An Income Tax search uncovered ₹8.66 crore in cash transactions on a woman's computer, triggering a massive tax demand. But ITAT ruled that the expenditure belonged to…
**ITAT Deletes ₹8.66 Crore Cash Addition**
The Income Tax Appellate Tribunal, Hyderabad, has deleted additions exceeding ₹8.66 crore that the Income Tax Department had treated as unexplained cash expenditure in the hands of an individual taxpayer. The order, dated 9 October 2026, was passed in ACIT, Central Circle-2(2), Hyderabad vs Chinthakunta Ramesh Sridevi (ITA Nos. 698 and 699/HYD/2022), covering assessment years 2017-18 and 2018-19.
The dispute followed a search and seizure operation under Section 132 of the Income Tax Act on 12 October 2018, linked to an investigation into the Rithwik group of companies. During the search, 97 pages of documents were recovered from a computer in an office room at the taxpayer's residence. These records detailed cash payments for land purchases, property registration, house construction and related expenses.
The assessing officer attributed ₹7.72 crore of expenditure to assessment year 2017-18 and ₹94.26 lakh to 2018-19, adding both amounts to the woman's income under Section 115BBE. The taxpayer denied ownership of the transactions, stating the documents pertained to Rithwik Projects Pvt Ltd, a real estate development and project execution company. She relied on a company confirmation and ledger extracts showing the expenditure as part of its business, including purchases of earth, sand and aggregates.
**Why The Department's Case Failed**
The department rejected this explanation, arguing that ledger descriptions did not match the seized documents and that the records showed cash payments while the company's books reflected journal entries. It contended the taxpayer had not proved the spending was the company's rather than her own. The Commissioner of Income Tax (Appeals) examined the confirmation and ledgers, sought a remand report, found the expenditure recorded in the company's books and directed deletion of the additions.
**What Businesses Should Watch**
The tribunal noted the assessing officer had not shown the woma…
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