LAXMA REDDY KORPOLU,HYDERABAD vs. ACIT., CENTRAL CIRCLE-1(2), HYDERABAD

search and seizure operation under section 132 of the Income Tax Act, 1961 (“the Act”) was carried out in the case of the assessee on 27.09.2019. On the same date, a survey under section 133A of the Act was also conducted at the business premises of the firm. Certain documents were impounded from the business premises of the firm. Subsequently, the assessee filed his return of income for Assessment Year 2019–20 on 28.09.2019 declaring total income of Rs.4,28,30,630/-. The case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued by the Learned Assessing Officer (“Ld. AO”) on 29.09.2020. During the assessment proceedings, the Ld. AO, on the basis of a document found from the business premises of the firm (“seized document”), alleged that the assessee had paid on-money in cash amounting to Rs.1,53,17,161/- to the vendors over and above the registered value in respect of certain land purchased during the year under consideration. Accordingly, the Ld. AO made an addition of Rs.1,53,17,161/- under section 69 of the Act in the hands of the assessee and completed the assessment under section 143(3) of the Act vide order dated 21.04.2021, determining total income of the assessee at Rs.5,81,47,521/-. 4. Aggrieved with the order of the Ld. AO, the assessee filed appeal before the Ld. CIT(A), who confirmed the addition made by the Ld. AO and dismissed the appeal. 5. Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that the only issue arising for adjudication out of the grounds of appeal is

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ITA No 765 769 and 770 of 2025 Laxma Reddy Korpolu and others

the addition of Rs.1,53,17,161/- made under section 69 of the Act on account of alleged on-money payment. It was submitted that during the year under consideration, the assessee, his wife and his son had purchased certain parcels of land from three different vendors on different dates. The details of purchase of the said parcels of land are placed at page no. 4 of the written submission of the assessee and the registered sale deeds for the same are placed at page nos. 47 to 108 of the paper book. The Ld. AR invited our attention to the seized document placed at page no. 172 of the paper book and submitted that the document was not seized from the premises of the assessee, is unsigned and undated and nowhere in the seized document it is mentioned that cash has been paid by the assessee or his relatives. It was further submitted that the Ld. AO treated the figure of Rs.2.61 crores mentioned as “balance value” as on-money and added Rs.1,53,17,161/- in the hands of the assessee and the balance amount of Rs.1,07,82,839/- in the hands of wife and son of the assessee without any corroborative evidence. The Ld. AR also demonstrated multiple serious dissimilarities between the seized document (page no. 172 of the paper book) and the actual transactions (page no.4 of the written submission), namely: (a) The total registered value mentioned in the seized document is about Rs.11.35 crores, whereas the actual total registered value of all sale deeds is only Rs.11.13 crores. (b) The cheque amounts mentioned in the seized document do not tally with the actual cheque payments made.

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ITA No 765 769 and 770 of 2025 Laxma Reddy Korpolu and others

(c) The area of land mentioned in the seized document is 11 acres 26 guntas, whereas the actual land purchased is 11 acres 32 guntas. 6. The Ld. AR further submitted that, except for the name of the vendors and the location of land (Mohabath Nagar), none of the figures match with the registered documents. All the lands were registered prior to the date of search, and therefore, any probability of manipulation or reconstruction after search is also cannot be presumed in the case of the assessee. No material evidence has been brought on record by the Revenue to establish that any cash was paid to the vendors. Despite full availability of vendors’ details, the Ld. AO did not conduct any enquiry with the vendors. He also invited our attention to the affidavits of all the vendors (page nos. 109 to 116 of the paper book) and submitted that these affidavits clearly state that no amount over and above the registered consideration was received by them. These affidavits were filed before the Ld. CIT(A), yet the Ld. CIT(A) did not point out any discrepancy in them. Accordingly, it was submitted that the addition is based purely on presumption and deserves to be deleted. 7. Per contra, the Learned Departmental Representative (“Ld. DR”) supported the orders of the lower authorities. He invited our attention to para no. 6.3 of the order of Ld. CIT (A) in the case of wife of the assessee and submitted that there are several similarities found by the Ld. CIT (A) between the seized documents and the actual transactions. He further invited our attention to the statement of the son of the assessee reproduced by the Ld. AO

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ITA No 765 769 and 770 of 2025 Laxma Reddy Korpolu and others

at page no. 3 of the assessment order, wherein initially the son of the assessee admitted that the seized documents pertain to purchase of land. However, he subsequently claimed that the balance amount as per the seized document represented estimated development expenditure. It was further submitted that no evidence of development expenditure has been produced and that the assessee failed to discharge the onus to prove that the impugned document does not represent on-money payment. Accordingly, the Ld. DR submitted that there is no infirmity in the order of the lower authorities. The same are liable to be upheld. 8. We have heard the rival submissions and perused the material available on record. We have carefully gone through the seized document placed at page no. 172 of the paper book, which is to the following effect:

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ITA No 765 769 and 770 of 2025 Laxma Reddy Korpolu and others

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ITA No 765 769 and 770 of 2025 Laxma Reddy Korpolu and others

assessee. There is also no mention anywhere in the document that any cash has been paid by the assessee or his family members. Most importantly, we observe that the Revenue has not brought any material on record to establish that any actual cash was paid by the assessee to the vendors. No enquiry has been conducted by the Ld. AO with the vendors, despite their identities and details being fully available. We also find that the assessee had filed affidavits from all the vendors before the Ld. CIT(A), categorically affirming that no consideration over and above the registered amount was received by them. We note that the Ld. CIT(A), while dismissing the appeal, has not pointed out any defect, contradiction or infirmity in these affidavits. Therefore, in our considered view, the addition made by the Ld. AO is based merely on suspicion and surmises, without any corroborative evidence. It is well-settled law that suspicion, howsoever strong, cannot take the place of proof. In the absence of any independent evidence of actual payment of cash and considering the significant inconsistencies between the impugned document and the registered transactions, we hold that the addition of Rs.1,53,17,161/- under section 69 of the Act is unsustainable in law. Accordingly, we direct the Ld. AO to delete the addition of Rs.1,53,17,161/-. 11. In the result, the appeal filed by the assessee in ITA No.765/Hyd/2025 is allowed. ITA Nos. 769 and 770/Hyd/2025: 12. The issues involved in these two appeals are identical to the issues involved in the appeal in ITA No.765/Hyd/2025

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ITA No 765 769 and 770 of 2025 Laxma Reddy Korpolu and others

regarding addition made by Ld. AO on the basis of seized documents, wherein we have deleted the addition made by the Ld. AO under section 69 of the Act. Therefore, our discussion and findings in ITA No.765/Hyd/2025 are mutatis mutandis applicable to these appeals also. Accordingly, we delete the additions made by the Ld. AO in these appeals also. 13. In the result, the appeals in ITA Nos. 769 and 770/Hyd/2025 of the respective assessees are allowed. 14. To sum up, all the three appeals filed by the assessees are allowed. Order pronounced in the Open Court on 28th January 2026.

Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad dated 28th January 2026. Vinodan/sps Copy to: S.No Addresses 1 Shri Laxma Reddy Korpolu, Smt. Leela Reddy Korpolu and Shri Uttam Kumar Reddy Korpolu, c/o B Narsingh Rao & Co. LLP, Plot No.554, Road No.92, MLA Colony, Jubilee Hills, Hyderabad 500096 2 Asstt. CIT, Central Circle 1(2), Aayakar Bhavan, Basheerbagh, Hyderabad 500004 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order

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