SREE SATYA PRAKASH NALAMATI,HYDERABAD V. INCOME TAX OFFICER, WARD - 6(1), HYDERABAD

ITA 1431/HYD/2025

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The case involves an appeal by Sree Satya Prakash Nalamati against the order of the Commissioner of Income-Tax (Appeals), which itself arose from an order passed by the Assessing Officer under Section 144 of the Income Tax Act, 1961. The Assessing Officer had treated a cash deposit of Rs. 18,03,730 made during the demonetization period as unexplained money under Section 69A of the Act, due to the assessee's failure to file a return of income or respond to notices. The CIT(A) upheld this decision, leading to the current appeal. The Tribunal found procedural lapses in the notification process of the hearing, leading to the decision to set aside the CIT(A)'s order and remand the case for a new hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786096 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 05-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Tax effect; Principle of natural justice
• Section: 144; 142(1)

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SM’ 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. 1431/Hyd/2025 (Ǔनधा[रणवष[/ Assessment Year: 2017-18) Sree Satya Prakash Nalamati, Hyderabad. PAN: AEBPN7865D VS. Income Tax Officer, Ward-6(1), Hyderabad. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) करदाताकाĤǓतǓनͬध×व/ Assessee Represented by : Sri P. Vinod, Advocate राजèवकाĤǓतǓनͬध×व/ Department Represented by : Sri V. Ravish Bhatt, Sr. AR सुनवाईसमाÜतहोनेकȧǓतͬथ/ Date of Conclusion of Hearing : 27/10/2025 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 29/08/2025, which in turn arises from the order passed by the Assessing Officer Printed from counselvise.com 2 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO (for short, “A.O.”) under Section 144 of the Income Tax Act, 1961 (for short “the Act”) dated 13/09/2019 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. On the facts and in the circumstances of the case, the order of the Id. CIT(A) is erroneous and unsustainable in law apart from being passed in violation of principles of natural justice. The Id. CIT(A) failed to appreciate that proper notices were not served on the appellant as required under section 282 of the Act r.w. rule 127 of the Rules, and therefore Appellant could not put forth his case. 2. Without prejudice to the above, the ld. CIT(A) erred in sustaining the addition made by the AO of Rs.18,03,730 as unexplained money u/s.69A of the Act. 3. The authorities below failed to the basic fact that the fertile wet agricultural lands would fetch minimum agricultural income and that the appellant's family is holding about Acres 57.2 gts of agricultural lands. (Tax Effect: Rs.13,93,382) 4. Any other ground that may be urged at the time of hearing.” 2. Succinctly stated, the AO based on information that the assessee had during the demonetization period i.e., 09/11/2016 to 31/12/2016 made cash deposits of Rs. 18,03,730/- in his bank account with Federal Bank, Punjagutta, Hyderabad, but had not filed his return of income for the year under consideration, issued notice under section 142(1) of the Act. However, the assessee did not comply with the notice issued by the AO and failed to come up with the return of income for the subject year. Accordingly, the AO vide his order passed under section 144 of the Act, dated 13/09/2019 held the entire amount of cash deposit of Rs. Printed from counselvise.com 3 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO 18,03,730/- as having been sourced out of the unexplained money of the assessee under section 69A of the Act. 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 4. Ostensibly, the CIT(A) observed that though the assessee had preferred the appeal in January, 2020, but despite having been afforded ample opportunities, had even after lapse of period of 5½ years failed to produce any evidence to substantiate his claim that the subject cash deposits of Rs. 18,03,730/- was sourced out of his agricultural income. Accordingly, the CIT(A) found no infirmity in the view taken by the AO and dismissed the appeal. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 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. Sri P. Vinod, Advocate, the Learned Authorized Representative (for short “Ld. AR”) for the assessee, at the threshold of the hearing of the appeal, submitted that the CIT(A) had grossly erred in law and facts of the case in dismissing the appeal without affording sufficient Printed from counselvise.com 4 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO opportunity of being heard to the assessee. Elaborating on his contention, the Ld. AR submitted that though four notices are stated to have been issued by the CIT(A) office intimating the fixation of the appeal i.e., notices dated 09/02/2021, 13/10/2022, 20/12/2024 and 20/08/2025, but except for the notice dated 13/10/2022 (supra) which was dropped in the