EAMANI INFRASTRUCTURE PRIVATE LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE-1(2), HYDERABAD

5. Ld.AO and Ld.CIT(A) erred in clubbing the WhatsApp message/chats and the Anand deluxe long book seized by the revenue on 05-01-2022 U/s 132 of the Act. The seized Anand deluxe long book did not contain the transactions for a sum of Rs.35,00,000 and WhatsApp chat was budgeted figure for the site development. Both are different.

7. Ld.AO and Ld.CIT(A)-11 failed to appreciate that the transactions recorded in the seized diary have been recorded in the audited books of account and Ld.AO without any basis came to the conclusion that the transactions recorded in the regular books were not correct.

3 ITA.No.1434/Hyd./2025 9. Ld.AO erred in relying on the statement of Sri.E.V. Raja Reddy recorded on 20-05-2022 which was recorded after 4 months and 15 days. This statement dated 20-05-2022 has no evidentiary value as it was recorded after closure of search and legally untenable.

10. Ld.AO failed to appreciate that the diary seized was maintained at the site development and not at the head office of the assessee.

3. The solitary issue arises in this appeal of the assessee is whether in the facts and circumstances of the case, the learned CIT(A) has erred in confirming the additions made by the Assessing Officer of Rs.35 lakhs u/sec.69C of the Income Tax Act, 1961 [in short "the Act"] based on the Whatsapp message found during the course of search and seizure action u/sec.132 of the Act on 05.01.2022.

4. The assessee is engaged in the real estate business and filed it’s return of income for the assessment year under 4 ITA.No.1434/Hyd./2025 consideration on 30.10.2022 admitting total income of Rs.24,92,486/-. There was a search and seizure action u/sec.132 of the Act carried-out on 05.01.2022 in the case of M/s. Eamani Group and others which covers the assessee. During the scrutiny assessment, the Assessing Officer asked the assessee to furnish the details and information regarding the expenditure of Rs.35 lakhs incurred in cash towards site development expenses of Raaga Vantage Venture of assessee company as it was found in the Whatsapp message as well as a diary maintained by Sri L. Rami Reddy, the site supervisor of the project. In response, the assessee furnished information called for and explained that the Whatsapp message as referred by the Assessing Officer regarding Rs.35 lakhs was only a proposal/budget prepared for the financial year 2021-2022 by the supervisor Sri L. Rami Reddy for the site development and the same was forwarded to the Managing Director through Whatsapp message for approval. The actual expenditure incurred during the year on the site development was duly recorded in the said diary maintained

5 ITA.No.1434/Hyd./2025 by the site supervisor seized during the course of search and seizure action. It was further explained that as per the said diary the total receipts from 01.06.2021 to 12.07.2021 towards expenditure is only Rs.25 lakhs and, therefore, once the entire transaction were duly recorded in the said diary and these transactions were also recorded in the cash book produced by the assessee before the Assessing Officer, then, the source of expenditure incurred during the year is duly explained by way of the entries in the diary as well as cash book produced by the assessee. The Assessing Officer did not accept this explanation of the assessee and made the addition of Rs.35 lakhs while framing the assessment u/sec.143(3) of the Income Tax Act, 1961.

6. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the Assessing Officer as well as the learned CIT(A) has given much emphasis on the Whatsapp message sent by the site supervisor L. Rami Reddy, whereas, the said message was sent for approval of the management during the period 13.02.2021 to 16.02.2021. Therefore, the same does not fall in the assessment year under consideration i.e., 2022-2023. The learned Authorised Representative of the Assessee has 7 ITA.No.1434/Hyd./2025 referred to the statement of the supervisor L. Rami Reddy as well as the statement of Sri E V Raja Reddy, Managing Director of the assessee company recorded u/sec.132(4) of the Act and submitted that both these persons have clearly explained the nature of transactions that the amount mentioned in the Whatsapp message is only a proposal / budget sent by the site supervisor for approval of the Managing Director and the actual amount was only Rs.25 lakhs, out of which, a sum of Rs.20,21,320/- was incurred in cash during the year under consideration. In any case, all these transactions are duly recorded in the cash book produced by the assessee before the Assessing Officer and also found recorded in the diary maintained by the site supervisor seized during the course of search and seizure action. Thus, the source of the expenditure incurred towards the site development is duly explained as per the cash book produced by the assessee and, therefore, the same cannot be added as unexplained expenditure u/sec.69C of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that the 8 ITA.No.1434/Hyd./2025 addition made by the Assessing Officer and confirmed by the learned CIT(A) relying on Whatsapp message print-out taken from the cell-phone of L. Rami Reddy, site supervisor of the project is not sustainable when the transaction was duly explained during the course of statement recorded u/sec.132(4) as well as recorded in the diary seized during the course of search as well as recorded in the cash book maintained by the assessee. He has also submitted that all the site expenses are recorded in the cash book maintained by the assessee and which are also matching with the diary maintained by the site supervisor L. Rami Reddy which was found and seized during the course of search and seizure action. Thus, the learned Authorised Representative of the Assessee submitted that the statement of Sri EV Raja Reddy, Managing Director of the assessee company recorded u/sec.131(1A) of the Act on 20.05.2022 wherein he has offered a sum of Rs.35 lakhs as income of the assessee cannot be the basis for addition in absence of any corroborative evidence. Thus, he has submitted that the addition made by the Assessing Officer and confirmed by 9 ITA.No.1434/Hyd./2025 the learned CIT(A) is liable to be deleted. In support of his contention, he has relied upon the following decisions :

