TaxTMI 
TaxTMI 
2025 (3) TMI 2145
X X X X Extracts X X X X
X X X X Extracts X X X X
....73/Hyd/2016 - A.Y. 2007-2008 : 2. The assessee has raised the following grounds and an additional ground : 1. "The order of the Commissioner of Income tax (Appeal)-12, Hyderabad in so far as it went against the appellant, is erroneous both on facts and in law. 2. (a) The CIT(A) ought to have deleted the entire addition of Rs. 49,70,000/- (instead of Rs. 4,00,000/-) made towards alleged unexplained investment in property at Muniswamiappa Road, Bangalore, since the same was made on hearsay basis without examining the owner of the property as to the correct purchase consideration involved. (b) While giving part relief to the extent of Rs. 4,00,000/-, the CIT(A) failed to appreciate violation of principles of natural justice in denying the assessee an opportunity to cross examine the witness, on the strength of whose deposition the A.O. brought to tax the amount of Rs. 49,70,000/-. 3. (a) The CIT(A) ought to have deleted the addition of Rs. 37,00,000/- made towards alleged unexplained investment in purchase of property at Horamavu village, Hubli. (b) The CIT(A) failed to appreciate violation of principles of natural justice in denying the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome of the assessee at Rs. 92,21,330/- by making additions towards estimated profit from profession for Rs. 2,21,655/-, addition towards unexplained investment in purchase of property at Bangalore for Rs. 49,70,000/- and addition of Rs. 37 lakhs towards purchase of property at Bangalore from one Shri Raghavendra Rao. 4. The assessee has filed appeal before the learned CIT(A) and challenged the additions made by the Assessing Officer towards estimated income from profession and addition towards undisclosed income in purchase of property at Bangalore. The learned CIT(A) after considering the relevant submissions of the assessee, allowed partial relief where the learned CIT(A) deleted a sum of Rs. 4 lakhs towards additions made by the Assessing Officer toward unexplained investment in purchase of property at Bangalore and sustained the balance addition of Rs. 45,70,000/-. The learned CIT(A) also sustained the addition made by the Assessing Officer towards unexplained investment in purchase of property from Shri R. Raghavendra Rao and also sustained the addition towards estimated profit from profession. 5. Aggrieved by the order of the learned CIT(A), the assessee is now in app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een sold for a consideration of Rs. 62.50 lakhs. He further stated that he has received Rs. 4 lakhs as commission in cash. Therefore, the Assessing Officer observed that there is a clear evidence of unexplained investment in purchase of property at Muniswamiappa Road, Bangalore and, therefore, rejected the arguments of the assessee and made addition of Rs. 49,70,000/- to the total income of the assessee. 7. On appeal, the learned CIT(A) deleted the addition of Rs. 4 lakhs towards alleged commission payment of Rs. 4 lakhs to Syed Asif on the ground that there is no evidence with the Assessing Officer to prove payment of commission of Rs. 4 lakhs except statement of Syed Asif and the remaining difference of Rs. 45,70,000/- being difference between sale consideration as per the agreement of sale dated 04.11.2006 and sale deed dated 04.12.2006 has been sustained. 8. Shri KC Devadas, Learned Counsel for the Assessee, submitted that the learned CIT(A) was erred in sustaining addition of Rs. 45,70,000/- towards alleged unexplained investment in purchase of property without appreciating the fact that as per the registered sale deed, property has been purchased for a price of Rs. 16,8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....62,50,000/-. The Assessing Officer had also took support from the statement of Syed Asif recorded by the ADIT (Inv.) Wing, Bangalore during the course of post-survey investigation. According to the Assessing Officer, there is a clear evidence in the form of sale agreement coupled with the statement of Syed Asif for payment of consideration in cash over and above the stated consideration as per the registered sale deed between the seller of the property Shri Syed Shabeer Hussain and the assessee. We have gone through the reasons given by the Assessing Officer in light of various averments of the Learned Counsel for the Assessee and we find that the Assessing Officer made addition solely on the basis of statement of Syed Asif and the purported sale agreement between the seller and the third parties even though there is no corroborative evidence with the Assessing Officer to suggest payment of consideration in cash as alleged by the Assessing Officer in excess of stated consideration as per the registered sale deed. Further, the Assessing Officer believed the statement of Syed Asif who was the broker for the property between the seller and the assessee, but, neither examined the selle....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uring the course of search, the assessee could not satisfactorily explain the consideration paid for purchase of property at Horamavu village. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain as to why addition shall not be made towards difference in value of property as per MOU dated 27.03.2005 and as per registered sale deed. In response, the assessee submitted that, he along with his wife had purchased the property at Horamavu village from Raghavendra and others for a total consideration of Rs. 53 lakhs and the same has been duly accounted for in his books of accounts. The Assessing Officer after considering the relevant submissions of the assessee and the statement of Mr. Raghavendra, recorded by ADIT (Inv.), Unit-1(2), Bangalore, observed that the seller Raghavendra and others has admitted to have sold the property for a consideration of Rs. 90 lakhs and received Rs. 40 lakhs by way of demand draft/ cheque and the remaining amount of Rs. 50 lakhs was received by way of cash. Therefore, observed that since there is a clear evidence in the form of sale agreement and also statement of Raghavendra and others-seller of the prope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e extent of Rs. 4,31,178/- only. 14. Shri B. Bala Krishna, CIT-DR, on the other hand, supporting the order of the learned CIT(A) submitted that, as per the sale agreement and admission of Raghavendra and others, the assessee has agreed to purchase 16800 sq.ft of land. Although, the assessee claims that it has purchased only 12006 sq.ft, but, there is no clarity as to what is the extent of land registered as per the registered sale deed. The learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer towards unexplained investment in purchase of property. Therefore, the order of the learned CIT(A) should be sustained. 15. We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that as per seized document there is a MOU dated 02.03.2005 between Raghavendra and others and appellant-assessee for purchase of 18750 sq.ft land at Horamavu village. It is also an admitted fact that, as per the registered sale deed dated 24.05.2006, the extent of land purchased by the assessee was only 12006 sq.ft for a consideration of Rs. 53 lakhs. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ained additions only on the basis of statement of Raghavendra. Therefore, in our considered view, the additions made by the Assessing Officer cannot be sustained only on the basis of statement of Raghavendra for two reasons i.e., (1) The statement of Raghavendra was not given to the assessee for his rebuttal and cross-examination and (2) there is a difference in extent of land agreed to be sold and extent of land finally sold by Raghavendra. Therefore, we are of the considered view that there is merit in the arguments of the assessee and thus, we are of the considered view that the Assessing Officer and the learned CIT(A) erred in making addition of Rs. 37 lakhs towards unexplained investment in purchase of property on the basis of agreement of sale and statement of Raghavendra. We, thus, direct the Assessing Officer to sustain addition to the extent of Rs. 11,31,178/- out of total addition of Rs. 37 lakhs and the remaining addition of Rs. 25,68,822/- is herby deleted. 16. The assessee has filed additional ground challenging validity of assessment order passed by the Assessing Officer u/sec.143(3) r.w.s.153A of the Income Tax Act, 1961 dated 31.12.2010 in absence of issue of not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essing Officer observed in para-5 of his order that notice u/secs. 142(1) & 143(2) were served on the assessee. However, there is no evidence with respect to date of issue of notice and service of notice to the assessee. Finally, the assessee appeared and filed relevant details on 21.12.2010. 19. The Assessing Officer after considering the submissions of the assessee, made various additions including additions towards unexplained investment in purchase of property at Shamshabad for Rs. 3.45 crores from Syed Mohammad Mehdi; unexplained investment in purchase of property from Sri Nayeemullah Hussaini for Rs. 8 lakhs; addition towards payment made to Mrs. Siddiqua Sultana for Rs. 12 lakhs; addition of Rs. 18,19,000/- towards receipts seized during the course of search in connection with purchase of property from Mr. Prakash V. Goud; addition of Rs. 65,10,000/- towards purchase of property; addition of Rs. 83 lakhs towards bad debts and estimated addition of Rs. 4,70,03,000/- for purchase of property at Shamshabad, Hyderabad and addition of Rs. 66 lakhs towards investment in purchase of property at Bangalore and determined the total income of the assessee at Rs. 11,07,16,405/- as ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Further, Shri Syed Mohd. Mehdi admitted that cash found at B.B. Cancer Hospital is paid by Shri Nasser Aziz towards purchase of plot sold at Shamshabad. 23. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain as to why addition shall not be made towards on-money payment of Rs. 3.45 crores for purchase of 16 plots for total area of 4,876 sq. yards at Mehdi Garden, Shamshabad, Hyderabad. In response, the assessee submitted that he along with his wife Smt. Aliya Nasser Aziz has purchased 16 plots from Shri Syed Mohd. Mehdi, GPA Holder for a negotiable rate of 2000 per sq. yard and paid consideration in cheque and cash duly supported by relevant evidences. Although, Shri Syed Mohd. Mehdi stated that he has sold plots @ Rs. 10,500/- per sq. yards, but, the fact remains that Shri Syed Mohd. Mehdi himself has sold plots to other parties @ Rs. 2000/- per sq. yard. He has denied the statement of Shri Syed Mohd. Mehdi and argued that he has not aware of the statement of Shri Syed Mohd. Mehdi and cash seized from B.B. Cancer Hospital. The Assessing Officer after considering the submissions of the assessee and also taking note of relevant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5. The learned CIT(A), after considering the submissions of the assessee and also taken note of relevant incriminating material found during the course of search observed that the documents found during the course of search coupled with the statement recorded from Shri Syed Mohd. Mehdi clearly establishes payment of Rs. 3.45 crores of on-money for purchase of 16 plots at Mehdi Garden, Shamshabad, Hyderabad. This is further supported by cash seized of Rs. 85 lakhs during the course of search at B.B. Cancer Hospital where Shri Syed Iqbal Mehdi confirmed that, cash belongs to Shri Syed Mohd. Mehdi and further Shri Syed Mohd. Mehdi has admitted to have received from assessee for sale of plots. The cash bundles contains seal of Kotak Mahindra Bank, Bangalore where the assessee operates bank account, which also supports the case of the Assessing Officer that the assessee has paid cash for purchase of plots. The presence of assessee in Hyderabad on 07.02.2009 is also goes to prove beyond doubt that the assessee was in Hyderabad to handover cash to Shri Syed Mohd. Mehdi for registration of plots and on the basis of such information, the Department has conducted searches in the case of Shri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the possession of Shri Syed Mohd Mehdi even though the said documents is not in the hand-writing of the assessee. Therefore, he submitted that the addition made by the Assessing Officer and sustained by the learned CIT(A) should be deleted. 28. The Learned CIT-DR, Shri B Bala Krishna, on the other hand, supporting the order of the learned CIT(A) submitted that search has been conducted in the case of assessee on the specific information with the Department that the assessee is purchased 16 plots from Shri Syed Mohd Mehdi and paid on-money for purchase of plots. During the course of search, the assessee was intercepted by the Department and also simultaneous search was conducted at various places including B.B. Cancer Hospital where a sum of Rs. 85 lakhs cash was found. A statement was recorded from Shri Syed Iqbal Mehdi and in response, he stated that cash belongs to Shri Syed Mohd. Shri Syed Mohd was examined and statement was recorded, where he confirmed to have received Rs. 85 lakhs cash from assessee towards sale of plots at Mehdi Garden, Shamshabad, Hyderabad. The documents found in the possession of Shri Syed Mohd clearly shows sale of 16 plots to assessee with various pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 3.45 crores is lacks relevant evidence, except, the statement of Shri Syed Mohd Mehdi and document found in his possession during the course of search. 31. Coming back to the document found in the possession of Shri Syed Mohd Mehd. During the course of search, rough notings in a paper was found in the possession of Shri Syed Mohd Mehdi which was marked as Annexure-A/SMM/RES/1230. The Assessing Officer alleged that as per the notings contained in the rough sheets, details of working in assessee's hand-writing towards purchase of 16 plots @ Rs. 10,500/- per sq. yard is found. The Assessing Officer on the basis of notings found in the possession of Shri Syed Mohd Mehdi has worked-out the on-money payment of Rs. 3.45 crores towards purchase of 16 plots by considering Rs. 10,500/- per sq. yard as per the admission of Shri Syed Mohd Mehdi in the statement recorded during the course of search and arrived at on-money payment of Rs. 3.45 crores. The assessee denied having paid any on-money over and above the consideration stated in the registered sale deed and as per the assessee, he has purchased plots @ Rs. 2000/- per sq. yard. The assessee supports his arguments in light of other e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... yard. Admittedly, there are few instances of third party sales @ Rs. 2000/- per sq. yard during the same period. Further, the Department has referred valuation of property to the DVO and the DVO has determined the fair market value of the property @ Rs. 2000/- per sq. yard. Therefore, once there are enough evidences to confirm the third party sales and DVO report to justify the rate paid by the assessee @ Rs. 2000/- per sq. yard, in our considered view, the allegation of the Assessing Officer that the assessee has paid Rs. 10,500/- per sq. yard cannot be accepted, unless the Assessing Officer justifies the said rate with relevant evidences. Since there is no evidence with the Assessing Officer, other than the statement of Shri Syed Mohd Mehdi, in our considered view, the rate adopted by the Assessing Officer to work-out on money for purchase of plots cannot be accepted. Therefore, we are of the considered view that Assessing Officer is erred in making addition towards alleged on-money payment of Rs. 3.45 crores without there being any supporting evidence. 33. Coming back to the cash seized from B.B. Cancer Hospital and purported un-signed cash receipt found in the premises of S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ey of Rs. 3.45 crores paid towards purchase of plots at Mehdi Garden, Shamshabad, Hyderabad. 34. The next issue that came-up for consideration vide ground no.3 of assessee's appeal is addition of Rs. 8 lakhs towards unexplained investment in purchase of property. 35. During the course of search, page-51 of Annexure-A/SMM/RES/03 contains details of payment of Rs. 8 lakhs to Shri Nayeemullah Hussaini for purchase of property. As per the said document, the Assessing Officer noted that assessee has purchased property from Shri Nayeemullah Hussaini for Rs. 8 lakhs and the same has been registered for Rs. 4 lakhs. Therefore, called-upon the assessee to explain as to why addition shall not be made towards unexplained investment in purchase of property. In response, the assessee submitted that he has purchased property from Shri Nayeemullah Hussaini for Rs. 4 lakhs and paid consideration through proper banking channel. The document found in the possession of Shri Nayeemullah Hussaini and relevant contents is not belongs to the assessee and whatever stated in the said document cannot be linked to the assessee. The Assessing Officer after considering the relevant submissions of the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n record and gone through the orders of the authorities below. There is no dispute that, during the course of search, a sale agreement dated 12.11.2008 between the assessee and Shri Nayeemullah Hussaini was found and as per the said sale agreement, assessee has agreed to purchase property for a consideration of Rs. 8 lakhs and also paid Rs. 1 lakh as advance in cash. The said property has been registered in favour of the assessee on 27.11.2008 for a consideration of Rs. 4 lakhs. Although, the assessee claims that it has purchased the property for a consideration of Rs. 4 lakhs, but, there is a clear evidence in the form of sale agreement dated 12.11.2008 which shows actual consideration of Rs. 8 lakhs and also payment of advance of Rs. 1 lakh in cash. Therefore, we are of the considered view that there is clear evidence in the form of sale agreement for payment of cash consideration of Rs. 4 lakhs which was not recorded in the sale deed. The Assessing Officer and the learned CIT(A) after considering the relevant facts has rightly made addition toward alleged on-money payment of Rs. 4 lakhs for purchase of property from Shri Nayeemullah Hussaini. Thus, we are inclined to uphold the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee and further there is no evidence in the possession of the Assessing Officer to allege that the assessee has paid extra consideration over and above the sale deed, in our considered view, the Assessing Officer cannot make additions towards alleged on-money in the hands of assessee. The learned CIT(A) without considering relevant facts, simply sustained the addition to the extent of Rs. 13 lakhs after reducing actual consideration paid of Rs. 6 lakhs as unexplained investment in the hands of the assessee. Thus, we set aside the order of the learned CIT(A) and direct the Assessing Officer to delete the addition made towards unexplained investment for purchase of property from Prakash V. Goud amounting to Rs. 13 lakhs. 