VISWANADHA NAIDU KASTURI,TIRUPATI vs. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), HYDERABAD

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ITA 1820/HYD/2018Status: DisposedITAT Hyderabad06 May 2021AY 2016-175 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the cash was found in the assessee's individual locker, not the company's, and the assessee failed to provide details of parties paying advances to the company. Therefore, the addition in the assessee's individual capacity was justified.

What were the facts?

During a search, cash of Rs. 8,00,000 was found in a locker in the assessee's name. The assessee claimed it was from receipts collected for a land development project, but failed to provide supporting evidence.

What were the issues?

Whether cash found in an individual's locker, claimed to be from a company's project, constitutes undisclosed income in the hands of the individual when no supporting evidence is provided.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 271AAB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

O R D E R PER S.S.GODARA, J.M. :

This assessee’s appeal for AY.2016-17 arises from the CIT(A)-12, Hyderabad’s order dated 25-06-2018 passed in case No.10461/2017-18, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

The assessee’s sole substantive grievance raised in the instant appeal challenges correctness of both the lower authorities’ action adding alleged his un-disclosed income of Rs.8 lakhs in the course of assessment dt.29-12-2017 affirmed in CIT(A)’s order vide following detailed discussion:

“6.0 Addition on account of cash found of Rs.8,00,000/-: 6.1 The addition was made by the AO on the following grounds: "During the course of search, cash amounting to Rs.8,00,000/- was found in Locker No.42 in Dhanlakshmi Bank RC Road, Tirupati. The assessee was required to explain the source of such cash found. Sri K.Vishwanath Naidu vide letter dated 29.12.201 stated that the cash was out of receipts collected from the lot owners a Haritavanam project and thus cannot be treated as undisclosed income. The contention of the assessee in unconvincing and no evidences have been brought forth by the assessee to substantiate such claim. Since the source of such cash has not been clearly substantiated, the amount of Rs.8,00,000/- is added to the total income of the assessee. Penalty proceedings u/s 271AAB are initiated as per the provisions of the Act. (Addition Rs.8,00,000)

6.2 The submissions made by the appellant's AR on this issue are as under: "Ground No.2 is against the addition of Rs.8 lakhs. The Assessing officer added Rs.8,00,000/- representing cash found on the date of search. The search was on 14.03.2016. The assessee submitted that cash was collected from the lot owners for development of the plots. The Assessing officer, while deciding the assessment of the company, held that substantial cash receipts were found during the search and seizure operations. The said amount was received by the assessee to meet the expenditure towards development. The Assessing Officer disbelieved the explanation without any reason. In fact the receipts against the expenditure added in the assessment of the company are as under: Asst.Year Amount (in Rs.) 2012-13 4,83,68,146 2013-14 6,51,24,122 2014-15 2,90,18,114 2015-16 11,79,01,710 2016-17 5,32,77,565 Total addition: 31,36,89,657 The assessee is the Managing Director of the company. The amounts received after including the expenditure is available with the assessee. The assessee in the said appeal contested the addition on the ground that expenditure to be incurred is to be reduced and and only net income can be assessed. In the circumstances the Assessing Officer is not justified in making the addition of Rs.8,00,000/- as the assessee was in possession of the above amounts. The same may please be directed to be deleted."

6.3 From the above, it is seen that it has been the contention of the appellant during assessment as well as appellate proceedings that the cash was out of receipts collected from the plot owners. However, no evidences to substantiate this claim were filed during assessment proceedings. During appellate proceedings also, the same argument has been repeated, but not an iota of evidence is furnished in support of this contention. Moreover, the cash has been found from the Locker of the appellant, and if the cash was indeed received from plot owners to meet expenditure on development, as claimed by the appellant's AR, it is not understandable why it would be kept in locker. Also, no cash book or cash-flow statement has been furnished. In view thereof, I find no reasons to interfere with the order of the Assessing Officer on this issue, and the addition made is confirmed”.

3.

Learned authorised representative vehemently contended during the course of hearing that both the lower authorities have erred in law on facts in making the impugned addition despite the fact that the same belongs to the company, M/s.Varsha Viswanath Properties Pvt. Ltd. And that this company had received the impugned sum as land development advance(s) from various customers followed by its declaration before the departmental authorities to the tune of Rs.31.36 crores (supra).

4.

Mr.Rama Rao, further sought to clarify that the impugned sum already stands assessed in the hands of the company which makes it an instance of double addition only.

5.

We have given our thoughtful consideration to rival pleadings against and in support of the impugned addition. As rightly pointed out at the Revenue’s behest and in view of the CIT(A)’s detailed discussion, it is sufficiently clear that the impugned sum has been recovered from a bank locker maintained in the name of the assessee-individual than the company. He has also not given any details about the parties paying the impugned advances to the company as well. Faced with this situation, we are of the opinion that both the learned lower authorities have rightly made the impugned addition in assessee’s hands in individual capacity after assessing that the same represents his un-disclosed income only.

6.

This assessee’s appeal is dismissed.

Order pronounced in the open court on 6th May, 2021

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