Case Law Details
Vittal Bussa Vs DCIT (ITAT Hyderabad)
In this case, cash of ₹65.71 lakh was found during a search, out of which ₹22 lakh was claimed by the assessee to belong to his mother. The AO rejected the explanation and added ₹22 lakh as unexplained money. The CIT(A), after considering additional evidence and remand report, granted partial relief of ₹14 lakh and sustained ₹8 lakh.
Before the ITAT, the Tribunal upheld the CIT(A)’s approach of accepting only substantiated portions. It agreed that estimation of ₹5 lakh as savings from the mother’s flour mill business was reasonable based on available evidence and human probabilities.
However, regarding ₹3 lakh claimed to have been received by the mother from her late husband, the Tribunal accepted the explanation considering social customs and practical realities in Indian households, even in the absence of strict documentary proof.
Accordingly, out of ₹8 lakh sustained by CIT(A), the ITAT granted further relief of ₹3 lakh and upheld the balance ₹5 lakh addition. The appeal was thus partly allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals) –12, Hyderabad (for short “Ld. CIT(A)”), dated 16.10.2025, pertaining to the assessment year 2023-24.
2. The grounds raised by the assessee read as under :
“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) The learned CIT (A) ought to have considered the fact that the appellant’s mother deposed that she saved an amount of Rs.10 lakhs from the business activity carried on by her and that the said amount of Rs. 10 lakhs was available with her,
3) The learned CIT (A) ought not to have limited the relief to Rs.5 lakhs when she explained that out of the amounts found during the search, an amount of Rs.10 lakhs is the savings from her own business activity;
4) The learned CIT (A) ought to have considered the fact that the mother of the appellant Smt.Bussa Ramalakshmi held in all an amount of Rs.22 lakhs out of which Rs.3,00,000/- was received from her husband and such amount was with her throughout,
5) The learned CIT (A) ought to have seen that the amount received from her husband and the income derived by her after his death aggregating to Rs.13 lakhs stated as available with her at the time of conducting the search and seizure operations;
6) The learned CIT (A) ought to have allowed the entire amount of Rs.13 lakhs without limiting the same to Rs.5,00,000/-;
7) Any other ground/grounds that may be urged at the time of hearing.”
3. The brief facts of the case are that, the assessee is an individual, who filed his return of income for the A.Y. 2023–24 on 28.10.2023, declaring a total income of Rs. 24,08,440/-. A search and seizure operation under Section 132 of the Income-tax Act, 1961, was conducted in the case of M/s. Khayati Steel Industries Pvt. Ltd. and its related entities, and the assessee was also covered under the said operation on 12.01.2023. During the course of search at the premises of the assessee, physical cash of Rs. 65,71,000/- was found and seized. The assessee submitted an explanation with regard to the cash found to the extent of Rs. 43,73,000/- and while explaining the source, the assessee has stated that his mother, Smt. Ramalakshmi, is residing with him at the same premises and that an amount of Rs. 22,00,000/-belonged to her.
4. Consequent to search, the case was taken up for scrutiny and, during the course of assessment proceedings, the A.O. called upon the assessee to explain as to why the addition should not be made towards unexplained cash found during the course of search and claimed to have belonged to the assessee’s mother as unexplained money. In response, the assessee submitted that, his mother, Smt. Bussa Ramalakshmi, is staying with him and that she has filed relevant details to substantiate that cash to the extent of Rs. 22,00,000/- belongs to her. The A.O. did not find merit in the explanation of the assessee and accordingly, rejected the explanation of the assessee and made addition of Rs. 22,00,000/-towards cash found during the course of search as unexplained investment and brought to tax under Section 115BBE of the Income-tax Act, 1961.
5. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee had filed certain additional evidences in terms of Rule 46A of the Income-tax Rules, 1962. During the course of appellate proceedings, the additional evidences filed by the assessee were forwarded to the A.O. for his remand report, and the A.O. submitted his remand report on 18.08.2025 and commented upon the additional evidences furnished by the assessee.
