SANTOSH KUMAR KATTURI,ADILABAD vs. ITO, WARD-1, ADILABAD

ITA 2411/HYD/2025Status: DisposedITAT Hyderabad16 October 2026AY 2023-249 pages
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What did the Tribunal hold?

The Tribunal held that the addition made by the AO under Section 69C towards cash withdrawal from the bank account cannot be sustained. The Tribunal noted that the assessee is a commission agent and received the entire credit in his bank account from M/s. SDG&PF via RTGS, which was withdrawn on the same day and allegedly paid to farmers. The Tribunal found that the AO had not proven any expenditure incurred by the assessee that was not recorded or that the source of cash withdrawal was unexplained. Section 69C applies when an assessee incurs expenditure and offers no explanation or an unsatisfactory explanation for its source. In this case, the source of funds received from M/s. SDG&PF was accepted. However, the Tribunal also noted that the assessee had not conclusively proved the payment of cash withdrawn to farmers with supporting evidence, although an excel sheet and some sample 'takpattis' were filed. Therefore, for the limited purpose of verifying the 'takpattis', the issue was set aside to the AO for verification. If the assessee submits relevant details of 'takpatti', the addition is to be deleted.

What were the facts?

The assessee, Santosh Kumar Katturi, an ITAT appellant, is a commission agent dealing in grains and Kapas. For AY 2023-24, he declared an income of Rs. 20,42,800. His case was selected for scrutiny. The Assessing Officer (AO) noted cash withdrawals of Rs. 31,43,00,647 from the assessee's SBI account. The assessee explained this was for distributing payments to farmers for cotton supplied to M/s. Sai Datta Ginning & Pressing Factory (M/s. SDG&PF), from whom he received funds via RTGS. The AO rejected this explanation, deeming the entire withdrawal as unexplained expenditure under Section 69C, amounting to Rs. 31,43,00,647. The CIT(A) upheld the AO's addition, finding the assessee failed to demonstrate creditworthiness and compliance with statutory provisions like GST.

What were the issues?

1. Whether the addition of Rs. 31,43,00,647 as unexplained expenditure under Section 69C of the Income Tax Act, 1961, is sustainable when the source of cash withdrawal (receipts from M/s. SDG&PF) was accepted by the AO? Assessee's Contention: The assessee argued that Section 69C cannot be applied when the source of cash withdrawal is accepted. He is a licensed commission agent, receiving funds from M/s. SDG&PF and immediately paying farmers. He submitted 'takpatti' as evidence, stating no purchase or sales invoices are raised in his name. Revenue's Contention: The revenue supported the AO and CIT(A)'s orders, stating the assessee failed to provide evidence for the huge cash withdrawal and that the AO correctly treated it as unexplained expenditure under Section 69C.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA.G

Pronounced: 16.10.2026

PER MANJUNATHA.G, AM:

This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), [in short “the Ld.CIT(A)”] Delhi, dated 31.10.2025, and pertains to assessment year 2023-24. ITA 2411/HYD/2025 SANTOSH KUMAR KATTURI

2.

The brief facts of the case are that the assessee is a commission agent, engaged in the business of purchase & sale of grains

The order continues below.

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