NAVEEN KUMAR KAPARTHY,HYDERABAD vs. INCOME TAX OFFICER, WARD-4(1), HYDERABAD.
Income Tax Appellate Tribunal, Hyderabad ‘ SM-A ‘ Bench, Hyderabad
प्रनत रवीश सूद, जे.एम./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),
National Faceless Appeal Center (NFAC), Delhi, dated 31.01.2025, which in turn arises from the order passed by the Assessing
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Naveen Kumar Kaparthy, Hyderabad.
Officer (for short “A.O.”) under Section 144 of the Income Tax Act,
1961 (for short “the Act”) dated 25.11.2019 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1) The order of the learned Commissioner of Income Tax (Appeals)-
NFAC, Delhi is not correct, both on facts and in law.
The Lower Authorities are not justified in making an addition of Rs.
14,08,000/- u/s 69A of the Income Tax Act, 1961. The Learned First Appellate Authority ought to have considered that the credit card transactions pertained to the business of the Assessee and payments were made out of receipts from business.
The Ld. First Appellate Authority ought to have appreciated that the Assessee could not submit details due to situations beyond his control.
The appellant reserves his right to add, amend, delete or alter any of the above grounds during the course of hearing of the appeal.”
Succinctly stated, the assessee had filed his return of income for A.Y 2017-18 on 30.11.2017, declaring an income of Rs. 8,89,530/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act.
During the course of assessment proceedings, it was observed by the A.O. that during the subject year, the assessee had made cash payments in his credit card accounts aggregating to Rs. 14,08,000/-. On being queried, the assessee failed to 3 Naveen Kumar Kaparthy, Hyderabad.
furnish the requisite details regarding the source of the cash payments. Accordingly, the A.O. was constrained to proceed with and frame the assessment to the best of his judgment u/s 144 of the Act, dated 25.11.2019, wherein he held the source of the subject cash deposits as having been sourced out of the assessee’s unexplained money u/s 69A of the Act.
Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success. For the sake of clarity, the observations of the CIT(A) are culled out as under :
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Naveen Kumar Kaparthy, Hyderabad.
The assessee, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the learned Authorized Representatives of both parties, perused the orders of lower authorities and the material available on record.
Shri K.A. Sai Prasad, C.A. the learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the assessee has filed an application for admission of certain documents as additional evidence. The Ld. AR took us through the aforesaid application. On a perusal of the documents, we find that the same,
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Naveen Kumar Kaparthy, Hyderabad.
inter alia, comprises of, viz. (i). the details of the payments made in the credit card account (Pages 5 to 9); (ii). ledger account of the assessee’s “current account” as a partner with M/s. S.K.S. Traders
(Pages 11 to 18); and (iii). copies of the account statements of the various credit cards during the subject year (Pages 19 to 36). The Ld. AR submitted that as the aforesaid additional documents will have a strong bearing on the adjudication of the issue involved in the present appeal, therefore, the same in all fairness be admitted.
We have thoughtfully considered the application filed by the assessee seeking admission of the aforesaid additional documents. We find substance in the Ld. AR's claim that, as a reference to the aforesaid documents, will be required while addressing the specific issues involved in the present appeal, therefore, the same, in all fairness, merits admission. We, thus, in terms of aforesaid observations, admit the additional documents filed by the assessee appellant.
The Ld. AR for the assessee submitted that both the authorities had grossly erred in law and facts of the case in making/sustaining the addition of Rs. 14.08 lacs (supra) by 6 Naveen Kumar Kaparthy, Hyderabad.
treating the same, as having been sourced out of the assessee’s unexplained money u/s 69A of the Act. Elaborating on his contention, the Ld. AR submitted that the subject payments in the credit card accounts of the assessee during the year under consideration were sourced out of his “current account” as a partner with M/s. S.K.S. Traders. The Ld. AR, to support his aforesaid claim, has taken us through the copy of the “current account” (supra) of the assessee (Pages 11 to 18 of the APB). The Ld.
AR had further tried to correlate the respective debits/payments in the “current account” of the assessee with the respective payments mentioned in the credit card statements. It was, thus, the Ld. AR's claim that, as the source of the payments in the credit card accounts of the assessee was explained, therefore, it was wrong on the part of the authorities below to treat the same as having been sourced out of his unexplained money u/s 69A of the Act.
10. Per contra, Shri Pavitran Kumar, J. the learned senior
Departmental Representative (for short “Ld. DR”) relied upon the orders of the lower authorities.
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Naveen Kumar Kaparthy, Hyderabad.
We have thoughtfully considered the contentions advanced by the learned Authorized Representatives of both parties on the issue in hand.
The controversy involved in the present appeal lies in a narrow compass, i.e., the sustainability of the view taken by the A.O. and CIT(A) that the cash payments made by the assessee in his credit card accounts during the subject year were sourced out of his unexplained money u/s 69A of the Act.
Ostensibly, the copy of the “current account” of the assessee, viz. Shri. Naveen Kumar Kaparthy in the concern, i.e., M/s. S.K.S. Traders read along with the respective credit card accounts, prima facie, reveal that the respective payments had been sourced from the said account. At the same time, as the aforementioned documents, i.e., the copy of the “current account” of the assessee with M/s. S.K.S. Traders; copy of the credit card account statements; and the “chart” disclosing the details of the payments made in the credit card accounts were not there before the lower authorities, therefore, we refrain from commenting on the same at the back of the A.O. Accordingly, in all fairness, we hereby restore
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Naveen Kumar Kaparthy, Hyderabad.
the matter to the file of the A.O. with a direction to verify the veracity of the aforesaid claim of the assessee, i.e., the payments made in the credit card accounts of the assessee during the subject year were sourced out of his “current account” with M/s.
S.K.S. Traders (supra). In case the claim of the assessee is found to be in order, then the impugned addition made by the A.O. shall stand vacated.
As we have set aside the matter to the file of the A.O. in terms of our aforesaid observations, we therefore refrain from adverting to the merits of the case based on which the impugned addition has been assailed before us. 15. Resultantly, the appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the Open Court on 09th July, 2025. (श्री मिुसूदन सावडिया)
(MADHUSUDAN SAWDIA)
लेखा सदस्य/ACCOUNTANT MEMBER (श्री रवीश सूद)
(RAVISH SOOD)
न्यायिक सदस्य/JUDICIAL MEMBER
Hyderabad, dated 09.07.2025. TYNM/sps
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Naveen Kumar Kaparthy, Hyderabad.
आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-
निर्धाररती/The Assessee : Naveen Kumar Kaparthy, C/o.Katrapati & Associates, 1-1-298/2/B/3, Sowbhagya Avenue Apts, 1st Floor, Ashok Nagar, Street No.1, Hyderabad. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward –4(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file
आदेशधिुसधर / BY ORDER
Sr. Private Secretary
ITAT, Hyderabad