DEEPAVALI BALU MAHENDRA,HYDERABAD V. DCIT, CENTRAL CIRCLE-2(4), HYDERABAD, HYDERABAD

ITA 1715/HYD/2025

AI Insights

The case revolves around the seizure of Rs.3,49,93,800 in cash by police authorities from individuals associated with the assessee, Deepavali Balu Mahendra, during a police operation. The cash was later impounded by the Income Tax Department under section 69A of the Income Tax Act, 1961, as unexplained money. The assessee contested the addition of this amount as unexplained money, arguing that it was accumulated from legitimate business activities and was intended for the purchase of land. The Assessing Officer initially rejected the assessee's explanations, leading to an appeal before the CIT(A), which upheld the additions. The Tribunal, however, found the assessee's explanations credible and directed the deletion of the additions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826581 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2023-2024
• Appeal Filed On: 23-10-2025
• Other Referred Cases: ACIT vs Nisha Jain, CIT vs Gagan Auto General Finance & Investment Co. (P.) Ltd., Bal Reddy Kandunuri vs ACIT, Kulbushan Sahani vs ITO, Ramchandra Kanu Mendadkar vs CIT(A), ACIT vs Raj Bajwa, DCIT vs Motion Education Private Limited, Ramesh Verma vs ITO, Sanjay Kumar Jain vs ACIT, CIT vs Vikram Plastics, CIT vs JJ Enterprises, DCIT vs Hanuman Sugar [Khandsari] Mills (P.) Ltd., CIT vs Satish Kumar Mitta and Rakesh Kumar Garg
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRITIKA JAISWAL
• Assessee Lawyers: C. MAHESHWAR REDDY
• Keywords: Set aside; Business income; Income from undisclosed sources
• Section: 143(3)

Judgement Text

" 1 ITA.No.1715/Hyd./2025 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G., ACCOUNTANT MEMBER आ.अपी.सं /ITA No.1715/Hyd/2025 Assessment Year 2023-2024 Deepavali Balu Mahendra, Hyderabad. PIN – 500 096 Telangana. PAN ADSPD2577N vs. The DCIT, Central Circle-2(4), Hyderabad – 500 004. Telangana. (Appellant) (Respondent) िनधाŊįरती Ȫारा /Assessee by: CA, C. Maheshwar Reddy राज̾ व Ȫारा /Revenue by: MS Kritika Jaiswal, Sr. AR सुनवाई की तारीख/Date of hearing: 18.12.2025 घोषणा की तारीख/Pronouncement: 09.01.2026 आदेश/ORDER PER MANJUNATHA G. A.M. : This appeal by the Assessee is directed against the Order dated 24.09.2025 of the learned Commissioner of Income Tax-(Appeals)-12, Hyderabad, for the assessment years 2023-2024. Printed from counselvise.com 2 ITA.No.1715/Hyd./2025 2. The assessee has raised the following grounds in the instant appeal : 1. “The order of the Ld. CIT(A) in upholding the order of the Ld. AO u/s 143(3) of the IT Act is arbitrary & erroneous in law as well as in facts of the case. 2. The order of the Ld. CIT(A), in dismissing the appeal by sustaining the addition of Rs.3,49,93,800/- as unexplained money wis 69A is erroneous in law as well as in the facts of the case. 3. The Ld. CIT(A) ought to have considered the detailed explanations furnished for the sources of the entire cash seized amounting to Rs.3,49,93,800/- and the addition confirmed is not having any base and against the facts of the case. 4. The Ld. CIT(A) has dismissed the appeal without any supporting material and without acknowledging the explanations offered for the sources of funds which is not correct. 5. The Ld. CIT(A) should have considered that the AO has not rejected the audited books of accounts but made the addition without any basis. 6. The Ld. CIT(A) should have appreciated the fact that the cash found forms part of the audited books of accounts which are not rejected by the AO as such, making the addition of cash which is forming part of audited books of accounts u/s 69A of the IT Act as unexplained is invalid. 7. The Ld. CIT(A) should not have dismissed without appreciating the fact that that the cash is related to the business which is duly Printed from counselvise.com 3 ITA.No.1715/Hyd./2025 accounted in the audited books of accounts which are not rejected or found to be incorrect by the AO. 8. The Ld. CIT(A) has erred in treating a mere mismatch in the cash book as an accommodation entry, without properly appreciating the facts and circumstances of the case, which is bad in law. 9. The Ld. CIT(A) should have considered that the AO has erred in arbitrarily computing the income without any supporting material on record, the computation is devoid of any factual or legal basis and is liable to be deleted. 10. The AO has made the addition u's 69A as unexplained money without any supporting material and there is no scope for treating the cash seized for Rs.3,49,93,800/-as unexplained money. 11. The Ld. CIT(A) has erred in sustaining the addition of Rs.3,49,93,600/- u/s 69A even after providing the detailed explanations regarding the sources of cash found and there is nothing to be treated as unexplained as per the facts and circumstances. 12. The Ld. CIT(A) ought to have considered that mere finding of cash and its subsequent seizure does not by itself mean that it is unexplained, without understanding the facts and submissions made by the Appellant in this regard and as such the addition sustained by the Ld. CIT(A) is not valid. 13. The Ld. CIT(A) has erred in sustaining the addition of cash which was duly recorded in the audited books of accounts and in respect of which the income had already been offered to tax. Printed from counselvise.com 4 ITA.No.1715/Hyd./2025 14. The Appellant craves to add/leave/alter/modify any other ground of appeal at the time of hearing.” 3. Brief facts of the case are that, the assessee is an individual, engaged in the business of running a petrol pump station and construction works. The assessee had filed his original return of income on 28.12.2023 admitting total income of Rs.48,54,630/-. On 11.10.2022 the Police Authorities intercepted the vehicles bearing nos. TS08EY0014 and TS07HX1266 and found cash of Rs.3,49,93,800/- in the possession of (1) Kunde Mahesh (2) M Machender (3) V Bharath (4) A.Anush Reddy (5) Deepavali Sandeep Kumar (6) Ghanta Sai Kumar Reddy. Subsequent to seizure of cash by the police authorities, summons u/sec.131 of the Income Tax Act [in short \"the Act\"], 1961 were issued to them and sworn statements were recorded on oath u/sec.131(1A) of the Act by DDIT-(Inv), Unit-II(4), Hyderabad on 12.10.2022. Sri Ghanta Sai Kumar vide his statement stated that, he was only following instructions of Shri Deepavali Balu Mahendra (Assessee). Further, summons were issued to Shri Deepavali Balu Mahendra-Appellant/ Printed from counselvise.com 5 ITA.No.1715/Hyd./2025 Assessee and his statement u/sec.131(1A) of the Act was recorded initially on 13.10.2022. In response to a specific question, he has stated that the cash was generated from his petrol pump business and accepted that he had instructed his acquaintances Shri Ghanta Sai Kumar Reddy and his other friends to collect the cash from Sri Venkateswara Rao. Later as per the orders of Additional Chief Metropolitan Magistrate (ACMM), the police authorities have deposited the seized cash in Indian Bank, Maredpally, Secunderabad on 11.11.2022. Later, warrant u/sec.132A was executed on 13.03.2023 on the Inspector of Police, Gandhi Nagar Police Station and the Demand Draft of Rs.3,52,97,911/- [Original amount seized of Rs. 3,49,93,800/- plus FD interest of Rs.3,04,111/-] has been requisitioned and the same was deposited into the PD account of Pr. DIT-(Inv.), Hyderabad on 15.03.2023. During the post-search investigation proceedings, the assessee has stated that, he has accumulated the cash for acquisition of land but has not submitted any specific plans regarding purchase of land. Printed from counselvise.com 6 ITA.No.1715/Hyd./2025 3.1. The case of the assessee has been selected for scrutiny under CASS. During the course of assessment proceedings, the Assessing Officer called upon the assessee to furnish the details of cash found by the police authorities and also to explain the source. In response, the assessee had appeared for hearing on 10.02.2023 and furnished reply dated 23.10.2024 along with bank statement and cash book. In his reply, the assessee submitted that reasons for carrying such huge cash was for a proposed land acquisition, for which, he was planning to make the payment in cash. Since he was traveling out of station, he had kept this cash with his friend Sri Venkateswara Rao. The Assessing Officer after considering the relevant submissions of the assessee and also taking note of cash book furnished by the assessee appearing opening cash balance of Rs.3,74,74,670/- as on 10.10.2022 observed that, although, the assessee claimed to have accumulated cash from his petrol pump business for the purpose of purchase of property but could not furnish any evidence. Further, the appellant claims to have accumulated