KIRAN PRAKASH NEKKANTI,VISAKHAPAGTNAM vs. INCOME-TAX OFFICER, WARD-3(2), VISAKHAPATNAM

आयकर अपीऱीय अधिकरण, विशाखापत्तनम पीठ, विशाखापत्तनम INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री एस एस विश्िनेत्र रवि, माननीय न्याययक सदस्य एिं श्री ओम्कारेश्िर धिदारा, माननीय ऱेखा सदस्य SHRI SS VISWANETHRA RAVI, HON’BLE JUDICIAL MEMBER AND SHRI OMKARESHWAR CHIDARA, HON’BLE ACCOUNTANT MEMBER ITA No.403/VIZ/2025 (ननधधारण वर्ा/Assmt. Year:2013-14) Kiran Prakash Nekkanti Income-Tax Officer, Visakhapatnam Ward-3(2) PAN : ABYPN5144R Visakhapatnam Vs. (प्रत्यथी/Respondent) (अपीलधथी/Appellant)

ननधधाऩरती द्वधरध/ Shri I Kama Sastry, CA Assessee represented by: रधजस्व द्वधरध/ Sri CVA Rama Rao, Sr AR Revenue represented by:

सुनवधई की तधरीख/ 21.04.2026 Date of conclusion of hearing: घोर्णध की तधरीख/ 29.05.2026 Date of pronouncement: आदेश/ORDER PER OMKARESHWAR CHIDARA, A.M: This appeal is filed by the Assessee against the order of Ld. CIT(Appeals), National Faceless Appeal Centre. vide DIN:

ITBA/NFAC/S/250/2025-26/1075573906(1) dated 09.04.2025 for the Assessment Year 2013-14, arising out of order passed by the Ld.AO u/s 143(3) of the Income Tax Act, 1961 (“the Act”) dated 31.03.2016 for the A.Y.2013-14.

