KARNAKAR SIDDALA,WARANGAL V. INCOME TAX OFFICER-WARD-1, WARANGAL

ITA 1183/HYD/2025

AI Insights

The case involves Karnakar Siddala, the appellant, who is engaged in the transportation business and faced issues with the Income Tax Department regarding unexplained investments. The Assessing Officer had made an addition of Rs.30 lakhs to the assessee's income, considering it an unexplained investment in a plot of land. This addition was based on the balance sheet of the assessee for the assessment year 2016-2017. The assessee did not initially respond to the notices due to extensive travel and lack of digital access, leading to an ex-parte order under section 144 of the Income Tax Act. The CIT(A) dismissed the appeal for non-prosecution. The Tribunal, considering the circumstances and the additional evidence provided, decided to remand the case for a thorough examination of the sources of the investment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840514 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 19-07-2025
• Other Referred Cases: Jharkhand Urja Utpadan Nigam Ltd. & Anr. vs. M/s. Bharat Heavy Electricals Limited, Government of Maharashtra [Water Resources Department] reptd. By Executive Engineer vs. M/s. Borse Brothers Engineers & Contractors Pvt. Ltd., PK Ramachandran vs. State of Kerala & Anr.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH BABU KN
• Assessee Lawyers: POORNA CHANDER RAO
• Keywords: Condonation of delay; Set aside; Additional evidence; Corroborative evidences; Unexplained investment