cash balance as on 10.10.2022 out of realization from debtors Printed from counselvise.com 7 ITA.No.1715/Hyd./2025 and also furnished relevant confirmations from the debtors, but the fact remains that the assessee has not established the difference between the business cash and personal cash as this cash was stated to have been kept at the place of the assessee’s friend. Therefore, observed that the arguments of the assessee that, he has generated cash out of his business for the purpose of purchase of property and the same has been kept in his friend’s possession because he was travelling out of station is only an afterthought to explain the cash found and seized by the police authorities. Therefore, rejected the explanation of assessee and made the addition of Rs.3,49,93,800/- towards cash found and seized by the police authorities and later impounded by the department u/sec.69A of the Income Tax Act, 1961 as unexplained money. The Assessing Officer had also made additions of Rs.3,04,111/- towards interest earned on FD kept with the bank. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee has explained the source for Printed from counselvise.com 8 ITA.No.1715/Hyd./2025 cash found and impounded by the police authorities out of his business receipts and also furnished relevant documentary evidence in the form of cash book along with confirmation letters indicating realization of outstanding debtors in the books of accounts for the earlier financial years. The assessee has also furnished relevant books of accounts along with GST return filed for the year and explained that, there is no abnormal increase in sales for the year under consideration when compared to earlier financial years as claimed by the Assessing Officer and further the assessee all along has stated that, he has realized the cash from outstanding debtors which were available in the books of accounts out of sales declared for the earlier financial years. Therefore, he submitted that, the Assessing Officer was erred in making the addition towards cash found and impounded by the police authorities as unexplained money u/sec.69A of the Act. 5. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of the reasons given by the Assessing Officer to make the addition Printed from counselvise.com 9 ITA.No.1715/Hyd./2025 towards cash found and impounded by the police authorities as unexplained money observed that, the appellant's own books do not support the assertion that large cash retention is required for day-to-day operations of the business of the assessee. A close perusal of the cash book shows no significant cash expenditures; most debit entries are cash deposits into bank, which is consistent with the business model of banking daily collections to make electronic/banked payments to IOCL for replenishment. In such a model, maintaining a very large physical cash float is neither customary nor shown to be operationally necessary. This is also consistent with the thin margin structure of petroleum retailing, where profits are modest and working capital cycles are largely bank routed. Against this background, the claim that the appellant accumulated Rs.3,49,93,800/- in physical cash while simultaneously showing negligible cash expenses and routine banking of collections appears implausible on the appellant's own accounting pattern. Further, no IOCL invoices/payment advice or bank withdrawals of comparable magnitude have been furnished to establish why such a large Printed from counselvise.com 10 ITA.No.1715/Hyd./2025 sum was held in cash and parked outside the business premises. It is also noteworthy that, the cash was not found at the petrol pump or from the appellant's cash chest but in transit with third parties, which heightens the need for clear, date-specific linkage between the closing cash-in-hand in books and the cash physically seized. In the absence of such linkage and in view of the timing inconsistency in the cash book entry, the lack of contemporaneous pump-level records, and the operational pattern of daily banking reflected in the books, the explanation offered cannot be regarded as satisfactory for the purposes of section 69A of the Act. Therefore, by taking note of relevant evidence filed by the assessee and by following certain judicial precedents, rejected the explanation of the assessee and upheld the additions made by the Assessing Officer towards