a. The assessee is in the business of hiring of excavators and in the business of real estate consultancy, filed his return of income, disclosing a total income of Rs.3,15,570/- and agricultural income of Rs.4,65,000/-. The case was taken up for scrutiny and notice u/s 143(2) was issued by the Ld.AO. Since the notice sent by the Ld.AO could not be served on the assessee at the given address, the same was sent through registered post, which was returned unserved by the postal authorities at Rajahmundry. Then, the said notice was served by affixture through income tax inspector at the last known address. Subsequently, the Income Tax Officer sent another notice to the latest address given by the assessee. Relevant notice u/s 143(2) and 142(1) of the Act were served on the assessee. Meanwhile, the Income Tax Officer (I&CI) forwarded certain information relating to cash deposits/credits aggregating to Rs.1.28 crore made by the assessee in the savings bank account of the Citizen Cooperative Society Ltd., Rajahmundry. The Ld.AO also came to know that the appellant has 3 bank accounts in Axis Bank in Rajahmundry and Visakhapatnam also in addition to 3 bank accounts in Citizen Cooperative Bank in various branches. After taking into consideration all this information, the Ld.Income Tax Officer requested the assessee to submit the savings bank account statements of Axis Bank, Rajahmundry, Axis Bank, Gopalapatnam, Visakhapatnam. The total cash deposits in these three branches of Axis Bank made by the assessee during the impugned year came to Rs.1.70 crores. b. Thus, the total deposits in both these banks of Axis Bank and Citizen Co-op. Bank Ltd., are Rs.2.78 crores. During the assessment proceedings, the assessee has stated that certain amounts were transferred from Seethammadhara and Hyderabad branches of Citizen Cooperative Society Ltd to Rajahmundry Branch of the same bank. After considering the explanations of the assessee, the Ld.AO held that the assessee could not satisfactorily explain the source of deposits for the following reasons : “2.4.1. The assessee admitted gross receipts at Rs.15 lakhs from machinery hires and consultancy fees for the financial year 2012-13. However, after claiming expenditure under various heads the assessee admitted net income at Rs. 2,02,400/- only. 2.4.2. In addition to the above, the assessee disclosed agricultural income at Rs.4,65,000/- from land holding of 16 acres. During the course of assessment proceedings the assessee furnished copies of documents/pattadarpass book copies evidencing agricultural land holding. Thus, the income agricultural admitted by the assessee works out to approx. Rs.30,000/- per acre. However, the assessee could not furnish other documentary evidences like details of crops grown, yield per acre, bills for expenditure incurred and sale bills/receipts etc., in support of such admission. Thus, correctness of the claim of agricultural income remain unverified. 2.4.3. The assessee could not explain details relating to credits (other than cash) appearing in his bank accounts along with supporting documentary evidences viz. persons from whom received, nature of receipt, confirmation letters etc., to prove genuineness of his claim. 2.4.4. The claim of the assessee that amounts were transferred from his SB accounts with The Citizen Cooperative Society Ltd. Visakhapatnam and Hyderabad to his account with Rajahmundry branch of the said society is verified and found to be acceptable. However, the assessee could not explain source for deposit of Rs.25,00,500/- made in cash In Hyderabad branch on 09- 07-2012 and also cash deposits made on various dates in his account with Visakhapatnam branch, which were transferred to his Rajahmundry account. For example, the assessee made cash deposits of Rs.10,01,000/-; Rs.2,00,200/-; Rs.9,00,900/- and Rs.8,50,000/-on 09-07- 2012, 23-07-2012, 27-07-2012, 10-08-2012 and 10-12- 2012, which were transferred to his Rajahmundry account either on the same day or on immediately next following day. 2.4.5. On a perusal of the capital account for the year ending on 31-03-2013, which was submitted during the course of assessment proceedings, it is noticed that the assessee has shown total capital at Rs.1,45,36,218/-, which includes incomes received during the year. The closing balance is shown at Rs.1,24,96,120/-. It is further observed that the assessee had opening balance of capital atRs.1,20,29,872/-. However, such claim is not substantiated with conclusive proof like cash flow statements, capital accounts of previous years, etc. Thus, it is held that the assessee had explainable source of Rs.25.07,6,54/- only(1,45,36,218 - opening balance of 1,20,29,872), which represent incomes received during FY 2012-13. 2.5. In view of the above it is proved beyond doubt that the aggregate cash deposits made by the assessee in his bank accounts does not commensurate with his total turnover for the relevant previous year. Consequently it is held that the assessee made such cash deposits out of his undisclosed sources of income. 2.5.1. However, keeping in view of the fact that the assessee had deposited gold loans amounts, insurance maturity proceedsand incomes (machinery hires,consultancy fees,agricultural income, house rents, etc.) derived by him during the relevant previous year under consideration in his SB accounts, redeposit of amounts withdrawn from the available balances cannot be ruled out. Taking into overall facts of the case, in my considered opinion, it would be in the interest of justice and fairness to adopt peak credit theory for computing the undisclosed income of the assessee towards unexplained cash deposits made in his bank accounts. Reliance is placed on the following orders: (i) ITO v. Surinder Bhatia, Prop. M/s New Life Brassiers Co.[2014 TaxPub(DT) 2823 (Del-Trib)] (ii) M/s. Peeshonu Marketing (P) Ltd. v. Addi. CIT [ITA No.1011/Hyd/12] (iii) Order of ITAT Delhi 'D' Bench in ITO v. Jagdish Kakker (ITA No. 4126/Del/2012) (iv) Smt. M.Sudha, Hyderabad v. Income-tax Officer [ITA No. 726/Hyd/2010 and ITANo.527/Hyd/2010] (v) ITO v. Kamal Kumar Mishra in ITA No. 398 (Luck.) of 2012 Co.No.69 (Luck.)of 2012 (vi) Naresh Chhabrav. ITO in ITA No.3962/Del/2011 2014 TaxPub(DT) 0649 (Del-Trib) 2.5.2.Accordingly, after considering simultaneous or corresponding cash withdrawals in the above-mentioned SB accounts (including accounts with The Citizen Cooperative Society td.) the peak credit amount works out to Rs.1.20.21.230/- A copy of the statement containing working of peak credit is enclosed to this assessment order. 2.6. For the detailed discussion made in the preceding paras, it is proposed to treatthe above peak credit amount as assessee's unexplained Income for the Assessment Year 2011-12. Accordingly, an amount of Rs. 1,20, 31, 230/- is added to the assessee's total income, as her unexplainedmoney.”

c. Finally, in view of the detailed discussion, the Ld.AOtreated the above peak credit amount of Rs.1.2 crore as unexplained income and raised consequent demand. d. In view of the various deposits made and withdrawn during the year, the Ld.AO made a detailed chart and enclosed to the assessment order, as per which, the appellant has made a total cash deposits of Rs.3,06,09,830/- and withdrew Rs.1,85,88,600/-. Actually, the appellant is supposed to explain the sources of all cash deposits of Rs.3.06 crores and explain why the amount of Rs.1.85 crore cash was withdrawn because all the withdrawals may not be spent for business purposes. But the Ld.AO gave the benefit of doubt to the appellant’s submission (even though there isno direct link and purpose of withdrawing and depositing in another bank was not explained by appellant) that same was withdrawn from one bank account was deposited in another bank account.

“During the course of assessment proceedings, it was observed by the Ld. AO that the assessee has made simultaneous cash deposits and withdrawals in his bank account and since no reason was adduced by the assessee, the Ld. AO worked outthe peak credit to Rs. 1,20,21,230/- and added the same to the income of the assessee. During the course of appellate proceedings, the appellant has made submission that the basis on which the Ld. AO has arrived at the peak credit is not clearly mentioned either in the assessment order or in the copy of the statement containing working of the peak credit. The submissions of the appellant have been perused. The appellant has not explained the source of the cash deposits and the application of the same by the him.There is no counter as to how the peak credit calculated by the Ld. AO has been wrongly applied to him. The appellant has not made any submissions explaining the cash deposits thereof.(Emphasis supplied) In view of the facts and circumstances as stated above, the addition of Rs.1,20,21,230/- made by the Ld. AO is hereby confirmed.” 4. As the assessee did not get relief from the order of Ld.CIT(A), the assessee filed an appeal before ITAT. Before ITAT, the appellant took the following grounds of appeals:

“1. The order passed is passed by the Assessing Officer withoutassuming jurisdiction as the notice under section 143(2) has notbeen issued by the Jurisdictional Assessing Officer havingjurisdiction over the case of the assessee within six months fromthe end of the financial year in which the return is filed.

7.1. In the case of Bajaj International Realty Pvt. Ltd., the coordinate Bench of Mumbai in ITA No.5320/Mum/2025 dated 12.03.2026 held as follows :

“4.2 While we find merit in the Assessee's technical contention that Section 68 is the appropriate provision for sums credited in books, it is a settled principle of law that the mere mention of a wrong section does not vitiate an assessment so long as the power to tax exists or the ingredients of the correct provision are satisfied and the Assessee was fully cognizant of the nature of the inquiry.. In the case entire enquiry by the Assessing Officer revolved around the genuineness, identity and creditworthiness of the lender — matters squarely falling within section 68. The assessee was fully aware of the nature of enquiry and responded accordingly. Consequently, we uphold the addition under the canopy of Section 68 of the Act, rejecting the plea to delete the addition on a mere technicality. The ground Nos. 1.1 and 1.2 of the assessee of the assessee are accordingly dismissed. “ 7.2. Similarly, in the case of Reena Kumari Vs. ITO, in ITA No.752/Del/2024 dated 20.12.224, the coordinate Bench of Delhi held that “mentioning wrong section by the AO is not fatal. In a case where income is chargeable under the deeming income provisions, transactions can be overlapping.Only based on the mentioning of a wrong section 68 vis-à-vis 69A cannot render the assessment invalid.

