SRAVAN KUMAR RATAKONDA,HYDERABAD V. ITO., WARD-12(3), HYDERABAD

ITA 398/HYD/2025

AI Insights

This case involves an appeal by Shri Sravan Kumar Ratakonda against the order of the Learned First Appellate Authority, which upheld the additions made by the Learned Assessing Officer under Section 143(3) of the Income Tax Act, 1961. The additions included Rs.83,409/- on account of house rent allowance and Rs.5,97,600/- under Section 68 of the Act. The primary contention in the appeal was regarding the addition of Rs.5,97,600/-, which the assessee claimed were credit card payments made on behalf of his friend, Shri J. Veeresh, for business purposes. The Tribunal found merit in the need for further verification of the source of funds and the mode of receipt of income by the assessee's friend.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708239 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAVITRAN KUMAR
• Assessee Lawyers: SAI PRASAD
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Revised return; Source of fund; FORM 26AS
• Section: 143(3); 68; 44AD

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad श्री रविश सूद, न् याययक सदस् य एवं श्री मिुसूदन सावडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.398/Hyd/2025 (निर्धारण वर्ा/Assessment Year:2017-18) Shri Sravan Kumar Ratakonda, Hyderabad. PAN: ALUPR9690J Vs. Income Tax Officer, Ward-12(3), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri K.A. Sai Prasad, C.A. रधजस् व द्वधरध/Revenue by: Shri Pavitran Kumar, SR-DR सुिवधई की तधरीख/Date of hearing: 10/07/2025 घोर्णध की तधरीख/Pronouncement: 14/07/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Shri Sravan Kumar Ratakonda (“the assessee”), feeling aggrieved by the order passed by the Learned ADDL/JCIT(A)-10, Mumbai (“Ld. First Appellate Authority”), dated 28.01.2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal : ITA No.398/Hyd/2025 2 3. The brief facts of the case are that, the assessee is an individual who filed his Return of Income (“ROI”) for Assessment Year 2017– 18 on 28.06.2017, declaring a total income of Rs.12,57,960/-. Subsequently, the assessee filed a revised return of income on 29.08.2018, declaring total income of Rs.17,15,270/-. The case was selected for limited scrutiny and a notice under Section 143(2) of the Income Tax Act, 1961 (“the Act”) dated 10.08.2018 was issued by the Learned Assessing Officer (“Ld. AO”). After considering the ITA No.398/Hyd/2025 3 submissions of the assessee, the Ld. AO completed the assessment under Section 143(3) of the Act on 20.11.2019 by making an addition of Rs.83,409/- on account of house rent allowance and an addition of Rs.5,97,600/- under Section 68 of the Act, and assessed the total income at Rs.23,96,279/-. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before the Ld. First Appellate Authority, who upheld the additions made by the Ld. AO and dismissed the appeal. 5. Aggrieved with the order of Ld. First Appellate Authority, the assessee has filed the present appeal before the Tribunal. At the threshold of the hearing, the Learned Authorised Representative (“Ld. AR”) submitted that, the assessee is not pressing Ground No.2. Accordingly, the same is dismissed as not pressed. Ground Nos.1 and 5 are general in nature and hence dismissed. 6. Ground Nos. 3 and 4 relate to the addition of Rs.5,97,600/- under Section 68 of the Act. The Ld. AR submitted that the said addition represents the credit card payments made by the assessee which, according to the assessee, were made on behalf of his friend ITA No.398/Hyd/2025 4 Shri J. Veeresh, who was using the assessee’s credit card for business purposes. It was submitted that a confirmation letter from the said friend was filed before the Ld. AO during assessment proceedings. Further, before the Ld. CIT(A), the assessee also submitted a copy of Form 26AS and ROI of his friend to demonstrate that his friend was engaged in business activities and was receiving income under Section 44AD of the Act. The Ld. AR drew our attention to the computation of income and Form 26AS of his friend placed at page nos. 18 to 23 of the paper book, showing that his friend had declared income under Section 44AD of the Act from business of internet services. It was further submitted by the Ld. AR that, after receiving business receipts in cash, his friend repaid the assessee who then deposited the cash into his credit card account. The Ld. AR prayed for deletion of the addition of Rs.5,97,600/- under Section 68 of the Act. 7. Per contra, the Learned Departmental Representative (“Ld. DR”) relied on the orders of the lower authorities and submitted that in Income Tax Return placed at page no.13 of the paper book, the friend of the assessee has declared a total turnover of only Rs.4,12,000/-, all of which is through banking channels. He further ITA No.398/Hyd/2025 5 submitted that, the contention of the assessee that his friend received Rs.5,97,600/- in cash and repaid it to the assessee for deposit into the credit card account is unsubstantiated. It was argued that no confirmation from the parties from whom his friend allegedly received such cash was furnished. 8. We have considered the rival submissions and perused the material available on record. We find merits in the contention of the Ld. DR that as per the Income Tax Return of the friend of the assessee ( page no. 13 of the paper book) the entire turnover of Rs.4,12,000/- is from banking channel. However we also found that the friend of the assessee has declared in addition to business receipts of Rs.4,12,000/- under Section 44AD of the Act, income of Rs.1,02,920/- under the head “Income from Other Sources” as seen from computation of income placed at page no.18 of the paper book. Therefore, it is a matter of verification that, how much of the receipts of the assessee’s friend is in cash and how much of the cash has been handed over to the assessee. Therefore, to ascertain the correctness of the source of funds deposited in the assessee’s credit card account, the matter needs verification. Accordingly, we deem it fit and proper to set aside the ITA No.398/Hyd/2025 6 issue of addition of Rs.5,97,600/- under Section 68 of the Act to the file of the Ld. AO for fresh adjudication, with the directions that the Ld. AO shall verify the exact quantum and mode of receipt of income by assessee’s friend, and whether any cash was handed over to the assessee for the purpose of credit card payments. The Ld. AO shall consider the confirmation letter, income-tax return, and Form 26AS of assessee’s friend and also call for his personal confirmation and supporting documents. The assessee shall be given due opportunity of being heard and shall be at liberty to file additional evidences, if any, to substantiate his claim. 9. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 14th July, 2025. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad. Dated: 14.07.2025. * Reddy gp ITA No.398/Hyd/2025 7 Copy of the Order forwarded to : 1. Shri Sravan Kumar Ratakonda, C/o Katrapati & Associates, 1-1- 298/2/B/3, Sowbhagya Avenue Apartments, 1st Floor, Ashok Nagar, Street No.1, Hyderabad-500 020 2. ITO, Ward 12(3), Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, "