TaxTMI 
TaxTMI 
2023 (11) TMI 1047
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....reckoning such the previous year related to the assessment year under without assigning proper reasons and justification. 3. The CIT(Appeals) - 19 failed to appreciate that provisions of the Act had no application to the present case and in circumstances case, thereby negating the related findings in the impugned order 4. The CIT(Appeals)-19 failed to appreciate that sum of Rs. were paid to the seller of the disputed transaction during the period 01.04.2012 to 27.05.2012 with a view to remove the encumbrances to the property, thereby negating the presumption of applicability provisions of Section 69B of the Act. 5. The CIT (Appeals) - 19 failed to appreciate that having proved of the transaction of Rs. 6,15,00,000/- by placing on record the copies of ledger account, orders of the courts regarding the disputed property, settlement memo in the hands of the appellant company, presumption of applicability of provisions of Section 69B of the Act was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law. 6. The IT(Appeals) - 19 failed to appreciate that the cross verification carried out by the revenue for comin....
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....llant herein, the re-assessment completed based on the suspicion should fall to the ground. 13. The CIT(Appeals) - 19 failed to appreciate that having accepted on one side about the payment of the balance purchase consideration after the completion of the registration process, the rejection of the stand of the appellant in making the payment of the disputed component of the purchase consideration during 01.04.2012 to 27.05.2012 should accordingly considered as wrong and incorrect especially in the absence of direct evidence. 14. The CIT(Appeals) - 19 failed to appreciate that there was effective/proper opportunity given before passing the impugned order and any order passed in violation of the principles of natural justice is nullity in law. 15. The appellant craves leave to file additional grounds/arguments at the time of hearing." 3. The brief facts of the case are that, the appellant is a Private Limited Company, filed its return of income for the assessment year 2008-09 on 27.09.2008, admitting Nil total income. A search and seizure action u/s. 132 of the Incometax Act, 1961 (hereinafter referred to as "the Act") was conducted at the premises of Sh....
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..... 4.85 crores has been paid for purchase of property on various dates starting from 02.04.2012 to 27.05.2012. The remaining amount of Rs. 1.50 crores has been offered to tax in the hands of Shri. R. Srinivasan, Director of the appellant company for assessment year 2013- 14, because the assessee could not explain source for payment made for purchase of property. 5. The Assessing Officer, however was not convinced with explanation furnished by the assessee and according to the Assessing Officer, subsequent affidavit filed by the appellant along with confirmation letter from Shri. C. Doraisamy, for receipt of Rs. 12 crores on various dates for the financial year 2012-13 relevant to assessment year 2013-14, is only an afterthought to circumvent additions proposed towards unexplained investment for purchase of property. The Assessing Officer, had discussed the issue at length in light of certain judicial precedents including the decision of Hon'ble Supreme Court in the case of CIT vs Durga Prasad More 82 ITR 540 and Sumati Dayal vs CIT 214 ITR 801, in light of theory of preponderance of human probabilities and observed that no prudent person would sell his property and receive part c....
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....lly thought plan to avoid taxation of the said on-money payments: * The Sworn statement of Sri C Duraisamy was recorded on 9.3.2012, on which date itself, he has deposed before the Investigation Authorities that the sale consideration of Rs. 24 Crores has already been received. * Sri R Srinivasan was enquired u/s 131 (1A) of the IT Act on 28.5.2012, on which date, he had deposed that he had paid the registered sale value of Rs. 12 Crores and the additional consideration of Rs. 12 Crores and that the same was unaccounted. * It is not possible that the payments made as recently as on 27.5.2012, practically a day before the said enquiry is not known / recolected as having been made from accounted or unaccounted source. * Further, in the statement deposed by Sri C Doraisamy u/s 132 (4) of the Act during the course of search proceedings on 9.3.2012, he had furnished the details of payments made to various persons / parties as follows: "Q.No.5 Please explaln the sale and purchase transactions of M/s. Premier Roller Flour Mills Page/ Ltd in detall? Ans: I state the transactions about M/s. Pramior Roller Flour Mlls Ltd as below Sale con....
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....mier Roller Flour Mills Limited sold the property to M/s. ARRS Mega Mall Private Limited for a consideration of Rs. 12 Crores. * 08.04.2008 -Compromise deed between C. Doraisamy group and K. Venkatachalam group. On receipt of Rs. 6,45,00,000/-, K. Venkatachalam group confirmed the transfer of shares to C. Doraisamy group and consented to the sale of company's properties to M/s. ARRS Mega Mall Private Limited. All the pending cases before the various authorities were agreed to be withdrawn. 09.04.2008 -Deposit through PNB D.D. to old share Holders by M/s Premier Roller Flour Mills P Ltd. Rs. 6,45,00,000/- * Paid in cash to old share holders Rs. 1,00,00,000/- * Paid to Shri. Gopalakrishnan, one of the old share holders Rs. 55,00,000/- * Settled outstanding dues relating to Venkatachalam & sons Rs. 20,00,000/ * Paid to Sundry cotton suppliers of Andhra Pradesh Rs. 75,00,000/ 22. The payments of the same to Sri C Duraisamy, therefore, are unverifiable and defy logic. No nexus can also be drawn to the alleged payments by the Purchaser and the payments made by the Seller to the persons stated above. Further, no prudent business man, ....
