VITTAL BANDARI,HYDERABAD V. DCIT., CENTRAL CIRCLE-2(1), HYDERABAD

ITA 296/HYD/2025

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The case involves Shri Vittal Bandari, an individual engaged in various businesses, who appealed against the orders of the Learned Commissioner of Income Tax (Appeals), Hyderabad, which upheld the additions made by the Learned Assessing Officer (Ld. AO) under section 69A of the Income Tax Act, 1961. The additions pertained to Rs.25,50,000/- seized from his son at the airport and Rs.6,10,000/- found at the assessee's residence. The Tribunal examined the validity of these additions, considering the explanations and evidence provided by the assessee, including the maintenance of proper books of accounts and the circumstances under which the cash was found.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716421 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2021-2022
• Appeal Filed On: 21-02-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MOHD. AFZAL
• Keywords: Search and seizure
• Section: 143(3); 142(1)

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री रविश सूद, न् याययक सदस् य एवं श्री मिुसूदन सावडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.296/Hyd/2025 (निर्धारण वर्ा/Assessment Year:2021-22) Shri Vittal Bandari, Hyderabad. PAN:AIKPB2167P Vs. Dy. Commissioner of Income Tax, Central Circle 2(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri Mohd. Afzal, Advocate. रधजस् व द्वधरध/Revenue by:: Dr. Sachin Kumar, SR-DR सुिवधई की तधरीख/Date of hearing: 06/08/2025 घोर्णध की तधरीख/Pronouncement: 20/08/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Shri Vittal Bandari (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), Hyderabad (“Ld. CIT(A)”), dated 27.12.2024 for the A.Y. 2021-22. 2. The grounds of the assessee are as under : Printed from counselvise.com ITA No.296/Hyd/2025 2 3. The brief facts of the case are that, the assessee is an individual engaged in the business of manpower supply, guest house maintenance, and canteen services. On 03.11.2020, cash amounting to Rs.40,50,000/- was found at the airport in possession of Shri Bandari Srikanth, son of the assessee. Shri Srikanth admitted that the cash belonged to his father, the assessee, which was also accepted by the assessee himself. Consequently, the said amount was handed over to the Income Tax Department. On 04.11.2020, the son of the assessee was called to the Income Tax Office, Hyderabad, where a search and seizure operation commenced on Srikanth Bandari at 11:00 AM. During this operation, cash of Rs.25,50,000/- was seized from the possession of the son, and the remaining Rs.15 lakhs was Printed from counselvise.com ITA No.296/Hyd/2025 3 released to him. The search concluded at 11:45 AM. Subsequently, at 2:25 PM on the same day, a search and seizure operation was conducted at the residential and business premises of the assessee, wherein further cash of Rs.6,10,000/- was found from the assessee’s residence. 3.1 Later on, the assessee filed his return of income for Assessment Year 2021–22 on 09.03.2022 declaring total income of Rs.52,82,260/-. The case was selected for scrutiny, and notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued on 10.03.2022. During the assessment proceedings, the Learned Assessing Officer (“Ld. AO”) added the amount of Rs.25,50,000/- seized from the son and Rs.6,10,000/- found from the residence of the assessee as unexplained money under section 69A of the Act. The assessment was completed under section 143(3) of the Act on 30.03.2022, determining the total income of the assessee at Rs.84,42,260/-. Printed from counselvise.com ITA No.296/Hyd/2025 4 4. Aggrieved with the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A), who upheld the additions made by the Ld. AO. 5. Aggrieved with the order of Ld. CIT(A), the assessee is now in appeal before this Tribunal. At the outset, the Learned Authorised Representative (“Ld. AR”) submitted that only two issues are involved in the present appeal i.e. (a) Addition of Rs.25,50,000/- under section 69A of the Act and (b) Addition of Rs.6,10,000/- under section 69A of the Act. 6. Regarding the first issue, the Ld. AR submitted that the assessee had maintained proper books of accounts, including a daily cash book, which were duly produced before the Ld. AO during the assessment proceedings. He submitted that the cash balance of Rs.40,52,740/- as on 03.11.2020 was available as per the books, which adequately explains the cash of Rs.40,50,000/- found at the airport. He drew our attention to para no. 2 of the assessment order, wherein the Ld. AO recorded that the assessee had filed all the necessary documents called by him. Further, he invited our attention to page nos. 9 and 10 of Printed from counselvise.com ITA No.296/Hyd/2025 5 the Ld. CIT(A)’s order, where from it is clear that the books of accounts, including cash book, were produced before the Ld. AO. The Ld. AR contended that without rejecting the books of accounts or pointing out any specific discrepancy, the Ld. AO could not have ignored the available cash balance and made the addition under section 69A of the Act. 7. Regarding the second issue, the Ld. AR submitted that the cash of Rs.6,10,000/- found at the residence was part of the Rs.15 lakhs released earlier on 04.11.2020 by the revenue authorities. Since the revenue had found this cash to be explained and had released it, the subsequent seizure of a portion thereof could not be treated as unexplained. Therefore, the addition of Rs.6,10,000/- is not sustainable. 8. Per contra, the Learned Departmental Representative (“Ld. DR”) supported the orders of the lower authorities. With respect to the addition of Rs.25,50,000/-, he submitted that the assessee failed to conclusively establish the availability of cash as per the books, and mere filing of books does not automatically prove the explanation. Printed from counselvise.com ITA No.296/Hyd/2025 6 9. Regarding the second issue, the Ld. DR submitted that the assessee’s claim that the cash of Rs.6,10,000/- was part of the Rs.15 lakhs released is not substantiated. He drew our attention to page no.73 of the paper book showing the denomination of notes released by the revenue (only Rs.500/- notes) and page no. 77 of the paper book showing the denomination of the notes found from the residence (which included 2000 notes of Rs.200/- totalling Rs.4 lakhs and 25 notes of Rs.2,000/- totalling Rs.50,000/-). Since the denominations do not match, the Ld. DR argued that the cash seized from the residence was not part of the amount earlier released, and therefore, the addition of Rs.6,10,000/- under section 69A is justified. 10. We have heard the rival submissions and perused the material available on record. As far as the first issue of the assessee i.e. addition of Rs.25,50,000/- is concerned, we have gone through the para no. 2 of the assessment order and page no. 9 of the Ld. CIT(A)’s order, which are to the following effect : Para no.2 of the order of Ld. AO as under : Printed from counselvise.com ITA No.296/Hyd/2025 7 “ 2.0 The assessee has filed his return of income for the assessment year 2021-22 on 09.03.2022 admitting his total income at Rs.52,82,260/-. As the case has been selected for compulsory scrutiny, a notice u/s. 143(2) of the I.T. Act, was issued on 10.03.2022 and duly served upon the assessee. Subsequently, a notice u/s. 142(1) of the I.T. Act, was issued on 10.03.2022 requiring him to furnish certain information i.e. income computation statements, bank account statements, 26 AS and other relevant information required for the completion of assessment proceedings. In response to the said notices, the assessee has filed required information and other relevant documents. After verifying the details submitted by the assessee and material available on record, the assessment is completed as under.” Para no.9 of the order of Ld. CIT(A) as under : Printed from counselvise.com ITA No.296/Hyd/2025 8 11. Ostensibly, as per the order of Ld. CIT(A), though the assessee during the course of assessment proceedings substantiated his claim regarding availability of cash in hand by producing the cash book entries and a monthly cash summary, but without dislodging the same, the Ld. AO had held the amount of Rs.25.50 lakhs as having been sourced out of the assessee’s unexplained money under section 69A of the Act. In fact, we find that the Ld. AO has merely confined himself to the recent cash withdrawals from his bank account, brushing aside the aforesaid extract of the cash book without giving any cogent reason for doing so. Further, on perusal of page no.45 of the paper book, Printed from counselvise.com ITA No.296/Hyd/2025 9 we find that the cash balance available with the assessee as on 03.11.2020 was Rs.40,52,740/-. The cash found at the airport was Rs.40,50,000/-, which is well within the recorded cash balance. Therefore, in the absence of any adverse finding regarding the authenticity of the books or cash book, the cash seized amounting to Rs.25,50,000/- (being part of the airport seizure) stands duly explained and no addition is warranted under section 69A. Accordingly, the addition of Rs.25,50,000/- is liable to be deleted. 12. As far as the second issue of the assessee, as regards the addition of Rs.6,10,000/-, the assessee’s claim that it formed part of the Rs.15 lakhs released earlier by the revenue is not supported by documentary evidence. The revenue has placed on record the denominations of the currency notes released (page no.73 of the paper book) and those found from the residence (page no.77 of the paper book). On comparison, we find significant mismatch in denominations, particularly, the presence of denomination notes of Rs.2,000/- and Rs.200/- found in the residence of the assessee, which were not part of the released Printed from counselvise.com ITA No.296/Hyd/2025 10 cash. This establishes that the seized amount cannot be part of the earlier released amount. Hence, we find merit in the submission of the Ld. DR that the seized cash of Rs.6,10,000/- is unexplained and rightly added under section 69A. Accordingly, the addition of Rs.6,10,000/- is upheld. 13. In view of the above, we hold that the addition of Rs.25,50,000/- under section 69A is deleted and the addition of Rs.6,10,000/- under section 69A is confirmed. 14. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 20th August, 2025. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad. Dated: 20.08.2025. * Reddy gp Copy of the Order forwarded to : 1. Shri Vittal Bandari, Plot No.50, NTR Nagar, Serilingampally Mandal, Gopanpally, Hyderabad-500 046 2. DCIT, Central Circle 2(1), Hyderabad. 3. Pr.CIT (Central), Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, Printed from counselvise.com "