RUTURAJ SHIVAJI PATIL,PUNE vs. INCOME TAX OFFICER WARD 2(2), PUNE

Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 31.03.2017 declaring total income of Rs.3,86,020/-. The case was selected for limited scrutiny to examine whether investment and income relating to properties are duly disclosed. Accordingly, statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served on the assessee. Thereafter, notice u/s 142(1) along with a questionnaire was also issued asking the assessee to file various details.

During the course of assessment proceedings the Assessing Officer noted that the assessee along with 3 other persons has purchased a land as per ITS Data on 29.01.2015 for Rs.2,76,76,000/- which has been registered with Civil cum Sub- Registrar Bardez Government Building Main Mapusa North Goa. The assessee has also not denied this transaction and has submitted documentary evidence by producing the deed of sale. The Assessing Officer observed from the details furnished by the assessee that the said land has been purchased by 4 persons, the details of which are as under: S. No. Name PAN Share Amount TDS 1 Dilip J. Oswal AAAPO9871F 73,85,400/- 73,856/- 2 Bharat D. Raigndhi AHIPR2197N 58,92,700/- 58,928/- 3 Ruturaj S. Patil ARLPP1012H 71,98,950/- 71,991/- 4 Kapil D. Oswal AALPO7640P 71,98,950 71,999/- Total 2,76,76,000/- 2,76,766/-

He observed that the assessee has contributed Rs.71,98,950/- and has deducted tax of Rs.71,991/- and has produced Form No.26QB in support of his claim for share in the property which is in proportion to the contribution. However, it was stated that the assessee has not paid the amount to the owner of the land which was not acceptable to the Assessing Officer on the ground that the registration of the property is completed and the assessee has already made TDS of Rs.71,991/- on his share amount of Rs.71,98,950/-. In absence of any explanation to his satisfaction supported by documentary evidence, the Assessing Officer made addition of Rs.71,98,950/- being his contribution of share in purchase of property u/s 69 i.e. unexplained investment.

Before the Ld. CIT(A) / NFAC the assessee filed certain additional eviences based on which the Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer. After considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report and the various submissions made by the assessee, the Ld. CIT(A) / NFAC upheld the addition made by the Assessing Officer by observing as under:

Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is not justified in confirming the unpaid amount Rs.71,98,950/- as unexplained investment by invoking S. 69 of the Act, without any cogent reasons; proof and based on assumption.

The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) / NFAC in confirming the addition made by the Assessing Officer. Referring to the copy of the remand report which is placed at pages 13 to 22 of the paper book he drew the attention of the Bench to page 15 and submitted that an amount of 1,11,00,000/- was advanced by Dream Landscape Hospitality Pvt. Ltd. for purchase of land owned by Shri Tukaram V. Naik Mirasgaonkar and his family members. He submitted that the assessee is one of the directors of the said company i.e. Dream Landscape Hospitality Pvt. Ltd. Since the transaction could not be materialized and the land owner was not cooperating in refunding the money, 3 directors of the company i.e. the assessee Shri Ruturaj Shivaji Patil and 2 other directors Shri Deelipkumar J. Oswal and Shri Kapil D. Oswal along with another person Shri Bharat D. Raigandhi decided to purchase the said land in their individual capacity for a consideration of Rs.2,76,76,000/-. He submitted that the amount paid by the company was adjusted against the sale consideration of the assessee. Referring to page 24 of the paper book he submitted that the assessee has refunded the amount of Rs.71,26,959/- to the company in the subsequent year. Referring to the sale deed, he submitted that Dream Landscape Hospitality Pvt. Ltd. is a confirming party to the sale. He submitted that unless the money of

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that no agreement between the assessee and Dream Landscape Hospitality Pvt. Ltd. was produced to find out the terms and conditions and the land owner has not given any confirmation, therefore, the various documents furnished by the assessee are nothing but self-serving documents. Referring to the Balance Sheet of the company he submitted that the company has not shown any loans and advances in the name of Shri Ruturaj Shivaji Patil and not even shown short term loan given, therefore, when the sale has been completed, it is presumed that the assessee has made the payment because the sale deed does not reflect the amount of any receivable from the assessee. Therefore, the Assessing Officer has rightly invoked the provisions of section 69 by making the addition.

The Ld. Counsel for the assessee in his rejoinder admitted that the sale deed does not refer any payment made by the assessee, however, Dream Landscape Hospitality Pvt. Ltd. is a confirming party.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We find the Assessing Officer in the instant case made addition of Rs.71,98,950/- being the amount attributable to the assessee towards his share for purchase of the property from Shri Tukaram Naik Mirsangaonkar by invoking the provisions of section 69 of the Act. We find the Ld. CIT(A) / NFAC sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that although the assessee has not paid the above amount at the time of sale, however, the same was adjusted against the advance given by Dream Landscape Hospitality Pvt. Ltd. wherein the assessee is one of the Directors. It is his submission that since the said company had earlier given advance of Rs.1,11,00,000/- towards purchase of property from Tukaram Naik Mirsangaonkar and since the said deal did not materialize and Tukaram Naik was unable to refund the money, therefore, to secure the interest of the company, money was adjusted towards share of the assessee. Further, the assessee has in the subsequent year refunded that money to the company. Thus, it is his submission that no addition u/s 69 is called for. It is the submission of the Ld. DR that there is no such agreement or resolution produced before the lower authorities regarding the adjustment of the amount due to the company. Further, the Balance Sheet of Dream Landscape Hospitality Pvt. Ltd. does not show any amount as loan or advance in the name of the assessee. Therefore, the addition made by the Assessing Officer is justified.

We find admittedly in the instant case the assessee has not explained the source of payment of his share of Rs.71,98,950/-. The argument of the Ld. Counsel for the assessee that the amount has been adjusted from the amount receivable by Dream Landscape Hospitality Pvt. Ltd. from Shri Tukaram Naik and the assessee has refunded the amount in the subsequent assessment year cannot be accepted especially when the Balance Sheet of Dream Landscape Hospitality Pvt. Ltd. does not reflect any loan or advance or short term loan against the name of the assessee. Merely because Dream Landscape Hospitality Pvt. Ltd. is a confirming party cannot be a ground to hold that the amount due from Shri Tukaram Naik has been adjusted especially when there is no such reference in the sale deed. Further, the sale deed is dated 27.01.2015 and therefore, when the accounts of the company are audited it was incumbent upon the company to show a part of the amount against the assessee. Further, we find the Balance Sheet of the company shows short term loans and advances at Rs.1,14,23,245/- which includes an amount of Rs.1,11,00,000/- against the name of Tukaram V. Naik (Land Advance) and which is as under:

However, the ledger account of the company filed at page 24 of the paper book for the period 01.04.2025 to 20.06.2025 shows the refund of Rs.68,00,000/- on 09.05.2025 and Rs.3,26,959/- on 20.06.2025 by Mr. Tukaram Naik i.e. after a period of about 10 years. No other evidence was produced to substantiate the payment of the sale consideration by the assessee to Mr. Naik for purchase of the land. Therefore, the assessee in our opinion has failed to substantiate the source of payment towards his share of contribution. So far as the argument of the Ld. Counsel for the assessee that M/s. Dream Landscape Hospitality Pvt. Ltd. is a confirming party is concerned, there may be so many reasons why Dream Landscape Hospitality Pvt. Ltd. became the confirming party. They had given an advance to the vendor. Apart from the 3 directors there is another outsider who has purchased the land. Therefore, to secure their interest and to avoid future litigation, the said party might have insisted for forcing the vendor to enforce Dream Landscape Hospitality Pvt. Ltd. as a confirming party. Therefore, merely because Dream Landscape Hospitality Pvt. Ltd. is a confirming party, the same cannot be a ground to say that the assessee is absolved from explaining the source of such payment. There is also no evidence that the assessee in subsequent year has refunded the money to the company. Under these circumstances and considering the fact that the assessee could not explain the source of his payment of Rs.71,98,950/-, the addition made by the Assessing Officer u/s 69 and upheld by the Ld. CIT(A) / NFAC is justified. However, since the assessee has deducted TDS of Rs.71,991/- which has not been disputed, therefore, this amount cannot be added u/s 69 of the Act. We, therefore, modify the order of the Ld. CIT(A) /

In the result, the appeal filed by the assessee is partly allowed.