ITO Vs Jaisingh Shankar (ITAT Chennai)
Chennai ITAT: Section 69A Cannot Be Invoked for Cash Withdrawals from Own Bank Account
The Chennai ITAT dismissed the Revenue’s appeal and upheld the First Appellate Authority’s order deleting the addition of ₹3,44,35,116 made under Section 69A of the Income-tax Act. The reassessment was initiated after credits were noticed in the assessee’s bank account, and the Assessing Officer treated cash withdrawals of ₹3,44,35,116 as unexplained money under Section 69A read with Section 115BBE, as the assessee could not furnish complete particulars of the beneficiaries. The assessee explained that he acted as an authorised sub-agent of Transcorp International Ltd. and Muthoot Forex Ltd., receiving funds for onward disbursement to customers and earning only commission income. The First Appellate Authority, after examining bank statements, day book, ledger accounts and Form 26AS, found that the assessee functioned as an intermediary and was not the beneficial owner of the funds. The Tribunal noted that the Revenue had not produced material to rebut these findings and further held that Section 69A contemplates unexplained money owned by the assessee and, in the context of bank transactions, may apply to unexplained cash deposits or credits and not to cash withdrawals from the assessee’s own bank account. The assessee’s cross-objection challenging reopening was dismissed as not pressed.
The Chennai ITAT dismissed the Revenue’s appeal and upheld the deletion of an addition of ₹3.44 crore made u/s 69A in the hands of an individual who acted as a commission agent/sub-agent for foreign exchange companies. The Assessing Officer had treated cash withdrawals from the assessee’s bank account as unexplained money on the ground that the assessee failed to furnish complete details of the ultimate beneficiaries to whom the amounts were disbursed.
The Tribunal noted that the assessee had produced bank statements, day book, ledger accounts and Form 26AS, which established that he was functioning as an authorised sub-agent of Transcorp International Ltd. and Muthoot Forex Ltd. The evidence showed a consistent pattern of receipt of funds from these entities, followed by cash withdrawals for disbursement to beneficiaries after KYC verification. Further, Form 26AS reflected commission income subjected to TDS u/s 194H, corroborating that the assessee earned only commission and was merely an intermediary, not the beneficial owner of the funds routed through his bank account.
The Tribunal further held that the Revenue had failed to produce any material to dislodge the factual findings recorded by the CIT(A). It also observed that, even otherwise, the very invocation of section 69A was legally untenable, as the provision applies to unexplained money, bullion, jewellery or other valuable articles owned by the assessee. In the context of bank transactions, it may at best apply to unexplained cash deposits or credits, and not to cash withdrawals from the assessee’s own bank account. Accordingly, the deletion of the addition of ₹3.44 crore was upheld and the Revenue’s appeal was dismissed. The assessee’s cross-objection challenging the reopening was dismissed as not pressed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the Revenue and the cross objection filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 26.08.2025, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