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....ments ranging from Rs. 5 lakhs- to Rs. 20 lakhs. 28. A Show Cause Notice, was therefore issued to the assessee, on 05.03,20 15 detailing the above facts and proposing to add the balance additional consideration of Rs. 6.15 Crores to the returned income and calling for his objections | clarifications / explanations to the said proposal. 29. The assessee filed a letter dated 10.3.2015 reiterating the facts already stated during assessment proceedings. He also referred to a letter alleged to have been issued by Sri C Doraisamy, confirming the receipt of Rs. 12 crores on various dates from Sri R Srinivasan and requested that as the Seller himself had accepted that the payments were made in April and May 2012, the same should be accepted by the Department and allowed. He further requested for an opportunity for personal representation. 30 The assessee's final submissions are again considered carefully. The assessee did not avail of the further final opportunity given for personal representation on 16.3.2015. 31. It is a well settled law that statements given under oath duing the course of Search and Seizure proceedings are reliable evidences and t....
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....ri C Doraisamy, MD of M/s Premier Roller Flour Mills Ltd has been established. The assessee-company has not filed its return of income for A.Y. 2013-14 to substantiate the said payments in its accounts. 35. Therefore, as detailed in the paragraphs mentloned supra, there is no veracity, authenticity, or sanctity for the cash paymernts of Rs. 6.15 Crores stated to have been made by Sri R Srinivasan towards the additional sale consideration oul of accounted sources. The same is held to be the unexplained investments of the assessee-company and assessed as such u/s 69B of the Act." 6. Being aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the ld. CIT(A), the assessee has filed a detailed written submission on the issue, which has been reproduced at Para 5 of page 4 to 9 of Ld. CIT(A) order. The sum and substance of arguments of the assessee before the ld. CIT(A) are that, the property has been purchased for a consideration of Rs. 24 crores and sale deed was executed for Rs. 12 crores only. The balance amount of Rs. 12 crores has been paid on various dates and up to assessment year 2013-14, including an amount of Rs. 4.85 crores in c....
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.... source for purchase of immovable property from M/s. Premier Roller Flour Mills Ltd., as unexplained investment u/s. 69B of the Act. The Ld. Counsel for the assessee, referring to various documents including judgment of District Court in O.S. No. 312/2007, dated 17.04.2008 and Compromise Deed executed by the sellers dated 08.05.2008, submitted that there was a dispute on the property, which has been subsequently sorted out by way of Court order and subsequent compromise deed. The appellant has paid a sum of Rs. 4.85 crores on various dates starting from April, 2012 to July, 2012, as per the directions of Shri. C. Doraisamy, Director of vendor company, and the appellant has accounted said payment in the books of accounts for the financial year 2012-13 relevant to assessment year 2013-14. The remaining amount of Rs. 1.50 crores has been offered to tax in the hands of Shri. R. Srinivasan, Director of the appellant company for the assessment year 2013-14. The appellant has filed an affidavit and explained details of payments made to different persons as per the directions of the seller company. Shri. C. Doraisamy, Director of vendor company has confirmed receipt of sum of Rs. 4.85 cror....
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....n the case of CIT vs Durga Prasad More (Supra) and Sumati Dayal vs CIT (Supra). The ld. CIT(A), after considering relevant facts has rightly sustained additions made by the Assessing Officer and their order should be upheld. 10. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the appellant company had purchased 1.97 acres of land from M/s. Premier Roller Flour Mills Ltd., vide registered sale deed dated 03.01.2008 for a consideration of Rs. 12 crores. It is also an admitted fact that evidence gathered during the course of search in the case of Shri. C. Doraisamy, Director of the vendor company, clearly establishes the fact of receipt of additional consideration of Rs. 12 crores for sale of property. This fact is further strengthened by post-search investigation conducted in the case of appellant company u/s. 131 of the Act, where Shri. R. Srinivasan, Managing Director of the company in his sworn statement recorded on 28.05.2012, clearly admitted to have paid additional consideration of Rs. 12 crores for purchase of property from M/s. Premier Roller Flour Mills....
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....amy, coupled with judgment of District Court in O.S. No.312/2007 and Compromise Deed executed by the seller dated 08.05.2008, clearly shows there was a dispute on the property between various persons and the same has been sorted out subsequent to the date of sale deed. This fact is further strengthened by affidavit filed by the Director of appellant company and supported by confirmation letter filed by Shri. C. Doraisamy, undertaking dates and amounts received subsequent to date of sale i.e., for the financial year relevant to assessment year 2013-14. If you go by affidavit filed by the assessee to support his argument, it appears that there was a dispute in the property between various persons and appellant has made part payment after settlement of dispute and execution of Compromise deed by the sellers. Further, statement recorded from Shri. R. Srinivasan, Director of appellant company during the course of search clearly shows that, additional consideration was paid only in installments due to pending litigation over the subject property and resolved during the assessment year 2013-14. The answers in the sworn statement under any stretch of imagination cannot be considered as a d....
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....he Assessing Officer to allege that the arguments of the appellant with regard to substantiate payment to the vendor company, in light of affidavit and confirmation letter from the Director of the vendor company is an afterthought is devoid of merits and thus, rejected. 12. Further, the Assessing Officer has made additions solely on the basis of statement of Shri. C. Doraisamy, but fact remains that said statement cannot be relied upon for the simple reason of non-furnishing of the full version before passing of the re-assessment order. Further, in the statement of Shri. C. Doraisamy, there is no iota of any evidence with regard to details of payments, even though he had admitted that additional consideration of Rs. 12 crores has been received for sale of property. Moreover, the offer of the additional consideration received by the seller in the income tax returns filed for the assessment year 2008-09, by virtue of provisions governing computation of capital gains would not alter the recognition of payments by the appellant during the assessment year 2013-14 in the hands of appellant company, especially when amounts were paid to resolve dispute, which was pending after the execu....