DEVARAJ ILAVARASAN,SALEM V. ITO, WARD-1(6), SALEM

ITA 2444/CHNY/2025

AI Insights

The case involves Devaraj Ilavarasan, who appealed against the order of the Commissioner of Income Tax (Appeals)/NFAC, Delhi, which confirmed the assessment made by the Assessing Officer for the Assessment Year 2017-18. The original return declared a turnover of Rs.10,76,50,000 and income of Rs.9,26,500 without an audit report, which was later revised to include an audit report and a higher turnover declaration. The Assessing Officer treated the revised return as non est and estimated business profit at 8% of turnover, adding Rs.60,00,000 as unexplained investment noted during a survey. The Tribunal found the estimation of profit at 8% excessive, referencing similar cases of the assessee's parents where a 4% estimation was deemed reasonable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791040 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 02-09-2025
• Other Referred Cases: ITA Nos.689-694/Chny/2024, ITA No.696/Chny/2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: S. BHUPENDRAN
• Keywords: Revised return; Unexplained investment
• Section: 144; 133A

Judgement Text

"आयकर अपीलीय अिधकरण, ’बी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी मनु क ुमार िग र, \u000eाियक सद\u0012 एवं \u0001ी एस. आर. रघुनाथा, लेखा सद\u0012 क े सम BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2444/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Year: 2017-18 Devaraj Ilavarasan, 2/217-C, Siddar Koil Main Road, Sivathapuram, Salem 636 307. v. The ITO, Ward 1(6), Salem. [PAN: ABOPI2465G] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Shri S. Bhupendran, Advocate \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाईक\u001aतारीख/Date of Hearing : 04.12.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 08.12.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: The captioned appeal by the assessee is arising out of the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 02.07.2025 for AY 2017-18. 2. The assessee filed an original return of income declaring turnover of Rs.10,76,50,000/- and income of Rs.9,26,500/-. No audit report was furnished. A revised return dated 01.08.2019 was later filed declaring turnover of Rs.13,76,50,000/- along with the audit report. Printed from counselvise.com ITA No.2444/Chny/25 (AY 2017-18) Devaraj Ilavarasan :: 2 :: The Assessing Officer (“AO”) treated the revised return as non est and completed assessment u/s 144 of the Act, estimating business profit @ 8% of turnover and further adding Rs.60,00,000/- as unexplained investment allegedly noted during survey u/s 133A in the “D. Devaraj group” cases. 3. On further appeal to ld.CIT(A), who confirmed the assessment order. 4. Aggrieved, assessee is in appeal before this Tribunal. 5. Before us, the assessee has raised multiple grounds, including the assessment order is bad in law and the CIT(A) erred in not appreciating records properly. The estimation of income @ 8% is without basis. Most importantly, in the cases of the assessee’s father Shri D. Devaraj [ITA Nos.689-694/Chny/2024 dated 26.07.2024] and mother Smt. Ellammal [ITA No.696/Chny/2024 dated 26.07.2024], arising from the same survey proceedings on 07.02.2018, the Tribunal had restricted the profit estimation to 4%. Ld.AR further submitted that the addition of Rs.60,00,000/- ought to have been deleted since the transaction was reflected in the return filed on 01.08.2019 and the assessee had sources. He also pleaded that authorities below wrongly applied section 115BBE of the Act. 6. Per contra, the ld.DR strongly relied upon the order of the ld.CIT(A). However, did not controvert the factum of Tribunal order in the case of Printed from counselvise.com ITA No.2444/Chny/25 (AY 2017-18) Devaraj Ilavarasan :: 3 :: assessee’s father Shri D. Devaraj and mother Smt. Ellammal referred supra. 7. We have heard the rival submissions and perused the record and Tribunal order as referred above. We note that the AO adopted 8% merely based on non-production of books. No comparable cases, past history of the assessee, or industry norms were referred to. Critically, in the cases of the assessee’s own parents, Shri D. Devaraj and Smt. Ellammal arising from the very same survey operation on identical facts the Coordinate Bench of the Tribunal has held that estimating profit @ 8% was excessive and that 4% was reasonable. Hnece, we are of the considered view that a taxpayer cannot be placed in a worse position than similarly-situated family members assessed out of the same survey evidence, unless distinguishing facts are demonstrated by the revenue. No such distinction has been shown. Therefore, respectfully following the earlier orders of the Coordinate Bench in the parents’ cases, we direct the AO to restrict the profit estimation to 4%. As far as, application of section 115BBE is concerned, since the substantive additions themselves have been deleted or reduced, discussion on the applicability of the increased tax rate under section 115BBE becomes academic. Nevertheless, we note that the Judicial Precedent of the Madurai Bench of Madras High Court in S.M.I.L.E Microfinance Ltd. supports the assessee’s position that the amended rate Printed from counselvise.com ITA No.2444/Chny/25 (AY 2017-18) Devaraj Ilavarasan :: 4 :: is not applicable to transactions prior to AY 2017-18. In conclusion, profit estimation restricted to 4% of turnover, in line with Tribunal orders in the cases of the assessee’s parents. Appeal of the assessee is partly allowed. 8. Result The appeal of the assessee is partly allowed. Order pronounced in the open court on 08th day of December, 2025 at Chennai. Sd/- (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िग र) (MANU KUMAR GIRI) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 08th December, 2025. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ\b/Appellant 2. थ\b/Respondent 3. आयकरआयु\u0010/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय ितिनिध/DR 5. गाड\u0019फाईल/GF Printed from counselvise.com "