SRI SAI MAITHRI COMMUNICATIONS,HYDERABAD vs. ITO, WARD-2, KARIMNAGAR

ITA 2175/HYD/2025Status: DisposedITAT Hyderabad23 September 2026AY 2018-1910 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(Appeals), by declining to condone the delay and dismissing the appeal on limitation but then proceeding to decide the appeal on merits and upholding the AO's order, had implicitly treated the appeal as properly before him. Citing Vijayeswari Textiles Ltd. Vs. CIT, the Tribunal inferred that the CIT(Appeals) was not convinced that the appeal should be dismissed as barred by limitation. Consequently, the Tribunal held that the delay in filing the appeal before the CIT(Appeals) deserved to be condoned and the appeal was to be treated as admitted for adjudication on merits. Furthermore, the Tribunal found substance in the assessee's claim that the cash deposits could be sourced from business turnover and that this claim could not be summarily discarded, especially since the bank account was disclosed in the balance sheet. The Tribunal set aside the CIT(Appeals)'s order and restored the matter to his file for adjudication on merits, directing him to examine the assessee's explanation, conduct necessary verification, and afford a reasonable opportunity of being heard. The Tribunal explicitly stated that no opinion was expressed on the merits of the addition made by the AO under section 69A, and all issues remained open for adjudication.

What were the facts?

The assessee, Sri Sai Maithri Communications, filed an appeal for Assessment Year 2018-19 against the order of the CIT(Appeals) dated 01.10.2025, which upheld the assessment order passed by the Assessing Officer (AO) under section 147 r.w.s. 144B of the Income-tax Act, 1961. The AO initiated reassessment proceedings under section 147 based on information regarding cash deposits of Rs. 3,59,14,040/- in the assessee's bank account and failure to file a return. The assessee eventually filed a return declaring Rs. 70,220/-. The AO observed total cash deposits of Rs. 3,74,14,040/- and treated this entire amount as unexplained income under section 69A, leading to an assessment order dated 07.03.2024. The CIT(Appeals) dismissed the assessee's appeal on grounds of limitation (242 days delay) but also dealt with the merits, upholding the AO's addition. The assessee is aggrieved by this order.

What were the issues?

1. Whether the CIT(Appeals) erred in dismissing the appeal on the ground of limitation, despite proceeding to decide the appeal on merits? 2. Whether the CIT(Appeals) erred in confirming the addition made under section 69A of Rs. 3,74,14,040/-, when the assessee claimed this amount represented business turnover with a low profit margin? 3. Whether the assessment proceedings under section 147 r.w.s. 144B were vitiated due to procedural irregularities, including the issuance of notice by the JAO and completion by the AO/NFAC, and vague/mechanical reasons recorded for reopening? Assessee's contentions: The assessee argued that the CIT(Appeals) implicitly condoned the delay by deciding the appeal on merits, relying on Vijayeswari Textiles Ltd. Vs. CIT. The assessee contended that the Rs. 3,74,14,040/- was business turnover from supplying cable TV set-top boxes with a profit margin less than 0.2%, and the addition under section 69A was incorrect as the amount was recorded in its books. Procedural grounds were also raised regarding the validity of reopening and assessment. Revenue's contentions: The revenue, through the CIT(Appeals), maintained that the assessee failed to discharge the onus of explaining the nature and source of cash deposits and that the appeal was rightly dismissed on limitation.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148A,Section 148,Section 69A,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER RAVISH SOOD, JM:

The present appeal filed by the assessee firm for the assessment year 2018- 19 is directed against the order passed by the CIT(Appeals), dated 01.10.2025, which in turn arises from the assessment order passed by the Assessing Officer (for short, ‘AO’) under section 147 r.w.s. 144B of the Income-tax Act, 1961 (for short, ‘the Act’), dated 07.03.2024. The assessee firm has assailed the impugned order on the following grounds of appeal before us:

ITA 2175/HYD/2025 SRI SAI MAITHRI COMMUNI

The order continues below.

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