REDDY SEVA SANGHAM AT NANDYAL,HYDERABAD vs. INCOME TAX OFFICER, WARD-1, NANDYAL

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC‘ Bench, Hyderabad �ी �वजय पाल राव, उपा� य� एवं �ी मधुसूदन साव�डया, लेखा सद� य के सम� । Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1640/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2017-18) Reddy Seva Sangham at Vs. Income Tax Officer Nandyal Ward – 1 Hyderabad Nandyal PAN: AAEAR1307E (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA C Maheshwar Reddy राज� व �ारा/Revenue by:: Smt. Aditi Goyal, Sr. AR सुनवाई की तारीख/Date of hearing: 05/05/2026 घोषणा की तारीख/Pronouncement: 13/05/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Reddy Seva Sangham at Nandyal (“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 17.09.2025 for the A.Y.2017-18. 2. The assessee has raised the following grounds of appeal:

“a. The Ld. CIT(A) has erred in passing the order u/s. 250 of the Act and is contrary to law, facts and circumstances of the case. b. The Ld. CIT(A) ought to have believed that the cash deposits made by the Appellant are out of the Voluntary donation received during the year; but failed to consider the same and has dismissed the appeal on ground that the donation receipts are self-made. c. The addition of Rs.9,54,000/- has been made purely on surmises, conjectures, and suspicion without any cogent material or corroborative evidence, which is unsustainable in law. d. The CIT(A) grossly erred in sustaining the addition of Rs.9,54,000/- as income, without appreciating that the same represented voluntary donations received voluntary donations from members and general public, duly supported by receipts maintained in the regular course of activities of the society. e. The Ld. CIT(A) below erred in ignoring that the appellant is a registered for not for profit, engaged in charitable activities, and the receipts were only donations, not income of commercial nature. f. The Ld. CIT(A) has purported to believe that deposits are made on account of demonetization of Specified Bank Notes and considered to be undisclosed nature; though evidentiary supporting documents has been submitted. g. The appellant craves leave to add, alter, modify or withdraw any of the above grounds at the time of hearing.” 3. Brief facts of the case are that the assessee is an Association of Persons (“AOP”) which had not filed any return of income for Assessment Year 2017-18. On the basis of information available with the Learned Assessing Officer (“Ld. AO”), it was noticed that Shri Sannala Venkata Reddy had deposited cash amounting to Rs.10,76,736/- in State Bank of Hyderabad during the demonetization period from 09.11.2016 to 30.12.2016. Accordingly, the case of Shri Sannala Venkata Reddy was taken up for scrutiny by the Ld. AO. During the course of scrutiny proceedings, Shri Sannala Venkata Reddy

submitted that he was member and treasurer of the assessee society and had provided his own PAN to the bank authorities for operation of the bank account and the entire transactions in the said bank account actually belonged to the assessee society. Accordingly, the case of the assessee society was reopened under section 147 of the Income Tax Act, 1961 (“the Act”) and notice under section 148 of the Act was issued by the Ld. AO on 31.03.2021. The assessee submitted before the Ld. AO that due to technical problem, the assessee could not file return of income in response to the notice issued under section 148 of the Act. However, the assessee furnished copy of computation of income, receipts and payments account and balance sheet for Assessment Year 2017-18 before the Ld. AO. During the course of assessment proceedings, the Ld. AO observed that the assessee had deposited total cash of Rs.9,80,500/- in the bank account during the year under consideration, out of which cash deposit of Rs.9,54,000/- was made during the demonetization period. Accordingly, the Ld. AO called for explanation from the assessee regarding the source of cash deposits. After considering the submissions of the assessee, the Ld. AO was not convinced with the explanation furnished by the assessee and accordingly treated the entire cash deposits of Rs.9,54,000/- made during the demonetization period as unexplained income in the hands of the assessee. Finally, the assessment was completed by the Ld. AO under section 147 of the Act vide order dated 30.03.2022 treating the entire cash deposit of Rs.9,54,000/- during demonetization period as income of the assessee. 4. Aggrieved by the order of the Ld. AO, the assessee filed appeal before the Ld. CIT(A). After considering the

submissions of the assessee, the Ld. CIT(A) confirmed the addition made by the Ld. AO and dismissed the appeal of the assessee. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. Before us, the Learned Authorized Representative (“Ld. AR”) submitted that the assessee is registered under the Societies Registration Act and is a non-profit motive organization. The Ld. AR submitted that the society collects donations and utilizes the same towards attainment of the objects of the society. The donations are collected in cash and the same are deposited into the bank accounts of the assessee society. The Ld. AR invited our attention to the receipts issued by the society to the donors placed at page nos. 117 to 280 of the paper book. The Ld. AR further invited our attention to the comparative month-wise chart of cash deposits made in the bank accounts for Financial Years 2015-16 to 2019-20 placed at page no. 88 of the paper book and demonstrated that the cash deposits made during the demonetization period in the year under consideration were not abnormal as compared to the cash deposits made during the corresponding periods in Financial Years 2017-18 to 2019-20. The Ld. AR also submitted that the relevant period falls during festival season and major donations are normally received by the society during such period. Therefore, according to the Ld. AR, there was no abnormality in the pattern of cash deposits during the demonetization period as compared to other years. The Ld. AR submitted that without properly appreciating these facts and evidences, the Ld. AO made the addition of cash deposits made during demonetization period and the Ld. CIT(A)

erred in confirming the same. Accordingly, the Ld. AR prayed for deletion of the addition made by the Ld. AO. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities and submitted that the receipts issued by the society are self-made vouchers and therefore the same cannot be relied upon. 7. We have heard the rival submissions and perused the material available on record. We have also gone through the receipts issued by the assessee society placed at page nos. 117 to 280 of the paper book. On perusal of the same, we find that the receipts issued by the society contain complete details such as name of the donor, father’s/husband’s name of the donor, area from which the donor belongs, receipt number, date of receipt and amount received. Accordingly, we find that the receipts issued by the assessee society are akin to the receipts normally issued by any society or trust while collecting donations from the public. We have also gone through the comparative month-wise chart of cash deposits made by the assessee in the bank accounts for Financial Years 2015-16 to 2019-20 placed at page no.88 of the paper book, which is to the following effect:

Copy to: S.No Addresses 1 Reddy Seva Sangham at Nandyal c/o Narsing Rao & Co. LLP, Plot No.554, Road No.92, MLA Colony, Jubilee Hills, Hyderabad 500096 2 Income Tax Officer Ward-1 Nandyal 3 Pr. CIT - KURNOOL 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.05.13 RAO 13:54:58 +05'30'