RAVEENDRANADH BONDAPALLI,HYDERABAD vs. INCOME TAX OFFICER, WARD -13(1), HYDERABAD

ITA 2002/HYD/2026Status: DisposedITAT Hyderabad14 October 2026AY 2016-1710 pages
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What did the Tribunal hold?

The Tribunal decided the issues as follows: 1. Regarding the jurisdiction of the AO and the validity of the Section 148 notice, the Tribunal noted that this issue is sub-judice before various High Courts due to amendments to Section 147A of the Act. Since the matter has not reached finality, the Tribunal chose not to adjudicate this legal ground at this stage. The grounds of appeal on this issue were kept open to be decided later, with liberty to restore the appeal if the High Court decision warrants it. Therefore, this issue was not decided on merits. 2. Regarding the addition of Rs. 27,57,200, the Tribunal held that once the assessee established the source of cash deposits as sale proceeds of property by his father, the addition cannot be made merely on the ground of a time gap between the sale and the deposit. The AO had accepted the source of funds from property sale to a certain extent. The Tribunal relied on CIT v. Ashok Kumar ([2010] 320 ITR 561 (P&H)) and CIT v. Shri Kulwant Rai ([2007] 291 ITR 36 (Delhi)) which state that an explanation cannot be rejected solely on suspicion or a time gap if the source is established and there is no material showing the cash was utilized elsewhere. The Tribunal found that the AO erred in making an addition of Rs. 23,95,000 out of the disputed amount, as the source was established as property sale. However, for the remaining Rs. 3,62,200, which the assessee claimed as out of agricultural income and pension, no evidence was filed. Therefore, the addition of Rs. 3,62,200 was confirmed. The operative direction was to delete the addition of Rs. 23,95,000 and confirm the addition of Rs. 3,62,200.

What were the facts?

The assessee, Raveendranath Bondapalli, failed to file his Return of Income for Assessment Year 2016-17. The assessment was reopened under Section 147 of the Income Tax Act, 1961, due to escaped income from financial transactions, including cash deposits. A notice under Section 148 was issued. The assessee filed a return declaring Rs. 3,46,230. During scrutiny, the Assessing Officer (AO) noted cash deposits of Rs. 52,07,200. The assessee claimed these deposits were from the sale of five properties by his late father, Mr. Bondapalli Appala Swamy, for Rs. 48,45,000 cash on April 29, 2015. The AO accepted cash deposits up to Rs. 24,50,000 as explained, but treated the balance Rs. 27,57,200 as unexplained and taxed it under Section 69A, citing a time gap between the sale date and deposit dates. The CIT(A) upheld the AO's addition.

What were the issues?

1. Whether the assessment order passed by the AO is invalid due to lack of jurisdiction, considering the provisions of Section 151A of the Act and CBDT Circular No. 18/2022, and whether the notice issued under Section 148 was invalid? (Question of law and fact, concerning Section 147, 148, 151A). Assessee's contention: The AO who issued the Section 148 notice (ITO, Ward-13(1), Hyderabad) lacked the authority, rendering the assessment order invalid. Revenue's contention: This issue is pending before various High Courts and has not reached finality; therefore, the appeal should be adjourned. 2. Whether the addition of Rs. 27,57,200 made by the AO and sustained by the CIT(A) towards cash deposits is justified under Section 69A of the Act, when the assessee established the source of funds from property sale? (Question of law and fact, concerning Section 69A). Assessee's contention: The AO accepted the source of cash deposits as property sale proceeds but erred in partially accepting it. The time gap between property sale and cash deposit is not a valid ground for addition, especially when the source is established. Relied on CIT v. Ashok Kumar ([2010] 320 ITR 561 (P&H)). Revenue's contention: The assessee's claim goes against human probability (citing CIT v. Durga Prasad More ([1971] 82 ITR 540 (SC))). There is a significant time gap of over six months. The AO fairly accepted deposits within a reasonable time. The claim of installment payments from relatives/friends is unsubstantiated. Supported the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 69A,Section 151A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G

PER MANJUNATHA.G, AM:

This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Hyderabad / Delhi, dated 27.03.2026, and pertains to assessment year 2016-17. ITA 2002/HYD/2026 RAVEENDRANADH BONDAPALLI

2.

The brief facts of the case are that the assesse

The order continues below.

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