2022 (8) TMI 1022 - AT - Income Tax

Addition u/s 69 - Share of the assessee paid for purchase of Savargaon land - addition based on seized material - seller parties Kokani Group filed a petition before Settlement Commission who passed an order u/s 245D(4) wherein the seller admitted of having received sale consideration in cash from Thakker Group - CIT-A allowed the appeal of the assessee by following the order of the coordinate bench in the case of the other co-owners which were decided on the same set of facts and the same transaction involving same seized material - HELD THAT - As decided in the case of other co buyers M/S. DHANANJAY MARKETING PVT. LTD. 2021 (5) TMI 664 - ITAT PUNE and M/S. ASIAN FOOD PRODUCTS 2021 (6) TMI 719 - ITAT PUNE coordinate bench has considered the above issue and held that that the learned assessing officer has failed to bring on record any reliable evidence to prove that the respondent assessee has made investment in purchase of land over and above the stated consideration - it cannot be said that the Co-ordinate bench did not consider the seized documents properly. The coordinate bench also considered the statement recorded u/s 132 (4) of the act of the company family as well as the preliminary restatement recorded u/s 131 - The coordinate bench in paragraph number 12 has dealt with such statement. In paragraph number 25 26 has considered the statement of the sellers as well as the statement of cross examination wherein all the buyers of confirmed that they have not received any own money consideration on the sale of land from Thakkar group. Further with respect to the disclosure made by them of additional income the affidavit is were filed which were considered in paragraph number 29 of the order that the same disclosure was made with an intention to buy peace and avoid further litigation and also denied the knowledge of receipt of the own money consideration is the subject transaction of sale of land to Thakkar group. It also dealt with in paragraph number 32 with respect to the additional income disclosed by the vendor‟s before the settlement commission. In view of this the coordinate bench has clearly taken into consideration all the statements of the family members of the Kokani group as well as disclosure made by them before the settlement commission. Merely because there is an error in mentioning the date of search in the order of the coordinate bench does not make the findings of the coordinate bench not binding on us. Further merely as the orders were passed either u/s 153A on u/s 153C, the findings of the coordinate bench does not change because the same was rendered after considering seized material, statement of the vendors, disclosure of the vendors before the settlement commission, the statement in cross examination by the vendors denying receipt of any on money consideration. Thus in the present case, the learned it authorised representative has produced before us 2 orders of the coordinate bench in case of the joint buyers of the property along with the respondent assessee is in this appeal. On the identical facts, same transaction, on the basis of same seized material, on the basis of same statements of the buyer and disclosure made by them before the settlement commission, in those cases of the joint buyers the additions have been deleted. Therefore, those orders become binding on us as there is no change in any of the facts pointed out before us which is a material bearing on the findings given by the coordinate bench. Therefore judicial discipline demands that those judicial precedents is to be followed. CIT (A) has followed two decision of coordinate benches in case of two different joint buyers of the same property on the same set of facts, no infirmities can be found therein. Therefore, we respectfully following the decision of the coordinate bench in case of Dhananjaya marketing private limited and Asian Foods products Ltd, confirm the orders of the ld CIT (A) and accordingly all the grounds of appeal are dismissed.

Issues Involved:

1. Alleged cash payments made by the assessee to the sellers (Kokani Group) over and above the consideration stated in the sale deed.
2. Validity of the addition made by the Assessing Officer (AO) under Section 69 of the Income-tax Act, 1961.
3. Reliance on statements made by the sellers during search proceedings and their subsequent retraction.
4. Application of the presumption under Section 132(4A) of the Income-tax Act, 1961.
5. Admissibility and evidentiary value of loose sheets found during the search.
6. Impact of the Settlement Commission's order on the assessment of the assessee.
7. Consistency with previous judgments in similar cases involving co-buyers.

Detailed Analysis:

1. Alleged Cash Payments:

The AO alleged that the Thakker Group, including the assessee, made cash payments over and above the stated consideration for the purchase of land from the Kokani Group. This allegation was based on statements made by the Kokani Group during search proceedings and certain loose sheets found and seized during the search.

2. Validity of the Addition under Section 69:

The AO issued a show cause notice to the assessee, proposing to add the alleged cash payments as unexplained investments under Section 69 of the Income-tax Act. The assessee denied making any cash payments and filed nil returns for the relevant assessment years. The AO, however, made the addition based on the statements of the sellers and the loose sheets.

3. Reliance on Sellers' Statements and Retraction:

The sellers, during search proceedings, admitted to receiving cash payments over and above the consideration stated in the sale deed. However, during cross-examination, they retracted their statements, stating that they made the admissions to buy peace with the Department. The assessee argued that these retracted statements should not be the sole basis for making the addition.

4. Presumption under Section 132(4A):

The AO applied the presumption under Section 132(4A), which assumes the correctness of documents found during the search. However, the Tribunal noted that this presumption applies only to the person from whose possession the documents were seized and cannot be extended to third parties like the assessee.

5. Admissibility and Evidentiary Value of Loose Sheets:

The Tribunal examined the loose sheets and concluded that they were "dumb documents" with no evidentiary value. The documents did not contain any dates, names of parties, or specific details linking the alleged transactions to the assessee. The Tribunal emphasized that additions cannot be made based on such documents without corroborative evidence.

6. Impact of the Settlement Commission's Order:

The Kokani Group filed a petition before the Settlement Commission, admitting to receiving cash payments. However, the Tribunal held that the Settlement Commission's order is not binding on the assessee and cannot be the sole basis for making additions in the hands of the assessee. The Tribunal cited legal precedents to support this view.

7. Consistency with Previous Judgments:

The Tribunal referred to its previous judgments in similar cases involving co-buyers of the same land, where identical additions were deleted. The Tribunal found that the facts and evidence in the present case were similar to those in the earlier cases. Therefore, it followed the principle of judicial consistency and deleted the additions made by the AO.

Conclusion:

The Tribunal concluded that the AO failed to bring on record any reliable evidence to prove that the assessee made cash payments over and above the stated consideration. The additions were based on assumptions, presumptions, and retracted statements without corroborative evidence. Therefore, the Tribunal upheld the order of the Commissioner of Income-tax (Appeals) [CIT(A)], deleting the additions for all the assessment years in question. All five appeals filed by the AO were dismissed.

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