VENKATA SUNIL BATTARUSHETTY,BANGALORE V. DCIT., CIRCLE- 1, NELLORE

ITA 106/HYD/2024

AI Insights

The case involves Venkata Sunil Battarushetty, the appellant, who contested the orders of the Deputy Commissioner of Income Tax, Circle-1, Nellore, and the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appellant was aggrieved by the additions made to his income for the Assessment Year 2017-18, which included unexplained cash deposits during the demonetization period and agricultural income treated as unexplained cash credit. The Tribunal found that the assessment order lacked specific details on how the alleged unexplained cash deposits were determined and noted discrepancies in the treatment of agricultural income. Consequently, the Tribunal set aside the previous orders and remanded the case for a detailed examination of the facts and proper adjudication.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46488 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINATH SADANALA
• Assessee Lawyers: KUMAR PAL TATED
• Keywords: Set aside; Opportunity of being heard; Unexplained cash credit; Principle of natural justice
• Section: 68; 69A; 272A

Judgement Text

"आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI VIJAY PAL RAO, HON’BLE VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTANT MEMBER ITA-No.106/Hyd/2024 Assessment Year: 2017-18 Venkata Sunil Battarushetty, Bangalore. PAN : ADDPB9544N Vs. Deputy Commissioner of Income Tax, Circle-1, Nellore. (Appellant) (Respondent) Assessee by: Shri Kumar Pal Tated, CA Revenue by: Shri Srinath Sadanala, Sr.A.R. Date of hearing: 01/04/2025 Date of pronouncement: 04/04/2025 O R D E R PER MADHUSUDAN SAWDIA, A.M. This appeal is filed by Venkata Sunil Battarusetty (“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 24.11.2023 for the A.Y. 2017-18. 2 ITA No.106/Hyd/2024 2. At the outset it is seen that, there is a delay of 1 day in filing of this appeal. After hearing the Ld. AR and the Ld. DR, the delay of 1 day in filing of this appeal is condoned and the appeal is admitted for adjudication. 3. The assessee has raised the following grounds of appeal : “1. The Ld. CIT(A) is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant. 2. The Ld. CIT(A) ought to have appreciated the fact that the Ld. AO, erred in making an addition of Rs.13,05,000/-without considering the facts of the case that considering the amount deposited in the bank account of the assessee during the year as unexplained money u/s 69A. 3. The Ld. CIT(A) ought to have appreciated the fact that the deposits during the year were made out of the withdrawals during the Financial Years and treating the same as unexplained is incorrect and unjustified and the assessee is having sufficient source of income and explanation for the deposits made. 4. The Ld. CIT(A) ought to have appreciated the fact that the assessee has explained the source of the deposits made in the bank account of the assessee during the year under reference, therefore the same cannot be considered as unexplained money u/s 69A of the Act. 5. The Ld. CIT(A) ought to have appreciated that the Ld. AO erred in making addition on Agricultural Income of Rs. 25,00,022/- as unexplained cash credit u/s 68 of the Act, without having any Bonafede belief which is incorrect and unjustified. 6. The Ld. CIT(A) ought to have appreciated the fact that the appellant is holding agricultural land, grown crops and earned agricultural income of Rs.25,00,022/-through such activities. 7. The Ld. CIT(A) ought to have appreciated the fact that the appellant earned agricultural income of Rs.25,00,022/- and the same is eligible for exemption as per the provisions of the Act. 3 ITA No.106/Hyd/2024 8.The Ld. CIT(A) ought to have appreciated the fact that to consider the Pattadhar Pass Book of assessee, which substantiates the claim of assessee that the assessee has agriculture land and has undertaken agricultural activities during the year under consideration. 9. Without considering the above facts, the Ld. CIT(A) erred in rejecting the income from agriculture by stating that no documentary evidence provided for sale of agriculture produce and expenses incurred by assessee. 10. Without prejudice to the above the Ld. CIT(A) failed to take into account the telescoping effect, and subsequently again made the addition on the same which has been derived from the Agricultural Income as Cash Deposits. 11. The Ld. CIT(A) erred in initiating the penalty proceedings u/s 271AAC and 272A without appreciating the facts of the case. 12. The appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.” 4. The brief facts of the case are that the assessee is an individual, filed his return of income for A.Y. 2017-18 on 31.03.2018 admitting total income of Rs.12,82,050/- and agricultural income of Rs.25,00,022/-. The case of the assessee was selected for scrutiny and various notices were issued by the learned Assessing Officer (“Ld. AO\") during the assessment proceedings. However, the assessee could not respond to the notices issued by the Ld. AO. Consequently, the Ld. AO observed that the assessee had deposited cash of Rs.13,05,000/- during the demonetization period, the sources which remained 4 ITA No.106/Hyd/2024 unexplained. The same was added to the total income of the assessee u/s 69A of the Act, as unexplained money. Further, the Ld. AO disbelieved the claim of the assessee of agricultural income of Rs.25,00,022/- and treated the same as unexplained cash credit u/s 68 of the Act. Accordingly, the Ld. AO computed the total income at Rs.50,87,070/-. 5. Aggrieved with order of Ld. AO, the assessee preferred appeal before Ld. CIT(A). However, due to non-compliance, the Ld. CIT(A) dismissed the appeal of the assessee and confirmed both the additions made by the Ld. AO. While confirming the addition of Rs.25,00,022/-, the Ld. CIT(A) observed that no ground had been raised by the assessee regarding such addition while filing the appeal. 6. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. 7. The Ld. AR submitted that, the assessee had deposited only Rs. 1,75,000/- in cash during the demonetization period and not 5 ITA No.106/Hyd/2024 Rs.13,05,000/- as alleged by the Ld. AO. In support, the Ld. AR placed on record the copy of the bank statement. The Ld. AR further pointed out that the assessment order does not disclose any break-up or specific details as to how the Ld. AO arrived at the figure of Rs.13,05,000/- as unexplained cash deposits. This, according to Ld. AR, is a matter requiring factual verification. With regards to the addition of Rs.25,00,022/- u/s 68 of the Act, the Ld. AR submitted that the assessee is engaged in agriculture and holds Ac.37.00 gts of land. In support of his claim, the Ld. AR placed on record a Land Holding Certificate issued by the Senior Assistant Director of Horticulture, Government of Karnataka. The Ld. AR further submitted that, the income of Rs.25,00,022/- is from agricultural sources only, however, both the revenue authorities treated it as unexplained credit. The Ld. AR also submitted that the Ld. CIT(A) erred in stating that no ground has been raised in respect of addition of Rs.25,00,022/-. In support of their claim, the Ld. AR invited our attention to Page No.2 of the order of Ld. CIT(A) wherein ground no.1 as reproduced by the Ld. AR clearly show that the assessee had raised a separate ground with regard to the addition made by 6 ITA No.106/Hyd/2024 the Ld.AO on account of agricultural income. Hence, the Ld. AR contended that the Ld. CIT(A) failed to adjudicate this ground on merit resulting in miscarriage of justice. Finally, the Ld. AR prayed before the Bench to set aside the issue to the file of Ld. AO for fresh adjudication of the issue on the basis of the documents / information to be submitted by the assessee before the Ld. AO. 8. Per contra, the Ld.DR objected to the request of the assessee for setting aside the issue to the file of Ld. AO. The Ld.DR submitted that proper opportunity has already been given to the assessee, therefore, no further opportunity is required to be given. 9. We have considered the rival contentions and perused the material available on record in view of the submissions made by either side. We have gone through the order of the Ld. AO and found that the assessment order did not contain any details or reference as to how the amount of Rs.13,05,000/- was determined as a cash deposit. Further, as contended by the 7 ITA No.106/Hyd/2024 assessee, the assessee has deposited only Rs.1,75,000/- during the demonetization period. Therefore, the actual amount of cash deposited in the bank is required to be verified. Further, the Land Holding Certificate submitted by the assessee supports the assessee's claim of holding Ac.37.00 gts of agricultural land. However, the ld.CIT(A), despite reproducing ground no.1 in his order, which is related to the addition made by the Ld. AO on account of agricultural income, failed to adjudicate the same on merits, holding erroneously that no such ground has been raised. Therefore, in our considered opinion, the issue raised by the assessee is factual in nature and requires verification at the level of the Ld. AO. Therefore, considering the principle of natural justice, we are of the view that one more opportunity may be given to the assessee to prosecute the case on merits. Accordingly, we set aside the assessment order as well as the order of the Ld. CIT(A) and restore the matter to the file of Ld. AO for fresh adjudication. Needless to mention that Ld. AO shall afford a reasonable opportunity of being heard to the assessee before deciding the issue. 8 ITA No.106/Hyd/2024 10. In the result, the appeal of the assessee is allowed for statistical purposes. 4th अप्रैल, 2025 को खुली अदालत में सुनाया गया आदेश। Order pronounced in the Open Court on 4th April, 2025. Sd/- Sd/- (VIJAY PAL RAO) VICE PRESIDENT Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 04.04.2025. **#TYNM/sps आदेशकी प्रतितिति अग्रेतिि/ Copy of the order forwarded to:- 1. तिर्धारििी/The Assessee : Venkata Sunil Battarushetty, Bangalore, Karnataka, Villa No.308, 10 Downing Villas, White Field Road, Kannamangala Village, Bangalore, Karnataka – 560036. 2. िधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle 1, Nellore. 3. The Principal Commissioner of Income Tax, Tirupati. 4. तिभधगीयप्रतितितर्, आयकि अिीिीय अतर्किण, हैदिधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईि / Guard file आदेशधिुसधि / BY ORDER Sr. Private Secretary ITAT, Hyderabad. "