HITEC CYBER CITY SPACES LLP,HYDERABAD vs. ACIT, CIRCLE-6(1), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G. ACCOUNTANT MEMBER आ.अपी.सं /ITA No.883/Hyd./2026 Assessment Year 2022-2023 Hitec Cyber City Spaces LLP, The ACIT, Hyderabad – 500 034. vs. Circle-6(1), Telangana. Hyderabad – 500 004. PAN AAOFH0063L (Appellant) (Respondent) For Assessee : Sri MV Prasad, CA For Revenue : Sri Narender Kumar Naik, CIT-DR Date of Hearing : 28.04.2026 Date of Pronouncement : 03.06.2026 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT :

This appeal by the assessee is directed against the Order dated 10.03.2026 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2022-2023.

2 ITA.No.883/Hyd./2026 2. The assessee has raised the following grounds of

appeal:

3 ITA.No.883/Hyd./2026 Rs.2,74,33,825/- towards disallowance of interest expenditure debited in the profit and loss account u/s 37(1) of the Act. 8. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) is not justified in rejecting the plea of the appellant that the Ld. Assessing Officer is erred in making the addition of Rs.143,00,00,000/- under Section 69 of the Act towards unexplained investment in purchase of immovable property without observing the fact that the said investment formed part of the financial statements and is duly is reflected in the Balance sheet and return of income. 9. On the facts and circumstance of the case and in law, the Learned CIT(Appeals) is not justified in not considering the Jurisdictional High Court case laws quoted by the Appellant even though these case laws are binding on learned CIT(Appeals) 10. Any other legal or factual ground that may be urged at the time of hearing of the appeal.”

4 ITA.No.883/Hyd./2026 capital introduced during the year with documentary evidence. The Assessing Officer also asked the assessee to furnish the copy of bank statement of the assessee as well as details of the creditors along with documentary evidence regarding the identity, creditworthiness and genuineness of the transaction. Since there was no response to the notice u/sec.142(1) of the Act and assessee failed to furnish the complete details as asked by the assessee therefore, the Assessing Officer has completed the assessment u/sec.143(3) r.w.s.144B of the Act by making additions on account of unexplained capital introduced, unverifiable other payables, interest expenditure and unexplained investment. The assessee challenged the assessment order before the learned CIT(A) but could not succeed as the request of the assessee for production of additional evidence in respect of capital introduction, outstanding payables and interest was rejected by the learned CIT(A).

5 ITA.No.883/Hyd./2026 the relevant details and supporting evidence before the Assessing Officer. He has submitted that one Mr. M. Someswara Rao was looking after the accounts as well as tax matters of the assessee firm was not available during the assessment proceedings due to his son’s serious health condition being suffering from brain epilepsy and fits and therefore, the assessee could not submit the requisite details and documents which were to be prepared by the accountant Sri M Someswara Rao but due to medical emergency he was not attending the office of the assessee firm. He has filed an affidavit of the authorised signatory of the assessee firm LLP explaining the facts and reasons for not furnishing the requisite details and supporting evidence before the Assessing Officer. The learned Authorised Representative of the Assessee has further submitted that the assessee filed an application before the learned CIT(A) under Rule 46A of I.T. Rules, 1962 for production of the additional evidence comprising of the relevant details and supporting documentary evidence however, the learned CIT(A) has rejected the application and declined to admit the additional

6 ITA.No.883/Hyd./2026 evidence sought to be filed by the assessee. He has referred to Para-6.3 of the impugned order and submitted that the application of the assessee under Rule-46A was rejected on technical ground of not mentioning the same in Form-35. Thus, the learned Authorised Representative of the Assessee has submitted that the assessee has now filed an application under Rule-29 of ITAT Rules, 1963 for admission of the additional evidence which was turned down by the learned CIT(A) on technical ground. The learned Authorised Representative of the Assessee has submitted that the assessee is maintaining regular books of account as well as all the relevant record however, due to unavoidable circumstances beyond the control of the assessee, the same could not be produced before the Assessing Officer at the time of completion of the assessment proceedings. Thus, he has pleaded that when the additions are made by the Assessing Officer for want of necessary details and supporting documentary evidence, then the additional evidence filed by the assessee before the learned CIT(A) ought to have been admitted. Hence, he prayed that the additional evidence filed

7 ITA.No.883/Hyd./2026 by the assessee may be admitted and matter may be remanded to the record of the Assessing Officer for verification and examination of the additional evidence filed by the assessee.

8 ITA.No.883/Hyd./2026 2. Please furnish details of sources of investment made to acquire immovable property during the year under consideration along with supporting documentary evidence viz bank statement highlighting payment made to acquire immovable property, payment of TDS on purchase of property. 3. Please furnish details of exempt income with documentary evidence. 4. Please furnish copy of bank statement of all the bank accounts held during the year under consideration. 5. Please furnish details of creditors along with documentary evidence regarding identity. genuineness and creditworthyness of the transaction made with them.

