VENKATA SIVASANKARARAO DARNA,VIJAYAWADA vs. JURISDICTIONAL ASSESSING OFFICER, APR-C-(75) (1), VIJAYAWADA

PER OMKARESHWAR CHIDARA, A.M: This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (“NFAC”), Delhi in DIN & Order No.ITBA/NFAC/S/250/2024- 25/1067922964(1) dated 23.08.2024, arising out of order passed by the Ld.AO u/s 147 r.w.s.144 of Income Tax Act, 1961 (“the Act”) dated 22.03.2024, pertaining to the assessment year 2015-16. 2. In the above cited appeal, the facts in brief are as follows :

(a) The assessee is a non-filer and did not file his return for the A.Y.2015-16 also. Based on the specific information received in the instant assessee’s case, it was found that there are cash deposits of Rs.50,85,000/- in the assessee’s savings bank account in the Citizen Co-operative Society Ltd.

(b) Since the appellant did not file return of income, the Ld.AO issued a notice u/s 148A(b) and the appellant was required to show cause as to why a notice u/s 148 of the Act should not be issued and the assessee was requested to furnish his reply by 28.03.2022. Since the assessee did not comply with the show cause notice u/s 148A within the prescribed time, order u/s 148A(d) of the Act was passed by the Juri ictional Assessing Officer (“JAO”) after taking prior approval from the competent authority as per section 151 of the Act. A notice u/s 148 of the Act was issued to the appellant on 07.04.2022 vide DIN No. ITBA/AST/S/148_1/2022- 23/1042607812(1), requiring the appellant to furnish return of income within 30 days. The appellant was issued notices u/s 143(2) and 142(1) of the Act and the appellant was required to file the sources of the cash deposits made in his bank account. On 26.12.2023, the assessee furnished a reply stating that a return of income was filed on 26.12.2023 and it was also stated that the amount of cash deposits are only re deposits of cash withdrawn. The amount represents the real estate brokerage commission income. As the assessee admitted an income of Rs.3,11,500/-, the assessee requested the department to close the issue as return of income was filed.

(c) The assessee filed a latter dated 24.01.2024, stating as follows :

“Respected Sir, Sub: Submission information called for your notice no ITBA/AST/F/143(2)_5/2023-24/1059791603(1) dt 17/01/2024 Ref: PAN AILPD1786H AY 2015-16 As declared in my income tax return my commission income which pertains to facilitation of purchase and sale of real estate. During the Financial year 2014-15 I had prospected on many realities for my clients; but none of the deals materialised, however the parties have made small adhoc payments exgratia in view of my efforts for their failed purchases / sales. Since the payments were exgratia and adhoc and in petty cash amounts, they were received in cash and there is no bank trail perse. Also the my bank account has an opening balance of Rs.3,43,605/- and my total receipts during the year approximated to Rs.3,00,000/- which have offered to tax in total. / therefore request you kindly withdraw the notice and the treat the matter as closed. Yours Sincerely (Darna Venkata Sivasankara Rao)." (d) Since the transactions pertain to the period, which is more than 10 years ago, it was not possible for him to furnish the details of transactions done by him.

(e) Since the appellant did not furnish the sources of cash deposits with corroborative evidences, the Ld.AO proposed an addition of Rs.18,90,105/-, which is a peak credit as on 23.08.2014. In response to this query, the appellant has explained that there is an opening balance of Rs.3,43,605/-, Rs.3,00,000/- as income returned for the current year and gifts to the extent of Rs.11,23,000/- should be taken into account and requested the Ld.AO to drop the proceedings to make any addition to the returned income.

