PRATHIBA EDUCATIONAL SOCIETY,HYDERABAD V. INCOME TAX OFFICER, WARD-6(4), HYDERABAD

ITA 1424/HYD/2025

AI Insights

The case involves Prathiba Educational Society, which appealed against the order of the CIT(A)-National Faceless Appeal Centre, Delhi, for the assessment year 2017-2018. The primary contention was regarding the addition of Rs.74,26,500 as unexplained money under section 69A of the Income Tax Act, 1961, due to cash deposits in bank accounts during the demonetization period. The Assessing Officer had made this addition, which was confirmed by the CIT(A). However, the Tribunal found that the assessee had sufficiently documented the source of these deposits, stemming from earlier cash withdrawals for construction purposes, and thus ruled in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786093 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Appeal Filed On: 02-09-2025
• Other Referred Cases: Madhav Laxman Apte v. ITO, ACIT v. Mukesh Shah, Nand Kumar Taneja v. ITO, Baljit Singh v. ITO, Hemant Pandya v. ITO, Ajay Data v. ACIT, Nanakchand Agrawal v. ITO, Jaya Aggarwal v. ITO, ITO v. Deepali Sehgal, Dheeraj Thakran v. ITO, Ajit Bapu Satam v. DCIT, Estate of Late Tukojirao Holkar vs. CWT, New Diwan Oil Mills vs CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA MOORTHY K.
• Assessee Lawyers: SANKET MILIND JOSHI
• Keywords: Corroborative evidences; Principle of natural justice; Source of fund; Assessment record; Initiation of penalty proceedings
• Section: 234B

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.1424/Hyd./2025 िनधाŊरण वषŊ/Assessment Years 2017-2018 Prathiba Educational Society, HYDERABAD. PIN – 500 038 PAN AAATP4036B. vs. The Income Tax Officer, Ward-6(4), Hyderabad. PIN – 500 001 (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by : CA Sanket Milind Joshi राज̾ व Ȫारा/Revenue by : Sri Krishna Moorthy K. Sr. AR सुनवाई की तारीख/Date of hearing: 28.10.2025 घोषणा की तारीख/Pronouncement: 31.10.2025 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : This appeal by the Assessee is directed against the order dated 21.08.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2017-2018. Printed from counselvise.com 2 ITA.No.1424/Hyd./2025 2. The assessee has raised the following grounds in the instant appeal : 1. “The order passed by the learned Assessing officer and confirmed by the Hon'ble CIT(A) are contrary to the law, facts and principles of natural Justice, hence, liable to be quashed. 2. That the learned authorities have erred in making addition u/s 69A of the Act and levying tax u/s 115 BBE without properly appreciating the nature of the appellant society activities, sources of income and availability of cash on hand as per regularly maintained books of account. 3. The learned AO has erred in treating the cash deposits into bank accounts as unexplained money u/s 69A ignoring the fact that, cash balance deposited into the bank accounts was recorded in the cash book maintained in the regular course of accounts and section 69A applies only to unexplained money not recorded in the books of accounts and/or offers no explanation. 4. That the learned AO having been admitted the cash on hand balance by verifying the cash withdrawals from bank accounts, ought not to have considered such admitted cash as unexplained money. 5. That the learned AO failed to conduct any independent enquiry into the genuineness of cash withdrawals from banks, fee receipts or cash balances and mechanically Invoked section 69A on the basis of cash deposits. 6. The learned AO and Commissioner of Income Tax (Appeals) have erred in considering cash deposits amount of Rs.74,26,500 as unexplained money under section 69A of Income Tax Act, 1961, Printed from counselvise.com 3 ITA.No.1424/Hyd./2025 when the said deposit amount was available with the appellant as cash on hand. 7. The learned AO and Commissioner of Income Tax (Appeals) ought to have allowed the cash deposits amount of Rs.74,26,500 as the cash deposits are emanated from cash on hand. 8. The appellant craves leave to add/alter/modify grounds which would be necessary for adjudication of the case.” 2. The assessee is a society and running educational institution viz., ‘Prathiba Educational Society’. The assessee filed it’s return of income for the year under consideration on 22.01.2018 declaring total income of Rs.1,01,290/-. The case of the assessee was selected for limited scrutiny under CASS. The Assessing Officer issued notice u/sec.143(2) as well as u/sec.142(1) of the Income Tax Act, [in short “the Act”] 1961, calling the assessee for furnishing certain information. There was no compliance on behalf of the assessee to the notices issued u/sec.142(1) of the Act dated 10.07.2019 and 11.11.2019. Therefore, the Assessing Officer issued a show cause notice dated 09.12.2019. In response to the same, the assessee filed it’s reply to explain the source of cash deposit of Rs.74,26,500/- in the bank account of the assessee during the