The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue’s appeal against the deletion of an addition of ₹2.36 crore made towards alleged unexplained investment in the purchase of immovable property.
The bench of Ravish Sood (Judicial Member) and Madhusudan Sawdia (Accountant Member) has observed that a loose sheet seized during a search operation, without any corroborative evidence, could not be relied upon to sustain an addition under Section 69 of the Income Tax Act, 1961.
The proceedings originated from a search and seizure action conducted in the case of Dr. Amidyala Lingaiah, which itself arose from a larger search involving the Yashoda Group. During the search, authorities seized a loose sheet identified as Page 24 of Annexure A/LA/RES/01. According to the Revenue, the document contained details relating to a land transaction involving the assessee.
The AO alleged that the assessee had purchased Plot No. 6 in Kanteshwar, Nizamabad, measuring 454.50 square yards, at a rate of ₹52,000 per square yard. Based on the seized document, the AO concluded that the total consideration for the property was ₹2.36 crore, of which only ₹27.27 lakh was reflected in the registered sale deed while the balance amount was allegedly paid in cash as “on-money.”
The assessee denied making any cash payment and maintained that the only consideration paid was through banking channels as recorded in the registered sale deed.
Rejecting the assessee’s explanation, the AO relied heavily on the contents of the seized loose sheet and concluded that the assessee had made an unexplained investment of ₹2.36 crore in acquiring the property. Consequently, an addition was made under Section 69 of the Income Tax Act.
On appeal, the CIT(A) found that the Revenue had failed to produce any independent evidence establishing that any amount over and above the registered sale consideration had actually changed hands. The appellate authority noted that the addition rested solely on the contents of the seized loose sheet.
Significantly, the CIT(A) also observed that in the case of the seller, Dr. Amidyala Lingaiah, a similar addition based on the same document had already been deleted on the ground that the seized paper was merely a “dumb document.” That finding had subsequently been upheld by the Tribunal in an earlier proceeding.
The Tribunal agreed with the CIT(A)’s reasoning and emphasized that the Revenue had not produced any corroborative material to support the allegation of cash payments. It observed that apart from the seized loose sheet, there was no documentary evidence establishing payment of on-money by the assessee.
The Bench further noted that identical additions based on the same seized document had already failed in the hands of both the seller and another co-purchaser of the property. Therefore, it would be inappropriate to adopt a different view in the assessee’s case when no additional evidence had been brought on record.
The Tribunal relied on the Punjab & Haryana High Court’s decision in Paramjit Singh v. ITO, which held that the contents of a registered sale deed cannot be displaced merely on the basis of oral assertions or unsubstantiated material. The Court had emphasized the evidentiary value of written documents under Sections 91 and 92 of the Indian Evidence Act, 1872.
Applying the same principle, the Tribunal held that when the assessee denied payment of any amount beyond what was recorded in the registered document, the burden was on the Revenue to produce convincing and independent evidence to prove otherwise. Mere reliance on a loose sheet was insufficient.
The Bench also referred to the Telangana High Court’s ruling in PCIT v. Tarun Kumar Goyal, where additions based solely on an uncorroborated “dumb document” were held to be unsustainable.
Concluding that the seized document had already been treated as a “dumb document” in related proceedings and that no independent corroborative evidence existed to establish payment of unaccounted consideration, the Tribunal upheld the CIT(A)’s order deleting the addition. Accordingly, the Revenue’s appeal was dismissed, while the assessee’s cross-objection supporting the CIT(A)’s findings was allowed.
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