DORA SWAMY PACHIPALA, HYDERABAD vs. ACIT, CENTRAL CIRCLE- 3(2), HYDERABAD

Succinctly stated, the assessee had filed his return of income for AY 2016- 17 on 31.03.2017, declaring an income of Rs. 69,72,120/-.

Search and seizure proceedings under Section 132 of the Act were conducted in the case of M/s Vasavi Group on 17.08.2022, during which certain material, evidence and books of account/documents were found and seized.

As is discernible from the record, the AO, upon perusal of the seized material, noticed certain vouchers bearing reference No. A/VG/MS/26, which revealed cash payments made to the assessee (through certain persons) by M/s Vasavi Nirmaan Pvt. Ltd. The AO observed that the seized material revealed that an aggregate amount of Rs. 3,41,60,000/- was paid in cash to the assessee by the aforementioned company, out of which an amount of Rs. 2,55,00,000/- pertained to the year under consideration, i.e., FY 2015-16 relevant to AY 2016-17.

Based on the aforesaid information made available in the Insight portal under the category “High Risk CRIU/VRU Information”, the AO issued notice under Section 148A(b) of the Act on 21.03.2023 through ITBA and provided to the assessse the information gathered from the seized material along with details of other transactions, and called upon him to show cause by 28.03.2023 as to why notice under Section 148 of the Act be not issued in his case.

As the assessee failed to respond to the aforesaid show-cause notice issued under Section 148A(b) of the Act, dated 21.03.2023, the AO passed an order under Section 148A(d) of the Act dated 29.03.2023. Thereafter, the AO issued notice under Section 148 of the Act dated 29.03.2023, calling upon the assessee to furnish his return of income. In response, the assessee filed his return of income on 27.04.2023, declaring the same income of Rs. 69,72,120/- as originally returned under Section 139(1) of the Act.

During the course of assessment proceedings, the AO called upon the assessee to explain whether the amount of Rs. 2,55,00,000/- received by him during the relevant previous year from M/s Vasavi Nirmaan Pvt. Ltd. was duly accounted for in his books of account. Initially, the assessee denied receiving cash receipts from the aforesaid company and stated that he was unaware of the persons named in the seized vouchers. However, the assessee thereafter submitted that the cash receipts of Rs. 2,55,00,000/- related to advertisement/marketing work allotted to him, for which he had worked as a channel partner for M/s Vasvi Nirmaan Pvt. Limited. Also, the assessee, on the basis of his aforesaid claim, offered to admit commission income @ 6% on the subject cash receipts of Rs. 2,55,00,000/-. However, the AO did not find favour with the aforesaid explanation furnished by the assessee. The reasons recorded by the AO for rejecting the explanation of the assessee are culled out hereunder:

The AO observed that a plain reading of the seized vouchers, the screenshots of which were culled out by him in the body of the assessment order, revealed that the subject cash amounts aggregating to Rs. 2.55 crores (supra) mentioned therein were received by the assessee from M/s Vasavi Nirmaan Pvt. Ltd. through various parties, viz., Shri J. Krishna Rao, Srikanth, Dileep, etc. It was further observed that, in some instances, the mobile numbers of the concerned parties were also mentioned.

The AO, during the course of post-search proceedings, recorded the statement of the assessee under Section 131 of the Act on 23.03.2023, wherein the assessee denied having received any cash as mentioned in the vouchers and also expressed his unawareness about the persons who had signed the said vouchers. However, the AO carried out necessary investigation with regard to the mobile numbers mentioned in the seized vouchers and gathered that one of the persons, viz., Shri J. Krishna Rao, was an acquaintance of the assessee.

The AO, based on his deliberations, concluded that the assessee had received the aforementioned cash aggregating to Rs. 2.55 crores (supra) from M/s Vasavi Nirmaan Private Limited (through his acquaintances), but had denied knowledge thereof in his statement recorded under Section 131 of the Act on 23.03.2023. It was further observed by the AO that, though the assessee had initially denied receipt of the aforementioned amounts, he thereafter attempted to explain the cash receipts as amounts received by him from the aforesaid company for onward payments to unknown parties, which payments, according to the assessee, were received by him as a channel partner.

