MAJID KHAN,HYDERABAD V. DCIT, CENTRAL CIRCLE-3(3), HYDERABAD

ITA 510/HYD/2025

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The case involves Majid Khan, an individual engaged in the real estate business, who was subjected to a search and seizure operation under Section 132 of the Income-tax Act, 1961, in the case of Shahnawaz Group. Following the search, notices under Section 153C were issued, leading to discrepancies between the income admitted during the search and the income declared in the returns. The A.O. made additions to the income, which were sustained by the CIT(A). However, the ITAT found that the A.O. had not considered all the heads under which additional income was declared, particularly the income from real estate business activities, which led to the decision to allow the appeal and direct the deletion of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790016 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: misc
• Appeal Filed On: 26-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Search and seizure
• Section: 143(3); 132

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री विजय पाल राि, माननीय उपाध्यक्ष एिं श्री मंजूनाथ जी, माननीय लेखा सदस्य SHRI VIJAY PAL RAO, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA G, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.510/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2016-17) Majid Khan, R/o. Hyderabad. PAN : AJGPK7329H. Vs. The Deputy Commissioner of Income Tax, Central Circle – 3(3), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri P. Murali Mohan Rao, C.A. राजस्व का प्रतततितित्व/ Department Represented by : Ms. G. Saratha, Sr. A.R. सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 24.11.2025 घोर्णध की तधरीख/ Date of Pronouncement : 28.11.2025 O R D E R PER MANJUNATHA G., A.M : This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), Hyderabad – 11, dated 01.03.2025, pertaining to the assessment year 2016-17. Printed from counselvise.com 2 ITA No.510/Hyd/2025 Majid Khan 2. The brief facts of the case are that, the assessee is an individual derives income from real estate business. A search and seizure operation under Section 132 of the Income-tax Act, 1961 (for short “the Act”) was conducted in the case of Shahnawaz Group on 25.10.2017. Consequent to search, notice under Section 153C of the Act, was issued to the assessee and in response to the said notice, the assessee filed his return of income for A.Y. 2016- 17 on 13.12.2019, admitting total income of the assessee at Rs. 20,66,692/-. The case was selected for scrutiny and during the course of assessment proceedings, the A.O. noticed that, during the course of search, in the case of Shri Shahnawaz, it was seen that, additional income of Rs. 40,00,00,000/- was disclosed under Section 132(4) of the Act, in the hands of Shri Shahnawaz, Shri Mohammad Zubairuddin and the assessee. The A.O. further noted that, for A.Y. 2016-17, the additional income of Rs. 87,21,138/- was offered in the name of the assessee. Since there is difference between the additional income offered during the course of search, in the statement recorded under Section 132(4) and the income admitted as per the return of income filed on 13.12.2019, the A.O. made addition of Rs. 66,54,448/- to the returned income. On Printed from counselvise.com 3 ITA No.510/Hyd/2025 Majid Khan appeal, the Ld. CIT(A) sustained additions made by the A.O. The assessee carried the matter in further appeal before the Ld. CIT(A). On further appeal, the ITAT remanded the issue back to the file of the A.O. with a direction to give an opportunity to the assessee to reconcile the income offered during the course of search and income returned as per the return of income filed in response to the notice issued under Section 153C of the Act. The A.O. passed consequential order as per the directions of the Tribunal under Section 143(3) r.w.s 254 of the Income Tax Act, where the A.O. allowed relief to the assessee for Rs. 57,72,170/- towards additional income offered as admitted during the course of search out of total addition of Rs. 66,54,448/-, however sustained the balance amount of Rs. 8,82,278/- on the ground that, although the assessee claims to have offered the said income in case of other family members, but failed to file any evidence in support of his arguments. 3. Aggrieved by the assessment order passed by the A.O. under Section 143(3) r.w.s. 254 dated 09.06.2023, the assessee filed an appeal before the Ld. CIT(A) and challenged the additions sustained by the A.O. for Rs. 8,82,278/- on the ground that, the Printed from counselvise.com 4 ITA No.510/Hyd/2025 Majid Khan assessee has offered additional income under two heads. One is under the head ‘income from real estate business activity’ and another one is under the head ‘income towards discrepancies and errors in gross receipts/expenses’. The A.O. considered the income offered in the hands of the assessee and Mohammad Zubairuddin on account of income towards discrepancies and errors in gross receipts/expenses, however, failed to consider and give telescoping towards additional income offered under the head real estate business activity. If we consider the income offered under the head real estate business, the addition sustained by the A.O. for Rs. 8,82,278/- stands explained and same needs to be deleted. 4. The Ld. CIT(A), after considering the submissions of the assessee and also taking note of various evidences filed by the assessee, observed that, before the Tribunal, the assessee has explained that, out of the additions made by the A.O. for Rs. 66,54,448/-, sum of Rs. 57,72,170/- has been offered in the name of Muhammad Zubairuddin and admitted during the course of search, and the balance amount of Rs. 8,82,278/- has been offered in the name of other family members, however, failed to file any evidence to justify income offered in other family members’ Printed from counselvise.com 5 ITA No.510/Hyd/2025 Majid Khan case in respect of Rs. 8,82,278/-. Therefore, the Ld. CIT(A) rejected the explanation of the assessee and sustained the additions made by the A.O. to the extent of Rs. 8,82,278/-. 5. Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal. 6. The learned counsel for the assessee Shri P. Murali Mohan Rao, C.A. referring to the assessment order passed by the A.O. u/s 143(3) r.w.s. 153C of the Act, dated 30.12.2019, the order of the Tribunal in ITA Nos.455 to 457/Hyd/2021 dated 16.11.2022 submitted that, the matter had been remanded to the file of the A.O. to reconcile the additional income offered by the assessee in the hands of Shri Shahnawaz, Shri Mohammad Zubairuddin and the assessee himself, and additions made by the A.O. towards difference between income admitted as per Section 132(4) of the Income Tax Act and income returned as per return of income filed under Section 153C of the Income Tax Act. The assessee has explained the difference and claimed that, the assessee and Shri Mohammad Zubairuddin have offered income under two heads. However, the A.O. has considered only the income under one head and ignored the income declared under the other head even Printed from counselvise.com 6 ITA No.510/Hyd/2025 Majid Khan though said income pertains additional income disclosed during the course of search under Section 132(4) of the Act. Although the assessee claims that, sum of Rs. 8,82,278/- is offered in the name of other family members, but finally upon verification of relevant facts, noticed that, the said income was also offered in the hands of the assessee and Shri Mohammad Zubairuddin. All these facts have been explained to the A.O. and Ld. CIT(A), but both have rejected the explanation of the assessee and sustained the addition to the extent of Rs. 8,82,278/-. Therefore, he submitted that, the additions made by the A.O. and confirmed by the Ld. CIT(A) should be deleted. 7. The learned Senior A.R. for the Revenue, Ms. G. Saratha, on the other hand, supporting the order of the Ld. CIT(A), submitted that, there is a contradiction between the explanation offered by the assessee before the A.O. during the course of consequential assessment proceedings and submission of the assessee before the Tribunal, which is evident from Para 9 of the Tribunal order where the assessee claims that, out of additions made by the A.O. for Rs. 66,54,448/-, the assessee has offered a sum of Rs. 57,72,170/- in the hands of Shri Shahnawaz and Shri Printed from counselvise.com 7 ITA No.510/Hyd/2025 Majid Khan Mohammad Zubairuddin, where both of them have offered additional income of Rs. 28,86,085/- on account of shortfall of amount of Rs. 57,72,170/-, and balance amount of Rs. 8,82,278/- was offered in the hands of other family members. However, the learned counsel for the assessee now claims that, the said income was also offered in the hands of Shri Shahnawaz and Shri Mohammad Zubairuddin without any evidence. The A.O. and the Ld. CIT(A), after considering the relevant facts, have rightly sustained the additions made by the A.O., and thus, the order of the Ld. CIT(A) should be upheld. 8. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. We have also carefully considered the relevant evidence submitted by the assessee, including the statement of total income of Shri Shahnawaz and Shri Mohammad Zubairuddin for A.Y. 2016-17. Initially, the A.O. made addition of Rs. 66,54,448/- towards difference between income admitted under Section 132(4) of the Act, and income returned as per return of income filed under Section 153C of the Act. In consequential assessment proceedings, as per the directions of the Tribunal, the A.O. allowed relief to the Printed from counselvise.com 8 ITA No.510/Hyd/2025 Majid Khan extent of Rs. 57,72,170/- on the basis of return of income filed by Shri Shahnawaz and Shri Mohammad Zubairuddin after considering the additional income offered by both parties towards discrepancies in gross receipts/expenses, where both of them have offered additional income of Rs. 28,86,085/- each which amounts to Rs.57,72,170/- and observed that, the balance amount of Rs. 8,82,278/- was unexplained. The learned counsel for the assessee explained that, Shri Shahnawaz and Shri Mohammad Zubairuddin have offered income under two heads, i.e. one under the head ‘income on estimate basis from real estate business activity’ and another under the head ‘income towards discrepancies in gross receipts/expenses’. The A.O. considered income only under one head i.e. ‘income offered towards discrepancies in gross receipts/expenses, however failed to consider the income on estimate basis from real estate business activity. If we consider income declared on estimate basis from real estate business activity, then the additional income offered by both the parties is in excess of the income disclosed during the course of search under Section 132(4) of the Act. Printed from counselvise.com 9 ITA No.510/Hyd/2025 Majid Khan 9. We find that, Shri Shahnawaz and Shri Mohammad Zubairuddin have offered additional income of Rs.60,58,283/- each under two heads i.e. (i) ‘income on estimate basis from real estate business activity’ and (ii) ‘income towards discrepancies in gross receipts/expenses’. However, the A.O. considered only the income declared under discrepancies in gross receipts/expenses. If we consider the income offered under the head ‘income on estimate basis from real estate business activity’, the total difference of Rs. 8,82,278/- stands explained as claimed by the assessee. The A.O. and Ld. CIT(A), without appreciating the relevant facts, simply sustained the additions to the extent of Rs. 8,82,278/-. Thus, we set aside the order of the Ld. CIT(A) and direct the A.O. to delete the additions sustained to the extent of Rs. 8,82,278/- towards difference in income admitted as per Section 132(4) of the Act at the time of search and income returned as per return of income filed under Section 153C of the Act. Printed from counselvise.com 10 ITA No.510/Hyd/2025 Majid Khan 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Open Court on 28th November, 2025. Sd/- श्री विजय पाल राि (VIJAY PAL RAO) उपाध्यक्ष /VICE PRESIDENT Sd/- (मंजूिधथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Hyderabad, dated 28.11.2025. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Majid Khan, C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, Somajiguda, Hyderabad. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle 3(3), Hyderabad. 3. The Principal Commissioner of Income Tax (Central), Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "