SUDHIR REDDY POONDLA,HYDERABAD vs. DCIT., CIRCLE-3(1), HYDERABAD

आदेश / O R D E R PER MADHUSUDAN SAWDIA, AM:

This appeal is filed by Shri Sudhir Reddy Poondla (“the assessee”),

feeling aggrieved by the order passed by the Learned Commissioner of

Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi,

(“Ld. CIT(A)”) dated 30.05.2025 for the A.Y. 2017-18.

filed his return of income for the Assessment Year 2017-18 declaring a

total income of ₹1,22,09,710/-. Subsequently, on the basis of information

available with the Income-tax Department, the Learned Assessing Officer

(“Ld. AO”) noticed that during the demonetisation period, the assessee

had deposited cash aggregating to ₹2,39,19,270/- in his bank account.

Accordingly, the Ld. AO formed a belief that income chargeable to tax had

escaped assessment in the hands of the assessee and reopened the

assessment under section 147 of the Income-tax Act, 1961 (“the Act”) by

issuing a notice under section 148 of the Act on 30.03.2021. In response

to the notice issued under section 148 of the Act, the assessee :: 3 :: participated in the reassessment proceedings and filed the requisite

details. However, not being satisfied with the explanation furnished by the

assessee regarding the source of the cash deposits made during the

demonetisation period, the Ld. AO treated the entire cash deposits of

₹2,39,19,270/- as unexplained money under section 69A of the Act.

Consequently, the Ld. AO completed the assessment under section 147

read with section 144B of the Act vide order dated 25.03.2022, assessing

the total income of the assessee at ₹3,61,28,980/- after making an

addition of ₹2,39,19,270/- under section 69A of the Act.

appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the

submissions of the assessee, upheld the action of the Ld. AO and

dismissed the appeal of the assessee.

appeal before this Tribunal. Ground Nos. 1 & 6 raised by the assessee is

general in nature. No submissions were advanced by the Learned

Authorised Representative (“Ld. AR”) during the course of hearing with

respect to the said grounds. Accordingly, as the ground does not call for

any specific adjudication, the same are dismissed.

legal grounds challenging the validity of the reassessment proceedings

initiated under section 147 of the Act. It was contended that the :: 4 :: reassessment proceedings were initiated solely on the basis of information

received from the Investigation Wing without any independent application

of mind by the Ld. AO. It was further submitted that the reopening of the

assessment is founded on borrowed satisfaction and that the Ld. AO had

mechanically acted upon the information received from the Investigation

Wing. It was also argued that there was no live nexus between the

reasons recorded for reopening the assessment and the addition

ultimately made by the Ld. AO under section 69A of the Act. Accordingly,

it was prayed that the reassessment proceedings initiated under section

147 of the Act and the consequential assessment order passed under

section 147 read with section 144B of the Act are without jurisdiction and

liable to be quashed.

strongly relied upon the orders of the lower authorities. It was submitted

that the reassessment proceedings were validly initiated in accordance

with law and that the assessee has failed to establish any infirmity in the

assumption of jurisdiction by the Ld. AO. Accordingly, the Ld. DR prayed

for dismissal of Ground Nos. 2 and 3 raised by the assessee.

available on record. The preliminary issue arising for our consideration is

whether the reassessment proceedings initiated by the Ld. AO under

section 147 of the Act are liable to be quashed on the ground that the :: 5 :: same were initiated merely on the basis of borrowed satisfaction without

any independent application of mind. The principal contention of the

assessee is that the Ld. AO reopened the assessment solely on the basis

of information received from the Investigation Wing and that there was no

independent application of mind while recording the reasons for reopening

the assessment. However, during the course of hearing, when a specific

query was put by the Bench to the Ld. AR to produce the copy of the

reasons recorded by the Ld. AO before initiating the reassessment

proceedings and to demonstrate as to how the said reasons reflected non-

application of mind or borrowed satisfaction, the Ld. AR fairly admitted

that he was not in possession of the copy of the reasons recorded by the

Ld. AO. In the absence of the reasons recorded, the Bench further

required the Ld. AR to substantiate, with reference to the record, as to

how the reassessment proceedings were initiated merely on borrowed

satisfaction or without independent application of mind. However, except

making a general oral submission, no material whatsoever was placed

before us to substantiate the allegation. No documentary evidence has

been brought on record to demonstrate that the Ld. AO had mechanically

acted upon the information received from the Investigation Wing or that

he had failed to independently examine the information before recording

his satisfaction. It is a settled principle of law that the burden to establish

a jurisdictional defect lies upon the person who alleges the same. A legal

plea challenging the validity of reassessment proceedings cannot be :: 6 :: accepted merely on the basis of bald assertions or presumptions

unsupported by any material available on record. In the present case, the

assessee has neither produced the reasons recorded nor pointed out any

portion thereof to demonstrate that the reopening suffers from the vice of

borrowed satisfaction or lack of independent application of mind.

between the reasons recorded and the addition ultimately made has also

remained a mere assertion without any supporting material. In the

absence of the reasons recorded, it is not possible for us to examine such

contention. The assessee, having failed to place the foundational

document itself on record, cannot seek to invalidate the reassessment

proceedings merely on conjectures and surmises. In our considered view,

the objections raised by the assessee are founded merely on

assumptions, suspicion and surmises, unsupported by any documentary

evidence. Such unsupported oral submissions cannot form the basis for

holding that the reassessment proceedings are without jurisdiction.