The AO, based on his aforesaid observations, concluded that the subject amount had been received by the assessee towards interest payments and was in the nature of his income for the year under consideration. Also, the AO observed that Shri Yerram Vijay Kumar, Chairman and Managing Director of M/s Vasavi Group, and his key associates, in their statements recorded during the course of search and post-search proceedings, had stated that the entries contained in the seized material were true and had been recorded on the basis of the parties involved in the respective transactions.

The AO, based on his aforesaid observations, concluded that as the assessee had failed to come forth with any reasonable explanation with regard to the seized cash vouchers in question, the cash receipts of Rs.2.55 crores (supra) stated therein to have been received by him during the subject year was liable to be treated as his unexplained money under Section 69A of the Act. Accordingly, the AO, vide his order passed under Section 143(3) r.w Section 147 of the Act dated 12.09.2024, after making an addition of Rs.2.55 crores (supra) under Section 69A of the Act, determined the income of the assessee at Rs.3,24,72,120/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success.

The assessee, aggrieved with the order of the CIT(A), 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 the Ld. Authorized Representative for the assessee.

Shri MV Prasad, Ld. Authorised Representative (for short, “AR”) for the assessee appellant, at the threshold of hearing of the appeal, took us through the additional grounds of appeal nos. 6 to 9, based on which the very initiation of proceedings vide notice issued under Section 148 of the Income-tax Act, 1961 (for short, “the Act”), as well as the consequential assessment order passed under Section 143(3) r.w Section 147 of the Act dated 12.09.2024 and the impugned addition under Section 69A of the Act was assailed before us.

Adverting to the additional “Ground of appeal No. 9”, the Ld. AR submitted that the assessment order passed by the AO under Section 143(3) r.w Section 147 of the Act dated 12.09.2024 is barred by limitation prescribed under Section 153 of the Act. It was, therefore, submitted that the impugned assessment order cannot be sustained in law and is liable to be quashed on the said ground itself. Elaborating upon his contention, the Ld. AR submitted that pursuant to a search conducted in the case of M/s Vasavi Group on 17.08.2022, the AO came across certain seized vouchers viz., A/VG/MS/26, which allegedly revealed certain cash payments made by M/s Vasavi Nirmaan Pvt. Ltd. to the assessee aggregating to Rs.2.55 crores (supra) during the year under consideration, and had based on the said seized material, issued notice under Section 148 of the Act dated 29.03.2023. 18. The Ld. AR submitted that, in terms of Section 153(2) of the Act, no order of assessment, reassessment or re-computation under Section 147 of the Act can be made after the expiry of twelve months from the end of the financial year in which the notice under Section 148 was served. Elaborating on his contention, the Ld. AR submitted that in the present case, as the notice under Section 148 of the Act was served on 29.03.2023, the reassessment proceedings were required to be completed within the prescribed period, i.e., on or before 31.03.2024. It was submitted that the assessment in the case of the assessee was, however, completed by the AO vide order passed under Section 143(3) r.w. Section 147 of the Act dated 12.09.2024, which was clearly beyond the period of limitation prescribed under Section 153(2) of the Act. The Ld. AR, therefore, submitted that the impugned assessment order having been passed beyond the statutory period of limitation is void in law and liable to be quashed. The Ld. AR, in support of his contention, took us through the provisions of Section 153(2) of the Act and reiterated that the assessment order dated 12.09.2024, having been passed beyond 31.03.2024, is barred by limitation.

Coming to additional “Grounds of appeal Nos. 6 to 8”, the Ld. AR submitted that the assessee was issued notice under Section 148 of the Act dated 9 29.03.2023 on the basis of material allegedly found and seized during the course of search proceedings conducted in the case of M/s Vasavi Group on 17.08.2022. It was submitted that the reassessment proceedings in the assessee's case were initiated on the basis of seized vouchers bearing reference A/VG/MS/26, which allegedly revealed cash payments made to the assessee. The Ld. AR submitted that the assessee is a person “other than the person searched” and, therefore, the AO was required to comply with the procedure prescribed under the proviso to Section 148A of the Act. Elaborating on his contention, the Ld. AR submitted that the AO, however, grossly erred both in law and on facts in issuing notice under Section 148 of the Act dated 29.03.2023 following the procedure contemplated under Section 148A of the Act. The Ld. AR to fortify his contention, submitted that clause (c) of the “proviso” to Section 148A of the Act specifically provides that the provisions of Section 148A shall not apply where the AO is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any books of account or documents seized in a search under Section 132 or requisitioned under Section 132A, in the case of any other person on or after 01.04.2021, pertain or pertains to, or any information contained therein relates to, the assessee.

