KASTURI RAJUPETA,BANGALORE V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BANGALORE

ITA 2035/BANG/2025

AI Insights

The case involves Ms. Kasturi Rajupeta, a director at multiple telecom companies, who appealed against the reassessment of her income for the Assessment Year 2011-12. The reassessment was triggered by substantial credits in her bank account, which she could not satisfactorily explain. The AO added these credits to her income, leading to a significant tax liability. The CIT(A) upheld the AO's decision, rejecting the assessee's claims regarding the nature of the bank credits. The Tribunal's decision to remand the case for further investigation indicates the complexity of the financial transactions involved and the need for a detailed examination of the sources and nature of the credits.

• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Bangalore
• Assessment Year: 2011-2012
• Appeal Filed On: 18-09-2025
• Laws Referred To: The Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMAN LUNKAR
• Keywords: Source of fund; Tangible material
• Section: 148; 143(3); 68; 131; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.2035/Bang/2025 Assessment Year: 2011-12 Ms. Kasturi Rajupeta, No.14, 29th Main, BTM Layout, Bannerghatta Road S.O Bangalore South, Bangalore – 566 076. PAN: ADDPK 6263 D Vs. ITO, Ward – 6(1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Smt. Suman Lunkar, CA Revenue by : Smt. N. Hemalatha, CIT(DR)(ITAT), Bangalore. Date of hearing : 29.01.2026 Date of Pronouncement : 25.03.2026 O R D E R Per Prashant Maharishi, Vice President: 1. Captioned appeal is filed by Ms. Kasturi Rajupeta, [ Assessee / Appellant ] against the appellate order passed by National Faceless Appeal Centre, Delhi, [ the ld. CIT (A) ] for the Assessment Year 2011–12, dated 23.07.2024, wherein the appeal filed by the assessee on 11.01.2019 against the Assessment Order under section 143(3) r.w.s. 147 of The Income Tax Act, 1961 [the Act] dated 13.12.2018 passed by the DCIT, Circle – 4(1)(1), Bengaluru [the Learned AO] was dismissed. Printed from counselvise.com ITA No.2035/Bang/2025 Page 2 of 8 2. Therefore, the assessee is in appeal raising following grounds of appeal: Printed from counselvise.com ITA No.2035/Bang/2025 Page 3 of 8 3. The brief facts of the case indicate that Smt. Kasturi Rajupeta is a Director at Kaveri Telecom Products Ltd., Kaveri Telecom Infrastructure Ltd., and SMR Telecom Holdings Pvt. Ltd. She receives salary and interest income. On 24.05.2011, she submitted her income tax return reporting a total income of Rs. 8,43,484/-. 4. The information was received from the Deputy Director of Income Tax, indicating that, pursuant to details obtained under section 133(6) of the Act from Axis Bank Ltd., Bengaluru, account No. 052010100031426 in the name of the assessee showed total credits amounting to Rs. 18,40,18,423/-. Consequently, the case was reopened after recording reasons, and a summons was issued to the assessee under section 131 of the Act for verification of the aforementioned account. Upon examination, the assessee was unable to provide a satisfactory explanation supported by relevant documentary evidence regarding the deposit. As a result, a notice under section 148 of the Act was issued on 29.03.2018, and the reasons were provided to the assessee on 12.10.2018. Despite this, the assessee failed to respond to subsequent notices, prompting issuance of a final show cause notice on 26.11.2018. 5. The assessee replied that credits in the bank accounts are loans from relatives such as son, husband, sister-in-law, etc. The debits are repayment of such loan. However, there are no documentary evidence with respect to any of the transactions and credit Printed from counselvise.com ITA No.2035/Bang/2025 Page 4 of 8 worthiness of the relatives were also not proved. Therefore, after examination of the books of accounts, verification of the return of income and considering submission of the assessee, the learned AO passed the Assessment Order under section 143(3) r.w.s. 147 of the Act on 13.12.2018, determining total income of the assessee at Rs.18,48,61,910/-. 6. The assessee aggrieved with the addition of Rs.18.40 Crores, preferred an appeal before the learned CIT(A). The learned CIT(A) passed the appellate order on 23.07.2025, after considering the written submission of the assessee, confirmed the action of the learned AO. On the reassessment and merits of the case, the learned CIT(A) dismissed the claim of the assessee with respect to reopening of the assessment in absence of tangible material, invalid reasons of reopening and other issues. The learned CIT(A) also dismissed the ground of the assessee that amount credited in the bank account does not invite addition under section 68 of the Act by citing several judicial precedence. In the written submission, no further evidence was produced on the merits of the addition of Rs.18.40 Crores. The learned CIT(A) also confirmed the same. 7. Against this, the assessee is in appeal before us. The learned AR Smt. Suman Lunkar, CA, filed a Paper Book containing fifty-one pages. She submitted that now assessee is filing the confirmation letters from the four creditors who are her relatives. She took to the confirmation pages 13-23 of the Paper Book. Further, she also submitted ledger account of Kaveri Telecom Products Ltd., Kaveri Printed from counselvise.com ITA No.2035/Bang/2025 Page 5 of 8 Telecom Infrastructure Ltd., and SMR Telecom Holdings Pvt. Ltd., to submit that assessee has deposited the sums received in the bank account with the above companies. She further referred to the bank statement with the Axis Bank wherein all these transactions are explained. She further referred to the chart submitted of all debits in bank accounts and all credits therein. Therefore, she submitted that she received money from her relatives and the money is deposited with these banks. 8. The learned DR Smt. N. Hemalatha, CIT(DR), vehemently opposed the submission made by the learned AR. She submitted that there is no submission of confirmation before the learned lower authorities. She submitted that the income declared in the return of income is Rs.8.43 lakhs whereas the total credits in bank accounts is tune of Rs.18.40 Crores and for this reason only the case of the assessee was reopened. She submitted that even this confirmation submitted by the assessee which was not before the learned lower authorities clearly shows that there is no mention of the sources of income and why they have given loan to the assessee. The return of income filed is also very low compared to the amount deposited. Further, merely submitting the PAN and bald confirmation without proving the source of credit worthiness and the genuineness of the transaction, the addition is correctly made by the learned lower authorities. Even otherwise she submitted that when the assessee has failed to show the identity, credit worthiness and genuineness of the loans received, the addition is correctly made on account of failure of the assessee to discharge initial onus cast on her under section 68 of the Act. Printed from counselvise.com ITA No.2035/Bang/2025 Page 6 of 8 9. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that assessee has deposited a sum of Rs.18.40 Crores in her bank account and naturally the assessee is duty bound to explain the source and nature of such credit. 10. The assessee has stated that she is a Director in Kaveri Group companies. From Kaveri Telecom Infrastructure Ltd., the assessee has taken a loan of Rs.1,39,00,000/-. This loan of Rs.1,39,00,000/- is repaid by a loan of Rs.1.27 Crores from Shri. Shivakumar Reddy. Similarly, in Kaveri Telecom Products Ltd., the assessee has deposited a sum of Rs.10,05,87,500/- which is also received back by the assessee. In case of SMR Telecom Holdings Pvt. Ltd., the assessee has a debit of Rs.16.65 Crores which was squared off during the year by various debits and credits without repayment by cash. The confirmation given by the assessee from her sister- in-law, son and husband are merely the details of the loan amount received stating their PAN and address. There is no evidence about their source of income. Before us, the assessee has produced seven confirmation letters which were not filed before the learned lower authorities. They are in support of the claims of the assessee that the loan received by assessee from relatives is genuine. On analysis of the debit and credit of the bank accounts submitted by the assessee, total credit of Rs.18.42 Crores is stated to be the share application money comprising of 15.55 Crores. The sources of total bank debits and credits are rotation of funds from these companies to the relatives and from relatives to these companies. Printed from counselvise.com ITA No.2035/Bang/2025 Page 7 of 8 There are huge debits and credits in the companies where the assessee is the Director. 11. Therefore, in view of peculiar nature of transaction and as these confirmations were not available before the lower authorities, we restore the whole issue back to the file of learned AO with direction to examine creditors and also these 3 companies for the purpose of verification of identity, creditworthiness and genuineness of the transactions and nature of transactions. He may carryout enquiries in accordance with the provisions of the law. The assessee is also directed to substantiate the genuineness and creditworthiness of the relatives and these companies. The learned AO may decide the issue on the merits of the addition under section 68 of the Act afresh. 12. Accordingly, grounds 4 and 5 of the appeal are allowed as indicated above. Grounds 1 to 3, no arguments were advanced and hence dismissed. Ground 7 is consequential in nature, hence, dismissed. Ground 8 is subsumed in ground Nos.4 and 5, accordingly allowed as indicated above. Printed from counselvise.com ITA No.2035/Bang/2025 Page 8 of 8 13. In the result, appeal filed by the assessee is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (SOUNDARARAJAN K) (PRASHANT MAHARISHI) Judicial Member Vice President Bangalore, Dated: 25.03.2026. /NS/* Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR, ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore. Printed from counselvise.com "