High Court · 2025

Appeal under Section 260 A of the lncorne Tax Act' 1961 aggrieved by the order dated 02-03-2007 in l.T.(SS) A.No.148/Hyd/2002 on the fire of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A" Hyderabad Between: Smt. B. Renuka, Hyderabad. Wo. B.S. Neelakanta, 6-3-883/2/4' Tejaswi Plaza' Paniagutta' ...ApPellant AND^"joint ClT, Central Circle-ll, Hyderabad ...ResPondent Counsel for the Appellant: Mr' A'V'A' Siva Kartikeya' representing Mr. A.V. Krishna KoundtnYa Counsel forthe Respondent: Ms' K' Mamata Choudary The Court delivered the following: JUDGMENT ..t THE H NOU RABLES RI JUsTICE P.SAM KOSH Y AND E UR B ES TI E N o D K N A INC M T T B N L P EAL o o 2 o JUDGMENT: (per the Hon,bte sri Justice p.Sam Koshy) Heard Mr. A.V.A. Siva Kartikeya, learned counsel, representing Mr. A.V. Krishna Koundinya, learned counsel for the appellant, and Ms. K. Mamata Choudary, learned Senior Standing Counsel for Income Tax Department appearing on beharf of the respondent. 2' The instant appear under section 260A ofthe Income Tax Act, 1961 (for short, the .Act,) has been filed by the appellant / assessee challenging the order passed by the Income Tax Apperate Tribunar, Hyderabad Bench 'A'(for short, the .ITATJ in I.T. (S.S.) A.No.14BlHy d/2[Oz,for the btock period 1989-90 to 1998_99 and 01.04.1999 to 27.O7.tggg, decided on

08.06.2007.

3. Vide the impugned order, the ITAT parfly allowed the appeal preferred by the appellant to the extent of the findings of the Assessing officer so far as the levy of surcharge under proviso to section 113 0f the Act which according to the ITAT courd had been revied as section 113 0f the Act was introduced only w.e.f. 01.06.2002 and, therefore, surcharge could not had been levied upon in cases where search was itself carried out before the introduction of proviso to section 113 of the Act' However' the ITAT disallowed the contention of the appellant and maintained the order passed by the Assessing Officer and that by the Commissioner of Income-tax (Appeals)-I' Hyderabad (for short 'CIT (Appeals)') to the extent of the value of the property being determined at Rs'1'99'26'696/- and not Rs.1,09.84,081/-' '

4. As has been mentioned earlier' the matter pertains to the block period 1989-90 to 1998-99 and 01'04'1999 to 27 'O7 '1999' 5, The brief facts of the case are that' search and seizure proceedings were initiated by the Department under Section 132 of the Act' The Department found certain incriminating materials such as cash books' ledgers and other documents and' subsequently' a notice under Section 1588D of the Act was issued to the appellant' In response to the said notice, the appellant filed its return of income in Form No'28 declaring undisclosed income as'nil'for the aforesaid block period' Later on' notices under section 142(1) and 143(2) of the Act were issued by the the appellant to produce evidences and Department calling uPon the response given by the appellant' the explanations. Based uPon Department added an amount of Rs'7'75'000/- to be the undisclosed income by way of financial transaction with one Sri B'Naganna' unaccounted investment made in Meridian schoor property for an amount oF Rs'17'78'523/- and rentar income received from Meridian schoor property amounting to Rs.S,10,000/_; all totaling to Rs.30,73,523/_. 6' Aggrieved by the above additions made by the Assessing officer, the appellant preferred an appeal before the CIT (Appeals) and it was contended that the apperant arong with sri B. Naganna had subscribed for a private chit and the starting chit was drawn by the apperant. out of the said amount' the appe'ant used to pay monthry instarments to the chit fund. Hence, the appellant prayed for deletion of this amount of Rs.7,75,O00/- from the income of the appellant. 7. Likewise, it was contended by the appellant that the total payment made to the landlord in the process of purchasing of Meridian schoor property was Rs.1,09,84,OBI/_. Whereas, the landlord has shown the value of the property sold to be Rs.1,99,2 2,696/_. Meanwhite, the appellant and others had also proposed to acquire the entire property, besides the property purchased by them from Meridian school property and therefore, the landowner might have added the value of the property to Rs.1,99,26,696/-. But the propgsed acquiring of the property besides Meridian educationar society somehow faired and the sare did not materia lize. It was further contended by the appellant that the Department has 8. also seized certain day-to-day cash transactions maintained by their accountant. Further, during the search and seizure operation' no cash payments were found to have been made in all these transactions and' therefore, the appellant prayed for deletion of an amount of Rs.17,88,523l- which was added by the Assessing Officer' 9. The CIT (Appeals) uiron due verification of the facts' and on due scrutiny of the documents and explanations provided by the appellant' found that the explanations given by the appellant were not satisfactory or unacceptable. It was the observation of the CIT (Appeals) that these amounts were not refrected in regurar returns of income fired by the appellant and therefore' it had to be treated as unaccounted income earned by the appeilant in the past. The cIT (Appears) arso found that the appellant has not been able to produce cogent and strong piece of evidence, both in respect of having subscribed the chits and also having received any gifts etc. In the absence of which, a presumption has to be drawn that the amount of Rs'7'75'000/- represents investment out of undisclosed sources of income and affirmed the additions of the said amount made by the Assessing Officer' given by the appellant was that the value of 1O. The exPla nation property Purchased by her from Meridian educationEl*society was ,,.,. Rs.1,09,84,081/_ and not Rs.1,99,26,696/- as was projected by the landowner of the said society, and found it to be unacceptabre expranation of there being an in-between negotiations for adjacent rands, the process of which might have been added by the society in their books of accounts while showing the sale of property to the appellant. 11' The said expranation was found to be unacceptable for the simpre reason that 'the manner oF entries made in the books of accounts of- Meridian educational society as to whether there was a comprete breakup given of ta'ying the amount of cheque payment made by the appertant of Rs.1,09,84,0gl/_ and an amount of Rs.69,80,000/_ was added and betow which there was also registration charges reflected at Rs.19,64,6 lS/_. en of which added together comes to Rs.1,99,28 ,696/_. 12' The aforesaid entries got substantiated from further material which was co'ected in the course of seizure that is part of the diary entry which reflected that, of this Rs.1,99,28,696/_, there was a total amount paid of Rs.1,87,50,000/- with a balance shown at Rs.11,76,690/_. Again there was an additional Rs.6,00,000/_ payment made reducing the balance amount payable at Rs.5,76,696/- and there was yet another entry which showed that of the total amount payable of Rs.1,93,5O,OOO/_ only a balance of Rs.5,76,696/- was left to be paid. Therefore, the CIT (Appeals) taking into consideration sub-section 4(A) of Section 132 0r the Act disallowed the contentions raised by the appellant and in the process treated the amount of Rs.89,42,6tl/- as an unaccounted investment'

