Rondla Pushpasena Reddy Vs ITO (ITAT Hyderabad)
ITAT Hyderabad Deletes Addition for Son’s Medical College Donation – Seized Documents from Third Party Not Conclusive- No Cross-Examination, No Addition
Hyderabad Tribunal considered whether seized documents found in a medical college during search could be the sole basis to tax alleged donation of ₹20.50 lakh paid for admission of assessee’s son.
The case arose from a search u/s 132 in Arihant Educational Society (Medical College) where evidences showed receipt of donations over prescribed fees. College admitted undisclosed income of ₹40.45 crore. Documents also contained assessee’s name showing ₹10.50 lakh regular fee & ₹29.50 lakh donation for his son’s MBBS admission. AO, invoking s.153C, added ₹20.50 lakh in AY 2012-13, being part of alleged cash payment. CIT(A) confirmed.
Before Tribunal, Assessee argued that:
- No document was seized from his possession; material was from third party.
- No corroborative evidence or independent enquiry proved actual payment.
- Seized papers were never confronted nor cross-examination of college staff allowed, violating natural justice as per SC ruling in Andaman Timber Industries v. CCE (281 CTR 214).
- In a parallel case on same seized documents (V.S.S.S.R. Raju Alluri v. ITO, ITA 2070/Hyd/2018, AY 2012-13), ITAT had already deleted addition.
Tribunal agreed, holding that when seized material belongs to a third party, presumption cannot automatically be drawn against assessee. Without cross-examination & corroboration, addition fails. Following precedent in Alluri’s case, it directed deletion of ₹20.50 lakh addition. Accordingly, appeal was allowed in full.
