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2015 (10) TMI 2111 - ITAT MUMBAI

2015 (10) TMI 2111 - ITAT MUMBAI - TMI - Assessment u/s 153C - Undisclosed investment in payment of consideration towards purchase of land at village Kharigaon, Taluka & Dist. Thane - Held that:- The assessee had filed explanation and its version regarding the first draft agreement which has not been disproved by the Assessing Officer. Once the assessee had explained that the first draft agreement was never executed and also the reasons as to why it was not executed and also proved that the seco .....

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sellers of the land in question. No such evidence has been brought on record before us by the authorities below. In our view, the addition on the basis of unsigned, undated draft agreement, the figures written on which had been struck off, cannot be a basis of addition in this case, especially in the absence of any other incriminating or corroborating evidence of exchange of cash.

So far as the addition on the basis of loose paper in relation to payment made to Sh. Mukund keni is conc .....

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; 60 lakh were paid by cheque and out of which ₹ 40 lakh was received back by the assessee from Shri Mukund Keni and that the deal has not been finalized till date. When there is no evidence about the payment of amount of ₹ 20 lakh by cheque about which the investigation wing /search party has made thorough investigations, then the presumption about the payment of cash cannot be drawn under such circumstances. The additions solely on the basis of suspicion, how strong it may be, in o .....

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rs of the ld. CIT(A) 37, Mumbai dated 28.12.2012. The assessee has taken following grounds of appeal: 1. The learned CIT (A) erred in confirming the addition of Rs.l,53,00,000- as undisclosed investment in payment of consideration towards purchase of land at village Kharigaon, Taluka & Dist. Thane from Shri. Naresh Motiram Gouri and others, not appreciating the valid explanation of your appellant which was duly supported by seized/impounded documents and evidences available in the course of .....

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evelopers and M/s. Twinkle Realtors Pvt. Ltd. as its members. The business of the AOP is of Real Estate Development. There was a search action u/s 132 of the Income tax Act on Siddhi Group on 28.08.2008. During course of said search, certain documents were found at various searched premises. Therefore, notice u/s 153C was issued to the assessee. The assessee filed the return declaring nil income. The AO noted that the following documents were found during the search action: (i) A copy of draft d .....

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to Gauri family in cash and had further paid ₹ 1,50,00,000/- in cash to Shri. Mukund Kini, who had certain rights in the said land. These cash payments as per AO had not been accounted in the books by the assessee. The AO, therefore, made the additions of ₹ 1.53 Crores and ₹ 1.50 Crores into the income of the assessee as unexplained expenditure. 3. The assessee filed an appeal to CIT(A) , he however sustained the additions so made by the AO. The assessee is thus in further appe .....

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lakhs. However, transaction could not be completed. Subsequently, in July 2008, the assessee decided to acquire this land from Gauri Family and negotiations were in progress through a group of brokers. At one stage of negotiations, the consideration demanded by Gauri Family was ₹ 5,10,00,000/- and the draft agreement was received by the assessee. The same was seized from the residence of Jayendra Gala during search on 20.08.2008. This land was subject to several reservations of Govt., name .....

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said draft was not signed by the parties. The said document was even undated and was not on any stamp paper. There were corrections and cuttings made in the said draft at some places. The figure depicting the consideration amount of ₹ 5.1 0 Crs. was also struck off. The said MOU was never accepted by the assessee. The ld. AR has further explained that in the second draft, which was also seized during the search action, the consideration was mentioned at ₹ 3.57 Crs. and there were al .....

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arashtra Jeevan Pradhikaran. As per this registered agreement, the actual consideration for which the assessee was to acquire the land was ₹ 3.57 Crores only . The Ld. AR has thus contended that the assessee had acquired the land for 3.57 Crs only from Shri Motiram Gouri and 12 others and no part of the consideration was paid in cash to any person. The Ld. AR has further submitted that even the explanation for final settlement of consideration at ₹ 3,57,00,000/- was corroborated by t .....

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Kini had certain rights in the property and for this reason a sum of ₹ 60,00,000/- was paid to him by account payee cheques. The addition of ₹ 1,50,00,000/- has been made on account of seized loose paper. The said paper, apart from further payment of ₹ 20,00,000/- by cheques also refers to payment of ₹ 1,50,00,000/- in cash. It has been submitted that only the cheques against which the word "paid" has been mentioned were paid and further entries of cheque payme .....

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- has paid to Shri Mukund Kini as advance against the proposed transfer of his interest in the land to the assessee. The Ld. AR, has thus submitted that no cash payment has ever been paid to the owners of the land as alleged by the AO. 5. The Ld. DR on the other hand has relied upon the findings of the lower authorities. 6. We have considered the rival submissions and have perused the material available on record. The copy of the first draft agreement has been placed on the file. Admittedly, the .....

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file at pages 44 to 62 of the paper book. The assessee has explained that the first agreement was not acted upon for the reason that the said lad was subject to several reservations of the Government, namely Maharastra Water Supply Department, Fire Department and that the part of the land was occupied by unauthorized encroachers. Further the assessee came to know that the land was also subject to Navi Shart which meant that it could not be sold unless Nazrana i.e., premium determined by the Gove .....

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the Department. He has been cross examined at length. Specific queries had been put to him in relation to the draft agreement and as to whether any cash payment was received by the seller from the assessee in respect of the sale transaction of the land in question. However despite lengthy examination, the investigation wing could not extract any word from the said seller of the land about receipt of any cash in relation to sale transaction in question. The said statement has also been signed by .....

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was registered with the registering authority. It is also not the case of the Revenue that the sale price indicated in the sale deed was valued less than the price fixed for the land by the stamp duty authorities. There is no evidence that the actual market value of the land was more than the sale consideration paid by the assessee. The Assessing Officer asked the assessee to produce evidence to prove the otherwise that no cash payment was made. However, the assessee has fully explained the circ .....

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o disprove the explanation offered by the assessee, which the A.O. has failed to discharge. The another pertinent fact is that the second draft agreement was also found during the search action and cannot be said to be an afterthought of the assessee. The Assessing Officer has failed to prove that any cash transaction had been undertaken between the assessee and the sellers of the land in question. No such evidence has been brought on record before us by the authorities below. In our view, the a .....

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