Therefore, we do not find any merit in the legal objections raised by the

assessee challenging the validity of the reassessment proceedings.

Accordingly, Ground Nos. 2 and 3 raised by the assessee are dismissed.

the validity of the reassessment proceedings on the ground that the Ld.

AO failed to furnish the copy of the reasons recorded for reopening the :: 7 :: assessment despite a specific request made by the assessee before

completion of the assessment. In this regard, the Ld. AR invited our

attention to the return of income filed by the assessee in response to the

notice issued under section 148 of the Act and submitted that the

assessee filed the return of income on 18.03.2022. He further invited our

attention to the letter dated 18.03.2022 placed at page nos. 1 to 4 of the

paper book, wherein the assessee had specifically requested the Ld. AO to

furnish the reasons recorded for reopening the assessment. It was

submitted that despite such request, the Ld. AO proceeded to complete

the reassessment without supplying the reasons recorded. According to

the Ld. AR, the failure to furnish the reasons recorded vitiates the

reassessment proceedings and renders the assessment order liable to be

quashed. In support of the above contention, reliance was placed on the

decision of this Tribunal in Tahera Abida Ghori Vs. DCIT (International

Taxation) in ITA No. 777/Hyd/2020 for Assessment Year 2008-09, order

dated 29.12.2023. Accordingly, the Ld. AR submitted that the order of the

Ld. AO is liable to be quashed.

assessee. He submitted that the notice under section 148 of the Act was

issued on 30.03.2021, whereby the assessee was required to furnish the

return of income within thirty days from the date of service of the notice.

However, despite the statutory notice, the assessee neither filed the

return of income within the stipulated time nor responded to the :: 8 :: subsequent notices issued by the Ld. AO during the reassessment

proceedings. It was further submitted that the assessee ultimately filed

the return of income only on 18.03.2022, i.e., almost one year after

issuance of notice under section 148 of the Act and barely thirteen days

before the statutory limitation for completion of the assessment, which

was expiring on 31.03.2022. Simultaneously, the assessee sought a copy

of the reasons recorded. The Ld. DR contended that in the peculiar facts

of the present case, it was practically impossible for the Ld. AO to furnish

the reasons recorded, allow the assessee reasonable time to file

objections, adjudicate such objections by passing a speaking order,

thereafter issue a show-cause notice along with the draft assessment

order, provide further opportunity to the assessee to respond thereto, and

finally pass the reassessment order, all within the remaining period of

thirteen days. It was further submitted that the Ld. AO had, in fact,

issued a show-cause notice along with the draft assessment order on

21.03.2022 calling upon the assessee to furnish his explanation or

objections. However, the assessee failed to submit any reply or objection

to the said show-cause notice. Therefore, according to the Ld. DR, no

fault can be attributed to the Ld. AO and the legal ground raised by the

assessee deserves to be rejected.

available on record including the case law relied upon. The issue arising

for our consideration under Ground No. 4 is whether the reassessment order is liable to be quashed merely because the Ld. AO did not furnish

the copy of the reasons recorded before completing the reassessment. In

this regard, we have carefully gone through para nos. 2 to 4 of the

assessment order, which is to the following effect:

[Addition: Rs.2,39,19,270/-]

In view of the above, penalty proceedings u/s 271AAC of the Income Tax Act, 1961 are separately initiated in respect of unexplained income of Rs.2,39,19,270/-.

In view of the above the income of the assessee is computed as under:

Assessed income - Rs. 1,22,09,710/- u/s143(1) of the IT Act, 1961 Add. Unexplained cash Rs.2,39,19,270/- - deposit u/s 69A Total Income Rs.3,61,28,980/-

Assessed at an income of Rs.3,61,28,980/-u/s 143(3) r.w.s 147 of the I. T. Act. Issue necessary forms. Penalty u/s 271AACof Income Tax Act, 1961.

under section 148 of the Act on 30.03.2021, requiring the assessee to

furnish his return of income within thirty days from the date of service of

the said notice. Admittedly, the assessee failed to file the return of

income within the time stipulated in the notice issued under section 148.

Thereafter, the Ld. AO issued notices under section 142(1) of the Act on

30.09.2021 and 02.12.2021, requiring the assessee to furnish the

requisite details. However, the assessee failed to comply with the said

notices. Even thereafter, the Ld. AO, following the principles of natural

justice, granted one more opportunity by issuing another notice under

section 142(1) on 22.12.2021 to make the compliance on or before

29.12.2021. In response thereto, the assessee belatedly filed a reply

dated 26.02.2022, merely seeking ten days’ further time to comply with

the notices. However, even within the extended period sought by the

assessee himself, no return of income or compliance was made.

Ultimately, the assessee chose to file the return of income only on

18.03.2022, almost one year after issuance of notice under section 148 of

the Act and barely thirteen days before the statutory limitation for :: 11 :: completion of assessment was to expire on 31.03.2022. It is only on the

very same date, i.e., 18.03.2022, that the assessee requested the Ld. AO

to furnish the copy of the reasons recorded for reopening the assessment.

considerable significance. Having failed to respond to the statutory notice

issued under section 148 of the Act and having remained non-compliant

with repeated notices issued under section 142(1) of the Act for nearly

one year, the assessee cannot, at the fag end of the limitation period,

seek to challenge the reassessment proceedings by requesting the

reasons recorded at a stage when only thirteen days remained for

completion of the assessment. In the peculiar facts and circumstances of

the present case, we find considerable force in the submissions advanced

by the Ld. DR. Once the assessee made the request only on 18.03.2022,

it was not practical for the Ld. AO, within the remaining period of thirteen

days, to (i) furnish the copy of the reasons recorded; (ii) grant reasonable

time to the assessee to file objections thereto; (iii) dispose of such

objections by passing a speaking order; (iv) thereafter issue a show-

cause notice along with the draft assessment order; (v) provide another

opportunity to the assessee to respond thereto; and (vi) finally pass the

reassessment order before expiry of the statutory limitation prescribed

under the Act.

:: 12 :: 15. We further find that the Ld. AO had nevertheless issued a show-

cause notice along with the draft assessment order on 21.03.2022,

specifically calling upon the assessee to furnish his explanation or

objections. However, even at that stage, the assessee chose not to file

any reply or objection before the Ld. AO. Therefore, the assessee cannot

now be permitted to take advantage of his own inaction and non-

cooperative conduct throughout the reassessment proceedings.

Accordingly, having regard to the peculiar facts and circumstances of the

present case, we are of the considered view that no infirmity can be

attributed to the action of the Ld. AO in not furnishing the reasons

recorded pursuant to the request made by the assessee only at the fag

end of the limitation period.

DCIT (International Taxation) (supra) is clearly distinguishable on facts.

In the said case, the assessee had sought the reasons recorded well in

advance, almost one year before the reassessment order was passed,

thereby affording sufficient opportunity to the Assessing Officer to furnish

the reasons and follow the procedure prescribed by law. The factual

matrix in the present case is entirely different. Therefore, the said

decision does not advance the case of the assessee. In view of the

foregoing discussion, we find no merit in Ground No. 4 raised by the

assessee. Accordingly, the same is dismissed.

:: 13 :: 17. Ground No. 5 relates to the addition of ₹2,39,19,270/- made by the

Ld. AO under section 69A of the Act. The Ld. AR submitted that during

the relevant previous year, the assessee was engaged in the business of

running a petrol pump. Inviting our attention to the various notifications

issued by the Government of India during the demonetisation period, it

was submitted that petrol pumps were specifically permitted to receive

payments in Specified Bank Notes (“SBNs”) during the notified period.

Therefore, there was no prohibition on the assessee from accepting cash

in the form of SBNs during the demonetisation period. The Ld. AR further

invited our attention to the cash book for Financial Year 2016-17 placed

at page nos. 90 to 145 of the paper book and submitted that the entire

cash deposited in the bank account stood duly recorded in the regular

books of account maintained by the assessee. It was submitted that the

cash deposits represented business receipts arising from the sale of

petroleum products and were duly reflected in the cash book. Therefore,

once the cash deposits were duly recorded in the regular books of

account, no addition under section 69A of the Act could legally be made.

The Ld. AR also invited our attention to para no. 7.3 of the order of the

Ld. CIT(A) and submitted that the Ld. CIT(A) rejected the assessee’s

explanation mainly on the ground that, in certain months, the cash

deposited exceeded the cash sales of the respective months. It was

submitted that while arriving at the said conclusion, the Ld. CIT(A) failed

to consider the opening cash balance available with the assessee at the :: 14 :: beginning of each month. Had the opening cash balance been considered,

there would have been no excess cash deposits over the cash available.

