RAVINDRANATH KANCHERLA,HYDERABAD vs. DCIT, CENTRAL CIRCLE - 3(2), HYDERABAD

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. 2246/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2006-07) Shri Ravindranath Vs. Dy. CIT Kancherla, Hyderabad Central Circle 3(2) PAN: AAZPK5186E Hyderabad (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA Suvibha Nolkha राज� व �ारा/Revenue by: Smt. Uppaluri Meena, Sr. AR सुनवाई की तारीख/Date of hearing: 10/06/2026 घोषणा की तारीख/Pronouncement: 17/06/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Ravindranath Kancherla (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad, (“Ld. CIT(A)”) dated 06.10.2025 for the A.Y. 2006- 07. 2. The assessee has raised the following grounds of appeal:

3 an order under section 143(3) read with sections 147 and 254 of the Income Tax Act, 1961 (“the Act”) on 22.02.2024 making an addition of Rs.38,15,000/- under section 69B of the Act and assessed the total income of the assessee at Rs.1,11,35,940/- 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld 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 us. The Learned Authorised Representative (“Ld. AR”) invited our attention to para no. 17 of the order of the Tribunal in ITA No.988/Hyd/2019 dated 27.10.2022 and submitted that while restoring the matter to the file of the Ld. AO, the Tribunal had specifically directed the Ld. AO to facilitate the cross-examination of Shri Ranga Rao by the assessee. The Ld. AR further submitted that despite the specific directions of the Tribunal, no opportunity of cross- examination of Shri Ranga Rao was ever provided by the Ld. AO to the assessee. It was submitted that the Ld. AO merely collected certain information from Shri Ranga Rao and furnished the same to the assessee. However, the assessee was never afforded an opportunity to cross-examine Shri Ranga Rao. Accordingly, it was submitted that the Ld. AO has acted in complete violation of the directions issued by the Tribunal and therefore the assessment order passed in the second round is liable to be quashed. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) submitted that the dispute relates to alleged cash payment of Rs.38,15,000/- made by the assessee towards purchase of a plot from M/s Emmar Hills Township Pvt. Ltd., which according to the Revenue was received by Shri

4 Ranga Rao. The Ld. DR invited our attention to para no. 6 to 9.4 of the assessment order and submitted that the Ld. AO had substantially complied with the directions of the Tribunal. It was submitted that summons under section 131 of the Act was issued on 28.08.2023 by the Ld. AO to Shri Ranga Rao. However, Shri Ranga Rao vide letter dated 07.09.2023 informed the Ld. AO that he had no further evidence to furnish and sought exemption from personal appearance. It was further submitted that subsequently the Ld. AO issued notice under section 133(6) of the Act dated 22.11.2023 to Shri Ranga Rao. In response thereto, Shri Ranga Rao vide letter dated 02.12.2023 stated that the assessee had paid cash of Rs.38,15,000/-. However, he admitted that no documentary evidence was available and that the sale agreement was yet to be executed in favour of the assessee. The Ld. DR submitted that a copy of the reply furnished by Shri Ranga Rao was supplied to the assessee vide notice issued under section 142(1) of the Act dated 04.12.2023 calling for comments. According to the Ld. DR, the assessee failed to furnish any rebuttal evidence and merely reiterated the request for cross- examination. Therefore, it was submitted that the Ld. AO had substantially complied with the directions of the Tribunal and there is no infirmity in the orders of the lower authorities. Accordingly, it was prayed to dismiss the appeal of the assessee. 7. We have heard the rival submissions and perused the material available on record. We have carefully gone through para no. 17 of the order of this Tribunal in ITA No.988/Hyd/2019 dated 27.10.2022, which is to the following effect:

5 “17. With this view of the matter, while respectfully following the view taken by the Hon’ble High Court in the case of G Ramesh Babu (supra), we set aside the impugned order and restore the issue to the file of the learned Assessing Officer to give an opportunity to the assessee to cross-examine Mr Ranga Rao, verify the facts and take a similar view according to law. Keeping in view the past conduct of the assessee, we make an observation that it is the last opportunity to the assessee to cooperate with the learned Assessing Officer in getting the matter disposed of on merits by submitting the details required by the learned Assessing Officer. Learned Assessing Officer will take steps to facilitate the cross examination of Mr. Ranga Rao by the assessee, and thereafter on factual verification will take a plausible view according to law. Grounds of appeal of the assessee are accordingly treated as allowed for statistical purpose.”

9 round of litigation remained uncomplied with. We are unable to accept the contention of the Revenue that furnishing a copy of the statement or reply of Shri Ranga Rao amounts to compliance with the direction to provide cross-examination. The Tribunal had specifically directed the Ld. AO to facilitate cross-examination. Such a direction cannot be diluted or substituted by merely furnishing copies of replies received from the witness. We further find from para no. 9.1 of the assessment order, reproduced above, that the Ld. AO has observed that cross-examination does not necessarily mean face-to-face confrontation. In our considered opinion, the Ld. AO has failed to appreciate the true import and significance of cross-examination while interpreting the law laid down by the Hon’ble Supreme Court. The Hon’ble Supreme Court in the case of Andaman Timber Industries Vs. CCE reported in 38 GSTR 117 has categorically held that denial of opportunity to cross-examine a witness whose statement is relied upon constitutes a serious flaw which makes the order a nullity inasmuch as it amounts to violation of the principles of natural justice. In the present case, the entire addition of Rs.38,15,000/- is founded upon the statement and assertions attributed to Shri Ranga Rao. Once this Tribunal had specifically directed the Ld. AO to facilitate cross-examination of Shri Ranga Rao, it was incumbent upon the Ld. AO to ensure strict compliance with the said directions. The Ld. AO could not sit in judgment over the necessity or manner of cross- examination after a specific direction had already been issued by the Tribunal. It is a settled proposition of law that the authorities subordinate to the Tribunal are bound by the directions issued by the Tribunal and cannot circumvent or dilute such directions. Failure to comply with the directions of the Tribunal renders the consequential order unsustainable in

10 law. Accordingly, we hold that the Ld. AO has failed to comply with the specific directions contained in the order of the Tribunal dated 27.10.2022 and has thereby violated the principles of natural justice. Consequently, the assessment order passed under section 143(3) read with sections 147 and 254 of the Act cannot be sustained. We therefore set aside the orders of the lower authorities and direct the Ld. AO to delete the addition of Rs.38,15,000/- made under section 69B of the Act. 10. In the result, the appeal of the assessee is allowed 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 Shri RAVINDRANATH KANCHERLA, 8-2-293/82/A, Plot No 303F Road No 25 ,Jubilee Hills HYDERABAD 500033 Telangana 2 Dy. CIT, Central Circle 3(2) Aayakar Bhavan, Opp: LB Stadium, Basheer Bagh, Hyderabad 500004 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.17 RAO 17:13:22 +05'30'