Order of ITAT, Hyderabad Bench, Hyderabad in the case of Shri Purushotham Naidu Lekkala, Hyderabad 1. vs., ACIT, Central Circle-3(2), Hyderabad in ITA.No.608/Hyd./2023, Dated 11.06.2024. Judgment of Hon’ble Delhi High Court in the case of Dell International Services India Private Limited vs., 2. Adeel Feroze and Others W.P.(C).No.4733/2024, Dated 02.07.2024. Order of ITAT, Delhi, in the case of Meenu Gupta vs., 3. ACIT, Central Circle, Meerut in ITA.No.3193/Del./ 2025, Dated 16.05.2025. Judgment of Hon’ble Supreme Court in the case of 4. Ravinder Singh Kaku vs., State of Punjab Dated 04.05.2022. Judgment of Hon’ble Supreme Court in the case of 5. Anwar P.V. vs., PK Basher & others in Civil Appeal No. 4226 of 2012 reported in [2014] 10 SCC 473 (SC). Judgment of Hon’ble Supreme Court in the case of 6. Ravinder Singh @ Kaku vs., State of Punjab 2022 LiveLaw (SC) 461. 6.1. Learned Authorised Representative of the Assessee then referred to the financial statements relevant to the assessment year 2022-2023 placed at page-47 of the paper book and submitted that the assessee was having opening cash balance in hand as on 01.04.2021 at Rs.17,12,440/- and closing balance in hand as on 31.03.2022 at Rs.11,01,770/-. The opening cash balance in 10 ITA.No.1434/Hyd./2025 hand was utilised for site development expenses and further the assessee was having the other income of Rs.28,20,350/- during the year, out of which, the balance amount of Rs.5,10,000/- was received in cash and thus, the total cash available with the assessee was at Rs.22,22,440/-, out of which, a sum of Rs.20,21,320/- was utilised in cash towards site development and another sum of Rs.5,70,121/- was incurred through banking channel. Thus, the entire expenditure of Rs.25 lakhs was incurred on the site development was from the business receipts and duly accounted in the books of accounts. The books of accounts of the assessee are duly audited and has not been rejected by the Assessing Officer and, therefore, once all the transactions are recorded in the books of accounts and the source is explained from the books of accounts of the assessee and cash available as business receipts, then, the addition is not sustainable and liable to be deleted.

12 ITA.No.1434/Hyd./2025 8. We have heard the rival submissions as well as relevant material on record. The Assessing Officer as well as the learned CIT(A) has taken the amount mentioned in the Whatsapp message, whereas the details as recorded in the deluxe diary as maintained by L. Rami Reddy, the site supervisor of the assessee reveals the total expenditure incurred during the year to the extent of Rs.25 lakhs. This fact has not been disputed by the Department and as per the said diary the total expenditure incurred towards site development expenditure during the year is only Rs.25 lakhs. It is also not disputed that out of this Rs.25 lakhs, a sum of Rs.5,70,000/- was incurred through banking channel. The contents of the Whatsapp message in question does not constitute a transaction of incurrence of expenditure at the time of the said message as neither it is a message of details of expenditure nor it is a transfer of the amount, but, it was only a message sent by the site supervisor to the Director of the assessee company regarding the expenditure to be incurred towards the site development of the project. Thus, it was only a proposal /

