ITO Vs Iddaiah Varikuppala (ITAT Hyderabad)
Hyderabad ITAT Upholds Deletion of ₹2.05 Crore Cash-Deposit Addition: AO’s Failure to Submit Remand Report Cannot Be Blamed on Assessee or CIT(A)
In ITO v. Iddaiah Varikuppala, ITA Nos. 1519 & 1569/Hyd/2025 (AY 2013-14), order dated 21.08.2026, the Hyderabad ITAT dealt with an ex-parte reassessment in which the AO, relying on NMS information, treated alleged cash deposits of ₹2,04,75,000 as unexplained money and assessed the entire amount as income.
Before the CIT(A), the assessee demonstrated that the actual cash deposits were only ₹49.55 lakh and not ₹2.05 crore and furnished bank accounts, ledger accounts and other supporting documents. A date-wise chart explained the ₹49.55 lakh deposits against cash withdrawals/amounts available aggregating to ₹52.28 lakh. The CIT(A) accepted the explanation and deleted the addition.
The Revenue challenged the deletion principally on the ground that the CIT(A) had admitted additional evidence in violation of Rule 46A(3) without giving the AO an opportunity to verify it. The ITAT found this contention factually incorrect. The record contained the AO’s letter dated 28.08.2024 titled “Remand Report Proceedings – Letter”, specifically calling upon the assessee to furnish documents concerning the additional evidence filed before the CIT(A). This established that the CIT(A) had in fact called for a remand report and afforded the AO an opportunity to examine the evidence.
The Tribunal importantly held that even if the AO ultimately failed to furnish the remand report, such failure was attributable to the AO himself and could neither be attributed to the assessee nor to the CIT(A). Once the CIT(A) had called for the remand report, the procedural requirement under Rule 46A stood complied with.
Accordingly, the ITAT found no infirmity in the CIT(A)’s well-reasoned order, upheld the deletion of the cash-deposit addition and dismissed the Revenue’s quantum appeal. Since the quantum addition had been deleted, the Tribunal also upheld cancellation of the consequential penalty under Section 271(1)(c). Thus, both Revenue appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
