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TMI Blog2025 (1) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cash payment if any made for purchase of property cannot be assessed for the A.Y.2020-21. Thus, we direct the AO to delete the addition as unexplained investment for the A.Y.2020-21.
Valid satisfaction note recorded by the AO for assessment or jurisdiction u/s 153C - Although, both the parties have argued the issue extensively, in light of certain judicial precedents, but the issue become merely academic in nature, because the additions made by the AO towards unexplained investment for purchase of the property has been deleted on substantial ground and therefore, legal ground taken by the appellant, challenging the jurisdiction of the AO becomes infructuous. Thus, the ground of appeal taken by the appellant challenging the jurisdiction of the AO in light of judicial precedents, including the decision of Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] has been dismissed as infructuous. X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the seized material that the on-money payments were made during the previous year relevant to A.Y 2020-21 is factually incorrect and that the said finding is based on a mere surmise and conjecture which is legally not permissible as per settled law. 8. On the facts and circumstances of the case and in law, the Ld.CIT(A) failed to appreciate that addition u/s 69 of the Act for the A'Y 2020-21 is not legally sustainable when the seized material contains no evidence of making on-money payments during the relevant previous year, which is a sine qua non for making such addition for the year. 9. On the facts and circumstances of the case, the Ld.CIT(A) failed to appreciate that the seized material has no tangible evidence of actual passing of on-money of Rs,4,65,40,000/-between the parties per se and the noting in respect of the said amount found therein merely appeared as "balance to be paid". 10. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in placing reliance on a dumb document seized from the premises of a third party showing a mere scribbling of partial payment of on-money of Rs. 1.85 crores, which neither contains required p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs. 14 crores and out of which, an amount of Rs. 9,34,60,000/- was paid through RTGS/Cheque and the balance amount of Rs. 4,65,40,000/- was alleged to be paid in cash. A statement on oath u/s 132 of the Act was recorded from Shri D.Venugopal Reddy and in response to question No.10 of his sworn statement on 24.02.2021, he admitted that the appellant company is part of MSN group of companies and further, Shri MSN Reddy and family members purchased land and building from MNR Dairy Farm for a consideration of 14 crores, out of which Rs. 9,34,60,000/- was paid through RTGS/Cheque and the balance amount of Rs. 4,65,40,000/- was paid by cash. The statement recorded from Shri D.Venugopal Reddy was confronted to Shri MSN Reddy and a statement on oath was recorded 27.02.2021, where he has admitted the purchase of property from MNR Dairy Farm and also payment of on-money in cash for the A.Y.2020-21 in the name of appellant for an amount of Rs. 4,65,40,000/- towards purchase of properties and also filed an affidavit, admitting additional income for the A.Y.2020-21. 3. Consequent to search, notice u/s 153C of the Act dated 09.12.2022 was issued. In response, the assessee has filed its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed by Shri D.Venugopal Reddy in the statement recorded u/s 132(4) of the Act and further affirmed by Shri MSN Reddy in his statement recorded u/s132(4) and also by the affidavit filed during the course of search, admitting additional income. Therefore, the arguments of the appellant that the appellant company has not paid any on-money in cash and the properties have been purchased by payment of consideration through RTGS / Cheque is incorrect. Therefore, rejected the arguments of the appellant and by taking into account the total amount of investment shown in the books of accounts of the appellant towards purchase of property from MNR Dairy Farm amounting to Rs. 7.57 crores, the balance amount of Rs. 6.43 crores has been treated as unexplained investment and added back to the total income of the assessee. 5. Being aggrieved by the assessment order, the appellant preferred an appeal before the CIT(A). Before the Ld.CIT(A), the appellant challenged the jurisdiction of the Assessing Officer in assuming jurisdiction for assessment of income for the A.Y.2020-21, in light of satisfaction note recorded by the Assessing Officer for initiation of proceedings u/s 153C of the Act. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or requisition is made. Also, the AO of the searched person as well as the AO of the appellant have recorded the satisfaction notes after duly complying with the provisions of the Act. Accordingly, the A0 stated that the mandatory jurisdictional requirements prescribed for the purpose of assuming jurisdiction u/s 153C of the Act have been duly complied with. The AO also stated that the amount of Rs. 4,65,40,000/- was admitted as additional income for the AY 2020-21 in the affidavit dated O5.07.2O21 filed by Sri M. Satyanarayana Reddy, Director of appellant company and an affidavit is admissible evidence, the contents of the affidavit are deemed to be true unless proved otherwise. The AO also relied on the decision of Hon'ble Bombay High court in the case of "Banganga Cooperative Housing Society Ltd. Vs. Mrs. Vasanti Gajanan Nerurkar in Chamber Summons (L) No.1678 of 20I4". With regard to the reliance placed by AO in the remand report on the decision of Hon'ble Bombay High Court in the case of "Banganga Cooperative Housing Society Ltd. Vs. Mrs. Vasanti Gajanan Nerurkar in Chamber Summons (L) No.1678 of 2014", it is pertinent to observe that the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reopened the proceedings u/s 153C of the Act in the case of the appellant after recording his satisfaction. Accordingly, the proceeding reopened by the Assessing Officer u/s 153C of the Act of the current AY 2020-21 is hereby held valid. The grounds no.3, 9 & 10 of the appeal are dismissed." 