GOVINDASAMY SARAVANAKUMAR,COIMBATORE vs. INCOME TAX OFFICER NON CORP WARD 4(1), COIMBATORE

The Assessee raised the following grounds of appeal : “A. The Ld. Assessing Officer and the appellate authority ought to have considered that the notice dated 28.03.2024, issued under Section 148 of the Income Tax Act, 1961, was issued only by the Respondent, who is the Jurisdictional Assessing Officer (JAO), and not by the Faceless Assessing Officer. Hence, the Respondent lacked the statutory authority to issue the said notice. Consequently, the assessment order dated 20.03.2025 and the impugned order are arbitrary, unlawful, and unsustainable in the eyes of law.

Briefly, the facts of the case are that the appellant is an Individual engaged in the business of growing and selling of Mushrooms. No regular Return of Income under the provisions of section 139 of the Act was filed by the appellant for the Assessment Year 2022-23. However, the appellant filed Return of Income for the Assessment Year 2022-23 u/s.139(8A) of the Act on 06.03.2024 disclosing the total income of Rs.9,69,760/-. However, based on the information unearthed as a result of search and seizure action conducted on 14.09.2023 in the case of Sree Daksha Properties India Ltd, that the appellant had received ‘on money’ consideration of Rs.4,20,00,000/- by way of cash on sale of agricultural land of 6.23 Acres located at Kalikkanaickenpalayam Village, Thondamuthur, Coimbatore apart from the apparent consideration stated in the sale deed no.3853/2021 registered on 19.04.2021 with Sub-Registrar of Tondamuthur. Based on this information, the Assessing Officer formed an opinion that the income got escaped assessment from tax, accordingly, a notice u/s.148 was issued on 28.03.2024 calling upon the appellant to file Return of Income.

In response to notice u/s.148, the appellant filed the Return of Income on 30.04.2024 disclosing a total income of Rs.9,69,760/-. Against the said Return of Income, the assessment was completed by the Income Tax Officer, Non- Corporate Ward-4(1), Coimbatore(hereinafter called ‘AO’) vide order dated 20.03.2025 passed u/s.143 r.w.s 147 of the Income Tax Act, 1961 at a total income of Rs.6,02,40,302/-. While doing so, the Assessing Officer made addition under Head “Capital Gains” on sale of agricultural lands by adopting sale consideration of Rs.6,88,41,500/- as against the consideration of Rs.93,45,000/-. The factual background leading to the above addition is as under :

During the course of search proceedings u/s.132 of the Act in the office premises of M/s. Sree Daksha Properties Developers India (P) Limited & their group concerns, and the premises of Shri J. Murugaraj, Accounts Manager of the group concerns on 14.09.2023, a copy of a sale agreement dated 25.02.2021 was seized from which it was seen that appellant had entered into a sale agreement on 25.02.2021 with M/s. Sree Daksha Land Shapers, a Partnership Firm for sale of an immovable property of land of 4.80 acres situated in Kalikkaniackenpalayam village, Thondamuthur, Coimbatore by appellant to M/s. Sree Daksha Land Shapers, for an agreed total sale consideration of Rs.6,88,41,500/-, and as per the said agreement appellant received Rs.1,00,00,000/- by way of cash on 25.02.2021.

The Assessing Officer also found the following three receipts signed by the assessee seized from the residence of said Shri Murugaraj :  on 18.03.2021 Rs.75,00,000/-  on 13.04.2021 Rs.1,70,00,000/-  on 22.03.2021 Rs.75,00,000/-

The Assessing Officer also had taken into consideration the statement recorded from Shri Murugaraj by ACIT, Central Circle-3, Coimbatore wherein, Shri Murugaraj admitted that ‘on money’ consideration 4.22 crores was paid to the appellant. This statement was also confirmed by Shri R.Mohan Managing Director of M/s.Sree Daksha Properties Developers India (P.) Ltd and Managing Partner of M/s.Sree Daksha Land Shapers.

Based on the above evidence, during the course of assessment proceedings, Assessing Officer had called-upon the appellant to show cause as to why the said ‘on money’ sale consideration of Rs.4.20 crores should not be treated as unexplained money of the appellant and brought to tax u/s.115BBE of the Act. In response to show cause notice, the appellant had filed an explanation vide letter dated 11.03.2025.

The Assessing Officer had rejected the above explanation of the appellant by citing the following reasons : i) The sale agreement dated 25.02.2021 was found and seized during the course of Search and Seizure Operations u/s.132 of the Act in the case of Shri Daksha Properties India Limited reveal that agreed value for the sale of land is Rs.6,88,41,500/-. The fact that purchaser had not signed the agreement is of no significance, in as much as, the agreement was signed by a person who received the ‘on money’ consideration and it is acknowledged by the seller of the property. The receipts signed by the assessee clearly contained details of the name of the purchaser, extent of land, location of the land, who is the title holder, from whom cash was received, addresses of both the seller and purchaser, and the amount of cash in figures and words, date of receipt, mobile number of the seller etc.

