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TMI Blog2022 (9) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... e. AO ignoring to examine relevant persons, who are material evidence in this case, proceeded to make addition in the hands of the assessee. The only documentary evidence available with the AO is that after conducting search, the purchaser has accepted in her sworn statement in respect of on-money payment. AO has made addition in the hands of the purchaser Smt. Pramila. Simply because the purchaser has admitted on-money payment is not sufficient. Particularly, in this case, a search was conducted and no incriminating material has been found in respect of on-money receipt. Therefore addition cannot be made in the hands of the assessee. In view of the above, we set aside the order of the ld. CIT(A) on this issue and the ground raised by the assessee is allowed. Disallowance of selling expenses - assessee has contended that amount was paid as a comprise amount as compensation for seeking them to release the assessee from an existing contract and that the original documents filed alone are to be considered and that the transactions are all in tandem to the terms of the contract - HELD THAT:- CIT(A) has observed that the whole sequence of events attendant with the inconsistenci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 04-02- 2013, wherein he had sought the right to examine the Mrs.P.Pramila and to verify the original receipt of Rs.2,00,00,000/- alleged to have been signed by the petitioner. 7) Your petitioner submits that Commissioner of Income Tax (Appeals) in para 7.5 of his order has inferred documents showing evidence of payments were produced before your petitioner during the cross examination proceedings. Your petitioner would categorically like to submits that this statement is erroneous and no such documentary evidence was produced either during the course of cross examination or till date. 8) Your petitioner submits that the sum of Rs.4,00,00,000- paid to M/s S.M Apparels Pvt Ltd., is a compromise amount paid as compensation for seeking them to release your petitioner from an existing contract and the said monies has been paid by account payee cheques. 9) Your petitioner submits that the purpose of concluding the sale was because he was undergoing severe financial crisis and which was the primary reason for initially trying to develop the property M/s S.M Apparel and when the assessee could not wait for commencement of development activity he sold the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee that as to why the cash received from Smt. Pramila for the sale of property at Arunachalam Road, Kotturpuram, Chennai to the extent of ₹.5,68,75,000/- should not be treated as his undisclosed income. In reply to the questionnaire, the assessee filed a letter dated 17.01.2013 and submitted that the property has been sold by the assessee to Mrs. P. Pramila, wife of Mr. P.B. Anandam for ₹.10,56,25,000/- and the same is evidenced by registering the property before the Sub-Registrar, Adyar. The assessee has further submitted that as stated to have paid an additional sum of ₹.5,68,75,000/- to Mrs. Pramila, the assessee asked the Assessing Officer to produce any evidence or records implicating the assessee by Mrs. P. Pramila for inspection by him and his AR. and also look for cross examination. The assessee also submitted before the Assessing Officer that as per the sale deed registered as document No. 672/2009, the sale consideration received was of ₹.10,56,25,000/- except admission made by the assessee and in respect of payment of on-money of ₹.5,68,75,000/-, the assessee has submitted that he has not received anything else other than the sale consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. He further submitted that the assessee has entered into a registered sale deed for the sale consideration of ₹.10,56,25,000/- and except that, no other amount has been received by him. It was further submission that it is not the case of the purchaser that the payment was made to the assessee by her. The case of the purchaser is that payment was made through an office staff of her husband and paid to a staff of the assessee just before registration. It was further submission that on the basis of the income tax and wealth tax returns filed by the purchaser subsequent to the search in the case of the purchaser cannot be considered as evidence and addition cannot be made. 7. On the other hand, the ld. DR strongly supported the orders passed by the authorities below and also submitted that during the course of assessment proceedings, the Assessing Officer referred to signed receipt given by the assessee for receipt of on-money of ₹.5,68,75,000/- by cash and also referred by letter filed by the purchaser as well as income tax and wealth tax returns require the assessee to explain as to why the said amount should not be included in the sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchaser and her son, who has given the statement that the cash was paid and four cheques are received. Thus, in totality, proper cross examination was not carried out. 10. In the sworn statement recorded, the son of the purchaser has stated that there is no written agreement towards purchase of the property and it was only an oral agreement. The purchaser s son has stated that the total consideration agreed to purchase was ₹.16.25 crores and ₹.10.05 crores was paid while registration and the balance amount of ₹.5.75 crores also paid which includes registration charges. In reply to question No. 7, he has submitted that ₹.1.5 crores paid prior to registration. When he was asked to whom the payment of on-money was made, he has submitted that it was paid through his office clerk Mr. Srinivasa Rao to hand over the same to Shri Vijay M Pai. When he was asked where and when Mr. Srinivasa Rao handed over the amount, he has stated that ₹.1.5 crores was paid on 18.04.2009 and ₹.4.18 crores was paid on 27.04.2009 through Mr. G. Srinivasa Rao. Both the amounts were handed over by Mr. Srinivasa Rao to a person shown by Mr. Vijay M Pai at his office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be made in the hands of the assessee. In view of the above, we set aside the order of the ld. CIT(A) on this issue and the ground raised by the assessee is allowed. 13. The next ground raised in the appeal of the assessee relates to confirmation of addition made towards disallowance of selling expenses of ₹.4,00,00,000/-. The assessee has claimed ₹.4 crores as selling expenses for the sale of his property. The Assessing Officer asked the assessee to furnish evidence in support of his claim. In response thereto, the assessee had vide his letter dated 17.01.2013 furnished a copy of the original sale agreement dated 28.04.2008 entered into with M/s. S.M. Apparels and a copy of the cancellation of agreement dated 11.04.2009 entered into with the said M/s. S.M. Apparels, and contended that the money was paid to M/s. S.M. Apparels with whom the agreement to sell the subject matter of capital asset and subsequent cancellation was effected, as compensation that is relatable to the sale of the impugned property. After considering the submission of the assessee and analysing the copies of agreements adduced by the assessee, after observing various discrepancies, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant s bank account only on 4.5.2009 i.e., only after the eventual sale of the said property Smt. P. Pramila that was registered on 27.04.2009 This act clearly shows that the impugned agreement, the purported receipt of money from M/. S.M. Apparels and the cancellation of agreement is nothing but a self-serving and an after thought attempt. Otherwise, how else could it be explained that the cheque received as per the agreement dated 11.4.2009 from M/s. S.M. Apparels was credited to the appellant s account on 4.5.2009, when the appellant in the meanwhile has actually transferred the property in favour of the third party namely Mrs. Priamila on 27.4.2009. Even if conceded without admitting that the appellant had received the impugned cheque, the normal course expected of a prudent person would be that he would return the cheque to the giver in view of the cancellation of the agreement and in view of the eventual sale of the property to that party rather than depositing the cheque in his account after transferring the property in favour of the third party. Further, the AO s observation that when the appellant who had availed overdraft facilities incurring interest expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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