Case Law Details
Smt. Satyabhama Vs DCIT (ITAT Hyderabad)
The Hyderabad ITAT deleted the addition of ₹16.55 lakh u/s 69A, holding that cash found during search was duly explained by earlier accepted cash balance. The Tribunal also condoned a 97-day delay, adopting a liberal approach considering the assessee’s age, lack of digital access, and procedural difficulties.
On merits, cash of ₹22 lakh was found during search. The assessee explained that it was out of cash-in-hand of ₹22.64 lakh as on 31.03.2018, as reflected in the balance sheet. Notably, this balance sheet had been accepted by the department in earlier assessment without any adverse finding.
The ITAT observed that the cash-in-hand was sufficient to cover the seized amount, and since the search took place shortly after year-end, the availability of such cash could not be doubted in absence of contrary evidence.
Accordingly, the Tribunal held that once earlier year cash balance is accepted, it cannot be arbitrarily disregarded, and directed deletion of the addition sustained by CIT(A).
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by Smt. Satyabhama Avadhanula (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-12, Hyderabad (“Ld. CIT(A)”) dated 27.02.2025 for the A.Y.2019-20.
2. At the outset, it is observed that there is a delay of 97 days in filing the present appeal before the Tribunal. The assessee has filed a petition for condonation of delay along with an affidavit explaining the reasons for such delay. The reasons submitted by the assessee are that the assessee is a senior citizen aged above 76 years and is not well acquainted with the use of email and online systems. It has been further submitted that the assessee resides in a village at Karimnagar, whereas his counsel is based in Hyderabad. Due to financial constraints, the assessee could not immediately pay the appeal fees of Rs.10,000/-, which was eventually paid on 17.05.2025. It has also been explained that since the assessee did not have an email ID and was residing far away from Hyderabad, the counsel had sent the appeal documents through email to one Shri Pawan Kumar for the purpose of obtaining signatures of the assessee and returning the signed copies. However, Shri Pawan Kumar inadvertently failed to hand over the hard copy of the appeal set to the assessee. In the meanwhile, the counsel was also occupied with the filing of time-barring income tax returns due on 31.07.2025. Subsequently, after the due date, the counsel followed up again by sending a reminder email on 04.08.2025, and eventually, the appeal was filed on 05.08.2025. Therefore, the Learned Authorized Representative (“Ld. AR”) submitted that the delay caused in filing the appeal was not intentional and was out of the control of the assessee. Accordingly, it was prayed to condone the delay and admit the appeal for adjudication on merits.
3. Per contra, the Learned Departmental Representative (“Ld. DR”) did not raise any serious objection to the condonation of delay.
4. We have considered the rival submissions and perused the material on record. We find that the delay in filing the appeal was on account of reasonable and bona fide causes, such as the advanced age of the assessee, lack of familiarity with digital systems, logistical issues due to distance, and inadvertent lapse on the part of an intermediary. There is nothing on record to suggest that the delay was deliberate or attributable to any mala fide intention on the part of the assessee. At this stage, it is relevant to refer to the decision of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal v. CIT (174 taxmann.com 21), wherein it has been held that while considering petitions for condonation of delay, a liberal and justice-oriented approach should be adopted so that substantial justice is not defeated on technical grounds. Respectfully following the said principle and considering the facts and circumstances of the present case, we are of the view that the assessee has shown sufficient cause for the delay in filing the appeal. Accordingly, the delay of 97 days in filing the appeal is hereby condoned and the appeal is admitted for adjudication on merits.
5. The assessee has raised the following grounds of appeal:
6. The brief facts of the case are that the assessee is an individual working as an Anganwadi teacher at Gumnoor Village. Based on information regarding availability of cash at the premises of the assessee, commission under section 131(1)(d) of the Income Tax Act, 1961 (“the Act”) was issued to carry out necessary enquiry. During the course of such enquiry, it was found that the assessee along with her son was in possession of cash amounting to Rs.22,50,500/-, out of which the assessee could not satisfactorily explain the source to the extent of Rs.22,00,000/-. Accordingly, a warrant under section 132 of the Act was executed on 23.10.2018 and cash of Rs.22,00,000/- was seized. The statement of the son of the assessee was recorded under section 131 of the Act on the same date, wherein it was stated that Rs.50,500/- pertained to his salary savings and the balance amount belonged to his mother. Thereafter, the statement of the assessee was also recorded under section 131 of the Act, wherein the assessee stated that the source of the cash was out of repayment received from money lending activities and accumulated savings, including savings of her son. Subsequently, since the assessee had not filed the return of income under section 139 of the Act for Assessment Year 2019–20, the Learned Assessing Officer (“Ld. AO”) issued notice under section 142(1) of the Act on 16.12.2020. In response, the assessee filed her return of income on 19.03.2021 declaring total income of Rs.2,60,320/-. During the assessment proceedings, the assessee submitted that the source of cash seized was out of accumulated savings over the years, money lending business and income from house property. However, the Ld. AO was not satisfied with the explanation and accordingly treated the seized cash of Rs.22,00,000/- as unexplained income under section 69A of the Act and added the same in the hands of the assessee. The assessment was completed by the Ld. AO under section 143(3) of the Act vide order dated 07.04.2021 assessing the total income of the assessee at Rs.24,60,320/-.
7. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT (A) granted relief of Rs.5,45,000/- and sustained the balance addition of Rs.16,55,000/-.
8. Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before the Tribunal. The Ld. AR submitted that notices under section 153A of the Act were issued to the assessee for Assessment Years 2013–14 to 2018–19, in response to which the assessee had filed returns of income for all the years. The Ld. AR invited our attention to the copies of income tax returns, computation of income, profit and loss account, balance sheet, capital account and Form No.26AS for all these years placed at page nos. 1 to 51 of the paper book and submitted that the returns so filed were accepted by the Ld. AO without any adverse finding. The Ld. AR further invited our attention to the balance sheet of the assessee for the immediately preceding financial year i.e., Financial Year 2017– 18 and submitted that the cash in hand as on 31.03.2018 was Rs.22,64,699/-. It was contended that the Ld. AO, while completing the assessment for Assessment Year 2018–19, had not raised any objection and thereby accepted the cash in hand reflected in the balance sheet. It was, therefore, submitted that the cash found during the course of search on 23.10.2018 stands duly explained by the cash in hand available as on 31.03.2018. Accordingly, the Ld. AR contended that the addition made by the Ld. AO and sustained by the Ld. CIT(A) is liable to be deleted.
9. Per contra, the Ld. DR relied upon the orders of the lower authorities.
10. We have carefully considered the rival submissions and perused the material available on record. The issue involved in the present appeal relates to the addition made under section 69A of the Act on account of cash found during the course of search. The primary contention of the assessee is that the cash found during the course of search is duly explained by the cash in hand available as per the balance sheet as on 31.03.2018, which has been accepted by the Revenue in assessment proceedings. In this regard, we have gone through the balance sheet of the assessee as on 31.03.2018 placed at page no.46 of the paper book, which is to the following effect:
11. On perusal of the above, we find that the cash in hand available with the assessee as on 31.03.2018 is Rs.22,64,699/-, which is sufficient to justify the cash of Rs.22,00,000/- found in the possession of the assessee during the course of search on 23.10.2018. We further find that the Revenue has not disputed the fact that the return of income for Assessment Year 2018–19, along with the balance sheet reflecting the aforesaid cash in hand, was accepted by the Revenue without pointing out any deficiency or discrepancy in the same. Once the cash in hand as on 31.03.2018 stands accepted by the Revenue, the same cannot be disregarded without bringing any contrary material on record. It is also pertinent to note that the search was conducted within a short span from the end of the financial year, and there is nothing on record to suggest that the cash balance reflected as on 31.03.2018 was not available with the assessee on the date of search. In the absence of any adverse material, the explanation of the assessee deserves to be accepted. In view of the present facts and circumstances, we are of the considered view that the addition sustained by the Ld. CIT(A) is not justified. Accordingly, we direct the Ld. AO to delete the addition of Rs.16,55,000/- sustained by the Ld. CIT(A).
12. In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 17th April, 2026.
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