SADHU RAMA KRISHNAREDDY,NALGONDA V. ITO., WARD-1, SURYAPET

ITA 833/HYD/2025

AI Insights

The case involves Sadhu Rama Krishnareddy, who appealed against the order of the Commissioner of Income-Tax (Appeals), which was based on an incorrect set of facts pertaining to another case. The original assessment by the Assessing Officer included unexplained cash deposits during the demonetization period and estimated business income, which the CIT(A) upheld without proper consideration of the appellant's specific circumstances. The Tribunal found that the CIT(A)'s decision was not relevant to the facts of Krishnareddy's case and thus remanded it for a fresh review.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786103 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2017-2018
• Appeal Filed On: 14-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Opportunity of being heard; Sale consideration of property below Jantri Value
• Section: 147; 144; 143(3)

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad Įी रवीश सूद, माननीय ÛयाǓयक सदèय एवं Įी मधुसूदन सावͫडया, माननीय लेखा सदèय SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A. No.833/Hyd/2025 (Ǔनधा[रणवष[/ Assessment Year:2017-18) Sadhu Rama Krishnareddy, Nalgonda. PAN: BTAPS6050C VS. Income Tax Officer, Ward-1, Suryapet. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) करदाताकाĤǓतǓनͬध×व/ Assessee Represented by : Smt. S. Sandhya, Advocate राजèवकाĤǓतǓनͬध×व/ Department Represented by : Sri Gurpreet Singh, Sr. AR सुनवाईसमाÜतहोनेकȧǓतͬथ/ Date of Conclusion of Hearing : 28/10/2025 घोषणा कȧ तारȣख/ Date of Pronouncement : 31/10/2025 ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 17/03/2025, which in turn arises from the order passed by the Assessing Officer Printed from counselvise.com 2 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO (for short, “A.O.”) under Section 143(3) of the Income Tax Act, 1961 (for short “the Act”) dated 26/12/2019 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The order of the learned Commissioner of Income-Tax (Appeals) erroneous both on facts and in law. is 2. The learned Commissioner of Income-Tax (Appeals) is not justified in deciding the appeal ex parte without providing any opportunity and without issuing any notices. 3. The learned Commissioner of Income-Tax (Appeals) is not justified in not considering the grounds raised by the appellant in the appeal filed 4. The learned Commissioner of Income-Tax (Appeals) considered the irrelevant grounds which do not relate to the appellant and decided the grounds which were never raised by the appellant and which did not emanate from the order of assessment. 5. The learned Commissioner of Income-Tax (Appeals) ought to have considered the fact that the income was admitted based on the books of account properly maintained and the Assessing Officer is not justified in rejecting the books of account. 6. The learned Commissioner of Income-Tax (Appeals) ought to have considered the fact that the deposits made into the bank account of Rs.95,40,672/- are already recorded in the books of account and cannot be treated as income u/s 69A of the 1.T. Act. 7. (a) The order of the learned Commissioner of Income-Tax (Appeals) is unjust as he did not consider the grounds relating to the addition of Rs.95,40,672/-made by applying the provisions of Sec.69A of the I.T. Act and the addition of Rs.66,15,265/- by estimating the income of the appellant rejecting the books of account. (b) On the other hand, the learned CIT (Appeals) considered the grounds raised by an educational institution which is financed by the Govt. instead considering the grounds raised by the appellant. 8. Any other ground that may be urged at the time of hearing.” 2. Succinctly stated, the assessee had filed his return of income for the assessment year 2017-18 on 07/11/2017 declaring an income of Printed from counselvise.com 3 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO Rs.4,65,820/-. Subsequently, the case of the assessee was selected for scrutiny assessment under section 143(2) of the Act. 3. During the course of the assessment proceedings, the AO observed that the assessee had during the demonetization period made cash deposits of Rs.95,40,672/- in his bank account, as under: 4. As the assessee had failed to comply with the notices issued by the AO U/s. 143(2)/142(1) of the Act, therefore, the AO in absence of any explanation regarding the source of the cash deposits made by the assessee in Specified Bank Notes (SBNs) in his aforementioned bank accounts held the entire amount of Rs. 95,40,672/- as having been sourced out of his unexplained money under section 69A of the Act. Apart from that, the AO observed that the assessee who was engaged in the business of poultry forming had on his admitted sales of Rs. 14,18,45,976/- disclosed a gross profit of Rs.18,67,173/- (gross profit Printed from counselvise.com 4 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO rate:1.32%) and net profit of Rs. 4,98,520/- (net profit rate:0.35%). As the assessee had failed to substantiate his claim for deduction of expenses debited in his books of accounts, therefore, the AO observing that the net profit rate in the business of trading in chicken/birds and poultry forming varied from 4% to 6% adopted the rate of net profit in the case of the assessee at 5% of his total sales. Thereafter, the AO observing that an addition of unexplained cash deposits of Rs. 95,40,672/- was separately made in the hands of the assessee, thus, scaled down his turnover by the said amount and determined the remaining turnover at Rs. 13,23,05,304/- on which he estimated his net income at the rate of 5% i.e., at Rs. 66,16,265/-. Accordingly, the AO based on his aforesaid observations determined the income of the assessee vide his order under section143(3) of the Act, dated 26/12/2019 at Rs. 1,63,98,944/-. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A) who dismissed the same for the reason that the assessee appellant had failed to participate in the appellate proceedings. 6. We have heard the Learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. 7. Smt. Sandhya, Advocate, the Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the Printed from counselvise.com 5 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO appeal, submitted that the CIT(A) had grossly erred in law and facts of the case in dismissing the assessee’s appeal based on his observations recorded in context of the facts of some other case. Elaborating on her contention, the Ld. AR submitted that neither of the facts as has been culled out by the CIT(A) in his order pertain to the assessee appellant. Apart from that, it was submitted by him that the grounds of appeal culled out in the appellate order along with the statement of facts and the observations, and the findings and decision of the CIT(A) in the case of the assessee appellant were totally out of context and not relevant to the facts involved in the case of the assessee. The Ld. AR to buttress her aforesaid claim had taken us through the appellate order which duly fortified her contention. The Ld. AR submitted that while for the case of the assessee involved two issues, viz., (i) addition of unexplained money under section 69A of the Act made during the demonetization period: Rs. 95,40,672/-; and (ii) estimation of his business income at the rate of 5% of turnover: Rs. 66,15,265/-, but the entire set of facts recorded by the CIT(A) were apparently in context of a case of an educational institution that had claimed an exemption under section 10(23C)(iii)(ab) of the Act. The Ld. AR further submitted that surprisingly the CIT(A) had thereafter in his observations, findings and decision referred to the facts pertaining to some individual assessee which were totally irrelevant to the facts involved in the case of the present assessee. The Ld. AR submitted that the assessee had Printed from counselvise.com 6 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO suffered the dismissal of his appeal on account of a gross miscarriage of justice by the CIT(A) who had not even taken cognizance of the facts involved in the case of the assessee appellant before him. 8. Per contra, Sri Gurpreet Singh, the Learned Departmental Representative (for short, “Ld. DR”), on being confronted with the aforesaid factual position failed to rebut the same. On a specific query by the Bench as to how such order had been passed by the CIT(A), the Ld. DR was unable to come up with any explanation. 9. We have given a thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both the parties in the backdrop of the orders of the authorities below. 10. At the threshold, we may herein observe that there is substance in the Ld. AR’s contention that the facts, observations, findings and decision emanating from the order passed by the CIT(A) are not at all relevant to the case of the assessee before us. As pointed out by the Ld. AR and rightly so, we find that the entire details of the appeal i.e., date of institution and also the impugned order of assessment as had been referred by the CIT(A) at the threshold of his order does not pertain to the assessee. Also, the reference to the date of notice/letters intimating the fixation of the hearing of the appeal are not in context of the proceedings in the case of the assessee before us. Further, we find that the CIT(A) in his order had referred to the grounds of appeal Printed from counselvise.com 7 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO pertaining to an educational institution/college substantially financed by the Government that had claimed exemption under section 10(23C)(iii)(ab) of the Act. Thereafter, the CIT(A) had in the statement of facts referred to an addition of Rs. 1,88,20,840/- which also as per the facts discernible from the record does not relate to the assessee appellant before us. Lastly, the observations, findings and decision of the CIT(A) are not in reference to the assessee but are in context of some assessment order passed by an assessing officer U/s. 147 r.w.s 144 r.w.s 144B of the Act, dated 13/03/2023 wherein an addition of Rs. 32,03,000/- was made. 11. Be that as it may, we not only find it incomprehensible but rather shocking the manner in which the appeal of the present assessee before us had been disposed of by the CIT(A) by referring the facts, grounds of appeal, observations and the final decision all in context of some third party. We are pained to find that the assessee appellant who had assailed the specific additions that were made in his case vide order under section 143(3) of the Act, dated 26/12/2019 had been subjected to unnecessary litigation and had been compelled to carry the matter before us for the reason that his appeal had suffered dismissal based on an incomprehensible order passed by the CIT(A)/NFAC, Delhi. We deprecate the manner in which the present appeal has been disposed of by the CIT(A) by referring to the facts and issues which are Printed from counselvise.com 8 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO not germane from the impugned order of assessment passed by the AO in his case under section 143(3) of the Act, dated 26/12/2019. 12. Considering the aforesaid facts, we are being left with no other option but to set aside the matter to the file of the CIT(A)/NFAC, Delhi with a direction to adjudicate the appeal based on a speaking and a reasoned order after considering the facts involved in the case of the present assessee before us. Needless to say, the CIT(A) shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his contentions based on fresh documentary evidence, if any. 13. Resultantly, appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the open court on 31ST October, 2025. S Sd/ -Sd/- (मधुसूदन सावͫडया) (MADHUSUDAN SAWDIA) लेखासदèय/ACCOUNTANT MEMBER Sd/- Sd/- (रवीश सूद) (RAVISH SOOD) ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Sd Hyderabad, dated 31.10.2025. OKK/sps Printed from counselvise.com 9 ITA No. 833/Hyd/2025 Sadhu Rama Krishna Reddy vs. ITO आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/The Assessee : Sadhu Rama Krishnareddy, Venkepalli Village, Noothankal Mandal, Nalgonda, Telangana. 2. राजèव/ The Revenue : Income Tax Officer, Ward-1, Suryapet, Telangana. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण /DR,ITAT, Hyderabad. 5. The Commissioner of Income Tax 6. गाड[फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad. Printed from counselvise.com "