ATCHYUTA RAMAIAH TALLURI,HYDERABAD V. ITO., WARD-11(4), HYDERABAD

ITA 271/HYD/2025

AI Insights

The case involves Atchyuta Ramaiah Talluri, who appealed against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, which upheld the A.O.'s addition of Rs. 30,00,000 to the assessee's income under section 69A of the Income Tax Act, 1961, for the Assessment Year 2017-18. The addition was based on unexplained cash deposits in the assessee's bank account during the demonetization period. The assessee contended that these deposits were refunds from cash withdrawals made for a failed land purchase. The Tribunal found merit in the assessee's arguments and the additional evidence provided, leading to the decision to remand the case back to the A.O. for further investigation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706912 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2017-2018
• Appeal Filed On: 19-02-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3)

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ SM-A ‘ Bench, Hyderabad श्री रवीश सूद, माननीय न्याययक सदस्य एवं श्री मिुसूदन सावडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON'BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.271/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2017-18) Atchyuta Ramaiah Talluri, Kukatpally, Hyderabad. PAN : AEJPT4992B. Vs. The Income Tax Officer, Ward 11(4), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Ms. K. Prabhabati, Advocate. राजस्व का प्रतततितित्व/ Department Represented by : Shri Waseem UR Rehman, Sr.A.R. सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 02.07.2025 घोर्णध की तधरीख/Date of Pronouncement : 07.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 19.12.2024, 2 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) u/s 143(3) of the Income Tax Act, 1961 (for short “the Act”) dated 21.12.2019 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. On the facts and in the circumstances of the case, the order passed by the learned Commissioner (Appeals)/NFAC is erroneous and unsustainable on facts and in law apart from being passed in violation of principles of natural justice. 2. On the facts and in the circumstances of the case, the learned CIT(A)/NFAC erred in dismissing the appeal of the Appellant without considering the adjournment request of the Appellant though the same has been acknowledged in para 1.3 of the impugned order. 3. On the facts and in the circumstances of the case, the learned CIT(A)/NFAC erred in making addition of Rs. 30,00,000/-u/s. 69A of the Income Tax Act, 1961 without considering the fact that the said amount was withdrawn from the bank for paying advances for purchase of an agricultural land and had been re-deposited into the same account as the said transaction did not materialize. 4. On the facts and in the circumstances of the case, the learned CIT(A)/NFAC erred in not granting relief, to the Appellant when the reason for cash deposit has been substantiated by cogent and credible evidence. In view of the same, addition of Rs. 30,00,000/- without considering the said evidence is arbitrary and unsustainable. 5. On the facts and in the circumstances of the case, the learned CIT(A)/NFAC erred in not granting an opportunity to the Appellant to substantiate its case with the evidence relied upon by him and proceeded to pass an ex parte order. 6. On the facts and in the circumstances of the case, the learned. Commissioner (Appeals)/NFAC failed to issue any notice or intimation rejecting the plea of adjournment sought by the Appellant and proceeded to dismiss the appeal. 7. For these and other grounds that may be urged, it is prayed that the appeal may be allowed.” 3 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri 2. Succinctly stated, the assessee filed his return of income for A.Y. 2017-18 on 29.03.2018, disclosing an income of Rs. 9,59,940/-. Subsequently, the case of the assessee was selected for limited scrutiny under CASS to verify, viz. (i). High value receipts of cash shown from third parties in the response data; and (ii). Large value cash deposits during the demonetization period as compared to the returned income. 3. During the course of assessment proceedings, the A.O. queried the assessee about the source of the cash deposits of Rs. 30 lacs made in his bank account no.40690011002021 with Bank of Baroda, Branch: Tenali, Andhra Pradesh on 24.11.2016. In reply, the assessee submitted that the subject cash deposits were sourced out of the amounts deposited with his consent by his eleven cousin brothers, who were agriculturists and were not holding any bank accounts. The A.O. to verify the veracity of the aforesaid explanation of the assessee, directed him to furnish the confirmations of the aforementioned persons who were stated to have deposited their money in his bank account. However, as the assessee failed to comply with the said direction, therefore, the A.O. held the entire amount of cash deposit of Rs.30 lacs made in 4 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri the assessee’s bank account no.40690011002021 with Bank of Baroda, Branch: Tenali, as having been sourced out of his unexplained money u/s 69A of the Act. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 5. It was the claim of the assessee before the CIT(A) that the subject cash deposits of Rs.30 lacs (supra) were sourced out of the cash withdrawals of Rs. 45 lacs that was made by him from the very same bank account in the immediately preceding year i.e., F.Y. 2015-16. Elaborating on his contention, the assessee had claimed that the cash withdrawal in the preceding year was made to purchase a piece of agricultural land, but as the deal did not materialize, therefore, an amount of Rs. 30 lacs (supra) was re- deposited in his bank account. 6. Although the CIT(A) observed that there was some force in the submissions of the assessee, but was of the view that as he had failed to substantiate it based on detailed submissions, therefore, the same did not merit acceptance. Accordingly, the CIT(A) upheld the addition made by the A.O. and dismissed the 5 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri appeal. For the sake of clarity, the observations of the CIT(A) are culled out as under : “4.2 Findings & Decision wrt Ground No 1 to 3: These grounds are directed against the addition of Rs 30 Lakhs made on account of cash deposits in the Bank of Baroda, Tenall branch account of the assessee, u/s 69A by the AO. The deposits happened during de-monetization period. There was no compliance from the assessee during assessment proceedings. There is no compliance from the assessee even during appellate proceedings either. From the SOF, the brief facts that can be culled are that the assessee had withdrawn cash of Rs 45 Lakhs from his same bank account in FY 15-16. It is claimed that he deposited Rs 30 Lakhs out of the same withdrawal, in the same bank account. He says that the purpose of withdrawal was to buy a piece of agricultural land. However, the deal did not go through. Hence, he deposited Rs 30 Lakhs back in to the account. I have considered the entire facts as emerging from the SOF. There is some force in the submissions. Still, the story does not get complete, as the source of huge bank deposits now remains unexplained. Had the assessee made detailed submissions and explained all the facts, as the entire fulcrum of facts belong to him only, making him the best person to explain the entire matter. it is not clear whether he is an agriculturist and whether the earlier funds lying inn bank account were agricultural income ! it is not clear whether he is a non-agriculturist, interested in doing farming and whether, therefore, the bank funds were from any business heads, etc 1 Needless to add, more light on the entire sequence of events would have helped. That, however, not being the case here, one is constrained to confirm the stand of the AO. The grounds are dismissed.” 7. The assessee, being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 8. We have heard the learned Authorized Representatives of both parties, perused the orders of lower authorities, and the material available on record. 6 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri 9. Ms. K. Prabhavati, Advocate, the learned Authorized Representative (for short “Ld.AR”) of the assessee, at the threshold of hearing of the appeal, submitted an application under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, seeking liberty for admission of certain additional documentary evidence has been filed before the Tribunal. The ld.AR had drawn our attention to the application, dated 01.05.2025, wherein the assessee had sought liberty for admission of certain additional documentary evidence. Elaborating on her contention, the ld.AR submitted that as the Show Cause Notice, dated 16.12.2016, was issued by the A.O. calling upon the assessee to furnish the requisite details was dropped in the spam folder of the assessee’s e-mail account, therefore, he had remained unaware about the same and failed to furnish the requisite details. Also, it was submitted by her that the CIT(A), despite being convinced by the explanation of the assessee regarding the source of the subject cash deposits, had confirmed the addition made by the A.O. u/s 69A of the Act. 10. The ld. AR submitted that as the aforementioned additional documents have a strong bearing on the issue in hand, and the assessee for justifiable reasons could not file the said documents 7 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri in the course of the proceedings before the authorities below, therefore, the same, in all fairness be admitted. 11. Per contra, Shri Waseem UR Rehman, the learned senior Departmental Representative (for short “Ld. DR”) objected to the admission of additional documents filed by the assessee. It was submitted by him that as the assessee had failed to furnish the said documents before the authorities below, therefore, there was no justification for him to seek admission of the same in the course of the proceedings before the Tribunal. 12. We have thoughtfully considered the contentions advanced by the learned Authorized Representatives of both parties qua the additional documents/evidence for the admission of which the assessee has sought our liberty. 