ACIT, CIRCLE-5(1), HYDERABAD vs. PARADIGM CORPORATION PRIVATE LIMITED, HYDERABAD

The brief facts of the case are that the assessee is a private limited company, filed its return of income for Assessment Year 2022-23 on 08.09.2022 declaring total income at Nil. The case of the assessee was selected for scrutiny assessment through CASS and accordingly notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”). During the course of assessment proceedings, the Ld. AO observed that the assessee had received share capital and share premium aggregating to Rs.51,50,94,066/- and Compulsory Convertible Debentures (“CCD”) and loans aggregating to Rs.11,06,87,976/- from Dr. Gurunath Reddy. The Ld. AO was not satisfied with the explanation furnished by the assessee regarding the source of the aforesaid receipts. Accordingly, the Ld. AO treated the share capital and share premium of Rs.51,50,94,066/- and the CCDs and loans amounting to Rs.11,06,87,976/- as unexplained cash credit under section 68 of the Act. Accordingly, the Ld. AO completed the assessment under section 143(3) read with section 144B of the Act vide order dated 22.03.2024 assessing the total income of the assessee at Rs.62,57,82,042/-. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted both the additions made by the Ld. AO and allowed the appeal of the assessee. 6. Aggrieved with the order of the Ld. CIT (A), the Revenue is in appeal before us. The assessee has also filed Cross Objections.

The Learned Departmental Representative (“Ld. DR”) submitted that the principal grievance of the Revenue is that the Ld. CIT(A) has accepted additional evidence filed by the assessee during the appellate proceedings without complying with the provisions of Rule 46A of the Income Tax Rules, 1962 (“the Rules”) and without affording an opportunity to the Ld. AO to examine such evidence. Inviting our attention to para no. 5.3 of the order of the Ld. CIT(A), the Ld. DR submitted that the share capital, share premium, CCDs and loans were admittedly provided by Dr. Gurunath Reddy. The Ld. DR further submitted that before the Ld. CIT(A), the assessee furnished confirmations from various loan creditors from whom Dr. Gurunath Reddy had allegedly borrowed funds and thereafter advanced the same to the assessee. According to the Ld. DR, such confirmations constituted additional evidence which were never produced before the Ld. AO during the assessment proceedings. However, the Ld. CIT(A) relied upon the said confirmations while deleting the additions without calling for any remand report from the Ld. AO. It was therefore submitted that there is a clear violation of Rule 46A of the Rules and principles of natural justice. Accordingly, the Ld. DR prayed that the matter may be restored to the file of the Ld. CIT(A) for fresh adjudication after obtaining a remand report from the Ld. AO. 8. Per contra, the Learned Authorized Representative (“Ld. AR”) supported the order of the Ld. CIT(A) and submitted that the Ld. CIT(A), after considering the material available on record, had rightly deleted the additions made by the Ld. AO. However, the Ld. AR fairly admitted that the confirmations of the loan creditors from whom Dr. Gurunath Reddy had

On a perusal of the above, it is evident that confirmations of various loan creditors from whom Dr. Gurunath Reddy had allegedly borrowed funds were produced before the Ld. CIT(A). The Ld. AR has also fairly admitted before us that these confirmations were not furnished before the Ld.

In the result, the appeal of the Revenue is allowed for statistical purposes and the Cross Objections filed by the assessee are treated as 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 Jt.CIT (OSD) Circle 5(1) Room No.344, 3D IT Towers, Masab Tank, AC Guards, Hyderabad 500004 2 PARADIGM Corporation (P) Ltd, 1292 Jubilee Hills, Hyderabad 500033 3 Pr. CIT , Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.17 RAO 17:14:43 +05'30'