KARUPPIAH J,ARIYALUR V. ACIT, CC-2(3), CHENNAI

ITA 2244/CHNY/2024

AI Insights

The case involves an appeal by J. Karuppiah against the order of the Commissioner of Income Tax (Appeals), Chennai, which sustained an addition of Rs. 22,52,000 to his income for the assessment year 2018-19. This amount was found in a bank locker during a search operation linked to another individual, S. Senthil, and was claimed to be unaccounted income. The Tribunal examined the sources of the cash, including professional receipts, agricultural income, and gifts, and found sufficient evidence to accept some of the explanations provided by the assessee, leading to a partial allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772016 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUMAR CHANDAN; J. C.I.T
• Assessee Lawyers: K.B. MURALIDHARAN
• Keywords: Income from undisclosed sources; Gift; Search and seizure
• Section: 132

Judgement Text

" .आयकर अपीलीय अधिकरण, ‘ए’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI श्री जॉजज जॉजज क े, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य क े समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:2244/Chny/2024 धनिाजरण वर्ज / Assessment Year: 2018-19 Karuppiah J, No. 2/76, Mariyamman Koil Street, Parathur, Kilakavattankurichi, Ariyalur – 621 715. Tamil Nadu. vs. ACIT, Central Circle -2(3), Chennai. [PAN:EOSPK-6816-L] (अपीलाथी/Appellant) (प्रत्यथी/Respondent) अपीलाथी की ओर से/Appellant by : Shri. K.B. Muralidharan, C A प्रत्यथी की ओर से/Respondent by : Shri. Kumar Chandan, J.C.I.T. सुनवाई की तारीख/Date of Hearing : 19.06.2025 घोर्णा की तारीख/Date of Pronouncement : 25.08.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal by the assessee is filed against the order of the Commissioner of Income Tax, Appeal, CIT(A), Chennai - 19, for the assessment year 2018-19, vide order dated 27.06.2025. 2. The assessee has raised the following grounds of appeal: 1. The order passed by the Hon'ble Commissioner, is arbitrary, incorrect and also against the facts and circumstances of the appellant's case. 2. The Hon'ble CIT had failed to appreciate and accept the explanations given by the appellant. Printed from counselvise.com :-2-: ITA. No:2244/Chny/2024 3. The Hon'ble CIT has failed to consider reply furnished by the appellant dated 25.11.2019 explaining the sources of cash found in the bank locker of the appellant. 4. The Hon'ble CIT has also failed to take into consideration the fact that the appellant's late wife was undergoing treatment for cancer and hence he was mandated to keep sufficient cash in hand as the hospitals demand cash payments many a time on admission. 5. The appellant's professional receipts are received in cash too and the same has been disclosed in the returns. However, the same has been erroneously added to the appellant's income which amounts to double counting and is bad in law. 6. The Hon'ble CIT has erred by stating that the appellant has not admitted any agricultural income in the return of income as the same has been clearly disclosed in the return. 7. With respect to the gifts received by the appellant, the nature, source and reason for the receipt of such amounts have been clearly specified by the appellant along with the relevant documentary evidences. The Hon'ble CIT had failed to consider the same while passing the order. 8. The Hon'ble CIT has also failed to take note of the fact the appellant's wife was working with reputed institutions like Adayar Cancer Institute before starting her own consultancy and had declared average taxable income of Rs.3.5 lakhs and monies were drawn from her savings account to meet the medical expenses. 9. The Hon'ble CIT has erred in stating that appellant had admitted Rs.10,00,000 as unaccounted income at the time of search itself. 10. The Hon'ble CIT has failed to appreciate the legal provisions of Section 44ADA. 11. The Hon'ble CIT had failed to appreciate and accept the explanations given by the appellant. 12. The appellant prays to delete the addition of Rs. 22,52,000/- made by the A.O and sustained by the Hon'ble CIT and consider the income returned u/s 139(1) of the Act. 13. The appellant craves leave to add, amend any/all grounds of appeal before or during the course of hearing of the appeal. 14. The appellant, therefore, request that the relief claimed in the appeal be allowed for various reasons cited above and such other grounds as may be adduced at the time of hearing. 