SRI MALAVI TEXTILES,VIJAYAWADA vs. COMMISSIONER OF INCOME TAX(APPEALS), NATIONAL FACELESS APPEAL CENTRE(NFAC)

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ITA 424/VIZ/2025Status: DisposedITAT Visakhapatnam17 June 2026AY 2017-188 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT condoned the delay in filing the appeal due to the death of a key person. The Tribunal remitted the issue back to the AO to verify if the cash deposits were already included in the assessee's turnover.

What were the facts?

The Assessing Officer (AO) added Rs. 10.31 lakhs to the assessee's income, treating it as unexplained cash deposits in the bank, which were allegedly made in the guise of sales. The CIT(A) dismissed the assessee's appeal, holding that the assessee failed to provide documentary evidence for cash sales.

What were the issues?

Whether the addition made by the AO on account of unexplained cash deposits is sustainable when the assessee claims it represents already included turnover. Whether the delay in filing the appeal is to be condoned.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

आयकर अपीऱीय अधिकरण, विशाखापत्तनम पीठ, विशाखापत्तनम INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री उदयन दास गुप्ता, माननीय न्याययक सदस्य एिं श्री ओम्कारेश्िर धिदारा, माननीय ऱेखा सदस्य SHRI UDAYAN DAS GUPTA, HON’BLE JUDICIAL MEMBER AND SHRI OMKARESHWAR CHIDARA, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं / ITA No.424/Viz/2025 (निर्धारण वर्ा/Assessment Year: 2017-18) Sri Malavi Textiles Vs. Income Tax Officer Vijayawada Ward-1(2) Vijayawada PAN : AAUFS9839D (प्रत्यर्थी/Respondent) (अपीलधर्थी/Appellant)

निर्धाऩिती द्वधिध/ Shri DL.Narasimha Rao, Assessee represented by: Advocate िधजस्वt द्वधिध/ Revenue represented by: Dr.Aparna Villuri, Sr.AR

सुिवधई की तधिीख/ 11.06.2026 Date of conclusion of hearing: घोषणध की तधिीख/ 17.06.2026 Date of pronouncement: आदेश / ORDER PER OMKARESHWAR CHIDARA, A.M.: This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld.CIT(A)] vide DIN & Order No. ITBA/NFAC/ /S/250/2023-24/1054551625(1) dated 24.07.2023, arising out of order passed by the Ld.AO u/s 143(3) of the Income Tax Act, 1961 (“the Act”) dated 24.07.2023 for the A.Y.2017-18.

2.

In this case, the appellant M/s Sri Malavi Textiles filed return of income, admitting total income of Rs.7.37 lakhs. The case was taken up for scrutiny and while completing the scrutiny assessment, the Ld.AO made an addition of Rs.10.31 lakhs, stating that the assessee had unaccounted Specified Bank Notes (“SBNs”) as on 09.11.2016, which was deposited into his bank account in the guise of sales/realization from sale debtors. The Ld.AO invoked the provisions of section 69A and concluded that the assessee is found to be owner of money in his bank account, for which he offered no proper explanation and in the hands of the Ld.AO, the said money was treated as income of the assessee from unexplained sources during the previous year under consideration. Thus, an amount of Rs.10.31 lakhs was treated as income of the assessee and accordingly brought to tax u/s 69A r.w.s. 115BBE of the Act.

3.

Aggrieved by this addition, the appellant filed an appeal before the Ld.CIT(A) and this appeal of the assessee was dismissed by the Ld.CIT(A) by holding as follows :