Accordingly, it was submitted that the Ld. CIT(A) had not properly

appreciated the facts of the case and, therefore, the addition made under

section 69A of the Act deserves to be deleted.

authorities. It was submitted that the assessee remained largely non-

compliant during the assessment proceedings and responded only on one

occasion, namely on 18.03.2022. The Ld. DR further submitted that mere

recording of cash receipts in the cash book is not sufficient to establish

the genuineness of the source of cash deposits unless the same is

corroborated by primary documentary evidence. Inviting our attention to

page nos. 1 and 2 of the assessment order, the Ld. DR submitted that

before the Ld. AO, the assessee had furnished only a monthly summary of

cash sales and cash deposits. However, the assessee failed to produce the

regular books of account, including the day-to-day cash book, purchase

bills, sales bills, invoices and other supporting vouchers. The Ld. DR also

submitted that the assessee even failed to file the said documents before

the Ld. CIT(A). It was submitted that in the absence of such primary

evidence, the lower authorities were fully justified in treating the cash

deposits as unexplained. Accordingly, it was prayed that the addition

made by the Ld. AO be sustained.

:: 15 :: 19. We have heard the rival submissions and perused the material

available on record. The solitary issue arising for our consideration under

Ground No. 5 is whether the addition of ₹2,39,19,270/- made under

section 69A of the Act is sustainable on the facts of the present case. We

have carefully gone through page nos. 1 and 2 of the assessment order

as well as para no. 7 of the order of the Ld. CIT(A). We find that both the

lower authorities have primarily examined the issue by comparing the

monthly cash sales with the monthly cash deposits made by the assessee

during the demonetisation period. The addition has substantially been

sustained on the premise that in certain months, the cash deposits

exceeded the monthly cash sales disclosed by the assessee. At the same

time, it is an admitted position that before the lower authorities, the

assessee had furnished only the monthly summary of cash sales and cash

deposits. During the course of hearing before us, the Ld. DR specifically

pointed out that the assessee had not produced the day-to-day books of

account, purchase bills, sales bills, invoices and other supporting vouchers

before either of the lower authorities. Significantly, the Ld. AR could not

dispute the said factual position. Before us, the assessee has produced

the day-to-day cash book for the entire financial year for the first time.

However, except for the cash book, the assessee has still not produced

the remaining books of account or the supporting documentary evidence

such as purchase bills, sales invoices and other vouchers to substantiate

the business receipts claimed to have generated the impugned cash :: 16 :: deposits. In our considered opinion, the controversy involved in the

present appeal cannot be adjudicated merely on the basis of the monthly

summary of cash sales or the day-to-day cash book alone. The

correctness of the cash book and the explanation offered by the assessee

necessarily require verification with reference to the complete books of

account maintained by the assessee and the corresponding primary

documentary evidence, including purchase bills, sales invoices and other

supporting vouchers. Since the necessary documentary evidence was not

produced before the lower authorities and the day-to-day cash book has

also been produced for the first time before us, we are of the considered

view that the matter requires fresh examination by the Ld. AO.

Accordingly, in the interest of justice, we set aside the orders of the lower

authorities on this issue and restore the matter to the file of the Ld. AO

with a direction to examine the issue afresh after verifying the complete

books of account, including the day-to-day cash book, ledger, purchase

register, sales register and all other relevant books of account, together

with the supporting documentary evidence such as purchase bills, sales

invoices and vouchers, which the assessee may produce in support of his

claim. The assessee is also directed to extend full cooperation in the

reassessment proceedings by producing all the relevant books of account

and documentary evidence as may be called for by the Ld. AO. The

assessee shall not seek unnecessary adjournments and shall promptly

comply with all notices and directions issued by the Ld. AO. Needless to :: 17 :: observe, the Ld. AO shall afford reasonable opportunity of being heard to

the assessee and thereafter decide the issue afresh in accordance with

law by passing a speaking order. Accordingly, Ground No. 5 of the

assessee is allowed for statistical purposes.

purpose.

Order pronounced in the open Court on 29th July, 2026.

Sd/- Sd/- (रिवश सूद) (मधुसूदन साविडया) (RAVISH SOOD) (MADHUSUDAN SAWDIA) �ाियक सद� /JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER

Hyderabad, dated 29th July, 2026. TLN

आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to: िनधा�रती/The 1 : SUDHIR REDDY POONDLA, PLOT NO.43, BALAJI NAGAR, KUKATPALLY, HYDERABAD- Assessee 500072, TELANGANA राज�/ The Revenue 2 : DCIT., CIRCLE-3(1), O/O DCIT., CIRCLE- 3(1), HYDERABAD-, TELANGANA The Principal Commissioner of Income Tax, Hyderabad. 3 िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT Hyderabad. 4 गाड�फ़ाईल / Guard file 5

आदेशानुसार / BY ORDER

Digitally signed by TUMMALACHARLA TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.07.29 17:29:42 +05'30'

Sr. Private Secretary ITAT, Hyderabad