3. The brief facts of the case are that the assessee is an individual, filed his return of income admitting a income of Rs.10,64,660/- for the assessment year 2018-19 on 30.08.2018. A search and seizure action under section 132 Printed from counselvise.com :-3-: ITA. No:2244/Chny/2024 of the Act was carried out in the case of Shri. S.Senthil, Advocate along with his associates and related entities. The search was conducted in connection with the case of Smt.V.K.Sasikala. In connection with the search of Shri. S.Senthil, the residential premises of J.Karuippiah, assessee, was also searched u/s.132 of the Act on 09.11.2019 at Flat no 12, Alwarpet, Chennai. 4. The case was taken up for assessment u/s 143 of the Act and statutory notices were issued. During the course of search proceedings on 09.11.2017 at Flat no 12, Alwarpet, Chennai, a bank locker pertaining to Shri Karuppiah’s wife, Mrs.Prabha in Axis bank as identified. A consequential search was conducted on 19.12.2017 at locker no 24 at Axis Bank. During the search proceedings, cash of Rs.22,52,000/- was found in the bank locker. During the course of sworn statements recorded on 19.10.2017, Shri Karuppiah have admitted Rs.10,00,000/- as his unaccounted income and further stated that the balance of amount i.e., Rs.6,50,000/- was earned from agriculture, cash of Rs.3,00,000/- was received from his sister J.Rubavathi as gift and Rs.3,50,000/- from his father in law Mr.Jayaram as gift. Considering his wife’s ill health and examining other factors Rs.10,00,000/- was seized. 5. The assessee, in response to the letter dated 25.11.2019, produced the breakup for Rs.22.50 Lakhs as under: 01. Unaccounted professional receipts Rs.5,50,000 02. Cash gifts received during the naming ceremony Rs.2,00,000 03. Wife accumulated savings Rs.2,00,000 04. Agricultural Income Rs.6,50,000 05. Gift received from Sister Rs.3,00,000 06. Gift Received from Father in Law Rs.3,50,000 ------------------ Total Rs.22,50,000 6. During the search proceeding on 10.11.2017, bank credits in the account maintained by the assessee in Canara bank, Mylapore, Chennai & Indian Bank, Chennai amounting to Rs.9,35,315/- could not be explained with regard to source. Printed from counselvise.com :-4-: ITA. No:2244/Chny/2024 7. The AO completed the assessment u/s.143(3) of the Act by making an addition of Rs.31,87,315/- to the total income of the assessee. 8. The ld.CIT(A) after perusal of the submissions made by the assessee was convinced about the source of Rs.9,35,315/- and deleted the additions and confirmed the additions amounting to Rs.22,50,000/- by passing an order dated 27.06.2024. Aggrieved by the order of the ld.CIT(A), Chennai-19, the assessee is before us. 9. The ld.AR for the assessee submitted that the assessee had a proper and complete explanation for the source of the cash found in the locker. The ld.AR submitted the paper book of 156 pages consisting of details of Gifts received from his father-in-law, ITR of K.Prabha (wife), details of land held in the names of parents, VAO certificate for proof of agriculture income, Sale of paddy, Sister – Rubavathi’s bank statement, client wise cash collected towards professional fees for the impugned assessment year 2018-19. In view of the above arguments and facts the ld.AR for the assessee prayed for deletion of the additions amounting to Rs.22,50,000/-. 10. Per contra, the Ld.DR strongly relied on the order of lower authorities and prayed for confirming the order of the ld.CIT(A). 11. We have heard the rival submissions and perused the material available on record. A search and seizure action u/s.132 of the Act was carried out in the case of Shri. S.Senthil, Advocate along with his associates and related entities. The search was conducted in connection with the case of Smt.V.K.Sasikala. In connection with the search of Shri.S.Senthil, the residential premises of J.Karuppiah, assessee was also searched u/s.132 of the Act on 09.11.2019 at Flat no 12, Alwerpet, Chennai. During the course of search proceedings on 09.11.2017 at Flat no 12, Alwerpet, Chennai, a bank Printed from counselvise.com :-5-: ITA. No:2244/Chny/2024 locker pertaining to Shri Karuppiah’s wife, Mrs.Prabha in Axis bank was identified. Further, the Mrs.Prabha is assesseed to tax in PAN – BIKPP2114F at ITO, Ward (1), Salem (Paper book page Nos.17 to 20) and having a regular cash withdrawal from her bank account (Paper book page No.21). A consequential search was conducted on 19.12.2017 at locker No.24 at Axis Bank. It is undisputed fact that during the search proceedings, the cash of Rs.22,52,000/- was found in the bank locker. The assessee explained the source of the cash found and seized from the bank locker as under: 01. Unaccounted professional receipts Rs.5,50,000 02. Cash gifts received during the naming ceremony Rs.2,00,000 03. Wife accumulated savings Rs.2,00,000 04. Agricultural Income Rs.6,50,000 05. Gift received from Sister Rs.3,00,000 06. Gift Received from Father in Law Rs.3,50,000 ------------------ Total Rs.22,50,000 12. On perusal of the paper book containing the evidence for the source of cash found as explained by the assessee, the ld.AR claimed that the assessee has been in the profession for the past 2 decades and had kept Rs.5.50 Lakhs out of the professional cash receipts for an emergency medical expenses of his wife’s ill health. It is pertinent to note that the assessee had declared the said amount in his return of income filed for the impugned assessment year u/s.44ADA i.e. 50% of Rs.24,96,135/- gross receipts (Paper book page No.107). Further, we find that the assessee’s professional gross receipts for the A.Y.2018-19 includes cash receipts of Rs.14.42 lakhs. Therefore, in our considered view the source of cash to the extent of Rs.5.50 Lakhs as explained by the assessee from his professional receipts cannot be rejected. Hence, we are inclined to delete the addition sustained by the ld.CIT(A) to the extent of Rs.5.50 Lakhs. 13. Further, we find that the assessee has explained the source of cash found to the extent of Rs.2.00 lakhs belong to his wife, which has been saved Printed from counselvise.com :-6-: ITA. No:2244/Chny/2024 from her pin money. In the present facts of the case and keeping in mind the ill health of the assessee’s wife, we are inclined to accept that she kept Rs.2,00,000/- for her medical emergency requirements. Further, we find that Smt. Prabha is assessed to tax and filed her ROI for the A.Ys 2016-17 to 2019-20 (Page No.17 to 20 of Paper Book) and also shown withdrawal of cash from her Bank account during the impugned Assessment Year (Page No. 21 of Paper Book). Therefore, we are of the view that the savings of assessee’s wife to the extent of Rs.2.00 Lakhs of source of cash stands explained considering the current value of money. 14. The assessee has explained Rs.3, 50,000/- as source for cash found at locker as the financial assistance to meet medical expenses of his wife Smt. Prabha from his father-in-law (Wife’s father). Even, this explanation has to be considered as valid, as the ill health of the assessee’s is not disputed. Further, we note that Mr. Jayaraman (Father-in-law) is having agricultural income based on the land held (Page No. 150-156 of Paper Book). Therefore, we are of the considered view that assessee’s explanation in this regard has to be accepted and hence we are inclined to delete the same as explained source of cash found and seized from the bank locker. 15. On perusal of the return of income, where in the assessee has declared agricultural income of Rs.3.60 Lakhs in his returns for the A.Y. 2018-19 (Page No.107 of the paper book). Therefore, the observation ld.CIT(A) in stating that the assessee has not admitted any agricultural income in para 6.10 in page No.11 is incorrect. Hence, in the peculiar facts and circumstances of the case, we are considering 50% of the agricultural income declared as explained source towards cash found (50% of Rs.3.60 Lakhs) to the tune of Rs.1.80 Lakhs out of the assessee’s claim of Rs.6.50 Lakhs. Therefore, we are inclined to delete Rs. 1.80 lakhs of Agricultural Income as explained source of cash found. Printed from counselvise.com :-7-: ITA. No:2244/Chny/2024 16. However, we are not convinced with the arguments and explanation put forth by the ld.AR in respect of cash gift received from sister to the tune of Rs.3.00 Lakhs and gifts received during the naming ceremony amounting to Rs.2.00 Lakhs. Hence, we are sustaining the addition made by Assessing Officer as well as the Ld.CIT(A). 17. In view of the above reasoning and discussion, we have deleted the addition to the tune of Rs.12.80 Lakhs and the balance amount of Rs.9.70 has been sustained as unexplained cash found. We order accordingly. 18. In the result the appeal of the assessee is partly allowed. Order pronounced in the court on 25th August, 2025 at Chennai. Sd/- Sd/- (जॉजज जॉजज क े) (GEORGE GEORGE K) उपाध्यक्ष /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated, the 25th August, 2025 RL आदेश की प्रदिदिदि अग्रेदिि/Copy to: 1. अिीिाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT 4. दिभागीय प्रदिदनदि/DR 5. गार्ज फाईि/GF Printed from counselvise.com "