VENKATARAMANA DUPAM,KURNOOL vs. ITO, WARD-1, NANDYAL

ITA 180/HYD/2026Status: DisposedITAT Hyderabad30 September 2026AY 2022-239 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal dismissed Ground No. 2 regarding the validity of the notice under Section 143(2), citing the Special Bench decision in MD Sons vs. Income Tax Officer and noting that the assessee's representative did not press this ground. Regarding the additions related to sundry creditors (Rs. 13,25,232/-) and unsecured loans (Rs. 20,60,236/-), the Tribunal found that the assessee had provided explanations and additional evidence, including bank statements of the son, which required verification at the Assessing Officer's level. Consequently, the Tribunal remanded both issues to the Assessing Officer for verification, examination, and adjudication, with an opportunity for a hearing. The Tribunal noted that the omission of a purchase bill did not affect the income offered under Section 44AD, as the turnover was not disputed. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Venkataramana Dupam, filed an appeal against the order of the CIT(A)-NFAC, Delhi, for Assessment Year 2022-2023. The appeal challenged additions made by the Assessing Officer (AO) and confirmed by the CIT(A). The disputed amounts involved Rs. 13,25,232/- on account of alleged differences in sundry creditors and Rs. 20,60,236/- related to unsecured loans. The AO had made these additions due to discrepancies in the assessee's ledger accounts and return of income, citing a lack of satisfactory explanation and supporting evidence. The assessee contended that the discrepancies arose from year-end purchase transactions and payments made from the son's bank account, which were not initially reflected in the assessee's records. The assessee subsequently provided additional evidence, including the son's bank statement, to reconcile these differences.

What were the issues?

1. Whether the notice issued by the Assessing Officer under section 143(2) of the Income Tax Act, 1961, is bad in law for not specifying the nature of scrutiny under which the case was selected, and consequently, whether the assessment order is unsustainable. 2. Whether the addition of Rs. 13,25,232/- to the business income on account of alleged differences in sundry creditors is correct, considering the assessee's explanation of year-end purchase transactions. 3. Whether the addition of Rs. 20,60,236/- on account of unsecured loans is sustainable, particularly concerning the CIT(A)'s alleged substitution of Section 69A with Section 68 without proper notice and opportunity to the assessee. Assessee's contentions: The assessee argued that the notice under Section 143(2) was defective. Regarding sundry creditors, the assessee claimed the discrepancies were due to bonafide mistakes in recording year-end purchases and that these did not affect the income declared under Section 44AD. For unsecured loans, the assessee stated that payments were made from the son's bank account and provided additional evidence to support this. The assessee also argued that the CIT(A) erred by substituting Section 69A with Section 68 without issuing an enhancement notice and violating principles of natural justice. Revenue's contentions: The revenue, through the learned DR, contended that the AO made additions due to discrepancies in sundry creditors and unsecured loans, for which the assessee failed to provide a satisfactory explanation and supporting evidence. The revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 69A,Section 68,Section 251(2),Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO

Pronounced: 30.09.2026

This appeal by the Assessee is directed against the Order dated 25.11.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short "NFAC"], Delhi, for the Assessment Year 2022-2023. 2. The Assessee has raised the following grounds of appeal:

1.

“The Order of the learned Commissioner of Income Tax (A), NFAC, Delhi is not correct either on facts or in law and in both.

2.

On the facts of

The order continues below.

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