KRISHNA VENI KANDALA,HYDERABAD V. DCIT., CENTRAL CIRCLE-2(3), HYDERABAD

ITA 699/HYD/2024

AI Insights

The case involves two appeals by Devaram Srinivasa Reddy and Smt. Krishna Veni Kandala against the order of the CIT(A)-12, Hyderabad, which related to the assessment year 2020-2021. The appeals were consolidated due to common issues. The primary contention was regarding the addition of Rs.25 lakhs as unexplained investment in the purchase of property, which was alleged to be paid in cash. The Assessing Officer had made this addition based on documents seized during a search operation and a sworn statement by the assessee. The CIT(A) upheld the addition, rejecting the assessee's claim that the document was a 'dumb document'. The Tribunal also upheld the CIT(A)'s decision, emphasizing that the assessee had admitted to the cash payment and failed to substantiate the source of the funds.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633171 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2020-2021
• Other Referred Cases: PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: T. CHAITANYA KUMAR
• Keywords: Unexplained investment; Document seized; Documents seized; Onus to prove; Search and seizure; Source of fund

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.698/Hyd./2024 Assessment Year 2020-2021 Devaram Srinivasa Reddy, Hyderabad. PIN – 500 074. PAN AIMPR9748J vs. The DCIT, Central Circle-2(3), Hyderabad – 500 004. Telangana (Appellant) (Respondent) ITA.No.699/Hyd./2024 Assessment Year 2020-2021 Smt. Krishna Veni Kandala, Hyderabad. PIN – 500 074. PANBHPPK2454K vs. The DCIT, Central Circle-2(3), Hyderabad – 500 004. Telangana (Appellant) (Respondent) For Assessees : Shri T. Chaitanya Kumar, Advocate For Revenue : Dr. Sachin Kumar, Sr. AR Date of Hearing : 05.06.2025 Date of Pronouncement : 09.06.2025 ORDER PER MANJUNATHA G. : The above appeals are filed by two assessee’s viz., Devaram Srinivasa Reddy and Smt. Krishna Veni Kandala against the order both dated 18.06.2024 of the learned 2 ITA.Nos.698 & 699/Hyd./2024 CIT(A)-12, Hyderabad, relating to the assessment year 2020-2021. Since common issues are involved in both these appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity. ITA.No.698/Hyd./2024 – A.Y. 2020-2021 : 2. Brief facts of the case are that, the assessee is an individual and proprietor of M/s. Srinivasa Infrastructures. A seizure and seizure operation was conducted in the case of M/s. RK Infracorp Private Limited and others on 06.02.2020 including M/s. Srinivasa Infrastructures and certain documents were found and seized. As per the loose sheets found and seized in the premises of M/s. Srinivasa Infrastructures, there are several cash transactions involved in the sheet which are marked as page no.149 of Annexure- 1. The said documents were confronted to the assessee and a statement u/sec.132(4) of the Act was recorded on 07.02.2020 wherein the assessee admitted that, he along with his wife Krishna Veni Kandala has paid Rs.1 crore to 3 ITA.Nos.698 & 699/Hyd./2024 M/s. Vandana Infra Developers Private Limited as advance for purchase of property out of which Rs.50 lakhs was paid through cheque which was withdrawn from his Firm viz., M/s. Srinivasa Infrastructures and the balance sum of Rs.50 lakhs was paid in cash. Hence, the Assessing Officer initiated the proceedings u/sec.153C of the Act and issued notice dated 25.08.2021 calling the assessee to file his return of income. In response, the assessee filed his return of income on 06.02.2024 for the assessment year 2020- 2021 declaring total income of Rs.12,56,070/-. The Assessing Officer issued notice u/sec.143(2) of the Act on 06.02.2024 and various notices u/sec.142(1) of the Act calling the assessee to furnish his explanation with regard to the investment in the property. However, the assessee did not file any valid explanation or documents to substantiate his case. Therefore, the Assessing Officer determined the total income of the assessee at Rs.37,56,070/- by making addition of Rs.25 lakhs [being 50% of assessee’s share] as unexplained investment u/sec.69 of the Act as against the returned income of the assessee at Rs.12,56,070/- vide 4 ITA.Nos.698 & 699/Hyd./2024 order dated 13.03.2024 passed u/sec.153C of the Income Tax Act, 1961 [in short “the Act’]. 3. Aggrieved by the assessment order passed by the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A) contending, inter alia, that, the Assessing Officer has made addition of Rs.25 lakhs based on ‘dumb document’ seized during the course of search and seizure operation and, therefore, the addition made by the Assessing Officer is not in accordance with law. The learned CIT(A) after considering the submissions of the assessee, satisfaction note recorded by the Assessing Officer u/sec.153C of the Act and the assessment order observed that, the documents seized at page no.149 of Annexure-A1 was confronted to the assessee and that, the assessee in his sworn statement dated 07.02.2020 admitted that, he along with his wife has paid a sum of Rs.50 lakhs to M/s. Vandana Infra Develoeprs Pvt. Ltd., in cash for purchase of property and Rs.50 lakhs by cheque out of withdrawals from Firm M/s. Srinivasa Infrastructures. The learned CIT(A), observed that, the incriminating material found and 5 ITA.Nos.698 & 699/Hyd./2024 seized i.e., page no.149 of Annexure-A1 is not at all a ‘dumb document’ and therefore, rejected the contention of the assessee. Further, the learned CIT(A) also rejected the contention of the assessee that, the satisfaction note recorded by the Assessing Officer is not based on any material found pertains to the assessee. The learned CIT(A) observed that, the satisfaction recorded by the Assessing Officer revolves around the loose sheet seized vide page no.149 of Annexure-A1 from the business premises of M/s. Srinivasa Infrastructures and statement of the assessee was recorded u/sec.132(4) of the Act on 07.02.2020 and, therefore, the document seized is incriminating in nature for the current assessment year 2020-2021 and thus, the satisfaction note recorded by the Assessing Officer is specific and a valid one. The learned CIT(A) further observed that, the assessee was failed to discharge his onus to prove the source of investment made in purchase of property and therefore, the addition made by the Assessing Officer amounting to Rs.25 lakhs [being 50% of assessee’s share] is in accordance with the provisions of sec.69 the Income Tax 6 ITA.Nos.698 & 699/Hyd./2024 Act, 1961 and accordingly sustained the addition made by the Assessing Officer. 4. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal. 5. Shri T. Chaitanya Kumar, Advocate-Learned Counsel for the Assessee submitted that, the authorities below has made the impugned addition of Rs.25 lakhs [being 50% of assessee’s share] in the hands of the assessee u/sec.69 of the Act without there being any incriminating material found or seized and the impugned addition has been made based on ‘dumb document’ and, therefore, the addition made by the Assessing Officer and sustained the learned CIT(A), is not in accordance with law. He further submitted that, the Assessing Officer has failed to pin-point what material found and seized which leads to the impugned addition of Rs.25 lakhs except relying on a ‘dumb document’ marked as page no.149 of Annexure-A1. He submitted that, in absence of incriminating material, no addition could be made in the hands of the assessee. In support of this contention, he relied upon the decision of 7 ITA.Nos.698 & 699/Hyd./2024 Hon’ble Supreme Court in the case of PCIT vs., Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC). He accordingly submitted that, the addition made by the Assessing Officer based on ‘dumb document’ and sustained by the learned CIT(A), in absence of incriminating material cannot be sustained in the eye of law. He, therefore, submitted that, the orders of the authorities below should be set-aside and addition should be deleted. 6. Dr. Sachin Kumar, Sr. AR for Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, it is an admitted fact that, a search and seizure operation was conducted in the business premises of the assessee Firm M/s. Srinivasa Infrastructures and the document impounded i.e., page no. 149 of Annexure-A1 has been confronted to the assessee and the assessee has also admitted the fact that, he along with his wife has paid a sum of Rs.50 lakhs by cheque out of the funds of his Firm M/s. Srinivasa Infrastrctures to M/s. Vandana Infra Developers Pvt. Ltd., for purchase of property for a sum of Rs.1 crore and the balance sum of Rs.50 lakhs has been 8 ITA.Nos.698 & 699/Hyd./2024 paid in cash. The Assessing Officer has made the impugned addition of Rs.25 lakhs in the hands of the assessee being the half share of assessee. Therefore, the seized document is not at all a ‘dumb document’ as alleged by the Learned Counsel for the Assessee. Further, the assessee and his wife are not discharged their onus in proving the payment of Rs.50 lakhs in cash from their known source of income for purchase of property with any supporting documentary evidences either before the Assessing Officer or before the learned CIT(A). Therefore, the learned CIT(A) after considering the submissions of the assessee, sustained the addition made by the Assessing Officer, which is in accordance with law and, therefore, the order of the learned CIT(A) should be upheld. 7. We have heard both the parties, perused the material on record and the orders of the authorities below. We find that, it is an admitted fact that a seizure and seizure operation has been conducted in the business premises of the assessee’s Firm M/s. Srinivasa Infrastructures at Flat No.502, Chandana Homes, Road 9 ITA.Nos.698 & 699/Hyd./2024 No.5, Chandrapuri Colony, LB Nagar, Hyderabad and as per the loose sheets found, marked as page no.149 of Annexure- 1, there are several cash transactions involved. The same was confronted to the assessee viz., Sri D. Srinivasa Reddy and a sworn statement was recorded u/sec.132(4) of the Act dated 07.02.2020, in which, the assessee confirmed that, he along with his wife paid Rs.1 crore to M/s. Vandana Infra Developers Private Limited as advance for purchase of property, out of which, a sum of Rs.50 lakhs was paid through cheque which was withdrawn from his Firm M/s. Srinivasa Infrastructures and the balance sum was paid in cash. Since the assessee did not respond to the notice issued by the Assessing Officer u/sec.142(1) of the Act, the Assessing Officer made the addition of Rs.25 lakhs in the hands of the assessee being half share of Rs.50 lakhs. Even during the course of appellate proceedings before the learned CIT(A), the assessee was unable to prove the sum of Rs.25 lakhs invested out of his known sources and, therefore, the learned CIT(A) has sustained the addition made by the Assessing Officer by rejecting the explanation 10 ITA.Nos.698 & 699/Hyd./2024 submitted by the assessee. The main issue involved in this appeal is the impounded document i.e., page no.149 of Annexure-A1 which is the basis for the impugned addition of Rs.25 lakhs in the hands of the assessee. We find that, the assessee himself has admitted on oath in the statement recorded u/sec.132(4) of the Act dated 07.02.2020 that, he has paid a sum of Rs.50 lakhs by way of cheque to M/s. M/s. Vandana Infra Developers Private Limited as advance for purchase of property and balance sum of Rs.50 lakhs was paid in cash. Therefore, in absence of primary onus discharged by the assessee that the said sum of Rs.25 lakhs has been paid by him out of his known sources of income, the impugned addition made by the authorities below cannot be set-aside. Further, the contention of the assessee that, the Assessing Officer has made the impugned addition on the basis of a ‘dumb document’ cannot be accepted, we find that, the assessee himself has admitted the entries made in the seized document in his sworn statement recorded u/sec.132(4) of the Act dated 07.02.2020 which co-relate to the payment made to M/s. Vandana Infra 11 ITA.Nos.698 & 699/Hyd./2024 Developers Private Limited as advance for purchase of property. Therefore, the document impounded cannot be treated as ‘dumb document’ and, therefore, the contention of the Learned Counsel for the Assessee is rejected. Coming to the case laws. The Learned Counsel for the Assessee relied on the decisions of Hon’ble Supreme Court in the case of PCIT vs., Abhisar Buildwell P. Ltd., (supra), in which, the Hon’ble Supreme Court held that, when no incriminating material found or seized during the course of search, no addition could be made. But, in the instant case, the incriminating material found and seized from the business premises of assessee’s Firm i.e., M/s. Srinivasa Infrastructures, which is marked as page no.149 of Annexure-A1, was confronted to the assessee and in the sworn statement recorded on oath u/sec.132(4) of the Act dated 07.02.2020 the assessee admitted that he along with his wife have made the alleged payment of Rs.50 lakhs in cash to M/s. Vandana Infra Developers Private Limited as advance for purchase of property and balance sum of Rs.50 lakhs was paid by cheque out of funds from his Firm viz., 12 ITA.Nos.698 & 699/Hyd./2024 M/s. Srinivasa Infrastructures. Further, loose sheets found during the course of search and seizure is also supported by the agreement of sale of property entered into between the assessee and his wife with M/s. Vandana Infra Developers Private Limited for purchase of open plot of 83 sq. yards and 248 sq. yards situated at Mansoorabad Village, Saroornagar Mandal. As per the sale agreement, the assessee has paid Rs.50 lakhs through cheque and an amount of Rs.50 lakhs on 27.01.2020 by way of cash for purchase of property. Therefore, the argument of the assessee that addition made by the Assessing Officer is not supported by any incriminating material found as a result of search and further, the material relied upon by the Assessing Officer is a ‘dumb document’ and cannot be treated as incriminating material is devoid of merit and thus, rejected. 8. In so far as the case law relied upon by the assessee in the case of Pr. CIT vs., Abhisar Buildwell P. Ltd., (supra), in our considered view, the facts of the present case are entirely different from the case considered by the Hon’ble Supreme Court in the above case and, therefore, in 13 ITA.Nos.698 & 699/Hyd./2024 our considered view, the said case is not applicable and thus, rejected. Further, although, the assessee claims that he has paid consideration for purchase of property out of funds drawn from partnership firm, but, in our considered view, the learned CIT(A) has recorded a categorical finding that, the appellant has drawn a sum of Rs.18 lakhs and his wife Smt. Krishna Veni Kandala has drawn an amount of Rs.10 lakhs from the partnership firm and further, the respective drawings has been already accounted for as the amounts given to Sri KSR [father-in-law of Sri D. Srinivasa Reddy] of Rs.15 lakhs and Rs.10 lakhs to Smt. Kousalya [mother-in-law of Sri D. Srinivasa Reddy]. Therefore, in our considered view, the arguments of assessee that, source for payment made for purchase of property is out of amounts withdrawn from the partnership firm is also not supported by any evidence and thus, rejected. We find that, since the entries in the document seized co-relate to the payment made by the assessee and in absence of sufficient documentary evidences furnished by the assessee that, the impugned sum has been paid out of his known sources of 14 ITA.Nos.698 & 699/Hyd./2024 income, the addition made by the Assessing Officer u/sec.69 of the Act and sustained by the learned CIT(A) are in accordance with law. We, therefore, inclined to uphold the order of the learned CIT(A). Accordingly, the grounds raised by the assessee are dismissed. 9. In the result, ITA.No.698/Hyd./2024 of the Assessee is dismissed. ITA.No.699/Hyd./2024 – A.Y. 2020-2021 : 10. This appeal has been filed by Smt. Krishna Veni Kandala who is wife of Devaram Srinivasa Reddy, assessee in ITA.No.698/Hyd./2024. Since, identical facts and figures are involved in this appeal, the reasons given by us in the appeal ITA.No.698/Hyd./2024 shall apply mutatis mutandis to this appeal ITA.No.699/Hyd./2024 as well. Therefore, for similar reasons as discussed by us in the preceding paragraph nos.7 and 8, we are inclined to uphold the order of the learned CIT(A) and dismiss the grounds raised by the assessee. 15 ITA.Nos.698 & 699/Hyd./2024 11. In the result, ITA.No.699/Hyd./2024 of the assessee is dismissed. 12. To sum-up, both the appeals of the assessee’s ITA.Nos.698 and 699/Hyd./2024 are dismissed. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 09.06.2025 Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 09th June, 2025 VBP Copy to 1. Devaram Srinivasa Reddy, Flat No.502, H.No.8-120, Chandana Homes, Road No.5, Chandrapuri Colony, LB Nagar, Hyderabad – 500 074. 2. Smt. Krishna Veni Kandala, Flat No.401, H.No.3-8-120, Chandana Homes, Road No.5, Chandrapuri Colony, LB Nagar, Hyderabad–500 074. 3. The DCIT, Central Circle-2(3), Aaykar Bhavan, Basheerbagh, Hyderabad – 500004. 4. The CIT(A)-12, 6th Floor, Aaykar Bhawan, Basheerbagh, Hyderabad – 500004. 5. The Pr. CIT (Central), Hyderabad 6. The DR ITAT “B” Bench, Hyderabad. 7. Guard File. //By Order// //True Copy// "