TMI Blog2023 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... er registration of the documents including the payment of additional consideration. Therefore, from the combined reading of all the answers given in the sworn statement of the Director of the appellant company, it is abundantly clear that said additional consideration has been paid and being accounted in the assessment year 2013-14. Shortfall for the source for payment of additional consideration is already offered for taxation in the assessment year 2013-14, in the hands, Director of the appellant company. Therefore, in our considered view, the reasons given by the Assessing Officer to allege that the arguments of the appellant with regard to substantiate payment to the vendor company, in light of affidavit and confirmation letter from the Director of the vendor company is an afterthought is devoid of merits and thus, rejected. AO has made additions solely on the basis of statement of Directors of the seller company, but fact remains that said statement cannot be relied upon for the simple reason of non-furnishing of the full version before passing of the re-assessment order. There is no iota of any evidence with regard to details of payments, even though he had admitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/2022-23/1050274837(1) for the above Assessment Year is contrary to law, fact and in circumstances 2. The CIT(Appeals) - 19 erred in sustaining the addition of Rs. being one of the components of the purchase consideration of an property owned by Premier Roller Flour Mills P. Ltd as investment in terms of Section 69B of the Act by reckoning such the previous year related to the assessment year under without assigning proper reasons and justification. 3. The CIT(Appeals) - 19 failed to appreciate that provisions of the Act had no application to the present case and in circumstances case, thereby negating the related findings in the impugned order 4. The CIT(Appeals)-19 failed to appreciate that sum of Rs. were paid to the seller of the disputed transaction during the period 01.04.2012 to 27.05.2012 with a view to remove the encumbrances to the property, thereby negating the presumption of applicability provisions of Section 69B of the Act. 5. The CIT (Appeals) - 19 failed to appreciate that having proved of the transaction of Rs. 6,15,00,000/- by placing on record the copies of ledger account, orders of the courts regarding the disputed property, settlement memo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(Appeals) - 19 failed to appreciate that the reopening of the assessment based on the misreading of the search results in the hands of the C. Duraisamy should be reckoned as bad in law and ought to have appreciated that having not possessed with any material to dislodge the stand of the appellant herein, the re-assessment completed based on the suspicion should fall to the ground. 13. The CIT(Appeals) - 19 failed to appreciate that having accepted on one side about the payment of the balance purchase consideration after the completion of the registration process, the rejection of the stand of the appellant in making the payment of the disputed component of the purchase consideration during 01.04.2012 to 27.05.2012 should accordingly considered as wrong and incorrect especially in the absence of direct evidence. 14. The CIT(Appeals) - 19 failed to appreciate that there was effective/proper opportunity given before passing the impugned order and any order passed in violation of the principles of natural justice is nullity in law. 15. The appellant craves leave to file additional grounds/arguments at the time of hearing. 3. The brief facts of the case are tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remier Roller Flour Mills Ltd., for purchase of property vide sale deed on 03.01.2008. In response, the assessee vide letter dated 18.06.2014 submitted details of payment of Rs. 24 crores made to M/s. Premier Roller Flour Mills Ltd., for purchase of property and explained that sum of Rs. 4.85 crores has been paid for purchase of property on various dates starting from 02.04.2012 to 27.05.2012. The remaining amount of Rs. 1.50 crores has been offered to tax in the hands of Shri. R. Srinivasan, Director of the appellant company for assessment year 2013- 14, because the assessee could not explain source for payment made for purchase of property. 5. The Assessing Officer, however was not convinced with explanation furnished by the assessee and according to the Assessing Officer, subsequent affidavit filed by the appellant along with confirmation letter from Shri. C. Doraisamy, for receipt of Rs. 12 crores on various dates for the financial year 2012-13 relevant to assessment year 2013-14, is only an afterthought to circumvent additions proposed towards unexplained investment for purchase of property. The Assessing Officer, had discussed the issue at length in light of certain judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us dates beginning with 1.4.2012 and ending with 27.5.2012. 20. However, the following facts point to the impracticability of the entire payment schedule of the balance amount of Rs. 6.15 Crores and indicate that this is a carefully thought plan to avoid taxation of the said on-money payments: The Sworn statement of Sri C Duraisamy was recorded on 9.3.2012, on which date itself, he has deposed before the Investigation Authorities that the sale consideration of Rs. 24 Crores has already been received. Sri R Srinivasan was enquired u/s 131 (1A) of the IT Act on 28.5.2012, on which date, he had deposed that he had paid the registered sale value of Rs. 12 Crores and the additional consideration of Rs. 12 Crores and that the same was unaccounted. It is not possible that the payments made as recently as on 27.5.2012, practically a day before the said enquiry is not known / recolected as having been made from accounted or unaccounted source. Further, in the statement deposed by Sri C Doraisamy u/s 132 (4) of the Act during the course of search proceedings on 9.3.2012, he had furnished the details of payments made to various persons / parties as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies. Annual Returns for the year 31.03.2005, 31.03.2006 and 31.03.2007 filed with the Registrar of Companies, Taminadu, Coimbatore disclosing the above facts. 18.12. 2006 -Settled Sundry Creditor Shri. Rarmalingam Rs. 2,50,00,000/ 2007 - Negotiations between C. Doraisamy Managing Director of M/s. Premier Rolier Flour Mills Private Limited and M/s. ARRS Mega Mall Private Limited for the sale of land building owned by M/s. Premier Roller Flour Mills Limited. K. Venkatachalam group filed a civil suit OS/312/2007 before the Munsif Court, Salem against the above sale. 03.01.2008 -M/s. Premier Roller Flour Mills Limited sold the property to M/s. ARRS Mega Mall Private Limited for a consideration of Rs. 12 Crores. 08.04.2008 -Compromise deed between C. Doraisamy group and K. Venkatachalam group. On receipt of Rs. 6,45,00,000/-, K. Venkatachalam group confirmed the transfer of shares to C. Doraisamy group and consented to the sale of company's properties to M/s. ARRS Mega Mall Private Limited. All the pending cases before the various authorities were agreed to be withdrawn. 09.04.2008 -Deposit through PNB D.D. to old share Holders by M/s Premier Rol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s statement is however not verifiable. 26. The seized materials and the sworn statements point towards the preponderance of probability that the sale consideration and the additional consideration have changed hands about the time of transfer of property. This fact cannot be ignored because of the human probabilities and surrounding circumstances as laid down by the Hon. Supreme Court of India in the cases of CIT Vs. Durga Prasad More 82 ITR 540 and Sumati Dayal Vs. CIT 214 ITR 801. 27. Further, it is humanly highly improbable that for a sale registered as early as on 3.1.2008, the Seller is willing and accepts to receive 50 % of the total actual consideration after nearly four years and that too in numerous installments ranging from Rs. 5 lakhs- to Rs. 20 lakhs. 28. A Show Cause Notice, was therefore issued to the assessee, on 05.03,20 15 detailing the above facts and proposing to add the balance additional consideration of Rs. 6.15 Crores to the returned income and calling for his objections | clarifications / explanations to the said proposal. 29. The assessee filed a letter dated 10.3.2015 reiterating the facts already stated during assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded at the time of search is retracted, its validity cannot be taken to be null and void Additions can still be made. 3) Hotel Kiran 82 ITD 493(Pune) - wherein it was held that When statement u/s. 132(4) was voluntarily made and there was no coercion or threat whatsoever, the same would be binding on the assessee even if it was retracted subsequently. 34. The assessee has not produced any additional evidence for corroborating his stand that the payments alleged to have been made to Sri C Doraisamy in April/ May 2012 are for the sale of the said property. No nexus between the payments made in April / May 2012 and the receipt of additional consideration by Sri C Doraisamy, MD of M/s Premier Roller Flour Mills Ltd has been established. The assessee-company has not filed its return of income for A.Y. 2013-14 to substantiate the said payments in its accounts. 35. Therefore, as detailed in the paragraphs mentloned supra, there is no veracity, authenticity, or sanctity for the cash paymernts of Rs. 6.15 Crores stated to have been made by Sri R Srinivasan towards the additional sale consideration oul of accounted sources. The same is held to be the unexplained invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbrance upon the title of the property purchased. Therefore, the ld. CIT(A) held that the argument of the assessee with subsequent affidavit and confirmation letter from Shri. C. Doraisamy regarding confirmation and subsequent payment made against purchase of property is only an afterthought and thus, rejected explanation of the assessee and sustained additions made u/s. 69B of the Act, towards unproved amount paid for purchase of property. Aggrieved by the ld. CIT(A) order, the assessee is in appeal before us. 8. The Ld. Counsel for the assessee, Shri. S. Sridhar, Advocate, submitted that the ld. CIT(A) erred in sustaining additions of Rs. 6.15 crores being unproved source for purchase of immovable property from M/s. Premier Roller Flour Mills Ltd., as unexplained investment u/s. 69B of the Act. The Ld. Counsel for the assessee, referring to various documents including judgment of District Court in O.S. No. 312/2007, dated 17.04.2008 and Compromise Deed executed by the sellers dated 08.05.2008, submitted that there was a dispute on the property, which has been subsequently sorted out by way of Court order and subsequent compromise deed. The appellant has paid a sum of Rs. 4.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany through Cheques/RTGS. In respect of balance cash payment of Rs. 6.15 crores, no source has been explained. Although, the appellant claims to have made Rs. 4.85 crores for the financial year 2012-13 relevant to assessment year 2013-14, but no evidence has been filed to substantiate the claim, except an affidavit from the appellant company and confirmation letter from the Director of the vendor company. From the above, it is very clear that subsequent averments by way of affidavit is only an afterthought, which is contrary to the theory of preponderance of human probabilities, as explained by the Assessing Officer, in light of the decision of Hon ble Supreme Court in the case of CIT vs Durga Prasad More (Supra) and Sumati Dayal vs CIT (Supra). The ld. CIT(A), after considering relevant facts has rightly sustained additions made by the Assessing Officer and their order should be upheld. 10. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the appellant company had purchased 1.97 acres of land from M/s. Premier Roller Flour Mills Ltd., vide registered sale d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d receive part consideration after a period of four years. Except this, the Assessing Officer has not brought on record any other reasons to disbelieve the affidavit filed by the Director of the appellant company, undertaking dates and amount paid to various persons as per the instructions of Shri. C. Doraisamy, the Managing Director of vendor company and confirmation letter filed by Shri. C. Doraisamy, accepting receipt of consideration subsequent to sale deed. On the other hand, the evidences brought on record by the assessee including statement of oath recorded from Shri. R. Srinivasan, Managing Director of appellant company and statement recorded from Shri. C. Doraisamy, coupled with judgment of District Court in O.S. No.312/2007 and Compromise Deed executed by the seller dated 08.05.2008, clearly shows there was a dispute on the property between various persons and the same has been sorted out subsequent to the date of sale deed. This fact is further strengthened by affidavit filed by the Director of appellant company and supported by confirmation letter filed by Shri. C. Doraisamy, undertaking dates and amounts received subsequent to date of sale i.e., for the financial year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject property is resolved only after registration of the documents including the payment of additional consideration. Therefore, from the combined reading of all the answers given in the sworn statement of the Director of the appellant company, it is abundantly clear that said additional consideration has been paid and being accounted in the assessment year 2013-14. Accordingly, the shortfall for the source for payment of additional consideration to the tune of Rs. 1.5 crores is already offered for taxation in the assessment year 2013-14, in the hands of Shri. R. Srinivasan, Director of the appellant company. Therefore, in our considered view, the reasons given by the Assessing Officer to allege that the arguments of the appellant with regard to substantiate payment to the vendor company, in light of affidavit and confirmation letter from the Director of the vendor company is an afterthought is devoid of merits and thus, rejected. 12. Further, the Assessing Officer has made additions solely on the basis of statement of Shri. C. Doraisamy, but fact remains that said statement cannot be relied upon for the simple reason of non-furnishing of the full version before passing of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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