7. In so far as the additions made towards on-money for purchase of property amounting to Rs. 4,65,40,000/-, the Ld.CIT(A), by taking note of documents found during the course of search, coupled with statements recorded from Shri D.Venugopal Reddy and Shri MSN Reddy, held that the documents found during the course of search in the form of loose sheets clearly indicate purchase of land from MNR Dairy Farm by the appellant company and Directors for a consideration of Rs. 14 crores. Further, the document clearly shows payment of Rs. 9,34,60,000/-, through RTGS/Cheque. The document also specifies the balance amount of Rs. 4,65,40,000/- is to be paid. Further, Sheet A2 shows that a sum of Rs. 1,85,00,000/- has been paid and a balance of Rs. 2,80,40,000/- is shown as balance to be paid. When these documents were confronted to Shri D.Venugopal Reddy, he has admitted payment of on-money for purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained investment for purchase of property. 8. Aggrieved by the Ld.CIT(A) order, the appellant is now in appeal before the Tribunal. 9. The learned Counsel for the appellant, referring to Ground No. 2 to 4 of appellant's appeal, submitted that the Ld.CIT(A) erred in failing to consider that the assumption of jurisdiction and issue of notices u/s 153C by the Assessing Officer for the instant assessment year is bad in law, in the absence of incriminating materials, in terms of provisions of section 153C(1) of the Act. The learned Counsel for the appellant, referring to satisfaction note, recorded by the Assessing Officer dated 07.12.2022 and incriminating material found during the course of search in the form of loose sheets that nowhere in the satisfaction note, the Assessing Officer indicated the undisclosed income pertains to the appellant for the A.Y.2020-21. Even in the seized material, there is no specific date of payment of cash to link the undisclosed income for the A.Y.2020-21. In the absence of any evidence to suggest payment of on-money for purchase of property in cash, which pertains to A.Y.2020-21, the satisfaction note recorded by the Assessing Officer, on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,80,40,000/- is yet to be paid, but there is no date in the said document to allege that the said money has been paid for the impugned assessment year. Assuming for a moment, the appellant has paid cash for purchase of property, but in the absence of specific date in the said document, it may be presumed that the cash has been paid at the time of registration of property and if we consider the said date of cash payment alleged to have been made for purchase of property, it does not pertain to A.Y.2020-21 as considered by the Assessing Officer, but it falls in the A.Y.2019-20 as claimed by the appellant company. The Ld.CIT(A), without considering the relevant facts, simply sustained the additions made by the Assessing Officer, therefore, he submitted that the additions made by the Assessing Officer should be deleted. 11. The Ld.DR, Shri Srinath Sadanala, on the other hand, supporting the order of the Ld.CIT(A) submitted that there is no merit in the legal ground taken by the appellant, challenging the jurisdiction of the Assessing Officer, in assuming jurisdiction u/s 153C of the Act. The Assessing Officer has assumed valid jurisdiction on the basis of satisfaction note, which cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of dates of registration and pending registration of some lands. As per the said documents, in Sheet A1, there are particulars about six properties, out of which, registration for properties at Sl.1 to 4 was completed and registration for properties at Sl.5 and 6 is pending. The said document further shows total consideration paid for purchase of property, amount paid through RTGS /Cheque and balance to be paid. Further as per the said document, total consideration paid for purchase of property was at Rs. 14 crores, out of which Rs. 9.35 crores has already been paid by RTGS/Cheque. The balance amount of Rs. 4.65 crores has been stated to be payable. In Sheet A2 Rs. 1.85 corers has been stated to be paid and Rs. 2.8 crores is yet to be paid. Admittedly, there are no dates in the said two sheets, either, the date of registration of the property or the date of payment of cheques and cash payment. The Assessing Officer made the addition of Rs. 4,65,40,000/- on the ground that the documents specify cash payment and the same has been admitted by Shri D.Venugopal Reddy and confirmed by Shri MSN Reddy in their statement recorded u/s 132(4) and also filed affidavit during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 and 08.01.2019. Sl.5 and 6 properties have been registered on 20.04.2023. If we go by the date of registration of the properties, SL.1 to 4 properties have been registered in the F.Y.2018-19, relevant to A.Y.2019-20. Sl.5 and 6 properties have been registered on 20.04.2023, which falls under the F.Y.23-24, relevant to A.Y.2024-25. We are not concerned with the properties registered at Sl.5 and 6, because the two properties have been registered in subsequent financial years and cash payments, if any has been made for the said property, which have to be dealt accordingly. In so far as properties registered at Sl.1 to 4, admittedly these four properties have been registered in the financial year 2018-19, relevant to the A.Y.2019-20 and this fact has not been disputed by the Assessing Officer and the Ld.CIT(A). Assuming for a moment, there is cash payment for purchase of property as alleged by the Assessing Officer, in fact, admitted by Shri D.Venugopal Reddy and Shri MSN Reddy, said cash payment has to be assessed in right assessment year based on the dates of payments. Since, there are no dates of payment in the Sheet A1 and Sheet A2, then obviously, we have to refer to other circu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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