Income Tax Appellate Tribunal - Hyderabad
Pattipaka Mahesh,Hyderabad vs Acit, Central Circle 2(4), Hyderabad on 6 May, 2026
आयकर अपील य अ धकरण, है दराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad 'A' Bench, Hyderabad
BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT
AND
SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER
आ.अपी.सं /ITA.No.1827/Hyd/2025
Assessment Year 2019-2020
Pattipaka Mahesh, The ACIT,
Hyderabad - 500 010. vs. Central Circle-2(4),
Telangana. Hyderabad - 500 004.
PAN AQFPM2377K Telangana.
(Appellant) (Respondent)
िनधा रती ारा/Assessee by : Sri T Rama Murthy, CA
राज व ारा/Revenue by : Sri B Sashi Kanth, Sr. AR
सु न वाई की तारीख/Date of hearing: 04.05.2026
घोषणा की तारीख/Pronouncement: 06.05.2026
आदे श/ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the Order dated 13.08.2025 of the learned CIT(A)-12, Hyderabad, for the assessment year 2019-2020.
2. The assessee has raised the following grounds of appeal:
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1. "The Ld Appellate Commissioner erred on both facts, circumstances and law by dismissing the appeal without properly considering the submissions and explanations offered during the appeal proceedings.
2. The Ld Appellate Commissioner erred in upholding the addition of Rs.218592 which is confirmed and certified by the employer vide Form 16.
3. The Ld Appellate Commissioner erred in proposing OR disallowing Rs.829263 out of source of funds duly supported.
4. The Ld Appellate Commissioner ought to have appreciated the fact that the AO failed to consider the submissions filed during assessment proceedings.
5. The Ld Appellate Commissioner erred and failed to appreciate the fact that the assessment completed on the basis of third party confirmation rather than submissions of the appellant and further failed to verify be corroborative evidence.
6. The appellant craves the right to alter, add, DLEETE all OR any of the ground OR grounds during the appeal proceedings."
3. Ground nos.1, 4 to 6 are general in nature and do not require any specific adjudication.
4. Ground no.2 is regarding disallowance made by the Assessing Officer on account of HRA by rejecting the claim of house rent payment in the absence of documentary evidence.
5. The learned Authorised Representative of the Assessee has submitted that the assessee has received HRA 3 ITA.No.1827/Hyd./2025 of Rs.3,61,800/- and the employer of the assessee has calculated the deduction on account of rent paid by the assessee at Rs.2,18,592/- out of the total house rent paid by the assessee of Rs.3 lakhs. However, the Assessing Officer has added the entire HRA received by the assessee to the total income of the assessee and thereby disallowed the claim of Rs.2,18,592/- as deduction on account of rent paid by the assessee. He has pointed out that the proof of rent payment was submitted by the assessee to the employer and accordingly, the employer has calculated the deduction allowable under the provisions of sec.10(13A) of the Income Tax Act, 1961. He further submitted that the assessee has given the particulars of landlord of the house which was taken by the assessee on rent during the relevant year under consideration and the assessee filed Form-16 and annexure to Form-16 regarding the calculation of deduction on account of house rent paid by the assessee but the learned CIT(A) has confirmed the disallowance made by the Assessing Officer without considering the evidence produced by the assessee. 4
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6. On the other hand, the learned DR has submitted that the Assessing Officer has given the reasons for disallowing the claim of deduction on account of house rent paid from the HRA since the assessee has not produced any supporting evidence. Therefore, in the absence of any supporting evidence, the learned CIT(A) has rightly confirmed the addition of Rs.2,18,592/-. He has relied upon the Orders of the authorities below.
7. We have considered the rival submissions as well as relevant material on record. The learned CIT(A) has dealt with this issue in Para no.6.3.3. as under:
"6.3.3. I have gone through the grounds of appeal, statement of facts, assessment order and the submissions of the appellant. The Income tax department cross verifies HRA claims during the processing of income tax returns. The department may match the details of rent paid (form form 16 or ITR fillings) with the rent receipts provided by the employee. Taxpayers claiming HRA exemptions must provide documentary evidence as rent receipts or a rent agreement. The department checks whether the employer has deducted the correct amount of tax on HRA as reflected in Form
16. The department will ensure that the rent paid is reasonable in relation to the salary. Claims of HRS exemption above a certain limit may be scrutinized. Incorrect reporting of HRA exemptions can lead to under reporting of taxable income, which may reduce the 5 ITA.No.1827/Hyd./2025 taxes. If the rent paid is overstated or if the HRA exemption is claimed without meeting the eligibility criteria, this may result in the exemption being revoked during an assessment. In the instant case, the appellant had not filed the documentary evidence in support of the claim made for HRA. In the appellate proceedings, burden of proof lies on the appellant to prove that facts and findings of the AO are incorrect. However, the appellant had not filed any documentary evidence in this regard. Under the circumstances and in view of the above, I am constrained to upheld the addition of Rs.2,18,592/. Hence, Ground No. 3 raised on this issue is dismissed."
7.1. Thus, it is clear that the claim of deduction against the HRA was denied by the Assessing Officer as well as by the learned CIT(A) for want of documentary evidence and particularly, the rent receipts or rent agreement along with proof of payment. The learned Authorised Representative of the Assessee has not disputed the fact that except Form-16 the assessee has not produced any documentary evidence in support of the claim of payment of rent by the assessee. Accordingly, in the facts and circumstances of the case, this issue is set aside to the record of the Assessing Officer to grant one more opportunity to the assessee to produce the proof of payment of rent including the bank account statement if the rent is paid through banking channel. 6
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8. Ground no.3 is regarding addition of Rs.8,29,263/- made on account of unexplained investment in purchase of property.
9. The learned Authorised Representative of the Assessee has submitted that the assessee has purchased a property plot bearing No.56 admeasuring 200 sq. yards in Survey Nos.299, 301, 303, 304, 311, 312, 313 & 314 out of total land admeasuring 11 acres situated at Dommarapochampally (V), Dundigal-Gandimaisamma Mandal, Medchal-Malkajigiri vide agreement to sale dated 07.10.2018 and subsequent sale deed dated 20.02.2019 for a consideration of Rs.49,60,000/- plus registration charges. The learned Authorised Representative of the Assessee has submitted that the assessee paid a sum of Rs.10,50,000/- at the time of agreement and the balance amount was paid by availing the loan from two banks i.e., Punjab National Bank and HDFC Bank and therefore, the loan amount was directly paid by the Banks to M/s. Mirchi Developers Private Limited. He has then pointed out that the Assessing Officer has made the addition of Rs.32,03,997/- u/sec.69 of the Act on the 7 ITA.No.1827/Hyd./2025 basis of documents found and seized in the search and seizure action in the case of M/s. MSR India Limited and Shri M Srinivasa Reddy, Director of M/s. Mirchi Developers Private Limited on 07.01.2021. The Assessing Officer has not considered the payment details as reflected from the bank accounts of the assessee that the entire payment was made through banking channel. The learned Authorised Representative of the Assessee has then referred to the Order of the learned CIT(A) and submitted that the learned CIT(A) has restricted the addition to the extent of Rs.8,29,263/- as against Rs.32,03,997/- made by the Assessing Officer. Thus, the learned CIT(A) has accepted the source of payment by way of loan from HDFC at Rs.20 lakhs and loan from Punjab National Bank of Rs.21,13,737/- out of the total cost of purchase of Rs.49,60,000/-. He has further submitted that the said addition is sustained by the learned CIT(A) on the ground that the assessee has made payment of Rs.8,29,263/- by making cash deposits in the bank account and claimed the loan received from family members and relatives but without any supporting evidence. The learned Authorised 8 ITA.No.1827/Hyd./2025 Representative of the Assessee has pointed out that the assessee has filed the confirmation of the said amount received by the assessee from family members including father, sister of the assessee and other friends. But those confirmations have not been considered by the learned CIT(A) while sustaining the addition.
10. On the other hand, the learned DR has submitted that from the bank accounts of the assessee it was found that the opening balance as on 01.04.2018 was Rs.52,255/- only and thereafter, the assessee has deposited various cash amounts in the bank account before the payment of Rs.10,50,000/- to M/s. Mirchi Developers Private Limited. The learned DR has further submitted that as per the agreement to sale the total sale consideration of the plot in question is shown at Rs.49,60,000/- whereas in the sale deed the sale consideration is shown at Rs.14 lakhs only therefore, the Assessing Officer has rightly added the balance amount as payment in cash by the assessee. He has further submitted that the learned CIT(A) has considered the loan availed by the assessee from the HDFC bank and PNB Bank 9 ITA.No.1827/Hyd./2025 and therefore, the addition sustained by the assessee to the extent of Rs.8,29,263/- is for want of any tangible material to explain the source of the said amount. The assessee has claimed to have received various amounts from the family members and friends however the assessee has failed to prove the source in the hand of the family members as well as friends. He has relied upon the Orders of the authorities below.
11. We have considered the rival submissions as well as relevant material on record. The learned CIT(A) has considered this issue in Para nos.6.4.6 to 6.4.9 as under:
"6.4.6. On verification of the bank statement of HDFC Bank of the appellant, it is seen that the carry forward balance as on 1.4.2018 was Rs.52,255/-only. It is observed that the appellant had received Rs.3,90,000/-from Pathipaka Lachaiah, Rs.2,50,000/- from Vandhankumar, Rs.1,00,000/- from Noone Bhudhavva. An amount of Rs.8,00,000/- were deposited in the bank account of the appellant before transferring Rs.14,50,000/- to M/s. Mirchi Developers. The appellant had repaid an amount of Rs.2,50,000/- to Vandan Kumar on 23.10.2018.
