Sabbarapu Narayana Rao V. Commissioner of Income Tax I, Visakhapatnam

ITTA/11/2024

AI Insights

This case involves an appeal by Sabbarapu Narayana Rao against the orders of the Income Tax Appellate Tribunal, Visakhapatnam, which confirmed the addition of Rs. 33,00,000 to his income as unexplained cash deposits. The appellant had initially filed returns for his business, Dhanalakshmi Agencies, and reported an income significantly lower than what was assessed by the Assessing Officer. The Tribunal's decision was based on the insufficient evidence provided to substantiate the source of the cash deposits. The High Court dismissed the appeal, agreeing with the Tribunal's findings and reasoning.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825491 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 04-12-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ANUP KARAVADI
• Assessee Lawyers: GVN HARI
• Keywords: Capital Contribution; Income from Agriculture; Partnership deed; Unexplained Cash Deposits
• Section: 143(3); 69A; 260A

Judgement Text

" APHC010015222024 IN THE HIGH COURT OF ANDHRA PRADESH THURSDAY TWO THOUSAND AND TWENTY FIVE THE HONOURABLE SRI JUSTICE BATTU DEVANAND THE HONOURABLE SRI JUSTICE A. INCOME TAX TRIBUNAL APPEAL NO: 11/2024 Between: 1. SABBARAPU NARAYANA RAO, D.NO.3 ANJANEYA SWAMY TEMPLE STREET, BIKKAVOLE MANDAL, EAST GODAVARI DIST-533343, ANDHRA PRADESH 1. PR COMMISSIONER OF INCOME TAXI, Visakhapatnam. Counsel for the Appellant: 1. G V N HARI Counsel for the Respondent: 1. ANUP KOUSHIK KARAVADI The Court made the following: 1 Judgment reserved on : 11.09.2025 Judgment pronounced on Judgment uploaded on IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) SDAY,THE FOURTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE BATTU DEVANAND THE HONOURABLE SRI JUSTICE A. HARI HARANADHA SARMA INCOME TAX TRIBUNAL APPEAL NO: 11/2024 SABBARAPU NARAYANA RAO, D.NO.3-71, VOOLAPALLI VILLAGE, ANJANEYA SWAMY TEMPLE STREET, BIKKAVOLE MANDAL, EAST 533343, ANDHRA PRADESH ...APPELLANT AND COMMISSIONER OF INCOME TAXI, Visakhapatnam. ...RESPONDENT Counsel for the Appellant: Counsel for the Respondent: ANUP KOUSHIK KARAVADI The Court made the following: ment reserved on : 11.09.2025 ment pronounced on : 04.12.2025 ment uploaded on : 05.12.2025 IN THE HIGH COURT OF ANDHRA PRADESH [3545] THE HONOURABLE SRI JUSTICE BATTU DEVANAND HARI HARANADHA SARMA 71, VOOLAPALLI VILLAGE, ANJANEYA SWAMY TEMPLE STREET, BIKKAVOLE MANDAL, EAST ...APPELLANT ...RESPONDENT Printed from counselvise.com 2 THE HONOURABLE SRI JUSTICE BATTU DEVANAND & THE HONOURABLE SRI JUSTICE A. HARI HARANADHA SARMA I.T.T.A.No.11 of 2024 JUDGMENT: (Per Hon’ble Sri Justice A. Hari Haranadha Sarma) Introductory:- This is an appeal filed under Section 260A of Income Tax Act 1961, questioning the Orders dated17.03.2023 passed in ITA No.217/Viz/2022 on the file of ITAT, Visakhapatnam Bench, Visakhapatnam. Facts that lead to filing of this Appeal:- 2. [a] Appellant is an assessee; he has filed returns in respect of the income derived from his business of sale of fertilizers and pesticides in the name and style of Dhanalakshmi Agencies for the assessment year 2017-18 to 09.06.2017, admitting an income of Rs.5,10,480/-. The assessment was made under Section 143(3) of the Act vide orders dated 16.12.2019 and the total income was assessed at Rs.1,39,50,480/- by the Assessing Officer. [b] The explanation of the assessee was rejected by the Assessing Officer with regard to the sources for cash deposits and made addition of Rs.1,34,40,000/- under Section 69A of the Act towards unexplained cash deposits. Printed from counselvise.com 3 [c] An appeal was filed before the Commissioner of Income Tax by the assessee/appellant and the same was dismissed, vide orders dated 22.09.2022 in ITA No.CIT(A),Visakhapatnam-2/10215/2019-20. Aggrieved by the same, the appellant preferred further appeal before the Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam vide I.T.A.No.217/Viz/2022. [d] The Appellate Tribunal confirmed the addition to an extent of Rs.33,00,000/- only, while exempting Rs.1,01,40,000/- after satisfying with the explanation submitted. Contention of the Appellant:- 3. [a] The appellant claims that the amount of Rs.33,00,000/- was deposited in the following pattern: Rs.20,00,000/- on 10.11.2016; Rs.12,00,000/- on 11.11.2016; and Rs.1,00,000/- on 19.01.2017. The explanation submitted in respect of these amounts that they have been received towards capital contribution from partners of M/s.Dhanalakshmi Traders, is not accepted by the Assessing Officer. Leaving the reasons assigned by the Assessing Officer, no separate reasons are assigned by the Commissioner of Income Tax (Appeals) and the explanation is summarily rejected for want of documentary evidence. [b] It is also the contention of the appellant that, before the Appellate Tribunal, the appellant filed confirmation letters of the partners of the firm, with the proof of land holdings of the partners, with an additional evidence in terms of Printed from counselvise.com 4 Rule 29 Income Tax Appellate Tribunal Rules. But the Appellate Tribunal rejected the additional evidence with insufficient reasons and confirmed the orders of the Commissioner of Income Tax (Appeals). Hence, the present appeal. Grounds urged in the present Appeal:- 4. (i) The Appellate Tribunal erred in rejecting the additional evidence on reasons, which are not relevant. (ii) The Appellate Tribunal overlooked the fact that the partners are owning reasonable extent of agriculture land, and furnished detailed basis of their annual savings. (iii) The Appellate Tribunal ought to have appreciated the fact that the appellant discharged the initial burden of proving the sources for the cash deposits by furnishing partnership deed and confirmation letters of the partners, therefore, cash deposits of Rs.33,00,000/- shall not be treated as unexplained. 5. Now the substantial question of law that arises for consideration in the facts and circumstances of this case, is:- Whether the Tribunal is justified in rejecting the additional evidence i.e., confirmation letters of the partners of the Firm- Dhanalakshmi Traders, without subjecting the same to any further enquiry and consequently subsisting the addition of Rs.33,00,000/- made by Assessing Officer in terms of Section 69A of the Act, in respect of cash deposits in the bank account of the appellant/assessee? Printed from counselvise.com 5 6. In view of the substantial question of law raised, the appeal is admitted and heard arguments on both sides. 7. Heard Sri G.V. N.Hari, learned counsel for the appellant and Sri Anup Koushik Karavadi, learned counsel for the respondent. 8. Perused the factual matrix of the instant case. 9. Reasoning of the learned Income Tax Appellate Tribunal, is as follows:- [i] Vide para 12 of the impugned orders, learned Income Tax Appellate Tribunal, Visakhapatnam, in its Orders dated 17.3.2023 has referred to the explanation in respect of Rs.33,00,000/- cash deposits that it is out of the capital introduced by the partners of the firm but there is no substantial evidence as to deposit by partners. [ii] With regard to additional evidence, the appellant has placed certain documents claiming that the partners have contributed the amount from agricultural income. There is addition of Rs.35,40,000/- cash deposits into the bank account of assessee as capital of the Firm Dhanalakshmi Traders. But the partnership deed does not contain any recital with respect to capital contribution by the partners. Printed from counselvise.com 6 [iii] There is no explanation as to why capital contribution to the firm is deposited into assessee’s personal account, instead of the Bank account of the partnership Firm, Dhanalakshmi Traders. [iv] The Additional evidence in the form of confirmation letters to the partners though filed creditworthiness of the partners is not established and the income earned by the partners through agricultural sources is not substantiated and that the deposit is into personal account of the assessee but not in the Firm Account. Therefore, the explanation is not acceptable. Analysis, Reasons and Findings:- 10. Upon considering the reasoning of the learned Income Tax Appellate Tribunal, we are of the view that the additional evidence has been overlooked is not correct. The confirmation letters of the partners and the sufficiency as well as credibility of the same is addressed by the Appellate Tribunal. The substantial question of law that, whether the Tribunal is justified in rejecting the confirmation letters of the partners without subjecting them to any further enquiry, is answered against the appellant for the reason that the learned Income Tax Appellate Tribunal assigned justification that the partnership deed is not indicating the contribution of the partners as well as the questioned deposit of capital contribution is into the individual bank account of the assessee but not in the account of partnership firm. Therefore, we are of the view that the Tribunal has properly addressed the aspects that, 1) Partnership deed is not containing capital Printed from counselvise.com 7 contribution, 2) why the capital contribution is deposited into the assessee’s bank account instead of partnership account. Hence, the substantial question of law framed, when examined in the light of the mixed factual and legal situation, in the present case found fit to be answered against the appellant. Accordingly, we answer the question of law framed that addressing and appreciating additional evidence relied on by the Appellate Tribunal is in accordance with law and the impugned orders does not warrant any interference. 11. In view of the reasons stated and discussions made above, the appeal is fit to be dismissed. 12. Accordingly, the appeal is dismissed. No costs. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed. __________________________ JUSTICE BATTU DEVANAND __________________________________ JUSTICE A.HARI HARANADHA SARMA Dated: 04 .12 .2025 Pnr Printed from counselvise.com 8 THE HON’BLE SRI JUSTICE BATTU DEVANAND And THE HONOURABLE SRI JUSTICE A. HARI HARANADHA SARMA I.T.T.A.No.11 of 2024 Dt.04.12.2025 Pnr Printed from counselvise.com "