Elaborating upon his contention, the Ld. AR submitted that as the assessee falls within the category of “any other person” contemplated under the aforesaid proviso, since the material relied upon by the Assessing Officer was seized during the course of search proceedings conducted in the case of M/s Vasavi Group and 10 was allegedly found to pertain to the assessee, therefore, it was incumbent upon the AO to satisfy the statutory requirements contemplated under the “proviso” to Section 148A of the Act, including obtaining the requisite prior approval of the Principal Commissioner or Commissioner of Income tax. The Ld. AR submitted that no such satisfaction, as contemplated under the aforementioned statutory provision, was recorded by the AO before issuance of notice under Section 148 of the Act dated 29.03.2023. It was submitted that the notice issued under Section 148 of the Act, without compliance with the mandatory statutory requirements, cannot be sustained in law and is liable to be quashed.

Apart from his aforesaid submissions, the Ld. AR submitted that the search proceedings conducted in the case of M/s Vasavi Group had unearthed certain loose sheets/seized vouchers, which were inventorised and seized as Annexure A/VG/MS/26, and as no unexplained money, valuable article or thing was found and seized during the course of the said search proceedings, therefore, there was no justification for the AO to have made the impugned addition of Rs. 2.55 crores (supra) under Section 69A of the Act. In support of his contention, the Ld. AR placed reliance on the judgment of the Hon’ble High Court of Punjab and Haryana in the case of CIT vs Ravi Kumar, (2008) 168 Taxman 150 (P&H) and the order of the ITAT, Hyderabad Bench, in the case of ACIT, Central Circle-2(4), Hyderabad vs M/s RK Infracorp Private Limited, Hyderabad, ITA Nos. 235 & 363/HYD/2025, dated 25.01.2026.

Further, the Ld. AR submitted that the AO had erred in issuing notice under Section 148 of the Act without following the procedure prescribed under Section 149(1)(b) of the Act. It was submitted that non-compliance with the statutory requirement rendered the notice issued under Section 148 of the Act invalid and void ab initio and the order passed in pursuance thereof could not be sustained in the eyes of law and was liable to be quashed.

On merits, the Ld. AR submitted that as the amounts mentioned in the seized vouchers, which the assessee had admitted before the AO to have received, were received by him for making onward payments as channel partner to facilitate advertisement services to the Vasavi Group; therefore, there was no justification for the authorities below in treating the entire amount as the assessee’s unexplained money under Section 69A of the Act.

Per contra, the Ld. Sr. DR submitted that the seized vouchers contained in Annexure A/VG/MS/26, which were found and seized during the course of search proceedings conducted under Section 132 of the Act in the case of the Vasavi Group entities, clearly revealed cash payments aggregating to Rs. 2.55 crores (supra) made to the assessee. It was submitted that as the assessee had failed to satisfactorily explain the nature and source of the said payments, therefore, the AO had rightly assumed jurisdiction and treated the same as the assessee’s unexplained money under Section 69A of the Act and made the impugned addition.

We have given our thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both parties in the backdrop of the orders of the authorities below, and considered the material available on record. As the Ld. AR has assailed the validity of the impugned assessment order passed by the AO under Section 143(3) r.w Section 147 of the Act dated 12.09.2024, inter alia, on the ground that the same is barred by limitation, we deem it appropriate to first adjudicate this preliminary and jurisdictional issue.

Before proceeding further, we deem it apposite to refer to Section 153(2) of the Act, which prescribes the time limit for passing an order of assessment, reassessment or recomputation under Section 147 of the Act, and reads as under:

In the present case before us, as observed by the AO at Page 4 - Paragraph 4 of the assessment order, the notice under Section 148 of the Act was issued and served on the assessee on 29.03.2023. Accordingly, the assessment under Section 143(3) r.w. Section 147 of the Act could have been completed by 31.03.2024 at the latest. However, the impugned assessment order under Section 143(3) r.w. Section 147 of the Act was passed on 12.09.2024, which was beyond the time limit prescribed under Section 153(2) of the Act.