(f) The Ld.AO concluded the assessment by stating that the above said contention is an afterthought only to avoid legitimate tax liability. Finally, the Ld.AO made an addition of Rs.18,90,105/- with the following observations :

“On perusal of statement of saving bank account No. 137260005191 maintained by the assessee with The Citizen Co-operative Society Limited, it is observed that the peak credit in the said account was on 23/08/2014 amounting to Rs. 18,90,105/-. Further, on perusal of bank account bearing No. 144710100027059 maintained by the assessee with Andhra Bank, it is observed that there were only two cash deposits in the said bank account ie Rs. 8,00,000 on 09/01/2015 and Rs. 2,00,000 on 24/02/2015 apart from interest and gas subsidy and balance on the said dates after the credit of the aforesaid amounts were Rs.8,00,547 and Rs.2,00,547 respectively. Further, if the credit balance of both the accounts are merged as on 09/01/2015 and 24/02/2015, the said credit balances come to Rs. 15,10,014 and Rs. 5,99,479 which is less than the aforesaid peak credit of Rs. 18,90,105/-. Thus, the peak credit of Rs. 18,90,105/- is added to the total income of the assessee treating it as his unexplained money u/s 69A which will be taxed at special rates u/s 115BBE of the I.T. Act, 1961. Further, penalty proceedings u/s 271(1)(c) are initiated separately for concealing particulars of income.”

(a) The legal ground raised by the appellant that his case is covered by section 149(1)(a) instead of section 149(1)(b) of the Act and hence notice u/s 148 is vitiated by the law and therefore, the assessment may be quashed. The Ld.CIT(A) at para 4.2 of his order has stated that the Ld.AO has issued show cause notice while issuing notice u/s 148A. Since there was no response from the appellant, an order u/s 148A(d) was passed by the AO on 06.04.2022 followed by a notice u/s 148 of the Act and there is no response for the notices also. Hence, the Ld.AO issued notice u/s 142(1) and 143(2) and proceeded to make the assessment. Thus, the Ld.CIT(A) has concluded that the Ld.AO followed the procedure as per law and held that this legal ground raised by the appellant is not sustainable.

(b) As far as merits are concerned, the Ld.CIT(A) has mentioned that the appellant is relying solely on the gifts and brokerage and no third party documents were provided by the purchasers of property or donors of gifts. There is no corroborative evidence from the seller or purchaser of the property nor the gift credit worthiness of donors were also established by the appellant. In the absence of supporting documents from the appellant, the authenticity of the transactions remained unproved as the evidences provided are inadequate and the Ld.CIT(A) confirmed the action of Ld.AO and dismissed the appeal of the assessee.

(a) The first issue to be adjudicated is the legal ground raised by the appellant that the notice issued by the Revenue is invalid as the peak credit added was far below Rs.50 lakhs and the notice issued u/s 147 was barred by limitation. In this regard, what is to be seen is the income which has escaped assessment at the first glance and not the figure arrived at by the Ld.AO while concluding the assessment. The Bench concurs with the argument of the Ld.DR that the decision of Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. is squarely applicable, where, it was held that at the time of issuance of notice, what is required is only the prima facie evidence and not concluding fact. In this regard Hon’ble Supreme Court in this case held as follows:

“It is not necessary to give a final decision as to whether there is suppression of material facts by the assessee or not. It is only to be seen whether there is prima facie material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not be considered at this stage. Hence, the court cannot strike down the reopening of the assessment.” The Bench concurs with the argument of Ld.DR that the decision of Kelvinator India Ltd. rendered by Hon’ble Supreme Court is not applicable to the facts of this case because there is no question of “change of opinion” as no opinion was formed earlier by the department. It is an undisputed fact that the appellant was non filer in earlier years and even in the impugned year. As held by Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd., the Ld.AO has rightly formed a belief that the total cash deposits of Rs.50 lakhs and above are not accounted for and consequently income of more than Rs.50 lakhs is not accounted for. Subsequent detailed enquiries by issuing a notice u/s 142(1) / 143(2) and calling for the required information shows proper application of mind by the Revenue. After considering the material facts and evidences, the Ld.AO made an addition of Rs.18,90,105/-. Moreover, the procedure laid down by Hon’ble Supreme Court in the case of GKN Driveshaft (India) Ltd. was followed by the Ld.AO by passing an order u/s 148A(d), even though there was no response from the appellant. Moreover, no books of accounts were maintained by the appellant to show that all the incomes are properly accounted for. In view of the same, the Bench decides that the notice issued by the Revenue u/s 148 is valid in the eyes of law and addition u/s 69A is upheld.

6(b). As far as the merits are concerned, the Ld.AO is fair and liberal while taking into consideration all the evidences filed by the appellant during the assessment. The undisputed facts are that the appellant did not maintain any books of accounts nor any corroborative evidence was filed before the lower authorities with regard to total cash deposits of more than Rs.50 lakhs. The appellant simply filed certain submissions stating that he was doing commission business relating to real estate and earned certain commissions, which were deposited into his bank account. But the appellant totally failed in furnishing the evidences relating to persons who gave commission to him and the details of real estate ventures. As far as the claim of the appellant that certain gifts and unsecured loans were received from some persons is clearly an afterthought, because the same were not filed before the lower authorities. From the record, it appears that the appellant filed details of loans and gifts only to cover up the peak credit added by the Ld.AO while concluding the assessment. In the beginning, the appellant has stated that the amounts were received as commission income while doing some real estate business. There also, the appellant did not furnish details of withdrawals, i.e. the reason for withdrawal and what happened to the amounts which were withdrawn. The appellant simply says that the amount which was withdrawn was redeposited. Even though there is no proof that the withdrawn amounts were redeposited, the Ld.AO is quite fair and liberal in accepting this proposition and made an addition of peak credit while completing the assessment. While explaining the alleged sources of peak credit added by the Ld.AO, there is no corroborative evidence with regard to the loans, gifts etc from wife and others and hence, the three ingredients to prove the genuineness – name and address of the person who lent the money, credit worthiness of the lender and genuineness of the transaction cumulatively were proved beyond doubt by the appellant before the Ld.AO. Even before the Bench, there is no corroborative evidence to show that the amounts were given by the creditors/donors. The fact that originally an argument was taken before the Ld.AO that the amounts were his commission income and later he shifted the argument towards receipt of money from wife and friends, shows that the appellant did not discharge the onus beyond doubt with regard to source of cash deposits. As far as the claim of the appellant that an amount of Rs.3 lakhs was available as opening balance is concerned, the same does not hold water, because there are “no drawings” during the year and hence, it is deemed that Rs.3 lakh is spent towards “drawings” in the current year and this source is not available to the appellant. The appellant claims that Rs.4,50,000/- was received by him while selling an immovable property was not given credit. But the appellant did not offer this amount as short term capital gain as fairly considered by the Ld.AR of the appellant during the hearing proceedings. Hence, this amount of Rs.4,50,000/- should be added as short term capital gains and not as unaccounted income u/s 115BBE. The argument of the Ld.AR of the appellant is correct in this regard. But the Ld.AO is directed to verify the purchase and sale documents and make addition accordingly. To conclude, the notice issued u/s 147 is valid in the eyes of law for the reasons mentioned above. As far as the merits are concerned, peak credit arrived at by the Ld.AO of Rs.18,90,105/- is upheld with a rider that the cash received while selling the immovable property is to be added as short term capital gain after verification of purchase and sale documents.

Order pronounced in the Open Court on 24th April, 2026. (एस एस विश्िनेत्र रवि) (ओम्कारेश्िर धचदारा) (SS VISWANETHRA RAVI) (OMKARESHWAR CHIDARA) न्याययक सदस्य /JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Visakhapatnam, dated 24.04.2026. L.Rama/Sr.PS

आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाऩरती/The Assessee : Shri Venkata Sivasankararao Darna, 21-12- 181B, Madhura Nagar, Indhira Colony 1st Line, Vijayawada 2. रधजस्व/ The Revenue : The Juri ictional Assessing Officer, APR-C- (75)(1), Central Revenue Buildings, MG Road, Vijayawada

आदेशधिुसधर / BY ORDER LOKIREDDI RAMA cn=LOKIREDDI RAMA c=IN o=INCOME TAX APPELLATE TRIBUNAL ou=INCOME TAX APPELLATE TRIBUNAL 2026-04-28 10:49+05:30 Sr. Private Secretary ITAT, Visakhapatnam