KRISHNAPPA PURUSHOTHAM ,BENGALURU V. INCOME TAX OFFICER, WARD-6(2)(1), BANGALORE

ITA 2310/BANG/2025

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The case involves Shri Krishnappa Purushotham, who appealed against the order of the Additional Commissioner of Income Tax (Appeals), Faridabad, which upheld the Assessment Order passed by the Income Tax Officer, Ward-6[2][1], Bengaluru. The Assessment Order included an addition to the Assessee's income based on alleged suppressed turnover, identified through substantial cash deposits in his bank accounts. The Assessee contested that these deposits were from legitimate business activities and not unaccounted income. The Income Tax Appellate Tribunal found that the Assessee had not been given a proper opportunity of hearing at both the assessment and appellate stages, leading to the decision to remand the case for a detailed examination on merits.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 832176 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 15-10-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE; GANESH R GHALE
• Assessee Lawyers: NARENDRA SHARMA
• Keywords: Business income; Income from undisclosed sources
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE – PRESIDENT ITA No. 2310/Bang/2025 Assessment Year : 2017-18 Shri Krishnappa Purushotham, No. 11, 1st Main Road, 2nd Stage, K H B Colony, Basaveshwara Nagar, Bengaluru, Karnataka – 560 079. PAN: AKEPP5036F Vs. The Income Tax Officer, Ward-6[2][1], Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Narendra Sharma, Advocate Revenue by : Shri Ganesh R Ghale - Advocate, Standing Counsel for Revenue Date of Hearing : 16-12-2025 Date of Pronouncement : 20-01-2026 ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1. ITA No. 2310/Bang/2025 is filed by Shri Krishanppa Purushotham for Assessment Year 2017-18 against the Appellate Order passed by the Additional Commissioner of Income Tax (Appeals), Faridabad (the Ld. CIT(A)) dated 24.08.2025 wherein the challenge by the Assessee against the Assessment Order passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) dated 15.12.2019 passed by the Income Tax Officer, Ward-6[2][1], Bengaluru [the ld. AO] was dismissed. Therefore, Assessee is in Appeal. 2. Brief facts of the case show that the Assessee is an individual, deriving income from business of Bar & Restaurant, filed his return of Printed from counselvise.com ITA No. 2310/Bang/2025 Page 2 of 5 income at total income of Rs. 6,71,600/- on 30.10.2017. This return was picked for limited scrutiny with reason that there are cash deposits during the year. 3. Notice u/s. 143(2) was issued on 08.08.2018. The Assessee submitted copy of the return of income, bank statements, VAT return before the Assessing Officer. It was found that as per bank statement, Assessee has deposited a cashof Rs. 4,00,32,290/- in 2 different accounts with M/s. Vijaya Bank. The Assessee has disclosed turnover of Rs. 2,10,57,149/- from M/s. Suprabhata Bar. Therefore, the Assessee was issued a show cause notice to explain that a sum of Rs. 35,57,839/- being 18.75% of suppressed turnover as per show cause notice of Rs. 1,89,75,141/- should not brought to tax as business income. No reply was received from the Assessee and therefore the Assessment Order was passed on 15.12.2019. 4. The Assessee challenged the same before the Ld. CIT(A). 5. The Ld. CIT(A) passed an Appellate Order on 24.08.2025 wherein the Assessee merely sought an adjournment and therefore the Ld. CIT(A) dismissed the Appeal of the Assessee stating that there is no infirmity in the order of the Ld. AO. 6. Assessee is in appeal before us. The Ld. Authorized Representative submitted that Assessee is into the business of retail liquor dealer after obtaining license from Excise Department. Purchases are also made from Karnataka State Beverages Corporation Limited. When the purchases are accepted there cannot be any suppressed sales. He submitted that even otherwise, neither the Assessing Officer nor the Ld. CIT(A) decided the issue on the merits. As it is an ex-parte order, the Ld. CIT(A) should have restored it back to the file of the Ld. AO in terms of provisions of section 251(1)(a) of the Act. It was stated that merely because the Assessment Order is passed u/s. 143(3), it Printed from counselvise.com ITA No. 2310/Bang/2025 Page 3 of 5 cannot be said that it is an ex-parte order by the Ld. Assessing Officer. Further the Ld. CIT(A) has not decided the issue on the merits of the case. On the merits he submitted that Assessee deposited cash in his bank account out of sales made the Assessee as well as the sales effected from the business of his father. It was further stated that there are re-deposit of earlier withdrawals in the regular course of his business. It was further stated that all these turnovers have been accounted in the books of accounts of the Assessee as well as in the books of his father’s accounts. Thus, it was submitted that there is no unaccounted income earned by the Assessee. The Assessee submitted that the turnover of M/s. Suprabhatha Bar & Restaurant owned by the Assessee is Rs. 2,10,57,159/- whereas turnover of M/s. Srinivasa Bar & Restaurant is Rs. 2,06,79,134/-. Therefore, the total turnover of the Assessee is Rs. 4,17,36,283/-. 