.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal is preferred by the Revenue against the order dated 16.12.2024 passed by the ld. Commissioner of Income Tax (Appeals)-19, Chennai (‘ld.CIT(A)’ in short), arising out of the assessment order dated 28.04.2021 passed u/s.153A r.w.s 143(3) of the Income Tax Act, 1961 (‘Act’ in short) by the Assistant Commissioner of Income Tax, Central Circle - 2, Madurai (‘AO’ in short), in relation to the assessment for the Assessment Year (‘AY’ in short) 2017-18. 2. The Revenue has raised the following grounds of appeal: 1. The learned Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs.5,12,000/- as unexplained cash credit u/s 68 of the Act when the assessee did not discharge the onus of proving that there was agricultural income for the current year with supporting evidences as each :-2-: ITA. No:603/Chny/2025 assessment year is distinct and onus is on assessee to prove the claim made in the return of Income. 2. The Ld. CIT (A) erred in deleting the addition of Rs.4,75,43,171/- made as unexplained money u/s 69A of the Act by observing that “…since nothing in the form of any money, bullion, jewellery or valuable article were found during the course of search, there can be no case to treat the evidence found about the deposit made will fetch the character of unexplained money as provided under section 69A of the Act when section 69A clearly reads, “Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.” 3. The Ld. CIT (A) erred in observing that section 69A is not drawn in the present case without appreciating the fact that the assessee in his original ITR filed on 20.03.2018 had admitted Total income of only Rs.1,69,08,010/- and had failed to disclose the money reflected in the bank accounts of Rs.4,75,43,171/-, made by cash deposits, nor offered explanation to the satisfaction of the Assessing Officer, attracting provisions of section 69A of the Act. 4. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order of Ld. CIT (Appeals) may be set aside and that of Assessing Officer may be restored. 3. The brief facts of the case are that the assessee is an individual, who is a partner in various firms comprising the M/s.V.V.Minerals Group of Concerns, and is also independently engaged in the proprietorship business of operating a ‘Rice Mill’. For the AY 2017-18, the assessee filed his return of income on 20.03.2018, declaring a total income of Rs.1,69,08,010/-. The said return was selected for scrutiny under CASS, and accordingly, a notice u/s.143(2) of the Act was issued on 16.08.2018. The case was selected for scrutiny based on the following parameters: i. Large cash deposits in bank accounts of the assessee during the year; ii. High value cash withdrawals during the year; and iii. Large agricultural income shown in ITR 4. Subsequently, a search and seizure operation u/s.132 of the Act was conducted in October 2018 in the case of the assessee and other entities forming :-3-: ITA. No:603/Chny/2025 part of the V.V. Group. Consequently, pending scrutiny assessment of the assessee for the impugned assessment year stood abated in accordance with the provisions of section 153A(1) of the Act. Pursuant to the search, the AO issued a notice u/s.153A of the Act on 15.07.2019. In response, the assessee filed a return of income u/s.153A of the Act on 02.08.2019, declaring a total income of Rs.1,51,08,010/-. Subsequently, a notice u/s.143(2) of the Act was issued on 28.09.2020 followed by a notice u/s.142(1) of the Act. 5. During the course of assessment proceedings, based on the AIR data, the AO observed that the assessee had made aggregate cash deposits amounting to Rs.4,75,43,171/- in various savings bank accounts during the relevant previous year, which included deposits of Rs.1,86,55,314/- made during the demonetization period. The bank-wise break-up of the said deposits, as taken note of by the AO, is as under: Bank Account No Bank Name Total cash deposits during the year (Rs.) 0883888045 Indian Bank Tisayanvillai 20,00,000 194801000000371 IOB, Tisayanvillai 1,30,63,000 194801000023371 IOB, Tisayanvillai 81,59,571 11910100058848 Federal Bank, Sankarankoil 1,60,20,600 883888045 Indian Bank Tisayanvillai 83,00,000 Total 4,75,43,171 6. The AO further noticed that the assessee had failed to disclose salary income amounting to Rs.18,00,000/- in the return filed in response to the notice u/s.153A of the Act, although such income had been disclosed in the original return of income. Consequently, a show-cause notice was issued to the assessee, seeking explanation regarding the following issues: :-4-: ITA. No:603/Chny/2025 i. The source of cash deposits aggregating to Rs.4,75,43,171/- made in the bank accounts during the assessment year under consideration; ii. The omission of salary income of Rs.18,00,000/- in the return filed pursuant to the notice issued u/s.153A of the Act; and iii. Evidence substantiating the agricultural income of Rs.5,12,000/- declared during the year under consideration. 7. In response, the assessee submitted that he was engaged in the proprietorship business of running a rice mill, and that the cash deposits, were out of the cash balance available in the rice mill and earlier withdrawals from bank accounts. With respect to the agricultural income, the assessee furnished land revenue records in support of his claim. As regards the omission of salary income, the assessee submitted that the same was an inadvertent error and clarified that the salary income had been duly reported in the original return of income and that the corresponding taxes had already been paid along with the original return of income. Since there is no dispute regarding the omission of salary income in the present appeal, the same is not discussed upon further. 8. The AO, however, was not convinced with the explanation furnished by the assessee relating to agricultural income and cash deposits. According to the AO, the assessee failed to substantiate the agricultural income of Rs.5,12,000/- with credible documentary evidence. Accordingly, the said amount was treated as unexplained cash credit u/s.68 of the Act and added to the total income. With respect to the aggregate cash deposits of Rs.4,75,43,171/-, the AO noted that the assessee had not satisfactorily explained the source of such deposits, particularly those made outside the demonetization window. The AO further observed that the figures disclosed in the return of income filed relating to the rice mill business for the relevant previous year were not commensurate with the volume of cash deposits, :-5-: ITA. No:603/Chny/2025 thereby rendering the explanation implausible. The AO, thus concluded that the entire cash deposits represented unexplained money within the meaning of section 69A of the Act, and accordingly brought the same to tax by making an addition of Rs.4,75,43,171/- to the returned income. The AO, thus completed the assessment vide order dated 28.04.2021 passed u/s.153A r.w.s 143(3) of the Act. 9. Being aggrieved by the assessment order, the assessee preferred an appeal before the ld.CIT(A). 10. Before the ld.CIT(A), the assessee submitted that an amount of Rs.20,00,000/- was erroneously included twice in the assessment order due to the duplication of bank account number 883888045 (Indian Bank, Tisayanvillai). This, according to the assessee, resulted in a double addition and constituted an apparent error on the face of the record. The assessee further explained that as on 01.04.2016, he held an opening balance of Rs.3,31,42,358.85 in his Federal Bank account. Substantial cash withdrawals were made from this account during the year with the intention of making investments. However, due to the unexpected announcement of demonetization on 08.11.2016, the withdrawn funds were redeposited into various bank accounts, including a sum of Rs.1.32 crores redeposited into the same Federal Bank account. In support of this claim, the assessee furnished relevant bank statements, cash withdrawal details, and a reconciliation statement. The remaining amount of Rs.75,85,607/-, the assessee explained that it represented business receipts from his proprietorship concerns ‘VV Rice Mill’ and ‘King Royal Palace’ as well as capital withdrawals from partnership firms in which he was a partner. Accordingly, the assessee contended that the :-6-: ITA. No:603/Chny/2025 addition made by the AO u/s.69A of the Act was unwarranted and ought to be deleted. 11. The assessee submitted land revenue records before the ld.CIT(A) in support of the claim of agricultural income. It was contended that the assessee has been consistently reporting agricultural income in previous assessment years, which has been duly accepted by the Department. Further, there has been no material deviation in the quantum or nature of agricultural income during the assessment year under consideration. Accordingly, the assessee submitted that the AO erred in treating the agricultural income of Rs.5,12,000/- as unexplained cash credit u/s.68 of the Act, and requested that the addition be deleted. 12. Considering the submissions made by the assessee during the appellate proceedings, the ld.CIT(A) by the impugned order dated 16.12.2024 deleted the additions made by the AO, treating agricultural income of Rs.5,12,000/- as unexplained cash credit u/s.68 of the Act and cash deposits of Rs.4,75,43,171/- as unexplained money u/s.69A of the Act. 13. With regard to the issue of agricultural income, the ld.CIT(A) observed that the assessee and his family have a longstanding history of agricultural activities and have consistently reported agricultural income in their tax returns, which has been accepted by the Department in previous assessment years. In the current assessment year, the AO questioned the genuineness of the declared agricultural income without furnishing any substantive evidence or offering valid reasons for disregarding the land revenue records submitted by the assessee. The ld.CIT(A) held that the submission of land revenue records sufficiently established both ownership of the agricultural land and the continuity of agricultural operations. :-7-: ITA. No:603/Chny/2025 Accordingly, the assessee had discharged the initial burden of proof. Consequently, the onus shifted to the AO to disprove the claim, which he failed to do. The ld.CIT(A) further noted that since the agricultural income was properly substantiated and not unexplained, the invocation of Section 68 of the Act was unwarranted. In view of these findings, the ld.CIT(A) deleted the addition of Rs.5,12,000/- made by the AO by treating the agricultural income as unexplained cash credit. The relevant observations of the ld.CIT(A) are as under:- “6.3.3 The AR during the course of appellate proceedings has claimed that the appellant’s family is owning more than 100 acres of land, which can be verified from revenue records. The appellant has produced copies of such revenue records to establish the fact about the holding of agricultural land by the appellant which was already made available before the AO during the course of assessment proceedings. Further the AR made available copies of return of income filed for the earlier years and subsequent year, wherein the appellant has regularly admitted substantial agricultural income. 