TaxTMI 
TaxTMI 
2026 (3) TMI 1012
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....ter of the assessee was meant only for limited purpose of negotiating the price with the customers, and, as such, no reliance can be placed on such unsigned 'welcome letters' (c) The Ld. CIT(A) has brushed aside the enquiries made by the investigation wing from the persons who had purchased he SCOs / DSS and nothing adverse has been admitted by such persons and there was no incriminating evidence with regard to the alleged suppression of sales price of SCOs / DSS. (d) Notwithstanding the above said ground of appeal, Ld. CIT(A) has failed to appreciate that no compliance with Section 65B of the Indian Evidence Act in respect of digital data on the basis of which, certain uncalled for addition have been made and also at best for the sake of argument, it is stated that only appropriate net profit ratio could be applied on such alleged suppression of receipts, rather than confirming the entire addition of Rs. 8,10,75,000/-. 2.That the Ld. CIT(A) has erred in making the addition of Rs. 2,32,00,000/- on account of unsecured loan u/s 68 and applying the provisions of Sec. 115BBE of the Income Tax Act and this addition was not called for as no incriminati....
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....sed on 15-09-2020 without change in declared figures. Post-search, a notice u/s 153A was issued on 20-10- 2021. In response, the assessee filed return of income. During the course of assessment proceedings, statutory notices were issued u/s 142(1) from time to time calling for various details from the assessee. The assessee duly responded to the same. Considering the same, impugned assessment was framed on the assessee after making certain additions. 2.2 The first issue that was identified by Ld. AO was alleged unaccounted sales on various units as sold by the assessee during AYs 2019-20 to 2021-22. The units were in the shape of Double Story Showrooms (DSSs) / Shop-cum-offices (SCOs). The addition stem from a survey action u/s 133A which was conducted by the department at the site office viz. Mohali Citi Centre, GMADA, Aerocity, Mohali wherein digital loose papers were found and impounded as Annexure-1 (Pages 16,17 & 18). The seized papers, inter-alia, contained list of customer's names, sale price, unit and address along with welcome letter-cum-receipt allegedly issued by the assessee against sale of Shop-cum-office (SCOs) / Double Story Shops (DSSs). The contents thereof ....
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....he Ld. AO thereafter observed that the rate of property would depend on the location, size of the property and market demand. However, SCOs / DSSs of same size with near location were sold at different prices. The Ld. AO quoted few cases to bolster the same. The same has been enumerated at Para 1.8 of the assessment order. 2.7 The Ld. AO sought internal validation of the aforesaid conclusion by referring to welcome letter cum receipts mentioning the sale price per unit. The same were seized from Mohali Citi Center. The payment details as mentioned therein was compared with the payment details of the same customer for the same property as recorded in the regular Tally data. The RTGS / Bank Payments as mentioned in these welcome letters matched with the bank account as well as Tally data of the assessee. This observation has been made for various units (DSS 114, 122, 99, 66, 138, 113, 94, 97 & 134). The same would prove receipt of excess sale consideration in cash. 2.8 For external validation, summons was issued by investigation wing to one Shri Santokh Singh who purchased a showroom DSS-99 in joint ownership and his statement was recorded. He confirmed having made payment in t....
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....the Mohali City Center and were shown the showroom and were quoted a price of Rs. 1.15 Crore including construction because the showroom was already completely constructed. I don't know what is the price on brochure. Ques. 19 How is it possible that you were given discount of Rs.42 Lakh even if Rs. 1.15 Crore is considered as its initial price? Ans. 19 I don't know I told him that we can arrange only up to 70-80 Lakh. We had returned home without making a deal and then Nitin Verma called us and invited to the office again to have a meeting with Shri Anil Goyal. We attended the meeting and the deal was finalized for 73 Lakh plus 11.2 Lakh for construction, a total of Rs. 84.2 Lakh. Pertinently, Shri Santokh Singh confirmed that DSS-99 was purchased by him for Rs.73 Lacs only after negotiations and only that much of payment was made by him to the assessee. Initially, he was quoted a price of Rs. 1.15 Crores but he was able to arrange funds only up to 70-80 Lakh. He had returned home without making a deal and thereafter, he was invited to the office of the assessee wherein the deal was finalized by Shri Anil Goyal for Rs.73 Lacs only for sale of plot and a....
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....s tabulated below: - No. Name of Lender Amount of Loan (Rs.) Repayment during AY 2020-21 Repayment during AY 2021-22 Documents furnished by the assessee 1. Shri Ajaib Singh s/o Basta Singh Rs.60.00 Lacs Copy of account, Assessee's bank statement, Aadhar Card, PAN and death certificate 2. Gagan Sharma Rs. 25.00 Lacs -- 3. Gora W/o Beeram Das Rs. 29.00 Lacs 4. Jashanpreet Kaur Rs. 15.00 Lacs Confirmed copy of accounts, Aadhar Card, PAN and Bank statement 5 O.P. Dhingra Rs. 30.00 Lacs Rs. 10.00 Lacs Rs. 20 Lacs 6. Sarninder Singh Brar Rs. 69.00 Lacs Rs. 55 Lacs 7 SDRD Construction Rs. 4.00 Lacs Rs. 24.00 Lacs Copy of Accounts, ITR, PAN, financial statements Total Rs. 232.00 Lacs Rs. 89.00 Lacs Rs. 20.00 Lacs 2.12 Finally, the assessment was framed on 28-12-2022 which was subjected to assessee's challenge in first appeal. Appellate Proceedings 3.1 The assessee, by way of det....
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....el, view, stage of construction, urgency of sale and buyer's negotiation strength etc. The assessee's books were not rejected u/s 145(3). No attempt was made to obtain comparable sale deeds for similar units sold during the year and no reference was made to Department's valuation cell for technical opinion on market rates. There was no corroboration of such extrapolation. Therefore, the addition of Rs.350.16 Lacs was deleted against which the revenue is in further appeal before us. 3.3 On the addition of Sec.68. the assessee contended that it furnished complete details of all the lenders including name, address, confirmation, PAN and bank statements. The loans were received through normal banking channels. There was no material to suggest that the same represent assessee's unaccounted money. No enquiry was made from any of the lender parties and there was no adverse material on record. However, Ld. CIT(A), at para 9.3.4, rejected the same on the ground that the assessee did not furnish ITR or bank statement of the lenders. There was mismatch of Rs.4 Lacs in loan of SDRD construction. Therefore, by endorsing the stand of Ld. AO, the impugned addition was confirmed....
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....s for individual SCOs / DSSs which were displayed at business premises so that the visiting customers could see that substantial advanced had already been received from other buyers thereby enhancing the confidence in the project. As per assessee, these letters were roughly drafted letters indicating higher amount of booking to build up confidence amongst customers regarding the demand of the project and so as to facilitate negotiations. These letters were used only as a marketing tool to demonstrate demand for SCOs / DSSs and to support negotiations. A sample copies of these welcome letters have already been extracted in the assessment order. Upon perusal of the same, it could be seen that there is no signature either of the assessee or of the customer and only certain rate and amount received has been mentioned. Pertinently, there is no mention of any cash component in the deal. The letter merely states the customer's name, unit number, rate and payment received. The same has not been acknowledged by any of the parties to the transaction. The same are not in the nature of any agreement, allotment letter, receipt or any legally enforceable document. No corroborative evidences ....
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....ual sale consideration as admitted by him. He has categorically stated that the price quoted to him was only Rs.115 Lacs and no brochure was shown to him. Shri Santokh Singh confirmed that DSS-99 was purchased by him for Rs.73 Lacs only after negotiations and only that much of payment was made by him to the assessee. Initially, he was quoted a price of Rs. 1.15 Crores but he was able to arrange funds only up to 70-80 Lakh. He had returned home without making a deal and thereafter, he was invited to the office of the assessee wherein the deal was finalized by Shri Anil Goyal for Rs.73 Lacs only for sale of plot and another Rs. 11.2 Lakh was to be paid towards construction component. Therefore, the whole case of Ld. AO that the welcome letters represent actual sale consideration by the assessee fall flat on the ground. On these facts, the argument that these welcome letters were merely a marketing and negotiation tool to create perception of demand and booking momentum amongst new customers in view of heavy financial burden of GMADA installment and development commitments is to be accepted. The same would also explain sale of units by the assessee at varied rates. It is not the case ....
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....he basis of probable market prices as gathered from portal 99acres.com. As rightly observed by Ld. CIT(A), such an approach by Ld. AO is legally impermissible in the absence of any seized material or independent evidences. The Ld. AO has merely presumed that all the other sales suffered similar suppression and applied market rate to compute actual consideration. The rates have been applied mechanically whereas no buyer was examined. No incriminating document was available for these units. The presumption of Ld. AO was speculative and contrary to the principle that additions in search cases must be based on cogent material. The extrapolation was flawed in methodology. The Ld. AO effectively replaced the assessee's declared turnover for 85 units with an artificial figure without rejecting the books u/s 145(3). The absence of any direct evidence for the alleged suppression of sales in these sales instances render the addition unsustainable. The rates displayed on the property portal was not authenticated record of concluded transactions. These rates are posted by brokers, sellers or other users to advertise asking prices. There is no certainty that these rates correspond to actual....
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.... furnished ITR and financial statements of that entity. Apparently, there is no difference in the accounts as alleged by lower authorities. The lender is a corporate entity. The financial statement reflect loan of Rs. 28 Lacs to the assessee. The amount of Rs. 28 Lacs has fully been repaid by the assessee in 30-01-2020. Therefore, the creditworthiness of this lender could not be doubted. The loan of Rs.69 Lacs from Shri Sarninder Singh Brar has been repaid substantially to the extent of Rs. 55 Lacs by the assessee during AY 2020- 21 and the lender has closing balance of Rs. 14 Lacs. The transactions are through normal banking channels only. The assessee has obtained loan of Rs. 15 Lacs from Ms. Jashanpreet Kaur on 20-07-2018 which is evident by ledger extract. The assessee has furnished PAN details as well as Aadhar Card of the lender. The loan is through normal banking channels only. The assessee has obtained loan of Rs.30 Lacs from Shri O.P. Dhingra on 15-05-2018 which has fully been liquidated by 06-11-2020. The same is evident from ledger extracts. All the transactions are through banking channels only. 9. We find that as per the provisions of Section 68 of the Inco....
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.... Haryana High Court in the case of CIT Vs Karaj Singh (15 Taxmann.com 70) held that where the assessee filed competed details to prove the genuineness and creditworthiness of the loan creditors and the loans stood repaid through normal banking channels, Ld. AO was not justified in treating the said loan as unexplained cash credit u/s 68. Similar is the decision of Chandigarh Tribunal in the case of Shri Rajiv Goyal vs. ITO (ITA No.481/Chd/2025). The decision of Agra Tribunal in the case of Sh. Agarsen Logistic (ITA No. 108/Agra/2025 dated 24-06-2025) has been rendered on identical facts. The Agra Tribunal held that addition u/s 68 could not be made on preponderance of probability and there has to be some evidence to establish the fact of unexplained cash credit. No addition could be made merely on the basis of suspicion. Once the assessee has filed all the details, the burden of proving the genuineness and creditworthiness of the creditor stood discharged by the assessee. The other decisions as quoted by Ld. AR in the written submissions lay down similar propositions and duly support the case of the assessee. 11. It could further be seen that no incriminating material has been f....