SRI RAJA JAGAPATHI VARMA VATSAVAI ACHYUTA RAMA,KHAMMAM vs. ITO, WARD -1, KHAMMAM

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ITA 2218/HYD/2025Status: DisposedITAT Hyderabad20 May 2026AY 2020-2110 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities had summarily rejected the assessee's claim without proper verification. The Tribunal noted the substantial land holding and the documentary evidence provided by the assessee, directing the AO to re-adjudicate the claim after necessary verifications.

What were the facts?

The assessee declared agricultural income of Rs. 26,34,000/- for AY 2020-21, which the Assessing Officer (AO) treated as unexplained money under Section 69A. The AO rejected the claim due to lack of substantiating documentary evidence, despite the assessee providing land records and claiming sales through banking channels.

What were the issues?

Whether the agricultural income declared by the assessee was correctly treated as unexplained money by the AO and CIT(A), and whether the assessee was denied natural justice.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 144B,Section 250,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘SM’ Bench, Hyderabad

Before: Shri Manjunatha G. & Shri Ravish Sood

Hearing: 12/05/2026

आयकर अपीलीय अिधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SM’ Bench, Hyderabad Before Shri Manjunatha G., Accountant Member and Shri Ravish Sood, Judicial Member आ.अपी.सं /ITA No.2218/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2020-21) Sri Raja Jagapathi Varma Vs. Income Tax Officer, Vatsavai Achyuta Rama, Ward-1, Khammam. Khammam. PAN: AIUPV9527D

(Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri T. Chaitanya Kumar, Advocate राज� व �ारा/Revenue by: Shri T. Sunil Gowtham, Sr. AR (Hybrid mode) सुनवाई की तारीख/Date of Hearing: 12/05/2026 घोषणा की तारीख/Date of 20/05/2026 Pronouncement: आदेश / ORDER PER. RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 18/06/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated

2 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO 09/09/2022 for the Assessment Year (AY) 2020-21. The assessee

has assailed the impugned order of the CIT(A) on the following

grounds of appeal:

“1. The learned Commissioner of Income-tax (Appeals) order is erroneous in facts and law. 2. The learned Commissioner of Income-tax (Appeals) erred in confirming the auctioning the officer without giving any proper opportunity therefore, the order passed by the learned commissioner of income tax appeals is illegal, ex-facie and violation of principals of natural justice. 3. The order passed by the Learned Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961 is contrary to law, facts and circumstances of the case and therefore, the order passed by the learned commissioner of income tax appeals is illegal, ex-facie and violation of principals of natural justice. 4. The Learned CIT(A) erred in confirming the addition of 26,34,000/- made by the Assessing Officer under section 69A, without appreciating that the appellant is an agriculturist and the agricultural income was earned from cultivation of commercial crops such as red chillies and turmeric. 5. The Learned CIT(A) failed to appreciate that agricultural income from commercial crops grown in in this area generally exceeds ₹2,00,000/- per acre, and the yield declared by the appellant is reasonable considering the extent of land holding of 27 acres. 6. The Learned CIT(A) erred in dismissing the appeal solely on the ground of alleged non-compliance, without adjudicating the matter on merits, violating the principles laid down by the Hon'ble Supreme Court that justice must not be denied merely for technical lapses. 7. The authorities below failed to appreciate the evidence already on record, including pattadar passbooks, land records and bank statements, clearly showing agricultural activity and receipts from sale of agricultural produce. 8. The learned Commissioner of Income-tax (Appeals) erred in confirming the action of the Assessing Officer without appreciating the fact that there was no investment or any other identifiable source of income to justify the addition. The treating of the impugned amount as unexplained money from undisclosed sources under Section 69A of the Income-tax Act is unjustified, illegal, arbitrary, ex-facie invalid, and liable to be deleted. 9. The addition under section 69A and the consequential application of section 115BBE are unjustified, arbitrary and made without proper

3 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO inquiry into prevailing agricultural prices, local practices, seasonal constraints and the COVID-19 situation affecting documentation and sale of crop yield. 10. Without prejudice, the addition made is excessive, unreasonable and deserves to be deleted. 11. The appellant craves leave to add, alter or modify any of the above grounds during the course of appellate proceedings.”

2.

Succinctly stated, the assessee has filed his return of income for AY 2020-21, declaring an income of Rs.3,70,840/- and agricultural income of Rs.26,34,000/-. The case of the assessee who had not filed his return of income for the last two years, was selected for ‘limited scrutiny’ through CASS for the reason “the assessee had declared agricultural income in his return of income for the subject year which required to be verified”.

3.

During the course of the assessment proceedings, the AO called upon the assessee to substantiate his claim of having earned agricultural income of Rs.26.34 lakhs in the subject year. In reply, it was claimed by the assessee that he and his wife owned 22 acres of agricultural land, viz., (i) he had inherited 16 acres of agricultural land and had further purchased 5 Acres of agricultural land from his earnings over the years; and (ii) that his wife owned agricultural land admeasuring 6 acres. The

4 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO assessee to substantiate his claim had placed on record a copy of P1, B2 Khasra and Khatoni and also filed Pattadar passbook of Agricultural Land ownership with title deed issued by the Government of Telangana (Ref: Passbook Nos.1.T24200220096 & 2. T24200250160). Also, it was submitted by him that as he was living in an interior rural area which was not catered with good transportation facility therefore, the agricultural produce was sold in small consignments to different small agents based on telephonic communications. Elaborating further, it was stated by him that the sale proceeds of the agricultural produce were primarily received through electronic banking mode only and credited in his bank account No.73136230029. Apropos, the expenditure incurred for cultivation it was stated by him that the same comprising of, viz., labour costs, harvest charges and transportation charges were incurred in cash but as the copies of the vouchers/bills having not been retained, thus could not be produced. Also, the assessee had attached the Adangal or copy (IB) of land details which were authorized by the Department of Revenue, Telangana.

5 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO 4. However, we find that the AO did not find favour with the explanation of the assessee and held the entire amount of Rs.26.34 lakhs (supra) as having been sourced out of his unexplained money under section 69A of the Act. Ostensibly, the AO while concluding as herein above had observed that a perusal of the current account No.73136230029 of the assessee maintained in the name of M/s. Venkateshwara Medical and General Stores, Nagaram, a proprietary concern of the assessee engaged in the retail business of sale of medicines did not conclusively reveal any agricultural receipts. The AO observed that as the assessee had failed to substantiate his claim of having earned agricultural income during the subject year based on supporting documentary evidence, thus his unsubstantiated claim did not merit acceptance. Accordingly, the AO vide his order passed under section 143(3) r.w.s 144B of the Act, dated 09/09/2022 recharacterized the agricultural income of Rs.26.34 lakhs as unexplained money of the assessee under section 69A of the Act, and determined his income at Rs.30,04,840/-.

5.

Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.

6 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO 6. The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

7.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record.

8.

Shri T Chaitanya Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that both the authorities below had grossly erred in law and facts of the case in summarily brushing aside the assessee’s claim of having earned agricultural income despite having substantial land holding, and treating the entire amount as his unexplained money under section 69A of the Act. Elaborating on his contention, the Ld. AR vehemently submitted that it is a matter of fact borne from the record that the assessee and his wife owned 27 Acres of agricultural land. The Ld. AR to buttress his contention had taken us through the revenue records, which revealed that the aforesaid land holding of 27 acres (approx.), viz., (i) land holding of the assessee: 20.248 Acres, Page-3 of APB; and (ii) land holding of Sri Raja Vastavai Sudha (assessee’s wife):

7 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO 5.2500 Acres, Page-6 of APB. The Ld. AR submitted that the assessee was carrying out cultivation of Red Chilies on the aforesaid agricultural land. Also, it was submitted by him that the sale proceeds of the agricultural produce were credited in the aforementioned bank account of the assessee, thus, there was no justification for both the lower authorities to have summarily rejected the agricultural income disclosed by the assessee without carrying out any verification and treating the same as his unexplained money under section 69A of the Act.

9.

Per contra, Shri T Sunil Gowthamm, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) relied upon the orders of the authorities below.

10.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties.

11.

Controversy involved in the present appeal lies in a narrow compass, i.e., the sustainability of the view taken by both the lower authorities who have recharacterized the agricultural income of Rs.26.34 lakhs disclosed by the assessee in his return

8 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO of income, as his unexplained money under section 69A of the Act.

12.

We have given thoughtful consideration and are unable to persuade ourselves to subscribe to the view taken by both the lower authorities who have summarily declined the assessee’s claim of having earned the agricultural income of Rs.26.34 lakhs during the subject year. We say so, primarily for two reasons, viz., (i) that a perusal of the revenue records produced by the assessee before the lower authorities reveal beyond doubt that the assessee along with his wife were owning 27 Acres (approx.) of agricultural land, viz., (i) the assessee: 20.248 Acres, Page-3 of APB; and (ii) Sri Raja Vastavai Sudha (assessee’s wife): 5.2500 Acres, Page-6 of APB. Apart from that, we find that the assessee to substantiate his aforesaid land holding had placed on record sufficient documentary evidence, i.e., copy of P1, B2 Khasra and Khatoni and also filed Pattadar passbook of Agricultural Land ownership with title deed issued by the Government of Telangana (Ref: Passbook Nos.1.T24200220096 & 2. T24200250160), and had also enclosed a copy of the Adangal of the subject lands. Apart from that, we find that though it has been the claim of the

9 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO assessee that the agricultural produce from cultivation of Red Chilies were sold to small commission agents in smaller consignments through telephonic communication and the sale proceeds were received through banking mode only in his bank account No. 73136230029, but the AO had summarily discarded the said material fact and without verifying the veracity of the same rejected the assessee’s claim of having earned agricultural income of Rs.26.34 lakhs (supra) during the subject year.

13.

In our view, considering the totality of the facts involved in the present case, the matter requires to be restored to the file of the AO who is directed to readjudicate the assessee’s claim of having earned agricultural income of Rs.26.34 lakhs (supra) after carrying out necessary verifications in terms of our aforesaid observations. Needless to say, the AO shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his claim of having earned the subject agricultural income based on fresh documentary evidence, if any.

14.

In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.

10 ITA No.2218/Hyd/2025 Sri Raja Jagapathi Varma Vatsavai Achyuta Rama vs ITO Order pronounced in the open court on 20th May, 2026.

Sd/- Sd/- (MANJUNATHA G.) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 20th May, 2026. OKK / SPS

Copy to: S.No Addresses 1 SRI RAJA JAGAPATHI VARMA VATSAVAI ACHYUTA RAMA, H NO 05 NAGARAM V, WALEEDU M, KHAMMAM 507136, Khammam, Telangana-507136 2 THE INCOME TAX OFFICER WARD 1, KHAMMAM, TELANGANA-507136 3 The Pr.CIT, Hyderabad 4 The DR, ITAT Hyderabad Benches 5 Guard File By Order Digitally signed by KAMALA KAMALA KUMAR KUMAR ORUGANTI ORUGANTI Date: 2026.05.21 14:06:00 +05'30' Sr. Private Secretary, ITAT, Hyderabad.

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