Judgement Text

" आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT आ.अपी.सं /ITA No.1183/Hyd./2025 Assessment Year 2016-2017 Karnakar Siddala, WARANGAL – 506 002. Telangana. PAN AVBPS0351A vs. The Income Tax Officer, Ward-1, WARANGAL – 506 001. Telangana. (Appellant) (Respondent) िनधाŊįरती Ȫारा /Assessee by: CA Poorna Chander Rao राज̾ व Ȫारा /Revenue by: Sri Suresh Babu KN, Sr. AR सुनवाई की तारीख/Date of hearing: 25.02.2026 घोषणा की तारीख/Pronouncement: 27.02.2026 आदेश/ORDER This appeal by the assessee is directed against the Order dated 22.10.2024 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi,6, Hyderabad, for the assessment year 2016-2017. 2. At the outset, there is a delay of 200 days in filing the present appeal. The assessee has filed a petition/affidavit for explaining the cause of delay. The learned Authorised Representative of the Assessee has submitted that the Printed from counselvise.com 2 ITA.No.1183/Hyd./2025 assessee is engaged in the business of transportation and due to the nature of his business, the assessee travels extensively throughout the year and remain out of his business place in Warangal. He has further pointed out that the impugned order passed by the learned CIT(A) was not in the knowledge of the assessee as the same was not at all delivered physically and only when his Tax Consultant discovered this fact that learned CIT(A) has already passed the order in the case of assessee, he informed the assessee. Immediately thereafter, the assessee took steps for filing the present appeal and therefore, there is a delay of 200 days in filing the appeal. The learned Authorised Representative of the Assessee has submitted that the delay in filing the appeal is neither deliberate nor willful but due to the reason that the assessee was not having any knowledge about the impugned order as it was not served on the assessee physically and assessee could not see the same on the ITBA portal or in the email due to his occupation and remaining out of station. Thus, he has pleaded that the delay in filing the appeal may be condoned as the Assessing Officer has made the addition u/sec.68 of Printed from counselvise.com 3 ITA.No.1183/Hyd./2025 the Income Tax Act [in short \"the Act\"], 1961 in respect of the advance paid by the assessee for purchase of land. The learned Authorised Representative of the Assessee has referred to the balance sheet of the assessee, part of the books of accounts which are duly audited and audit report in Form- 3CB and Form-3CD was also filed along with the return of income. He has pointed out that the source of the said advance is also available in the balance sheet of the assessee itself being the amount received by the assessee on bidding of various chit fund subscribed by the assessee. 3. On the other hand, the learned DR has opposed to the condonation of delay and submitted that it is a case of gross negligence on the part of the assessee for not filing the appeal intime despite the fact that the assessee has not appeared before the Assessing Officer and the learned CIT(A) which shows the conduct of the assessee as gross negligence in dealing with the tax matters. He has relied upon the following decisions: (i) Order of Hon’ble Supreme Court in the case of Jharkhand Urja Utpadan Nigam Ltd., & Anr. vs. Printed from counselvise.com 4 ITA.No.1183/Hyd./2025 M/s. Bharat Heavy Electricals Limited in Special Leave to Appeal (C) No.9580/2025 dated 15.04.2025; 2. Judgment of Hon’ble Supreme Court in the case of Government of Maharashtra [Water Resources Department] reptd. By Executive Engineer vs. M/s. Borse Brothers Engineers & Contractors Pvt. Ltd., in Civil Appeal No.995 of 2021 / SLP (Civil) No.665 of 2021. 3. Judgment of Hon’ble Kerala High Court in the case of PK Ramachandran vs. State of Kerala & Anr. Dated 19.09.1997 . 4. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee did not appear before the Assessing Officer and consequently, the assessment order was passed ex-parte u/sec.144 of the Act. Similarly, despite various notices there was no participation on behalf of the assessee before the learned CIT(A) and the appeal of the assessee was dismissed Printed from counselvise.com 5 ITA.No.1183/Hyd./2025 by the learned CIT(A) on the ground of non-prosecution. The assessee has now explained the cause of delay having no knowledge of the impugned order till the Tax Consultant of the assessee found from the Department Portal that the impugned order was already passed by the learned CIT(A). The reasons explained by the assessee in the petition/ affidavit for condonation of delay are as under: “3. The appellant is an individual engaged in the business of transportation under the name Devi Roadways. Owing to the nature of his occupation the appellant travels extensively throughout the year, often away from his base in Warangal. Furthermore, as the appellant has very limited familiarity with electronic he rarely visits his mail accounts as well has his account in the portal of income tax department. Therefore, he coming to know regarding the issuance of notices u/s 250 of the act was very slim. 4. The order passed u/s 250 of the Act has come to the knowledge of the appellant when his tax consultant, during a visit to the Department, discovered the appellate order and informed him about the demand raised and the Immediate need to file the appeal. 5. Thereafter, the appellant took steps to initiate the appeal process. The delay was thus caused due to bonafide reasons, including the appellant's lack of digital knowledge, extensive travel requirements of his business, and circumstances beyond his control. The delay, in the humble opinion of the appellant is neither Printed from counselvise.com 6 ITA.No.1183/Hyd./2025 deliberate nor due to negligence, but arises from genuine and sufficient causes faced by the appellant. 6. The appellant submits that the case involves a significant addition of the alleged unexplained investment, which the appellant opines that he could adequately explain. If the appeal is dismissed solely on the ground of delay, a meritorious case will be denied justice at the threshold, defeating the principles of equity and fair hearing.” 