SHASHIKANTH BUDHAVARAPU,JAGTIAL vs. ITO, WARD-3, KARIMNAGAR

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 256/Hyd/2026 (िनधा�रण वष�/Assessment Year: 2017-18) Shri Shashikanth Vs. Income Tax Officer Budhavarapu Ward 3 Jagtial Karimnagar PAN:ARZPB8064F (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA Chiranjeevi राज� व �ारा/Revenue by:: Shri Vamshi Krishna, Sr. AR सुनवाई की तारीख/Date of hearing: 08/06/2026 घोषणा की तारीख/Pronouncement: 12/06/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Shashikanth Budhavarapu (“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 03.11.2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal: “1. The order of the Commissioner of Income Tax (Appeals) is erroneous both in law and on facts.

with the Learned Assessing Officer (“Ld. Ld. AO”), it came to his notice that during the demonetization period, i.e., from 09.11.2016 to 30.12.2016, the assessee had deposited cash of Rs.27.38 lakhs in his bank account maintained with Canara Bank. Since the assessee had not filed any return of income, the Ld. AO issued notice under section 142(1) of the Income Tax Act, 1961 (“the Act”) on 28.11.2017 calling upon the assessee to furnish the return of income for the Assessment Year 2017-18. The assessee failed to furnish the return of income in response to the said notice. The assessee also did not comply with the notices issued by the Ld. AO during the course of assessment proceedings. The Ld. AO thereafter obtained the bank statement of the assessee from the concerned bank under section 133(6) of the Act and found that the total deposits, including cash deposits, made in the bank account of the assessee during the relevant previous year aggregated to Rs.47,88,608/-. In the absence of any explanation from the assessee, the Ld. AO treated the entire deposits of Rs.47,88,608/- as unexplained money under section 69A of the Act and completed the assessment under section 144 of the Act vide order dated 31.10.2019 assessing the total income of the assessee at Rs.47,88,608/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). However, before the Ld. CIT(A) also, the assessee failed to comply with the notices issued during appellate proceedings. Accordingly, the appeal of the assessee came to be dismissed. 5. Aggrieved by the order of the Ld. CIT (A), the assessee is in appeal before the Tribunal. Before us, the

Learned Authorized Representative (“Ld. AR”) submitted that due to continuous losses in the textile business, the assessee had closed down his business and moved abroad for employment. During the assessment proceedings, the assessee was mostly residing outside India and, therefore, could not effectively respond to the notices issued by the Ld. AO. The Ld. AR further submitted that even during the appellate proceedings before the Ld. CIT(A), the assessee remained outside India for a considerable period and was simultaneously attempting to collect and compile the relevant records pertaining to his erstwhile business. However, due to non- availability of records and practical difficulties faced while residing abroad, the assessee could not furnish the necessary details before the Ld. CIT(A). The Ld. AR drew our attention to the copies of the passport and immigration records evidencing the arrival and departure details of the assessee from India, placed at page nos. 83 to 96 of the paper book. It was submitted that the said documents clearly demonstrate that the assessee was staying abroad during substantial periods relevant to the assessment and appellate proceedings. The Ld. AR further contended that the assessee has a strong case on merits. It was submitted that the deposits appearing in the bank account were related to the business activities carried on by the assessee and that the Ld. AO, without examining the nature and source of the deposits, had treated the entire bank deposits as unexplained money under section 69A of the Act. The Ld. AR submitted that the assessee is now in a position to substantiate the source of deposits and explain the transactions with supporting documentary evidence. Accordingly, it was prayed that in the interest of justice one

more opportunity may be granted and the matter may be restored to the file of the Ld. AO for fresh adjudication on merits. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities. It was submitted that sufficient opportunities had been provided by both the Ld. AO as well as the Ld. CIT(A), but the assessee failed to avail the same. Therefore, according to the Ld. DR, no further opportunity deserves to be granted and the orders of the authorities below should be sustained. 7. We have heard the rival submissions and perused the material available on record. We have also gone through the copies of the passport and immigration records placed at page nos. 83 to 96 of the paper book and on perusal of the same, we find that the assessee had travelled abroad and remained outside India for substantial periods during the relevant time. It is an undisputed fact that the assessment has been completed under section 144 of the Act and the addition of Rs.47,88,608/- has been made primarily on the basis of bank deposits appearing in the account of the assessee. It is also evident from the record that the assessee could not place his explanation along with supporting evidence before the authorities below. The assessee has now contended that the deposits were related to his business activities and that he is in a position to substantiate the same with relevant documentary evidence. We are conscious of the fact that adequate opportunities had been granted by the authorities below. However, at the same time, it is a settled principle that substantial justice should prevail over technical

considerations. Considering the peculiar facts of the present case, particularly the contention of the assessee that he was residing abroad during the relevant period and considering that the assessment has been framed ex parte under section 144 of the Act, we are of the considered opinion that one more opportunity deserves to be granted to the assessee to explain the nature and source of the deposits appearing in his bank account. Accordingly, in the interest of justice, we set aside the orders of the authorities below and restore the entire matter to the file of the Ld. AO for fresh adjudication. The Ld. AO shall examine the claim of the assessee on merits and decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is also directed to fully cooperate in the remand proceedings, furnish all requisite details and evidences as may be called for by the Ld. AO, and shall not seek unnecessary adjournments. The assessee shall be at liberty to file all supporting documents and evidences in support of his claim before the Ld. AO. Needless to say, the Ld. AO shall pass a speaking order after considering the submissions and evidences that may be furnished by the assessee. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 12th June, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 12th June, 2026. Vinodan/sps

Copy to: S.No Addresses 1 Shri SHASHIKANTH BUDHAVARAPU 7-7-209 NEAR VIJAYA LAXMI THEATRE, MAHA LAXMI NAGAR JAGTIAL KARIMNAGAR 505327, Telangana 2 Income Tax Officer Ward-3 Aayakar Bhavan, Karimnagar 505001 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.12 RAO 14:40:21 +05'30'