6.1. In response to the said notice the assessee did not furnish the relevant details, supporting evidence as well as submissions and consequently, the Assessing Officer has issued reminder to the assessee but still there was no compliance on behalf of the assessee. Ultimately, the Assessing Officer has made the additions on account of unexplained capital introduced during the year, unverifiable other payables, interest expenditure and unexplained investment, the details of the same are given in Para-4 of the assessment order as under:

9 ITA.No.883/Hyd./2026

6.2. Thus, ongoing through the assessment order we find that for want of necessary details and supporting evidence the Assessing Officer has made these additions. It is pertinent to note that this is the first year of the assessee LLP and therefore, the introduction of capital by the partners is not an unusual transaction. Similarly, the assessee produced the registered sale deed showing the transaction of purchase of immovable property and payment details. Therefore, the

10 ITA.No.883/Hyd./2026 payment for purchase of property was made through banking channel and details were given in the sale deed. However, the Assessing Officer has made the addition on account of unexplained investment on the ground that no other details were provided by the assessee. The assessee has explained the reasons for non-production of the relevant details and supporting evidence as the accountant of the assessee was not available during the relevant period due to the illness of his son who was suffering from brain epilepsy and fits. The assessee has filed an affidavit of the authorised person along with application of the accountant Sri M Someswara Rao for availing the leave due to the illness of his son. The assessee has also filed the relevant medical record of the son of the accountant to show that due to genuine reasons the accountant was not available to prepare the relevant details as well as production of the documentary evidence during the assessment proceedings. Before the learned CIT(A), the assessee sought to file additional evidence under Rule-46A of IT Rules, 1962 however, the learned CIT(A) has rejected the

11 ITA.No.883/Hyd./2026 application of the assessee on technical ground as given in Para-6.3 as under:

“6.3. It is noted that in Form No. 35, Column 12, the appellant has indicated "No," signifying that no documentary evidence other than that produced during the assessment proceedings is being relied upon in the appeal under Rule 46A. This submission is crucial as it confines the appellate consideration to the evidence that was available to the Assessing Officer during assessment. Consequently, while submissions, explanations, and arguments raised at the appellate stage are examined, they must be evaluated on the basis of the material already on record; no weight can be accorded to alleged evidence that was not filed during assessment.”

6.3. Therefore, this is not the case of filing the additional evidence first time before the Tribunal, but the assessee also filed a request before the learned CIT(A) for filing the additional evidence. But since there was no such indication was given in Form-35, the learned CIT(A) has declined to accept the additional evidence filed by the assessee. Thus, it is manifest from record that the assessee LLP was newly formed and additions were made by the Assessing Officer for want of relevant details and supporting documentary evidence and thereafter the assessee before the

12 ITA.No.883/Hyd./2026 learned CIT(A) attempted to produce the relevant details and supporting evidence which was declined on technical ground. The explanation of the assessee for non-production of the relevant details and documentary evidences is found to be bonafide and reasonable as the son of the accountant who was dealing with the accounts and tax matters of the assessee was suffering from serious disease and was undergoing treatment therefore, the said accountant was not available at the relevant point of time. The reasons explained by the assessee in the affidavit are as under:

“AFFIDAVIT I, Killamsethy Joga Rao, son of Late Sri K. Sri Ramulu, aged about 59 years, residing at Plot No. 101,4th Cross west, Hastinapuri Colony, Near Ganesh Temple, Sainikpuri, Kapra, Secunderabad 500094, Telangana do hereby solemnly affirm and state as follows: 1. That I am the Authorized Signatory of HITEC CYBER CITY SPACES LLP, incorporated under the Limited Liability Partnership Act, having its registered office at 802, Astral Heights, Banjara Hills, Hyderabad-500034, Telangana. 2. That I am duly authorized to make and submit this affidavit on behalf of the said LLP.

13 ITA.No.883/Hyd./2026 3. That Mr. M. Someswara Rao, employed as Chief Accountant with M/s. Aparna Infra Housing Pvt. Ltd., which holds a 50% share in the said Limited Liability Partnership Firm, has been entrusted with handling Income Tax-related matters of the firm. 4. That Mr. M.Someswara Rao, who also serves as the common accountant for both the company and the LLP, was on leave from 01.03.2024 to 30.04.2024 due to his son's serious health condition (suffering from brain epilepsy combined with fits). 5. That the said accountant is responsible for preparing tax documents, maintaining accounts, ensuring financial compliance, and handling related duties for the firm. 6. That due to his temporary absence, the company has been unable to respond fully or provide the requisite information as sought in the notice issued by the Income Tax Department. 7. Furthermore, I would like to clarify that no employees were appointed on the rolls of the LLP, and accordingly, no salary expenditure has been claimed in the Profit & Loss account of the LLP. All statutory compliance requirements have been managed by its holding company, M/s Aparna Infra Housing Pvt. Ltd and Mr. Someswara Rao is an employee of Aparna Infra Housing Pvt. Ltd. 8. That in light of the above genuine and unavoidable circumstances, the company respectfully requests the

14 ITA.No.883/Hyd./2026 condonation of delay in submitting the required response. 9. This affidavit is being submitted to place the aforementioned facts on record and to request your kind consideration and leniency in this matter.”

6.4. Along with the affidavit, the assessee has also filed medical record of the son of the accountant. Hence, in the facts and circumstances of the case, we admit the additional evidence filed by the assessee for proper verification and examination at the level of the Assessing Officer. Accordingly, the impugned order of the learned CIT(A) is set aside, and the matter is remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of the additional evidence filed by the assessee. Needless to say, the Assessing Officer is directed to provide sufficient opportunity of being heard to the assessee before passing the fresh order.

15 ITA.No.883/Hyd./2026 Order pronounced in the open Court on 03.06.2026.

Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 03rd June, 2026. VBP Copy to : Hitec Cyber City Spaces LLP, 802 Astral Heights, 1. Banjara Hills S.O. Khairatabad, Hyderabad–500 034. Telangana. The ACIT, Circle-6(1), Aayakar Bhawan, Opposite 2. LB Stadium, Basheerbagh, Hyderabad – 500 004. 3. The Pr. CIT, Hyderabad. 4. The DR, ITAT, “B” Bench, Hyderabad. 5. Guard file. BY ORDER VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.03 RAO 11:56:30 +05'30'