13. The said finding given by the CIT (Appeals) was also tested by the appellant before the ITAT and the ITAT also found that the explanation given by the appellant was not satisfactory or did not have much force' L4.ThelearnedcounselfortheappellanthadreliedUponthefollowing judgments in support of his contentions' viz'' 1) Commissioner of Income Tax vs' Engineers India Limitedl; 2) B. J. Services Co' Middle East Ltd' vs' Ass'stant Commiss'oner of Income-tax2; 3) Common Cause (A Registered Society) and Others vs' Union of India and Others3; 4) Deputy Commissioner of Income-tax and Another vs' Sunil Kumar Sharmaa; and 5) Deputy Commissioner of Income-Tax and Another vs' Sunil Kumar Sharmas'

15. The contention of the learned counsel for the appellant primarily was, firstly the search and seizure was not carried out at the premises of '120141 15 supreme Court cases 420 '1zot61 tao trn tae (uttarakhand) ' [zorz] :sq trR zzo (sc) [2024] 469 lrR 197 (Karn) ' lzoz+1+as tt". ztt (sc) ..- r! o a Page Z of 8 the appe'ant and secondry, the nature of search and seizure was on roose sheets of paper or entries made in a diary which again did not belong to the appelrant' Therefore, on both these counts those materiars wourd be who'y irrerevant so far as evidence admissible under section 34 0f the Indian Evidence Act and also does not carry any evidential value. 16' However' when we look into the materiar facts of the present case, it wourd revear that the premises where the search and seizure was conducted in fact belonged to the apperant,s husband namery Sri B.s. Neerakanta' Further, the so-calred transactions carried out in the name of Meridian educationar society arso berongs to the famiry of the apperant where the appe,ant's husband is the secretary and her uncle is the chairman of the said society respectively. 17 ' Because the search and seizure was carried out in the premises which was substantiaily under the contror of the apperant,s husband and .rtu,rr." also being made in the course of search of the said premises; the relevance of those documents and articres seized receives more rerevance --..*. and importance, unlike the facts in the judgments which were relied upon by the learned counsel for the appellant where the nexus between the person from whose custody the documents were received and the name oF the individuals reflected were quite different. Moreover, apart from the fact that the search and seizure was conductecr at the premises of the : appellant's husband, it is also relevant to mention that even the in' whose name the transactions relating to educational institution investments have been made also belong to the same family i'e' the appellant, as it is all are relatives who are managing the affairs of the said educational society including her uncle and her husband'

18. In the aforesaid factual backdrop and the judgments relied upon by the learned counser for the appeilant being distinguishabre on facts itserf, Weareoftheconsideredopinionthattheconcurrentfindingsgivenbythe Assessing Officer which have been affirmed by the CIT (Appeals) does not warrant interference. The instant appeal therefore fails and is accordingly dismissed. The question oi law raised stands answered in favour of the Revenue and against the appellant' No costs' 19. As a sequel, miscellaneous petitions pending if any' shall stand closed. sD/ A.V.S. PRASAD EPUTY REGISTRAR //TRUE COPYI/ SECTION OFFICER The lncome Tax Appellate Tribunal' Hyderabad Bench 'A" ci""'dl:i"-rrri. n.t rrisnna rounalnv"' Advocate [OPUC] il & i" r,rr". r' Mamata Choudary' Advocate [OPUC] Two CD CoPies To, 1 2 3 4 Kam/gh yt- Hyderabad HIGH COURT DATED:21 t}Btz}zs // \., . 'i\ t.. .' \ 2o srp mm- .....,... 'i.- 'i. .,^ JUDGMENT lTTA.No.128 of 2OOB DISMISSING OF THE APPEAL G*{^ w,-_ -<foE€