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

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ITA 586/HYD/2024Status: DisposedITAT Hyderabad30 September 2025AY 2019-2028 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A). The CIT(A) had observed that the assessee acted solely as a facilitator or mediator for land aggregation for Spectra Group. Bank records showed that even cheque payments from Spectra Group were routed through the assessee to the landowners. In similar cases of other land aggregators/mediators, the CIT(A) had consistently restricted additions to 10% of the cash receipts. The Tribunal found that the assessee's role as a mediator was well-established, supported by sale agreements, statements, and bank records showing funds received from Spectra Group and paid for land procurement. The Tribunal noted that the AO's addition was disproportionately high compared to the profit of the ultimate beneficiary, Spectra Group, which was estimated at 15%. Therefore, the Tribunal concluded that the CIT(A) had rightly estimated 10% of the undisclosed cash receipts as the assessee's income, aligning with the principle of consistency and industry standards. The grounds of appeal by the Revenue were rejected.

What were the facts?

The Revenue filed appeals against the orders of the CIT(A) for Assessment Years (AY) 2018-19 and 2019-20. These orders arose from assessments made by the Assessing Officer (AO) under Section 153C read with Section 144 of the Income Tax Act, 1961. During search proceedings in the case of 'Spectra Group', documents were seized indicating cash receipts aggregating to Rs. 2,78,57,500/- for AY 2018-19, referencing the assessee. The AO, based on these seized materials, initiated proceedings under Section 153C. The assessee claimed to be a land aggregator/mediator for Spectra Group, receiving funds from them to pay farmers. However, the assessee failed to provide evidence of onward payments, leading the AO to treat the entire cash receipts as undisclosed income.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in drawing certain presumptions which are not correct? (Revenue's contention: CIT(A) made incorrect presumptions. Assessee's contention: Not recorded). 2. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in law while comparing the estimation in the hands on the Spectra Group has failed to distinguish the fact it involved in sale of plot, not in aggregation? (Revenue's contention: CIT(A) erred by comparing with Spectra Group's case, which involved plot sales, not aggregation. Assessee's contention: Not recorded). 3. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in law in failing to verify the outward movement of cash portion of transaction to the different parties from whom loan was aggregated for which the assessee has not filed any confirmation from the said parties evidencing the receipt of cash? (Revenue's contention: CIT(A) failed to verify outward cash movement and lack of confirmations from parties. Assessee's contention: Not recorded). 4. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) failed to distinguish the fact that while in the seized material found in the Spectra Group there is mention of outward movement of cash to the land aggregators which is not indicative in the case of the assessee? (Revenue's contention: CIT(A) failed to distinguish outward cash movement in Spectra Group's case from the assessee's. Assessee's contention: Not recorded). 5. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in law that the estimation in the hand of the Spectra Group cannot be extended to the assessee, who is land aggregator and could not furnish confirmation from land sellers? (Revenue's contention: CIT(A) erred in extending estimation from Spectra Group to the assessee, who couldn't provide confirmations. Assessee's contention: Not recorded).

Which sections of the Income-tax Act were involved?

Section 153C,Section 144,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad

For Respondent: Shri Ravi Bharadwaj, AR, DR :

आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:- 1. िनधा�रती/The : Shri Varala Janga Reddy, Room No.616, Aayakar Bhavan, Assessee Basheerbaug, Hyderabad 2. राज�/ The Revenue : The ACIT, Central Circle-2(2), Room No.616, Aayakar Bhavan, Basheerbaug, Hyderabad 3. The Principal Commissioner of Income Tax, Central Circle, Hyderabad 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 5. गाड�फ़ाईल / Guard file

आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Hyderabad

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