SYED ZAHED ALI,HYDERABAD V. ITO., WARD-14(1), HYDERABAD

ITA 474/HYD/2025

AI Insights

Shri Syed Zahed Ali, the appellant, contested the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which upheld the additions made by the Ld. AO for the Assessment Year 2017-18. The additions included Rs.39,62,880, comprising unexplained cash deposits and undisclosed business receipts. The Tribunal found that the assessee had not adequately complied with earlier notices but allowed the appeal to provide an opportunity for proper adjudication, emphasizing the need for a fair hearing and consideration of new evidence presented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711250 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMITHA PARMATA
• Assessee Lawyers: Y.V. BHANU NARAYAN RAO
• Keywords: Set aside; Business income; Opportunity of being heard; Corroborative evidences; FORM 26AS
• Section: 144; 142(1); 133(6); 234B

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री विजय पाल राि, उपाध् यक्ष एिं श्री मिुसूदन सािडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.474/Hyd/2025 (निर्धारण वर्ा/Assessment Year:2017-18) Shri Syed Zahed Ali, Hyderabad. PAN: AIFPA6433J Vs. Income Tax Officer, Ward-14(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri Y.V. Bhanu Narayan Rao, C.A. रधजस् व द्वधरध/Revenue by: Sumitha Parmata, SR-DR सुिवधई की तधरीख/Date of hearing: 22/07/2025 घोर्णध की तधरीख/Pronouncement: 25/07/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Syed Zahed Ali (“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 05.02.2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal : Printed from counselvise.com ITA No.474/Hyd/2025 2 “ 1. On the facts and in the circumstances of the case, the order passed by the learned CIT (A), NFAC, Delhi u/s. 250 of the Act for the AY 2017-18 is erroneous and bad in law. 2. On the facts and in the circumstances of the case, the learned CIT (A), NFAC, Delhi erred in upholding the erroneous addition made by the learned A.O. of Rs. 39,62,880/- comprising of cash deposits of Rs.35,77,400/- as unexplained money u/s. 69A of the Act and Rs.3,85,480/- as undisclosed business receipts for the AY 2017-18. 3. On the facts and in the circumstances of the case, it is submitted that, the cash deposits of Rs. 35,73,400/- were made out of earlier cash withdrawals from the bank accounts of the assessee during the AY 2017-18 from out of business receipts. Hence, the addition of Rs. 35,77,400/- as unexplained money u/s. 69A of the Act needs to be deleted. 4. On the facts and in the circumstances of the case, the learned CIT(A), NFAC, Delhi erred in upholding the act of the learned AO who assessed Rs. 35,77,400/- to income u/s. 69A of the Act in the assessment order u/s. 144 of the Act but mentioned in the computation sheet attached therewith, the addition u/s. 69A of the Act as Rs. 71,54,800/- instead of Rs. 35,77,400/- and hence, taxing the same amount twice, i.e., Rs. 35,77,400/- once as per slab rates and again as per special rates of section 115BBE of the Act resulting in an erroneous and high pitched demand for the AY 2017-18. 5. On the facts and in the circumstances of the case, the erroneous addition of Rs. 3,85,480/- (being 8 percent of service receipts of Rs.48,18,500/- appearing in Form 26AS) as undisclosed business receipts needs to be deleted as the income from the said business Printed from counselvise.com ITA No.474/Hyd/2025 3 receipts is already disclosed in the ROI filed for the AY 2017-18 under the head Income from Other Sources. 6. On the facts and in the circumstances of the case, the learned CIT (A), NFAC, Delhi erred in upholding the erroneous demand of Rs. 50,70,265/- (inclusive of interest u/s. 234 of Rs. 1,84,500/- and interest u/s. 234B of Rs. 11,80,800/-) raised by the learned A.O. for the AY 2017-18. 7. Any other ground or grounds of appeal your appellant may urge at the time of hearing.” 3. The brief facts of the case are that, the assessee is an individual who filed his return of income for the Assessment Year 2017–18 on 01.12.2017, declaring total income of Rs.6,50,000/- under the head “income from other sources”. The case of the assessee was selected for limited scrutiny under CASS for the purpose of examining the sources of cash deposits, services fee received and cash withdrawals from bank. Accordingly, notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued to the assessee on 08.08.2018. Subsequently, notice under section 142(1) of the Act was issued to the assessee seeking information regarding the source of cash deposits in bank accounts and reconciliation between service fee receipts reflected in Form 26AS. However, there was no compliance by the assessee to the notices issued by Learned Assessing Officer (“Ld. Printed from counselvise.com ITA No.474/Hyd/2025 4 AO”). Consequently, the Ld. AO issued notice under section 133(6) of the Act to Canara Bank and Karur Vysya Bank and obtained bank statements of the assessee. Upon perusal of the bank statements, the Ld. AO noted that cash of Rs.35,77,400/- had been deposited in the assessee’s bank accounts during the year, for which no explanation was furnished. The same was treated as unexplained money under section 69A of the Act and added to the assessee’s income. Further, on the basis of Form 26AS, the Ld. AO found that the assessee had business receipts of Rs.48,18,500/- during the year under consideration. However, the return of income filed by the assessee did not disclose any income under the head “business or profession”. Accordingly, the Ld. AO estimated business income at 8% of Rs.48,18,500/-, which amounted to Rs.3,85,480/-, and added the same under the head “business income”. Finally, the Ld. AO passed the assessment order under section 144 of the Act on 14.11.2019 determining the total income of the assessee at Rs.46,12,880/-. 4. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). However, before the Ld. CIT(A), the assessee did not make any compliances to the notices issued by the Ld. Printed from counselvise.com ITA No.474/Hyd/2025 5 CIT(A). Consequently, the Ld. CIT(A) dismissed the appeal of the assessee. 5. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before this Tribunal. At the outset, the Learned Authorised Representative (“Ld. AR”) submitted that two issues are involved in the appeal of the assessee i.e. (i) the addition of Rs.3,85,480/- on account of business receipts and (ii) addition of Rs.35, 77,400/- on account of unexplained money in the bank account of the assessee. 6. As far as the addition of Rs.3,85,480/- is concerned, the Ld. AR submitted that, the assessee had inadvertently disclosed the total income of Rs.8,00,000/- under the head “income from other sources”, which was actually a combined figure of his business income and interest income. After claiming deduction of Rs.1,50,000/- under section 80C, the returned income came to Rs.6,50,000/-. It was explained that the mistake occurred due to lack of tax knowledge on the part of the assessee. The Ld. AR further submitted that the total business receipts during the year were Rs.91,71,990/- and not Rs.48,18,500/- as assumed by the Ld. AO. The assessee had Printed from counselvise.com ITA No.474/Hyd/2025 6 computed business income on presumptive basis at 8%, resulting in business income of Rs.7,33,760/-. Including the bank interest income, total income of the assessee came to Rs.7,99,518/-, which was rounded off to Rs.8,00,000/- in the return. Accordingly, the business income was already offered to tax, and the addition of Rs.3,85,480/- made by the Ld. AO resulted in double taxation. 7. With regard to the addition of Rs.35,77,400/-, the Ld. AR placed before the Bench copies of bank statements and a cash summary showing cash withdrawals of Rs.54,76,920/- and cash deposits of Rs.35,73,400/-, thereby demonstrating that cash deposited was more than the cash withdrawals. It was argued that the assessee had filed sufficient material now, which could not be placed earlier before the lower authorities. 8. The Ld. AR prayed that, in the interest of justice, both the issues may be restored to the file of the Ld. AO for proper adjudication after granting an opportunity to the assessee to furnish supporting evidences. Printed from counselvise.com ITA No.474/Hyd/2025 7 9. The Learned Departmental Representative (“Ld. DR”) opposed the plea for remand and submitted that the assessee was granted sufficient opportunities during assessment as well as first appellate proceedings but failed to avail the same. It was submitted that the case does not deserve another opportunity and the orders of lower authorities should be upheld. 10. We have heard the rival contentions and perused the material available on record. As far as the addition of Rs.3,85,480/- is concerned, the Ld. AR has submitted that, the assessee had inadvertently disclosed the total income of Rs.8,00,000/- under the head “income from other sources”, which was actually a combined figure of his business income and interest income. After claiming deduction of Rs.1,50,000/- under section 80C, the returned income came to Rs.6,50,000/-. It was explained that the mistake occurred due to lack of tax knowledge on the part of the assessee. The Ld. AR further submitted that the total business receipts during the year were Rs.91,71,990/- and not Rs.48,18,500/- as assumed by the Ld. AO. The assessee had computed business income on presumptive basis at 8%, resulting in business income of Rs.7,33,760/-. Including the bank Printed from counselvise.com ITA No.474/Hyd/2025 8 interest income, total income of the assessee came to Rs.7,99,518/-, which was rounded off to Rs.8,00,000/- in the return. As the evidences and the explanation are filed first time before this Tribunal, in our view, the same are required to be verified by the Ld. AO in detail. 11. As far as the addition of Rs.35,77,400/- is concerned, the Ld. AR placed before us copies of bank statements and a cash summary showing cash withdrawals of Rs.54,76,920/- and cash deposits of Rs.35,73,400/-, thereby demonstrating that cash deposited was more than the cash withdrawals. It was argued that the assessee had filed sufficient material now, which could not be placed earlier before the lower authorities. As the evidences and the explanation are filed first time before this Tribunal, in our view, the same are required to be verified by the Ld. AO in detail. 12. Therefore, under the facts and circumstances and in the interest of justice, we are inclined to provide one more opportunity to the assessee to present his case before the Ld. AO. Accordingly, we set aside the assessment order and restore both the issues to the file of the Printed from counselvise.com ITA No.474/Hyd/2025 9 Ld. AO for denovo adjudication after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to file all necessary evidence to substantiate his claims during the remand proceedings. 13. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 25th July, 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 25.07.2025. * Reddy gp Copy of the Order forwarded to : 1. Shri Syed Zahed Ali, 8-3-234/66/16, LN Nagar, Yousufguda, Hyderabad-500045 2. ITO, Ward 14(1), Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, Printed from counselvise.com "