ACIT., CENTRAL CIRCLE-2(2), HYDERABAD V. NETHI RAVI, HYDERABAD

ITA 594/HYD/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) which had deleted the addition of Rs.2,15,49,000 as unexplained money under section 69A of the Income Tax Act, 1961. The assessee, Shri Nethi Ravi, a Director in the Spectra India Group, was found in possession of Rs.4,65,49,000 during a search operation. Initially, he admitted that Rs.2,15,49,000 belonged to him, earned from various sources. However, he later retracted this statement, claiming the cash belonged to the Spectra India Group. The Tribunal, after considering the submissions and evidence, concluded that the deletion of the addition by the CIT(A) was not substantiated and restored the addition made by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822316 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2021-2022
• Appeal Filed On: 03-06-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI BHARADAWAJ
• Keywords: Set aside; Retraction; Search and seizure
• Section: 143(3); 132; 131

Judgement Text

" ITA No 594 of 2024 Nethi Ravi Page 1 of 9 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB A ‘ Bench, Hyderabad ŵी रिवश सूद,Ɋाियक सद˟ एवं ŵी मधुसूदन साविड़या लेखा सद˟ समƗ | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.594/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2021-22) Assistant Commissioner of Income Tax Central Circle 2(2) Hyderabad Vs. Shri Nethi Ravi Hyderabad PAN:ADBPN7597F (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri Ravi Bharadawaj, CA राज̾ व Ȫारा/Revenue by:: Shri S. Arun Kumar, Sr. DR सुनवाई की तारीख/Date of hearing: 16/12/2025 घोषणा की तारीख/Pronouncement: 24/12/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by the Revenue, feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-12, Hyderabad, (“Ld. CIT(A)”) dated 07.03.2024 for the A.Y.2021-22. 2. The assessee has raised the following grounds of appeal: “1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition made towards Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 2 of 9 unexplained u/s 69A of Rs. 2,15,49,000/- which is not correct? 2. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) failed to distinguish the fact that the assessee has contradicted his earlier stand which is nothing but an afterthought and there is an inconsistency in the statements given by the assessee? 3. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) also failed to distinguish the fact that the assessee failed to furnish he documentary evidence in support of his claim with respect to availability of cash of Rs. 2,15,49,000/-? 4. Any other ground that may be urged at the time of hearing.” 3. The brief facts of the case are that the assessee is an individual and a Director in the Spectra India Group. The assessee filed his return of income for the Assessment Year 2021–22 under section 139(4) of the Income Tax Act, 1961 (“the Act”) on 27.12.2021, declaring a total income of Rs.9,55,620/-. A search and seizure operation under section 132 of the Act was conducted on 23.03.2021 in the case of the Spectra India Group, in connection with which the residential premises of the assessee was also covered. During the course of the search, cash amounting to Rs.4,65,49,000/- was found from the residential premises of the assessee out of which cash of Rs. 4,63,49,000/- was seized by the Revenue. In the statement recorded under section 132(4) of the Act, the assessee explained that out of the cash found, an amount of Rs.2.50 crores belongs to the Spectra India Group, and the balance amount of Rs.2,15,49,000/- belonged to him and was earned out of his commission income, his own real estate business, and other sources. Subsequently, in a statement recorded under section 131 of the Act on 05.04.2021, Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 3 of 9 the assessee retracted from his earlier statement and claimed that the entire cash of Rs.4,65,49,000/- belonged to the Spectra India Group, which was handed over to him by the Spectra India Group for disbursement to site supervisors in connection with various development works and also for onward payments to farmers towards land purchases. The Ld. AO did not accept the subsequent retraction and treated it as an afterthought. The Ld. AO accepted only the amount of Rs.2.50 crores as belonging to the Spectra India Group, as admitted in the original statement under section 132(4) of the Act, and treated the balance amount of Rs.2,15,49,000/- as unexplained money under section 69A of the Act in the hands of the assessee. The Ld. AO also made other additions of Rs.24,37,225/- under the head of capital gain and Rs.2,23,683/- on account of disallowance of claim of the assessee under section 24(b) of the Act. Accordingly, the assessment was completed by the Ld. AO under section 143(3) of the Act vide order dated 13.04.2022, determining the total income of the assessee at Rs.2,51,65,528/-. 4. Aggrieved with the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) partly allowed the appeal of the assessee, which include deletion of the addition of Rs.2,15,49,000/-, accepting the assessee’s contention that the cash belonged to the Spectra India Group. 5. Aggrieved by the order of the Ld. CIT (A), the Revenue is in appeal before this Tribunal. The Learned Departmental Representative (“Ld. DR”) submitted that the sole issue in the Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 4 of 9 Revenue’s appeal relates to the deletion of the addition of Rs.2,15,49,000/- made by the Ld. AO under section 69A of the Act. In this regard, the Ld. DR submitted that in the statement recorded under section 132(4) of the Act, the assessee categorically admitted that out of the total cash found, Rs. 2,15,49,000/- belonged to him and was earned from his commission income, his real estate business, and other sources. It was submitted that the cash involved is a substantial amount, and it is not believable that the assessee was unaware of the source of such huge cash at the time of recording the statement under section 132(4) of the Act, especially when the assessee stated that out of cash of Rs.4,65,49,000/- , Rs. 2.50 crores was only related to Spectra India Group. It was further submitted that the subsequent retraction made by the assessee in the statement recorded under section 131 of the Act on 05.04.2021 is a clear afterthought and not supported by any contemporaneous or corroborative evidence. The Ld. DR submitted that the Ld. CIT(A) deleted the addition merely on the basis of a letter issued by the Spectra India Group without verifying whether the alleged cash was actually recorded in the books of the Spectra India Group or whether any documentary evidence existed to show that the cash was handed over to the assessee by the Spectra India Group. Accordingly, the Ld. DR prayed that the order of the Ld. CIT(A) be set aside, and the addition made by the Ld. AO be restored. 6. Per contra, the Learned Authorised Representative (“Ld. AR”) submitted that the cash belonged to the Spectra India Group and was duly accounted for in their books of account. It Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 5 of 9 was submitted that the earlier statement under section 132(4) of the Act was given under confusion and pressure, and the same was corrected by the assessee at the earliest opportunity by way of a statement under section 131 of the Act and by filing an affidavit. The Ld. AR invited our attention to the letter issued by the Spectra India Group to the Ld. AO, which has been reproduced at page no. 14 of the order of the Ld. CIT(A), stating that the cash was collected from customers towards sale of plots and was duly accounted for. He also invited our attention to the ledger account of “Creditors for Expenses” in the books of the Spectra India Group (page no. 25 of the paper book), wherein a credit entry of Rs.5,58,49,000/- was passed on 23.03.2021 on account of cash seized by the Revenue from various persons including the assessee. It was submitted that taxing the same cash in the hands of the assessee would result in double taxation, which is impermissible under law. Accordingly, the Ld. AR prayed to uphold the order of the Ld. CIT (A). 7. We have carefully considered the rival submissions and perused the material available on record. At the outset, we find considerable force in the submissions of the Ld. DR. First and foremost, we find it unbelievable that the assessee, having been found in possession of a huge amount of cash, was not aware of its source at the time of recording the statement under section 132(4) of the Act and categorically stated that the cash belonged to him and was earned from his commission income, real estate business, and other sources. Furthermore, it is also not believable due to the reason that when the assessee stated that out of cash Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 6 of 9 of Rs.4,65,49,000/-, Rs. 2.50 crores was only related to Spectra India Group. It cannot be accepted that when the entire amount is related to Spectra India Group, the assessee at the first instance submitted that only part of the amount i.e. Rs.2.50 crore belongs to Spectra India Group. Therefore, in our considered view, the subsequent statement of the assessee that the entire amount belongs to Spectra India Group is an afterthought. Furthermore, the statement recorded under section 132(4) of the Act has significant evidentiary value, and the burden lies heavily on the assessee to prove that such admission was incorrect. The subsequent retraction made by the assessee in the statement recorded under section 131 of the Act on 05.04.2021, supported only by a self-serving affidavit, is clearly an afterthought, especially in the absence of any cogent or corroborative evidence. If the cash indeed belonged to the Spectra India Group, then in the normal course of business, the Spectra India Group would have maintained records detailing the purpose of handing over such huge cash, the amount would have been debited to the personal account of the assessee in the books of the Spectre Group, the assessee would have issued some acknowledgment or receipt, and such documents would have been found during the search proceedings, particularly when both the assessee and the Spectra India Group were covered under search. However, no such documents were found or produced. We have gone through the ledger account of “Creditors for Expenses” in the books of the Spectra India Group (page no. 25 of the paper book), which is to the following effect: Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 7 of 9 8. On perusal of the above, we find that there is only a credit entry of Rs.5,58,49,000/- dated 23.03.2021, passed through a journal entry on account of cash seized by the Revenue from various persons including the assessee. We also find that the entire amount remained outstanding as on 31.03.2021. There is no corresponding debit entry showing that any cash was actually paid to the assessee. In normal accounting practice, when an advance is given to a person, the personal account of that person is debited. When a specific question was asked from the Bench regarding this deficiency, the Ld. AR during the course of hearing admitted that no amount has been debited to the personal account of the assessee in the books of the Spectra India Group. Instead, the Ld. AR submitted that the said amount has been deleted by Spectra India Group to project development account. The contention that the amount was debited to a project development account is also not acceptable, as it violates settled accounting principles that a payment of advance was debited to Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 8 of 9 project development account instead of the personal account of the assessee. We have also gone through the letter issued by the Spectra India Group placed at page No.14 of the order of the Ld. CIT (A), which is to the following effect: Printed from counselvise.com ITA No 594 of 2024 Nethi Ravi Page 9 of 9 9. The above letter issued by the Spectra India Group claiming ownership of the cash, in the absence of supporting documentary evidence, cannot be accepted. Mere book entries, that too passed through a general adjustment entry after the search, are insufficient to rebut the clear admission made by the assessee under section 132(4) of the Act. Therefore, we hold that the Ld. CIT(A) erred in deleting the addition without any substantial evidence and by accepting the assessee’s explanation in a mechanical manner. Accordingly, the order of the Ld. CIT(A) is set aside, and the addition of Rs.2,15,49,000/- made by the Ld. AO under section 69A of the Act is restored. 10. In the result, the appeal filed by the Revenue is allowed. Order pronounced in the Open Court on 24th December 2025. Sd/- Sd/- (RAVISH SOOD) JUDICIAL MEMBER (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 24th December 2025 Vinodan/sps Copy to: S.No Addresses 1 Assistant Commissioner of Income Tax Central Circle 2(2) Room No.616, 6th Floor, Aayakar Bhavan, Basheerbagh Hyderabad 500004 2 Shri Ravi Nethi Villa no. 218, Hayathnagar, Ssi(Sr) Bandlaguda S.O, K.V.Rangareddy, Telangana Telangana, India - 500068. 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com "