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Facts
On 03.04.2019, police seized Rs. 48 lakhs cash from the assessee's driver. The assessee explained the source as real estate business income for Assessment Year 2019-2020 and offered it as additional income. The Assessing Officer, however, made additions of Rs. 48 lakhs as unexplained money under Section 69A and Rs. 10 lakhs as agricultural income under "Income from other sources" for Assessment Year 2020-2021, which were sustained by the CIT(A).
Held
The Tribunal held that the addition of Rs. 48 lakhs as unexplained money for AY 2020-2021 was a double addition, as the assessee had already declared and paid taxes on this amount for AY 2019-2020, and thus deleted it. Regarding the Rs. 10 lakhs agricultural income, the Tribunal upheld the addition as the assessee failed to furnish any supporting evidence and rejected the argument that the belated return rendered the claim non est.
Key Issues
1. Whether the addition of Rs. 48 lakhs as unexplained money was justified for AY 2020-2021 when the assessee had already offered it as income for AY 2019-2020. 2. Whether the addition of Rs. 10 lakhs for agricultural income was justified due to lack of evidence, and if a belated return claiming this income was valid despite being treated as non est.
Sections Cited
132, 131, 69A, 144, 250, 139(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.48/Hyd./2025 Assessment Year 2020-2021 Srinivas Reddy Mereddy The DCIT, Gandipet, Ranga Reddy vs. Central Circle-1(3), PIN – 500 075. PAN AGGPM4871P Hyderabad. (Appellant) (Respondent) For Assessee : CA K A Sai Prasad For Revenue : Sri Gurpreet Singh, Sr. AR Date of Hearing : 16.06.2025 Date of Pronouncement : 03.07.2025 ORDER PER MANJUNATHA G. :
This appeal has been filed by the Assessee against the order dated 22.11.2024 of the learned CIT(A) Hyderabad-11, Hyderabad, relating to the assessment year 2020-2021.
Briefly stated facts of the case are that, the assessee is an individual and engaged in the business of real estate. On 03.04.2019, the Police authorities of 2 ITA.No.48/Hyd./2025 Rachakonda Commissionerate at Kothagudem X Road Abdullapurmet, Ranga Reddy District intercepted a car bearing Regn.No.AP28DS3456 and found cash of Rs.48,00,000/- in the possession of Sri K. Satyapal Reddy who was identified as Driver of the assessee viz., Sri. M. Srinivas Reddy. The cash seized by the police authorities, was intimated to Income Tax Department. On the strength of the warrant u/sec.132 of the Income Tax Act, 1961 [in short “the Act”] the cash was requisitioned and seized by the Income Tax Department on 10.04.2019 and on the same day, statement of the assessee u/sec.131 of the Act was recorded, in which, the assessee had stated that, the seized cash of Rs.48,00,000/- belongs to his real estate business and also stated that, he has no documents in support of his submission. Thereafter, relevant notices were issued to the assessee, for which, there was no response, except, filing the return of income for the impugned assessment year 2020-2021 on 31.03.2021, admitting total income of Rs.2,89,370/- and agricultural income of Rs.10,00,000/-. Thereafter, the Assessing Officer has issued a final show
3 ITA.No.48/Hyd./2025 cause notice on 16.09.2021 requiring the assessee to furnish reasons as to why Rs.48,00,000/- should not be treated as unexplained money u/sec.69A of the Act. Since, there was no response from the side of the assessee, the AO completed the best Judgment assessment u/sec.144 of the Income Tax Act, 1961 by making the addition of Rs.48 lakhs u/sec.69A of the Act on account of unexplained cash and addition of Rs.10 lakhs under the Head “Income from other sources” and accordingly determined the total income of the assessee at Rs.60,89,370/- as against the returned income of the assessee at Rs.2,89,370/- vide order dated 24.09.2021 passed u/sec.144 of the Income Tax Act, 1961.
On being aggrieved by the assessment order passed by the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A). During the course of appellate proceedings, the learned CIT(A) has issued 24 notices u/sec.250 of the Income Tax Act, 1961 calling the assessee to furnish his reply/explanation. However, the assessee has failed to furnish his submissions in support of his claim. Therefore, the learned CIT(A) after
4 ITA.No.48/Hyd./2025 considering the assessment order passed by the Assessing Officer and material on record, sustained the additions made by the Assessing Officer.
Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.
CA, K.A. Sai Prasad, Learned Counsel for the Assessee submitted that, the learned CIT(A) has erred in sustaining the additions made by the Assessing Officer towards cash seized during the course of search as unexplained money u/sec.69 of the Act, without appreciating the fact that, during the course of search, the assessee has explained the source for cash, out of his business receipts and also agreed to offer as additional income for the assessment year 2019-2020. Further, the assessee has also filed his return of income for the assessment year 2019-2020 on 30.11.2020 u/sec.139(4) of the Act and declared total income of Rs.48,63,670/-, which includes additional income of Rs.48 lakhs offered during the course of search towards cash found by the Police Authorities. Although, these facts has been brought to the 5 ITA.No.48/Hyd./2025 notice of the Assessing Officer and the learned CIT(A), but, both the authorities have made additions for the year under consideration only on the ground that cash was found on 03.04.2019, even though, the assessee has clearly explained before the authorities that, it is out of his earning for the financial year 2018-2019 relevant to the assessment year 2019-2020. Therefore, he submitted that, the addition made by the Assessing Officer and sustained by the learned CIT(A) should be deleted.
5.1. In so far as addition of Rs.10 lakhs made under the Head “Income from Other Sources”, towards agricultural income, the Learned Counsel for the Assessee submitted that, the assessee has filed relevant evidences including proof of agriculture land holding and agricultural activities carried-out by the assessee. Further, the Assessing Officer has treated the return filed by the assessee as non est in the eye of law because, the same was filed beyond the due date provided u/sec.139 of the Act. Once the return of income has been considered as non est, then, on the basis of said return of income, no additions can be made. Therefore, he
6 ITA.No.48/Hyd./2025 submitted that, the additions made by the Assessing Officer should be deleted.
Shri Gurpreet Singh, learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the Police Authorities have seized cash on 03.04.2019 and the Department has impounded the said cash on 03.04.2019. The date of seizure of cash pertains to financial year 2019-2020 relevant to assessment year 2020-2021. Therefore, the Assessing Officer has rightly assessed the cash found during the course of search as income of the assessee for the year under consideration. The learned CIT(A) after considering the relevant facts has rightly sustained the additions made by the Assessing Officer and thus, the order of the learned CIT(A) should be upheld.
6.1. In so far as the addition of Rs.10 lakhs towards agricultural income under the Head “Income from Other Sources”, the assessee has not filed any documents to prove agriculture land holding, carrying-out agricultural
7 ITA.No.48/Hyd./2025 operations and sale of agriculture produce etc. In absence of any evidences, the Assessing Officer has rightly made the addition and the learned CIT(A) after considering relevant facts has rightly sustained the addition made by the Assessing Officer. Therefore, he submitted that, the order of the Assessing Officer should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below. During the course of vehicle checking by the Police authorities of Rachakonda Commissionerate at Kothagudem X Road Abdullapurmet, Ranga Reddy District, on 03.04.2019, cash of Rs.48,00,000/- was found in the possession of Sri K. Satyapal Reddy, Driver of the assessee viz., Sri. M. Srinivas Reddy. In absence of satisfactory explanation, the cash found was seized by the Police and intimated to the Income Tax Department. The Department, after drawing a ‘Panchanama’ on 03.04.2019 and a warrant of Authorization u/sec.132(2) of the Act dated 10.04.2019, seized the cash found by the Police Authorities for Rs.48,00,000/-. Further, statement u/sec.131 of the Act
8 ITA.No.48/Hyd./2025 dated 10.04.2019 was recorded from the assessee, where the assessee has explained source for cash out of his business income for the financial year 2018-2019 and also admitted additional income of Rs.48 lakhs for the assessment year 2019-2020. The assessee had also filed belated return of income on 30.11.2020 and declared total income of Rs.48,63,670/- which includes additional income of Rs.48 lakhs declared for the assessment year 2019-2020 before the DDIT (Inv.)Unit-1(2), Hyderabad. From the details filed by the assessee, it is undisputedly clear that, the assessee has explained the source for cash deposit out of business income for the financial year 2018-2019 relevant to assessment year 2019-2020 and further, paid taxes on the said income for the assessment year 2019-2020. Therefore, in our considered view, the addition made by the Assessing Officer for the year under consideration only on the basis of date of seizure of cash i.e., on 03.04.2019, amounts to double addition. No doubt, correct income should be assessed in the correct assessment year. If we go by the date of seizure of the cash, it falls in the assessment
9 ITA.No.48/Hyd./2025 year 2020-2021. Further, going by the theory of human preponderance, it is impossible for any person to earn such a huge amount of Rs.48 lakhs in two days of the financial year. Therefore, in our considered view, when the assessee has admitted additional income towards cash seized during the course of search of Rs.48 lakhs for the assessment year 2019-2020, if at all the income is assessable in the assessment year 2020-2021, the DDIT (Inv), Unit-1(2), Hyderabad, should have accepted the declaration for the assessment year 2020-2021 instead of assessment year 2019-2020. Having accepted the declaration for the assessment year 2019-2020 and collected taxes on the income, once again making the addition on very same income for the subsequent assessment year only on the basis of date of seizure of cash is illogical, devoid of merit and cannot be accepted. Therefore, we are of the considered view that, the Assessing Officer erred in making addition towards cash seized during the course of search as unexplained money u/sec.69A of the Act for the assessment year under consideration. The learned CIT(A) without
10 ITA.No.48/Hyd./2025 considering the relevant facts, has simply sustained the addition made by the Assessing Officer. Thus, we set aside the findings of the learned CIT(A) and direct the Assessing Officer to delete the addition made u/sec.69A of the Income Tax Act, 1961.
In so far as addition of Rs.10 lakhs towards agricultural income under the Head “Income from Other Sources”, the assessee could not file any evidence including pattadar passbook, details of crops grown, details of sale of agriculture produce etc., in support of earning of agricultural income. Further, the assessee has made a legal argument in light of belated return filed by the assessee and claimed that, once the return of income filed by the assessee is non est in the eye of law, then, on the basis of the said return of income, no addition can be made. In our considered view, once assessee has claimed agricultural income of Rs.10 lakhs in his return of income filed u/sec.139(4) of the Act, then, the Assessing Officer is bound to consider such income in accordance with law and assess it’s taxability. Therefore, in our considered view, there is no 11 ITA.No.48/Hyd./2025 merit in the legal ground taken by the assessee on this issue and thus, the same is rejected. Since the assessee could not file any evidences to prove agricultural income, in our considered view, there is no error in the reasons given by the learned CIT(A) to sustain the addition made by the Assessing Officer. Thus, we are inclined to uphold the order of the learned CIT(A) and reject the ground taken by the assessee.
In the result, appeal of the Assessee is partly allowed.