GORANTLA RAHUL KUMAR,VISAKHAPATNAM vs. THE ASST. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-1, VISAKHAPATNAM, VISAKHAPATNAM

ITA 669/VIZ/2025Status: DisposedITAT Visakhapatnam16 October 2026AY 2020-2110 pages
AI SummaryAllowed

What were the facts?

A search and seizure operation under Section 132 of the Income Tax Act, 1961, was conducted in the Sardar Group of cases, including the residential premises of Sri Y. Ramesh Chandra, a key person of the assessee group. Seized material contained information relating to the assessee, Gorantla Rahul Kumar. Consequently, the assessment was reopened under Section 147, and a notice under Section 148 was issued. The assessee filed a return of income admitting Rs. 17,80,690/-. During scrutiny, the Assessing Officer (AO) observed from Sri Y. Ramesh Chandra's statement recorded under Section 132(4) that on-money was received for flat sales. Sri Y. Venkanna Choudary, assisting the assessee's father who managed the 'Gorantal Residency Project' via Power of Attorney, confirmed receipt of Rs. 28,02,500/- cash during FY 2020-21 (AY 2021-22), but stated the assessee was unaware. The AO made an addition of Rs. 21,47,500/- for AY 2020-21 and Rs. 77,62,000/- for AY 2021-22 as unexplained money under Section 69A, based on estimated on-money receipts.

What did the Tribunal hold?

The Tribunal held that the addition made by the AO towards estimated on-money receipt for sale of flats under Section 69A of the Act for Rs. 21,47,500/- for AY 2020-21 and Rs. 77,62,000/- for AY 2021-22 cannot be sustained. The Tribunal noted that the AO did not have any direct evidence to support his findings that the assessee had received on-money. The AO resorted to estimation based on a single piece of evidence from the search in Sri Y. Ramesh Chandra's case, which indicated on-money receipt of Rs. 28,02,500/- for AY 2021-22. Crucially, this entire amount was accepted and admitted by Sri Y. Venkanna Choudary, who was in charge of the project, as his income, and he also paid taxes on it. Sri Y. Venkanna Choudary explicitly stated that the assessee was unaware of these cash transactions. The Tribunal reasoned that when the person managing the project admitted the on-money as his income and stated the assessee's lack of knowledge, making additions by estimating alleged on-money without corroborative evidence is incorrect. The Ld.CIT(A)'s reasoning that the assessee is the legal owner was also found insufficient without evidence of the assessee's actual receipt of on-money. Therefore, the Tribunal set aside the orders of the Ld.CIT(A) and deleted the additions.

What were the issues?

1. Whether the addition made towards estimated on-money received for sale of flats, amounting to Rs. 21,47,500/- for AY 2020-21 and Rs. 77,62,000/- for AY 2021-22, is sustainable in the hands of the assessee? Assessee's Contentions: - The addition is incorrect because the on-money was received and owned up by Sri Y. Venkanna Choudary, the caretaker of the project and a relative of the assessee, who also declared it as his income and paid taxes for AY 2021-22. - The assessee, being an NRI residing in Jamaica, was unaware of these cash transactions. - The addition was purely based on estimation and not supported by any incriminating material found during the search. - The Ld.CIT(A) erred in sustaining the addition solely on the ground that the assessee is the legal owner of the property. Revenue's Contentions: - The Ld.CIT(A) rejected the assessee's arguments, holding that once the assessee is the legal owner of the property, consequent transactions, including cash transactions, are taxable in the assessee's hands. - The Ld.CIT(A) upheld the addition made by the AO towards estimated on-money receipts.

Which sections of the Income-tax Act were involved?

Section 132,Section 147,Section 148,Section 131(1),Section 132(4),Section 69A,Section 69,Section 115BBE,Section 151A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G

PER MANJUNATHA G, AM:

The above appeals filed by the assessee are directed against the order of the Learned Commissioner of Income Tax (Appeals), Visakhapatnam-3 [in short “the Ld.CIT(A)”], both dated 29.08.2025, and pertains to assessment years 2020-21 & 2021-

22.

ITA 669 & 670/V

The order continues below.

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