6.3.4 The undersigned has carefully examined the issue under consideration. The appellant and his family have been engaged in agricultural activities for several years. The appellant has been declaring agricultural income in his returns of income regularly, which has been accepted by the department in earlier assessment years. This long- standing pattern of agricultural activity is corroborated by the land revenue records submitted during the assessment proceedings. 6.3.5 It is an established principle that, where agricultural income has been regularly declared and accepted by the department in previous years, it should not be refuted unless there is sufficient evidence to the contrary. In this case, the AO has not brought on record any incriminating evidence or material to suggest that the agricultural income declared by the appellant is not genuine. Merely rejecting the land revenue records without providing a reasoned basis for such rejection is not sufficient to treat the agricultural income as unexplained cash credit. The land revenue records and other documentary evidence provided by the appellant clearly establish ownership of agricultural land and ongoing agricultural operations. The AO’s contention that the genuineness of the agricultural receipts is not proved lacks merit, as the burden of proof shifts to the revenue once evidence is submitted by the assessee. In this case, the appellant has discharged his onus by producing the relevant land records, and the AO has not provided any material to disprove the same. 6.3.6 Further the provisions of Section 68 of the Act applies where there are unexplained cash credits, and the burden is on the assessee to explain the nature and source of such credits. In this case, the appellant has consistently declared agricultural income and provided evidence in the :-8-: ITA. No:603/Chny/2025 form of land revenue records. There is no unexplained cash credit, as the source of income (agriculture) has been sufficiently explained. Thus, the addition under Section 68 of the Act is not warranted to the facts and circumstances of the case. 6.3.7 In light of the above discussion, it is clear that it is not appropriate for the AO to make addition u/s 68 of the Act by treating the agricultural income as unexplained cash credit. The agricultural income declared by the appellant is supported by documentary evidence, and has been consistently accepted in prior assessments. Therefore, the addition made by the AO is devoid of merits. Accordingly, the ground raised by the appellant upon this issue is here by treated as allowed and the AO is directed to delete the addition of Rs. 5,12,000/- made as unexplained cash credit u/s 68 of the Act and treat the amount of Rs. 5,12,000/- as agricultural income for the AY 2017-18.” 14. In respect of the addition made u/s.69A of the Act on account of cash deposits treated as unexplained money, the ld.CIT(A) noted that the Indian Bank account (A/c No. 883888045), Tisayanvillai Branch, was erroneously considered twice in the assessment order, resulting in an incorrect addition of Rs.20,00,000/-. This duplication was held to be an apparent error on the face of the record. Further, based on a review of the assessee’s bank statements, the ld.CIT(A) observed that the assessee had made cash withdrawals totalling Rs.4,34,00,000/-. In the absence of any findings by the AO indicating alternative utilization of these withdrawals, the ld.CIT(A) accepted the assessee’s explanation that this amount constituted the source for the cash deposits during the relevant assessment year. With respect to the remaining balance of Rs.21,43,171/- (i.e., Rs.4,75,43,171/- minus Rs.20,00,000/- and Rs.4,34,00,000/-), the ld.CIT(A) noted that the assessee is the sole proprietor of VV Rice Mills and King Royal Palace, and also a partner in various firms. Accordingly, the ld.CIT(A) held that the balance deposits were sourced from business sale proceeds and capital withdrawals from these entities. The ld.CIT(A) further held that since nothing in the form of any money, bullion, jewellery or valuable article were found during the course of search, there can be no case to treat the evidence found about the deposit made will fetch the character of unexplained :-9-: ITA. No:603/Chny/2025 money as provided u/s.69A of the Act. In view of these findings, the ld.CIT(A) deleted the entire addition of Rs.4,75,43,171/- made by the AO u/s.69A of the Act, holding that the cash deposits were satisfactorily explained. The relevant observations of the ld.CIT(A) are as under: - “6.4.3 The undersigned has carefully examined the issue raised. As evident from the assessment order, the return of the appellant was selected for scrutiny to verify the cash the large cash deposits in bank accounts and the high value of cash withdrawals during the year. On examination of the facts of the case, it can be seen that the appellant has provided sufficient evidence reflecting that the Indian Bank account (A/c No. 883888045) was mentioned twice in the assessment order, leading to the erroneous addition of Rs. 20,00,000/-. The undersigned is of the view that this is a clear error apparent on the face of the record, and the addition of Rs. 20,00,000/- is unjustified. Therefore, the addition of Rs. 20,00,000/- requires to be deleted. 6.4.4 The undersigned has carefully examined the issue under consideration and the submissions made by the appellant. The crux of the dispute revolves around the action of the AO in treating cash deposits amounting to Rs.4,75,43,171/- made during the (FY) 2016-17 as unexplained money u/s 69A of the Act. As per the AO, out of the total cash deposits, an amount of Rs.1,86,55,314/- was deposited in cash during the demonetization period. However, the appellant has differed this finding by asserting that a sum of Rs.3,79,57,564/- was deposited during the demonetization period and has substantiated this claim by providing copies of bank statements. Further upon examining the bank statements submitted by the appellant, it is evident that the cash deposits during the demonetization period are higher than what the AO has mentioned. 6.4.5 During the course of appellate proceedings, the appellant has further explained that these deposits represent cash withdrawn from various bank accounts prior to demonetization, a fact corroborated by bank statements reflecting substantial cash withdrawals of Rs.4.34 crore between September and October 2016. The appellant has claimed that the details of these deposits were duly disclosed in the \"Cash Transaction 2016\" form filed through the e-filing portal of the department. 6.4.6 The undersigned is of the view that the AO, rather than confining the examination to cash deposits made in Specified Bank Notes (SBNs) during the demonetization period, has treated the entire cash deposits made during the FY 2016-17 as unexplained. This approach is fundamentally flawed for the following reasons:  The AO has failed to account for the appellant's business activities and has not made any effort to distinguish between regular business- related cash receipts and deposits in SBNs during the demonetization period.  The appellant’s return of income, filed on the basis of audited financials, disclosed a total income of Rs.1.51 crore. The AO has not :-10-: ITA. No:603/Chny/2025 made any adverse findings with respect to the audited financials or questioned the appellant’s business turnover or profit.  The AO has not established any contrary evidence to disprove the appellant's claim regarding the source of cash deposits. The explanation provided by the appellant is supported by documentary evidence in the form of bank statements and prior disclosures made in compliance with departmental requirements. 6.4.7 The undersigned is of the view that the appellant has satisfactorily demonstrated the following:  A clear nexus between cash withdrawals made prior to demonetization and the cash deposits made during the demonetization period.  Disclosures made to the department regarding cash deposits during the demonetization period through the “Cash Transaction 2016” form.  Legitimate business activities as evidenced by audited financials, which indicate sufficient turnover and business income to justify the cash deposits. 6.4.8 Therefore, in the absence of any evidence to the contrary, the appellant’s explanation regarding the cash deposits is both plausible and supported by evidence. In view of this, the action of the AO in treating the entire cash deposits of Rs.4,75,43,171/- as unexplained u/s 69A of the Act is untenable for the reasons stated above. Further the undersigned has elaborately discussed in para 6.4.3 and deleted the amount of Rs. 20,00,000/- on account of being considered twice. Therefore, the balance of the amount that requires to be considered is ( 4,75,43,171 20,00,000) Rs. 4,55,43,171/-. In respect of this balance of Rs. 4,55,43,171/-, the appellant has explained about the withdrawals effected prior to the declaration of demonetization. The relevant extract of the submission is reproduced here as under………… 6.4.9 The appellant to substantiate the above withdrawals has made available relevant bank statements which were also made available before the AO during the course of assessment proceedings. On account of the withdrawal and subsequent deposit, the amount of Rs. 4,34,00,000/-out of the balance of Rs. 4,55,43,171/- stands explained. Now the remaining balance is Rs. 21,43,171/- only. As already brought out by the appellant himself that he is the sole proprietor of VV Rice mills, and King Royal Palace and also a partner in various firms. The sales proceeds of the proprietorship concerns and the capital withdrawals from the firms constitute the remaining cash deposits. made throughout the financial year. Accordingly, the same stands explained. 6.4.10 The undersigned is of the view that the AO has not discharged the onus of proving that the cash deposits emanated from unexplained sources, nor has the AO made any independent inquiry to negate the explanation provided by the appellant. Accordingly, all the grounds raised upon this issue are hereby treated as allowed and the AO is directed to :-11-: ITA. No:603/Chny/2025 delete the addition of Rs. 4,75,43,171/- made as unexplained income u/s 69A of the Act for the AY 2017-18 . . . . . 6.4.15 The above cited judicial decisions of the Hon’ble Apex Court goes on to prove that even the fixed deposit receipts found during the course of search cannot partake the character of any money, bullion, jewellery or valuable article. In the case of the Appellant what the AO has found is only the details of deposit made. Obviously, such evidence will not have the character of money, bullion, jewellery or valuable article as envisaged in the provisions of section 69A of the Act. 6.4.16 In view of the above decision of the Hon’ble Apex Court, the undersigned is of the considered view that since nothing in the form of any money, bullion, jewellery or valuable article were found during the course of search, there can be no case to treat the evidence found about the deposit made will fetch the character of unexplained money as provided under section 69A of the Act. In view of this the undersigned is not inclined to accept the observation of the AO to treat the same as unexplained money u/s 69A of the Act. Accordingly, the ground raised by the Appellant upon this issue is treated as allowed and the addition made on this accounts is unsustainable.” 15. Aggrieved by the order of the ld.CIT(A), the Revenue is in appeal before us. 16. The ld.DR, Ms.E.Pavuna Sundari, CIT, vehemently opposed the findings rendered by the ld.CIT(A) in deleting the additions made by the AO. It was submitted that the assessee failed to discharge the burden of proof in respect of the agricultural income claimed, as no credible or contemporaneous documentary evidence was furnished to substantiate the same. The ld. DR contended that in the absence of verifiable and corroborative material on record, the action of the ld.CIT(A) in accepting the assessee’s claim is unsustainable in law. 17. Drawing reference to page 10 of the assessment order, the ld.DR submitted that the assessee’s declared turnover from the rice mill business during the assessment year 2017-18 was Rs.1,99,52,856/-, which, according to her, does not :-12-: ITA. No:603/Chny/2025 reconcile with or substantiate the magnitude of the cash deposits made by the assessee in his bank accounts during the relevant period. 18. With respect to the explanation offered by the assessee regarding the redeposit of previously withdrawn cash, the ld.DR submitted that such a proposition is inherently implausible, as no prudent individual would retain substantial cash in hand over an extended period, thereby foregoing potential interest income and exposing the funds to risks. In the absence of any contemporaneous evidence demonstrating the necessity or intention to retain such large sums in cash, the assessee’s explanation deserves to be rejected. 19. Placing substantial reliance on the reasoning set forth by the AO in the assessment order, the ld.DR submitted that the ld.CIT(A) erred in accepting the assessee’s explanation without appreciating the case of the AO. The ld.DR therefore urged that the impugned order of the ld.CIT(A) be reversed and the additions made by the AO be restored by allowing the appeal of the Revenue. 20. Per contra, the ld.AR for the assessee, Shri R.Venkata Raman, Chartered Accountant, supported the findings of the ld.CIT(A) and submitted that the agricultural income of Rs.5,12,000/- declared by the assessee for the impugned assessment year is consistent with the assessee’s past pattern of disclosures and does not reflect any abnormal increase warranting suspicion. The ld. AR submitted that for the immediately preceding and succeeding assessment years, i.e., A.Ys. 2016-17 and 2018-19, the assessee had declared similar amounts under agricultural income, which were duly accepted by the Department in the course of the respective assessment proceedings. In support of this contention, the ld.AR placed reliance on copies of the assessment orders passed for the said assessment years. It was :-13-: ITA. No:603/Chny/2025 further contended that, having accepted similar declarations of agricultural income in the earlier and subsequent years, the AO was not justified in isolating the income declared in the impugned year as unexplained cash credit, without bringing on record any contrary evidence to disprove the genuineness of the claim. Referring to the reasoning recorded by the ld.CIT(A), the ld. AR submitted that the findings are well-reasoned and in accordance with law, based on appreciation of facts and supporting material. The ld.AR, therefore, prayed that the decision of the ld.CIT(A) in deleting the addition of Rs.5,12,000/- made towards agricultural income requires to be upheld. 21. The ld.AR for the assessee drew our attention to paragraph 6.4.3 of the impugned order of the ld.CIT(A) and submitted that the addition of Rs.20,00,000/- made on account of cash deposits was erroneously made on the basis of a duplicate entry. It was pointed out that the Indian Bank account bearing A/c No. 883888045 had been inadvertently considered twice by the AO in the computation of total deposits, resulting in a duplication and consequent overstatement. The ld.AR contended that this constituted a mistake apparent on the face of the record, warranting deletion which the ld.CIT(A) has rightly deleted. 