13. We are of the considered view that as the aforesaid additional documentary evidence will have a strong bearing on the adjudication of the core issue involved in the present appeal, therefore, the same merits admission. 14. Apropos the merits of the case, the ld.AR submitted that the assessee had in the immediately preceding year, i.e. F.Y. 2015-16 8 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri made cash withdrawals of Rs. 45 lacs from his bank account no.40690011002021 with Bank of Baroda, Branch: Tenali, which was paid by him as an advance to his relatives, viz. (i). Smt. Gorijala Lakshmi Surekha; (ii). Smt. Jammula Kamala; and (iii). Sri Gorijala Sujan Kumar for the purchase of an agricultural land admeasuring 2.64 acres situated at Village: Tullurur, Tulluru Mandal, District: Guntur for a consideration of Rs.54 lac. The ld. A.R has submitted that the aforesaid amount of advance of Rs. 45 lac was paid by the assessee to the aforementioned persons in three tranches, viz. (i) on 26.02.2015: Rs. 29 lac; (ii) on 24.09.2015: Rs. 8 lac; and (iii). on 10.03.2016: Rs. 8 lac. The ld. AR submitted that due to certain legal disputes, the aforementioned sale transaction did not fructify and was cancelled vide a “Memorandum of Understanding” (for short “MoU”), dated 23.11.2016. It was further submitted by him that out of the aforesaid advance of Rs. 45 lacs (supra) the aforementioned parties had refunded an amount of Rs. 30 lacs on 23.11.2016, and had agreed to refund the balance amount of Rs.15 lac within a period of one month. Elaborating further on her contention, the ld. AR submitted that it was the amount of the refund that was 9 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri received by the assessee from the aforementioned parties that had sourced the subject cash deposits in his bank account during the year under consideration. Thus, it was the ld. AR’s claim that as the source of the cash deposits in the bank account of the assessee was duly explained, therefore, no part of the same could have been held as having been sourced out of the assessee’s unexplained money u/s 69A of the Act. 15. Per contra, the ld. DR relied upon the orders of the lower authorities. 16. We have thoughtfully considered the contentions advanced by the authorized representatives of both parties qua the issue in hand, i.e. the sustainability of the addition of Rs.30 lac (supra) made by the A.O. by treating the same as having been sourced out of the assessee’s unexplained money u/s 69A of the Act. 17. We have given our thoughtful consideration, and have perused the “agreement to sell”, dated 26.02.2015 along with the MOU, dated 23.11.2016 and the assessee’s bank account no.40690011002021 with Bank of Baroda, Branch: Tenali, which reveal the respective cash withdrawals made by the assessee in 10 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri the immediately preceding year. We are, prima facie, of the view that the assessee’s explanation that the subject cash deposits in his bank account were sourced out of the refund of the advance that he had received from the aforementioned parties, viz. (i). Smt. Gorijala Lakshmi Surekha; (ii). Smt. Jammula Kamala; and (iii). Sri Gorijala Sujan Kumar ought to have been verified and not summarily discarded. Rather, we find that the CIT(A) had also while dismissing the appeal fairly observed that there was some substance in the submissions of the assessee. 18. Be that as it may, we though are not expressing any view on the explanation of the assessee regarding the source of cash deposits of Rs.30 lacs (supra), but are of the firm conviction that in the totality of the facts involved in the case and also the additional documentary evidence that have been filed before us, which, inter alia, includes, viz. (i). “agreement to sell”, dated 26.02.2015; (ii) Memorandum of Understanding for cancellation of sale agreement, dt.23.11.2016 and (iii). Copy of bank account for the period from 05.12.2014 to 07.10.2016, the matter, in all fairness, requires to be restored to the file of A.O. for re- adjudication. The A.O. is directed to verify the aforesaid claim of 11 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri the assessee by examining the respective parties to whom the assessee had claimed to have advanced the amounts for the purchase of agricultural land. Needless to say, the A.O. shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee, who shall remain at liberty to substantiate his contentions based on fresh documentary evidence, if any. 19. Resultantly, the appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 7th July, 2025. Sd/- (श्री मिुसूदन सावडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 07.07.2025. TYNM/sps 12 ITA No.271/Hyd/2025 Atchyuta Ramaiah Talluri आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Atchyuta Ramaiah Talluri, 2-232, Sardar Patel Nagar, Kukatpally – 500055, Hyderabad. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward 11(4), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad "