ACIT., CENTRAL CIRCLE-2(2), HYDERABAD vs. VARALA JANGA REDDY, HYDERABAD

Facts

A search and seizure operation on "Spectra Group" revealed cash receipts totaling Rs. 2,78,57,500/- attributed to the assessee for A.Y. 2018-19. The Assessing Officer treated the entire amount as the assessee's undisclosed income, as the assessee, claiming to be a land mediator/aggregator, could not provide evidence of onward payments. The CIT(A), however, restricted the addition to 10% of the unaccounted cash receipts (Rs. 27,85,750/-), noting the assessee's role as a facilitator and consistency with other similar cases.

Held

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 10% of the unaccounted cash receipts. It was concluded that taxing the entire receipts would lead to manifest injustice and double taxation, especially since "Spectra Group" (the ultimate beneficiary) had already been assessed separately on similar seized material. The CIT(A)'s approach was deemed fair, consistent with similar cases, and in line with the principle of consistency as emphasized by the Supreme Court.

Key Issues

Whether the CIT(A) was justified in restricting the addition of unexplained cash receipts to 10% of the total amount, treating the assessee as a land mediator/aggregator, rather than taxing the entire sum as undisclosed income.