ANEEL KUMAR CHINTHA,RAJAHMUNDRY vs. THE ACIT, CENTRAL CIRCLE-2, RAJAHMUNDRY

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ITA 33/VIZ/2026Status: DisposedITAT Visakhapatnam13 August 2026AY 2021-228 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if the AO relies on information found during a search operation on a third party, the assessment should be made under Section 153C, not Section 143(3). Therefore, the additions made by the AO were unsustainable.

What were the facts?

The assessee's income was assessed based on information received from a search operation on a third party. The Assessing Officer (AO) made an addition of Rs. 37,00,000/- as unexplained money. The assessee argued that the AO should have initiated proceedings under Section 153C of the Income Tax Act.

What were the issues?

Whether additions made under Section 143(3) are valid when based on information from a third-party search, or if Section 153C should have been invoked.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153C,Section 69A,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Pronounced: 13.08.2026

आयकर अऩीऱीय अधधकरण, विशाखाऩत्तनम ऩीठ, विशाखाऩत्तनम INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM BENCH: DIVN श्री विजय ऩाऱ राि, माननीय उऩाध्यक्ष एिं श्री मंजूनाथ जी, माननीय ऱेखा सदस्य SHRI VIJAY PAL RAO, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA G, HON’BLE ACCOUNTANT MEMBER ITA 33/VIZ/2026 निर्धारण वर्ा/Assessment Year:2021-22) ANEEL KUMAR CHINTHA THE ACIT, CENTRAL CIRCLE-2 FLAT.NO.5, D.NO.88-02-06/4, AMARAVATHI NILAYAM, NEAR RAJAHMUNDRY BVR FUNCTION HALL, Vs. GANDALAMMA NAGAR,, RAJAHMUNDRY-533104, ANDHRA PRADESH अपीलधर्थीAppellant प्रत्यथी Respondent

Permanent Account Number of AYXPC5256H Assessee:

अपीलधर्थी द्वारा/Appellant represented by: Shri MV Prasad, CA, AR प्रत्यथी द्वारा/Respondent represented by: Shri Nilanjan Dey, CIT(DR) सुनवाईकीतारीख/Date of conclusion of hearing: 11.08.2026 घोषणाकीतारीख/Date of pronouncement: 13.08.2026 आदेश / ORDER PER SHRI MANJUNATHA G., ACCOUNTANT MEMBER: This appeal is filed by the Assessee against the order of the Commissioner of Income Tax Appeals-3, Visakhapatnam [“Ld.CIT(A)”],

ITA No.33/VIZ/2026 Aneel Kumar Chintha Visakhapatnam vide DIN: ITBA/APL/S/250/2025-26/1083856783(1) dated 18.12.2025 for the Assessment Year 2021-22.

2.

The brief facts of the case are that the assessee is an individual, filed his return of income for the A.Y.2021-22 on 23.12.2021, declaring total income of Rs.78,850/- and agricultural income of Rs.2,45,000/-. A search and seizure operation u/s 132 of the Income Tax Act, 1961 (“the Act”) was conducted on 28.01.2021 in the case of Dr.Parvataneni Nagabhushanam, Prop.Usha Diabetic Hospital. During the course of survey u/s 133A in the business premises of Dr.Parvataneni Nagabhushanam, it was noticed that Dr.Parvataneni Nagabhushanam has paid an advance of Rs.33,00,000/- in relation to purchase of flat. During the course of assessment proceedings, the AO on the basis of information received from the Investigation Wing in connection with search operation in the case of Dr.Parvataneni Nagabhushanam called upon the assessee to explain the transaction. In response, the assessee submitted that during the Financial Year relevant to the Assessment Year under consideration he has received Rs.25,00,000/- through account transfer from, Smt. Parvathaneni Vijaya Rani, wife of Dr.Parvataneni Nagabhushanam. However, not received any cash of Rs.33,00,000/-. The AO after considering the relevant submissions of the assessee and also taking note of various evidences, observed

ITA No.33/VIZ/2026 Aneel Kumar Chintha that Dr.Parvataneni Nagabhushanam purchased property from the assessee and in this connection has paid cash, which is evident from relevant documents found in the course of search, therefore, made addition of Rs.37,00,000/- u/s 69A of the Act as unexplained money.

3.

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee challenged validity of the assessment order passed by the AO u/s 143(3) of the Act dated 27.12.2022 and argued that when the AO relied upon the material found in the course of search proceedings of third party, then proper course of action for the AO is to initiate proceedings u/s 153C of the Act and therefore, the additions made by the AO towards alleged cash payment received by the appellant from Dr.Parvataneni Nagabhushanam in the assessment order passed u/s 143(3) is invalid. The assessee also argued the case on merits and argued that he has not received any cash as alleged by the AO. The Ld.CIT(A) after considering relevant submissions of the assessee rejected the legal ground taken by the assessee on the issue of validity of the proceedings and observed that the documents relied upon were impounded u/s 133A of the Act and not seized or requisitioned during search u/s 132 of the Act and therefore, the AO has rightly considered the material impounded and passed order u/s 143(3) of the Act. The Ld.CIT(A) also rejected the arguments of 3

ITA No.33/VIZ/2026 Aneel Kumar Chintha the assessee on merits and claimed that as per documents found during the course of search / survey, the appellant received on money of Rs.37 lakhs in connection with sale of Flat No.4. The sale agreement dated 07.11.2020 clearly fixes the total consideration at Rs.1,12,00,000/-. The stamped receipts forming part of Annexure A/UDH/08 acknowledge receipt of Rs.33,00,000/- in cash. The sworn statement of Dr. Nagabhushanam confirms payment of such cash. The subsequent registration of the flat for Rs.75,00,000/- in the name of the purchaser’s son does not negate the earlier receipt of cash, but rather substantiates the inference that part of the consideration was received outside the registered document. The appellant’s explanation that Rs.25,00,000/- received through banking channels from Smt.Vijaya Rani was merely an unsecured loan is not supported by contemporaneous evidence, therefore, rejected and upheld the addition made by the AO towards on money of Rs.37 lakhs u/s 69A of the Act.

4.

Aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before the Tribunal.

5.

Shri M.V.Prasad, CA, the Ld.Counsel for the assessee submitted that the Ld.CIT(A) erred in rejecting the legal ground taken by the assessee, challenging the validity of additions made u/s 143(3) of the Act by considering evidences received from

ITA No.33/VIZ/2026 Aneel Kumar Chintha Investigation Wing in connection with search proceedings of Usha Bala group of cases. The Ld.Counsel for the assessee further submitted that the proper course of action for the AO when material was found during third party search is to initiate assessment proceedings u/s 153C by recording satisfaction and assess income if any. Since the AO has considered information received from the third party search and assessed income in the assessment order passed u/s 143(3), additions made by the AO is unsustainable, therefore, he submitted that the additions made by the AO and confirmed by the Ld.CIT(A) should be deleted.

6.

Sri Nilanjan Dey, CIT(DR) on the other hand supporting the order of the CIT(A) submitted that the AO relied upon the material impounded during the course of survey conducted in the case of Dr.Parvataneni Nagabhushanam u/s 133A of the Act. The claim of the AO relied upon the documents found during the search proceedings are not found on the basis of any evidences, therefore, the additions made by the AO in the assessment proceedings u/s 143(3) of the Act is valid and the Ld.CIT(A) has rightly sustained the additions made by the AO. Therefore, the additions made by the AO should be upheld.

7.

We have heard both the parties, perused the material on record and had gone through the orders of the authorities below. It

ITA No.33/VIZ/2026 Aneel Kumar Chintha is an admitted fact that the additions made by the AO towards alleged on money of Rs.37,00,000/- is based on the information received from Investigation Wing in the course of search and seizure operations in M/s Usha Bala group of cases. As per the information, it is found that one Dr.Parvataneni Nagabhushanam had admitted that he had given cash advance of Rs.37,00,000/- to the assessee ostensibly in relation to purchase of flat and that the assessee has not repaid the same. It is also not in dispute that the assessment of Dr.Parvataneni Nagabhushanam for the A.Y.2020-21 has been completed u/s 143(3) r.w.s. 153A vide order dated 27.12.2022, where, the AO refers to search operation conducted on 28.01.2021. From the above, it is very clear that the additions made by the AO towards alleged on-money receipt of Rs.37,00,000/- is on the basis of search operation conducted in the case of Dr.Parvataneni Nagabhushanam and documents found during the course of search. Therefore, in our considered view, once the AO considers any information found during the course of search operation conducted in the case of a third party, then, the AO should proceed to assess the case of the other person in terms of section 153C of the Act as per the procedure provided there including recording satisfaction, if any. In case, the AO considers any material found in the search proceedings conducted in the case of a third party and framed assessment u/s 143(3), then additions made by the AO cannot be

ITA No.33/VIZ/2026 Aneel Kumar Chintha upheld because, once there is search assessment framed u/s 153A in the case of searched person and in case of any other person, the assessment can be made only u/s 153C of the Act. This legal principle is supported by the decision of ITAT Visakhapatnam Bench in the case of ITO Vs. Md.Ahmed Ejaz in ITA No.462/Viz/2024 dated 07.03.2025. Similar view has been held by Hon’ble High Court of Karnataka in the case of PCIT Vs. VSL Mining Company (P.) Ltd. in IT Appeal No.32 of 2020. Therefore, we are of the considered view that the additions made by the AO towards alleged on-money received in the assessment order passed u/s 143(3) on the basis of information received from Investigation Wing in connection with search proceedings in the case of Usha Bala group of cases cannot be sustained. The Ld.CIT(A) without appreciating relevant facts, simply confirmed the additions made by the AO. Therefore, we set aside the order of the Ld.CIT(A) and direct the AO to delete the addition made by the AO u/s 69A of the Act.

8.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 13th August, 2026.

Sd/- Sd/- (विजय पाऱ राि) (मंजूनाथ जी) (VIJAY PAL RAO) (MANJUNATHA G.) उऩाध्यक्ष /VICE PRESIDENT ऱेखा सदस्य/ACCOUNTANT MEMBER Visakhapatnam, dated 13.08.2026. L.Rama/Sr.PS

ITA No.33/VIZ/2026 Aneel Kumar Chintha

Copy to: ANEEL KUMAR CHINTHA, FLAT.NO.5, D.NO.88-02-06/4, AMARAVATHI NILAYAM, NEAR BVR 1 FUNCTION HALL, GANDALAMMA NAGAR,, RAJAHMUNDRY-533104, ANDHRA PRADESH THE ACIT, CENTRAL CIRCLE-2, THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, 2 AAYAKAR BHAWAN, VEERABHADRAPURAM, RAJAHMUNDRY-533105, ANDHRA PRADESH 3 THE PCIT / CIT, 4 THE D.R., ITAT, VISAKHAPATNAMBENCH 5 GUARD FILE

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