SHYAMPRASAD REDDY GADDAM,HYDERABAD vs. DCIT., CENTRAL CIRCLE-3(3), HYDERABAD
आयकर अपीलीय अिधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘A’ Bench, Hyderabad
Before Shri Manjunatha G., Accountant Member and Shri Ravish Sood, Judicial Member
आ.अपी.सं /ITA No. 196/Hyd/2024
(िनधाŊरण वषŊ/Assessment Year: 2014-15)
Shyamprasad Reddy
Gaddam,
Hyderabad.
PAN: AETPG9117P
Vs.
DCIT,
Central Circle-3(3),
Hyderabad.
(Appellant)
(Respondent)
िनधाŊįरती Ȫारा/Assessee by:
Sri P. Murali Mohan Rao, CA
राज̾ व Ȫारा/Revenue by:
Sri Gurpreet Singh, Sr. AR
सुनवाई की तारीख/Date of Hearing:
06/10/2025
घोषणा की तारीख/Date of Pronouncement:
10/10/2025
आदेश / ORDER
PER. RAVISH SOOD, J.M:
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals)-
11, Hyderabad, dated 02/02/2004, which in turn arises from the order passed by the Assessing Officer under Section 144 r.w.s
153A of the Income Tax Act, 1961 (for short, “Act”), dated
12/12/2019 for the Assessment Year 2014-15. 2
2. The assessee has assailed the impugned order on the following grounds of appeal before us:
“The order passed by the Ld. CIT(A) u/s 250 of the Act dated 02.02.2024 is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant. 2. The Ld. CIT(A) erred in partly allowing the appeal filed by the assessee without considering the facts and circumstances of the case. 3. The Ld. CIT(A) erred in confirming the addition of Rs. 80,53,411/- as unexplained money u/s 69A of the Income Tax Act, 1961. 4. The Ld. CIT(A) erred in holding that if the appellant substantiates later, saying that the amount of Rs. 20,00,000/- out of the total amount of Rs. 80,53,411/- is part of books, then the sum of Rs. 20,00,000/-will fall u/s 68 of the Act. 5. The Ld. CIT(A) ought to have appreciated that the appellant has already admitted its gross receipts to the extent of Rs. 20,00,000/- on which income @ 8% has been admitted. 6. The Ld. CIT(A) ought to have appreciated that taking the amount of Rs. 20,00,000/- once again u/s 69A or u/s 68 of the Act leads to double taxation in the hands of the appellant for the year under consideration. 7. The Ld. CIT(A) erred in holding that the entire cash credits of Rs. 80,53,411/-stand unexplained as the appellant has failed to furnish any cogent evidence substantiating the sources of the said cash deposits. 8. The Ld. CIT(A) erred in holding that mere claiming of the cash credits as the turnover cannot be accepted unless the bonafides of the turnover are proved with necessary evidences without appreciating the fact that the assessee has provided all the necessary information to substantiate his claim. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have appreciated that while completing the assessment u/s 153A of the Act, no addition can be made in the absence of any incriminating material.
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10. The Ld. CIT(A) erred in holding that the AO rightfully made the additions based on incriminating material and other material on record without appreciating the fact that the so- called incriminating material consists of dumb, unauthenticated documents and that the additions made are based on surmises, assumptions and on estimate basis.
11. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not giving telescoping effect towards the unexplained investments/
expenditure, against the unexplained credits in the group related concerns of the earlier or current years.
12. The assessee may add, alter, or modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”
Succinctly stated, the assessee, who is engaged in the real estate business, had not filed his return of income for the Asst. Year 2014-15. 4. Search and seizure proceedings were conducted on the assessee under Section 132 of the Act on 20/09/2017. Thereafter, the assessee, in compliance to the notice issued under Section 153A of the Act, dated 03/04/2018, e-filed his return of income for the subject year, i.e., AY 2014-15 on 13/11/2018, wherein he had failed to disclose the income that was admitted by him in his statement recorded under Section 132(4) of the Act, dated 20/09/2017, 25/09/2017 and 17/11/2017, and also in the affidavit dated 26/10/2017. 4 5. The AO, vide his order passed under Section 144 r.w.s 153A of the Act, dated 12/12/2019, determined the income of the assessee at Rs. 36,14,47,165/-, i.e., after making three additions viz., (i) unexplained investment U/s. 69 of the Act (as admitted in the course of the search proceedings): Rs. 35,16,93,754/-; (ii) unexplained investment towards stamp duty and other charges: Rs. 15,00,000/-; and (iii) unexplained cash credits U/s. 68 of the Act in his three bank accounts: Rs. 80,53,411/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(A).
Apropos, the addition of Rs. 80,53,411/- that was made by the AO under Section 68 of the Act, though the same was confirmed by the CIT(A), but he had recharacterized the same as an addition under Section 69A of the Act. For the sake of clarity, the observation of the CIT(A) on the subject issue is culled out as under:
5
Representative for the assessee (for short “Ld. AR”), at the threshold of hearing of the appeal, submitted that the CIT(A) had erred in law and facts of the case in recharacterizing the addition of Rs. 80,53,411/- made by the AO as an unexplained cash credit under Section 68 of the Act as an addition under Section 69A of the Act. Elaborating on his contention, the Ld. AR submitted that as the CIT(A) had failed to put the assessee to notice about the aforesaid recharacterization of the addition, therefore, the same cannot be sustained and is liable to be quashed. The Ld. AR to buttress his aforesaid contention has taken us through the observations of the CIT(A). The Ld. AR had relied upon the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax vs. Shapoorji Pallonji Mistry (1962)
44 ITR 891 (SC). The Ld. AR submitted that the Hon’ble Apex
Court in its aforesaid order had observed that the CIT(A) was divested of his juri iction to introduce a new source of addition while exercising the power of enhancement vested with him under Section 251(1) of the Act. Apart from that, the Ld. AR had relied upon the orders of the coordinate benches of the Tribunal viz., (i)
Sekhar Jayalakshmi Doshi vs. ITO (ITA No. 20/Chny/2021), ITAT
12
Chennai; (ii) Toffee Agriculture Farms Pvt Ltd vs. ITO (ITA No.
4903/Del/2019), ITAT, Delhi; (iii) Pooja Diphen Joshi vs. ITO (ITA
No. 856/Ahd/2023), ITAT, Ahmedabad; and (iv) Mandeep Singh
80,43,411/- made by the AO as an unexplained cash credit U/s.
68 of the Act as an addition U/s. 69A of the Act without putting the assessee to notice, therefore, the same cannot be sustained and is liable to be quashed on account of an invalid assumption of juri iction on his part.
Per contra, the Learned Sr. Departmental Representative (for short “Ld. DR”) submitted that as the CIT(A) has retained the addition and not carried out any enhancement, thus, it is incorrect on the part of the assessee’s Counsel to claim that the assessee had been divested of an opportunity to put forth his case before him regarding the issue in hand. Elaborating on his contention, the Ld. DR submitted that as no infirmity emerges from the orders of the lower authorities, therefore, the appeal filed
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12. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the lower authorities. Admittedly, it is a matter of fact discernible from the record that the AO had held the amounts credited in the three bank accounts of the assessee aggregating to Rs. 80,53,411/-, viz., (i) State Bank of India
Account No. 32778736470: Rs. 20,51,411/-; (ii) Axis Bank
Account No. 912020015362601: Rs.53,77,000/-; and (iii)
Neelakrishna Co-operative Urban Bank Ltd Account No.
100040070000555: Rs. 6,25,000/- as unexplained cash credits under Section 68 of the Act.
Thereafter, it transpires that the CIT(A) vide his order dated 02/02/2024, had observed that the assessee on being queried about the cash deposit for Rs. 80,53,411/- (supra) in his aforesaid bank accounts, had claimed that the same were partially sourced from his gross business receipts of Rs. 20 lacs on which he had returned income @ 8% i.e., Rs. 1,60,000/-. However, the CIT(A) observed that the assessee had failed to 14 Shyamprasad Reddy Gaddam vs. DCIT substantiate his claim of having carried out any business activity and, thus, the fact that the amount of Rs. 20 lacs (supra) was sourced from his business turnover for the subject year did not merit acceptance. Accordingly, the CIT(A) rejected the assessee’s claim that the amount of Rs. 20 lacs (supra) was his business turnover.
Apart from that, we find that the CIT(A) had observed that the assessee had failed to place on record any cogent evidence to substantiate the source of the cash deposits made in his bank accounts. Apropos the assessee’s claim that the cash withdrawals made from his bank accounts were thereafter utilized to redeposit the amount in the bank accounts, the CIT(A), holding a conviction that the assessee had failed to substantiate his said claim based on any supporting material, thus, rejected the same.
Ostensibly, the CIT(A) had further observed that as per the assessment order (Para 13 of the order) the assessee had disclosed only one bank account, while for the credits in the other two bank accounts of Rs. 80,53,411/- had surfaced only in the assessment order.
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Also, it was observed by him that though the assessee had claimed that a sum of Rs. 20 lacs was sourced from his business turnover but he had failed to come forth with any explanation regarding the balance amount of Rs. 60,53,411/-. The CIT(A), considering the facts, viz. (i). that the assessee had failed to substantiate his claim of having carried out any business; and (ii). that there was no disclosure of the two bank accounts (out of the three bank accounts), held a conviction that the entire amount of cash deposits of Rs. 80,53,411/- was the assessee’s
16
Shyamprasad Reddy Gaddam vs. DCIT unexplained money under Section 69A of the Act and could not have been assessed as his unexplained cash credits under Section 68 of the Act i.e., as was done by the AO. The CIT(A) taking cognizance of the fact that he had powers co-terminus with that of the AO, and observing, that he was well within his juri iction to make an addition under a completely different head of income, i.e. even under a head of income which is not taxed in the assessment order, thus, he remained well within his juri iction to change the section under which the aforesaid addition was made by the AO with no consequential change of rate of tax, i.e., from section 68 (as made by the AO) to section 69A of the Act (as was substituted by him). Accordingly, the CIT(A), based on his aforesaid observations, concluded that the sum of Rs. 80,53,411/- was the assessee’s unexplained money
U/s. 69A of the Act. At the same time, the CIT(A) came up with a rider to his aforesaid observation, i.e., if the assessee was able to substantiate later on that the sum of Rs. 20 lacs (supra) formed part of his books of accounts, then, the same would be assessed in his hands as an unexplained cash credit under Section 68 of the Act, while for the balance amount of Rs. 60,53,411/- would
17
18. We find that the assessee in the backdrop of the aforesaid observation of the CIT(A), has assailed his order primarily on the ground that by interchanging the head of the addition, i.e., from section 68 (as made by the AO) to section 69A of the Act (as held by him), the CIT(A), had without putting the assessee to notice about the said substitution of the head of addition had grossly erred in traversing beyond the scope of his juri iction and sustaining the addition made by the AO in an absolutely different manner, without affording any opportunity to the assessee to put-forth an explanation on the said aspect. To sum up, it is the assessee’s claim before us that as the assessee had not only suffered sustaining of the impugned addition, but also had been caught by surprise wherein the said addition had been sustained on an entirely different head without affording him any opportunity to put forth an explanation on the said aspect.
We have thoughtfully considered the contentions of the Ld. Shyamprasad Reddy Gaddam vs. DCIT substituted the head under which the addition was made by the AO without putting the assessee/appellant to notice and calling for his explanation on the said aspect. Our aforesaid view is fortified by the order of the ITAT, SMC Bench, Chennai in the case of Smt. Sekhar Jayalakshmi vs. ITO in ITA No. 20/Chny/2021, dated 21/12/2022. In the said case, the AO, while framing the assessment, had made an addition of Rs. 6 lacs under Section 68 21. Also, we find that the ITAT, SMC Bench, Delhi, in M/s. 4903/Del/2019, dated 18/04/2022, involving identical facts, had observed that the CIT(A) did not have any juri iction to treat the addition made by the AO under Section 69C as an addition under Section 69B of the Act. We find that the Tribunal, while so concluding, had relied upon the judgment of the Hon’ble High 319 ITR 276 (Del). Apart from that, we find that a similar view had been taken by the ITAT, Ahmedabad Bench, in the case of Pooja Dipen Joshi vs. ITO, ITA No. 856/Ahd/2023, dated 15/05/2025. In the said case, the AO had made an addition under Section 50C r.w.s 56(2)(vii)(b) of the Act, which, thereafter, on appeal, was sustained by the CIT(A) under Section 69C of the Act. On appeal, the Tribunal had observed that as the CIT(A) had not issued any show cause notice to the assessee for making the addition under Section 69C of the Act, therefore, the order passed by him could not be sustained.
We, thus, in terms of our aforesaid deliberations, are of the firm conviction that, as in the present case before us, the CIT(A),
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Shyamprasad Reddy Gaddam vs. DCIT had, without validly putting the assessee to notice about the recharacterizing of the addition of Rs. 80,53,411/- (supra) made by the AO as an unexplained cash credit under Section 68 of the Act as an addition towards unexplained money under Section 69A of the Act, therefore, the same cannot be sustained and is liable to be vacated.
As we have vacated the addition sustained by the CIT(A) in terms of our aforesaid deliberations, therefore, we refrain from dealing with the other aspects based on which the impugned addition has been assailed before us, which, thus, are left open.
In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
Order pronounced in the open court on 10th October, 2025. (MANJUNATHA G.)
ACCOUNTANT MEMBER (RAVISH SOOD)
JUDICIAL MEMBER
Hyderabad,
Dated 10th October, 2025
**OKK / SPS
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Copy to:
S.No Addresses
1
Shyamprasad Reddy Gaddam, C/o. P. Murali & Co.,
Chartered
Accountants,
6-3-655/2/3,
Somajiguda,
Hyderabad, Telangana-500082. 2
DCIT, Central Circle-3(3),Hyderabad, Telangana.
3
The Pr.CIT, Central Circle, Hyderabad
4
The DR, ITAT Hyderabad Benches
5
Guard File
By Order
Sr. Private Secretary,
ITAT, Hyderabad.