At this stage, we may herein observe that Section 153(3A) of the Act provides for an extension of the time available for completing an assessment or reassessment in certain cases. However, the said provision applies where an assessment or reassessment is pending on the date of initiation of search under Section 132 of the Act. In such a case, the period available to complete the assessment or reassessment is extended by a further 12 months. Accordingly, the aforesaid extension for framing the assessment can be availed only when the statutory conditions prescribed under Section 153(3A) are satisfied. In particular, on the date of initiation of search under Section 132 of the Act, an assessment or reassessment must be pending in the case of the assessee to whom the seized books of account or documents pertain, or to whom the information contained therein relates.

In the present case, the AO initiated proceedings under Section 147 of the Act on the basis of vouchers seized during the search conducted in the case of the Vasavi Group on 17.08.2022, forming part of Annexure A/VG/MS/26. Therefore, the extension of twelve months contemplated under clause (c) of Section 153(3A) could have been available only if an assessment or reassessment for AY 2016-17 was pending in the case of the assessee on the date of initiation of search, i.e., 17.08.2022. However, as no assessment or reassessment for the subject year, i.e., AY 2016-17, was pending in the case of the assessee on 17.08.2022, when the search under Section 132 of the Act was conducted against the Vasavi Group, therefore, the basic pre-condition for invoking Section 153(3A) was not satisfied. Consequently, the extended period of twelve months provided under Section 153(3A) could not have been made available to the AO for framing the assessment in the present case. Accordingly, the assessment under Section 143(3) r.w. Section 147 of the Act could have been completed only within the time prescribed under Section 153(2) of the Act, i.e., on or before 31.03.2024. However, as the assessment order under Section 143(3) r.w. Section 147 of the Act was passed by the AO on 12.09.2024, the same is barred by limitation and cannot be sustained. We, therefore, quash the assessment order passed by the AO under Section 143(3) r.w. Section 147 of the Act, dated 12/09/2024.

As we have quashed the assessment on the ground of limitation, we do not consider it necessary to adjudicate the other grounds raised by the assessee challenging the assessment order and the additions made therein, which, thus, are left open.

Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.

We shall now take up the appeal filed by the assessee for assessment year 2019-20. The assessee has assailed the impugned order on the following grounds of appeal before us. “1. The order of the Learned First Appellate Authority in not correct either on facts or in law and in both. 2. Since the notice issued u/s 148 dated 29.12.2023 was issued by the Jurisdictional Assessing Officer, Asst. Commissioner of Income tax, Central Circle 3(2), Hyderabad, and not in a faceless manner as mandated, the notice is invalid and all consequential proceedings are bad in law. 3. The Learned First Appellate Authority is not justified in confirming the addition of Rs.50,00,000/- made by the Assessing Officer as unexplained money u/s.69A the Income Tax Act, 1961, despite the fact that the cash receipts are not related to him. 4. The Learned First Appellate Authority is not justified in confirming the addition of Rs.50,00,000/- u/s.69A made by the assessing officer in absence of any corroborative evidence, and hence, the addition made is not justified and needs to be deleted. 5. The Learned First Appellate Authority is not justified in confirming the action of the assessing officer in absence of any corroborative evidence, and hence, the addition made is not justified and needs to be deleted. 6. The Appellant prays for leave to add or amend or alter any of the grounds at the time of hearing of appeal.” Also, the assessee has raised the following additional grounds of appeal before us. “7. On the facts and circumstance of the case, notice issued U/s 148 is bad in law as the Assessing Officer has not complied the conditions prescribed under the provisions of Section 149(1)(b). 8. On the facts and circumstance of the case and law, invoking Section 69A is bad in law because as per the Section 69A, it speaks about unexplained money and not loose sheets. Hence Assessment made is against the provisions of law and also consequent invoking the provisions of Section 115BBE is also bad in law.”

We find on a perusal of the record that the contents of the vouchers seized during the search proceedings conducted in the case of the Vasvi Group on 17.08.2022, which were subsequently marked as Annexure A/VG/MS/2/26, revealed that the assessee had during the year under consideration received (through certain persons) cash payments aggregating to Rs. 50 lac from M/s Vasavi Nirman Private Limited. The said amount comprised two receipts, viz. (i). Voucher dated 11.01.2019: Rs. 29,00,000/-; and (ii) Voucher dated 04.01.2019: Rs. 21,00,000/-. The AO, based on the aforesaid facts, held a conviction that the income of the assessee chargeable to tax had escaped assessment and issued notice under Section 148 of the Act on 29.12.2023. In response, the assessee filed his return of income for AY 2019-20 on 30.03.2024, declaring an income of Rs. 2,75,94,960/-, which was more than Rs. 3 lac higher than the income declared in his original return. The assessee's case was thereafter selected for scrutiny assessment under Section 143(2) of the Act.