13 ITA.No.1434/Hyd./2025 estimation sent by the site supervisor regarding the site development expenditure to be incurred in future. It is also not in dispute that these Whatsapp messages were sent from 13.02.2021 to 16.02.2021 and, therefore, the same does not fall in the assessment year under consideration, but, it is a transaction if at all falls in the assessment year 2021-2022. Therefore, the said Whatsapp message chat cannot be a basis for addition made on account of site development expenditure incurred in cash by the assessee. The only relevance of the said message is that the assessee was to incur the site development expenses during the financial year 2021-2022 relevant to the assessment year 2022-2023. The actual expenditure incurred towards site development is duly recorded in the diary maintained by the site supervisor of the project which was found and seized during the course of search and seizure action on 05.01.2022. The assessee has produced the cash book before the Assessing Officer which is duly acknowledged by the Assessing Officer in the assessment order. As per the said cash book, the assessee has shown an opening balance

14 ITA.No.1434/Hyd./2025 of cash of Rs.17,12,440/- and also shown as income from other sources in cash of Rs.5,10,000/- out of total income from other sources at Rs.28,70,350/- reflected in the financial statements of the assessee. The books of accounts of the assessee are duly audited and, therefore, the assessee has explained the availability of the cash to the extent of Rs.22,22,440/-, out of which, a sum of Rs.20,21,320/- was incurred towards the site development. It is also matter on record that a sum of Rs.5,70,121/- was incurred through banking channel towards the site development out of total amount of Rs.25 lakhs which is duly explained by the Director of the assessee company in his statement recorded u/sec.132(4) of the Act on 24.02.2022 in reply to Question No.8 as under :

“Q8. Your attention is drawn to the statement of Shri L. Rami Reddy dated 05.01.2022 in which in his answer to the Q No. 15, he stated that Rs.38 lakh and Rs.77 lakhs were paid in cash to Chevuri Real Estate & Developers over and above the sale consideration and Rs.10 lakhs and Rs.25 lakhs were utilized for site development expenses for the Raaga Mayuri Vantage Venture. Please offer your comments and explain the sources of the cash.

15 ITA.No.1434/Hyd./2025

Yes Sir, I agree that Sri L.Rami Reddy has given his statement as mentioned above but the said statement was given by him in my absence. Going into background of the transaction, we purchased agricultural land admeasuring 13 Acres 34 Cents from M/s Chevuru Real Estate and Developers for a consideration of Rs.1,30,06,500 at Nandigama, Andhra Pradesh in the name of M/s. Eamani Pharma Laboratories Pvt. Ltd. At the time of purchase, the vendors insisted payment of certain part of the consideration in cash However, on consultation with our auditor, Shri S.S. Koteswara Rao of M/s Brahmayya & Company, we paid the entire consideration by way of RTGS. However, Shri L. Rami Reddy, who is supervisor in M/s. Eamani Infrastructure Pvt. Ltd., is not fully aware of the transaction. Hence, he was of the opinion that the sale consideration of Rs.1.15 Cr was paid in cash. But that is not correct. Coming to 'site development expenses’, I confirm that the amount of Rs.35,00,000 was proposed to be spend in cash for site development of Raagumayuri Vantage, a venture developed by our company M/s. Eamani Infrastructures Pvt. Ltd. and M/s. EVR Enterprises Pvt. Ltd. We incurred around Rs.25 lakhs as per the cash book (Anand deluxe long ex-book) seized by the Department during the course of search and seizure operation dated 05.01.2022 The sources for the cash to meet these development expenses are from the business receipts of the companies. I will submit the cash book and ledger extracts in a week's time.”

16 ITA.No.1434/Hyd./2025 u/sec.132(4) of the Act. Though, in the statement recorded u/sec.131(1A) of the Act on 20.05.2022 a surrender was made by the Director of the assessee company to the extent of Rs.35 lakhs. However, mere statement of surrender would not constitute a tangible material or incriminating material leading to an addition in the absence of any corroborative evidence. All the documentary evidences found during the course of search as well as the books of accounts produced by the assessee reveals that the expenditure towards site development was incurred only of Rs.25 lakhs, out of which, Rs.5,70,121/- was incurred through banking channel and balance amount of Rs.20,21,320/- was incurred in cash, for which, the assessee has explained the source from cash book having an opening balance of more than Rs.17 lakhs and cash receipts during the year. Thus, the assessee has explained the source of the cash expenditure from it’s business receipts and opening cash balance with the assessee. This fact was also revealed by the Director in the statement as this sum was incurred from the business receipts. Accordingly, in the facts and circumstances of the 17 ITA.No.1434/Hyd./2025 case as evident from the record, we find that the addition made by the Assessing Officer of Rs.35 lakhs and confirmed by the learned CIT(A) based on the Whatsapp message is not sustainable and hence, the same is deleted.

Order pronounced in the open Court on 31.10.2025.