42. The next issue came up for consideration vide ground no.5 of assessee's appeal is, addition towards alleged unexplained investment for purchase of Plot 63 and 64 at Mehdi Garden from Tayyaba Begum for Rs. 65,10,000/- and sustained by the learned CIT(A) to the tune of Rs. 26,46,000/-. The Assessing Officer made addition of Rs. 65 lakhs towards purchase of Plot No.63 and 64 from Tayyaba Begum on the basis of page 108 to 118 of Annexure-A/SMM/RES/02 which is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s rightly allowed partial relief to the assessee and thus, the order of the learned CIT(A) should be upheld. 45. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. Admittedly, document found during the course of search is registered sale deed for purchase of Plot nos.63 and 64 at Mehdi Garden from Tayyaba Begum for a consideration of Rs. 12,40,000/-. It is also an admitted fact that assessee has paid consideration by cheque and the same has been recorded in the books of accounts. In fact, there is no dispute on these aspect. The learned CIT(A), after considering relevant facts, has rightly considered the investment made by the assessee. The Assessing Officer made addition on the basis of statement of Shri Syed Mohd Mehdi where he has admitted to have sold plots in Mehdi Gardens @ Rs. 10,500/- per sq. yard. The learned CIT(A) scaled down the additions by adopting Rs. 6300/- per sq. yard on the basis of purchase of property from Prakash V Goud. In our considered view, the Assessing Officer and the learned CIT(A) are clearly erred in making addition without there being any evidence to suggest that the assessee has pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid business failed. Money was neither received nor paid back. In respect of remaining entries, the assessee could not explain as to the nature and contents of the said recording. The Assessing Officer after considering the submissions of the assessee, observed that the assessee has made investment in various properties including advance for various persons. The same was not recorded in the books of accounts of the assessee. Thus, rejected the arguments of the assessee and made addition of Rs. 83 lakhs to the total income of the assessee. 48. Before the learned CIT(A), the assessee has filed additional evidences and argued that out of additions made by the Assessing Officer of Rs. 83 lakhs, the assessee has accounted a sum of Rs. 37,50,000/- in his books of accounts, for which, the assessee has filed relevant evidences. The learned CIT(A) remanded the additional evidences filed by the assessee to Assessing Officer for re-examination and report. As per the remand report from the Assessing Officer, a sum of Rs. 37,50,000/- were recorded in the books of accounts of assessee. Therefore, the learned CIT(A) after considering the relevant remand report of Assessing Officer and also con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....payment of Rs. 30,50,000/- the Assessing Officer and the learned CIT(A) considered only one entry of Gangadhar Reddy for Rs. 25 lakhs claimed to have paid on 31.05.2007. If we go by the date of payment for a moment, then it pertains to financial year 2007-2008 relevant to assessment year 2008-2009. Therefore, to this extent, addition cannot be made for assessment year 2009-2010, that too only on the basis of a date of entry i.e., 02.01.2009 in page-52 of the seized document. Therefore, we direct the Assessing Officer to delete further additions sustained by the learned CIT(A) to the extent of Rs. 25 lakhs and entry contained in the name of Gangadhar Reddy also claimed to have been paid on 31.05.2007. If we delete Rs. 25 lakhs out of Rs. 30,50,000/-, the remaining amount left for consideration is Rs. 5,50,000/-. The sum of Rs. 5,50,000/- is considered of two parts, one is Rs. 3,50,000/- in respect of payment to Lisha Vistara plot and Rs. 2 lakh payment in case of office furniture and scrap. There is no details as to date of payment and person to whom the said payment is made in the seized document. Even the assessee could not explain what is the nature of payment, when the said paym....