TaxTMI 
TaxTMI 
2025 (9) TMI 1795
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....l the appeals are identical and all the appeals are outcome of the common search action carried out by the Department in the case of One Shri Suresh Thakkar, hence, the same were consolidated vide order dated 27/09/2024 of this Tribunal and were heard together and are being disposed of by this common order. 2. The issue involved in all these appeals pertains to the exchange of alleged on-money between the sellers and buyer over and above the sale consideration mentioned in the sale deed of the land. The IT(SS)A No. 21/Ahd/2024 for AY 2019-20 and ITA No. 665/Ahd/2024 for AY 2020-21 respectively have been filed by the revenue contesting the action of the CIT(A) in deleting the impugned additions made by the AO in the hands of the purchaser GSG Abode LLP; whereas the remaining appeals by the Revenue pertain to the additions made by the Assessing Officer (in short, "the AO) and deleted by the CIT(A) in the hands of the sellers. C.O. 32/Ahd/2024 for AY 2019-20 has been filed by the asssessee GSG Abode contesting the validity of assuming jurisdiction by the AO u/s 153C of the Act on the ground that no incriminating material pertaining to the assessee was found during the course of sea....
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.... for AY 2020-21: "Whether, in the facts and on the circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the addition of Rs. 5,93,45,914/- made by AO on account of LTCG on sale of immovable property, without considering the incriminating digital evidence suggested cash involvement in the transaction of immovable property ?. 4. IT(SS)A No.21/ Ahd/2024 is taken as lead case for the purpose of narration of facts. 5. The brief facts of the case as extracted from the assessment order are that the assessee is a limited liability partnership-firm and is engaged in the business of real estate and rendering services. The assessee filed its original return of income on 24/09/2019 declaring total income of Rs.1,74,642/-, the same was processed u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). Later on, a search and seizure action u/s.132 of the Act was carried out on 15/10/2019 in the case of one Shri Suresh Ranchodbhai Thakkar, who was involved in the land broking business. During the course of search action, in the case of said Shri Suresh Thakkar, certain incriminating material/ digital data was found and seized, which wa....
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.... the assessee, GSG Abode LLP as well as in the case of land owners was re-opened for six assessment years u/s.153C of the Act. 5.1. During the assessment proceedings, for the year under consideration, the AO show-caused the assessee as to why the sale consideration of the land be not taken at Rs.163 crores and the difference be not added to the income of the assessee being the expenditure incurred from undisclosed sources. However, the assessee disputed the value of the land as proposed by the AO at Rs.163 crores and stressed that the value of the land even as per the market price was that at which the sale consideration was mentioned in the sale-deed i.e. at Rs.49 crores. It was also contended that if the AO had any doubt about the actual value of the land in question, he should refer the matter to the Departmental Valuer to avoid high-pitched and unrealistic addition in the hands of the assessee. The assessee in this also contended that if it was not so done by the AO, the assessee would make an application to the High Pitch Committee as circulated vide F. No. 225/101/2020-21-ITA-II dated 23.04.2022. Apart from that, the assessee also furnished before the AO a report from the ....
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....nsaction and during the period the condition of the land had considerably improved and thus the DVO had arrived at a higher value than the actual sale value. It was also submitted that the assessee was a not a party to the earlier MOU entered into by the owners with Shri Dhiren Bharwad and hence the said MOU cannot be made a base to make addition in the hands of the assessee. That even the said MOU was cancelled between the parties within 10 days between the parties. That there was no evidence at all that the assessee had made any payment over and above the sale consideration as mentioned in sale-deed. That even otherwise there were various conditions mentioned in the MOU which the party could not fulfil, hence the said MOU was cancelled and, therefore, the said MOU cannot be relied upon to estimate the sale consideration paid by the assessee. It was further submitted that once the assessee had executed registered sale-deed on 30/10/2018, there could not be any reason for any on-money payment subsequent to registration of the sale-deed. That even the alleged loose-paper No.145 was found during the course of search at the premise of Shri Suresh Thakkar on 15/10/2019, however, it con....
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....r negotiated with the GSG Abode LLP to repay the same to Shri Dhiren Bharwad together with the amount of interest on Rs. 25 crores. 5.6. The AO on the basis of his above points of conclusions held that it was established that there was involvement of on-money payment to the extent of Rs.25 crores as depicted in page No.145 of Annexure A/2 by the purchasers to the sellers. That even the DVO's report also suggested that the valuation of the land was not Rs.49 crores were Rs. 54.37 crores. The AO thereafter observed that since the amount of on-money of Rs.25 crores was more than the difference of value in sale-deed and the DVO's valuation report which was of Rs.5.37 crores, therefore, the said difference of Rs.5.37 crores was subsumed in the total on-money payment of Rs.25 crores. He further observed that the sale-deed was done on 30/10/2 018 at Rs.49 crores and the valuation report gave the valuation at Rs. 54.37 crores as on 30/10/2018. He, therefore, made the addition of Rs.5.37crores in the assessment year under consideration, i.e. AY 2019-20. He assumed that the remaining amount of Rs.19.63 crores was paid in the subsequent assessment year AY 2020-21 by assessee GSG Ab....
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....-money payment was made over and above the consideration mentioned in the registered sale-deed. The Ld. CIT (A) further observed that the entire addition made in the year under consideration was based upon the DVO's report, however, on perusal of DVO's report, it revealed that the DVO had arrived at fair market value of the land after making certain presumptions as well estimates. He also took note of the fact that the DVO had valued the land in the year 2022, whereas, the sale transaction was made on 30/10/2018 and at that time the land was barren. That by the time, the DVO valued the land, the real estate project was already executed and significant improvements in land had already taken place. Therefore, there were chances of higher valuation of the land by the DVO influenced by the aforesaid circumstances. The Ld. CIT(A) also observed that the assessee had also provided similar market value instances in same TP area, wherein, it had purchased land in similar period to prove that the value of the land as mentioned in the registered sale-deed was reflecting fair market value of the land. He further observed that the variation in the fair market value of land as per DVO an....