7.3. The coordinate Bench of Bangalore in the case of P.V.Ajay Narayan Vs. ITO 57 TTJ 159 (Bangalore) and also held that mentioning a wrong section is not fatal to making an assessment order under any other section. Para 8 of that order is quoted here for clarity :

“8. It is further contended by the learned counsel for the assessee that the addition cannot be made under section 68 because the assessee has not been maintaining regular books of account. It is contended that only in cases where regular books are maintained the provisions of section 68 would be applicable. But the learned Departmental Representative, on the other hand, submitted that misquoting of a section is not fatal to the case of the Revenue. For this proposition, he relied on the following case law : (i) Commissioner v. Gilbert and Barker Manufacture Inc. Co. U.S.A. (1978) 111 ITR 529 (Bom.). (ii) Steel Containers Ltd. v. Commissioner (1978) 112 ITR 995 (Cal.), and (iii) D.M. Neterwalla v. Commissioner (1980) 122 ITR 880 (Bom.). The above decisions point out to one thing that the Tribunal has power to allow the Revenue to raise a ground for the first time before it. It is also held therein that the Tribunal can uphold disallowance under another section. In the light of the above decisions we hold that mentioning of a wrong section is not fatal to making an assessment under any other section.”

“2.4.4. The claim of the assessee that amounts were transferred from his SB accounts with The Citizen Cooperative Society Ltd. Visakhapatnam and Hyderabad to his account with Rajahmundry branch of the said society is verified and found to be acceptable. However, the assessee could not explain source for deposit of Rs.25,00,500/- made in cash In Hyderabad branch on 09-07-2012 and also cash deposits made on various dates in his account with Visakhapatnam branch, which were transferred to his Rajahmundry account. For example, the assessee made cash deposits of Rs.10,01,000/-; Rs.2,00,200/-; Rs.9,00,900/- and Rs.8,50,000/-on 09-07-2012, 23-07-2012, 27-07-2012, 10- 08-2012 and 10-12-2012, which were transferred to his Rajahmundry account either on the same day or on immediately next following day. 2.4.5. On a perusal of the capital account for the year ending on 31-03-2013, which was submitted during the course of assessment proceedings, it is noticed that the assessee has shown total capital at Rs.1,45,36,218/-, which includes incomes received during the year. The closing balance is shown at Rs.1,24,96,120/-. It is further observed that the assessee had opening balance of capital atRs.1,20,29,872/-. However, such claim is not substantiated with conclusive proof like cash flow statements, capital accounts of previous years, etc. Thus, it is held that the assessee had explainable source of Rs.25.07,6,54/- only (1,45,36,218 - opening balance of 1,20,29,872), which represent incomes received during FY 2012-13.”

9.1. The Ld.AO has adopted peak credit theory and a table of “deposits and withdrawals” for the entire year in the bank account was prepared and enclosed to the assessment order. The Ld.CIT(A) has held that the appellant has not submitted the details of cash deposits/withdrawals, i.e., source of deposits, name and address of persons from whom cash was received etc. Since the appellant did not adduce any argument as to how the peak credit theory adopted by Ld.AO is incorrect, the addition made by Ld.AO is hereby confirmed.

9.1.2. The Ld.AO has tabulated all the cash deposits on one side and all the withdrawals on the other side. From that table, the Ld.AO found that Rs.3,06,09,830/- cash was deposited and Rs.1,85,88,600/- was withdrawn during the year. The balance of Rs.1.2 crore was added as “unexplained deposits” by Ld.AO while completing the assessment. The appellant’s argument that sometimes cash withdrawn from one bank was deposited into another was given due credit by Ld.AO despite there is no proof that same cash was deposited and despite no evidence wasadduced relating to all these cash deposits/withdrawals. The Ld.AO was very liberal in making addition of Rs.1.2 cr. only despite the fact that the appellant did not submit the evidences of Rs.3.06 crores cash deposited in his bank account by taking a lenient view that the remaining amount was deposited out of withdrawal; by adopting “peak credit” theory.