7. The Ld. Departmental Representative vehemently supported the order of the Ld. lower authority and stated that when the Assessee has not submitted any details before the Ld. lower authorities, the addition is correctly made. 8. The Ld. Authorized Representative in rejoinder submitted that during this period, the Assessee was not well and therefore the Assessee could not appear before the Ld. lower authorities. He submitted that even otherwise the Assessee deserves one more opportunity. 9. We have carefully considered the rival contentions and perused the orders of the Ld. lower authorities. The fact clearly shows that the Assessee was asked a question during Assessment Proceedings and Assessee did not make any reply. The Ld. Assessing Officer found that there is a huge difference between the turnover shown by the Assessee and amount of cash deposited in the bank account and therefore an appropriate percentage of such suppressed turnover Printed from counselvise.com ITA No. 2310/Bang/2025 Page 4 of 5 added by the Ld. Assessing Officer. Before the Ld. CIT(A) it was stated that the Assessee deposited cash in his bank account out of sales made the Assessee as well as the sales effected from the business of his father. It was further stated that there are re-deposit of earlier withdrawals in the regular course of his business. It was further stated that all these turnovers have been accounted in the books of accounts of the Assessee as well as in the books of his father’s accounts. Thus, it was submitted that there is no unaccounted income earned by the Assessee. The Assessee submitted that the turnover of M/s. Suprabhatha Bar & Restaurant owned by the Assessee is Rs. 2,10,57,159/- whereas turnover of M/s. Srinivasa Bar & Restaurant is Rs. 2,06,79,134/-. Therefore, the total turnover of the Assessee is Rs. 4,17,36,283/-. It is also claimed that the amount of cash deposited in the Overdraft Account no. 006 of Assessee with M/s. Vijaya Bank were of the sales turnover of the Assessee as well as of the business carried on by the father of the Assessee. It is also the claim that both the Assessee as well as his father are maintaining regular books of accounts which are subject to Audit u/s. 144AB of the Act. It is also the claim that the Assessee purchases IMFL from the Government Organization and also keeps statutory records of the sale etc., which is also verified by the Excise Department and therefore there could not have been any unaccounted income. It is also the claim of the Assessee that father of the Assessee is aged about 77 years. Due to the frequent health issues, could not look after his business and Assessee was entrusted to look after the business of M/s. Srinivasa Bar & Restaurant. Anyway, we find that both the lower authorities have not granted proper opportunity of hearing to the Assessee. Before the Ld. AO, Assessee was issued a show cause notice on 10.12.2019 and the Assessment Order was passed on 15.12.2019. Assessee was directed to file the reply on before 12.12.2019. Thus, it is apparent that giving an opportunity of hearing for three days is not a proper opportunity. Printed from counselvise.com ITA No. 2310/Bang/2025 Page 5 of 5 Before the Ld. CIT(A) the Assessee was no doubt issued three notices but the Ld. CIT(A) despite noticing the fact that statement of facts is available before him, held that Assessee is not interested in pursuing the appeal in paragraph no. 3.2 to 3.8 and dismissed the Appeal of the Assessee holding the reasons of the Ld. AO. 10. In view of the above facts, it is apparent that Assessee also did not get proper opportunity of hearing, and the Appeals are not decided on merit, the issue deserves to be sent back to the file of the Ld. Assessing Officer. The Assessee is directed to furnish the necessary details before the Ld. Assessing Officer within 90 days from the date of receipt of this order, the Ld. Assessing Officer may verify the claim of the Assessee and decide the issue on the merits. 11. In the result, Appeal filed by the Assessee is allowed for statistical purposes. Order pronounced in the open court on 20th January, 2026. Sd/- (PRASHANT MAHARISHI) VICE-PRESIDENT Bangalore, Dated, the 20th January, 2026. *TNTS* Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "