RAMARAGHAVA REDDY KOLLAREDDY,HYDERABAD V. ACIT., CIRCLE 6(1), HYDERABAD

ITA 234/HYD/2025

AI Insights

The case involves Ramaraghava Reddy Kollareddy, the appellant, who contested the addition of Rs. 18,35,83,816 as unexplained cash credit under section 68 of the Income Tax Act, 1961, by the Assessing Officer. The addition was based on alleged cash deposits during the demonetization period, which the Assessing Officer and CIT(A) sustained despite the appellant's claims and partial evidence. The Tribunal found procedural lapses in how the Assessing Officer and CIT(A) handled the appellant's submissions and evidence, leading to the decision to remand the case back to the Assessing Officer for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313957 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M. NARMADA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Set aside; Opportunity of being heard; Unexplained cash credit
• Section: 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH: HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.234/Hyd./2025 Assessment Year 2017-2018 Ramaraghava Reddy Kollareddy, Hyderabad – 500 034. PAN AEMPK0325E vs. The ACIT, Circle-6(1), Hyderabad. Telangana. (Appellant) (Respondent) For Assessee : CA P Murali Mohan Rao For Revenue : MS. M. Narmada, CIT-DR Date of Hearing : 08.05.2025 Date of Pronouncement : 08.05.2025 ORDER PER MANJUNATHA G. : This appeal has been filed by the Assessee- against the order dated 27.12.2024 of the learned CIT(A)- National Faceless Appeal Centre [in short the “NFAC”] Delhi, relating to the assessment year 2017-2018. 2. Briefly stated facts of the case are that, the assessee filed his return of income on 28.10.2017 for the 2 ITA.No.234/Hyd./2025 impugned assessment year 2017-2018 declaring total income of Rs.40,22,880/-. The case was selected for scrutiny under CASS for examination of cash deposits into Canara Bank, Industrial Finance Branch, Hyderabad to the tune of Rs.18,35,83,816/- during demonetization period. The Assessing Officer issued various statutory notices u/sec.143(2) and 142(1) of the Income Tax Act, 1961 [in short “the Act”] and in absence of any reply from the side of the assessee, the Assessing Officer passed his best Judgment assessment order by determining the total income of the assessee at Rs.18,76,06,196/- by making addition of Rs.18,35,83,816/- u/sec.68 of the Act towards unexplained cash credit as against the returned income of assessee at Rs.40,22,880/- vide order dated 03.12.2019 u/sec.144 of the Income Tax Act, 1961. 3. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A) and the learned CIT(A) after considering the submissions of the assessee and assessment order, sustained the addition made by the Assessing Officer. 3 ITA.No.234/Hyd./2025 4. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal. 5. CA P Murali Mohan Rao, Learned Counsel for the Assessee, submitted that, the authorities below has not provided adequate opportunity of hearing to the assessee, before making/sustaining the addition. He submitted that, the assessee has made total deposit into Canara Bank, Industrial Finance Branch, Hyderabad to the tune of Rs.9,86,29,240/- and not Rs.18,35,83,316/- as noted by the Assessing Officer. He submitted that, in response to the notices issued by the Assessing Officer, the assessee has furnished on-line reply to substantiate his claim of cash deposit into bank account. However, the Assessing Officer passed ex-parte assessment order without considering the submissions of the assessee and also not afforded adequate opportunity while making addition u/sec.68 of the Act treating the cash deposited into bank a/c as unexplained cash credit. Even during the course of appellate proceedings, although, the assessee filed his submissions dated 27.11.2024 before the learned CIT(A) which is evident 4 ITA.No.234/Hyd./2025 from page-6 of his order, but, the learned CIT(A) has sustained the addition on the ground that, the submissions filed before him, are not filed before the Assessing Officer. He submitted that, being the appellate authority, if the learned CIT(A) was of the view that, if the submissions furnished by the assessee before him needs factual verification from the Assessing Officer, he ought to have call for remand report from the Assessing Officer. However, the learned CIT(A) without discussing the submissions of the assessee in his order, simply sustained the addition made by the Assessing Officer by observing that these submissions were not filed before the Assessing Officer, which is not in accordance with law and, therefore, the orders of the authorities below should be set aside. In the alternative, the Learned Counsel for the Assessee submitted that, in the event, the Tribunal could not delete the addition made by the Assessing Officer, the matter may be restored back to the file of Assessing Officer to reconsider the issue in the interest of justice. 5 ITA.No.234/Hyd./2025 6. MS. M. Narmada, learned CIT-DR for the Revenue, on the other hand, supporting the orders of the lower authorities submitted that, the assessee has been provided with numerous opportunities to substantiate his claim of cash deposited into Canara Bank, Industrial Finance Branch, Hyderabad which is evident from the orders of both the authorities. Since, the assessee was failed to comply with the notices issued by the Assessing Officer, the Assessing Officer had no option, except to pass the ex- parte assessment order and, therefore, the order of the Assessing Officer is in accordance with law. Further, even during the course of appellate proceedings, the learned CIT(A) has issued six notices dated 10.10.2020, 26.02.2020, 02.09.2020, 24.02.2021, 23.10.2024 and 27.11.2024 which is evident from page-4 of the order of the learned CIT(A) and out of which, the assessee has filed his reply only on 27.11.2024. The learned CIT(A) after considering the submissions of the assessee and assessment order of the Assessing Officer and in absence of failing to prove cash credit into the bank account, the learned CIT(A), sustained 6 ITA.No.234/Hyd./2025 the addition made by the Assessing Officer. She accordingly submitted that, the order of the learned CIT(A) should be upheld. 7. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. Admittedly the assessment proceedings before the Assessing Officer are ex-parte. The assessee neither appeared nor explained the credits in Canara Bank, Industrial Finance Branch, Hyderabad. Before the learned CIT(A), although, the assessee contended that, the Assessing Officer has considered total credits of Rs.18,35,83,316/- in light of relevant bank statement and argued that, the total credits in Canara Bank, Industrial Finance Branch, Hyderabad is only of Rs.9,86,29,240/- but, could not substantiate his claim with relevant evidences which is evident from the order of the CIT(A) where the CIT(A) observed that, the assessee could not file complete evidences. 7 ITA.No.234/Hyd./2025 8. Before us, the assessee has filed relevant Bank account statement of Canara Bank, Industrial Finance Branch, Hyderabad and as per the said bank statement, the total credits in the bank account from 01.04.2016 to 31.03.2017 is at Rs.9,86,29,240/-. However, the Assessing Officer has considered total credits of Rs.18,35,83,316/- from 01.04.2016 to 30.12.2016. There is no details as to the source of information with the Assessing Officer either in the assessment order or the CIT(A)’s order, except stating that, the total amount of cash deposited in Canara Bank Industrial Branch, Hyderabad is at Rs.18,35,83,316/-. On the other hand, evidences filed by the assessee including relevant bank account statement clearly shows that, there are hardly any cash deposits in Canara Bank a/c and further, the total credits itself is at Rs.9,86,29,240/-. Since there are contrary facts when compared to relevant evidences brought on record by the assessee before us, these facts needs to be re-examined by the Assessing Officer. Thus, we set aside the order of the learned CIT(A) and restore the issue back to the file of Assessing Officer 8 ITA.No.234/Hyd./2025 with a direction to re-consider the issue de novo after providing adequate opportunity of being heard to the assessee. 9. In the result appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 08.05.2025. Sd/- Sd/- [RAVISH SOOD] [MANJUNATHA G] JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 08th May, 2025 VBP Copy to 1. Ramaraghava Reddy Kollareddy, Hyderabad – 500 034. C/o. P. Murali & Co. Chartered Accountants, 6-3-655/1/3, Somajiguda, Hyderabad - 500 082. 2. The ACIT, Circle-6(1), Hyderabad. Telangana. 3. The DR ITAT “B” Bench, Hyderabad. 4. Guard File. //By Order// //True Copy// "