22. Referring to paragraph 6.4.2 of the CIT(A)’s order, the ld.AR submitted that the assessee had an opening bank balance in Federal Bank, Tisayanvillai Branch (A/c No. 11910100058848) of Rs.3,31,42,358/- as on the first day of the relevant assessment year. The ld. AR further submitted that this fact was supported by the bank account statement, which was duly furnished before the AO and not disputed. According to the ld.AR, a substantial portion of the said bank balance was withdrawn in cash during the months of September and October 2016 and later redeposited into :-14-: ITA. No:603/Chny/2025 various bank accounts during both the demonetisation and non-demonetisation periods in the impugned assessment year. It was contended by the ld.AR that the assessee’s rice mill turnover, along with cash withdrawals from multiple bank accounts, constituted a valid and explainable source for the cash deposits made during the relevant assessment year. Accordingly, the ld.AR argued that the Revenue’s contention that the rice mill turnover alone was insufficient to explain the magnitude of deposits was misplaced and based on an incomplete reading of the financial records. Further referring to paragraphs 6.4.8, 6.4.9, and 6.4.10 of the CIT(A)'s order, the ld.AR submitted that the ld.CIT(A) had examined the evidentiary material in detail and, after due consideration, arrived at a reasoned conclusion deleting the addition. The ld. AR submitted that there was no error in the said findings and urged that they be upheld. 23. The ld. AR also made additional submissions to the effect that the assessee had been subjected to a search and seizure action under the provisions of the Act. However, during the course of such proceedings, no incriminating material was unearthed which would suggest that the cash deposits amounting to Rs.4,75,43,171/- represented undisclosed income of the assessee. It was further submitted that the Revenue had neither alleged nor demonstrated that the earlier cash withdrawals had been diverted or utilised for any purpose other than for redeposit into the assessee’s own bank accounts. In the absence of any material evidence to the contrary, the Revenue's presumption that the funds were not available with the assessee was purely speculative. :-15-: ITA. No:603/Chny/2025 24. In light of the above submissions, the ld. AR prayed that the well-reasoned order passed by the ld.CIT(A) be upheld, and the appeal of the Revenue be dismissed. 25. We have carefully considered the rival submissions advanced by both sides and have perused the material available on record, including the assessment order and the submissions filed by the assessee during the course of appellate proceedings. 26. We note that the assessee has furnished documentary evidence in support of ownership of agricultural land, including certified copies of land revenue records issued by the competent revenue authorities. These records remain unchallenged by the AO. Furthermore, we find that the assessee has consistently declared agricultural income in preceding as well as subsequent assessment years, and such returns have been accepted by the Department without any adverse findings. This consistent treatment lends substantial credibility to the assessee’s claim for the relevant assessment year. The principle of consistency, as laid down in various judicial precedents, mandates that in the absence of any material change in facts or circumstances, the Department ought not to take a divergent view in subsequent years. Under Section 68 of the Act, the initial onus lies upon the assessee to offer an explanation regarding the nature and source of any credit found in the books of accounts. In the present case, the assessee has discharged this burden by stating that the sum in question represents agricultural income derived from self-owned agricultural land and by furnishing corroborative documentary evidence in support thereof. Once the assessee has provided a plausible explanation supported by credible evidence, the onus shifts to the Revenue to disprove the same. However, :-16-: ITA. No:603/Chny/2025 the AO has neither conducted any field enquiries nor collected independent material to rebut the assessee’s contention. In the absence of such efforts by the AO, the explanation tendered by the assessee stands unrebutted. In view of the above discussion, we find that the order passed by the ld.CIT(A) is based on a sound appreciation of facts and settled legal principles. The assessee has sufficiently discharged the burden of proof to establish the genuineness of the agricultural income declared. Consequently, the addition of Rs.5,12,000/- made by the AO u/s.68 of the Act is devoid of merit and has been rightly deleted by the ld.CIT(A). We, therefore, do not find any reason to interfere in the order of the ld. CIT(A) on this issue and hence we dismiss the related grounds raised by the revenue. 