9.1.3. The Ld.AO has mentioned in the assessment order that the sources of income are from hiring of excavators and real estate transactions. But despite opportunities, the appellant has not produced the details of hiring receipts, i.e. received from whom, whether TDS was deducted etc. Similarly, the nature of real estate transactions, whether by buying and selling plots/flats or commission income etc., were neither filed before the Ld.AO nor before the Ld.CIT(A) nor even before the Bench. In fact, no arguments were adduced by the appellant before the Ld.CIT(A) and Ld.AR of appellant before the Bench. Without submitting the details of all cash deposits/withdrawals, the arguments of appellant are only on legal ground that the addition cannot be made u/s 69A or some technical ground. After hearing the Revenue and Ld.AR of appellant, the Bench decides that the addition was made correctly by Ld.AO in view of the above. The Ld.AR of appellant could not say, under what section, these additions are to be made, when the receipts are taxable and not exempted under any provision of Act. As the definition is of “income” has widest amplitude u/s 2(24) of Income Tax Act and inclusive in nature, all incomes are taxable unless the same are exempt under Income Tax Act and as held by Hon’ble Supreme Court in the case of G.R.Karthikeyan 201 ITR 866 (SC). When the appellant claims that all receipts are from hire receipts of machinery/real estate, it is for the appellant to prove as to under which section, the income/receipt is exempt. From the assessment order and bank statement, it is observed that all the receipts and withdrawals are by way of cash. The applicability of penal provisions like section 40(A)(3), section 269SS/269T could not be examined by Ld.AO, as no details of receipts were submitted by the appellant. The ITAT’s powers are restricted to the addition made by Ld.AO and new section to bring additional incomes /penalties into the tax net can’t be brought nor adjudicated and hence penal provisions are not discussed here.

9.1.4. The Ld.AR of appellant relied on the following decisions and filed a legal paper book. To start with, the Ld.AR of appellant relied on the decision of Ushakant Patel Vs. CIT 282 ITR 553 (Guj), where there was a search operation and statement was recorded u/s 132(4A) and Hon’ble High Court has held that “Tribunal was not justified in remanding the matter to CIT(Appeal) without dealing with applicability of section 1232(4A) vis-à-vis 69 and hence matter was restored Tribunal for consideration”. Coming to our impugned case, there was neither a search operation nor any statement u/s 132(4A) was recorded. Moreover, in this case, the Hon’ble High Court has not passed any concluding order, but the issue was remanded to ITAT. Since no law was laid down in this case and there was no search operation in our case, reliance placed by Ld.AR of appellant will not come to the rescue of appellant. The second case relied on by Ld.AR of appellant is Aurobindo Sanitary Stores Vs. CIT 276 ITR 549 (Orissa HC) and the facts in that case are addition u/s 69 on the basis of difference in the figures of “sundry creditors” shown in the Balance Sheet of appellant and creditors shown in the party ledgers, whereas in the impugned case, appellant did not explain the sources of deposits in his own bank account. Hence this case is also not applicable to the facts of this case on hand. The last case relied on by the appellant is Kanchan Lalwani Vs. ITO, ITA No.484/Viz/2025, decision rendered by ITAT, Visakhapatnam Bench and the facts relate to addition u/s 68 of Income Tax Act, where the sources of cash deposits were accepted by the Department in earlier year and the addition relates to “Opening Balance”. Hence, the ITAT gave relief to appellant. In the impugned case on hand, the appellant neither explained the source in earlier year nor current year and the addition was not made relating to “opening balance”. All deposits/withdrawals are made in the current year for which undisputedly, no explanation was furnished and hence the addition is correctly made by Ld.AO. Thus, all the cases-law relied on by the Ld.AR of appellant are distinguishable on facts and dealt with and held that the cases relied on by appellant are distinguishable.

In fact, the addition of “Peak Credit”, instead of all credits, after reducing debits was upheld by the co-ordinate Bench of Hyderabad in the case of Smt.M.Sudha Vs. ITO (Hyd), ITA No.726/Hyd/2011 dt.8/7/2011 (copy of ITAT order filed by Ld.AR of appellant in his legal paper book.)

