Case Law Details
Yaganti Sunkar Vs ITO (ITAT Hyderabad)
Material Facts
The assessee, an individual, did not file a return of income for Assessment Year 2016-17. Based on departmental information regarding cash deposits of ₹80,30,500 in a bank account, the Assessing Officer reopened the assessment under Section 147 by issuing a notice under Section 148 dated 13.03.2023. In response, the assessee filed a return declaring gross commission receipts of ₹5,48,000 and net income of ₹4,82,637. During reassessment, the Assessing Officer found cash deposits of ₹1,61,51,200 and other credits of ₹2,20,92,928, aggregating to ₹3,82,44,128.
Procedural History
The Assessing Officer completed the assessment under Sections 147 read with 144B by treating the entire bank credits as business turnover and estimating income at 8%, resulting in an addition of ₹30,59,530 and assessed total income of ₹35,42,170. The Commissioner of Income Tax (Appeals), NFAC, confirmed the addition. The assessee appealed before the ITAT but remained unrepresented despite two hearing opportunities. The Tribunal proceeded ex parte after hearing the Departmental Representative.
Legal Issue
Whether the addition of ₹30,59,530, computed at 8% of total bank credits treated as business turnover, was sustainable.
Relevant Statutory Provisions
- Sections 147, 148 and 144B of the Income-tax Act, 1961
- Section 44AD of the Income-tax Act, 1961
Assessee’s Submissions
The assessee stated that he acted as a commission agent supplying poultry feed to poultry farmers through various companies. According to him, the bank deposits represented sale proceeds received from farmers. He furnished lists of cash receipts, sale bills and commission-related documents in support of his claim.
Revenue’s Findings
The Assessing Officer found that the cash receipts did not tally with cash deposits in the bank account. Audited books and audited cash books were not produced. The commission receipts did not specify the quantum of commission, and no agreements regarding payment of commission or commission rates were furnished. The bills relied upon were handwritten, lacked serial or receipt numbers, and did not identify the persons from whom cash had allegedly been received. Accordingly, the Assessing Officer treated the total credits of ₹3,82,44,128 as business turnover and estimated income at 8%.
CIT(A)’s Findings
The CIT(A) observed that although the assessee produced unaudited financial statements, return acknowledgement and sample sale bills, he failed to establish the commission arrangement, commission rates or the quantum of commission received with corroborative evidence. The CIT(A) held that the Assessing Officer had rightly invoked Section 44AD and confirmed the addition.
Tribunal’s Findings
The Tribunal noted that the Assessing Officer had recorded specific deficiencies in the evidence, including mismatch between cash receipts and bank deposits, absence of audited books, lack of commission agreements and unverifiable handwritten receipts. It further observed that the CIT(A) had found that these deficiencies remained unaddressed even during appellate proceedings. Before the Tribunal, the assessee neither appeared nor filed any written submissions or additional evidence to rebut the concurrent findings of the lower authorities. The Tribunal found no reason to interfere with the orders of the Assessing Officer and the CIT(A).
Final Ruling
The Tribunal upheld the order of the CIT(A) confirming the addition of ₹30,59,530 made by the Assessing Officer and dismissed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by Shri Yaganti Sunkar (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 12.01.2026 for the A.Y. 2016-17.
2. The assessee has raised the following grounds of appeal:
“1. The learned First Appellate Authority is not justified in deciding the appeal without affording the appropriate and fair opportunity to the appellant.
2. The learned First Appellate Authority is not justified in confirming the addition of Rs.30,59,530/- as business income made by the Ld. A.O without considering the evidences submitted by the appellant.
3. The appellant reserves his right to add, amend, delete or substitute any ground or grounds during the course of the hearing”
3. The brief facts of the case are that the assessee is an individual who had not filed any return of income for Assessment Year 2016-17. On the basis of information available with the Department, the Learned Assessing Officer (“Ld. AO”) came to know that during the year under consideration, the assessee had deposited cash of ₹80,30,500/- in his bank account maintained with State Bank of Hyderabad. Since no return of income had been filed by the assessee, the case was reopened under section 147 of the Income-tax Act, 1961 (“the Act”) and accordingly notice under section 148 of the Act, dated 13.03.2023 was issued by the Ld. AO. In response to the notice issued under section 148 of the Act, the assessee filed his return of income declaring net income of ₹4,82,637/- from gross commission receipts of ₹5,48,000/-. During the reassessment proceedings, the Ld. AO observed that the assessee had deposited cash of ₹1,61,51,200/- in his bank account and the other credits in the said bank account was amounted to ₹2,20,92,928/-. Accordingly, the total credits in the bank account, including cash deposits, aggregated to ₹3,82,44,128/-. The Ld. AO called upon the assessee to explain the source of the aforesaid deposits and credits. Not being satisfied with the explanation furnished by the assessee, the Ld. AO treated the entire credits of ₹3,82,44,128/- as business turnover of the assessee and estimated income therefrom at the rate of 8%, which worked out to ₹30,59,530/-. Accordingly, the assessment was completed by the Ld. AO under section 147 read with section 144B of the Act vide order dated 18.03.2024 by making an addition of ₹30,59,530/- and assessing the total income of the assessee at ₹35,42,170/-.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the addition made by the AO and dismissed the appeal of the assessee.
5. Aggrieved by the order of the Ld. CIT (A), the assessee is in further appeal before the Tribunal. Before the Tribunal, the appeal was initially fixed for hearing on 11.05.2026. However, on the said date, neither anybody appeared on behalf of the assessee nor was any adjournment petition filed. In the interest of justice, one more opportunity was granted to the assessee and the hearing was adjourned to 29.06.2026. However, on 29.06.2026 also, none appeared on behalf of the assessee and no adjournment application was filed. Considering the repeated non-compliance on the part of the assessee, we proceed to adjudicate the appeal ex-parte qua the assessee on the basis of material available on record and after hearing the submissions of the Learned Departmental Representative (“Ld. DR”).
6. The Ld. DR submitted that during the reassessment proceedings, the Ld. AO found total credits of ₹3,82,44,128/-in the bank account of the assessee and called upon the assessee to explain the source thereof. It was submitted that the assessee explained before the Ld. AO that he was engaged in the business of supplying feed to poultry farmers on brokerage basis. According to the assessee, various companies supplied feed to poultry farmers through him and he received commission from such companies. It was further explained that the deposits in the bank account represented sale proceeds received from farmers on account of such supplies.
The Ld. DR submitted that the assessee failed to substantiate the aforesaid claim with cogent documentary evidence before the Ld. AO as well as before the Ld. CIT(A). Accordingly, the authorities below were justified in estimating the income at the rate of 8% on the total credits treated as business turnover. Therefore, there is no infirmity in the orders of the lower authorities and the appeal of the assessee deserves to be dismissed.
7. We have heard the submissions of the Ld. DR and perused the material available on record. The solitary issue out of the grounds of appeal of the assessee is the addition of Rs.30,59, 530/-. We have gone through relevant portion of the page nos. 5 and 6 of the assessment order, which is to the following effect:
Synopsis of the reply of the assessee to SCN and additional SCN (if any)
Reply dated 15/02/2024:
I have paid an amount of Rs. 3,82,33,866/- to various companies who have supplied poultry feed to various poultry farmers under my commission. I am herewith enclosing Bank account in my books of account for your information. The remaining information will be submitted within 5 days.
Reply dated 16/02/2024:
I have received an amount of Rs. 1,59,21,200/- as cash from different poultry farmers to whom feed was supplied by various companies under my brokerage. The same has been deposited into my State Bank of India, Gandhi Road, Chittoor. List of the cash receipt is enclosed for your reference. For proof as Commission agent, I am herewith enclosing Sale bills from company to poultry farmers. Further proof of evidence for cash received from various poultry farmers, sum of the cash receipt are enclosed (Due to high volume of receipt, we could not able to attach all receipt).
Point wise rebuttal of reply of the assessee including analysis of any case law relied upon
The assessee furnished list of cash receipt from poultry farmers and some sale bills from company to poultry farmers. The cash receipts from farmers did not tally with the cash deposits made in the bank account. The assessee did not file audited accounts and no audited cash books were furnished to prove that cash was actually received from the farmers and was deposited in the bank account. The commission receipts furnished by the assessee had no mention of the quantum of commission paid to the assessee. The assessee could not furnish any agreement made with the traders regarding payment of commission on sales and rate of commission on which it was paid to the assessee. The bills which were submitted claiming receipt of cash from farmers were handmade having no receipt number, and the authenticity is not verifiable as no details regarding the identity of the person from whom the amount of cash has been received is mentioned.
It is seen from the profit and loss account submitted by the assessee as well as the return filed in response to the notice u/s 148 of the Act that the assessee has disclosed a gross commission income of Rs. 5,48,000/- and net income of Rs. 4,82,637/-, but without authentic documents and audited accounts certifying the veracity of the bills, vouchers and deposits into the bank account, the contention of the assessee is not acceptable.
Conclusion Drawn:-
Hence, entire deposits made in the account no. 52115832070 maintained at State Bank of India, Gandhi Road Branch, Chittoor, Andhra Pradesh amounting to Rs. 3,82,44,128/- (Rs. 1,61,51,200/- + Rs. 2,20,92,928/-) is considered as the business turnover of the assessee and 8% of the said turnover amounting to Rs. 30,59,530/- is added to the total income of the assessee under the head income from business and profession during the F.Y. 2015-16 relevant to A.Y. 2016-17.
8. On a perusal of the above, we find that before the Ld. AO, the assessee had explained credits aggregating to ₹3,82,33,866/- in his bank accounts as proceeds arising from supply of feed to poultry farmers. However, we find that the Ld. AO has specifically recorded a finding that the cash receipts claimed to have been received from farmers did not tally with the cash deposits made in the bank account. We further find that despite claiming total receipts of more than ₹3.82 crore, the assessee failed to furnish audited books of account before the Ld. AO. The commission certificates furnished by the assessee also did not mention the quantum of commission paid by the companies to the assessee. Further, the assessee could not furnish any agreement entered into with the traders or companies regarding payment of commission, the rate of commission payable, or the terms governing such transactions. We also find that the bills produced by the assessee in support of receipt of cash from farmers were hand-written documents having no serial numbers or receipt numbers. The authenticity of such documents could not be verified as no details regarding the identity of the persons from whom the cash was allegedly received were mentioned therein. We have also gone through para nos. 9 and 10 of the order of the Ld. CIT(A), which is to the following effect:
9.0 Adjudication: I have carefully perused the impugned order, the grounds of appeal, the statement of facts and the submissions filed by the appellant in the present appeal. The Ground of Appeal wise adjudication is as under:
9.1 On careful perusal of the grounds of appeal as mentioned in para-4 of this order, it is seen that the appellant has mainly contested against the determination of income of Rs. 35,42,1,70/- u/s 147 read with section 144B of the Income-tax Act, dated 18.03.2024 against the Return Of Income filed in response to notice u/s 148 of the Act of Rs. 4,82,640/-. The appellant through its grounds of appeal has contended that the Id. AO erred in estimating the income of the appellant @ 8% of gross deposits made in the account no. 52115832070 maintained at State bank of India, Gandhi Road Branch, Chittoor, Andhra Pradesh amounting to Rs. 3,82,44,128/-considered as the business turnover of the assessee. The appellant has further contended that AO erred making addition without examining/ analyzing the nature of transactions and amounts in the Form 26AS.
9.2 With regard to the above, the impugned assessment order has been perused and it is noticed that the appellant during the year did not file its ROI for the year under consideration and based on information of cash deposits to the tune of Rs. 80,30,500/- in account maintained with State Bank of Hyderabad, the case of the appellant was reopened by issuance of notice u/s 148 of the Act. During the course of assessment proceedings, the AO noticed that the appellant had made total deposits of Rs. 3,82,44,1281- and the books of account of the appellant has not been audited. Further, the claim of the appellant in respect of being commission agent/broker of Principal Companies selling poultry feed to respective poultry Farm has also been not established as the appellant failed to submit copy of agreement, rate at which the commission is paid to the appellant or any other details which can establish the relationship between Principal and the agent. The AO in the above-mentioned factual backdrop concluded 8% of the entire credits in the bank account of the appellant as business income of the appellant and accordingly made the addition to the total income of the appellant. It is pertinent to mention here that the appellant at this juncture also, could not establish with corroborative evidence, the rate at which commission is received and the exact amount of commission received from the seller as well as purchaser. The appellant has submitted copy of ITR acknowledgement filed on 20.03.2023, copy of computation sheet, unaudited copy of P & L account and copy of unaudited Balance sheet and some sample bills of sale which establishes that the appellant is a commission agent. The AO during the course of assessment proceedings has not disputed this fact however, as the quantum involved in such sale/purchase and other conditions under which commission to the extent the appellant is claiming remains unestablished even at this juncture. The submissions made by the appellant during the assessment proceedings as well as during appellate proceedings do not explicitly picturize the true and correct affairs of business of the appellant. Therefore, I am of the considered opinion that to arrive at the correct taxable income, the AO has rightly invoked provisions of section 44AD of the Act and made the addition to the total income of the appellant. The method of working of taxable income adopted by the AO in the event of above-mentioned facts and circumstances of the case do not require any short of interference and in light of the above facts, the addition made in the assessment order is confirmed. The grounds raised by the appellant do not have merit and are accordingly dismissed.
10.0 Decision: After having considered the facts and circumstances of the case, findings made by the A.O. in the order and submissions made by the appellant during the appellate proceedings, subject to remarks in the preceding para, addition made to the total income of the appellant is confirmed and the present appeal is accordingly dismissed.
9. On perusal thereof, we find that the Ld. CIT(A) has categorically recorded that even during the appellate proceedings, the assessee failed to furnish the necessary documentary evidence to rebut the findings recorded by the Ld. AO. Accordingly, the Ld. CIT (A) upheld the addition made by the Ld. AO. Even before us, despite being granted adequate opportunity, the assessee has chosen not to appear and has not filed any written submissions or documentary evidence controverting the findings concurrently recorded by both the lower authorities. Thus, the factual findings recorded by the Ld. AO and affirmed by the Ld. CIT(A) remain unrebutted. In these circumstances, we find no reason to interfere with the well-reasoned orders of the lower authorities. Accordingly, we uphold the order of the Ld. CIT(A) confirming the addition of ₹30,59,530/- made by the Ld. AO.
10. In the result, the appeal of the assessee is dismissed.
Order pronounced in the Open Court on 3rd July, 2026
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