6.4.7. It is also seen some cash deposits in the bank account of the appellant. On 22.10.2018 Rs.1,00,000/-; on 25.10.2018 Rs.1,15,000/-; on 26.12.2018 Rs.1,80,000/-. It is also seen that there are transfer of Rs.2,55,400/- and Rs.2,00,000/- on 10 ITA.No.1827/Hyd./2025 19.1.2019 and 25.1.2019. No details are available with the said deposits.
6.4.8. In the appellate proceedings, burden of proof lies on the appellant to prove that facts and findings of the AO are incorrect. Appellant contested in appeal that the assessment order is totally arbitrary and not proper and justified. The appellant has to prove or rebut with cogent evidence against the facts and findings of the AO in the assessment order. The appellant had reiterated the facts narrated before the Assessing officer during the assessment proceedings. No new facts have been submitted by the appellant during the present proceedings. Thus the entire transactions are camouflaged to appear like a genuine transaction to evade the payment of tax.
ISHWAR CHAND BANSAL v. COMMISSIONER OF INCOME-
TAX AND ANOTHER [2007] 294 ITR 95 (P&H) Unexplained investment-Finding that there was no reasonable explanation regarding investment Addition to income justified-- Income-tax Act, 1961, s.69.
SURENDRA M. KHANDHAR v. ASSISTANT COMMISSIONER OF INCOME-TAX AND OTHERS (2010) 321 ITR 254 (Bom) Search and seizure-Unexplained investment-Document discovered during search -presumption that contents of document are true-Document stating that amount had been advanced by assessee Presumption of truth of document not rebutted by assessee -Amount shown in document assessable as unexplained investment -Income-tax Act, 1961, s. 69, 132(4A), 292C.
TECHNICAL GLASS INDUSTRIES VS. CIT [2006] 281 ITR 61 (ALL) Unexplained investments Burden of proof on assessee
- No proper explanation by assessee Amounts assessable u/s. 69.11
ITA.No.1827/Hyd./2025 MT. DHANVIDYA A. DALAL v COMMISSIONER OF INCOME-
TAX, [2007] 294 ITR 277 (BOM). Unexplained investment- Search and seizure-Explanation given by Assessee not satisfactory-Addition of amount justified-Income-tax Act, 1961, 5.69A.
6.4.9. Under the circumstances and in view of the above, the explanation for the sources by way of loans from HDFC Bank of Rs.20,00,000/- and from PNB Bank of Rs.21,30,737/- is acceptable out of Rs.49,60,000/- incurred by the appellant. For the remaining amount, the sources were not properly explained with sufficient documentary evidence. As pointed out by the AO, the appellant has failed to furnish the confirmation and creditworthiness of the friends and relatives to substantiate his claim that he had taken gifts and loans from relatives and friends. Therefore, the AO is directed to restrict the addition to Rs.8,29,263/- as against Rs.32,03,997/. The appellant gets part relief. Ground No. 4 is partly allowed."
12. Thus, the learned CIT(A) has doubted the claim of the assessee regarding the deposit of Rs.8 lakhs in the bank account for transferring the payment of Rs.14,50,000/- to M/s. Mirchi Developers Private Limited. The assessee claimed to have received certain amounts from family members and friends which was not accepted by the Assessing Officer as well as learned CIT(A). The assessee has filed the confirmation from these family members and friends placed at Page nos.107 to 115 of the paper book. Accordingly, in the 12 ITA.No.1827/Hyd./2025 facts and circumstances of the case and in the interest of justice, this issue is set aside to the record of the Assessing Officer for proper verification and examination of the confirmations filed by the assessee. It is pertinent to note that once the assessee has filed the confirmations of the persons from whom the assessee has received the money then, without conducting a proper enquiry or bringing any evidence contrary to the evidence filed by the assessee, the disallowance made by the Assessing Officer is arbitrary. Thus, the Assessing Officer is directed to decide this issue of addition of Rs.8,29,263/- sustained by the learned CIT(A) by conducting a proper enquiry in respect of the confirmations filed by the assessee.
13. In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 06.05.2026.
Sd/- Sd/-
[MADHUSUDAN SAWDIA] [VIJAY PAL RAO]
ACCOUNTANT MEMBER VICE PRESIDENT
Hyderabad, Dated 06th May, 2026
VBP
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ITA.No.1827/Hyd./2025
Copy to:
Pattipaka Mahesh, Plot No.409, Tower VB City,
1. Bollaram, Alwal, Hyderabad - 500 010. Telangana.
The ACIT, Central Circle-2(4), Aayakar Bhavan,
2. Basheerbagh Road, Hyderabad - 500 004. Telangana.
The CIT(A)-12, 6th Floor, Aayakar Bhawan,
3. Basheerbagh, Hyderabad - 500 004.
4. The Pr. CIT-(Central), Hyderabad.
5. The DR, ITAT, "A" Bench, Hyderabad.
6. Guard file.
BY ORDER VADREVU Digitally by VADREVU signed PRASADA PRASADA RAO Date: 2026.05.06 RAO 14:32:07 +05'30'