9.1.5. A copy of cash book filed by Ld.AR of appellant before the Bench (filed before lower authorities also) is perused and the following observations are made. Examples of cash deposits and withdrawals are shown below. Transactions of February 2013 are reproduced :

From the above, it is observed that appellant claims to have received cash from “securities & deposits” on various dates and amounts were claimed to have received from V.Raghunath, Y.Rajesh, M.Krishnam Raju etc. The appellant then claims to have deposited this cash in his bank account. Similarly, entire cash book is submitted as above. In other words, the so called Cash Book does not give any details of persons who gave the cash to appellant, the purpose of receipt nor their addresses were furnished before lower authorities and before the Bench also. Thus, no details of deposits and withdrawals were furnished and hence the “peak credit” was adopted by Ld.AO, i.e. amounts paid were reduced from total cash deposited, was only added by Ld.AO and hence confirmed.

9.1.6. To sum up, the addition made by Ld.AO is confirmed for the following reasons :

For the sake of clarity, section 69A is reproduced as under (emphasis supplied)

Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.

a) Section 69A is correctly invoked by Ld.AO and even if the section quoted is incorrect, addition can be upheld by ITAT, as long as no further facts are required and if the incomes are taxable.

b) The appellant has not filed the details of huge cash deposits and cash withdrawals mentioned in the bank statements. Still, the Ld. A.O., is reasonable in allowing all the Cash withdrawals as allowable business expenditure which may not be correct factually.

c) The appellant could not explain the sources of Rs.3 crore plus when their gross turnover as per Return of Income is only Rs.15 lakhs.

d) The Ld.AO is quite liberal and reasonable to add “peak credit” of Rs.1.2 crores only even though appellant has not explained sources of Rs.3.02 crores and purposes of withdrawals of Rs.1.8 crore and the penal provisions u/s.269SS/T/ 40(A)(3)/40(a)(ia) which deals with prohibition of cash receipt/payment/acceptance of cash loans, etc., were not invoked.

e) The so called “cash book” produced before AO is actually not a regular cash book because no corroborative evidences with reference to deposits/withdrawals were submitted. Even, the “cash book” filed by appellant was prepared based on bank pass book and not on the basis of daily transactions. No day book, ledger, 44AB report relating to “compulsory audit” to be done by a qualified CA as per provisions of law were produced to explain the sources of cash deposits despite being asked which implies the same were not maintained.The bank statements produced before Ld.A.Ocan’t be deemed as appellant’s books of account, as they are documented by bank, as held by Hon’ble Bombay High Court in the case of CIT Vs.

Bhaichand Gandi 149 ITR 67 (Bom.). Hence, it is held that no books of account are maintained and addition was correctly made by Ld.A.O.

f) It is a settled law that the onus lies on assessee to explain source of cash deposit/credit as held by Hon’ble Supreme Court in the case of Mohd. Hanif 50 ITR 1(SC) and Sreelekha Banerjee 49 ITR 112(SC), and this onus was not discharged by assessee before any authorities including this Bench. In view of the failure of assessee to prove sources of deposits made in his bank account, the addition made by Ld. A.O. is upheld.

g) All the legal and factual grounds raised by appellant, thus are discussed and dismissed as above. 10. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 29th May,2026.

Sd/- Sd/- (एस एस विश्िनेत्र रवि) (ओम्कारेश्िर धिदारा) (SS VISWANETHRA RAVI) (OMKARESHWAR CHIDARA) न्याययक सदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Visakhapatnam, Dated 29.05.2026. L.Rama/Sr.PS Copy to: KIRAN PRAKASH NEKKANTI, D.NO. 50-49-16/5, FLAT NO. 302, NAVYA SAUDA APARTMENTS, 1 SEETHAMMADHARA, VISAKHAPATNAM-530013, ANDHRA PRADESH INCOME-TAX OFFICER, WARD-3(2), INFINITY TOWERS, 2 SHANKARMATTAM ROAD, SANTHIPURAM, VISAKHAPATNAM-, ANDHRA PRADESH 3 THE PCIT, VISAKHAPATNAM 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE