SUDALAGUNTA KRISHNA KALYAN KUMAR,TIRUPATI vs. ACIT, CIRCLE-1(1), TIRUPATI

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ITA 706/HYD/2026Status: DisposedITAT Hyderabad20 May 2026AY 2017-1811 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the assessee failed to provide any material to substantiate the source of the cash deposits, the authorities below were justified in treating the same as unexplained money under Section 69A of the Act.

What were the facts?

The assessee made cash deposits of Rs. 21,25,636/- in his bank account during the demonetization period. He claimed these were business receipts but failed to provide documentary evidence to substantiate his claim.

What were the issues?

Whether cash deposits made during the demonetization period can be treated as unexplained income under Section 69A when the assessee fails to provide supporting evidence for their business origin.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: Shri Manjunatha G. & Shri Ravish Sood

Hearing: 14/05/2026

आयकर अपीलीय अिधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad Before Shri Manjunatha G., Accountant Member and Shri Ravish Sood, Judicial Member आ.अपी.सं /ITA No.706/Hyd/2026 (िनधा�रण वष�/Assessment Year:2017-18) Sudalagunta Krishna Vs. ACIT, Kalyan Kumar, Tirupati. Tirupati. PAN: APNPK4646Q (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: None राज� व �ारा/Revenue by: Dr. Sachin Kumar, Sr. AR सुनवाई की तारीख/Date of Hearing: 14/05/2026 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 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 23/10/2023, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) of the Income Tax Act, 1961 (for short, “the Act”), dated 11/12/2019. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:

2 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT “1. The assessment order is contrary to law, facts and evidence on record and is liable to be quashed. Invalid Invocation of Section 69A 2. The learned Assessing Officer erred in invoking Section 69A without establishing that the cash deposits were not recorded in the books of account Also without properly appreciating the facts and evidences on record. The essential conditions for invoking Section 69A were not satisfied, namely: a) The money must be found to be owned by the assessee b) The same must not be recorded in the books of account, c) The explanation offered must be unsatisfactory No Rejection of Books 3. The addition is unsustainable as the books of account were not rejected under Section 145(3), and therefore no separate addition under Section 69A could be made. Recorded Business Receipts 4. The authorities failed to appreciate that the cash deposits represented business receipts already recorded and included in declared turnover Misapplication of Burden of Proof 5. The burden under Section 69A was wrongly shifted without discharging the initial burden to prove non-recording in books. Presumption Without Evidence 6. The addition is based on suspicion arising from demonetisation period deposits and not on any independent material evidence Suspicion, however strong, cannot substitute proof. Incorrect Reliance on Judicial Precedents 7. The reliance placed on decisions relating to unrecorded assets and high denomination notes is misplaced and inapplicable to the facts of the present case.

AO relies on: Chuharmal (1988)

3 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT Smt Srilekha Banerjee (1963) These cases relate to  Unrecorded assets  High denomination notes outside books Whereas this case involves:  Maintained books  Tax audit  Declared turnover  Business cash receipts  These are materially different facts Double Taxation 8. The addition results in taxing business receipts twice, once as turnover and again as unexplained money Without Prejudice - Peak Credit 9. Without prejudice, even if addition is warranted, the same ought to be restricted to peak credit after considering cash withdrawals and available cash balance Levy under Section 115BBE 10. The levy of tax under Section 115BBE is consequential and unsustainable if the addition under Section 69A fails. Penalty Initiation 11. Initiation of penalty under Section 271AAC is bad in law and consequential. Violation of Principles of Natural Justice 12. The learned CIT(A) erred in sustaining the addition without proper inquiry and without effectively rebutting the evidences furnished, thereby violating principles of natural justice Excessive and Arbitrary Addition 13 The addition sustained is excessive, arbitrary and disproportionate to facts and is liable to be deleted in full. Without Prejudice – Estimation

4 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT 14. Without prejudice to the above, even if any addition is warranted, the same ought to be restricted to the peak credit after considering withdrawals and availability of cash balance. Right to Add, Amend Grounds 15. The appellant craves leave to add, amend or alter grounds at the time of hearing.” 2. Succinctly stated, the assessee had filed his return of income for AY 2017-18 on 31/03/2018, declaring an income of Rs. 1,71,50,750/-. Subsequently, the case of the assessee was selected for “complete scrutiny” through CASS, and notice under section 143(2) of the Act, dated 24/09/2018, was issued and served upon the assessee. In response, the assessee furnished his return of income for AY 2017-18, along with an audit report, balance sheet, profit and loss account, and Schedules, on 03/10/2018 through the e-proceedings portal.

3.

During the course of the assessment proceedings, the AO called upon the assessee to put forth an explanation regarding the cash deposits of Rs. 21,25,636/- made by him in his bank account No.50200003129571 with HDFC Bank during the demonetization period, i.e., 09/11/2016 to 30/12/2016. In response, the assessee, vide letter dated 08/10/2019, submitted that the subject cash deposits were sourced from his business receipts. However, he failed to furnish any documentary evidence

5 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT to substantiate his claim that the subject cash deposits in his bank account were sourced out of his business proceeds.

4.

The AO holding a conviction that the assessee had failed to discharge the onus that was cast upon him to explain the source of the cash deposits made in his bank account during the demonetization period, held the entire amount of Rs. 21,35,636/- as having been sourced out of his unexplained money under section 69A of the Act. Accordingly, the AO vide his order passed under section 143(3) of the Act, dated 11/12/2019, determined the income of the assessee at Rs. 1,92,76,386/-.

