UPPALAIAH RAVULA,ADILABAD vs. ACIT., CENTRAL CIRCLE-2(1), HYDERABAD

The brief facts of the case are that, the assessee is an individual deriving income from commission from LIC, filed his return of income for the assessment year 2015-16 on 19.01.2016 admitting income of Rs. 5,54,150/-. A survey operation under Section 133A of the Income Tax Act, 1961 (for short “the Act”) was conducted on 23.01.2019 in the case of M/s. Srinidhi Real Estate and Constructions, in which the assessee is one of the partners. During the course of survey operations conducted on 23.01.2019, certain incriminating material was found and impounded vide Annexure-A/S1/01 to A/S1/05. As seen from the impounded material Annexure-A/S1/01, it is noticed that, the assessee has received an amount of Rs. 50,00,000/- i.e. Rs. 25,00,000/- from U. Kumaraswamy and Rs. 25,00,000/- from Ch. Venu on different dates. On verification of the return filed for the assessment year 2015-16, the assessee has admitted commission receipt of Rs. 14,61,100/- and taxable income at Rs. 5,89,721/- after reducing expenditure. As the receipt of Rs. 50,00,000/- found in the impounded material does not commensurate with the income admitted in the return of income, the assessment has been reopened u/s 147 of the Income-tax Act and notice u/s 148 of the Act dated 14.08.2019 was issued to the assessee. In response to the notice, the assessee filed his return of income on 16.09.2019 admitting an income of Rs. 5,54,150/-. 4. During the course of the assessment proceedings, the A.O. called upon the assessee to explain the contents of the documents found during the course of survey in the premises of M/s. Srinidhi Real Estate and Construction and the nature of the amounts received from the above two persons. The A.O. further noted that, the assessee has not furnished any information with regard to the source of income received. Therefore, he made addition of Rs. 50,00,000/- towards amount received from the above two persons to the total income of the assessee and assessed the income under the provisions of Section 115BBE of the Income Tax Act, 1961. 5. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee of M/s. Srinidhi Real Estate and Constructions belongs to the above firm towards sale of land and the same has been accounted in the books of firm under the head “advances”. The assessee further contended that, the firm has developed a land and made into flats and sold to various persons and the assessee being one of the partners of the firm has received advance from various persons and the same has been recorded in the documents found during the course of survey. Since the amount pertained to the firm, the same cannot be added in the hands of the assessee. During the course of appellate proceedings, the Ld. CIT(A) forwarded the written submissions filed by the assessee to the A.O. for remand report. The A.O. vide remand report dated 12.06.2025 submitted that, as per the seized document A/S1/01 to A/S1/05 pages 5 to 10, the assessee has received sum of Rs. 50,00,000/- for the assessment year 2015-16 and Rs. 47,00,000/- for the assessment year 2016-17, for which the assessee could not explain any source. Further during the course of assessment proceedings despite being a partner in M/s. Srinidhi Real Estate receipts were on behalf of or relate to the transactions of the firm. Therefore, rejected the submissions of the assessee. The Ld. CIT(A) after considering the relevant submissions of the assessee and also taking note of the impounded documents vide Annexure A/S1/01 to A/S1/05 observed that, on examination of page nos. 5 to 10 impounded during the survey shows that, the assessee has received amount of Rs. 50,00,000/- on different dates from two persons and the same has not been explained to the satisfaction of the A.O. Further, during the appellate proceedings, the assessee has not submitted any specific explanation or produced any evidence to show that, the cash receipts recorded in the impounded material were on behalf of the firm and claimed that, he was merely acting as an Agent for the firm is unsubstantiated. Therefore, rejected the explanation of the assessee and sustained the additions made by the A.O. towards cash receipt of Rs. 50,00,000/- from two persons found and recorded in the impounded material to the income of the assessee. 6. Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal. 7. The learned counsel for the assessee, Shri A.V. Raghuram, submitted that, Ld. CIT(A) erred in sustaining additions made by the A.O. towards cash receipts found and recorded in the impounded material for Rs. 50,00,000/- as income of the assessee, even though the assessee has explained the contents of the impounded material and claimed that, the above entries pertain to the transactions of firm M/s. Srinidhi Real Estate and Constructions, and related to sale of plotted lands. The learned counsel for the assessee further referring to various documents submitted that, the impounded documents show receipt of money for sale of flats in survey numbers 157, 158, and 160, and the said lands were owned by partnership firm M/s. Srinidhi Real Estate and Constructions. Further, the above documents were found in the possession of the partnership firm and were recorded by the firm in their books of account in the name of the assessee. The assessee, being partner of the firm, has received the money on behalf of the firm from the prospective buyers of the flats and the under the head ‘advances’. Since the transactions relate to the partnership firm and not pertain to the assessee, the additions made by the A.O. towards income of the assessee cannot be sustained. Therefore, he submitted that, the additions made by the A.O. should be deleted. 8. Learned Senior A.R. for the Revenue, Ms. G. Saratha, on the other hand, supporting the order of the Ld. CIT(A), submitted that, the documents found and impounded during the course of survey under Section 133A of the Act, clearly shows that, the assessee has received a sum of Rs. 25,00,000/- from one person and further sum of Rs. 25,00,000/- from another person on different dates. Further, the above documents are in the name of the assessee. The other evidence found during the course of survey clearly shows that the firm has recorded receipts of money in the name of the assessee, which is available in page no. 91 of the paper book filed by the assessee. Since the assessee has received the money from two different persons, it is the duty of the assessee to explain the contents of the impounded material and also the nature of transactions. Since the assessee has not explained the transactions and also not claimed during the assessment proceedings, that the said transactions pertain to the partnership firm and also accounted by the firm, the A.O. has rightly made addition towards amount received from above two persons as income of the assessee. The Ld. CIT(A), after considering the relevant facts, has rightly sustained the addition made by the A.O. Therefore, she submitted that, the addition sustained by the Ld. CIT(A) should be upheld. 9. 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, the assessee is an Agent for LIC and deriving income from commission and the same has been reported in his return of income filed for the assessment year under consideration. It is also an undisputed fact that, during the course of survey conducted under Section 133A of the Income Tax Act, 1961 on 23.01.2019 in the case of M/s. Srinidhi Real Estate and Constructions, in which the assessee is one of the partners, certain materials were found and impounded and as per the said impounded material, the assessee has received Rs. 25,00,000/- from Shri U. Kumaraswamy, as a part of payment and further received sum of Rs. 25,00,000/- from Shri C. H. Venu on 24.01.2015 for survey numbers 157, 158 and 160 of Rangampet. During the course of survey, a statement under Section 131 of the Act, was recorded from one of the partners of the firm M/s. Srinidhi Real Estate and Constructions, where he has denied the transactions and claimed that, the above transactions of receipt of money by the assessee is between the assessee and other two persons and it is nothing to do with the firm. The A.O. made additions of Rs. 50,00,000/- on the basis of impounded materials on the ground that, the assessee could not explain the transactions with relevant evidences. It was the argument of the learned counsel for the assessee that, the assessee, being one of the partners of the firm M/s. Srinidhi Real Estate and Constructions, has received amount from the buyers of the flats for and on behalf of the firm, and the said transactions have been recorded in the books of accounts of the firm as advances. Therefore, the same cannot be assessed as its income. 10. We have given our thoughtful consideration to the relevant reasons given by the A.O. to make addition of Rs. 50,00,000/- towards the cash receipt of Rs.50,00,000/- from two persons in light of various arguments of the learned counsel for the assessee. We have also considered the relevant material impounded during the course of survey and upon careful consideration of relevant material, we find that, the assessee has received sum of Rs. 25,00,000/- from U. Kumaraswamy as part payment and further received sum of Rs. 25,00,000/- on 24.01.2015 from Ch. Venu for survey numbers 157, 158 and 160 of Rangampet. Further, the above receipts clearly show it is a payment for sale of land at survey numbers 157, 158 and 160. Admittedly, the lands at survey numbers 157, 158 and 160 were owned by the partnership firm M/s. Srinidhi Real Estate and Constructions, which is evident from the relevant financial statements and copies of sale deeds filed by the assessee. In fact, the A.O. never disputed the fact that, the above lands were owned by the partnership firm and also sold after plotting into residential sites to various persons and income from sale of flats has been offered in the hands of the partnership firm. Further, the above receipts of Rs. 50,00,000/- assessment year 2017-18 onwards. Since the cash receipt of Rs. 50,00,000/- from the above two persons by the assessee is for sale of land at survey numbers 157, 158 and 160 and further, the firm owned up the above advances and also claimed that, the same has been accounted under the head ‘advances’, in our considered view, the additions made by the A.O. without there being any further evidences to suggest that, the said transactions belong to the assessee and income of the assessee cannot be upheld. The Ld. CIT(A) without appreciating the relevant facts simply sustained the additions made by the A.O. Thus, we set aside the order of Ld. CIT(A) and direct the A.O. to delete the addition of Rs. 50,00,000/- made towards cash receipts found and impounded during the course of survey, as income of the assessee. 11. In the result, the appeal of the assessee is allowed. 12. The facts and issues involved in this appeal are identical to the issues which we had considered in assessee’s own case for A.Y. 2015-16. The A.O. had made similar addition of Rs. 47,00,000/- towards entries contained in the documents found and impounded during the course of survey under Section 133A of the Income-tax Act in the case of M/s. Srinidhi Real Estate and Constructions on the ground that, the assessee could not explain the transactions with relevant details. Further, after the appeal was heard on 26.11.2025, the assessee has filed a memo dated 27.11.2025 along with consequential order passed by the A.O. to give effect to the order of the Ld. CIT(A), and its directions in respect of sum of Rs. 15,00,000/- payment made on 21.05.2016 to verify whether it pertains to the assessment year under consideration. The A.O., after verifying relevant material found and impounded during the course of survey, has deleted the additions of Rs. 15,00,000/- out of the total addition made by the A.O. in the original assessment order for Rs. 47,00,000/- and Rs. 47,00,000/- in the original grounds of appeal filed before the Tribunal, but in effect, the additions remain to be adjudicated is only Rs. 32,00,000/-. 13. We find that, after consequential order passed by the A.O., the remaining additions to be adjudicated by the Tribunal is Rs. 32,00,000/- on the basis of material impounded during the course of survey. Once again, the A.O. made addition of Rs. 32,00,000/- as income of the assessee on the basis of material impounded during the course of survey and as per the said material, certain transactions were recorded in the name of the assessee. A similar issue had been considered by us in assessee’s own case for A.Y. 2015-16, where under identical set of facts, we held that, the addition made by the A.O. towards cash receipts on the basis of material impounded and seized during the course of survey cannot be upheld, because the above transactions pertain to the partnership firm M/s. Srinidhi Real Estate and Constructions, and also recorded in the books of accounts of the firm under the head ‘advances’. The reasons given by us in the preceding paragraphs 9 and 10 shall equally apply to this appeal as well. Therefore, for similar reasons, we direct the A.O. to delete the additions made to the income of the assessee towards cash receipts found during the course of survey for Rs. 32,00,000/-. 14. In the result, the appeal filed by the assessee is allowed. 15. To sum up, both the appeals of assessee are allowed.

निर्धाररती/The Assessee : Uppalaiah Ravula, 4-88, Azad Nagar, Mancherial, Adilabad – 504208. 2. रधजस्व/ The Revenue : The Assistant Commissioner of Income Tax, Central Circle – 2(1), Hyderabad. 3. The Principal Commissioner of Income Tax (Central), Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file