High Court of Andhra Pradesh · Judgments and reasoned final orders
Bathina Srilakshmi v. Income Tax Officer, Ward-2, Nellore & Anr.
I.T.T.A. No. 53 of 2025 ·
Addition of Rs. 1,82,34,150 for unexplained negative cash balance as on 26.03.2014 upheld where the assessee initially claimed before the AO to have received Rs. 1.83 crore cash gifts from unnamed 'others' via self-signed vouchers and shifted stand before the CIT(A) to claim a cash gift from her late grandmother allegedly withdrawn from a Bangalore firm that never filed a return for AY 2014-15.
1. FACTS OF THE CASE
Bathina Srilakshmi filed her return for AY 2014-15 declaring income of Rs. 2,48,490. During scrutiny, the AO found that while she had an opening cash balance of Rs. 2,01,83,834 on 01.03.2014, her cash payments resulted in a negative/deficit cash balance of Rs. 1,82,34,150 as on 26.03.2014. Before the AO, she filed a letter dated 05.12.2016 claiming she had received cash gifts of Rs. 1.83 crore from 'others' supported only by self-signed receipt vouchers, which the AO rejected. Before the CIT(A), Tirupati, she changed her version and claimed she had received a cash gift of Rs. 1.83 crore on 05.03.2014 (wrongly posted on 31.03.2014) from her grandmother (who died in 2016), who had allegedly withdrawn Rs. 3.5 crore from a partnership firm M/s R.R. Estates and Projects, Bangalore. On verification with Bangalore Income-tax authorities, the AO reported that M/s R.R. Estates and Projects had not filed any return of income for AY 2014-15. The CIT(A) nevertheless allowed the appeal on 28.11.2018, but the ITAT Hyderabad 'B' Bench reversed the CIT(A) on 16.05.2025 in ITA No. 83/Hyd/2019.
2. DISCUSSION BY THE COURT
The Division Bench agreed with the ITAT on two decisive counts: first, the creditworthiness and source of funds in the hands of the grandmother were wholly unsubstantiated since the alleged source firm (M/s R.R. Estates and Projects, Bangalore) had not even filed an income-tax return for AY 2014-15; and second, had the assessee genuinely received Rs. 1.83 crore in cash from her own grandmother on 05.03.2014 to cover the March 2014 cash deficit, she would have named her grandmother during the assessment proceedings rather than claiming in her letter dated 05.12.2016 that she received cash gifts from 'others' on self-signed vouchers.
3. JUDICIAL DECISION
Finding no ground to interfere with the order of the ITAT Hyderabad Bench dated 16.05.2025, the Andhra Pradesh High Court dismissed I.T.T.A. No. 53 of 2025.
4. OUTCOME
In favour of the Revenue; assessee's appeal I.T.T.A. No. 53 of 2025 dismissed and addition of Rs. 1,82,34,150 for negative cash balance upheld.
5. AKHB REVIEW POINT
AKHB analysis: Attempting to explain a peak negative cash-book balance by shifting at the appellate stage from unnamed 'gifts from others' (backed by self-signed vouchers) to a single large cash gift from a deceased relative allegedly funded by a non-filing partnership firm fails both the creditworthiness limb and the human-probability / consistency test.
Source and verification
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Refers to the Income-tax Act, 1961 and allied statutory rules/circulars as applicable to the relevant assessment years.
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