“6.5. On perusal of the above provision it is essential that the explanation offered by appellant shall demonstrate nature and source of acquisition of money. However in the underlined case the appellant has merely claimed that the alleged money was generated from sales proceeds but it has not filed any sort of documentary evidence is showcase that it had made cash sales. In other words the appellant failed to submit basic documentation such as sales register, purchase register, cashbook, copies of invoices, stock register, details of its customer, etc. To demonstrate that it had actually done sales in cash. 6.6. The appellant has failed to discharge its primary onus to demonstrate the cash sales and therefore the explanation about source of money as provided by the appellant is not found to be acceptable. Merely arguing about legality of demonetization would not prove the cash sales made by the appellant. 6.7. In view of the above I am of the considered opinion that the arguments of appellant are very academic and not backed by any documentary evidences. Therefore, the addition made by learned AO is liable to be upheld.” 4. As the appellant did not get relief from the First Appellate Authority, an appeal was filed before ITAT, stating that the amount added by the Ld.AO was already included in the turnover of the appellant and making same addition by invoking section 69A amounts to double addition, which is illogical and impermissible. In view of the same, the appellant has pleaded that the addition may be deleted. But before going to adjudicate the issue on merits, the Bench observed that the appeal was filed before ITAT with the delay of 643 days. During the course of hearing before ITAT, the Ld.AR of the appellant has stated that this concern is engaged in wholesale trading activity in cloth at Vastralatha, Vijayawada. The main person, Mr.K.Vijaya Kumar is the In-charge of operational activities of the above business concern and suddenly he suffered with certain medical problems relating to neurology, abdominal lumps etc. There was no improvement in his health condition and subsequently, Mr.Vijaya Kumar passed away. An affidavit also was filed by the Managing Partner, Sri Malavi Textiles, stating that Mr.Vijaya Kumar is the Head of the family, holding expertise and business skills and as he passed away, there was no peace of mind on the domestic front and hence, tax proceedings could not be pursued vigorously leading to the aforesaid consulting the Tax Consultants, who advised them to file an appeal now. To sum up, the health condition of Mr.Vijaya Kumar, who is the key person in managing affairs of this concern passed away and hence, the appeal was filed with the delay of 643 days. As this is a valid reason and sufficient cause, the Ld.AR of the appellant requested the Bench to condone the delay and pass order on merits.

5.

Ld.DR opposed the argument of the Ld.AR of the appellant with regard to filing of appeal with an inordinate delay of 643 days. The Ld.DR has pointed out that the assessee is doing excellent business and from the paper book filed by the Ld.AR of the appellant, it is observed that the turnover of the business is more than Rs.13 crores. The appellant was filing the returns of income regularly, GST returns were also filed and business also went on smoothly. When all other tax matters and business dealings went on smoothly, the Ld.AR of the appellant cannot not take a plea that the reason for filing of appeal was the illness of Mr.Vijaya Kumar, who is the key person of the assessee concern. Hence, the reason given by the Ld.AR of the appellant is not correct and the same is liable to be dismissed.

6.

After hearing both the sides, the Bench concurs with the argument of the Ld.DR that all other business transactions and tax matters were going on smoothly and hence the ill health of Mr.Vijaya Kumar cannot be a reason for filing the appeal with an inordinate delay of 643 days. There may be some truth with regard to the illness of Mr.Vijaya Kumar, but the Ld.AR of the appellant could not demonstrate that the ill health of Mr.Vijaya Kumar hindered the filing of appeal before ITAT with inordinate delay. In other words, there is no link between the ill health of Mr.Vijaya Kumar and filing an appeal before ITAT with a delay of more than 600 days. Hence, the Bench decided to levy cost of Rs.10,000/- on the assessee concern, which should be paid to AP State Legal Services Authority within a month of receipt of this Order. The delay is condoned taking into consideration of the fact of death of Vijaya Kumar, who is said to be the main person to run the business/incharge of filing of appeal.

6.1. As far as the merits are concerned, the Ld.AR of the appellant has stated that the cash, which was deposited into the bank added by the Ld.AO is part of their regular business turnover and hence, the same cannot be added again. In this regard, the issue is remitted back to the file of the Ld.AO with a direction to verify the claim of appellant that the cash sales, which represent the addition were included in the total turnover/return of income and an order may be passed afresh after giving a reasonable opportunity to the appellant. This direction is given to Ld.AO as the Ld.CIT(A) held that no evidence was filed before him with reference to the sales and purchase registers, cash book etc. to come to a conclusion that these cash sales were included in the turnover. In view of the above, the delay in filing an appeal before the ITAT is condoned and the main issue relating to depositing cash into the bank account is remitted to the file of the Ld.AO for further verification.

7.

In the result, the appeal filed by the Assessee is allowed for statistical purpose.

Order pronounced in the open court on 17th Jun, 2026.

Sd/- Sd/- (उदयन दास गुप्ता) (ओम्कारेश्िर धिदारा) (UDAYAN DAS GUPTA) (OMKARESHWAR CHIDARA) न्याययक सदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Visakhapatnam dated 17.06.2026. L.Rama/Sr.PS Copy to:

M/S SRI MALAVI TEXTILES, SHOP 1 NO.125A, VASTRALATHA, BRP ROAD VIJAYAWADA

THE INCOME TAX OFFICER 2 WARD-1(2) VIJAYAWADA 3 THE PCIT, VIJAYAWADA 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE

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