FEHMIDA BEGUM,HYDERABAD V. ITO., WARD-6(1), HYDERABAD

ITA 501/HYD/2025

AI Insights

Ms. Fehmida Begum appealed against the order of the Learned Commissioner of Income Tax (Appeals), which confirmed the addition of unexplained cash deposits during the demonetisation period to her income for the Assessment Year 2017-18. The Assessing Officer had treated these deposits as unexplained money under section 69A of the Income Tax Act, 1961, due to the assessee's failure to respond to notices and provide satisfactory explanations. The Tribunal admitted additional grounds raised by the assessee, challenging the validity of the assessment and the service of notices under section 142(1). After considering the arguments and evidence, the Tribunal partly allowed the appeal, directing the deletion of one addition and remanding other issues for further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776998 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2025
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 25-03-2025
• Other Referred Cases: National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), Kuldeep Kumar vs. ITO in ITA No.221/Jodh/2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANKAR PANDI P
• Assessee Lawyers: MOHD. AFZAL
• Keywords: Opportunity of being heard; Additional evidence; Principle of natural justice
• Section: 144; 142(1); 133(6); 139

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SM’ Bench, Hyderabad श्री विजय पाल राि, उपाध् यक्ष एिं श्री मिुसूदन सािडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.501/Hyd/2025 (निर्धारण वर्ा/Assessment Year:2017-18) Ms. Fehmida Begum, Hyderabad. PAN:BABPB3468H Vs. Income Tax Officer, Ward-6(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri Mohd. Afzal, Advocate रधजस् व द्वधरध/Revenue by: Shri Sankar Pandi P, SR-DR सुिवधई की तधरीख/Date of hearing: 09/09/2025 घोर्णध की तधरीख/Pronouncement: 19/09/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Ms. Fehmida Begum (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 30.01.2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal : Printed from counselvise.com ITA No.501/Hyd/2025 2 3. The assessee has raised additional grounds as under : “ 1. The learned Commissioner ought to have appreciated that the notice u/s. 142(1) is issued to examine the cash deposits during the demonetisation period, at para 6 of the assessment order, the Assessing Officer stated the demonetisation period is 09.11.2016 to 30.12.2016, which is not the period of demonetisation, therefore, erred in confirming the order of the Assessing Officer. 2. The learned Commissioner ought to have appreciated that the state Bank of India account No.62209394338, is not pertaining to the assessee. Therefore, erred in confirming the order of the Assessing Officer.” 3.1 In this context the Ld. AR submitted that the additional grounds so raised are admissible in view of judgment rendered by Printed from counselvise.com ITA No.501/Hyd/2025 3 the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The prayer for admission of additional ground noted above which are not in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of the ITAT Rules owing to the fact that objections raised in additional grounds are legal in nature for which relevant facts are stated to be emanating from the existing records. 4. The brief facts of the case are that, the assessee is an individual who had not filed any return of income under section 139 of the Income Tax Act, 1961 (“the Act”). Based on information regarding substantial cash deposits during the demonetisation period, the Learned Assessing Officer (“Ld. AO”) issued notices to the assessee under section 142(1) of the Act on 31.01.2018 and 23.07.2019, but the assessee did not respond. Consequently, the Ld. AO obtained bank statements of the assessee from State Bank of India under section 133(6) of the Act and noticed that the assessee had an aggregate credit of Rs.28,97,272/- during the year, which included cash deposit of Rs.17,81,694/- during the demonetisation period. Printed from counselvise.com ITA No.501/Hyd/2025 4 Since no explanation was filed, the entire credit of Rs.28,97,272/- found in the bank account of the assessee was treated as unexplained money under section 69A of the Act. Accordingly, the Ld. AO completed the assessment under section 144 of the Act on 19.11.2019 at a total income of Rs.28,97,272/-. 5. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the addition made by the Ld. AO. The relevant observation of the Ld. CIT(A) are stated at para nos. 8.2 to 8.4 of his order, which is to the following effect : Printed from counselvise.com ITA No.501/Hyd/2025 5 6. Aggrieved with the order of Ld. CIT(A), the assessee is in further appeal before us. We noted that, the assessee has raised an additional legal ground challenging the validity of the assessment. In this regard, the first objection of the assessee is that the notices under section 142(1) of the Act were never served. The other objection of the assessee is that the case was selected for limited scrutiny confined only to demonetisation cash deposits. However, the Ld. AO erred in making the assessment covering the issue beyond demonetisation period. Accordingly, the Ld. AR submitted that the order of the Ld. AO is liable to be quashed on the legal ground. Printed from counselvise.com ITA No.501/Hyd/2025 6 7. Per contra, the Ld. DR submitted that the assessment order nowhere mentions limited scrutiny and the Ld. AO was within his jurisdiction to examine the entire deposits. 8. We have heard the rival contentions and perused the material available on record. We find merit in the contention of the Ld. DR. The assessment order does not indicate that the case was selected for limited scrutiny, but only records that it was flagged due to substantial cash deposits. Hence, the Ld. AO had the power to examine the entire year’s bank deposits. Further, the plea of non- service of notices under section 142(1) of the Act is not supported by any cogent evidence. Accordingly, the additional ground raised by the assessee challenging the validity of the assessment is rejected. 9. On merits, the Ld. AR submitted that the total deposits added by the Ld. AO consist of cash deposit of Rs.13,62,500/-, non-cash deposit of Rs.14,00,000/- on 13.11.2016 and balance deposits of Rs.1,34,772/-. As far as cash deposit of Rs.13,62,500/- is concerned, the Ld. AR submitted that the cash was received from her brothers Printed from counselvise.com ITA No.501/Hyd/2025 7 on account of a family property settlement, wherein Rs.14 lakhs was earmarked to be given to female members (assessee, her sisters and mother). The assessee received the amount on behalf of all of them and deposited Rs.13,62,500/- in her bank account. Later, she refunded her sisters’ and mother’s shares, retaining Rs.2.5 lakhs as her portion. In support, affidavits from family members were filed. Reliance was placed on the decision of the Co-ordinate Bench of the ITAT, Jodhpur Bench, in Kuldeep Kumar vs. ITO in ITA No.221/Jodh/2023 for A.Y. 2010-11 dated 10.08.2023; wherein the Tribunal has held that if the assessee has filed the affidavit of the payer, then the onus is shifted on the Revenue. Accordingly, the Ld. AR submitted that, the assessee had submitted the affidavit of all the family members qua the receipt of cash, hence the assessee has complied his responsibility of proving the source of cash deposited in the bank. Therefore, he prayed for deletion of the same. 10. With regard to the deposit of Rs.14,00,000/- on 13.11.2016, it was submitted that the deposit was on account of premature encashment of an FDR made on 10.11.2016, out of balance already Printed from counselvise.com ITA No.501/Hyd/2025 8 available in her account. The Ld. AR invited our attention to the bank statement (page no. 53 of the paper book) and submitted that, the assessee has made FDR of Rs.14 lakhs on 10.11.2016 and the same FDR was prematured on 13.11.2016. Accordingly, the credit of Rs.14 lakhs in the bank account on 13.11.2016 is completely explainable and no addition can be made in this regard. 11. With regard to the balance deposits of Rs.1,34,772/- the Ld. AR submitted that the credit of Rs.1,372/- is on account of bank interest and Rs.125/- is on account of LPG subsidy received. The Ld. AR also submitted that, the other deposits in the bank account are also explainable for which he prayed for remand of the issue to the file of Ld. AO for verification. 12. Per contra, the Ld. DR submitted that the assessee had not produced any family settlement deed or evidence of property relinquishment, nor established the source of cash in the hands of her brothers. Therefore, the explanation is unsubstantiated. Printed from counselvise.com ITA No.501/Hyd/2025 9 Accordingly, the Ld. DR prayed for dismissal of appeal of the assessee. 13. We have carefully considered the rival submissions and perused the material available on record. With regard to the deposit of Rs.14,00,000/-, on perusal of the bank statement, it is clearly evident that the sum was credited on 13.11.2016 due to premature encashment of an FDR created on 10.11.2016. This explanation is supported by documentary evidence. Accordingly, the Ld. AO is directed to delete the addition of Rs.14,00,000/-. 14. With regard to the cash deposit of Rs.13,62,500/- (family settlement), the assessee has relied on affidavits of her siblings and claimed that the money represented a family property settlement. However, no family settlement deed or documentary evidence regarding her relinquishment of property rights, nor any proof of cash availability with the brothers, has been filed. The reliance placed on the decision of co-ordinate bench of Tribunal in the case of Kuldeep Kumar vs. ITO (supra) is distinguishable, as in the present Printed from counselvise.com ITA No.501/Hyd/2025 10 case the lower authority has noted the absence of family settlement deed, documentary evidence regarding the assessee’s relinquishment of property right and proof of availability of cash with her brother. However, now the assessee is ready to file the necessary explanation / evidences if an opportunity is provided, to remove the discrepancies noticed by the Revenue authorities. Considering the principle of natural justice and the request of the assessee, we are inclined to give one more opportunity to the assessee to file necessary evidences in support of her claim before the Ld. AO. Accordingly, we remand the issue to the file of Ld. AO with a direction to adjudicate the issue afresh after giving an opportunity of being heard to the assessee. The Ld. AO shall also call for additional evidences / explanation from the assessee in this regard. The assessee is also directed to cooperate in the remand proceedings without seeking any unnecessary adjournment. 15. As regards balance deposits of Rs.1,34,772/-, the assessee has prayed for one more opportunity to furnish the necessary evidences in support of her claim. Therefore, considering the principle of Printed from counselvise.com ITA No.501/Hyd/2025 11 natural justice, we are inclined to give one more opportunity to the assessee to file necessary evidences in support of her claim before the Ld. AO. Accordingly, we remand the issue to the file of Ld. AO with a direction to adjudicate the issue afresh after giving an opportunity of being heard to the assessee. The Ld. AO shall also call for additional evidences / explanation from the assessee in this regard. The assessee is also directed to cooperate in the remand proceedings without seeking any unnecessary adjournment. 16. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 19th Sept., 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 19.09.2025. * Reddy gp Printed from counselvise.com ITA No.501/Hyd/2025 12 Copy of the Order forwarded to : 1. Ms. Fehmida Begum, 7-1-304/A/1/EB, B K Guda, SR Nagar, E B B K Guda, Hyderabad-500038 2. The ITO, Ward 6(1), Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, Printed from counselvise.com "