MADHU SUDHAN REDDY BIDDAL,HYDERABAD V. INCOME TAX OFFIER, WARD-9(1), HYDERABAD

ITA 1253/HYD/2024

AI Insights

The case involves Shri Madhu Sudhan Reddy Biddal, an employee of the AP State Co-Operative Bank, who appealed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The appeal was concerning the assessment year 2017-18, where the AO had added a discrepancy in reported salary and treated a cash deposit of Rs.11,21,000 as unexplained under Section 68 of the Income Tax Act, 1961. The CIT(A) upheld the AO's decision, leading to the current appeal before the ITAT. The assessee argued that the cash deposits were recoveries from short-term loans he provided to colleagues, which the ITAT found necessitated further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472720 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SM-A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S.RAMA RAO
• Keywords: Set aside; Revised return; Unexplained cash credit; Salary income
• Section: 143(3); 142(1); 68; 22; 13

Judgement Text

" आआआआ आआआआआआ आआआआआआ, आआआआआआआआ आआआ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.1253/Hyd/2024 (निर्धारण वर्ा/Assessment Year:2017-18) Shri Madhu Sudhan Reddy Biddal, Hyderabad. PAN:ADJPB2005L Vs. Income Tax Officer, Ward-9(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri S. Rama Rao, Advocate रधजस् व द्वधरध/Revenue by:: Shri Srikanth Reddy Y, SR-DR सुिवधई की तधरीख/Date of hearing: 22/01/2025 घोर्णध की तधरीख/Pronouncement: 24/01/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Shri Madhu Sudhan Reddy Biddal (“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 14.10.2024 for the A.Y. 2017-18. 2. The assessee has raised the following grounds : ITA No.1253/Hyd/2024 2 3. At the outset the Ld. AR submitted that, the assessee is in appeal before the ITAT on as many as 6 grounds. He further submitted that, the ground nos.1 and 6 are generally in nature and the assessee is not pressing ground no. 2 and 3. Accordingly, the ground number 1,2,3 and 6 are not required to be separately adjudicated. Ground no. 4 and 5 are related to the addition made by the learned Assessing Officer (“Ld. AO”) on account of the cash deposit of Rs.11,21,000/- as unexplained cash credit under Section 68 of the Income Tax Act, 1961 (“the Act”). ITA No.1253/Hyd/2024 3 4. Brief Facts of the Case as culled out from the records are that, the assessee is an individual and an employee of AP State Co- Operative Bank. He initially filed the original return of income for the A.Y. 2017-18 on 12th June 2017, declaring a total income of Rs.8,43,880/-. Subsequently, a revised return of income was filed on 7th March 2018, declaring a total income of Rs.8,43,910/-. The case of the assessee was selected for limited scrutiny under the Centralized Processing of Scrutiny Cases (CASS) to verify Cash deposits during the year, Salary income and cash withdrawals. Notices under Section 143(2) and Section 142(1) of the Act were issued by the Ld. AO to the assessee. However, no compliance was made by the assessee to these notices. On examination of the records, the Ld. AO observed a discrepancy of Rs.7,10,410/- between the gross salary reported in the Income Tax Return (ITR) and Form no. 16. He also found cash deposit of Rs.11,21,000/- in the bank account of the assessee during the year under consideration. In the absence of any explanation or documentary evidence, the AO added the difference in gross salary of Rs. 7,10,410/- to the total income and treated the cash deposit of Rs.11,21,000/- as unexplained cash credit under Section 68 of the Act. Accordingly, the Ld. AO completed the assessment u/s 143(3) of the Act on 18/11/2019 and determined the total income of the assessee at Rs.26,75,320/-. 5. Aggrieved by the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). During the appellate proceedings, with regards to the addition of Rs.11,21,000/-, the assessee submitted that, ITA No.1253/Hyd/2024 4 he was an employee of the AP State Cooperative Bank and a union leader. He often assisted lower-grade employees by providing them short-term loans from his overdraft account for household expenses. The cash deposits in his bank account represented recoveries of these short-term loans from his colleagues. However, the CIT(A) dismissed the appeal, observing that the assessee was engaged in unlicensed money-lending activities and the explanation provided by the assessee lacked genuineness, as most transactions were in cash . 6. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. The Ld. AR submitted that, the Ld. CIT(A) without appreciating the facts of the case of the assessee, dismissed the claim of the assessee. The Ld. AR produced before us the bank statements (page nos. 13 to 21 of the paper book) and confirmation letters from borrowers (page nos. 22 to 30 of the paper book), wherein, the confirmation letters provided details of the loans, including the dates and amounts of disbursement and repayment. He further submitted that some of the loan were made directly from his overdraft account, while others were made in cash. He also submitted that the cash deposits in his bank account represented recoveries of these short-term loans from his colleagues in cash. Finally, the Ld. AR prayed before the bench for the deletion of the additions Rs. 11,21,000/- made by the Ld. AO. ITA No.1253/Hyd/2024 5 7. Per contra the Ld. DR relied on the orders of the Revenue Authorities. 8. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have also gone through the bank statements (page nos. 13 to 21 of the paper book) and also the confirmation letters from borrowers (page nos. 22 to 30 of the paper book). Upon examination, we find that the confirmation letters contain details of the loans disbursed by the assessee and the subsequent repayments by the borrowers. Some of the loans were made directly from the overdraft account, while others were made in cash. The one to one correlation of the loan given to the borrowers and the recoveries are required to be verified from the bank statements, the confirmations letters of the borrowers, the available cash in hand with the assessee and other relevant available documents with the assessee. Accordingly, we deem it appropriate to set aside the issue to the file of the Ld. AO for fresh examination and decide the issue in accordance with the law. The assessee is directed to cooperate with the Ld. AO and provide all requisite information/documents within the prescribed time frame. Accordingly, the grounds no. 3 & 4 of the assessee are allowed for statistical purposes. ITA No.1253/Hyd/2024 6 9. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 24th Jan., 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 24.01.2025. * Reddy gp Copy of the Order forwarded to : 1. Shri Madhu Sudhan Reddy Biddal, 11-126, P & T Colony, Gaddiannaram, Hyderabad-500 060 2. ITO, Ward 9(1), Hyderabad. 3. Pr. CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard File. BY ORDER, "