Uppalaiah Ravula Vs ACIT (ITAT Hyderabad)
The Hyderabad Bench of the ITAT held that additions made in the hands of an individual partner on account of cash receipts found and impounded during survey proceedings under Section 133A were unsustainable, as the receipts pertained to transactions of the partnership firm and not to the assessee in his individual capacity. The assessee, an LIC commission agent and a partner in M/s. Srinidhi Real Estate and Constructions, was subjected to reassessment on the basis of impounded material showing receipt of Rs. 50,00,000 for AY 2015–16 and Rs. 47,00,000 / Rs. 32,00,000 for AY 2016–17 from two persons.
On examination of the seized documents and surrounding facts, the Tribunal recorded that the amounts represented advances received for sale of land/plots situated at Survey Nos. 157, 158 and 160, which were admittedly owned by the partnership firm. The Tribunal noted that the Assessing Officer never disputed the ownership of the land by the firm, nor the fact that the firm had developed the land, sold plots/flats, and accounted for such advances in its books of account under the head “advances”, offering the income to tax in subsequent assessment years. Merely because the documents were found in the name of the assessee or because he had received money on behalf of the firm, the receipts could not be treated as his individual income.
The ITAT further held that the additions were made purely on presumptions without any corroborative material to establish that the cash receipts constituted undisclosed income of the assessee personally. In the absence of evidence to suggest diversion of funds or personal ownership of the transactions, the additions sustained by the CIT(A) were found to be contrary to facts and law. Accordingly, the Tribunal set aside the orders of the CIT(A) and directed the Assessing Officer to delete the additions made towards cash receipts for both assessment years. As a result, both the appeals filed by the assessee were allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
These appeals are filed by a single assessee viz., Vuppalaiah Ravula against the separate orders of Commissioner of Income Tax (Appeals) — 12, Hyderabad pertaining to A.Ys. 2015-16 and 2016-17, respectively. Since common issues are involved in both the appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity.
