2019 (11) TMI 1429 - AT - Income Tax

Stay of demand of disputed tax and interest - unaccounted cash income generated through unaccounted cash sales - search and seizure operations - on-money paid in property transactions over and above value recorded in registered sale deed - HELD THAT - Enquiries were made by the AO as to guideline value which was found to be in excess of value as shown in registered sale deed, recording of statement of three personnel s of Pothys Private Limited, surrender of income by buyers towards purchase of this property, offer of income made in an application made before Hon ble Income Tax Settlement Commission by buyers as to undisclosed income invested in purchase of this Crompet property were all looked into by the AO. There is search and seizure operations conducted by Revenue and there were seizure of incriminating material during the course of search operations. In the said seized material, there is a mention of date wise cash payments made for purchase of Crompet Property which was found to be over and above sale consideration of ₹ 28 crores as mentioned in registered sale deed. The guideline value of property was found to be in excess of value mentioned as sale consideration in the registered sale deed. The statements of three personnel of Pothys Private Limited namely Managing Director, Chief Accountant and Account Assistant were recorded by Revenue and all of them have deposed that the details mentioned in the seized material are unaccounted cash income generated through unaccounted cash sales made by Pothys Private Limited. There was an surrender of ₹ 44,95,37,490/- made by Managing Director of Pothys Private Limited towards unaccounted investments made in purchase of properties. There was a offer for taxation made by the buyers to the tune of ₹ 17,57,87,000/- towards unaccounted cash investments in Crompet Property in an application filed before Hon ble Income Tax Settlement Commission. There are no such retraction of statements made by these three personnel s of Pothys Group who deposed before Revenue during the course of search operations , as per facts emanating from records. Thus, no case whatsoever has been made by assessee for stay of demand on all the grounds of Prima-facie case, balance of convenience, irreparable loss and financial difficulties before us and hence this stay petition filed by assessee lacks merits and stand dismissed.

Summary

Issues:
Stay of demand of disputed tax and interest amount in a case involving unaccounted cash payments made for property purchase.

Analysis:
The appellant sought a stay of demand of disputed tax and interest amount totaling ?15,47,06,467 arising from the sale of a property in Chennai. The Revenue conducted search and seizure operations revealing unaccounted cash payments of ?34,73,87,000 made by buyers to the appellant over and above the registered sale deed value of ?28 crores. Statements of Pothys Private Limited personnel confirmed the unaccounted cash sales used for these payments. Despite the appellant's claim of financial difficulties and lack of cross-examination opportunity, the tribunal found no merit in granting the stay, emphasizing the absence of evidence supporting the appellant's claims. The tribunal dismissed the stay petition, clarifying that its decision did not address the merits of the appeal itself.

The tribunal noted that the appellant did not provide financial statements or other evidence to substantiate financial difficulties, contrary to the claim made. Additionally, the appellant's failure to request cross-examination undermined the argument of denial of opportunity. The tribunal cited precedents where retracted statements and lack of independent inquiry affected the decision, distinguishing the current case where thorough investigations and statements supported the Revenue's findings. The tribunal highlighted the significant unaccounted cash payments, surrender of additional income, and buyers' offer for taxation as key factors in rejecting the stay petition. Despite arguments invoking legal precedents, the tribunal found no compelling grounds for granting the stay, ultimately dismissing the petition based on the totality of circumstances and lack of merit in the appellant's claims.

In conclusion, the tribunal dismissed the stay petition, emphasizing the absence of substantial evidence supporting the appellant's claims of financial difficulties and denial of cross-examination opportunity. The decision focused on the specific circumstances of the case, including unaccounted cash payments, surrender of additional income, and buyers' offer for taxation, which collectively led to the rejection of the stay request. The tribunal clarified that its decision pertained solely to the stay petition and did not address the merits of the underlying appeal.