SREE RAMACHANDRA VEERAPANENI,HYDERABAD vs. ACIT, CENTRAL CIRCLE-2(1), HYDERABAD

The assessee has assailed the impugned order on the following grounds of appeal before us:

Search and seizure proceedings under Section 132 of the Act were conducted on 12.07.2018 in the case of M/s K.M. Kohinoor Infra, Hyderabad. During the course of the search, certain loose sheets were found and seized as Annexure K/PMK/OFS/07, comprising Pages 1 to 27 and 90 to 109. The said loose sheets contained details of payments made by the purchasers to the assessee along with 11 other co-owners, being the landlords/sellers, towards purchase of land situated at Mamidapalli, admeasuring 5 acres 28 guntas and 0.16 acres, in respect of document Nos. 4038/2018 and 4888/2018. As per the material found during search, the total actual consideration paid by the purchasers to the assessee and the other co-owners was stated to be Rs. 11,59,00,000/-, out of which Rs. 6,10,00,000/- was paid through DD and the balance amount of Rs. 5,49,00,000/- was allegedly paid in cash.

It was further observed that, in the sworn statement recorded on 14.07.2018, Shri Syed Hamiduddin (husband of one of the purchasers) confirmed the aforesaid transaction and the cash component thereof. On the basis of the material found during the search and the statements recorded, the AO took the view that the assessee had received his share of the cash consideration amounting to Rs. 45,00,000/- in excess of the consideration disclosed in the registered sale documents. Consequently, notice under Section 153C of the Act was issued to the assessee on 05.02.2022. In response thereto, the assessee filed his return of income on 12.07.2022 declaring an income of Rs. 1,86,72,330/-. Thereafter, notice under Section 143(2) of the Act was issued on 03.08.2022.

During the course of assessment proceedings, the assessee submitted that the land sold by him was rural agricultural land and that the consideration of Rs. 50,00,000/- received by him was through banking channels. As is discernible from the record, the assessee denied having received any unaccounted cash consideration. However, the AO, after considering the material available on record, was of the view that the assessee had received Rs. 45,00,000/- in cash over and above the disclosed sale consideration and accordingly treated the said amount as cash sale consideration received by the assessee.

Subsequently, the assessee filed an application under Section 154 of the Act pointing out, inter alia, that deduction under Section 54F of the Act had not been allowed while computing the capital gains. The AO, vide order dated 11.04.2023 passed under Section 154 r.w Section 153C of the Act, allowed the deduction under Section 54F and consequently determined the long-term capital gain at Rs. 38,17,655/-.

The assessee, however, remained aggrieved by the treatment of Rs. 45,00,000/- as alleged unaccounted cash consideration and the consequential computation of capital gains, carried the matter in appeal before the CIT(A), who, vide order dated 12.09.2025, upheld the action of the AO.

Aggrieved by the CIT(A) order, the assessee has carried the matter in appeal before us.

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements pressed into service by them.

Shri P. Vinod, Advocate, Ld. Authorized Representative (for short, “AR”) submitted that the issue involved in the present appeal is squarely covered by the decision of the Tribunal in the case of the co-owner, Shri Veerapaneni Lakshmi Narayana Vs. ACIT, Central Circle-2(1), Hyderabad, in ITA No. 2087/Hyd/2025 and Others, dated 05.08.2026. It was submitted that the said case arose out of the same land transaction and involved the same seized material and the same allegations regarding the receipt of cash consideration. The Tribunal, after considering the facts, found that the assessee therein had not been afforded an effective opportunity to cross-examine the relevant persons whose statements/material were relied upon by the Revenue and, accordingly, restored the matter to the file of the AO for providing an effective opportunity of cross-examination and fresh adjudication.

The Ld. Authorized Representative further submitted that the relevant persons included Shri Syed Hamiduddin (husband of one of the purchasers), Smt. Asifa Fatima and Shri Mohammed Ahmed Qadri (purchasers). It was submitted that as the assessee in the present appeal is similarly placed and that the addition of Rs. 45,00,000/- is also based upon the same transaction and material without affording any opportunity to cross-examine the aforesaid persons, therefore, the same directions as issued by the Tribunal in the case of the co-owner be followed in the present case.

Per Contra, the Ld. Departmental Representative (for short, “DR”) did not controvert the aforesaid submissions of the Ld. Authorized Representative.

We have given thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both parties in the backdrop of the orders of the authorities below.

We find that the facts and the issue involved in the present appeal are materially identical to those considered by the Tribunal in the case of the co-owners, Shri Veerapaneni Lakshmi Narayana & others Vs. ACIT, Central Circle-2(1), Hyderabad, in ITA No. 2087/Hyd/2025 and others, dated 05.08.2026. The said appeal also arose out of the same transaction relating to the land at Mamidapalli and involved consideration of the same seized material and the alleged cash component of the sale consideration. In the said case, the Tribunal, after considering the facts and circumstances of the matter, restored the issue to the file of the AO with directions to make all reasonable and effective efforts available under law to secure the presence of the relevant persons, afford the assessee an effective opportunity to cross-examine them and thereafter re-adjudicate the issue afresh in accordance with law after considering the outcome of such cross-examination and affording adequate opportunity of being heard to the assessee.

In the present case also, the addition of Rs. 45,00,000/- has been made on the basis of the alleged cash component of the consideration in the very same land transaction, and the assessee has denied having received the alleged cash consideration. For the sake of clarity, we deem it apposite to cull out the observations recorded by the Tribunal at Para 9 of its order in ITA No. 2087/Hyd/2025 and others, dated 05.08.2026, as under:

Accordingly, on the same terms, we set aside the matter to the file of the AO with the direction to make all reasonable and effective efforts available under law to secure the presence of Shri Syed Hamiduddin (husband of one of the purchasers), Smt. Asifa Fatima and Shri Mohammed Ahmed Qadri (purchasers), and afford the assessee an effective opportunity to cross-examine them, insofar as their statements/evidence are relied upon against the assessee. Thereafter, the AO shall re-adjudicate the issue afresh in accordance with law after considering the outcome of such cross-examination and affording adequate opportunity of being heard to the assessee.

Before parting, we may herein clarify that we have not expressed any opinion on the merits of the addition of Rs. 45,00,000/- or on the consequential computation of capital gains. All contentions of the assessee and the Revenue are left open to be considered by the AO in accordance with law.

In the result, the appeal of the assessee is allowed for statistical purposes.