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....tend that it was proved that the value of the land was higher than that was mentioned in the sale deed, which further proves that on-money has exchanged hands in respect of the above noted land sale transaction. 9.2. On the other hand, Sh. Biren Shah, the Ld. AR of the Assessee GSG Abode has reiterated the submissions as were made before the Ld. CIT(A). He has contended that the name of the assessee GSG Abode did not appear in any of the seized documents; That the alleged Whatsapp chat was between third parties and the assessee GSG Adobe has no concern with that at all. That even there was no mention in the chat that the assessee GSG Adobe has paid any on-money either to the land owners/sellers or to Sh. Dhiren Bharwad. He has also disputed the additions made by the AO on the basis of valuation report and stated that the assessee had duly explained the reasons for the variation in the value done by the DVO as compared to the sale deed, which has been accepted by the Ld. CIT(A). He has also relied upon the findings of the Ld. CIT(A) that since the variation was less than 15%, therefore even otherwise, the additions on the basis of such valuation report could not have been made. ....
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....tself does not prove that any on-money was received by the sellers. 9.7. He has further submitted that even the Ld. CIT(A) has given the finding that the difference between the DVO's report and sale-deed price was minor and, therefore, the same has to be ignored 9.8. The Ld. AR relying upon the decision of Hon'ble Supreme Court in the case of Ambalal Sarabhai Enterprises Ltd. vs. KS Infraspace LLP [Civil Appeal No.9346 of 2019] has submitted that the Hon'ble Supreme Court has clarified that Whatsapp chats are virtual verbal communications, which must be scrutinized through examination-in-chief and cross-examination to assess their probative value. He, in this respect, has also relied on the decision of Co-ordinate Mumbai Bench of the Tribunal in the case of Rucha Consultancy LLP vs. DCIT [(2005) 174 taxamnn.com 221]. He has further submitted that, in the case in hand despite so demanded by the assessees, the Ld. AO has not given any opportunity to the assessees/sellers to cross-examine Shri Suresh Thakkar and Shri Dhiren Bharwad. Therefore, no adverse inference can be drawn on the basis of oral statement of Shri Suresh Thakkar which was resiled later on. 9.9. T....
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....ri Dhiren Bharwad and the sellers vide MOU dated 20.01.2018 for which a token money of Rs. 5 crores was paid and the said land deal was later on cancelled on 30.01.2018. Further, that a new deal was executed with the assessee by the sellers on 30.10.2018. From the seized Whatsapp chat and statement of Sh. Suresh Thakkar, he derived the conclusion that in fact the total advance received by the sellers from Dhiren Bharwad was of Rs.25 crores. He further presumed that the said money paid by Shri Dhren Bharwad was not refunded by the sellers to him and that the assessee-GSG Adobe LLP had paid the said amount of Rs. 25 crores to Sh. Dhiren Bharwad, however, without any reliable or corroborative evidence on the file in this respect. 10.3. However, the peculiar facts on the file are that in this case the alleged incriminating material was allegedly recovered from the mobile of Sh. Suresh Thakkar, who admittedly was not a party to any of the transactions in question. More particularly, the alleged Whatsapp chat relied upon by the AO was not between the parties to the transaction, rather the same was between the original potential buyer Sh. Dhiren Bharwad and Sh. Suresh Thakkar. Though, ....
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....n mentioned in the cancellation deed that, in fact, the said sum of Rs.5 crores was not paid by Shri Dhiren Bharwad at the time of execution of the agreement. Admittedly, the Ld. AO has not disputed the cancellation deed. Hence, once the cancellation deed was not disputed, therefore the mention that even Rs.5 crores as token money was not received by the sellers has become relevant and to be admitted as correct as the said cancellation deed/ document is to be read in full. The AO cannot discard the part of the documents which supports the contentions of the assessee and demolish the case of the revenue. 10.6. Even the alleged loose-paper No.145 found during the course of search at the premise of Shri Suresh Thakkar on 15/10/2019, contained various dates of payment for calculation of interest which, however, were subsequent to such date of search, which means no payment had exchanged hands as on the date of search and as discussed above. It is highly improbable that any payment would have been made by GSG Abode to Dhiren Bharwad or to the sellers subsequent to the execution of the sale deed. 10.7. The Ld. AO has relied upon the said MOU on 20/01/2018 to presume that the subseq....
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....ee had also provided similar market value instances in same TP area, wherein, it had purchased land in similar period to prove that the value of the land as mentioned in the registered sale-deed was reflecting fair market value of the land. 10.11. Therefore, the assessee, having explained the minor variation in the valuation of the DVO as compared to the sale consideration and there being no corroborative evidence available to the AO showing any extra consideration passing between buyer and seller, the AO was not justified in assuming unexplained investment and making addition u/s 69B of the Act. We, therefore, do not find any infirmity of the order of the CIT(A) in this respect, holding that the impugned additions, solely on the basis of DVO's report were not justified. 10.12. Even otherwise, the AO on the one hand has relied upon the DVO's report and on the other hand has presumed the payment of on-money of Rs. 25 Crore which is almost 5 times more of the variation in the sale price and DVO's report which has neither been proved from any direct documentary evidence not from the circumstantial evidence in the shape of valuation report etc. Hence, the AO, thus, ha....