demonetization period Printed from counselvise.com 4 ITA.No.1424/Hyd./2025 i.e., 09.11.2016 to 30.12.2016. The assessee explained the source of cash deposit as earlier withdrawal of cash from the bank account in the month of May, 2016. The Assessing Officer has made the addition of the deposit of Rs.74,26,500/- on the ground that the assessee has failed to substantiate the source of deposit made into the bank account. Accordingly, the Assessing Officer has made the addition u/sec.69 of the Act. 3. The assessee challenged the action of the Assessing Officer before the learned CIT(A) and reiterated it’s stand that the source of deposit is prior withdrawal made on 24.05.2016. However, the learned CIT(A) was not impressed with the explanation of the assessee and confirmed the addition made by the Assessing Officer. 4. Before us, the learned Authorised Representative of the Assessee has referred to the reply dated 18.12.2019 and submitted that the assessee has duly explained before the Assessing Officer the source of the deposit of Rs.74,26,500/- in three bank accounts during the demonetization period. The learned Authorised Printed from counselvise.com 5 ITA.No.1424/Hyd./2025 Representative of the Assessee has submitted that the assessee has withdrawn an amount of Rs.84,00,000/- on 24.05.2016, out of which, a sum of Rs.74,26,500/- was deposited in the bank account during the demonetization period. He has also referred to the details and other record filed before the Assessing Officer comprising of cash book, vouchers and bills for physical verification of the Assessing Officer and submitted that once the transactions are recorded in the cash book of the assessee, then, the provisions of sec.69A of the Act cannot be applied in the case of the assessee. In support of his contentions, he has relied upon the following decisions : 1. Madhav Laxman Apte v. ITO [ITA No.1557/Mum/ 2010 (Mumbai Trib.)] dated 25.07.2012. 2. ACIT v. Mukesh Shah [(2025) 171 taxmann.com 304 (Jodhpur Trib.)] dated 08.01.2025. 3. Nand Kumar Taneja v. ITO [(2019) 105 taxmann.com 390 (Delhi Trib.)] dated 29.03.2019. 4. Baljit Singh v. ITO [(2019) 108 taxmann.com 123 (Chandigarh Trib.)] dated 03.07.2019. 5. Hemant Pandya v. ITO [ITA No. 173/Ind/2022 (Indore Trib.)] dated 22.05.2023. 6. Ajay Data v. ACIT [(2025) 171 taxmann.com 308 (Jaipur-Trib.)] dated 07.01.2025. 7. Nanakchand Agrawal v. ITO [TAXC No. 8 of 2024 (Chhattisgarh High Court)] dated 29.08.2025. 8. Jaya Aggarwal v. ITO [ITA No. 315/2005 (Delhi High Court)] dated 13.03.2018. Printed from counselvise.com 6 ITA.No.1424/Hyd./2025 9. ITO v. Deepali Sehgal [ITA No. 5660/Del/2012 (Delhi Trib.)] dated 05.09.2014. 10. Dheeraj Thakran v. ITO [ITA No. 2761/Del/2016 (Delhi Trib.)] dated 28.05.2021. 11. Ajit Bapu Satam v. DCIT [ITA No. 1599/Mum/2021 (Mumbai Trib.)] dated 29.08.2022. 12. Judgment of Chattisgarh at Bilaspur High Court in TAXC No.8 of 2024 dated 29.08.2025 in the case of Nanakchand Agrawal L/h of Kalawati Agrawal, Dhamtari vs., The ITO, Ward, Dhamtari. 4.1. He has then referred to the balance-sheet of the assessee society and submitted that the assessee has shown the work-in-progress of building in the fixed assets Schedule and the purpose of withdrawal of the cash was for the payment to the builder/developer. Thus, the learned Authorised Representative of the Assessee submitted that in view of various decisions as cited above, the addition made by the Assessing Officer and confirmed by the learned CIT(A) is not sustainable and liable to be deleted. 5. On the other hand, Learned DR submitted that the assessee has taken a plea that the earlier withdrawal of cash from the bank in the month of May, 2016 is the source of the deposit during the demonetization period. However, the assessee has failed to substantiate this fact with Printed from counselvise.com 7 ITA.No.1424/Hyd./2025 documentary evidence that the withdrawal was made for the purpose of construction of building. The learned Authorised Representative of the Department has further submitted that the assessee has not explained why this huge amount of Rs.84,00,000/- was withdrawn and when the same amount was received back by the assessee society. The Learned DR has referred to the findings of the Assessing Officer as well as the learned CIT(A) and submitted that the assessee has failed to substantiate the claim regarding source of the deposit made in the bank account during the demonetization period. He has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as relevant material on record. The assessee society in it’s reply dated 18.12.2019 has claimed that the assessee society was having cash in hand balance as on 08.11.2016 of Rs.74,42,507/-, out of which, the deposit in the three bank accounts were made to the tune of Rs.74,26,500/-. The cash in hand as on 08.11.2016 was explained by the assessee society as earlier withdrawal of Rs.84,00,000/- on Printed from counselvise.com 8 ITA.No.1424/Hyd./2025 24.05.2016. On going through the bank account statement of the assessee, it is noted that on 24.05.2016 an amount of Rs.84 lakhs was withdrawn through self cheques. The learned Authorised Representative of the Assessee explained the purpose of withdrawal was for construction of building. He has referred to the schedule of fixed asset and work-in- progress of the building as on 31.03.2017. The assessee has filed the cash book before the Assessing Officer to explain all these entries of inflow as well as outflow of cash and availability of the cash as on 08.11.2016. The learned CIT(A) has stated in the impugned order that despite sufficient number of opportunities given to the assessee, the assessee has not complied with the notices, however, the cash book and other relevant documents including the bank account statement was available in the assessment record. The relevant observations of the learned CIT(A) in Paras-5.3 to 7.7 as under : “5.3. As seen from the above, it is clearly evident that the appellant was provided with sufficient time and adequate number of opportunities of being heard, but in vain. To be precise, every time the appellant has been seeking adjournment with the same reason that they are in the process of compiling the rely Printed from counselvise.com 9 ITA.No.1424/Hyd./2025 and the documents but never bothered to file it or request for definite time frame to submit the same. Thus it shows the very casual attitude of the appellant with respect to representation of the appeal filed by it. 5.4. Accordingly, I am of the considered view that no useful purpose will be served in keep on adjourning the case without there being any response from the assessee. 5.5. In this regard, it is pertinent to note the decision of the Hon'ble Supreme Court in the case of B.N. Bhattacharjee and Another (118 ITR 461) wherein it has been held that appeal does not mean merely filing of memo of appeal but also pursuing it effectively. In cases where the appellant does not want to pursue the appeal, appellate authorities have inherent power to dismiss the appeal for non-prosecution as held by the Hon'ble Bombay High Court in the case of Mis Chemipol vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the issue, the Hon'ble High Court of Bombay has referred to the observations of Hidayatullah, Chief Justice (as His Lordship then was) in Sundertal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was observed :- \"Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses 5.6. There is a well-known dictum of law \"VIGILANTIBUS, NO DORMENTIBUS. JURA SUBVENIUNT which means law will help Printed from counselvise.com 10 ITA.No.1424/Hyd./2025 only those who are vigilant Law will not assist those who are careless of his/her right. In order to claim one's right, s/he must be watchful of his/her night. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law. Law confers rights on persons who are vigilant of their rights. Hon'ble Madhya Pradesh High Court in the case of Estate of Late TukojiraoHolkar vs. CWT (223 ITR 480) has held as under : \"if the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference. Similarly, Hon'ble Punjab & Haryana High Court in the case of New Diwan Oil Mills vs CIT (2008) 296 ITR 495) returned the reference unanswered since the assessee remained absent and there was no assistance from the assessee 5.7. This appeal has been filed by the appellant claiming that the action of the Assessing Officer is not supported by facts and laws and that it is unjust. In such a situation, it is for the appellant to furnish submissions with relevant evidence(s) to support the claim. The 'burden of proof is always on the person who makes the claim. In this case, it is the appellant who has made the claim by filing the appeal. Thus, in cases where a particular receipt is sought to be taxed as income, the initial onus is on the Assessing Officer to prove that it is taxable. Where, however, the assessee claims exemption, the burden is on the assessee to prove it to be exempt. Same is the position in case of Printed from counselvise.com 11 ITA.No.1424/Hyd./2025 all the credits, receipts, allowances, deductions, claims or loss, etc. Since an appeal is nothing but the claim of the appellant that he has been unduly unjustifiably taxed, it is for the appellant to prove its case. The appellant has not availed any opportunity to do so. 5.8. In view of the above, as the appellant failed to furnish the requisite details and documentary evidence in support of his claim made in the grounds of appeal in spite of affording sufficient opportunities, the appeal filed by the appellant is liable to be dismissed. Therefore, the appeal filed by the assessee is being disposed of on merits of the case, after considering the submissions made by the appellant in the form of ground of appeal and statement of facts, in the subsequent paragraphs of this order. 6. ANALYSIS OF THE FACTS AND ADJUDICATION OF THE GROUNDS: 6.1. The appellant has raised 5 grounds of appeal, relating to additions made by the AO against which the present appeal is filed. Ground No.1, 2 and 3 are raised against addition on account of unexplained cash deposits u/s 69A. Ground No.4 is raised against addition on levy of interest u/s 234A, 234B and 234C. Ground No.5 is raised against initiation of penalty proceedings u/s 271(1)(c)/271AAC(1). 6.2. These grounds are taken up for discussion and adjudication in the subsequent paragraphs of this order. Further, as explained in the preceding paras, during the course of Printed from counselvise.com 12 ITA.No.1424/Hyd./2025 appellate proceedings also, even after availing of sufficient time and adequate number of opportunities of being heard provided to the appellant in terms of the provisions of section 250(1) of the Act, the appellant chose not to file any written submissions in support of its grounds of appeal. 7.0. DECISION : 7.1. I have carefully considered the material facts on record and grounds of appeal raised by the appellant. 7.2. Though the appellant has stated in the statement of facts that it has withdrawn the amount from bank vide cheque no, 165864 dt.25.05.2016 of Rs.5000000/-and vide cheque 165866 dt.25.05.2016 of Rs.3400000/-, and the same has been recorded in its cash book and the same amount after utilising certain portion has been deposited back into the bank. The appellant has stated it has furnished the copy of the cash book in support of its claim. However it is noted no any submission other than form 35 has been made by the appellant. 7.3. Further it is noted that vide sl.no. 12 of Form 35 the appellant as stated as follows : 12. Whether any documentary evidence produced during the course of proceedings before the Income- tax Authority has been filed in terms of Rule 46A -No- 12.1. If reply to 12 is Yes, furnish the list of such documentary evidence. 7.4. From the above it is clear that the appellant other than filing the form 35 has not submitted any document or it is not having any material in support of its grounds of appeal. 7.5. The appellant being non responsive and in the absence of any proof in support of its grounds of appeal, it is held that the Printed from counselvise.com 13 ITA.No.1424/Hyd./2025 addition made by the AO u/s 69A Rs as unexplained money holds good. Accordingly, the grounds of appeal 1 to 6 stands dismissed. 7.6. Ground 7: Being charging of interest u/s 234A, B and C are mandatory and consequential, this ground of appeal is dismissed. 7.7 Ground 8. This ground relates to initiation of penalty proceedings u/s. 271AAol the Act cannot be made a ground of appeal at this stage. Only in the event of penalty under relevant section is imposed and in case the appellant is not in agreement with the decision of the AO, the option of seeking relief by preferring an appeal within the stipulated time period is open to any assessee. Accordingly, this ground of appeal is hereby dismissed.” 7. Thus, it is clear that the learned CIT(A) has dismissed the appeal of the assessee on the ground that the assessee has not submitted the necessary details and supporting evidences, but, without considering the details and documents already filed by the assessee before the Assessing Officer. Once the documents and details filed before the Assessing Officer manifest the availability of cash in the books and in the hands of the assessee and particularly, the earlier withdrawal from the bank account to the tune of Rs.84,00,000/-, then, deposit made in the Printed from counselvise.com 14 ITA.No.1424/Hyd./2025 bank account of Rs.74,26,500/- stood explained. Accordingly, in the facts and circumstances of the case, the fact of withdrawal of Rs.84 lakhs from the bank account of the assessee is not in dispute, then, merely because there is a gap between the withdrawal and re-deposit of the cash cannot be a sole ground for making the addition without bringing any contrary fact or material on record to show that the earlier withdrawal from the bank account were utilized for some other purpose by the assessee and not available for re-deposit in the bank account. Accordingly, in the facts and circumstances of the case, we are of the considered opinion that the assessee has explained the source of the deposit of Rs.74,26,500/- during the months of November and December, 2016 and consequently, the addition made by the Assessing Officer is not sustainable and the same is deleted. 8. In the result, appeal of the Assessee is allowed. Printed from counselvise.com 15 ITA.No.1424/Hyd./2025 Order pronounced in the open Court on 31.10.2025. Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 31st October, 2025 VBP Copy to : 1. Pratibha Educational Society, H39, Madhura Nagar, Hyderabad – 500 038. 2. The Income Tax Officer, Ward-6(4), 6th Floor, I.T. Towers, AC Guards, Hyderabad – 500 004. 3. The Pr. CIT, Hyderabad 4. DR, ITAT “B” Bench, Hyderabad. 5. Guard file. BY ORDER, //True copy// Printed from counselvise.com "