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TMI Blog2023 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the hands of the appellant company, presumption of applicability of provisions of Section 69B of the Act was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law. 6. The IT(Appeals) - 19 failed to appreciate that the cross verification carried out by the revenue for coming to the conclusion on the completion of the transaction in the assessment year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 that, the appellant is a Private Limited Company, filed its return of income for the assessment year 2008-09 on 27.09.2008, admitting Nil total income. A search and seizure action u/s. 132 of the Incometax Act, 1961 (hereinafter referred to as "the Act") was conducted at the premises of Shri. C. Doraisamy on 09.03.2012. During the course of search proceedings, it was noticed that the appellant company had purchased an immovable property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 judicial precedents including the decision of Hon'ble Supreme Court in the case of CIT vs Durga Prasad More 82 ITR 540 and Sumati Dayal vs CIT 214 ITR 801, in light of theory of preponderance of human probabilities and observed that no prudent person would sell his property and receive part consideration after period of four years. The Assessing Officer, further observed that the evidence gathered during the course of search and post-search inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: "Q.No.5 Please explaln the sale and purchase transactions of M/s. Premier Roller Flour Mills Page/ Ltd in detall? Ans: I state the transactions about M/s. Pramior Roller Flour Mlls Ltd as below Sale consideration Ms, Prermier Roller Flour Mills Ltd Rs. 24 Cr. Less: Description Amount 1. Amount paid to erstwhilo shareholders Rs. 3.15 Cr 2. Amount paid to erstwhile shareholder as per receipt Rs. 645 Cr 3. Amount paid to the uncle of erstwhilo shareholders Rs. 0.55 Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited. 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 Roller Flour Mills P Ltd. Rs. 6,45,00,000/- * Paid in cash to old share holders Rs. 1,00,00,000/- * Paid to Shri. Gopalakrishnan, one of the old share holders Rs. 55,00,000/- * Settled outstanding dues relating to Venkatachalam & sons Rs. 20,00,000/ * Paid to Sundry cotton suppliers of Andhra Pradesh Rs. 75,00,000/ 22. The payments of the same to Sri C Duraisamy, therefore, are unverifiable and defy logic. No nexus can also be drawn to the alleged payments by the Purchaser and the payments made by the Seller to the persons stated above. Further, no prudent business man, especially in a real estate transaction, would wait up to more than four years for the payment of the additional consideration, especially after the transfer of the property. 22. Though it is averred that an affidavit was filed on 4.6.2012 itself before the Investigating Authorities retracting a part of the deposition made on 28.5.2012 and stating that the payments of Rs. 10.50 crores were accounted and the uncovered portion of Rs, 1.50 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged to have been issued by Sri C Doraisamy, confirming the receipt of Rs. 12 crores on various dates from Sri R Srinivasan and requested that as the Seller himself had accepted that the payments were made in April and May 2012, the same should be accepted by the Department and allowed. He further requested for an opportunity for personal representation. 30 The assessee's final submissions are again considered carefully. The assessee did not avail of the further final opportunity given for personal representation on 16.3.2015. 31. It is a well settled law that statements given under oath duing the course of Search and Seizure proceedings are reliable evidences and the same cannot be retracted lightly without any basis or corroborative evidence. A statement given under oath is reliable evidence and cannot be retracted without any material evidence to show that such statement was made under ignorance of facts or on account of misunderstanding of the provisions of law. The following case laws hold that statement recorded u/s 132 (4) of the Act are reliable and oral evidence and retraction of the Statement without establishing coercion cannot be accepted: 1. PRASANCHAND S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 6. Being aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the ld. CIT(A), the assessee has filed a detailed written submission on the issue, which has been reproduced at Para 5 of page 4 to 9 of Ld. CIT(A) order. The sum and substance of arguments of the assessee before the ld. CIT(A) are that, the property has been purchased for a consideration of Rs. 24 crores and sale deed was executed for Rs. 12 crores only. The balance amount of Rs. 12 crores has been paid on various dates and up to assessment year 2013-14, including an amount of Rs. 4.85 crores in cash to Shri. C. Doraisamy, Director of the seller company. The appellant had also offered to tax a sum of Rs. 1.50 crores towards source for investment in purchase of property for the assessment year 2013-14 in the hands of Shri. R. Srinivasan, Managing Director of appellant company. The appellant had also explained reasons for deferred payment to the seller, even though the property was registered in the financial year 2007-08 relevant to assessment year 2008-09 and argued that there was a dispute in the property, which resolved in settlement between the seller and purchaser subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions of Shri. C. Doraisamy, Director of vendor company, and the appellant has accounted said payment in the books of accounts for the financial year 2012-13 relevant to assessment year 2013-14. 