TaxTMI 
TaxTMI 
2026 (5) TMI 1618
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....tments in the form of unaccounted cash payments related to land transactions. (2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) has ignored the facts of the case that the addition was based on the seized documents and statements of Shri Dilip K. Patel, the seller, confirming cash transactions that were not recorded in the regular books of accounts. (3) On the facts and in the circumstances of the case and in law the ld. CIT(A) has failed to consider the full weight of the incriminating evidence, including the corroborative statements, and erroneously overlooked the direct connection between the seized material, and the assessee's unaccounted investments. (4) The Revenue craves leave to add/alter/amend and/or substitute any or all of the grounds of appeal 3. Succinctly, the factual panorama of the case is that assessee before us is a partnership -firm, which earned income from manufacturing and trading of all kinds of tiles. The return of income for the year has been filed u/s 139 of the Act on 17.10.2019, declaring total income at Rs. Nil. A Search and seizure action named "Operation Star Alliance" was conducted on 26.....
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.... Shri Dilip K Patel and he was asked to explain the contents of same. While explaining, Shri Patel admitted that these are details of land Unchi Mandal Morbi, Revenue Survey No. 77/2/1 + others situated in Morbi, sold to M/s. Simola Tiles LLP for a sum of Rs. 1,50,00,000/- and document value for the same is only Rs. 8,03,000/-. The transactions recorded in seized documents were received in cash. Shri Dilip Patel also admitted that interests were also received for the delayed payments and the same were in cash also. He agreed that the cash transactions are unaccounted transactions and not recorded in his regular books of accounts. Therefore, assessing officer, issued a show cause notice to the assessee to explain the transaction, the said show cause notice is reproduced by the assessing officer on page nos. 9 to 13. 5. In response to the show cause notice of the assessing officer, the assessee submitted its reply before the assessing officer. That is, during the assessment proceedings, the assessee clearly denied the allegation of on-money payment for purchase of an agricultural land at Survey No. 77/2/1, Unchi-Mandal, Morbi from Shri Dilip K. Patel. The assessee also stated that....
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....ecuted on 24.10.2016 whereas the date mentioned on the loose papers was 01.12.2017. Thus, there was also a substantial time gap of more than 1 year between the two documents which is significant. The ld.CIT(A) also noted that under the sacrosanct principles of natural justice which the Courts and Tribunals have repeatedly held to be indispensable in the tax proceedings, that it is obligatory on the part of the assessing officer to provide each and every material that he proposes to use against the assessee and allow the assessee a meaningful opportunity to rebut such material. The judiciaries have consistently held that if the material so relied upon for the addition is not provided to the assessee and an opportunity of rebuttal is not allowed to him, the material loses its admissibility as evidence against the assessee. On this count, the above loose paper fails to classify as valid evidence in the present case. Even otherwise, the above loose paper, like the other loose papers, did not contain the name of the assessee or the particulars of the land. In fact, all the loose papers primarily depict the payment of certain amounts along with interest and none of them showed that they ....
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....urchase of an agricultural land from Shri Dilip K Patel. The facts of the case as derived from the assessment order are that there, was a search u/s 132 of the Act in the case of Dr. Dilip K. Patel on 26-09-2018, During the course of the search the following loose papers were found. In reply, Shri Dilip K. Patel stated that the above loose papers were in respect of the sale of agricultural land situated at Unchi Mandal, Morbi for Rs. 1,50,00,000/-for which the sale deed was registered at Rs. 8,03,000/- and the remaining amount was received in cash along with interest. The relevant portion of his statement as relied upon and reproduced by the assessing officer in the assessment order is as under: पान : 7 सर्च के दौरान आपके घर से annexure- Al seize हुवा जिसका page no 29 में आपकी दिखा रहा हु जिसने क. 1,87,36,445/- एवं क. 1,50,00,000/- &#....
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....2327;ंधा land बेपी है जो की रु 1,50,00,000/- में वेपी जिसका documents 18,03,000/- का कमेट बना है और निता है। और इसमें जो interest है वो late payments के लिए लगाया है वो भी मुझे केस में निला है। ना books of accounts में जंत्री वैल्यू के हिसाब से जो कीमत है उसकी entry है। कश और इंटरेस्ट इसमें &#....
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....ctions appear to be a loan transactions along with the interest component. Ostensibly, the link between the loose papers and the alleged sale of land is visibly absent in the document relied heavily by the assessing officer. What is strikingly baffling is that the sale deed was executed on 24.10.2016, whereas the date mentioned on the loose papers was 01.12.2017. Thus, there was also a substantial time gap of more than 1 year between the two documents which is significant. In the Show Cause Notice, the assessing officer referred to and provided the assessee, the loose papers No. 28, 28A and 29. However, when the assessee replied in response to the Show Cause Notice stating that the loose papers did not have any visible link with its name or the land purchased, the assessing officer came out with another loose paper directly in the assessment order. Based on the above, the assessing officer contended that the word "Shirvi" mentioned on the above loose paper referred to one of the partners of the assessee namely Shri Rajesh Naranbhai Shirvi. In this manner, the assessing officer tried to establish a link between the loose papers and the land purchased by the assessee. However, the le....
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....chased by the assessee is the statement of Shri Dilip K Patel wherein he stated that the loose papers contained the details of on-money he received from the sale of land to the assessee. On holistic consideration of the loose papers and submissions of the assessee, the ld.CIT(A) noticed that the statement of Shri Dilip K Patel is unreliable in the assessee's case on several counts. At first, Shri Dilip K. Patel in his statement stated that he sold the land to the assessee for Rs 1,50,00,000/- and the sale deed was executed at Rs. 8,03,000/- and that the remaining amount was received by him in cash. This means that the total consideration of the land was Rs. 1,50,00,000/- and the on-money component was Rs. 1,41,97,000/- The loose papers also showed the calculation for the amount of Rs. 1,50,00,000/-. Now if the loose papers contained the details of payments for the land, the figure of Rs. 8,03,000/- should have appeared in it, since this amount was also a part of the total amount of Rs. 1,50,00,000/- as per the statement of Shri Dilip K. Patel. However, the amount of Rs 8,03,000/- is conspicuously absent in the loose papers. On the other hand, if it is believed that the amount o....
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....amination is a serious flaw which makes the order a nullity due to the violation of the principles of natural justice. The Hon'ble Gujarat High Court has also taken the same view in the case of Indrajit Singh Suri (33 taxmann.com 281). The judgments cited by the assessing officer for the denial of cross-examination have been explained by the assessee and they are certainly distinguishable from the present case since the seized maternal (loose papers) is conspicuously silent about the name of the assessee or the nature of transaction. 18. The ld.CIT(A) also noted that the abnormality of the facts also suggested that the statement of Shri Dilip K. Patel could not have been taken at face value in the case of the assessee. In common practice, the on-money (wherever paid) is paid either before the sale deed or at the time of sale deed. Generally, it is never after the sale deed. In the present case, the statement of registration of the property. Shri Dilip K. Patel, however, suggested that the on-money was paid by the assessee after the sale deed and that too in instalments along with interest. This position is appearing from the loose papers was certainly unusual and not as per ....
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.... the law does not and cannot extend to a third party. That is, the reason why the Courts and tribunals have emphasized the requirement of cross-examination in such a case. There are a number of judicial pronouncements (including those relied upon by the assessee) holding and approving this legal principle. In the present case, the loose papers in question were found from the possession of a third party namely Shri Dilip K. Patel during the search in his case. The loose papers were unilaterally created and they neither bear the signature of the assessee nor has the assessee admitted to it. Hence, ld.CIT(A) noted that once the assessee denied the correctness of the loose papers found from the possession of a third party, it was incumbent upon the assessing officer to bring on record some independent corroborative evidence before making the addition in the hands of the assessee. However, the assessing officer simply relied upon the statement of Shri Dilip K. Patel and thrust the loose papers upon the assessee's case as gospel truth without appreciating that such loose papers were neither found from the possession of the assessee nor bore any signature of the assessee and therefore....