AVVA SITARAMA RAO,HYDERABAD vs. DCIT., CENTRAL CIRCLE- 2(4), HYDERABAD

PER MANJUNATHA G., A.M :

This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals) – 12,

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Avva Sitarama Rao

Hyderabad, dated 30.03.2025, pertaining to the assessment year
2009-10. 2. The brief facts of the case are that, the assessee filed his return of income for A.Y. 2009–10 on 31.03.2011, admitting total income of Rs. 23,00,740/-. A search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted in the case of the assessee on 23.01.2015. During the course of search, certain incriminating documents were found and seized, as per Annexure
A/AGFEIPL/HYD/01, Page nos.170 to 175. Consequent to search, notice under Section 153A of the Income Tax Act, dated
28.03.2016, was issued and served on the assessee and the assessee had not filed his return of income. Therefore, notice under Section 142(1) of the Income Tax Act, dated 21.10.2016, was issued and requested the assessee to submit the return of income and explain the contents of seized documents. Since the assessee has not furnished any details and also not filed any return of income, the A.O. on the basis of documents found during the course of search, completed the assessment and determined the total income at Rs. 16,59,20,952/- by making addition

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Avva Sitarama Rao towards unexplained investment of Rs. 16 crores on the basis of an agreement of sale dated 23.03.2009. 3. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A).
4. Before the Ld. CIT(A), the assessee challenged the additions made by the A.O. towards unexplained investment on the ground that, the documents found during the course of search being agreement of sale dated 23.03.2009 is between Sri Swami
Hathiramji Mutt and M/s. Billiyard Farms Pvt. Ltd., a company represented by its Director A. Sitarama Rao (assessee). Further, the above agreement does not have any relation to the assessee or his business, therefore, the addition made by the A.O. on the basis of the said document cannot be sustained. The Ld. CIT(A), during the course of appellate proceedings, forwarded the submissions of the assessee to the A.O. for his comments and remand report. The A.O. vide his remand report dt.14.02.2025
stated that, the additions made in the assessment order do not have linkage to the seized material referred to in the assessment order. The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of the agreement of sale dated

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Avva Sitarama Rao

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Avva Sitarama Rao incriminating material referred to by the A.O. and furnished by the revenue is an agreement of sale between Sri Swami Hathiramji
Mutt and M/s. Billiyard Farms Pvt. Ltd., and the assessee is only a representative of the said company, and therefore, the contents of the agreement, if any, should be explained by the said company, but not the assessee. Therefore, the additions made by the A.O. on the basis of the said unrelated document cannot be said to be on the basis of incriminating material to sustain addition. Therefore, he submitted that, in view of the decision of the Hon'ble Supreme Court in the case of Pr. CIT Vs. Abhisar
Buildwell Pvt. Ltd (2023) 454 ITR 212, the additions made by the A.O. should be deleted.
7. The Ld. CIT-DR, Dr. Narendra Kumar Naik, on the other hand, supporting the order of the Ld. CIT(A), submitted that, there is no dispute with regard to the fact that, there are apparent discrepancies in the material considered by the A.O. for making additions and the report submitted by the A.O. during the remand proceedings, and thus, the Ld. CIT(A) has rightly set aside the matter to the A.O. for further verification. Further, although the agreement is between Sri Swami Hathiramji Mutt and the 6
Avva Sitarama Rao assessee, it is for the assessee to explain the contents of the agreement found during the course of search in the capacity of the Director of company. Since the assessee has not explained the contents of the documents found during the course of search, the Ld. CIT(A) has rightly set aside the matter and thus, the order of the Ld. CIT(A) should be upheld.
8. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below.
There is no dispute with regard to the fact that, during the course of search on 23.01.2015, incriminating material in the form of an agreement of sale, dated 23.03.2009 between Sri Swami
Hathiranjee Mutt and M/s. Billiyard Farms Pvt. Ltd., represented by its Director, A. Seetha Rama Rao (assessee), was found. The A.O.
made additions towards unexplained investment of Rs.16,59,20,952/- on the basis of the above seized material, coupled with the statement recorded from the assessee during the course of search on 23.01.2015, and observed that, the assessee could not explain the contents of the seized material and therefore, made additions under Section 69 of the Income Tax Act,
1961. We have gone through the relevant incriminating material

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Avva Sitarama Rao found during the course of search being agreement of sale dated
23.03.2009, and we find that, the above agreement is between Sri
Swami Hathiranjee Mutt and the assessee, and the assessee being a Director of the above company signed the agreement. The A.O.
made additions towards unexplained investment on the basis of the agreement of sale between Sri Swami Hathiranjee Mutt and the assessee, on the ground that, in the statement recorded during the course of search, the assessee could not explain the agreement and source for making investment. First of all, the agreement is not directly related to the assessee or his business.
The assessee has entered into an agreement with Sri Swami
Hathiranjee Mutt as a Director of M/s. Billiyard Farms Pvt. Ltd.
The A.O., on the other hand, claims that, the additions were made on the basis of incriminating material found during the course of search, coupled with the statement recorded from the assessee.
Although the A.O. in the remand report stated that, there is no linkage between the additions made in the assessment order and the incriminating material found during the course of search, but facts remain that, there are apparent contradictions in the reasons given by the A.O. in the assessment order and the reasons

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Avva Sitarama Rao given by the A.O. in the remand report on the issue of additions made towards unexplained investment.
These apparent contradictions need further verification. The Ld. CIT(A), after considering relevant apparent contradictions, has rightly set aside the matter to the file of the A.O. for de novo consideration in light of relevant evidences found during the course of search and also explanation of the assessee. Since the Ld. CIT(A) has set aside the issue for de novo consideration of the matter, because of there are apparent contradictions in the order of the A.O. and the remand report, in our considered view, there is no error in the reasons given by the Ld. CIT(A) to remit the issue to the A.O. for further verification and de novo consideration of the issue. The assessee gets an opportunity to explain his case in light of relevant incriminating material found during the course of search and also remand report of the A.O. and to put forth all his defense in respect of additions made towards unexplained investment. Thus, we are inclined to uphold the order of the Ld. CIT(A) and dismiss the appeal filed by the assessee.

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Avva Sitarama Rao

Order pronounced in the Open Court on 12th December, 2025. श्री विजय पाल राि
(VIJAY PAL RAO)
उपाध्यक्ष /VICE PRESIDENT (मंजूनाथ जी)
(MANJUNATHA G.)
लेखा सदस्य/ACCOUNTANT MEMBER

Hyderabad, dated 12.12.2025. TYNM/sps

आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-

आदेशधिुसधर / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad