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TMI Blog2019 (1) TMI 2061X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout complying with the primary and fundamental requirement of rules of natural justice. Assessment order reveals that the AO has heavily relied upon the statement recorded from Shri Niranjan Hiranandani, for making the disputed addition, however, AO has not provided the full text of such statement recorded and has also not allowed the assessee an opportunity to cross-examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, is in gross violation of rules of natural justice and against the basic principle of law. Addition made cannot be sustained. Addition on account of on-money is the information contained in the pen drive found during the search and seizure operation and the statement recorded u/s 132(4) - The said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a third party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on-money in cash, no addition can be made u/s 69B of the Act. Also in the statement recorded u/s 132(4) of the Act, Shi Nir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh over and above the registered value of the flat from the buyers. On the basis of such information / material found during the search and seizure operation, the Assessing Officer re-opened the assessment under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer called upon the assessee to explain why the on-money paid in cash amounting to Rs. 42 lakh towards purchase of flat should not be treated as unexplained investment under section 69B of the Act and added to the income of the assessee. Though, the assessee by filing detailed written submissions objected to the proposed addition by submitting that it neither has interacted with Shri Niranjan Hiranandani, nor paid any on-money in cash for purchase of flat, however, the Assessing Officer did not find merit in the submissions of the assessee. He observed, the information / material found as a result of search and seizure operation coupled with the statement recorded form Shri Niranjan Hiranandani, under section 132(4) of the Act clearly reveal that the assessee had paid on-money in cash towards purchase of the flat. Accordingly, he proceeded to add back the amount of Rs. 42 lakh to the income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass the test laid down in various judicial precedents as far as admissibility of documents as per section 34 of the Indian Evidence Act, 1872, is concerned. Thus, ultimately, he confirmed the addition of Rs. 42 lakh made by the Assessing Officer. 8. Reiterating the stand taken before the departmental authorities, the learned Authorised Representative submitted, the basis for addition of Rs. 42 lakh on account of on-money is the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani and certain information contained in a pendrive found and seized in course of search and seizure operation conducted in case of Shri Niranjan Hiranandani. He submitted, beside the aforesaid materials there was no other corroborative evidence to demonstrate that the assessee in fact has paid on-money in cash for purchasing the flat. The learned Authorised Representative submitted, in the course of assessment proceedings, though, the assessee had repeatedly requested the Assessing Officer to provide him all the adverse materials including the statement recorded from Shri Niranjan Hiranandani in full, however, the Assessing Officer never provided the adverse materials to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party and the statement recorded from such third party, addition cannot be made at the hands of the assessee on account of payment of on-money in cash, that too, in the absence of any other corroborative evidence to establish that the assessee has paid on- money in cash over and above the declared sale consideration. The learned Authorised Representative submitted, under identical facts and circumstances addition made on account of alleged payment of on- money in cash to some other entities of Hiranandani Group in respect of other assessees have been deleted by the Tribunal on the ground that in the absence of other corroborative evidences brought on record to prove the contents of the pen drive and the statement recorded from Shri Niranjan Hiranandani are correct, no addition under section 69B of the Act can be made. In this context, he relied upon the decision of the Tribunal, Mumbai Benchi, in case of Shri Anil Jaggi v/s ACIT, ITA No. 3049/Mum./2016, dated 20.12.2017. Further, he submitted, since the Assessing Officer made the addition without confronting the adverse materials to the assessee and without allowing the assessee to cross-examine the witness whose statement was reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for allowing her to cross-examine Shri Niranjan Hiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not acceded to by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority, the learned Commissioner (Appeals) in letter dated 18th July 2016, had clearly directed the Assessing Officer to provide the assessee all adverse materials / documentary evidences available with him indicating payment of on- money. However, on a perusal of the remand report dated 23th June 2017, a copy of which is at Page-53 of the paper book, it is very much clear that the Assessing Officer has completely avoided the issue and there is no mention whether the assessee was provided with all the adverse material and if, not so, whether he has provided them to the assessee as per the directions of the learned Commissioner (Appeals). Thus, from the aforesaid facts, it is patent and obvious that the addition of Rs. 42 lakh made on account of on-money payment in cash is without complying with the primary and fundamental requirement of rules of natural justice. It is well settled proposition of law that if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Hiranandani are enough to conclusively establish the factum of payment of on-money by the assessee. At best, they can raise a doubt or suspicion against the conduct of the assessee triggering further enquiry / investigation to find out and bring on record the relevant fact and material to conclusively prove the payment of on-money by the assessee over and above the declared sale consideration. Apparently, the Assessing Officer has failed to bring any such evidence / material on record to prove the payment of on- money by the assessee. More so, when the assessee from the very beginning has stoutly denied payment of on-money in cash. Notably, while dealing with a case involving similar nature of dispute concerning similar transaction with another concern of Hiranandani Group, the Tribunal in case of Shri Anil Jaggi v/s ACIT (supra) has held as under:- "15. We shall now take up the case of the assessee on merits and deliberate on the validity of the addition of Rs. 2.23 crore made by the A.O on the ground that the assessee had made a payment of "on money" for purchase of flats from M/s Lakeview developers. We have perused the facts of the case and the material available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled before the Settlement commission. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of "on money" by the assessee would not lead to drawing of adverse inferences as regards the investment made by the assessee for purchase of the property under consideration. We rather hold a strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the "market value‟ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of the property under consideration was well in order. We are of the considered view that though the material acted upon by the department for drawing of adverse inferences as regards payment of "on money" by the assessee formed a strong basis for doubting the investment made by the assessee for purchase of the property under con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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