27. Coming to the issue of cash deposits of Rs.4,75,43,171/- treated as unexplained money u/s.69A of the Act, we note that the AO made the addition in respect of the following cash deposits made in the bank accounts during the impugned assessment year: Bank Account No Bank Name Total cash deposits during the year (Rs.) 0883888045 Indian Bank Tisayanvillai 20,00,000 194801000000371 IOB, Tisayanvillai 1,30,63,000 194801000023371 IOB, Tisayanvillai 81,59,571 11910100058848 Federal Bank, Sankarankoil 1,60,20,600 883888045 Indian Bank Tisayanvillai 83,00,000 Total 4,75,43,171 28. It is evident from the foregoing facts and the records on file that the AO, while computing the aggregate cash deposits amounting to Rs.4,75,43,171/-, has inadvertently considered the Indian Bank, Tisayanvillai Branch (Account No: 883888045), on two separate occasions, thereby resulting in a duplication of entries. Upon meticulous examination, the ld.CIT(A) has categorically observed that the sum :-17-: ITA. No:603/Chny/2025 of Rs.83,00,000/-, as considered by the AO, erroneously includes an amount of Rs.20,00,000/- which represents a duplicate entry. The ld. CIT(A), in his reasoned findings, has explicitly held that the said amount of Rs.20,00,000/- has been erroneously considered twice and, accordingly, directed its deletion from the total cash deposit computation. Before us, the ld.DR was unable to rebut or controvert the factual findings recorded by the ld.CIT(A) in relation to the duplication of the said amount. In light of the foregoing and having regard to the material on record, we are of the considered opinion that the ld.CIT(A) has rightly directed the deletion of the duplicated amount of Rs.20,00,000/- from the total addition of Rs.4,75,43,171/-. 29. It is an undisputed fact that the assessee had the following cash withdrawals during the impugned assessment year from Federal Bank, Tisayanvillai Branch (A/c No:11910100058848):- Date of withdrawal Amount withdrawn (Rs.) 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 9,00,000 06.09.2016 10,00,000 17.10.2016 70,00,000 18.10.2016 70,00,000 18.10.2016 70,00,000 18.10.2016 70,00,000 18.10.2016 54,00,000 Total 4,34,00,000 30. The assessee has contended that the cash deposits in question, aggregating to Rs.4,34,00,000/- out of total cash deposits of Rs.4,55,43,171/-, originated from earlier cash withdrawals made from the above bank account just prior to :-18-: ITA. No:603/Chny/2025 announcement of demonetisation i.e. in the months of September and October 2016 and were subsequently re-deposited after the announcement of demonetisation. Upon careful consideration of the facts and the material available on record, we are of the considered view that, in the absence of any cogent or contradictory findings brought forth by the AO to demonstrate that such cash withdrawals were not available with the assessee or had been diverted or utilized for purposes other than re-deposit, the explanation offered by the assessee cannot be disbelieved merely on conjecture or surmise. 31. It is pertinent to note that no incriminating material or evidence was found during the course of the search proceedings which could suggest that the above cash withdrawals were expended or otherwise utilized by the assessee for any alternate investments. Further, there is no material on record indicating that the cash deposits made into the bank accounts during the relevant assessment year represent income constituted undisclosed income of the assessee. 32. We note that the assessee has sufficiently discharged the initial burden of proof by furnishing a plausible explanation supported by corresponding entries in the bank accounts, thereby establishing a direct nexus between the earlier withdrawals and the subsequent deposits. It is a well-settled proposition of law that while an assessee is obligated to prove affirmative facts, he cannot be called upon to prove the negative that is, to demonstrate conclusively that the cash withdrawn was not utilized elsewhere. In such a situation, the burden of proof shifts to the AO to rebut the assessee’s explanation by adducing material evidence to establish that the cash withdrawals were, in fact, applied for a different purpose or were otherwise unavailable for redeposit. In the absence of any such positive finding or contrary :-19-: ITA. No:603/Chny/2025 material brought on record by the Revenue, the presumption that the cash deposits are unexplained is untenable and not legally sustainable. Accordingly, we are of the considered opinion that the explanation offered by the assessee merits acceptance, and no adverse inference can be drawn solely on the basis of suspicion or absence of further corroborative evidence. Our above view has been asserted by the following judicial precedents. 33. The Hon’ble Karnataka High Court in S.R.Venkata Ratnam v. CIT [1981] 127 ITR 807 (Kar) has held as under: “….once the petitioner-assessee disclosed the source as having come from the withdrawal made on a given date from a given bank, it was not for respondents Nos. 1 and 2 to concern themselves with what the assessee did with that money, i.e., whether he had kept the same in his house or utilised the services of a bank by depositing the same. The ITO had only two choices before him. One was to reject the explanation as not believable for the reason that on his investigation no such pigmy deposit was ever made in the bank. In the alternative he ought to have called upon the assessee-petitioner to substantiate his claim by documentary evidence. Having exercised neither of the choices, it was not open to the ITO to merely surmise that it would not be probable for the assessee to keep Rs.15,000 unutilised for a period of two years. The ITO should have given an opportunity to the assessee to substantiate his assertion as to the source of his capital outlay.” 