During the course of the assessment proceedings, the AO queried the assessee regarding the aforesaid cash receipts of Rs. 50 lac stated to have been received from M/s Vasavi Nirman Private Limited. In his reply dated 21.06.2024, the assessee explained that the said amount was received by him for onward payments as a channel partner to facilitate the advertising and marketing work allotted to him by the aforesaid company. The assessee had also offered commission income at 6% of the aforesaid receipts, resulting in additional income of Rs. 3 lac. However, the AO did not accept the assessee's explanation for the reasons discussed in the assessment order.

The AO, on perusal of the seized vouchers, copies of which were reproduced in the assessment order, observed that the vouchers recorded receipt of amounts by the assessee through various persons, viz. Shri J. Krishna Rao, Srikanth, Dileep, etc. The mobile numbers of the aforesaid persons were also mentioned on the vouchers. The AO further observed that when confronted with the seized vouchers, the assessee, in his statement recorded under Section 131 of the Act on 23.03.2023, denied having received any cash as mentioned in the vouchers and stated that he was not aware of the persons who had signed them. However, based on his investigation of the mobile numbers mentioned on the vouchers, the AO observed that one of the persons, viz. Shri J. Krishna Rao, was known to the assessee. Accordingly, the AO, based on his observations, concluded that the amounts mentioned in the seized vouchers forming part of Annexure A/VG/MS/2/26 represented unexplained money belonging to the assessee and was liable to be assessed under Section 69A of the Act. Accordingly, the AO vide his order passed under Section 143(3) r.w. Section 147 of the Act, dated 15.10.2024, after making an addition of Rs. 50 lac under Section 69A of the Act, determined the income of the assessee at Rs. 3,22,94,960/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success.

The assessee, aggrieved with the CIT(A) order, 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 MV Prasad, Ld. Authorized Representative (for short, “Ld. AR”) for the assessee, at the outset of the hearing, submitted that as the AO had issued notice under Section 148 of the Act without satisfying the conditions prescribed under Section 149(1)(b) of the Act, therefore, the very foundation for initiating the assessment proceedings was absent, as a result whereof the impugned assessment could not be sustained and was liable to be quashed. Elaborating on his contention, the Ld. AR submitted that the AO had issued notice under Section 148 of the Act on 29.12.2023 for assessment year 2019-20, which, thus, was issued beyond three years from the end of the relevant assessment year. The Ld. AR submitted that in terms of Section 149(1)(b) of the Act, the AO before assuming jurisdiction to issue notice under Section 148 of the Act beyond a period of three years from the end of the relevant assessment year was required to have in his possession books of account or other documents or evidence which revealed that the income chargeable to tax, represented in the form of an asset, expenditure in respect of a transaction, or in relation to an event or occasion, or an entry in the books of account, which had escaped assessment, amounted to or was likely to amount to Rs. 50 lakh or more. The Ld. AR submitted that, in the present case, the AO had proceeded on the basis of certain seized documents, namely cash vouchers, which allegedly indicated receipt of cash by the assessee from M/s Vasavi Nirman Private Limited, and thus, had wrongly treated the same as an “asset” for the purpose of Section 149(1)(b) of the Act. Carrying his contention further, the Ld. AR submitted that the cash vouchers could not be regarded as an “asset” of the assessee under Section 149(1)(b) of the Act. Based on his aforesaid contention, the Ld. AR submitted that as the AO had issued the notice under Section 148 of the Act without satisfying the conditions prescribed under Section 149(1)(b) of the Act, the reassessment proceedings initiated on the basis of such notice and the assessment framed pursuant thereto were bad in law and liable to be quashed.

The Ld. AR further submitted that the AO had erred in law and on facts in making an addition of Rs. 50 lakh under Section 69A of the Act. Elaborating on his contention, the Ld. AR submitted that the AO had made the addition on the basis of certain seized documents, which could not, by themselves, attract the provisions of Section 69A of the Act. It was submitted by him that Section 69A could be invoked only where the assessee was found to be the owner of money, bullion, jewelry or other valuable article which was not recorded in the books of account, if any, maintained by the assessee for any source of income. The Ld. AR submitted that the AO had wrongly invoked Section 69A of the Act by relying upon the seized cash vouchers, which allegedly recorded receipt of amounts by the assessee from M/s Vasavi Nirman Private Limited. In support of his contention, the Ld. AR relied upon the judgment of the Hon’ble High Court of Punjab and Haryana in the case of CIT Vs. Ravi Kumar (2008) 168 Taxman 150 (P&H). Reliance was also placed on the order of the Co-ordinate Bench of the Tribunal in the case of ACIT, Central Circle-2(4), Hyderabad Vs. M/s R.K. Infra Projects Private Limited, ITA No. 235/Hyd/2025, dated 25.02.2026.