4.1. Since the Assessing Officer has made the addition on account of unexplained investment to the tune of Rs.30 lakhs shown by the assessee in the balance sheet as advance for purchase of plot of land. The source of the said investment was also shown in the balance sheet as loan/liabilities on account of secured loans and unsecured loans including a sum of Rs.30 lakhs received from the chit fund and another amount of chit fund was also appearing under the current liabilities in the balance sheet. The Assessing Officer has not considered these sources of fund available with the assessee during the assessment proceedings. The learned CIT(A) has also dismissed the appeal of the assessee for non-prosecution and not decided the issue on merits by considering the relevant record and facts. Accordingly, considering the facts Printed from counselvise.com 7 ITA.No.1183/Hyd./2025 and circumstances of the case and in the interest of justice, a lenient view is taken regarding ‘sufficient cause’ for delay of 200 days in filing the present appeal. Hence, the delay of 200 days in filing the present appeal is condoned subject to cost of Rs.5000/- [Rs. Five Thousand Only] to be paid to the Prime Minister’s National Relief Fund within a period of one month from the date of this order. The Judgment relied upon by the learned DR are all on the specific facts of those cases and some of the Judgments are in respect of the corporate bodies/ Government Departments having all the facilities and infrastructure for dealing the legal matters pending in the Courts. Therefore, those decisions are not applicable in the facts of the present case of an individual. 5. The assessee has raised the following grounds of appeal: 1. “The Appellant contends that Ld. CIT-(A) ought not to have confirmed the addition of Rs.30,00,000 representing the amount invested in Kapil Group as the same is bad in law and on the facts of the case. Printed from counselvise.com 8 ITA.No.1183/Hyd./2025 2. The appellant contends that he has enough explainable sources to explain the source for said addition of Rs. 30,00,000/- and therefore its confirmation by Ld. CIT-(A) is bad in facts and in law. 3. In view of all these and other grounds which may be pleaded during the hearing of the appeal, the appeal may kindly be allowed.” 6. At the time of hearing, the learned Authorised Representative of the Assessee has submitted that since the assessment order as well as the impugned order of the learned CIT(A) are passed ex-parte, therefore, the assessee could not produce the supporting evidence before the authorities below. He has filed a petition under Rule-29 of ITAT Rules, 1963 for admission of the additional evidence which is as under:  ITR acknowledgements for A.Ys. 2016-17 and 2017-18  Form 3CB-CD for A.Ys. 2016-17 and 2017-18  Balance Sheet and Profit & Loss Accounts for A.Ys. 2016-17 and 2017-18  Bank statement of the appellant bearing Account No. 6370981510  Bank statement from Kapil Chit Funds bearing Account No. 797109759 Printed from counselvise.com 9 ITA.No.1183/Hyd./2025  Chit statements of chits paid in Kapil Chits by the appellant  Deposit receipts from Kapil Property Developers Ltd.  Ledger copies for A.Y. 2016-17 6.1. Thus, the learned Authorised Representative of the Assessee has pleaded that the impugned order of the learned CIT(A) may be set aside and matter may be remanded to the record of the Assessing Officer for verification and examination of the additional evidence filed by the assessee in respect of the source of Rs.30 lakhs as advance paid by the assessee for purchase of plot of land. 7. On the other hand, the learned DR has submitted that despite sufficient opportunities given by the Assessing Officer as well as the learned CIT(A) the assessee could not produce any supporting evidence to explain the source of payment of Rs.30 lakhs. He relied upon the Orders of the authorities below. 8. I have considered the rival submissions as well as relevant material on record. As evident from the record that the assessee filed his return of income for the year under Printed from counselvise.com 10 ITA.No.1183/Hyd./2025 consideration on 10.01.2017 declaring total income of Rs.9,15,060/-. Thereafter, the Assessing Officer reopened the assessment by issuing notice u/sec.148 of the Act on 31.03.2021 to assess the income of Rs.30 lakhs as investment made by the assessee for purchase of plot of land reflected in the balance sheet of the assessee. During the re- assessment proceedings, the assessee did not respond to the notices issued by the Assessing Officer and consequently, the assessment order was passed ex-parte u/sec.147 r.w.s.144 of the Act whereby the Assessing Officer has made the addition of Rs.30 lakhs on account of unexplained investment. The assessee challenged the assessment order before the learned CIT(A) but despite various notices issued by the learned CIT(A), there was no appearance and participation on behalf of the assessee in the proceedings before the learned CIT(A). Consequently, the learned CIT(A) has dismissed the appeal of the assessee due to failure on the part of the assessee to participate in the proceedings. As it is clear from the record that neither the Assessing Officer nor the learned CIT(A) has examined and verified the relevant Printed from counselvise.com 11 ITA.No.1183/Hyd./2025 record showing the source of the investment of Rs.30 lakhs as reflected in the balance sheet of the assessee. Now the assessee has filed the additional evidence for verification and examination in respect of available fund with the assessee for the said investment. Accordingly, in the facts and circumstances of the case and in the interest of justice, the impugned order of the learned CIT(A) is set aside, and the matter is remanded to the record of the Assessing Officer for re-adjudication of the matter after verification and examination of the additional evidence filed by the assessee. Needless to say, the assessee be given appropriate opportunity of hearing before passing the fresh order. 9. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 27.02.2026. Sd/- [VIJAY PAL RAO] VICE PRESIDENT Hyderabad, Dated 27th February, 2026. VBP Printed from counselvise.com 12 ITA.No.1183/Hyd./2025 Copy to : 1. Karnakar Siddala, 11-14-32, O-City, Narsampet Road, WARANGAL – 506 002. Telangana. 2. The Income Tax Officer, Ward-1, BSNL Bhavan, Hanmakonda, WARANGAL – 506 001. Telangana. 3. The Pr. CIT, Hyderabad. 4. The DR, ITAT, “SMC” Bench, Hyderabad. 5. Guard file. BY ORDER Printed from counselvise.com VADREVU PRASADA RAO Digitally signed by VADREVU PRASADA RAO Date: 2026.02.27 11:56:46 +05'30' "