VENU GOPAL REDDY CHALLA,HYDERABAD vs. DCIT, CIRCLE-12(1), HYDERABAD

ITA 525/HYD/2026Status: DisposedITAT Hyderabad09 October 2026AY 2013-1414 pages
AI SummaryRemanded

What were the facts?

The assessee, Shri Venu Gopal Reddy Challa, is an individual who did not file his income tax return for Assessment Year 2013-14. The Assessing Officer (AO) initiated proceedings under Section 147 based on information about cash deposits of Rs. 1,87,71,400/- in his savings account and salary receipts of Rs. 9,04,243/-. The assessee did not respond to notices. The AO passed an ex parte assessment order, treating the entire cash deposits as unexplained under Section 69A and adding the salary income, determining total income at Rs. 1,96,75,643/-. The Commissioner of Income Tax (Appeals) [CIT(A)] restricted the Section 69A addition to Rs. 20,89,050/- based on a peak negative cash balance and sustained the salary income addition.

What did the Tribunal hold?

The Tribunal found a discrepancy between the peak negative cash balance of Rs. 20,89,050/- recorded by the Ld. CIT(A) and the Rs. 3,02,965/- appearing in the assessee's cash statement for 04.10.2012, necessitating factual verification. The Tribunal also noted that an entry regarding a fixed deposit maturity and withdrawal on 18.01.2013 appeared to have been duplicated in the cash statement, requiring verification of its effect on the peak negative balance against bank and fixed deposit records. The claims regarding cash received from the assessee's father-in-law were rejected due to a lack of confirmation and unexplained circumstances. The claims regarding cash from the wife also required verification, as her bank statement alone did not establish available cash after household expenses. Consequently, the addition of Rs. 20,89,050/- under Section 69A was set aside and restored to the AO for fresh examination. The penalty proceedings were also set aside and restored to the AO as they were consequential to the quantum assessment.

What were the issues?

1. Whether the addition of Rs. 20,89,050/- sustained by the Ld. CIT(A) under Section 69A of the Income Tax Act, 1961, is justified? Assessee's Contention: The assessee argues that the peak negative cash balance was inadvertently inflated due to an incorrect entry of a fixed deposit maturity and withdrawal. Upon correction, the peak negative balance should be Rs. 3,02,965/-. Alternatively, the assessee claims cash deposits were made from funds received from his wife and father-in-law, supported by their bank statements and other documents. Revenue's Contention: The revenue points out a discrepancy in the cash balance figures between the Ld. CIT(A)'s order and the assessee's statement. Regarding the father-in-law, the revenue notes that the explanation before the Ld. CIT(A) referred to cheques from friends and relatives, and no confirmation from the father-in-law was provided for the current claim. For the wife, the revenue argues that her bank statement alone does not prove the availability of cash for the assessee's deposits after household expenses.

Which sections of the Income-tax Act were involved?

Section 139,Section 147,Section 148,Section 144,Section 144B,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia

Hearing: 28/09/2026

Per Madhusudhan Sawdia, A.M:. These two appeals are filed by Shri Venu Gopal Reddy Challa (“the assessee”), feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi (“Ld. CIT(A)”) both dated 15.10.2025 for the A.Y. 2013-

14.

Since the issues raised by the assessee in these two appeals are inter-related, for the sake of convenience, these

ITA Nos 524 and 525 of 2026 Venu Gopal Reddy Challa

were hear

The order continues below.

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