KRISHNA VENI KANDALA,HYDERABAD vs. DCIT., CENTRAL CIRCLE-2(3), HYDERABAD

Aggrieved by the assessment order passed by the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A) contending, inter alia, that, the Assessing Officer has made addition of Rs.25 lakhs based on ‘dumb document’ seized during the course of search and seizure operation and, therefore, the addition made by the Assessing Officer is not in accordance with law. The learned CIT(A) after considering the submissions of the assessee, satisfaction note recorded by the Assessing Officer u/sec.153C of the Act and the assessment order observed that, the documents seized at page no.149 of Annexure-A1 was confronted to the assessee and that, the assessee in his sworn statement dated 07.02.2020 admitted that, he along with his wife has paid a sum of Rs.50 lakhs to M/s. Vandana Infra Develoeprs Pvt. Ltd., in cash for purchase of property and Rs.50 lakhs by cheque out of withdrawals from Firm M/s. Srinivasa Infrastructures. The learned CIT(A), observed that, the incriminating material found and 5 ITA.Nos.698 & 699/Hyd./2024 seized i.e., page no.149 of Annexure-A1 is not at all a ‘dumb document’ and therefore, rejected the contention of the assessee. Further, the learned CIT(A) also rejected the contention of the assessee that, the satisfaction note recorded by the Assessing Officer is not based on any material found pertains to the assessee. The learned CIT(A) observed that, the satisfaction recorded by the Assessing Officer revolves around the loose sheet seized vide page no.149 of Annexure-A1 from the business premises of M/s. Srinivasa Infrastructures and statement of the assessee was recorded u/sec.132(4) of the Act on 07.02.2020 and, therefore, the document seized is incriminating in nature for the current assessment year 2020-2021 and thus, the satisfaction note recorded by the Assessing Officer is specific and a valid one. The learned CIT(A) further observed that, the assessee was failed to discharge his onus to prove the source of investment made in purchase of property and therefore, the addition made by the Assessing Officer amounting to Rs.25 lakhs [being 50% of assessee’s share] is in accordance with the provisions of sec.69 the Income Tax

Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.

Shri T. Chaitanya Kumar, Advocate-Learned Counsel for the Assessee submitted that, the authorities below has made the impugned addition of Rs.25 lakhs [being 50% of assessee’s share] in the hands of the assessee u/sec.69 of the Act without there being any incriminating material found or seized and the impugned addition has been made based on ‘dumb document’ and, therefore, the addition made by the Assessing Officer and sustained the learned CIT(A), is not in accordance with law. He further submitted that, the Assessing Officer has failed to pin-point what material found and seized which leads to the impugned addition of Rs.25 lakhs except relying on a ‘dumb document’ marked as page no.149 of Annexure-A1. He submitted that, in absence of incriminating material, no addition could be made in the hands of the assessee. In support of this contention, he relied upon the decision of 7 ITA.Nos.698 & 699/Hyd./2024 Hon’ble Supreme Court in the case of PCIT vs., Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC). He accordingly submitted that, the addition made by the Assessing Officer based on ‘dumb document’ and sustained by the learned CIT(A), in absence of incriminating material cannot be sustained in the eye of law. He, therefore, submitted that, the orders of the authorities below should be set-aside and addition should be deleted.

Dr. Sachin Kumar, Sr. AR for Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, it is an admitted fact that, a search and seizure operation was conducted in the business premises of the assessee Firm M/s. Srinivasa Infrastructures and the document impounded i.e., page no. 149 of Annexure-A1 has been confronted to the assessee and the assessee has also admitted the fact that, he along with his wife has paid a sum of Rs.50 lakhs by cheque out of the funds of his Firm M/s. Srinivasa Infrastrctures to M/s. Vandana Infra Developers Pvt. Ltd., for purchase of property for a sum of Rs.1 crore and the balance sum of Rs.50 lakhs has been 8 ITA.Nos.698 & 699/Hyd./2024 paid in cash. The Assessing Officer has made the impugned addition of Rs.25 lakhs in the hands of the assessee being the half share of assessee. Therefore, the seized document is not at all a ‘dumb document’ as alleged by the Learned Counsel for the Assessee. Further, the assessee and his wife are not discharged their onus in proving the payment of Rs.50 lakhs in cash from their known source of income for purchase of property with any supporting documentary evidences either before the Assessing Officer or before the learned CIT(A). Therefore, the learned CIT(A) after considering the submissions of the assessee, sustained the addition made by the Assessing Officer, which is in accordance with law and, therefore, the order of the learned CIT(A) should be upheld.

We have heard both the parties, perused the material on record and the orders of the authorities below. We find that, it is an admitted fact that a seizure and seizure operation has been conducted in the business premises of the assessee’s Firm M/s. Srinivasa Infrastructures at Flat No.502, Chandana Homes, Road

In so far as the case law relied upon by the assessee in the case of Pr. CIT vs., Abhisar Buildwell P. Ltd., (supra), in our considered view, the facts of the present case are entirely different from the case considered by the Hon’ble Supreme Court in the above case and, therefore, in 13 ITA.Nos.698 & 699/Hyd./2024 our considered view, the said case is not applicable and thus, rejected. Further, although, the assessee claims that he has paid consideration for purchase of property out of funds drawn from partnership firm, but, in our considered view, the learned CIT(A) has recorded a categorical finding that, the appellant has drawn a sum of Rs.18 lakhs and his wife Smt. Krishna Veni Kandala has drawn an amount of Rs.10 lakhs from the partnership firm and further, the respective drawings has been already accounted for as the amounts given to Sri KSR [father-in-law of Sri D. Srinivasa Reddy] of Rs.15 lakhs and Rs.10 lakhs to Smt. Kousalya [mother-in-law of Sri D. Srinivasa Reddy]. Therefore, in our considered view, the arguments of assessee that, source for payment made for purchase of property is out of amounts withdrawn from the partnership firm is also not supported by any evidence and thus, rejected. We find that, since the entries in the document seized co-relate to the payment made by the assessee and in absence of sufficient documentary evidences furnished by the assessee that, the impugned sum has been paid out of his known sources of 14 ITA.Nos.698 & 699/Hyd./2024 income, the addition made by the Assessing Officer u/sec.69 of the Act and sustained by the learned CIT(A) are in accordance with law. We, therefore, inclined to uphold the order of the learned CIT(A). Accordingly, the grounds raised by the assessee are dismissed.

In the result, ITA.No.698/Hyd./2024 of the Assessee is dismissed.

This appeal has been filed by Smt. Krishna Veni Kandala who is wife of Devaram Srinivasa Reddy, assessee in ITA.No.698/Hyd./2024. Since, identical facts and figures are involved in this appeal, the reasons given by us in the appeal ITA.No.698/Hyd./2024 shall apply mutatis mutandis to this appeal ITA.No.699/Hyd./2024 as well. Therefore, for similar reasons as discussed by us in the preceding paragraph nos.7 and 8, we are inclined to uphold the order of the learned CIT(A) and dismiss the grounds raised by the assessee.

To sum-up, both the appeals of the assessee’s ITA.Nos.698 and 699/Hyd./2024 are dismissed. A copy of this common order be placed in the respective case files.