6. The Ld. CIT(A), after considering the additional evidences filed by the assessee and also taking into account the remand report of the A.O., allowed partial relief to the assessee where the Ld. CIT(A) directed the A.O. to accept the source explained by assessee’s mother to the extent of Rs. 8,00,000/- out of the gifts claimed to have been received from her daughter. The Ld. CIT(A) had also directed to A.O. to accept the source explained by the mother of the assessee out of her past savings from the business of flour mill to the extent of Rs. 5,00,000/- out of Rs. 10,00,000/- claimed by the assessee. In so far as the arguments of the assessee that the remaining amount of Rs. 3,00,000/- was received from the estate of his mother’s late husband, was not accepted due to absence of relevant supporting details. Thus, out of the total addition of Rs. 22,00,000/- made by the A.O., the Ld. CIT(A) granted relief to the extent of Rs. 14,00,000/- and the remaining amount of Rs.8,00,000/- was sustained.
7. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
8. The learned counsel for the assessee, Shri S. Rama Rao, Advocate, submitted that, the assessee has explained the source of cash of Rs. 22,00,000/- found during the course of search belonged to the his mother, which was further supported by an affidavit filed by his mother along with relevant evidences. The Ld. CIT(A) accepted the explanation of the assessee in part and sustained addition in part, even though, the assessee has explained the source to the extent of Rs. 22,00,000/- found at the time of search. Therefore, he submitted that the addition sustained by the Ld. CIT(A) should be deleted.
9. The learned Senior A.R. for the Revenue, Ms. Helen Ruby Jesindha, on the other hand, supporting the order of the Ld. CIT(A), submitted that, wherever the assessee could explain the source with supporting evidences, the Ld. CIT(A) had allowed relief. Insofar as the balance amount, the assessee, except filing an oral explanation could not file supporting evidence in respect of the source of his mother’s funds. Therefore, the Ld. CIT(A) has rightly sustained the addition to the extent of Rs.8,00,000/- and the order of the Ld. CIT(A) should be upheld.
10. I have heard both parties, perused the material available on record and had gone through the orders of the authorities below. The A.O. made an addition of Rs. 22,00,000/- towards cash found during the course of search in the absence of a proper explanation by the assessee. The assessee explained the source of funds of his mother, Smt. B. Ramalakshmi, from various sources, including gifts received from her daughter, her past savings from the business of running a flour mill, and the amounts received from her late husband. Thus, out of the total addition of Rs. 22,00,000/- made by the A.O., the Ld. CIT(A) granted relief to the extent of Rs. 14,00,000/- and sustained the balance addition of Rs. 8,00,000/-. The balance addition of Rs. 8,00,000/- comprises the following parts: (i) Rs. 5,00,000/- being the portion of the explanation of the assessee out of the past savings of his mother from running a flour mill, which was not accepted by the Ld. CIT(A); and (ii) Rs. 3,00,000/- being the amount claimed to have been received from other sources, which remained unexplained. The Ld. CIT(A), after considering the evidences filed by the assessee, the remand report of the A.O., and by applying the theory of human probabilities, accepted the explanation in part and, out of the total claim of Rs. 10,00,000/- from the business of running a flour mill, reasonably estimated the savings at Rs. 5,00,000/-. Before me, the assessee could not adduce any further evidence except relying upon the very same arguments made before the A.O. Therefore, I am inclined to uphold the findings of the Ld. CIT(A) to estimate savings from running the flour mill to an extent of Rs. 5,00,000/- only. Accordingly, the addition sustained by the Ld. CIT(A) to an extent of Rs.5,00,000/- towards cash found at the time of search and explained out of savings from running a flour mill is sustained.
11. nsofar as the remaining amount of Rs. 3,00,000/- is concerned, the assessee claims that his mother, Smt. Bussa Ramalakshmi, had received the said amount from her late husband. To support his contentions, the assessee has filed an affidavit from his mother. Considering the social status of the assessee’s family and the customary practices prevalent in India, it is plausible that a deceased person may leave behind some unspent cash. Therefore, having regard to the customary practices and the social status of the assessee and his mother, in my opinion, the A.O. ought to have accepted the source explained by the assessee to the extent of Rs. 3,00,000/- received by his mother from her late husband. Therefore, I direct the A.O. to delete the addition to the extent of Rs. 3,00,000/- being cash found at the time of search and explained by the assessee as having been received from his mother. To sum up, out of the addition sustained by the Ld. CIT(A) to an extent of Rs. 8,00,000/-, the assessee gets relief of Rs. 3,00,000/- and the balance addition of Rs. 5,00,000/- is sustained.
12. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the Open Court on 22nd April, 2026.
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