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Facts
The assessee filed an appeal against the order of the Ld. CIT(A), who confirmed an addition of Rs.1,83,600/- made under section 69A of the Act. The addition was based on a seized "agreement of sale" indicating a cash payment, allegedly made by the assessee. However, the assessee contended that the agreement was not signed by them and they never received any cash.
Held
The Tribunal noted that the seized 'agreement of sale' lacked signatures of the assessee or vendors and was therefore unsubstantiated. Furthermore, the property was acquired by the assessee after the date of the alleged agreement, and it was later sold to a third party. The Revenue failed to provide cogent material to prove actual cash receipt.
Key Issues
Whether the addition made under Section 69A based on an unsigned seized document, without corroborative evidence of cash receipt and ownership at the time of the alleged transaction, is sustainable.
Sections Cited
153C, 69A
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Income Tax Appellate Tribunal, Hyderabad ‘ DB A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
(िनधा�रण वष�/Assessment Year: 2020-21) Atchutha Venkata Vs. Assistant Commissioner Sreenivasa Rao, of Income Tax Ranga Reddy Central Circle 2(1) PAN:ADGPA1171P Hyderabad (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: CA Praveen Kumar राज� व �ारा/Revenue by:: Smt. Helen Ruby Jesindha, Sr. DR सुनवाई की तारीख/Date of hearing: 22/12/2025 घोषणा की तारीख/Pronouncement: 07/01/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by Atchutha Venkata Sreenivasa Rao (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-12, Hyderabad (“Ld. CIT(A)”) dated 18.07.2025 for the A.Y 2020-21.
The assessee has raised the following grounds of appeal:
The brief facts of the case are that the assessee is an individual who filed his return of income for the Assessment Year 2020-21 on 04.11.2020, declaring a total income of Rs.5,02,000/-. A search and seizure operation under section 132 of the Income Tax Act, 1961 (“the Act”) was conducted on 23.03.2021 in the case of Spectra Group of Companies. During the course of the said search, an “agreement of sale” was found and seized, which indicated that the assessee along with twelve other persons had allegedly entered into an agreement of sale dated 31.12.2019. On the basis of the said seized document, proceedings under section 153C of the Act were initiated in the case of the assessee and notice under section 153C was issued on 12.07.2023. Subsequently, notice under section 142(1) of the Act dated 23.10.2024 was issued requiring the assessee to file his return of income, in response to which the assessee requested that the original return filed earlier may be treated as the return filed in response to the notice. Thereafter, notice under section 143(2) of the Act was issued to the assessee. From the seized document, the Learned Assessing Officer (“Ld. AO”) observed that cash of Rs.60 lakhs was stated to have been paid by the vendee to the vendors and the assessee’s share therein was worked out at Rs.1,83,600/- being 3.06%. The Ld. AO called upon the assessee to explain the said alleged cash receipt. Not being satisfied with the explanation furnished by the assessee, the Ld. AO treated the amount of Rs.1,83,600/- as unexplained money under section 69A of the Act and added the same to the total income of the assessee.
Page 3 of 7 Accordingly, the assessment was completed by the Ld. AO under section 153C of the Act on 25.02.2025 by making an addition of Rs.1,83,600/- under section 69A of the Act and determining the total income of the assessee at Rs.6,85,600/-.
Aggrieved with the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions of the assessee, was not convinced and dismissed the appeal, confirming the addition made by the Ld. AO.
Aggrieved with the order of the Ld. CIT (A), the assessee is in further appeal before the Tribunal. The learned Authorised Representative (“Ld. AR”) invited our attention to page nos. 9 to 18 of the paper book No. I and submitted that the seized “agreement of sale” does not bear the signature of any of the alleged vendors, including the assessee. It was contended that the assessee has never executed the alleged agreement of sale and has also never received any cash from the Spectra Group. The Ld. AR further submitted that although the seized document mentions the date of execution as 31.12.2019, the assessee was not even the owner of the property as on that date. In this regard, he drew our attention to the registered sale deed placed at page nos. 9 to 23 of the paper book No. II, which shows that the assessee purchased the property only on 30.01.2020, i.e., subsequent to the date mentioned in the seized document. The Ld. AR also invited our attention to the encumbrance certificate placed at page
Page 4 of 7 no.1 of the paper book No. II, which clearly evidences that the property was registered in favour of the assessee only on 30.01.2020. It was submitted that even assuming, without admitting, that the seized document exists, the sale contemplated therein has never been acted upon and the property was never transferred to the Spectra Group. Further, the Ld. AR drew our attention to the registered sale deed placed at page nos. 24 to 44 of Paper Book No. II and demonstrated that the property was ultimately sold by the assessee to a third party, namely, Shri Karnati Ramya Teja, on 21.12.2024. He also relied upon the encumbrance certificate placed at page nos.1 to 8 of Paper Book No. II, which corroborates the registration of the property in favour of the said purchaser on 21.12.2024. It was further contended that there is no material brought on record by the Revenue to establish that the assessee had actually received any cash from the Spectra Group. Finally, the Ld. AR submitted that in the absence of any signature on the seized document, absence of ownership of the property on the alleged date of execution, and in the absence of any evidence of actual receipt of cash, the addition under section 69A of the Act is wholly unsustainable and liable to be deleted.
Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities and the seized document and submitted that the addition has been rightly made on the basis of incriminating material found during the course of search.
We have heard the rival submissions and perused the material available on record. We have also gone through the seized document i.e. “agreement of sale” placed at page nos. 9 to 18 of the paper book No. I. On perusal of the same, we find that the alleged “agreement of sale” does not bear the signature of the assessee or any of the alleged vendors. In the absence of signatures, the execution of the said document itself remains unsubstantiated. We further note that the seized document mentions the date of execution as 30.12.2019. However, on perusal of the registered sale deed (page no. 9 to 23 of the Paper Book No. II) and the encumbrance certificate (page nos.1 to 8 of the Paper Book No. II) placed on record, it is evident that the assessee acquired ownership of the property only on 30.01.2020. Therefore, on the date mentioned in the seized document, the assessee was not the owner of the property in question. We also find force in the submission of the Ld. AR that the alleged transaction with the Spectra Group has never materialised. On the contrary, the property has ultimately been sold by the assessee to a third party, namely Shri Karnati Ramya Teja, on 21.12.2024, as evidenced by the registered sale deed placed at page nos. 24 to 44 of Paper Book No. II. The encumbrance certificate placed at page nos.1 to 8 of Paper Book No. II also corroborates the said factual position. We further observe that the Revenue has not brought on record any cogent material to establish that the assessee has actually received any cash from the Spectra Group. Mere reference to an alleged cash payment in Page 6 of 7 an unsigned seized document, without any corroborative evidence of actual receipt, is not sufficient to sustain an addition under section 69A of the Act.
In view of the above factual and legal position, we are of the considered opinion that the addition of Rs.1,83,600/- made under section 69A of the Act is not sustainable. Accordingly, we direct the Ld. AO to delete the said addition.
Since we have allowed the appeal of the assessee on merits, we refrain from adjudicating the legal grounds raised by the assessee, which are kept open.