VENKATARAMAN GIRIDHARAN,KANCHEEPURAM V. ITO, WARD-2, KANCHEEPURAM

SA 111/CHNY/2025

AI Insights

The case involves Venkataraman Giridharan, who operates a rice mill and was assessed for the Assessment Year 2017-18. The ITO noticed substantial cash deposits in Giridharan's bank account during the demonetization period and treated them as unexplained, leading to an addition of Rs. 20,00,000 to his income. Giridharan appealed this decision, arguing that the deposits were from legitimate business sales. The Tribunal, after reviewing the evidence including sales invoices and cash book extracts, concluded that the deposits were from recorded sales and not unexplained, thus allowing the appeal and deleting the addition.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833537 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 02-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 19-11-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURUPRASAD; C.I.T
• Assessee Lawyers: SONALI; S.P.CHIDAMBARAM; ADVOCATES
• Keywords: Business income; Income from undisclosed sources; Application of stay

Judgement Text

" आयकर अपील य अ धकरण, ‘ए’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI \u0015ी मनु क ुमार ग\u0019र, \u000eया\u001aयक सद य एवं \u0015ी एस. आर. रघुनाथा, लेखा सद य क े सम# BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:3199/Chny/2025 & S.A.No.111/Chny/2025 [Arising in ITA No.: 3199/Chny/2025] \u001aनधा$रण वष$ / Assessment Year: 2017-18 Venkataraman Giridharan, No.4, Vedhachalam Nagar, Nethaji Street, Kanchipuram – 631 501. vs. ITO, Ward -2, Kanchipuram. [PAN:AFDPG-7822-C] (अपीलाथ&/Appellant) ('(यथ&/Respondent) अपीलाथ& क) ओर से/Appellant by : Ms. Sonali, & Shri. S.P. Chidambaram, Advocates '(यथ& क) ओर से/Respondent by : Shri. Guru Prasad, Addl. C.I.T. सुनवाई क) तार ख/Date of Hearing : 12.01.2026 घोषणा क) तार ख/Date of Pronouncement : 02.02.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal along with the stay application has been preferred by the assessee against the order dated 23.09.2025 passed by the Learned Additional/Joint Commissioner of Income Tax (Appeals)-2, Vadodara [hereinafter referred to as “the Ld.JCIT(A)”], arising out of the assessment order dated 05.12.2019 passed u/s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] by the Income Tax Officer, Ward-3, Kancheepuram Printed from counselvise.com :-2-: S.A. No.111/Chny/2025 & ITA. No:3199/Chny/2025 [hereinafter referred to as “the AO”], pertaining to the Assessment Year 2017- 18. 2. The assessee has raised the following grounds of appeal: - 1. The impugned order is contrary to law, facts and circumstances of the case. 2. The CIT(A) erred in impliedly confirming the addition of Rs.20,00,000/- on cash deposits in the hands of the Appellant under section 69A r.w.s 115BBE of the Act. 3. The CIT(A) ought to have considered that the cash deposit of Rs.20,00,000/- is out of the business i.e. cash sales and as such same cannot be treated as unexplained money. 4. The CIT(A) ought to have appreciated that the Appellant has filed required evidentiary documents such as sales bills, confirmation from Purchasers and audited books of accounts. 5. Without further prejudice, the Appellant prays that directions be given to grant all such relief arising from the grounds of appeal mentioned supra as also all consequential relief thereto. 6. The Appellant craves leave to add, alter, amend, substitute, rescind, modify and/or withdraw in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. 3. The brief facts of the case, as borne out from the records, are that the assessee is an individual carrying on business of running a rice mill and wholesale purchase and sale of paddy and rice in the proprietary concern under the trade name M/s.Sri Sathyanarayana Modern Rice Mill. For the A.Y.2017-18, the assessee filed his return of income on 23.07.2017 declaring a total income of Rs.6,45,010/-. 4. The case was selected for scrutiny under CASS for examination of bank accounts and cash deposits. Accordingly, notice u/s.143(2) of the Act was issued on 09.08.2018, followed by a notice u/s.142(1) of the Act on 14.05.2019. During the course of assessment proceedings, the AO noticed substantial cash deposits in the assessee’s bank account during the demonetization period. The AO therefore issued a show cause notice dated 28.11.2019, proposing to treat cash deposits aggregating to Rs. 20,00,000/- as unexplained. The AO recorded Printed from counselvise.com :-3-: S.A. No.111/Chny/2025 & ITA. No:3199/Chny/2025 that no response was received from the assessee to the said show cause notice and, accordingly, held that the assessee failed to satisfactorily explain the nature and source of the cash deposits. Consequently, the AO treated the cash deposits of Rs.20,00,000/- made during the demonetization period as unexplained and made addition thereof, bringing the same to tax in terms of section 115BBE of the Act. Thus, the assessment was completed u/s.143(3) of the Act vide order dated 05.12.2019. 5. Aggrieved by the assessment order, assessee carried the matter in appeal before the Ld.JCIT(A), who vide the impugned appellate order dated 23.09.2025 dismissed the appeal of the assessee confirming the addition of Rs.20,00,000/- made by the AO towards unexplained cash deposits in the bank account. 6. Aggrieved of the order passed by the Ld.JCIT(A) in confirming the addition made by the AO, the assessee is in appeal before this Tribunal. 7. The Ld.AR appearing on behalf of the assessee submitted that the sole issue arising in the present appeal pertains to the confirmation of addition of Rs.20,00,000/- made by the AO by treating the cash deposits made in the assessee’s bank account during the demonetization period as unexplained. It was submitted that the assessee is engaged in the business of wholesale trading in paddy and rice and is maintaining regular books of account, which are duly audited u/s.44AB of the Act. 8. The Ld.AR further contended that during the period from 31.10.2016 to 08.11.2016, the assessee effected sales aggregating to Rs.27,30,830/-, and the said business receipts resulted in a closing cash balance as on 08.11.2016, which was subsequently deposited into the bank account during the demonetization period. It was argued that the corresponding sales have been duly recorded and disclosed in the Profit & Loss Account and the same have also been accepted by the AO. The Ld. AR submitted that once the sales have Printed from counselvise.com :-4-: S.A. No.111/Chny/2025 & ITA. No:3199/Chny/2025 been accepted and the books of account have not been rejected, the cash deposits representing such recorded sales receipts cannot be treated as unexplained money. Accordingly, the Ld. AR prayed that the addition made by the AO and sustained by the Ld. JCIT(A) be deleted. 9. Per contra, the Ld.DR, appearing on behalf of the Revenue, submitted that the assessee has failed to satisfactorily explain the genuineness and source of the cash deposits made during the demonetization period. The Ld.DR, placing reliance on the assessment order as well as the order of the learned first appellate authority, contended that the AO has rightly made the impugned addition, which has been duly confirmed by the Ld.JCIT(A). It was thus submitted that no interference is warranted in the findings of the lower authorities. Accordingly, the Ld.DR prayed for dismissal of the appeal filed by the assessee. 10. We have carefully considered the rival submissions advanced by the parties and perused the material available on record, including the paper book filed by the assessee as well as the judicial precedents relied upon. 11. At the outset, it is an admitted position that the assessee is engaged in the business of wholesale rice trade. It is further noted that during the course of remand proceedings, the AO caused a field enquiry/inspection, pursuant to which it was found that the assessee is operating a Rice Mill. The said enquiry revealed that the assessee purchases paddy and rice from agriculturists, undertakes processing and packing thereof into bags, and thereafter effects sales to wholesalers and retailers. Thus, the nature and conduct of business carried on by the assessee stands duly verified and is not under dispute. 12. From a perusal of the cash book, it is evident that the assessee was maintaining a cash balance of Rs.65,95,388/- as on 08.11.2016, i.e., immediately prior to the demonetization period. The assessee has explained that the aforesaid cash balance represented accumulation out of regular sales Printed from counselvise.com :-5-: S.A. No.111/Chny/2025 & ITA. No:3199/Chny/2025 made to various customers prior to demonetization. In support of such explanation, the assessee furnished sales invoices, cash book extracts and other primary evidences. It is also undisputed that the said sales have been duly recorded in the regular books of account, reflected in the turnover declared by the assessee, and offered to tax in the return of income filed for the relevant assessment year. 13. Significantly, the AO has neither rejected the books of account maintained by the assessee nor has he disputed the sales reflected therein by making any corresponding reduction from the declared turnover. In such circumstances, once the cash balance as per books has been accepted, the subsequent cash deposits made during the demonetization period, being out of such recorded cash balance, cannot be treated as unexplained. Any addition merely on the basis of cash deposits, without disturbing the underlying sales/turnover already accepted, would amount to taxing the same receipts twice, which is impermissible and unsustainable in law. 14. We further find that the assessee has discharged the onus cast upon it by furnishing relevant documentary evidences such as sales invoices, cash book, confirmations from buyers, and audited financial statements, thereby establishing the genuineness of the cash deposits made during the demonetization period. In the absence of any cogent material brought on record by the Revenue to controvert the documentary evidences or to establish that the cash deposits represented income from undisclosed sources, no addition can be sustained merely on surmises and conjectures. 15. In view of the aforesaid facts and circumstances, we are of the considered opinion that no case is made out for sustaining the impugned addition. Accordingly, the addition of Rs.20,00,000/- made by the AO and confirmed by the Ld.JCIT(A) towards alleged unexplained cash deposits is Printed from counselvise.com :-6-: S.A. No.111/Chny/2025 & ITA. No:3199/Chny/2025 hereby deleted. Consequently, the grounds of appeal raised by the assessee are allowed. 16. Since we have already allowed the main appeal, the stay application filed by the assessee has become infructuous and is dismissed accordingly. 17. In the result, the appeal of the assessee is allowed and the stay application is dismissed as infructuous. Order pronounced in the open court on 02nd February, 2026 at Chennai. Sd/- Sd/- (मनु क ुमार ग\u0019र) (MANU KUMAR GIRI) \u000eया\u001aयक सद य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद य/Accountant Member चे\u000eनई/Chennai, .दनांक/Dated, the 02nd February, 2026 SP आदेश क) '\u001aत0ल1प अ2े1षत/Copy to: 1. अपीलाथ&/Appellant 2. '(यथ&/Respondent 3.आयकर आयु3त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 1वभागीय '\u001aत\u001aन ध/DR 5. गाड$ फाईल/GF Printed from counselvise.com "