SANTOSH CHAKRAVARTHY ENABOTHULA,WARANGAL vs. ITO, WARD-1 , WARANGAL

Succinctly stated, the AO based on information received through

During the course of the assessment proceedings, the AO issued notices under section 142(1) of the Act and called upon the assessee to explain the source of the cash deposits of Rs.3.93 crores (approx.) made in his current bank account maintained with SBI, but the assessee failed to come forth with any reply.

Ostensibly, the AO is stated to have collected the bank account statement from SBI, under section 133(6) of the Act, which revealed the total deposits of Rs.8,46,21,946/- in the assessee’s current account.

Shri K A Sai Prasad, CA, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the assessee in compliance to notice received under section 148A(a) of Act, dated 13/02/2023 of the Act, wherein he was called upon to explain the source of the cash deposits/withdrawals of Rs.3.93 crores (supra), had vide his reply uploaded on the Income Tax portal on 24/02/2023, submitted that he was working as a private employee and had not made any deposits/withdrawals in his bank account No.62479895450 with SBI, Pages 1-5 of APB. Apart from that, the Ld. AR submitted that a copy of the bank account along with the 5 Santosh Chakravarthy Enabothula vs. ITO certificate of the bank, dated 22/08/2025 was filed/uploaded wherein it was stated that the bank account of the assessee who was earlier running a wine shop at Mallampally was closed on 05/01/2019 and he was not currently holding any such bank account with the said branch. The Ld. AR had further taken us through the other bank account held by the assessee during the subject year along with the copies of the respective statements. The Ld. AR submitted that the AO had vide his notice under section 148A(b) of the Act, dated 21/03/2023 once again called upon the assessee to explain the source of the cash deposits of Rs.3.93 crores (supra) failing which the same would be assessed as his income chargeable to tax that had escaped assessment for the subject year. In reply, the assessee had vide his letter, dated 27/03/2023, (uploaded on the same date) submitted before the CIT(A) that he had not made any cash deposits/withdrawals from his bank account during the year under consideration. Elaborating further on his contention, the Ld. AR submitted that the AO bypassing the aforesaid replies/submissions of the assessee had vide his order passed under section 148A(d) of the Act, dated 05/04/2023 observed that as there was information available with the Department about the cash deposits/time deposits of Rs.3.93 crores (supra) made by him during the subject year, therefore, based on the said fact it could be safely be gathered that the income of the assessee chargeable to tax to the said extent had escaped assessment and it was a fit case for issuing of 6 06/04/2023 and without any basis made an addition of Rs.8.46 crores (approx.) in the hands of the assessee under section 69A of the Act. Carrying his contention further, the Ld. AR submitted that the AO had not only erred in summarily discarding the explanation of the assessee that he had not made any cash deposits in his bank account during the subject year, but had most arbitrarily without pointing out or bringing on record as to in which bank account the alleged cash deposits of Rs.8.46 crores (supra) made by the assessee during the year under consideration, saddled him with an exorbitant addition of the aforesaid amount.

Elaborating further, the Ld. AR submitted that as the assessee who in response to the notices received from the AO had filed his reply wherein it was clarified that he had not made any cash deposits/withdrawals in his bank account during the subject year, remained under a bona fide belief that the proceedings in his case were closed, and thus, remained oblivion about the framing of the assessment in his case at an astronomical figure by the AO. The Ld. AR submitted that the assessee had learnt about the assessment order passed in his case only when a demand notice was issued by the ITO, Ward-1, Warangal vide letter dated 13/08/2025, (through post). It was 7 Santosh Chakravarthy Enabothula vs. ITO submitted that the assessee had thereafter obtained a copy of the assessment order from the ITO, Ward-1, Warangal on 26/08/2025 and involving no further loss of time had filed the appeal on 29/08/2025 with the CIT(A), which by the time involved a delay of 176 days.

The Ld. AR further submitted that as the notices issued by the CIT(A), i.e., intimating the fixation of the hearing of the appeal on two dates, i.e., 23/09/2025 and 08/10/2025 were not served in the email account that was provided by the assessee in his Form-35, i.e., “santudrm@gmail.com” but were forwarded/dropped in the email account, viz., “pmr5319@gmail.com” (on both occasions), the assessee had remained divested of an opportunity of participating in the appellate proceedings and putting up his case before the CIT(A).

Per contra, Ms M Narmada, Learned CIT-DR relied upon the orders of the authorities below.

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

At the threshold, we may herein above observe that a perusal of the notices/enquiry letters issued by the AO, viz., (i) under section 148A(a) of the Act, dated 13/02/2023; (ii) under section 148A(b) of the Act, dated 21/03/2023; and (iii) order under section 148A(d), dated

We find that the aforesaid serious lapse on the part of the AO in not bringing on record the bank account in which the aforesaid cash deposits of Rs.3.93 crores (supra) was allegedly made had continued in the body of the assessment order. In fact, the AO while framing the assessment from the sources best known to him had observed that as per the bank account statement collected by him from SBI under section 133(6) of the Act, it stood revealed that the total cash deposits in the said bank account amounted to Rs.8,46,21,946/-. At this juncture, we may herein observe that the AO had not even while framing the assessment made any mention of the bank account in which the cash deposits of Rs.8.46 crores (supra) were stated to have been made during the subject year.

Considering the totality of the facts involved in the present case, we are of the view that as the assessee had not been validly put to notice about the hearing of the appeal, therefore, he had remained divested of an opportunity of participating in the proceedings before him and substantiate his claim regarding the reasons leading to the delay in filing of the appeal.

Be that as it may, in our view there is a substance in the assessee’s explanation regarding the reasons which had resulted to the 10

In our view, considering the manner in which the assessment had been framed in the present case, wherein the assessee has been saddled with an exorbitant addition of Rs.8.46 crores (supra) on the ground that he had made cash deposits to the said extent in a bank account, the details as regards which are not available on record, the matter in all fairness and in the interest of justice requires to be set aside to the file of the AO who is directed to re-frame the assessment based on a speaking order. Needless to say, the AO shall in the course of the set aside proceedings afford an opportunity of being heard to the assessee who shall remain at liberty to substantiate his explanation based on supporting documentary evidence, if any.

Resultantly, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 30th April, 2026. /- (मधुसूदन साव"डया) (रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखासद"य/ACCOUNTANT MEMBER "या"यकसद"य/JUDICIAL MEMBER Hyderabad, dated: 30/04/2026. 11 OKK/sps आदेशक"""त"ल"पअ"े"षत/ Copy of the order forwarded to:-

The Principal Commissioner of Income Tax, Hyderabad.

"वभागीय""त"न"ध, आयकरअपील"यअ"धकरण /DR,ITAT, Hyderabad.

The Commissioner of Income Tax 6. गाड"फ़ाईल / Guard file