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 the assessment year 2013-14. The appellant has filed an affidavit and explained details of payments made to different persons as per the directions of the seller company. Shri. C. Doraisamy, Director of vendor company has confirmed receipt of sum of Rs. 4.85 crores during the financial year relevant to assessment year 2013-14. Therefore, the Assessing Officer and CIT(A) are erred in making addition of Rs. 6.15 crores for the assessment year 2008-09, only on the basis of sale deed executed for the assessment year 2008-09, ignoring all evidences filed by the assessee. Further, the Ld. Counsel for the assessee submitted that, it is not strange in real estate transactions that payments have been made subsequent to the date of registration of property depending upon various facts including understanding between the buyer and the seller. Therefore, merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fact that evidence gathered during the course of search in the case of Shri. C. Doraisamy, Director of the vendor company, clearly establishes the fact of receipt of additional consideration of Rs. 12 crores for sale of property. This fact is further strengthened by post-search investigation conducted in the case of appellant company u/s. 131 of the Act, where Shri. R. Srinivasan, Managing Director of the company in his sworn statement recorded on 28.05.2012, clearly admitted to have paid additional consideration of Rs. 12 crores for purchase of property from M/s. Premier Roller Flour Mills Ltd. From the above, it is undoubtedly clear that the appellant company had purchased immovable property from M/s. Premier Roller Flour Mills Ltd., for a consideration of Rs. 24 crores and the sale deed has been executed for a consideration of Rs. 12 crores only. In fact, both the vendor company and the appellant company agreed that the property has been purchased for a consideration of Rs. 24 crores. In light of above facts, it is necessary to examine reasons given by the Assessing Officer to make additions of Rs. 6.15 crores as unexplained investment u/s. 69B of the Act. 11. It is an admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to support his argument, it appears that there was a dispute in the property between various persons and appellant has made part payment after settlement of dispute and execution of Compromise deed by the sellers. Further, statement recorded from Shri. R. Srinivasan, Director of appellant company during the course of search clearly shows that, additional consideration was paid only in installments due to pending litigation over the subject property and resolved during the assessment year 2013-14. The answers in the sworn statement under any stretch of imagination cannot be considered as a device to cover up the source for the additional consideration paid, because the survey team has not put the information obtained in the search/survey conducted in the hands of the seller. The questions were put to the Director of the appellant company during survey independent of the search results obtained in the hands of the seller and therefore, the answers given by the Director of the appellant company cannot be brushed aside by solely relying upon the sworn statement of Shri. C. Doraisamy. Moreover, additional consideration paid in tranches, dispute pertaining to the transfer of property by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o iota of any evidence with regard to details of payments, even though he had admitted that additional consideration of Rs. 12 crores has been received for sale of property. Moreover, the offer of the additional consideration received by the seller in the income tax returns filed for the assessment year 2008-09, by virtue of provisions governing computation of capital gains would not alter the recognition of payments by the appellant during the assessment year 2013-14 in the hands of appellant company, especially when amounts were paid to resolve dispute, which was pending after the execution of sale deed and also stated on oath in the statement which should be considered as sacrosanct. Furthermore, the reporting of additional consideration by the seller either as capital gains or as other income because of the search conducted in the month of March 2012 in the assessment year 2008-09, so as to justify and to link the additional consideration to the sale deed executed for several reasons to come out from the rigors of the Income Tax Act. Therefore, the statement of Shri. C. Doraisamy, cannot be taken as sacrosanct and on that basis additions cannot be made for assessment year 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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