Balineni Kishore Babu Vs ITO (ITAT Hyderabad)
The Income Tax Appellate Tribunal (ITAT), Hyderabad, addressed an appeal filed by Shri Balineni Kishore Babu against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had largely sustained the Assessing Officer’s (AO) addition of ₹5.38 lakh to the assessee’s income as unexplained cash deposits for the Assessment Year 2017-18. The case originated from the scrutiny of high-value cash deposits made by the assessee during the financial year 2016-17, following the filing of his income tax return. The AO had issued notices seeking details of bank accounts, credits, and the sources of these cash deposits. In response, the assessee, a Chartered Accountant working as a General Manager and also practicing part-time consultancy, explained that a significant portion of the total deposits of ₹14.80 lakh came from cash withdrawals and demonetization-period savings. However, for the remaining ₹5.38 lakh, the assessee claimed it was received from two individuals as agricultural income and as client payments for self-assessment tax, but failed to provide supporting evidence. Consequently, the AO treated this ₹5.38 lakh as unexplained income. The CIT(A) upheld the AO’s decision, leading to the appeal before the ITAT.
During the ITAT proceedings, the assessee managed to provide some explanation and demonstrate the source for a portion of the disputed amount. The assessee showed that ₹2.96 lakh was available from his mother and ₹94,000 was received as cash for advance tax deposits from a client, totaling ₹3.92 lakh. Regarding the remaining amount received from his uncle, Shri Ravipudi Krishna Murthy, the assessee sought to explain the availability of ₹1.48 lakh. The ITAT, taking an equitable view, acknowledged the explanation for ₹1.00 lakh received from the uncle but found the assessee failed to adequately demonstrate the source for the remaining ₹48,000 from this transaction. As a result, the ITAT partly allowed the assessee’s appeal, sustaining the addition of ₹48,000 as unexplained cash deposit while deleting the remaining portion of the initial addition of ₹5.38 lakh.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order dated 18/11/2024 of the learned CIT (A)-/ADDL/ JCIT(I)-10 Mumbai, relating to A.Y.2017-18.
2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT (A) in sustaining the disallowance made by the Assessing Officer u/s 143(3) of the I.T. Act, 1961.
3. Facts of case, in brief, are that the assessee filed the e- return of Income A. Y. 2017-18 on 31/07/2017 admitting income at 5,22,840/ -. The said return was processed under sec.143 (1) of the I. T. Act. Subsequently, the case was selected under ’CASS’ to verify the ‘high value cash deposits made during the year’. For the purpose of assessment, statutory notices under sec.143 (2) and 142(1) were issued to the assessee through ITBA asking the assessee to furnish copies of Return of Income for the A.Y.2017-18, copies of all the bank accounts held by the assessee during F.Y.2016- 17, details of all credits appearing in the bank accounts and sources for the cash deposits made in the bank accounts for the financial year 2016-17. The assessee was also asked to explain the nature of business carried, cash flow statement for the year 2016-17. In response, the assessee submitted the copies of bank account statements maintained with Axis Bank, Vijaywada, Andhra Pradesh and State Bank of India, NRI Branch, Vijaywada during the F.Y.2016-17 along with copy of return of income for the A.Y.2017-18. With regard to the nature of business, the assesee submitted that he is a Chartered Accountant working as General Manager- Accounts and Finance in Lingamaneni Landmarks Developers Private Limited, Vijayawada and also practicing part time consultancy for taxation and accounts. The assessee stated that total deposits made during the demonetization were Rs. 3,40,000/- which were out of his savings and other credits during the year were out of the cash withdrawals made out of his other bank account. The assessee was asked to submit the sources for the total cash deposits made in the bank a/c during the whole year of F.Y 2016-17. In reply, the assessee submitted that the total cash deposits made during the year are Rs. 14,80,000/- out of which Rs. 9,42,000/- were deposited out of cash withdrawals. For the balance of Rs. 5,38,000/-, he stated that these amounts were received from B. Chinamma and R. Krishna Murthy out of their agricultural income and same were deposited by clients for the payment of self-assessment tax. Since, the assessee did not submit any supporting evidence for these receipts, he Assessing Officer treated this amount of Rs. 5,38,000/- as his unexplained cash deposits and added to the income returned.
3. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A) who rejected the contention of the assessee and dismissed the appeal of the assessee.
4. Aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal.
5. The learned Counsel for the assessee submitted that in response to the statutory notices u/s 143(2) and 142(1) of the I.T. Act, 1961, the assessee submitted Return of Income along with two Bank Statements and statement of fact & receipts and payments accounts. It is the submission of the learned Counsel for the assessee that in the Financial Year 2016-17, the assessee deposited cash into axis bank of Rs 14,80,000 (Fourteen Lakhs Eighty Thousand) out of withdrawal from State Bank of India and savings from his earnings in previous Thus, he prayed that the addition so made by the Assessing Officer and upheld by the learned CIT (A) should be deleted.
6. On the other hand, the learned DR relied upon the orders of the authorities below.
7. We have heard the rival contentions and perused the available material on record. Before us, the assessee was able to demonstrate the availability of cash from his mother Smt. Balineni Chinamma to the extent of Rs.2,96,000/- and further the assessee was also able to demonstrate that he has received Rs.94,000/- as cash for depositing the advance tax from his The assessee is a professional as a Chartered Accountant and was able to demonstrate the availability of Rs.3,92,000/- out of the amount confirmed by the Assessing Officer to the extent of Rs.5,38,000/-. Thus, the assessee was able to demonstrate the valid source of Rs.3,92,000/- out of the amount of Rs.5,38,000/-. We also found that the assessee has given the explanation for the remaining amounts which was received by the assessee from his uncle Shri Ravipudi Krishna Murthy. In our considered opinion, an equitable and balance view is required to be taken by the Bench whereby the assessee sought to explain the availability of cash from his uncle for an amount of Rs.1,48,000/-. Thus, we found that though the assessee was able to demonstrate the availability of cash of Rs.1.00 lakhs from his uncle, however, he failed to demonstrate the remaining availability of cash from his uncle amounting to Rs.48,000/-. Accordingly, this amount of Rs. 48, 000/- is sustained and the remaining amount is deleted. We order accordingly.
8. In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the Open Court on 4th February, 2025.
