ITO Vs Palanikumar Velusamy Krishnakumar (ITAT Chennai)
Bank Deposits Treated as Business Receipts – ITAT Upholds Deletion of ₹1.71 Cr Addition U/s 69A
The AO received information that the assessee had bank credits of ₹1.71 crore, including cash deposits of ₹75.29 lakh during the demonetisation period, and since the assessee had allegedly not filed a return or explained the deposits, the AO completed ex-parte assessment u/s 144 and treated the entire amount as unexplained money u/s 69A.
Before the CIT(A), the assessee submitted that:
- He was a battery dealer and authorised distributor of Amararaja Batteries.
- He had filed the return of income on 25.09.2019 in response to notice u/s 142(1).
- The bank deposits represented business receipts, supported by financial statements, VAT returns, books of account and tax audit report.
- The assessee had declared turnover of ₹2.81 crore, which was higher than the total bank credits of ₹1.71 crore.
The CIT(A) accepted the explanation and deleted the addition holding that the bank credits represented business receipts already reflected in turnover.
On appeal by the Revenue, the ITAT held that:
- The documents relied upon by the CIT(A) were already part of the return and not fresh evidence, hence no violation of Rule 46A occurred.
- Since the declared turnover exceeded the bank credits, the deposits were reasonably explained as business receipts.
- The assessee had discharged the burden of proving the nature and source of deposits.
Accordingly, the Tribunal confirmed the deletion of addition of ₹1.71 crore made u/s 69A.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 18.06.2025 for the Assessment Year (hereinafter referred to as “AY”) 2017-18.
