P. Tamilmani Vs ITO (ITAT Chennai)
The case concerns P. Tamilmani, a Hindu Undivided Family (HUF) entity dealing in egg sales and a partner in R.V. Poultry Farm. The dispute arose over cash deposits totaling ₹45.62 lakhs made during the demonetization period, for which the Assessing Officer (AO) questioned the source. Tamilmani claimed the deposits were sourced from a declared cash balance of ₹57.89 lakhs as of November 8, 2016, supported by maintained books of accounts. However, the AO partially accepted the claim, adding ₹19.82 lakhs under Section 69A for unexplained deposits, citing delays in depositing the cash. Additionally, ₹10 lakhs deposited into R.V. Poultry Farm’s account was also added to Tamilmani’s taxable income. Both additions were upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].
On appeal, the Income Tax Appellate Tribunal (ITAT) Chennai overturned the additions, observing that Tamilmani’s books of accounts were properly maintained, and no defects were identified. The tribunal deemed the AO’s reliance on the “human probability test” and partial acceptance of the claim as unjustified, given the corroborating evidence. Furthermore, the ₹10 lakhs deposit into the bank account of R.V. Poultry Farm could not be taxed in Tamilmani’s hands. Consequently, the tribunal allowed the appeal, deleting both additions, emphasizing the importance of evidence over suspicion in assessment proceedings.