34. Following the above judgment, the Hon’ble Karnataka High Court in Smt. P.Padmavathi v. ITO (ITA No. 414/2009, dated 06.10.2020), has held as under: “12. In this case, it is not in dispute that the assessee withdrew a sum of ₹.5,00,000/- on 18.8.2003 and ₹.2,00,000/- on 20.8.2003 from her savings account. She is an agriculturist and she had agricultural income. Once she demonstrated that she was in possession of ₹.7,00,000/- cash plus agricultural income on her hands, if after 40 days, a cash deposit is made to the extent of about ₹.5,20,000/- towards loan account, it cannot be said that the source of the said deposit is not properly explained. Merely because there is a delay of 40 days from the date of withdrawal of the money from the bank account to the date of deposit in the loan account. Once money is shown to be in the account and withdrawn, what the assessee did with that money till it was actually deposited, is not the concern of the Department. As long as the source is explained and established and when the money is withdrawn from a savings bank account and paid to discharge loan by deposit into a loan account, it is not possible to hold that the source is not explained. In that interregnum period, if the very same money is utilised for other purpose and thereafter, :-20-: ITA. No:603/Chny/2025 it is appropriated towards discharge of a loan, that cannot be held against the assessee. In that view of the matter, the finding recorded by the Tribunal is erroneous and requires to be set aside. Therefore, the said substantial question of law is also held against the revenue and in favour of the assessee.” 35. The Hon’ble Delhi High Court in Jaya Aggarwal v. ITO [2018] 92 taxmann.com 108 (Del) has held as under: “8. We find it difficult to accept the approach and findings recorded for several reasons. The brief order does not examine and consider the entire explanation and material on record as withdrawal of Rs.2,00,000/- in cash was undisputed. Naturally, the huge withdrawal was for a purpose and objective. From the beginning the explanation given was that withdrawal was to pay earnest money for purchase of immovable property, which deal did not fructify. Explanation given was not fanciful and sham story. It was perfectly plausible and should be accepted, unless there was justification and ground to hold to the contrary. Delay of some months in redeposit of part amount is the sole and only reason to disbelieve the appellant. Persons can behave differently even when placed in similar situations. Due regard and latitude to human conduct and behaviour has to be given and accepted when we consider validity and truthfulness of an explanation. One should not consider and reject an explanation as concocted and contrived by applying prudent man's behaviour test. Principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus. Probability means likelihood of anything to be true. Probability refers to appearance of truth or likelihood of being realised which any statement or event bears in light of the present evidence (Murray's English Dictionary). Evidence can be oral and cannot be discarded on this ground. Assessment order and the appellate orders fall foul and have disregarded the preponderance of probability test.” 36. Therefore, in the present facts and circumstances of the case and the ratio decidendi laid down in the aforementioned judgments is directly applicable to the facts and circumstances of the present case concerning the assessee and hence we are inclined to uphold the findings of the ld.CIT(A) accepting the source for cash deposits to the extent of Rs.4,34,00,000/- made out of previous cash withdrawals from Federal Bank, Tisayanvillai Branch (A/c No:11910100058848). 37. As for the remaining balance of Rs.21,43,171/-, we are of the considered view that the ld.CIT(A) has rightly held that the sales proceeds of assessee’s proprietorship concerns, namely VV Rice Mills and King Royal Palace, and from :-21-: ITA. No:603/Chny/2025 capital withdrawals from the partnership firms’ business, in which the assessee is a partner constitutes source for the remaining cash deposits. 38. In light of the foregoing discussion and upon careful consideration of the facts and legal position, we are of the considered opinion that the ld.CIT(A) has correctly appreciated the material on record and has rightly deleted the addition of Rs.4,75,43,171/- on account of cash deposits as unexplained money u/s.69A of the Act made by the AO. We find no cogent reason, nor any substantive ground, to disturb or displace the well-founded findings recorded by the ld.CIT(A). The Revenue has not been able to point out any error, either factual or legal, warranting interference by this appellate forum. Accordingly, we uphold the order of the ld.CIT(A) and dismiss the grounds of appeal filed by the Revenue as devoid of merit. 39. In the result, appeal filed by the Revenue stands dismissed. Order pronounced in the court on 09th, July, 2025 at Chennai. Sd/- Sd/- (जॉजŊ जॉजŊ क े) (GEORGE GEORGE K) उपाȯƗ /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद˟/ACCOUNTANT MEMBER चेɄई/Chennai, िदनांक/Dated, the 09th July, 2025 SP आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "