RAMBABU VARMA LANKA,HYDERABAD vs. INCOME TAX OFFICER, WARD-6(1), HYDERABAD

The assessee has raised the following rounds of appeal

The solitary issue arises in this appeal is whether in the facts and circumstances of the case, the CIT(A) has erred in sustaining the addition made by the Assessing Officer of Rs.11,62,200/- as unexplained money under section 69A of the Act. 4. The assessee is an individual and has not filed any return of income under section 139 of the Act. On the basis of the information received through inside portal under RMS category, the Assessing Officer noted that the assessee has made transactions totaling to Rs.63,02,424/- during the year and has not filed the return of income. Accordingly, the Assessing Officer reopened the assessment by issuing notice under section 148(A)(b) and Order passed under section 148A(d) and issued notice under section 148 of the Act on 29.03.2024. In response to the notice issued u/sec.148 of the Act, the assessee filed return of income declaring total income of Rs.4,90,950/-. The Assessing Officer passed the assessment order by making an addition of Rs.11,62,200/- on account of the credit card payments by treating the same as unexplained money under section 69A of the Act. The assessee has challenged the action of the Assessing Officer before the learned CIT(A) but could not succeed.

Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that out of the total credit card payment of Rs.11,62,200/- a sum of Rs.8,66,200/- was paid by the assessee through banking channel and therefore, the same cannot be added as unexplained money when the deposit in the bank account was not at all questioned or doubted by the Assessing Officer. He has further submitted that the balance amount of Rs.2,96,000/- was comprising of certain reversal entries of the credit card itself and the payment made by the daughter of the assessee towards the credit card expenses and therefore, the entire source of the credit card payment of Rs.11,62,200/- stand explained. The learned Authorised Representative of the Assessee has referred to the details of the bank statement at page no.11 of the paper book and submitted that the Assessing Officer has not considered the reversal entries of credit card payment. Thus, he has submitted that the addition made by the Assessing Officer and confirmed by the learned CIT(A) is not sustainable and liable to be deleted.

On the other hand, the learned DR has submitted that the assessee is shifting the stand at different stages. Before the Assessing Officer the assessee claimed the source as past savings and now the assessee has taken the plea that the payment is made through banking channel whereas the assessee has not explained the source of the credit in the bank account. Thus, the learned DR has submitted that the assessee has failed to explain the source. He has relied upon the orders of the authorities below.

I have considered the rival submissions as well as relevant material on record. The Assessing Officer has made addition of Rs.11,62,200/- on account of credit card payment treating the same as unexplained money in para no.3.4.2 as under:

As regards the balance payment of Rs.2,96,000/- the assessee has referred to various cancellation transactions like booking of tickets etc., and refund of the money. However, the said details and facts were not considered by the Assessing Officer may be for want of proper explanation on behalf of the assessee. Further the assessee has also claimed that the remaining payment was made by the daughter of the assessee through her bank account, which was also not explained before the authorities below and therefore remained unverified. Accordingly, the addition to the extent of Rs.2.96,000/- is remanded to the record of the Assessing Officer for verification of the relevant facts and material to be produced by the assessee to show that the payment was made by the daughter of the assessee through her bank account and also the transaction of credit card payment got cancelled and refund is received. The Assessing Officer is directed to decide this issue, after giving proper opportunity of hearing to the assessee.

The assessee has also raised additional ground which reads as under:

I have heard the learned Authorised Representative of the Assessee as well as learned DR. The additional ground raised by the assessee is purely legal in nature as to whether the provisions of sec.115BBE of the Act are applicable on the additions made by the Assessing Officer or not. Therefore, in order to adjudicate the issue raised in the additional ground no new fact or record is required to be verified or examined but the same can be adjudicated on the basis of the facts available on record. Accordingly, in view of the Judgment of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT [1998] 229 ITR 383 (SC), I admit the additional ground raised by the assessee for adjudication.

Since the additional ground raised by the assessee goes to the root of the matter, I take up the additional ground for hearing and adjudication.

The learned Authorised Representative of the Assessee has submitted that the amendment inserting section 115BBE has come into force w.e.f. 01.04.2017 therefore, it is applicable for the assessment year 2018-19 and not for the assessment year 2017-2018. He, therefore, submitted that the Assessing Officer is not justified in levying tax at increased rate of 60% u/sec.115BBE of the Act and pleaded that applying the higher rate of tax is not sustainable and liable to be deleted. In support of his contention, the learned Authorised Representative of the Assessee has relied upon the Judgment of Hon’ble Rajasthan High Court dated 27.05.2026 in the case of Deepak Maratha vs.

On the other hand, the learned DR submitted that though the assessee has taken the plea that the payment is made through banking channel whereas the assessee has not explained the source of the credit in the bank account and therefore, the Assessing Officer has rightly made the addition on account of unexplained money u/sec.69A read with amended provisions of sec.115BBE of the Act. In support of his contention, he has relied upon Judgment of Hon’ble Kerala High Court in the case of Maruti Babu Rao Jadav vs. ACIT [2021] 430 ITR 504 (Ker).

I have considered the rival submissions as well as relevant material on record. At the outset, it is noted that the Hon’ble Rajasthan High Court in the case of Deepak Maratha vs. Union of India & two Others (supra), has considered the Judgement of Kerala High Court in the case of Maruti Babu Rao Jadav vs. ACIT (supra), and then held that the amendment inserting in section 115BBE has come into force on 01.04.2017 therefore, it is applicable for the assessment year 2018-19 and not for the assessment year 2017-2018 under consideration. The concluding part of the Judgement of Hon’ble Rajasthan High Court in Para nos.17 and 18 as under:

In the result, appeal of the assessee is partly allowed for statistical purposes.