CHILAKAMURI SUNANDA,ANANTHAPUR vs. ITO, WARD-1, ANANTHAPUR

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ 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. 1881/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2015-16) Smt.Chilakamuri Sunanda Vs. Income Tax Officer Anantapur Ward 1 PAN: FCAPS2300J Ananthapur (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA NVV Gopalal Krishna राज� व �ारा/Revenue by: Smt. Uppaluri Meena, Sr.AR सुनवाई की तारीख/Date of hearing: 11/06/2026 घोषणा की तारीख/Pronouncement: 17/06/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Smt. Chilakamuri Sunanda (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 11.09.2025 for the A.Y. 2015-16. 2. The assessee has raised the following grounds of appeal:

3 16. On the basis of information available with the Learned Assessing Officer (“Ld.AO”), it was noticed that the assessee had undertaken substantial financial transactions during the relevant previous year. Accordingly, the case of the assessee was reopened under section 147 of the Income-tax Act, 1961 (“the Act”). After passing an order under section 148A(d) of the Act on 30.03.2022, the Ld. AO issued notice under section 148 of the Act on 30.03.2022. In response to the notice issued under section 148 of the Act, the assessee filed its return of income on 22.04.2022 declaring total income of Rs.3,12,020/-. Thereafter, the Ld. AO completed the assessment under section 147 read with section 144B of the Act on 24.03.2023 by making an addition of Rs.3,12,36,585/- under section 68 of the Act, disallowance of rent expenditure of Rs.84,000/- and disallowance of deduction claimed under section 80GG of the Act amounting to Rs.24,000/-. Accordingly, the total income of the assessee was assessed at Rs.3,16,56,605/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal and upheld the additions/disallowances made by the Ld. AO. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that three issues arise out of the grounds of appeal of the assessee for our consideration, namely, addition of Rs.3,12,36,585/- under section 68 of the Act, disallowance of rent expenditure of Rs.84,000/- and disallowance of deduction claimed under section 80GG of the Act amounting to Rs.24,000/-.

4 6. As regards the addition of Rs.3,12,36,585/- under section 68 of the Act, the Ld. AR submitted that the assessee is engaged in the business of trading in fruits and most of the sales transactions are carried out in cash. He submitted that in many instances the purchasers directly deposited cash into the bank account of the assessee towards payment for fruits purchased by them. He further submitted that the books of account of the assessee are liable for audit and have in fact been audited by a Chartered Accountant. The audit report, audited financial statements, books of account and supporting bills and vouchers were produced before the Ld. AO. He also submitted that the assessee had furnished details of the persons who directly deposited cash into the bank account of the assessee. The Ld. AR also submitted that without appreciating the fact that the cash deposits stood duly recorded in the books of account and represented sale proceeds, the Ld. AO treated the same as unexplained cash credits under section 68 of the Act. He accordingly prayed for deletion of the addition. 7. In the alternative, the Ld. AR submitted that the impugned addition of Rs. 3,12,36,585/- has been made solely with reference to entries appearing in the bank account of the assessee. According to him, a bank account cannot be regarded as the books of account of the assessee and therefore section 68 of the Act has no application. He submitted that only a credit found recorded in the books of account of the assessee can be subjected to addition under section 68 of the Act. Accordingly, he submitted that the addition deserves to be deleted on this legal ground also. 8. With regard to the disallowance of rent expenditure of Rs.84,000/- and deduction under section 80GG of the Act

5 amounting to Rs.24,000/-, the Ld. AR submitted that adequate opportunity was not granted by the lower authorities to furnish supporting documentary evidence. He therefore prayed that in the interest of justice, one more opportunity may be granted to the assessee and the issues may be restored to the file of the Ld. AO. 9. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities. In so far as the addition of Rs.3,12,36,585/- under section 68 of the Act is concerned, she submitted that though the assessee claimed that the cash deposits represented sales receipts, the assessee had recorded sales through journal entries in the books of account and failed to correlate the cash deposits with the corresponding sales transactions. She submitted that merely furnishing details of persons who deposited cash into the bank account is not sufficient. The assessee was required to reconcile the cash deposits with the corresponding sales and establish that the deposits actually represented business receipts. The Ld. DR also submitted that the assessee failed to furnish sufficient documentary evidence in support of its claim and therefore the addition made by the Ld. AO was justified. However, she fairly submitted that if the assessee is willing to furnish complete documentary evidence and reconciliation statements, the matter may be restored to the file of the Ld. AO for fresh verification. 10. With regard to the alternative legal contention raised by the assessee regarding applicability of section 68 of the Act, the Ld. DR submitted that the assessee has admittedly maintained regular books of account and got the same audited by a Chartered Accountant. There is also no dispute that all

6 the bank transactions have been duly recorded in the books of account maintained by the assessee. Therefore, the contention that the addition has been made only on the basis of bank statements and that section 68 of the Act is not applicable is misconceived and deserves to be rejected. 11. As regards the disallowance of rent expenditure of Rs.84,000/- and deduction under section 80GG of the Act amounting to Rs.24,000/-, the Ld. DR submitted that she has no objection if the matter is restored to the file of the Ld. AO for fresh examination. 12. We have heard the rival submissions and perused the material available on record. As regards the primary contention of the assessee relating to the addition of Rs.3,12,36,585/- under section 68 of the Act, we find force in the submission of the Ld. DR that the assessee has failed to furnish sufficient documentary evidence to substantiate that the cash deposited in the bank account represented sale proceeds. Though the assessee has claimed that the cash deposits were made by customers towards sales effected by it, the assessee has not properly reconciled the cash deposits with the corresponding sales transactions. In our considered opinion, a proper verification of the reconciliation statement and supporting documentary evidence is necessary before adjudicating the issue. Accordingly, in the interest of justice, we deem it appropriate to set aside the issue relating to the addition of Rs.3,12,36,585/- under section 68 of the Act to the file of the Ld. AO for fresh verification. The assessee shall furnish complete reconciliation statements, details of customers, books of account and all supporting documentary evidence necessary to establish that the cash deposits

7 represent genuine business receipts. The Ld. AO shall examine the same and decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. 13. As regards the alternative legal contention of the assessee that section 68 of the Act is not applicable because the addition has been made on the basis of entries appearing in the bank account, we are unable to accept the same. The assessee himself has admitted that she maintained regular books of account and got the same audited by a Chartered Accountant. There is also no dispute that the bank transactions were duly recorded in the books of account maintained by the assessee. Therefore, the contention that the addition has been made solely on the basis of bank statements and that section 68 of the Act is not applicable has no legs to stand upon and is accordingly rejected. 14. With regard to the disallowance of rent expenditure of Rs.84,000/- and deduction claimed under section 80GG of the Act amounting to Rs.24,000/-, the Ld. AR has submitted that both the disallowances has been made due to absence of necessary documentary evidence and therefore, he prayed for one more opportunity for substantiating the claim before the Ld. AO by filing the necessary documentary evidence. We are of the considered opinion that in the interest of justice one more opportunity deserves to be granted to the assessee to substantiate its claim with supporting documentary evidence. Accordingly, these issues are also restored to the file of the Ld. AO for fresh examination.

8 15. It is stated that the assessee shall be at liberty to file all necessary documents, explanations and evidences in support of its claims before the Ld. AO. The Ld. AO shall provide adequate opportunity of being heard and thereafter decide the issues afresh in accordance with law. The assessee is also directed not to seek any unnecessary adjournment and to fully cooperate in the remand proceedings. 16. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 17th June, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 17th June, 2026. Vinodan/sps Copy to: S.No Addresses 1 Smt. CHILAMAKURI SUNANDA 18-2-28 FLOT NO 204 RAJAHAMSA DELUX ,GOOTY ROAD ANANTAPUR 515001 ,Andhra Pradesh 2 Income Tax Officer Ward-1, 3 Revenue Colony, Rangaswamy Nagar, Anantapur 515004, A.P 3 Pr. CIT , Kurnool 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.17 RAO 17:12:51 +05'30'