SRINIVAS EMMADI,HYDERABAD V. INCOME TAX OFFICER, WARD-1, SANGAREDDY

ITA 32/HYD/2024

AI Insights

This case involves an appeal by Shri Srinivas Emmadi against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, which was dated 20.06.2023 for the Assessment Year 2014-15. The primary issues in the appeal were the addition of Rs.77,78,368 sustained by the CIT(A) out of an initial addition of Rs.80,81,404 by the Ld. AO on account of unexplained cash credit, and the upholding of an addition of Rs.5,94,202 made by the Ld. AO on account of 25% disallowance of transport and hamali charges. The ITAT found procedural errors in the assessment and granted the assessee another opportunity to present his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668851 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: S.RAMA RAO
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Unexplained cash credit

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री रविश सूद, न् याययक सदस् य एिं श्री मिुसूदन सािडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.32/Hyd/2024 (निर्धारण वर्ा/Assessment Year:2014-15) Shri Srinivas Emmadi, Hyderabad. PAN:AAFPE1439A Vs. Income Tax Officer, Ward 1, Sangareddy. (Appellant) (Respondent) निर्धारिती द्वधिध/Assessee by: Shri S. Rama Rao, Advocate िधजस्‍ व द्वधिध/Revenue by: Dr. Sachin Kumar, SR-DR सुिवधई की तधिीख/Date of hearing: 11/06/2025 घोषणध की‍िीख/Pronouncement: 23/06/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Srinivas Emmadi (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 20.06.2023 for the A.Y. 2014-15. ITA No.32/Hyd/2024 2 2. The assessee has raised the following grounds of appeal : “1. The order of the Hon'ble CIT(A) is erroneous in law as well as facts of the case. 2. The Hon'ble CIT(A) ought to have observed that the assessing officer without allowing proper opportunity proceeded to complete the assessment u/s.144 of the IT Act and therefore, the same cannot be held as valid. 3. The Hon'ble CIT{A) ought not to have upheld the addition to the extent of Rs.30,00,000/-- as the unexplained Fixed deposits and Rs.47,78,369/- as the unexplained deposits in bank. 4. The Hon'ble CIT(A) ought to have observed that the assessing officer made the addition without making any proper enquiries towards unexplained cash deposits, and without allowing proper opportunity to the assesse to explain the bank transactions. 5. The Hon'ble CIT(A) ought to have observed that the assessing officer erred in making addition of Rs. 77,78,369/- and the Hon'ble CIT(A) ought to have directed the assessing officer for deletion of the same. 6. The Hon'ble CIT(A) ought to have observed that the assessing officer erred in making disallowance of 25% expenditure of Rs.5,94,202/- towards transport charges and hamali charges are without property verification and therefore the same is liable to be deleted. 7. Any other ground will be raised at the time of hearing.” ITA No.32/Hyd/2024 3 3. At the outset, it was observed that, there is a delay of 144 days in filing of the appeal before the Tribunal. In support of the same, the assessee has filed condonation petition along with a copy of Affidavit explaining the reasons for such delay. 3.1 The Learned Authorised Representative (“Ld. AR”) of the assessee submitted that, the order of Ld. CIT(A) was communicated through e-mail ID i.e. [e-mail] and [e-mail]. These e-mails were created / operated by the counsel of the assessee who had filed the appeal. The assessee had appointed one new counsel for the tax matters and could not consult with the earlier counsel regarding development of appeal before Ld. CIT(A). Therefore, the assessee was unaware of the communication and only came to know about the disposal of order of Ld. CIT(A) much later, when after advise of new counsel, the assessee went to the old counsel and enquired about the appellate proceedings. The Ld. AR also submitted that, there were marriages in the family of assessee which also caused some delay in filing of the appeal. As soon as the assessee came to know about the disposal of appeal by Ld. CIT(A), the assessee took steps to file the present appeal. In the ITA No.32/Hyd/2024 4 meantime, the appeal got delayed by 144 days. The Ld. AR submitted that, the delay in filing of the appeal is not deliberate and was due to the reasons beyond the control of the assessee. Finally, the Ld. AR prayed before the bench to condone the delay in filing of the appeal. 3.2 After hearing the Learned Department Representative (“Ld. DR”), we found that there was reasonable cause for the delay in filing of the appeal. Accordingly, we condone the delay in filing of the appeal and admit the appeal for adjudication. 4. The brief facts of the case are that, the assessee is an individual running the business in the name and style of M/s. Sri Dwarka Gas Agencies. He filed his return of income for the assessment year 2014– 15 on 29.11.2014 declaring total income of Rs.4,67,740/-. The case of the assessee was selected for scrutiny and statutory notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued on 03.09.2015. Since the assessee did not fully comply with the said notices, the learned Assessing Officer (“Ld. AO”) completed the assessment under section 144 of the Act on 30.06.2016, determining ITA No.32/Hyd/2024 5 the total income at Rs.94,43,344/- by making total additions of Rs.89,75,604/- under various heads. 5. Aggrieved by the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee. 6. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Ld. AR submitted that, two issues are involved in the appeal of the assessee. (a) Addition of Rs.77,78,368/- sustained by the Ld. CIT(A) out of the addition of Rs.80,81,404/- by the Ld. AO on account of unexplained cash credit and (b) Upholding the addition by Ld. CIT(A) of Rs.5,94,202/- made by Ld. AO on account of 25% of transport and hamali charges. 6.1 As far as the first issue is concerned, the Ld. AR submitted that during the assessment proceedings, the Ld. AO observed that the total credit in the bank account of the assessee was Rs.10,10,96,342/-, whereas the turnover disclosed by the assessee in the profit and loss account was only Rs.930,14,938/-. Based on the difference, the Ld. AO made addition of Rs.80,81,404/- under unexplained cash deposit, which was partly allowed by the Ld. CIT(A) sustaining the addition ITA No.32/Hyd/2024 6 of Rs.77,78,369/-. To justify the source of the credit, the Ld. AR invited our attention to extracts of banks of State Bank of India, Andhra Bank and ICICI Bank placed at page nos.25 to 102 of the paper book. The Ld. AR also invited our attention to copy of bank statements of SBI, ICICI Bank and Andhra Bank placed at page nos.125 to 194 of the paper book. Accordingly, the Ld. AR tried to explain the source of unexplained cash credit of Rs.77,78,369/-. 6.2 With regard to the second issue regarding disallowance of Rs.5,94,202/-, the Ld. AR submitted that, the assessee could not file necessary evidences / explanation before the revenue authorities to prosecute the issue on merits. Accordingly, the Ld. AR prayed before the bench for remanding the matter to the file of Ld. AO so that the assessee can prosecute the issue on merits by production of necessary evidences / explanation. 7. Per contra, the Ld. DR relied on the orders of revenue authorities and prayed before the bench to dismiss the appeal of the assessee. ITA No.32/Hyd/2024 7 8. We have heard the rival submissions and also gone through the record in the light of the submissions made on either side. As far as the first issue is concerned, on perusal of profit and loss account of the assessee for the year ended 31.03.2014 placed at page no.3 of the paper book, we found that the actual turnover of the assessee is Rs.911,79,686/-. However, while calculating the amount of unexplained cash credits, the Ld. AO has taken the turnover at Rs.930,14,938/-. Hence, we found that the Ld. AO has committed a factual error in adopting the turnover of the assessee resulting in a incorrect quantification of the alleged difference and consequent addition. Further, the addition of Rs.77,78,368/- sustained by the Ld. CIT(A) consist of two parts, one is, on account on unexplained fixed deposit of Rs.30 lakhs which was not reflecting in the balance sheet of the assessee as on 31.03.2024 and the balance addition of Rs.47,78,368/- is on account of unexplained credit entry in the bank accounts of the assessee. As far as the amount of fixed deposit of Rs.30 lakhs is concerned, we have gone through the bank statement of Andhra Bank placed at page no.183 of the paper book and found that two fixed deposits of Rs.15 lakhs each has been made from the ITA No.32/Hyd/2024 8 bank on 28.09.2013 and 19.10.2013 respectively. We have also gone through the balance sheet of the assessee as on 31.03.2024 placed at page no.4 of the paper book and found that these fixed deposits are not reflected in the balance sheet of the assessee. While making addition of Rs.80,81,404/- the Ld. AO had considered the credit in the bank accounts of SBI, ICICI Bank and Andhra Bank, the closing balances of which as on 31.03.2014 are Rs.14,231.72; Rs.9,27,834.53 and Rs.1,14,052.50 respectively. However, on perusal of balance sheet of the assessee as on 31.03.2024 placed at page no.4 of the paper book, we found that the closing balance of only SBI is reflected in the balance sheet of the assessee, however, the closing balances of ICICI Bank and Andhra Bank are not reflected in the balance sheet of the assessee. The same discrepancy has not been noticed by the revenue authorities nor taken effect by them while passing the assessment order. Therefore, in a case where the bank accounts which have been considered for making addition, not reflected in the balance sheet of the assessee, the same is required to be reverified from the books of account of the assessee. Therefore, we remand the first issue to the file of Ld. AO for re-adjudication on merits. ITA No.32/Hyd/2024 9 Accordingly, we set aside the first issue to the file of Ld. AO for de novo adjudication. 9. As far as the second issue with regard to disallowance of Rs.5,94,202/- is concerned, the same could not be adjudicated on merits by the Ld. AO due to non-response of the assessee. However, in the interest of justice, we are of the considered view that, one more opportunity may be granted to the assessee to present their case on merits. Accordingly, we set aside the second issue also to the file of Ld. AO for de novo adjudication. 10. Finally, both the issues of the assessee are set aside to the file of Ld . AO for de novo adjudication on merits. The Ld. AO is directed to provide adequate opportunity of being heard to the assessee, to file necessary documents / explanation in support of their claim. The assessee is also directed to co-operate with the Ld. AO by filing their submissions in time without taking unnecessary adjournments. ITA No.32/Hyd/2024 10 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 23rd June, 2025. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad. Dated: 23.06.2025. * Reddy gp Copy of the Order forwarded to : 1. Shri Srinivas Emmadi, No.3-88/D, Main Road, Narsapur Village and Mandal, Narsapur-502 313 Telangana. 2. ITO, Ward-1, Sangareddy. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, "