email account provided by the assessee for necessary correspondence at Sl No. 17 of his memorandum of appeal i.e., “Form-35” – “[e-mail]” neither of the remaining three notices were delivered at the said email address. The Ld. AR submitted that the remaining three notices i.e., dated 09/02/2021, 20/12/2024 and 20/08/2025 were dropped in the email account of the assessee i.e., “[e-mail]” which was never the account provided by him for receiving the notices from the CIT(A) office. Elaborating further on his contention, the Ld. AR submitted that though the assessee had responded to the notice dated 13/10/2022 and had in compliance thereto sought for an adjournment on 25/10/2022, but he not being aware of the remaining notices could not respond to the same. The Ld. AR based on his aforesaid contention submitted that as the assessee had remained divested of sufficient opportunity to participate in the proceedings before the CIT(A) and put up his case, therefore, the matter in all fairness be restored to his file for re-adjudication. Printed from counselvise.com 5 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO 8. Per contra, the Sri V. Ravish Bhatt, Learned Departmental Representative (for short “Ld. DR”) relied on the orders of the lower authorities. The Ld. DR submitted that as the assessee had not only failed to participate in the appellate proceedings but also not placed on record any documentary evidence to substantiate his claim that the cash deposits made in his bank account during the demonetization period were sourced out of his agricultural income, therefore, the CIT(A) had rightly dismissed the appeal and upheld the addition made by the AO. 9. We have heard the Learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. 10. Admittedly, it is a matter of fact borne from the record that the assessee had in the memorandum of appeal i.e. “Form-35” specifically opted for receipt of notices/communications from the CIT(A) office through email. Although, we find that the email address of the assessee, i.e., [e-mail] was by default mentioned in the memorandum of appeal, i.e. “Form-35”, but the same was not the one that was provided by him for receiving the notices/communications from the CIT(A) office. We say so, for the reason that at Sl No. 17 of the memorandum of appeal the assessee had specifically stated that the notices be sent to her at email address, viz., [e-mail]. Although, we cannot remain oblivion of the Printed from counselvise.com 6 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO fact the email address i.e., “[e-mail]” is also mentioned in “Form-35” but the same was picked up by default at the time compiling the appeal. 11. Be that as it may, we are of a firm conviction that now when the assessee at Sr. No.17 of the memorandum of appeal specifically provided the email address, i.e., “[e-mail]” for receipt of notices/communications from the CIT(A) office, therefore, there was no justification for the CIT(A) office to have sent the three notices intimating the fixation of the hearing of the appeal i.e., dated 09/02/201, 20/12/2024 and 20/08/2025 at other email accounts belonging to the assessee. 12. Although, we cannot remain oblivion of the fact that the appellant in the present case after having sought adjournment on 25/10/2022 ought to have remained vigilant regarding the ongoing appellate proceedings, but at the same time cannot lose sight of the fact that there is a gross failure on the part of the CIT(A) office in not forwarding/delivering the subsequent notices intimating the fixation of the appeal i.e., notices dated 20/12/2024 and 20/08/2025 at the email address provided by the assessee at Sr. No. 17 of the memorandum of appeal. Printed from counselvise.com 7 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO 13. Considering the totality of the facts involved in the present appeal, we are of a firm conviction that the matter requires to be set aside to the file of the CIT(A) with a direction to readjudicate the same after affording a reasonable opportunity of being heard to the assessee. 14. Before parting, we may herein observe that the CIT(A) office shall in the course of the set aside proceedings forward/deliver the notice intimating the fixation of the appeal at the email account provided by the assessee at Sr. No. 17 of the Form-35 i.e., “akumaraghuram@ yahoo. com”. 15. Resultantly, the 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 S d/ Sd/- (रवीश सूद) (RAVISH SOOD) ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Sd Hyderabad, dated 31.10.2025. OKK/sps Printed from counselvise.com 8 ITA No. 1431/Hyd/2025 Sree Satya Prakash Nalamati vs. ITO आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/The Assessee : Sree Satya Prakash Nalamati, 6-3- 903/A/3,Surya Nagar Colony, Khairatabad, Hyderabad, Telangana-500082. 2. राजèव/ The Revenue : Income Tax Officer, Ward-6(1), IT Towers, AC Guards, Masab Tank, Hyderabad, Telangana-500004. 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 "