cash found and seized by the police authorities and later impounded by the department as unexplained money u/sec.69A of the Act. 6. Aggrieved by the learned CIT(A) order, the assessee is now, in appeal before the Tribunal. Printed from counselvise.com 11 ITA.No.1715/Hyd./2025 7. CA, C. Maheshwar Reddy, learned Counsel for the Assessee submitted that the learned CIT(A) was erred in sustaining the additions made by the Assessing Officer towards cash of Rs.3,49,93,800/- u/sec.69A of the Act only on suspicion and surmises without considering various evidences filed by the assessee including the cash book which clearly shows cash balance as on 10.10.2022 which is sufficient to explain the cash found by the police authorities. Learned Counsel for the Assessee further submitted that, the assessee is running petrol pump which has turnover of more than Rs.115 crores for the year under consideration. The assessee has also maintained huge cash balance in his books of accounts which is evident from the cash book furnished by the assessee. Further, the assessee never claimed that he has accumulated cash out of sales but has realized debtors outstanding in the books of accounts, for which, confirmations from the parties has been produced. The Assessing Officer neither verified the evidence filed by the assessee nor disproved the claim of the assessee regarding source but has made additions only on suspicion ground that Printed from counselvise.com 12 ITA.No.1715/Hyd./2025 appellant has not able to bifurcate the business cash and personal cash. The learned CIT(A) one step gone ahead and decided the issue purely on guess work in light of the trade and its margins even though the books of accounts produced by the assessee clearly shows that, the assessee has not shown any abnormal increase in sales for the year under consideration when compared to earlier years to disbelieve the books of accounts of the assessee. Since, the assessee has not shown any abnormal sales, the question of doubting the purchases and corresponding statements from the IOCL does not arise. The learned Counsel for the Assessee further referring to the assessment order passed by the Assessing Officer for the assessment year 2022-2023 submitted that, the assessee has realized outstanding debtors for the financial year 2021-2022 and the same been subject to verification by the Assessing Officer in the assessment proceedings for the assessment year 2022-2023 where the Assessing Officer has accepted the outstanding debtors shown by the assessee. Since, the assessee is having sufficient sundry debtors in his books of accounts and has Printed from counselvise.com 13 ITA.No.1715/Hyd./2025 realised the same for the year under consideration, the explanation offered by the assessee with regard to cash balance of Rs.3,74,74,670/- is bonafide and reasonable. The Assessing Officer without bringing on record any contrary evidence, simply on the ground of cash seized by the police authorities has disbelieved the explanation of the assessee and made the addition towards cash u/sec.69A of the Act. The learned CIT(A) without appreciating the relevant facts, has simply sustained the addition made by the Assessing Officer. Therefore, he submitted that the order of the learned CIT(A) should be set aside and the addition made by the Assessing Officer should be deleted. In this regard, he relied upon the following judicial precedents. 1. Order of ITAT, Jaipur Tribunal in the case of ACIT vs Nisha Jain [2025] 170 taxmann.com 550 (Jaipur-Trib.); 2. Judgment of Hon’ble Delhi High Court in the case of CIT vs Gagan Auto General Finance & Investment Co. (P.) Ltd. [1998] 99 Taxman 202 (Delhi); Printed from counselvise.com 14 ITA.No.1715/Hyd./2025 3. Order of ITAT, Hyderabad Benches, Hyderabad in the case of Bal Reddy Kandunuri vs ACIT in ITA.No.1203/Hyd./2024; 4. Order of ITAT, Delhi Benches, Delhi in the case of Kulbushan Sahani vs ITO in ITA.No.4066/Del./2024; 5. Order of ITAT, Mumbai Benches, Mumbai in the case of Ramchandra Kanu Mendadkar vs CIT(A) [2023]151 taxmann.com 356 (Mumbai-Trib.); 6. Order of ITAT, Delhi Benches, Delhi in the case of ACIT vs Raj Bajwa ITA.No.4830/Del./2024; 7. Order of ITAT, Jaipur Bench, Jaipur in the case of DCIT vs Motion Education Private Limited in ΙΤΑ.Nos.472 & 455/JP/2025; 8. Order of ITAT, Delhi Benches, Delhi in the case of Ramesh Verma vs ITO in ITA.No.5124/ Del/2024; 9. Order of ITAT, Hyderabad Benches, Hyderabad in the case of Sanjay Kumar Jain vs ACIT in ITA.No.616/ Hyd./2025; Printed from counselvise.com 15 ITA.No.1715/Hyd./2025 10. Judgment of Hon’ble Delhi High Court in the case of Sunil Kumar Agarwal [2015] 64 taxmann.com 107 (Delhi); 11. Order of ITAT, Kolkata Benches, Kolkata in the case of DCIT, Central-1, Siliguri vs. Bajla Motoers Pvt. Ltd., ITA No.1381/Kol/2025, dated 11.12.2025. 