SURYA PRAKASH RAO VOLAM,WARANGAL vs. ITO, WARD-1, WARANGAL

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ITA 600/HYD/2026Status: DisposedITAT Hyderabad04 September 2026AY 2017-1810 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the deletion of Rs. 15,54,500/- of the addition, finding the assessee's explanation for cash accumulation for his son's marriage satisfactory. The issue of the remaining Rs. 4,00,000/- was remanded for fresh adjudication. The Tribunal also held that the enhanced tax rate under Section 115BBE was not applicable for AY 2017-18.

What were the facts?

The assessee declared an income of Rs. 12,64,000/-. The Assessing Officer re-computed the income to Rs. 17,07,174/- and made an addition of Rs. 19,54,500/- under Section 69A for cash deposited during demonetization. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the cash deposited during demonetization was unexplained income, and whether the enhanced tax rate under Section 115BBE was applicable for AY 2017-18.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(2),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘SMC‘ Bench, Hyderabad

Before: Shri Ravish SoodShri Madhusudan Sawdia

Hearing: 19/08/2026

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 600/Hyd/2026 (िनधा�रण वष�/Assessment Year: 2017-18) Shri Surya Prakash Rao Vs. Income Tax Officer Volam, WARANGAL Ward-1 PAN: ACPPV3010N Warangal (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA G. Srinivasa Rao राज� व �ारा/Revenue by: Shri B. Laxmi Kanth, Sr. AR सुनवाई की तारीख/Date of hearing: 19/08/2026 घोषणा की तारीख/Pronouncement: 04/09/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Surya Prakash Rao Volam (“the assessee”), feeling aggrieved by the order passed by the Learned Addl/JCIT(A), Aurangabad (“Ld. Addl/JCIT(A)”) dated 31.12.2015 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal:

3.

The brief facts of the case are that the assessee is an individual who filed his return of income for the assessment year 2017-18 on 27.06.2017, declaring total income of Rs. 12,64,000/-. Subsequently, the assessee filed a revised return of income on 15.07.2016, declaring the same total income of

Rs. 12,64,000/- as declared in the original return of income. The case of the assessee was selected for limited scrutiny under CASS and, accordingly, notice under section 143(2) of the Income-tax Act, 1961 (“the Act”) was issued by the Assessing Officer. After considering the submissions of the assessee, the Assessing Officer re-computed the declared income of the assessee at Rs. 17,07,174/- after making certain disallowances on account of interest on housing loan and deduction claimed under sections 80D, 80E and 80DDB of the Act. The Assessing Officer further made an addition of Rs. 19,54,500/- under section 69A of the Act on account of cash deposited by the assessee in his bank accounts during the demonetization period and, accordingly, completed the assessment under section 143(3) of the Act vide order dated 14.12.2019, assessing the total income of the assessee at Rs. 36,61,674/-.

4.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee.

5.

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. At the outset, the Ld. AR submitted that the only issue involved in the grounds raised by the assessee relates to the addition of Rs. 19,54,500/- made by the Assessing Officer under section 69A of the Act on account of cash deposited by the assessee in his bank accounts during the demonetization period. In this regard, the Ld. AR submitted that the assessee had deposited total cash of Rs. 19,54,500/- during the demonetization period, out of which Rs. 15,54,500/- represented cash balance available with the assessee as on

08.11.2016 and the balance amount of Rs. 4,00,000/- represented amounts received from friends in Specified Bank Notes (“SBN”) on 09.11.2016. The Ld. AR, inviting our attention to the bank statements of the assessee placed at page nos. 21 to 38 of the paper book, submitted that the assessee had withdrawn cash of Rs. 5,00,000/- on 06.04.2016, Rs. 2,00,000/- on 13.04.2016, Rs. 1,00,000/- on 13.05.2016, Rs. 1,15,000/- on 30.05.2016, Rs. 1,00,000/- on 26.07.2016 and Rs. 5,00,000/- on 29.10.2016 from his bank accounts during the relevant year and prior to 08.11.2016. Thus, the assessee had made aggregate cash withdrawals of Rs. 15,15,000/- from his bank accounts before 08.11.2016. It was further submitted that the assessee was having an additional amount of Rs. 39,500/- out of his personal savings and, accordingly, the total cash available with the assessee as on 08.11.2016 was Rs. 15,54,500/-. The Ld. AR further submitted that the aforesaid cash withdrawals were accumulated by the assessee for the marriage of his son, which was ultimately solemnized on 10.12.2016. In support of the said contention, the assessee placed on record the marriage certificate of his son placed at page no. 42 of the paper book. It was further submitted that the assessee received an amount of Rs. 4,00,000/- in SBNs from his friends on 09.11.2016, which was also subsequently deposited in his bank account. 6. Inviting our attention to page no. 2 of the assessment order, the Ld. AR submitted that the Assessing Officer rejected the explanation of the assessee merely on the suspicion that the cash withdrawn by the assessee might have been utilized towards pre-marriage arrangements. The Assessing Officer further observed that, if the assessee was

actually having such substantial cash in hand, he ought to have deposited the entire amount in one tranche on 10.11.2016 instead of depositing the same in several tranches. The Ld. AR submitted that the Assessing Officer had not brought any material on record to establish that the cash earlier withdrawn by the assessee had actually been spent or otherwise utilized before 08.11.2016. Accordingly, he prayed that the addition made by the Assessing Officer be deleted.

7.

The Ld. DR, on the other hand, relied upon the orders of the lower authorities and submitted that there was no infirmity in the addition made by the Assessing Officer and sustained by the Ld. CIT(A).

8.

We have heard the rival submissions and perused the material available on record. We have gone through the bank statements of the assessee placed at page nos. 21 to 38 of the paper book and find that the assessee had withdrawn aggregate cash of Rs. 15,15,000/- on various dates during the year under consideration from his bank accounts prior to 08.11.2016. The factum of such cash withdrawals has not been disputed by the lower authorities. The assessee has also explained that an amount of Rs. 39,500/- was available with him out of his personal savings and, thus, the total cash available with him as on 08.11.2016 was Rs. 15,54,500/-. We have also gone through the marriage certificate of the son of the assessee placed at page no. 42 of the paper book, which shows that the marriage was solemnized on 10.12.2016. The said document lends support to the explanation of the assessee that the cash withdrawn by him was being accumulated for the

marriage of his son. We have further gone through the relevant observations of the Assessing Officer at page no. 2 of the assessment order, the relevant portion of which is to the following effect:

9.

On perusal of the above, we find that the explanation of the assessee regarding availability of cash has essentially been rejected on two grounds. Firstly, the Assessing Officer suspected that the cash earlier withdrawn by the assessee might have been utilized towards pre-marriage arrangements. Secondly, the Assessing Officer was of the view that, if such cash was actually available with the assessee, the entire amount ought to have been deposited in one tranche instead of being deposited in several tranches. In our considered opinion, both the aforesaid reasons are based on mere suspicion and conjecture. Once the assessee has

demonstrated substantial cash withdrawals from his disclosed bank accounts prior to 08.11.2016, the burden shifts upon the Revenue to bring some material on record to show that such cash had been spent, utilized or was otherwise unavailable with the assessee at the time of its subsequent deposit. No such material has been brought on record by the Assessing Officer. Merely because there was a time gap between the withdrawals and the subsequent deposits, in the absence of any evidence demonstrating utilization of the withdrawn cash for some other purpose, the explanation of the assessee cannot be rejected merely on presumption. Further, the assessee is a salaried individual and nothing has been brought on record by the Assessing Officer to demonstrate that the assessee was carrying on any undisclosed business or other income- generating activity from which the impugned cash deposits could have arisen. The explanation of the assessee regarding accumulation of cash for the marriage of his son also finds support from the marriage certificate placed on record. Therefore, in the absence of any contrary material, the availability of cash arising from the disclosed withdrawals cannot be disregarded merely on suspicion that the same might have been spent on pre-marriage arrangements. Similarly, the observation of the Assessing Officer that the assessee ought to have deposited the entire cash in one tranche instead of depositing it in several tranches cannot constitute a valid basis for treating the cash deposits as unexplained. The manner or timing in which an assessee chooses to deposit cash available with him cannot, by itself, determine the nature or source of such cash. What is relevant is whether the assessee has satisfactorily explained the source thereof. In the present case,

we are satisfied that the assessee has satisfactorily explained the availability of cash of Rs. 15,54,500/- as on 08.11.2016. Accordingly, we direct the Assessing Officer to delete the addition to the extent of Rs. 15,54,500/- made under section 69A of the Act.

10.

So far as the balance addition of Rs. 4,00,000/- is concerned, the assessee has explained that the said amount was received in SBNs from his friends on 09.11.2016. We do not find any specific adverse material brought on record by the lower authorities disproving the said explanation. However, at the same time, the assessee has also not placed before us any documentary evidence to substantiate the receipt of Rs. 4,00,000/- from his friends or to establish the identity of the persons from whom such amounts were received and the genuineness of the transactions. Therefore, in the interest of justice, we deem it appropriate to set aside this limited issue relating to the addition of Rs. 4,00,000/- to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall examine the explanation and supporting evidence, if any, furnished by the assessee and decide the issue in accordance with law after providing adequate opportunity of being heard to the assessee.

11.

The assessee has also raised an alternative contention regarding the applicability of the enhanced rate of tax under section 115BBE of the Act. The assessee has challenged the levy of tax at increased rate of 60% under section 115BBE of the Act instead of 30% applicable for the year under consideration i.e. A.Y. 2017-18. We find that an identical issue has already been considered by this Tribunal in

the case of Soma Shekhar Bingumalla Vs. ITO in ITA No. 76/Hyd/2026 for the assessment year 2017-18, dated 29.07.2026, wherein, at para nos. 18 to 21 of the order, the Tribunal has held as under:

12.

On perusal of the above, we find that the Tribunal has considered the reliance placed by the assessee on the decision of the Hon’ble Rajasthan High Court in the case of Deepak Maratha Vs. Union of India & Others (supra) as well as the reliance placed by the Department on the decision of the Hon’ble Kerala High Court in the case of Maruti Babu Rao Vs. ACIT (supra), and ultimately held that the enhanced rate of 60% under section 115BBE of the Act is not applicable for the

assessment year 2017-18. In the present case also, the assessment year under consideration is 2017-18. Therefore, respectfully following the aforesaid order of the Tribunal in the case of Soma Shekhar Bingumalla Vs. ITO (Supra), we hold that the enhanced rate of 60% under section 115BBE of the Act is not applicable to the assessment year under consideration. Accordingly, we direct the Assessing Officer to compute the tax liability of the assessee on the impugned addition by applying the rate of tax as applicable under the unamended provisions of section 115BBE of the Act.

13.

In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the Open Court on 4th September, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 4th September, 2026 Vinodan/sps Copy to: S.No Addresses 1 Shri Surya Prakash Rao Volam, D.No.15-1-53/1 Srinivasa Colony, Opp: MGM Hospital, Warangal 506002 2 Income Tax Officer Ward-1, Warangal 3 Pr. CIT, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order

TIRUPATI Digitally signed by TIRUPATI YAMINI NAGA YAMINI NAGA MALLESWARI Date: 2026.09.04 11:53:12 MALLESWARI +05'30'

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