No credence can be given for subsequent denial of receipt of ‘on money’ consideration in view of the fact that the receipts dated 18.03.2021, 13.04.2021, 22.03.2021 were signed by the assessee and found in the premises of the purchaser of property and it was seized during the course of search and seizure operation.

The Assessing Officer also reproduced the scanned copies of the receipts in the assessment order. The Assessing Officer thus, concluded that in view of the above corroborative evidence, the appellant had received ‘on money’ consideration of Rs.4.20 crore, accordingly made addition while assessing income under Head “Capital Gains”.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), contending that in the absence of evidence that the appellant had received the ‘on money’ consideration over and above what is stated in the sale deed, no addition can be made. The burden of proving that the appellant had received more than the declared amount lies on the revenue in the absence of any evidence to show that the appellant received the ‘on money’ consideration, no addition can be made. Reliance was also placed in the following decisions :  CIT Vs. Shivakami Co. Pvt. Ltd [1986] 159 ITR 71 (Hon’ble SC)  Krishna Textiles Vs. CIT [2009] 310 ITR 227 (Hon’ble Gujarat HC)

However, the ld.CIT(A) has dismissed the appeal filed by the assessee by holding that the addition is not based merely on a loose sheet or third party entry, but on a sale agreement and multiple cash receipts duly signed by the appellant, recovered during search and supported by sworn statements. The burden placed upon the Revenue stands adequately discharged, and the appellant has failed to rebut the incriminating material with any cogent or credible evidence.

Being aggrieved by the order of the ld.CIT(A), the appellant is in appeal before us in the present appeal.

The learned Counsel had withdrawn the grounds of appeal no.A, B, C & D challenging the jurisdiction of Jurisdictional Assessing Officer to issue notice u/s.148 of the Act. Hence, these grounds of appeal are dismissed as withdrawn. The Learned Counsel submits that the learned CIT(A) in the absence of any corroborative evidence to show that the appellant had received the ‘on money’ consideration over and above what is stated in the sale deed ought not have confirmed the addition. He placed reliance on the following decisions : CIT Vs. Lalit Kumar Bhadani [2021] 131 taxmann.com  253 (Hon. Jharkant HC]. CIT Vs. Shivakami Co Pvt Ltd [1986] 159 ITR 71 (SC). 

On the other hand, learned CIT-DR submits that the Assessing Officer had brought on record conclusive evidence in the form of receipts signed by the appellant, agreement to sale and the statement recorded from Shri Murugaraj and Shri R.Mohan to show that the appellant had received ‘on money’ consideration on the sale of immovable property measuring 6.23 acres of land situated at Kalikkanaickenpalayam Village, Thondamuthur, Coimbatore to Shree Daksha Land Shapers. The appellant had failed to rebut the above evidence. Therefore, the ld.CIT(A) had rightly confirmed the addition made by the Assessing Officer.

We heard the rival submissions and perused the material on record. The solitary issue that arises for our consideration is whether the ld.CIT(A) was justified in confirming the addition on account of receipt of ‘on money’ consideration. On careful perusal of the assessment order, it would reveal that the Assessing Officer had made addition on account of receipt of ‘on money’ consideration on sale of immovable property admeasuring 6.23 Acres of land situated at Kalikkanaickenpalayam Village, Thondamuthur, Coimbatore based on the evidence unearthed during the course of search and seizure operations conducted in the case of Sree Daksha Properties India Limited in the form of a) receipts signed by the appellant on the following dates :  on 18.03.2021 Rs.75,00,000/-  on 13.04.2021 Rs.1,70,00,000/-  on 22.03.2021 Rs.75,00,000/-

When the above evidences were confronted with the appellant during the course of assessment proceedings, the appellant had failed to controvert the above evidence except denying that he had not received any ‘on money’ consideration. The appellant had not denied having signed the above receipts and the agreement of sale, nor he questioned the veracity of the above evidences. Therefore, we are of the considered opinion that the Assessing Officer had brought on record clinching evidence to show that the appellant had received ‘on money’ sale consideration over and above the consideration stated in the sale deed. The decisions relied upon by the appellant have no application to the facts of the present case. Those decisions were rendered on the premise that in the absence of any evidence to show the receipt of ‘on money’ consideration, no addition can be made merely on the surmises and assumptions. Whereas, in the present case, as held by us(supra), there was a clinching evidence brought by the Assessing Officer to show that the appellant had received ‘on money’ consideration. The ld.CIT(A) had rightly upheld the addition on proper appreciation of the evidence on record by passing a reasoned order. We do not find any illegality or perversity in the findings of the ld.CIT(A). Accordingly, we uphold the orders of the Lower Authorities. We do not find any merit in the grounds of appeal filed by the assessee.

In the result, appeal filed by the assessee stands dismissed. Order pronounced in the open Court on 11th August, 2026.