8. MS. Kritika Jaiswal, learned Sr. AR for the Revenue, on the other hand, submitted that the learned CIT(A) has considered the explanation of the assessee with regard to source of cash found by the police authorities which is contrary to the theory of human probability going by the business model of the assessee and margin earned from the said business. Further, the assessee although, claims to have accumulated cash out of realization of debtors for the purpose of purchase of property but could not place any evidence to prove his Bonafide intention to purchase the property. Further, the learned CIT(A) had also analysed the case of the assessee in light of business model of the assessee and margin earned from the business and observed that, going by the trade practice of the assessee, accumulation of Printed from counselvise.com 16 ITA.No.1715/Hyd./2025 cash out of sales that too in such a huge amount is impossible because, the assessee needs to deposit cash into bank account for onward transfer of funds to IOCL for supply of petroleum products. Except for this year, the assessee all along has routinely deposited cash into bank account out of sale proceeds and the same has been transferred to IOCL for purchases which is evident from the average cash balance maintained by the assessee for the previous period and earlier financial years. Since the appellant could not explain the cash found by the police authorities with relevant evidence to the satisfaction of the Assessing Officer, the Assessing Officer has rightly rejected the explanation of the assessee and made the addition towards cash u/sec.69A of the Act. The learned CIT(A) after considering the relevant submissions of the assessee has rightly sustained the additions made by the Assessing Officer. Therefore, she submitted that the Order of the learned CIT(A) should be upheld and the additions made by the Assessing Officer should be sustained. Printed from counselvise.com 17 ITA.No.1715/Hyd./2025 9. We have considered the rival submissions of both the parties, perused the relevant material on record and gone through the Orders of the authorities below. There is no dispute with regard to the fact that on 11.10.2022, the police authorities have intercepted the vehicles bearing nos. TS08EY0014 and TS07HX1266 and found cash of Rs.3,49,93,800/- in the possession of (1) Kunde Mahesh (2) M Machender (3) V Bharath (4) A.Anush Reddy (5) Deepavali Sandeep Kumar (6) Ghanta Sai Kumar Reddy. It is also an admitted fact that, the DDIT-(Inv.), Unit-II(4), Hyderabad has recorded statement u/sec.131(1A) of the Act from all the persons in whose possession the cash was found and seized by the police authorities, where they have clearly stated that they are actually carrying the cash as per the instructions of the appellant. The department had also recorded the statement from the appellant u/sec.131(1A) of the Act, where the appellant stated that, he has accumulated the cash out of his business of running petroleum pump for the purpose of acquisition of the property and since, he was travelling out of the city, the cash has been kept in the possession of his Printed from counselvise.com 18 ITA.No.1715/Hyd./2025 friend Sri Venkateshwar Rao and the same has been taken by his acquaintances on 11.10.2022. The appellant had furnished relevant details of source for cash, including cash book which shows availability of opening cash in hand as on 10.10.2022 of Rs.3,74,74,670/-. To support the cash balance in the books of accounts, the appellant has furnished the financial statements of earlier financial year 2021-2022 and confirmation from various parties [sundry debtors] and claimed that, the appellant has realized the cash out of outstanding sundry debtors available in the books of accounts. The appellant had also furnished relevant GST returns filed for the year under consideration and claimed that, there is no abnormal increase in sales or purchases for the