VARSHITA JAIN,HYDERABAD V. DCIT., CIRCLE-5(1), HYDERABAD

ITA 1169/HYD/2025

AI Insights

The case involves Varshita Jain, who appealed against the order of the CIT(A), which upheld the assessment order passed by the AO under Section 144 of the Income-tax Act, 1961. The AO had treated the cash deposits in Varshita's bank account during the demonetization period as unexplained money under Section 69A of the Act, amounting to Rs. 14,72,548. Varshita contended that the actual deposits were Rs. 11,85,000 and provided explanations for the sources of these deposits, including cash gifts and maturity proceeds of fixed deposits. The CIT(A) dismissed her appeal, leading to her appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786087 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 14 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: 17-07-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences; Gift
• Section: 144; 142(1)

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B-SMC’ 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.1169/Hyd/2025 (Ǔनधा[रणवष[/ Assessment Year: 2017-18) Varshita Jain, Hyderabad. PAN: ANSPJ0074G VS. Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) करदाताकाĤǓतǓनͬध×व/ Assessee Represented by : Sri Mayank Patwari, CA राजèवकाĤǓतǓनͬध×व/ Department Represented by : Sri V. Ravish Bhatt, Sr. AR सुनवाईसमाÜतहोनेकȧǓतͬथ/ Date of Conclusion of Hearing : 30/10/2025 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 CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 23.05.2025, which in turn arises from the assessment order passed under Section 144 of the Income-tax Act, 1961 (for short, “the Printed from counselvise.com 2 ITA No. 1169/Hyd/2025 Varshita Jain vs DCIT Act”) dated 12.12.2019 for the Assessment Year 2017–18. The assessee has assailed the impugned order on the following grounds of appeal before us: “Ground No. 1: - On the facts and circumstances of the case, the order passed by Ld. CIT(A) is bad both in eyes of law and on facts. Ground No. 2: - That the Ld. CIT(A) has erred in law and on facts in upholding the total addition of Rs. 14,72,548/- us 69A of the Act, despite the fact that the same had been duly explained. Ground No. 2.1: - That the Ld. CIT(A) has erred in law and on facts in not taking cognizance of the submissions and evidence placed on record, which clearly established that the actual cash deposit was only Rs. 11,85,000/-. Ground No. 2.2: - That the Ld. CIT(A) has erred in law and on facts in ignoring the amount of Rs. 2,75,308/- out of the total addition, which pertains to the proceeds from the maturity of an old fixed deposit. Ground No. 3: - That the appellant reserves the right to add, modify, alter, amend or delete any of the grounds.” 2. Succinctly stated, the assessee had filed her return of income for the assessment year 2017-18 on 05.08.2017, declaring an income of Rs. 2,58,010/-. Subsequently, the case of the assessee was selected for “limited scrutiny” under CASS, inter alia, to verify the source of cash deposits in bank accounts during the demonetization period. 3. During the course of the assessment proceedings, the AO observed that the assessee had, during the subject year, made cash deposits in her bank account amounting to Rs. 14,72,548/-. As the assessee had failed to comply with the notices issued under Sections 143(2) and 142(1) of the Act, therefore, the AO, in the absence of any explanation or supporting evidence forthcoming held the entire amount Printed from counselvise.com 3 ITA No. 1169/Hyd/2025 Varshita Jain vs DCIT of cash deposits of Rs. 14,72,548/- as having been sourced out of the assessee’s unexplained money under Section 69A of the Act. Accordingly, the AO completed the assessment vide an ex parte order under Section 144 of the Act, assessing the total income at Rs. 17,30,558/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A), the assessee submitted that she was married on 16.11.2016 and had immediately thereafter shifted abroad to the USA. It was submitted by her that, as she had remained unaware of the assessment proceedings, therefore for the said reason could not respond to the notices that were issued by the AO. On merits, it was the assessee’s claim that the cash deposits in her bank account during the relevant period were sourced from, viz. (i) her past savings; (ii) cash gifts received on the occasion of her marriage and pre-marriage ceremonies; and (iii) maturity proceeds of fixed deposits. It was further contended that the total cash deposits in her bank account during the year were Rs. 11,85,000/-, and not Rs. 14,72,548/- as was erroneously taken by the AO. 5. However, the CIT(A) did not find favour with the explanation of the assessee and upheld the action of the AO and dismissed the appeal, observing that the assessee had failed to substantiate her explanation with documentary evidence. Printed from counselvise.com 4 ITA No. 1169/Hyd/2025 Varshita Jain vs DCIT 6. The assessee aggrieved with the CIT(A) order has carried the matter in appeal before us. The assessee has assailed the orders of the authorities below on multi-facet grounds, viz. (i). that the authorities below had erred in treating the cash deposits as unexplained without appreciating that they were duly explainable from verifiable sources; (ii). that the cash gifts received on the occasion of marriage and the maturity of fixed deposits were legitimate and explainable sources; and (iii). that the computation of cash deposits at Rs. 14,72,548/- was factually incorrect, as the actual deposits amounted to Rs. 11,85,000/-. 7. We have heard the Ld. Authorised Representatives of both parties, perused the orders of the lower authorities and the material available on record. 8. Admittedly, it is an undisputed fact that the impugned assessment was framed by the AO vide an ex parte order under Section 144 of the Act without the participation of the assessee. It is the assessee’s claim that due to her marriage on 16.11.2016 and subsequent relocation abroad, she could not receive and respond to the statutory notices that were issued by the AO under Section 143(2)/142(1) of the Act. 9. We have thoughtfully considered the explanation of the assessee regarding the reason for not participating in the assessment proceedings and find substance in the same. Printed from counselvise.com 5 ITA No. 1169/Hyd/2025 Varshita Jain vs DCIT 10. Before us, the assessee has come forward with an explanation that the cash deposits in her bank account were sourced from, viz. (i). cash gifts received during her marriage and pre-marriage functions; (ii). cash in hand available with her from earlier savings; and (iii). maturity proceeds of a fixed deposit amounting to Rs. 2,75,308/-. Apart from that, the assessee has claimed to have furnished certain details of cash deposits during the demonetization period on the income tax portal. 11. We have given thoughtful consideration to the facts involved in the present case, and are of a firm conviction that in the interest of justice, it would be appropriate to afford to the assessee one more opportunity to substantiate her claim regarding the source of the subject cash deposits made in her bank account with proper evidence, viz. confirmations of gifts, details of the fixed deposit maturity, and cash flow statements, before the Assessing Officer. The Assessing Officer is directed to verify the explanation of the assessee and adjudicate the matter afresh after giving a reasonable opportunity of being heard to the assessee. 12. We, thus, in terms of our aforesaid observations, set-aside the impugned order of the CIT(A) and the assessment order passed by the AO under Section 144 of the Act, and restore the matter to his file for fresh adjudication in accordance with law. Needless to say, the AO Printed from counselvise.com 6 ITA No. 1169/Hyd/2025 Varshita Jain vs DCIT shall, in the course of the set aside proceedings, afford a reasonable opportunity of being heard to the assessee. 13. In the result, the appeal of the assessee is allowed for statistical purposes. 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 7 ITA No. 1169/Hyd/2025 Varshita Jain vs DCIT आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/The Assessee : Varshita Jain, 5-8-50/2/1, Fathe Sultan Lane, Opp Nandanam Apartments, Nampally, Hyderabad, GPO, Hyderabad-500001. 2. राजèव/ The Revenue : DCIT, Circle-5(1), Hyderabad. 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 "