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TMI Blog2024 (3) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... n upholding the estimation of the cost of acquisition of the property at Dera Mandi, new Delhi at Rs. 2849,38,823 and thereby upholding the addition of Rs. 27,29,38,823 made to the taxable income of the appellant under section 69 of the Income Tax Act, 1961. Fact of the matter is that the property under consideration had been purchased for a sum of Rs. 1,20,00,000/- and as such the estimation of the cost of acquisition at Rs. 28,49,38,823/- is absolutely bad in law and facts. 3. That the orders of the Learned Commissioner of Income Tax (Appeals) is bad in law and facts." 3. Brief facts of the case are that, an information was received from Assistant Director of Income Tax, Faridabad, vide letter dated 18/03/2015, that during the survey proceedings on the Lingaya Group on 30/06/2014, it was discovered that a Farm House was purchased by M/s. Maple Destinations and Dream build (P) Ltd. in Dera Mandi locality of New Delhi, from Sh. Picheswar Gadde and Smt. Sunita Gadde in the F.Y. 2011-12. It was further discovered that the sale deed was registered at Rs. 1.2 Crores at the circle rate, but cash component of Rs. 5.41 Crores was also paid over and above the registered value of Rs. 1.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the A.O. initiated reassessment proceedings based on the information received from Investigation Wing that the Assessee was involved in making cash payment, the reasons recorded by the A.O. also indicates the amount in nature of cash payment and persons with whom transaction taken place the reassessment proceedings initiated with a certain information having sufficient and relevant material, therefore, the same cannot be found fault with. The Ld. DR relying on the findings of the Lower Authorities sought for dismissal of the Ground No. 1. 8. We have heard the parties perused the material available on record. In the present case, Assessing Officer initiated reassessment proceedings on the information that, during the survey proceedings on Lingya Group it was discovered that farm house was purchased by M/s Maple Destinations and Dream build (P) Ltd. in Dera Mandi locality of New Delhi from Sh. Picheswar Gadde and Smt. Sunita Gadde in the F.Y.2011-12. It was further discovered that the sale deed was registered at Rs. 1.2 Crores i.e. at the circle rate and the Ld. A.O. observed that the a cash component of Rs. 5.41 Crores was paid over and above the registered value of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the present case. It is well settled law that, for an assessment to be re-opened what is required that the AO should have reason to believe that the income of assessee had escaped assessment and the said belief should be an honest and reasonable person based on reasonable grounds. The correctness of the materials/reason to believe is not a matter to be looked into at the initial state. Therefore, we find no merit in the ground No.1 of the assessee. Accordingly, Ground No.1 of the assessee is dismissed. 11. The Ld. Counsel for the assessee addressing on the Ground No. 2 submitted that the lower authorities have not justified in making the addition and upholding the addition based on the estimation of the cost of acquisition of the property at Dera Mandi, New Delhi at Rs. 28,49,38,823/- and thereby upholding the addition of Rs. 27,29,38,823/- made to the taxable income of the assessee u/s 69 of the Act. Further submitted that, the property under consideration had been purchased for a sum of Rs. 1,20,00,000/- and as such the estimation of the cost of acquisition at Rs. 28,49,38,823/- is absolutely bad in law and facts and the property has been acquired at the circle rate with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. A.O. made the addition of Rs. 27,29,38,823/- u/s 69 of the Act on following conclusions:- Payment of on money and quantum of One Money: On the basis of discussion made as above in para 7, Issue 1 and Issue 4 it is established beyond doubt that assessee company has made payment of on money of Rs. 27,29,38,823/- for purchasing the property situated at Dera Mandi, New Delhi. Supply of material and cross examination On the basis of discussion made as above in para 7, Issue 2 and taking into account the peculiar fact in this case that assessee company has requested for an opportunity to cross-examine one of closed aid to the director of the assessee company and a person from whom assessee has purchased the property and not defining the reasons & basis for cross-examination and legal position with reference to cross-examination as discussed above, the request of assessee is not valid. Retraction from Statements Taking into consideration of the facts as discussed above in para 7 issue no. 3 and a bald denial of a statement recorded on oath and corroborated with other statements and material does not hold any water in the eyes of law, the retraction letters filed by Sh. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, purportedly given by Shri Picheswar Gadde. You asked me to accept that I was aware of a sale transaction of Rs. 6.51 crore (Rupees Six hundred and fifty one lakhs) between the buyer and seller of the said property. This denied then and I deny it now. I do not recognise any writing of that of the buyer or seller as recorded by you in the statement you had obtained from me. I also deny that I had in any way assisted the buyer in the purchase of this land except for having identified it and having stood as a witness for the registration of the property. I submit that as the statements were obtained from me by putting me under duress. coercion and threat of dire consequences to my business it would not have any legal validity and would not bind me in any manner. Further I was under tremendous stress and in a disturbed state of mind due to the survey which went on till the next day morning / evening. I was queried throughout night by your officials and was not allowed to sleep. The statement taken from me under such stressful situation, naturally do/would not reflect the correct state of affairs. Therefore, I request to furnish a copy of all the statements taken from me under w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the form of registered sale deed which being a best evidence for finding the actual sale value and in the absence of any other material to show the transactions involved in cash outside the sale consideration mentioned in the sale deed and in the absence of any corroborative documentary or credible oral evidence, the AO should not have made addition. The said view of ours is fortified by the decisions of Apex Court in CIT Vs. Motors & General Stores Pvt. Ltd. (1967) 66 ITR 692 (SC) and those in CIT Vs. K. C. Agnes (2003) 262 ITR 354 (Ker) and Paramjit singh Vs. ITO (2010) 323 ITR 588 (P &H). 18. The addition has been made not based on any document or material which could suggest that cash was earned by the assessee from any source or that any under handed cash payment was involved in the sale of transaction. Further considering the fact that the entire addition made by the AO based on the statements of the witnesses which have been retracted thereafter and no opportunity of cross examination was granted by the AO and in the absence of any corroborative material on record, the AO could not have made any addition and the Ld. CIT(A) should have deleted the addition. Thus, in our c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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