year under consideration when compared to earlier financial years so as to allege that the appellant has shown higher sales to cover or shown cash balance as on 10.10.2022. In fact, the Assessing Officer never disputed the fact that, the appellant has explained the source for cash found by the police authorities with the opening cash balance available as on 10.10.2022 in the books of accounts Printed from counselvise.com 19 ITA.No.1715/Hyd./2025 maintained for the business. The Assessing Officer had also not disputed the fact that, the appellant has realized cash from debtors which is evident from the assessment order passed by the Assessing Officer where the Assessing Officer has reproduced the list of sundry debtors from whom the appellant has received cash. However, disbelieved the arguments of the assessee only on the ground that the appellant’s arguments is only an afterthought to circumvent or to explain source for cash found by the police authorities. Except this, the Assessing Officer neither made out any case or incorrectness in the books of accounts maintained by the assessee nor rejected the explanation of assessee with regard to source for cash found by the police authorities. Therefore, in our considered view, without there being any contrary evidence with the Assessing Officer to allege that the cash found by the police authorities is undisclosed income of the assessee, the explanation offered by the assessee with regard to source for cash deposit needs to be accepted. Therefore, to this extent, we cannot appreciate the reasons given by the Printed from counselvise.com 20 ITA.No.1715/Hyd./2025 Assessing Officer to make the addition towards cash u/sec.69A of the Act. 10. Coming back to the reasons given by the learned CIT(A) to sustain the addition made by the Assessing Officer towards cash u/sec.69A of the Act. The learned CIT(A) had also disbelieved the explanation of assessee with regard to source for cash found by the police authorities in light of business model of the assessee and margin earned from such business and observed that, going by the business model of the assessee it is impossible to accept the explanation of assessee with regard to source for cash deposit because, a close perusal of the cash book, it was found that no significant cash expenditure except cash deposited into bank account which is consistent with the business model of banking daily collection to make electronic/bank payment to IOCL for supply of petroleum products. The learned CIT(A) had also discussed the issue in light of the huge physical cash balance shown by the assessee in the books of accounts as on 10.10.2022 and the sales declared by the assessee for the year under consideration and observed that, the Printed from counselvise.com 21 ITA.No.1715/Hyd./2025 appellant had failed to file relevant invoices/payment advice or bank withdrawals of comparable magnitude to establish why such large sum was held in cash and outside business premises of the assessee. Therefore, disbelieved the explanation of assessee. In our considered view, the observation of the learned CIT(A) with regard to the explanation of assessee is only on suspicion and surmises manner without there being any contrary evidence with the department to allege that the cash found by the police authorities is unaccounted income of the assessee. We further note that, the appellant is in the business of selling petroleum products and has achieved huge turnover of more than Rs.115 crores for the year under consideration. Further, the turnover declared by the assessee for the year under consideration is also consistent with the turnover declared for the earlier years and there is no abnormal deviation or increase in the turnover for the year under consideration when compared to earlier financial years. From the above, it is very clear that, the cash balance shown by the assessee in the books of accounts as on 10.10.2022 is out of business Printed from counselvise.com 22 ITA.No.1715/Hyd./2025 receipts which includes realization from the sundry debtors outstanding in the books of accounts for the earlier financial years. We also carefully considered the relevant financial statements filed by the assessee for both financial years and find that the appellant was having sufficient sundry debtors in the books of accounts, out of which, he has realized huge cash for the year