Coming to the merits of the case, the Ld. AR, as in the appeal for the preceding year, i.e., ITA No. 99/Hyd/2025 for assessment year 2016-17, submitted that as the assessee had received the subject amounts for making onward payments to facilitate advertisement services for M/s Vasavi Nirman Private Limited, therefore, there was no justification for the AO in treating the entire amount so received as the assessee’s unexplained money under Section 69A of the Act.

Per contra, Shri K Prasad, Ld. Senior Departmental Representative (for short, “Ld. Sr. DR”) relied upon the orders of the authorities below. The Ld. Sr. DR submitted that the contents of the vouchers seized during the search proceedings conducted in the case of Vasavi Group on 17.08.2022, which were marked as Annexure A/VG/MS/26, revealed that the assessee had received an aggregate amount of Rs. 50 lakh during the year under consideration. It was submitted that, the AO had rightly assumed jurisdiction under Section 149(1)(b) of the Act on the basis of the contents of the seized vouchers, which revealed that income of the assessee chargeable to tax amounting to Rs. 50 lac had escaped assessment. The Ld. Sr. DR submitted that the AO had validly assumed jurisdiction for issuing notice under Section 148 of the Act.

Coming to the contention of the Ld. AR that the AO had wrongly assumed jurisdiction and made an addition of Rs. 50 lakh under Section 69A of the Act, the Ld. Sr. DR submitted that as the seized vouchers, i.e., Annexure A/VG/MS/26, to the extent relatable to the year under consideration, clearly revealed receipt of unaccounted cash amounting to Rs. 50 lakh by the assessee during the year under consideration; therefore, the AO, observing that the assessee was the owner of the said money and that the same was not recorded in his books of account, had rightly treated the said amount as the assessee’s unexplained money under Section 69A of the Act.

As regards the merits of the case, the Ld. Sr. DR submitted that as the assessee had failed to furnish any satisfactory explanation regarding the contents of the seized vouchers, viz., Annexure A/VG/MS/26, which recorded receipt of cash amounting to Rs. 50 lac by the assessee through certain person; therefore, in the absence of any satisfactory explanation regarding the nature and source of the said amount, the AO had rightly treated the same as the assessee’s unexplained money under Section 69A of the Act.

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.

Admittedly, it is a matter of fact borne from record that the AO issued notice under Section 148 of the Act on 29.12.2023 for assessment year 2019-20, which was beyond a period of three years from the end of the relevant assessment year.

As observed by us hereinabove, the AO was in possession of the seized documents, i.e., vouchers forming part of Annexure A/VG/MS/26, which revealed receipt of Rs. 50 lakh by the assessee from M/s Vasavi Nirman Private Limited during the year under consideration. The said amount had not been offered to tax by the assessee in his return of income. We, thus, are of the view that the AO, based on the contents of the seized vouchers which revealed that the assessee during the subject year was in receipt of unaccounted cash amounting to Rs. 50 lacs, had validly assumed jurisdiction and issued notice under Section 148 of the Act dated 29.12.2023.

As regards the Ld. AR’s contention that the AO had erred in observing that the seized vouchers represented an “asset” of the assessee, we shall hereinafter examine the same in the light of the provisions of Section 149(1)(b) of the Act.

We have given thoughtful consideration and are unable to persuade ourselves to accept the Ld. AR’s contention that the AO had erred in issuing notice under Section 148 of the Act dated 29.12.2023 on the basis that the seized cash vouchers allegedly indicated receipt of cash by the assessee from M/s Vasavi Nirman Private Limited, as the said vouchers could not be brought within the meaning of an “asset”. We say so for the reason that the “Explanation” to Section 149(1)(b) of the Act, as it stood at the relevant time, provided an inclusive definition of the term “asset”. The said definition includes immovable property, being land, buildings, or both; shares and securities; loans and advances; and deposits in bank accounts. In our view, the definition of the term “asset,” which is inclusive in nature, cannot be given a restrictive meaning. The ownership of cash amounting to Rs. 50 lakh by the assessee, as evidenced by the seized vouchers forming part of Annexure A/VG/MS/26, would therefore fall within the meaning of the term “asset”. Accordingly, we are of the view that the AO had validly assumed jurisdiction for issuing notice under Section 148 of the Act for the year under consideration. We, therefore, find no substance in the Ld. AR’s contention that, despite the seized documents revealing that the assessee was in receipt of unaccounted cash of Rs. 50 lakh, which amount satisfied the threshold amount prescribed under Section 149(1)(b) of the Act for issuing notice under Section 148 of the Act beyond a period of 3 years from the end of the relevant assessment year, the AO could not have issued notice under Section 148 of the Act.

Coming to the Ld. AR’s contention that the AO had wrongly made an addition of Rs. 50 lakh under Section 69A of the Act, on the ground that the loose sheets/cash vouchers forming part of Annexure A/VG/MS/26 seized during the search proceedings could not themselves be treated as “money”, we are unable to accept the same. We say so because the contents of the seized vouchers forming part of Annexure A/VG/MS/26, dated 04.01.2019 and 11.01.2019, clearly reveal that the assessee had received cash aggregating to Rs. 50 lakh through certain persons. At this stage, we may note that, though the assessee had initially sought to distance himself from the contents of the aforesaid documents and had expressed his unawareness about the persons whose names appeared on the vouchers, he subsequently admitted that the amounts had been received by him for making onward payments in respect of services rendered by him to facilitate advertisement and marketing work allotted to him by M/s Vasavi Nirman Private Limited. Rather, the assessee had offered commission income at the rate of 6% of 25 the aforesaid amount of cash receipts of Rs. 50 lakh, amounting to Rs. 3 lakh. However, the assessee failed to substantiate his claim that the amounts recorded in the seized vouchers were received by him from M/s Vasavi Nirman Private Limited for onward payment in connection with the advertisement and marketing work allotted to him as a channel partner. Accordingly, the AO rejected the assessee's explanation and treated the entire amount of Rs. 50 lakh as his unexplained money under Section 69A of the Act.

We are of the firm conviction that, despite being afforded sufficient opportunity by the AO, the assessee failed to substantiate, based on irrefutable documentary evidence, his claim that the subject amounts were received by him as a channel partner for making onward payments towards the advertisement and marketing work allotted to him by M/s Vasavi Nirman Private Limited, Hyderabad. We are of the view that in the absence of any supporting evidence to establish the nature and utilization of the said amount, the AO was justified in treating the entire amount of Rs. 50 lakh as the assessee’s unexplained money under Section 69A of the Act. We, therefore, find no infirmity in the view taken by the AO and uphold the addition of Rs. 50 lakh made under Section 69A of the Act.

At this stage, we may herein observe that the judgment of the Hon’ble High Court of Punjab and Haryana in the case of CIT Vs. Ravi Kumar (2008) 168 Taxman 150 (P&H) and the order of the ITAT, Hyderabad in the case of ACIT, Central Circle-2(4), Hyderabad Vs. M/s R.K. Infra Corp Private Limited, Hyderabad, ITA Nos. 235 & 363/Hyd/2025, dated 25.02.2026, relied upon by the Ld. AR, being distinguishable on the facts, will not assist the assessee's case. In the case of CIT Vs. Ravi Kumar (supra), the addition under Section 69A of the Act was made merely on the basis of five loose slips/loose papers/chits containing certain calculations. The assessee was found in possession of the loose slips but not in possession of any money, bullion, jewelry, or other valuable articles referred to in those slips. The Hon’ble High Court specifically observed that neither the possession nor the ownership of any jewelry mentioned in the slips could be proved. It was in these circumstances that the Hon’ble High Court held that the provisions of Section 69A of the Act could not be invoked. The Court further observed that, even if the assessee had failed to explain the contents of the slips, it was for the Revenue to establish, on the basis of material on record, that the slips represented transactions of sale or stock-in-trade before making an addition. However, the facts before us are materially different. In the present case, the seized documents are not mere loose slips containing rough calculations or unidentified figures. The vouchers forming part of Annexure A/VG/MS/26 specifically record cash receipts of Rs. 29 lakh and Rs. 21 lakh, aggregating to Rs. 50 lakh, during the year under consideration. The vouchers also contain particulars of the persons through whom the amounts were received. Apart from that, the assessee, after initially denying receipt of the cash, subsequently admitted before the AO that the amounts had in fact been received by him and sought to explain them as amounts received for making onward payments in connection with advertising and marketing work. Thus, unlike the facts in CIT Vs. Ravi Kumar (supra), the present case is not one where the Revenue seeks to infer ownership of money merely from an unexplained loose slip. The seized vouchers themselves record specific cash receipts by the assessee, and the assessee's subsequent statement furnishes further material connecting him with the amounts recorded therein. The question, therefore, is not whether the loose vouchers, by themselves, constitute money, but whether the material on record establishes that the assessee was the owner of the cash referred to therein, which we are of the view that it does.