5.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee had failed to participate in the proceedings before the first appellate authority, therefore, the latter was constrained to proceed with and dispose of the appeal based on the facts available on record.

6.

The CIT(A) observed that though it was the claim of the assessee that the subject cash deposits made in his bank account during the demonetization period were sourced out of his business receipts, but he had failed to substantiate the same based on any supporting documentary evidence. Accordingly, the

6 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT CIT(A) holding a conviction that the assessee had failed to place on record any submissions or evidence which would dislodge the observations drawn by the AO, upheld the addition made by him and dismissed the appeal.

7.

The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

8.

As the assessee, despite having been put to notice about the fixation of the hearing of the appeal, had neither participated nor filed any application for adjournment, we are constrained to proceed with as per Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 and dispose of the appeal after hearing the Ld. DR and perusing the orders of the authorities below.

9.

Dr. Sachin Kumar, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) at the threshold of hearing of the appeal, relied upon the orders of the authorities below. It was submitted that as the assessee had failed to substantiate, based on irrefutable documentary evidence, the source of the cash deposits of Rs. 21.25 lakhs made in his bank account during the demonetization period, the authorities below have rightly held

7 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT the same as having been sourced out of his unexplained money under section 69A of the Act.

10.

We have given thoughtful consideration to the contentions advanced by the Ld. Sr-DR in the backdrop of the orders of the authorities below.

11.

Admittedly, it is a matter of fact borne from the record that the assessee had during the demonetization period, i.e., 09/11/2016 to 31/12/2016, made cash deposits of Rs. 21.25 lakhs (supa) in his bank account No. 50200003129571 with HDFC Bank. On being questioned, the assessee claimed that the subject cash deposits were sourced from his business proceeds, but despite specific directions by the AO, he had failed to place on record any documentary evidence to substantiate his claim. In fact, we find that the AO vide notice under section 143(2) of the Act, dated 20/11/2019, had directed the assessee to furnish the cash book for the period 01/04/2016 to 31/03/2017, but the assessee failed to do so. It was though the claim of the assessee that the subject cash deposits made during the demonetization period were sourced out of his regular business proceeds, but the AO observed that he had failed to substantiate the said claim

8 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT either by producing the cash book for the subject year or any other material in support thereof. Accordingly, the AO in the backdrop of the aforesaid facts was constrained to consider the entire cash deposits of Rs. 21,25,636/- made by the assessee during the demonetization period in his subject bank account as his unexplained money under section 69A of the Act.

12.

We find that the assessee has assailed the addition of Rs.21.25 lakhs (supra) made by the AO vide his order passed under section 143(3) of the Act, dated 11/12/2019 before the CIT(A), but as he had failed to participate in the proceedings before the first appellate authority, therefore, the latter after deliberating on the facts gathered from the assessment record and the material before him, upheld the addition made by the AO under section 69A of the Act and dismissed the appeal.

13.

We find that, as the assessee, despite having been put to notice about the hearing of the appeal, had continued with his lackadaisical approach, where he had neither participated in the proceedings before us nor filed any application seeking adjournment, therefore, we are constrained to proceed with and dispose of the appeal based on the facts available on record.

9 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT 14. We have thoughtfully considered the issue involved in the present case. In our view, as the assessee had failed to place on record any material to substantiate the source of the cash deposits of Rs.21.25 lakhs (supra) made in his bank account during the demonetization period, therefore, no infirmity can be attributed to either of the authorities below who have rightly held that the subject cash deposits were sourced from the unexplained money under section 69A of the Act. Although we are not oblivion of the fact that the assessee had claimed that the subject cash deposits were sourced from his regular business proceeds, but we are of the view that as the assessee despite specific directions by the AO had neither produced the cash book nor placed on record any documentary evidence which would support his aforesaid claim, therefore, the said contention raised by him in the thin air could not have been summarily accepted and had been rightly rejected by both the lower authorities. At this juncture, we may herein observe that the assessee, even in the course of the proceedings before us, had not placed on record any material which would point out any perversity in the view taken by the authorities below and substantiate his claim that the

10 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT subject cash deposits were sourced out of his regular business proceeds.

15.

We thus, in terms of our aforesaid deliberations, find no infirmity in the view taken by the CIT(A), who had rightly sustained the addition of Rs. 21.25 lakhs (supra) made by the AO under section 69A of the Act and uphold the same.

16.

In the result, the appeal filed by the assessee, being devoid and bereft of any substance, is dismissed in terms of our aforesaid observations.

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 SUDALAGUNTA KRISHNA KALYAN KUMAR 20G,19-3-20G/1, KAKATHIYA NAGAR TIRUCHANOOR ROAD, Tirupati, Andhra Pradesh-517501.

11 ITA No.706/Hyd/2026 Sudalagunta Krishna Kalyan Kumar vs. ACIT 2 ACIT, NEAR SBI TILAK ROAD BRANCH KT ROAD TIRUPATI, Tirupati, Andhra Pradesh-517507 3 The Pr. CIT, Tirupati. 4 The DR, ITAT Hyderabad Benches 5 Guard File By Order Digitally signed by KAMALA KAMALA KUMAR KUMAR ORUGANTI ORUGANTI Date: 2026.05.21 13:07:16 +05'30' Sr. Private Secretary, ITAT, Hyderabad.

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