under consideration which was available as opening balance as on 10.10.2022. If we go by the explanation of the assessee along with relevant evidences such as cash book maintained for the year under consideration, in our considered view, the appellant in one voice right from the very beginning i.e., including date of statement recorded by the Assessing Officer or Investigation Department has stated that, he has accumulated cash out of his business for the purpose of purchase of property and the same has been kept with his friend’s possession because he was out of city for the relevant period. Going by the books of accounts maintained by the assessee and explanation offered during the course of survey/investigation coupled with explanation furnished by the assessee during the course of Printed from counselvise.com 23 ITA.No.1715/Hyd./2025 assessment proceedings, in our considered view, the explanation of assessee with regard to source for cash deposit is bonafide and acceptable. Since the Assessing Officer does not have any contrary evidence in his possession to allege that the cash found by the police authorities is unaccounted income of the assessee, in our considered view, the explanation offered by the assessee ought to have accepted by the Assessing Officer. This legal principle is supported by the decision of Hon’ble Gujarat High Court in the case of CIT vs. Vikram Plastics [1999] 239 ITR 161 (Guj.) wherein it has been clearly held that, when there was no discrepancy or defects in books of account maintained by assessee and further, the books of account maintained by assessee were not found to be incorrect or incomplete and that no material was brought on record by the Revenue to prove that purchases and expenses had been inflated or sales had been suppressed, no addition can be made towards cash on suspicion and surmises manner. The Hon’ble Supreme Court has upheld the Order of Hon’ble Gujarat High Court by dismissing the SLP filed by the department reported in CIT Printed from counselvise.com 24 ITA.No.1715/Hyd./2025 vs. JJ Enterprises [2002] 122 Taxman 124 (SC). A similar view has been taken by the Hon’ble Allahabad High Court in the case of DCIT vs. Hanuman Sugar [Khandsari] Mills (P.) Ltd., [2014] 221 Taxman 156 (All.). The Hon’ble Punjab and Haryana High Court has also taken a similar view in the case of CIT vs. Satish Kumar Mitta and Rakesh Kumar Garg [2008] 173 Taxman 185 (P & H). The sum and substance of the ratio laid down by various Hon’ble High Courts including the Hon’ble Supreme Court is that, no addition can be made on the basis of suspicion and surmises when the books of accounts maintained by the assessee clearly shows true and correct financial position for the relevant financial years. 11. In the present case, on perusal of the facts available on record, there is no dispute with regard to the fact that the appellant has explained the cash found by the police authorities with known source of income by furnishing cash book maintained for the year under consideration which clearly shows cash balance of Rs.3,74,74,670/- as on 10.10.2022 which is sufficient to explain the cash of Rs.3,49,93,800/- found by the police authorities. The Printed from counselvise.com 25 ITA.No.1715/Hyd./2025 Assessing Officer without appreciating the relevant facts has simply made addition towards cash found by the police authorities as unexplained money u/sec.69A of the Act. The learned CIT(A) without appreciating the relevant facts has simply upheld the addition made by the Assessing Officer. Thus, we set aside the order of the learned CIT(A) and direct the Assessing Officer to delete the addition made towards cash of Rs.3,49,93,800/- found by the police authorities u/sec.69A of the Act. 12. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 09.01.2026. Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G.] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 09th January, 2026 VBP Copy to : 1. Deepavali Balu Mahendra, Hyderabad - 500 096. C/o. B. Narsing Rao & Co. LLP, Plot No.554, Road No.92, MLA Colony, Jubilee Hills, Hyderabad – 500 096. Telangana. 2. The DCIT, Central Circle-2(4), Hyderabad–500004. 3. The CIT(A)-12, 6th Floor, Aayakar Bhawan, Basheerbagh, Hyderabad – 500 004. 4. The. Pr. CIT (Central), Hyderabad. 5. The DR, ITAT, B-Bench, Hyderabad. 6. Guard file. BY ORDER //True copy// Printed from counselvise.com "