Taxpayer's Statement Validates Dumb Document Found During Search: ITAT Upholds Unexplained Investment Addition [Read Order]
The Tribunal upheld the addition of Rs. 25 lakhs as unexplained investment under Section 69 of the Income Tax Act, 1961, ruling that the seized document, citing the assessee’s sworn statement.
![Taxpayers Statement Validates Dumb Document Found During Search: ITAT Upholds Unexplained Investment Addition [Read Order]](https://images.taxscan.in/h-upload/2025/06/29/2056267-taxpayer-dumb-document-itat-unexplained-investment-addition-taxscan.webp "Taxpayers Statement Validates Dumb Document Found During Search: ITAT Upholds Unexplained Investment Addition [Read Order]")
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition of Rs. 25 lakhs as unexplained investment based on the document found during search and rejected the claim of dumb document as the assessee himself admitted on his sworn statement. Devaram Srinivasa Reddy, (assessee) proprietor of M/s. Srinivasa Infrastructures, and his wife, Smt. Krishna Veni...
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition of Rs. 25 lakhs as unexplained investment based on the document found during search and rejected the claim of dumb document as the assessee himself admitted on his sworn statement.
Devaram Srinivasa Reddy, (assessee) proprietor of M/s. Srinivasa Infrastructures, and his wife, Smt. Krishna Veni Kandala, were subjected to a search and seizure operation on 06.02.2020 at their business premises.
During the search, loose sheets marked were seized, indicating cash transactions. A sworn statement recorded, wherein Srinivasa Reddy admitted the payment of Rs. 1 crore to M/s. Vandana Infra Developers Private Limited as an advance for purchasing property.
Based on the seized document and the statement, the Assessing Officer (AO) initiated proceedings. The AO issued notices, but the assessees failed to provide valid explanations or documents to substantiate the source of the cash payment.
The AO added Rs. 25 lakhs to each assessee’s income as unexplained investment under Section 69, determining Srinivasa Reddy’s total income at Rs. 37,56,070 against his declared income of Rs. 12,56,070.
Aggrieved by the AO’s order, the assessees appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) observed that the assessees failed to prove the source of the cash investment, upholding the AO’s addition.
Aggrieved by the CIT(A)’s order, the assessees appealed to the ITAT. The counsel for the assessees argued that the addition was invalid as it relied on a ‘dumb document’ without incriminating material.
The Counsel for the Revenue argued that the seized document was incriminating, as it was supported by Srinivasa Reddy’s admission of the cash payment. The counsel argued that the assessees failed to discharge their onus to prove the source of the cash, and the addition was lawful.
The two-member bench comprising Vijay Pal Rao (Vice President) and Manjunatha G (Accountant Member), observed that the seized document indicated cash transactions and was corroborated by Srinivasa Reddy’s sworn statement.
The tribunal held that the document was not a ‘dumb document’, as it directly related to the payment made to M/s. Vandana Infra Developers Private Limited, which was supported by a sale agreement for the purchase of plots.
The tribunal rejected the assessee’s claim that the cash was sourced from partnership firm withdrawals, as the CIT(A) found that the withdrawals were accounted for other purposes. The tribunal concluded that the assessees failed to prove the source of the Rs. 50 lakhs cash payment.
The tribunal upheld the addition of Rs. 25 lakhs each under Section 69 of the Act. The tribunal observed that the assessee’s admission in the sworn statement validated the seized document, justifying the addition. The appeals of the assessee were dismissed.
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