Also, the decision of the Co-ordinate Bench in the case of ACIT, Central Circle-2(4), Hyderabad Vs. M/s R.K. Infracorp Private Limited, ITA No. 235/Hyd/2025, dated 25.02.2026 is distinguishable on facts. In the said case, the addition under Section 69A of the Act was based on handwritten loose sheets containing several entries. The Tribunal observed that no corroborative evidence had been brought on record to establish that the assessee owned any unaccounted cash, jewelry, or other valuable articles. It was also observed that the entries in the loose sheets could not be satisfactorily correlated with the books of account or with any actual cash or asset found during the search. The Tribunal, therefore, held that the basic condition of Section 69A, namely, that the assessee should be found to be the owner of money, bullion, jewelry or other valuable article, was not satisfied. However, we find that the facts of the present case stand on an 28 entirely different footing. In the present case before us, the seized vouchers relate to identified receipts of Rs. 50 lakh during the relevant previous year. The vouchers record two specific cash receipts of Rs. 29 lakh and Rs. 21 lakh. Further, the assessee himself subsequently admitted to having received the amounts, though he claimed that the same were received for onward payment in connection with advertising and marketing work. Thus, there is material on record, apart from the mere existence of the vouchers, connecting the assessee with the cash receipts.

Accordingly, the ratio of the aforesaid decisions cannot be applied to the facts of the present case. The objection raised by the Ld. AR that the seized vouchers could not constitute “money” for the purposes of Section 69A of the Act is, therefore, misplaced. The addition in the present case is not based merely on the existence of the vouchers; it is based on the cash receipts recorded therein, the material connecting the assessee with such receipts and the assessee’s own subsequent admission of having received the amounts. We, therefore, find no merit in the reliance placed by the Ld. AR on CIT Vs. Ravi Kumar (supra) and ACIT, Central Circle-2(4), Hyderabad Vs. M/s R.K. Infracorp Private Limited (supra).

Coming to the merits of the addition, as observed hereinabove, the assessee failed to substantiate, by irrefutable documentary evidence, that the amount of Rs. 50 lakh received from M/s Vasavi Nirman Private Limited during the year under consideration was actually utilized for making onward payments in connection with the advertisement and marketing work allotted to him by the said company, and that he had received the amount only in his capacity as a channel partner. The AO was therefore justified in relying upon the seized vouchers forming part of Annexure A/VG/MS/26, namely, the voucher dated 04.01.2019 recording Rs. 21 lakh and the voucher dated 11.01.2019 recording Rs. 29 lakh, and in treating the aggregate amount of Rs. 50 lakh as the assessee’s unexplained money under Section 69A of the Act. Accordingly, the addition of Rs. 50 lakh made by the AO under Section 69A of the Act is upheld.

We thus, based on our aforesaid observations, find no infirmity in the view taken by the AO, who has rightly assumed jurisdiction and made the addition of Rs. 50 lac under Section 69A of the Act, and uphold the same.

Resultantly, the appeal filed by the assessee in ITA No. 2000/Hyd/2025 for assessment year 2019-20, being devoid and bereft of any substance, is dismissed.

In the result, the appeal filed by the assessee in ITA No. 1999/Hyd/2025 for assessment year 2016-17 is allowed in terms of our aforesaid observations, while the appeal filed by the assessee for assessment year 2019-20 in ITA No. 2000/Hyd/2025 is dismissed. Order pronounced in the open court on 25th August, 2026. Sd/- Sd/- MADHUSUDAN SAWDIA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Dated: 25th August, 2026.