Smt. Ayesha Magdlene Komanapalli Vs ACIT (ITAT Hyderabad)
Hyderabad ITAT Deletes ₹2.55 Crore “On-Money” Additions: Third-Party Seized Material Without Corroborative Evidence Cannot Sustain Addition
The Hyderabad ITAT in Smt. Ayesha Magdlene Komanapalli v. ACIT, Central Circle-3(2) allowed the assessee’s appeals for AYs 2020-21, 2021-22 and 2022-23, arising from alleged cash “on-money” payments recorded in documents seized during a search on the Vasavi Group / M/s SV Complexes LLP, the developer with whom the assessee and other co-owners had entered into a JDA.
Based on the developer’s seized records, the AO alleged that the assessee had received cash of ₹1 crore in FY 2019-20, ₹55 lakh in FY 2020-21 and ₹1 crore in FY 2021-22—aggregating to ₹2.55 crore. For AY 2020-21, ₹1 crore was consequently added as income under Section 56.
The Tribunal found that the AO had not produced any independent evidence establishing actual receipt of cash. There was no cash trail, movement of funds, confirmation of payment or contemporaneous evidence connecting the assessee with the alleged payments. Importantly, the assessee had categorically denied receipt of any cash in her statement recorded under Section 131, and the Revenue failed to rebut that denial with independent evidence.
The ITAT reiterated an important principle: the presumptions under Sections 132(4A) and 292C apply to the person from whose possession or control the documents are found; they cannot automatically be extended against a third party. Therefore, when Revenue seeks to tax another person on the basis of documents seized from a third party, the entries must be supported by independent corroborative evidence.
Following its earlier decisions in SVS Projects India Pvt. Ltd. v. ACIT and Surya Prakash Kancham v. DCIT, the Tribunal held that the additions were founded solely on third-party seized material without proof of actual receipt of cash and therefore could not be sustained in law. It directed deletion of the ₹1 crore addition for AY 2020-21, and applied the same reasoning to AYs 2021-22 and 2022-23, directing deletion of those additions as well.
Thus, the entire alleged on-money addition of ₹2.55 crore across the three years stood deleted, and all three appeals were allowed.
Cases Discussed:
- Shri Surya Prakash Kancham Vs. DCIT (ITAT Hyderabad), dated 15.05.2026
- SVS Projects India Pvt. Ltd. Vs. ACIT (ITAT Hyderabad), ITA Nos. 2139 to 2141/Hyd/2025 dated 30.04.2026
- DCIT Vs. Shivram Consultants India Pvt. Ltd. (ITAT Delhi), [(2023) 147 taxmann.com 457]
- Dharmaraj Prasad Bibhuti Vs. ITAT (Patna High Court), (2019) 109 taxmann.com 388 (Patna)
- PCIT Vs. Gaurang Bhai Pramod Chandra Upadhyay (Gujarat High Court)
- National Thermal Power Co. Ltd. Vs. CIT (SC), (1998) 229 ITR 383 (SC)
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
These three appeals are filed by Smt. Ayesha Magdlene Komanapalli (“the assessee”), feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad (“Ld. CIT(A)”) all dated 18.08.2025 for the A.Ys. 2020-21, 2021-22 & 2022-23 respectively. Since the assessee has raised identical issues in all these three appeals, for the sake of convenience, these three appeals were heard together and are being disposed of by this common and consolidated order.
