SHRIKANT GUNWANTRAO DESHMUKH,AURANGABAD vs. ASSISTANT COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE-1, AURANGABAD, AURANGABAD

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ITSSA 113/PUN/2022Status: DisposedITAT Pune26 September 2023AY 2015-168 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the case required further factual verification. The assessee's contention regarding the cancellation deed dated 30/10/2014, which appeared to be executed on the same date as the payment receipt and substantial payment, raised questions about human probability. The Tribunal noted that the revenue authorities had not brought out conclusive evidence regarding the cancellation deed, particularly concerning its date, and had presumed it to be 28/10/2014. Furthermore, the Tribunal observed that the seized paper showed Shri Janardhan Kamble's signature, but the declaration deed indicated that both Row Houses belonged to M/s. Gangami Industries & Construction Ltd., represented by Shri Ranjeet Padmakar Mulay, whose signature was absent on the seized document. The Tribunal held that these issues went to the root of the matter and needed detailed verification. Therefore, the Tribunal set aside the order of the CIT(A) and remanded the matter back to the CIT(A)'s file for detailed verification of all the observed issues. The CIT(A) was directed to decide the case as per law after bringing out the facts through clear examination and complying with the principles of natural justice. The grounds of appeal were allowed for statistical purposes.

What were the facts?

The assessee, Shrikant Gunwantrao Deshmukh, is appealing an order from the CIT(A)-12, Pune, for Assessment Year 2015-16. The appeal concerns an addition of Rs. 20,25,000/- made by the Assessing Officer (AO) and confirmed by the CIT(A) on account of unexplained investment in the purchase of a Row House, invoking Section 69 of the Income Tax Act, 1961. The addition arose from a search and seizure action on 21/08/2018. During the search, a document dated 30/10/2014 was seized, indicating a payment of Rs. 20,25,000/- in cash to Shri Janardhan Kamble for Row House No. 8, with a total consideration of Rs. 58.00 lacs. The assessee's wife's statement also confirmed payments for booking a Row House. The AO noted a discrepancy with a deed of cancellation dated 28/10/2014, which preceded the payment receipt.

What were the issues?

1. Whether the addition of Rs. 20,25,000/- as unexplained investment in the purchase of a Row House under Section 69 of the Income Tax Act, 1961, is sustainable in the hands of the assessee, considering the seized payment receipt and the subsequent deed of cancellation. Assessee's contentions: The assessee argued that an oral agreement was made to purchase Row House No. 8 for Rs. 58.00 lacs, and the seized document dated 30/10/2014 relates to this agreement, with only Rs. 25,000/- advanced. Subsequently, this oral transaction was cancelled via a deed of cancellation dated 30/10/2014, and the assessee purchased Row House No. 9 for Rs. 40.00 lacs. The assessee submitted a copy of the deed of cancellation but could not produce the original. The assessee also pointed out that the stamp paper for the cancellation deed had a vendor's date of 28/10/2014, not necessarily the date of execution. The assessee highlighted that the registered sale deed for Row House No. 9 was produced, and a declaration deed showed both Row Houses belonged to M/s. Gangami Industries & Construction Ltd., questioning the validity of Shri Janardhan Kamble's signature on the seized paper when Shri Ranjeet Padmakar Mulay's signature was absent. Revenue's contentions: The revenue authorities, as reflected in the AO's and CIT(A)'s orders, considered the seized document dated 30/10/2014 as a valid payment receipt for Row House No. 8, with a total consideration of Rs. 58.00 lacs. They viewed the cancellation agreement dated 28/10/2014 as suspicious because it predated the payment receipt, suggesting it was a made-up document. The revenue authorities did not bring out conclusive evidence regarding the cancellation deed and its correct date, presuming 28/10/2014 as the date of cancellation.

Which sections of the Income-tax Act were involved?

Section 69,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE „B‟ BENCHES :: PUNE

For Appellant: Shri Kishor B. Phadke, CA
For Respondent: Shri M.G. Jasnani, DR
Hearing: 25/09/2023Pronounced: 26/09/2023

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE „B‟ BENCHES :: PUNE BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER & DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER IT (SS) A No.113/PUN/2022 (A.Y. 2015-16) Shrikant Gunwantrao vs ACIT, Central Circle-2, Deshmukh, 58, Sarushree Aurangabad. Nathpuram, Paithan Road, Aurangabad PAN: ADUPD 1172 B Appellant Respondent Assessee by : Shri Kishor B. Phadke, CA Revenue by : Shri M.G. Jasnani, DR Date of hearing : 25/09/2023 Date of pronouncement : 26/09/2023 O R D E R Per PARTHA SARATHI CHAUDHURY, JM: This appeal preferred by the assessee emanates from the order of Commissioner of Income Tax [Appeals]-12, Pune (for short, „CIT(A)‟), dated 30.08.2022 for A.Y.2015-16 as per the grounds of appeal on record.

2.

That, on perusal of the grounds of appeal, it is evident that assessee is aggrieved with the addition of Rs. 20,25,000/- on account of unexplained investment in purchase of Row House u/sec. 69 of the Income Tax Act, 1961 (for short, 'the Act') as made by the Assessing Officer (AO) and confirmed by the ld. CIT(A).

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh 3. Brief facts of the case are that there was a search and seizure action u/sec.132 of the Act on 21/08/2018 at the business and residential premises of Padmakar Haribhau Mulay branch of Mulay Group of Aurangabad at Aurangabad and their family members and business concerns. The assessee is one of the professors in the college of such Mulay Group and, therefore, assessee was also covered by the search action u/sec. 132 of the Act. During the course of search in the residential premises of the assessee, some documents/ loose papers were found and seized. That, on perusal of the seized material, page No.01 of item No.01 to the Annexure-A of panchanama, it was seen that payment of Rs. 20,25,000/- was made to Shri Janardhan Kamble. This paper was dated 30/10/2014. As per the scanned copy of the said document appearing in the record, as also reproduced at para 4.2 in the order of AO, it was seen that payments were made for Row House No.8 as follows:- Rs. 25,000/- On occasion of Gudi Padwa Rs. 5,00,000/- 14/10/2014 Rs. 5,00,000/- 24/10/2014 Rs. 10,00,000/- 30/10/2014

The AO had observed that this paper is a payment receipt dated 30/10/2014 for booking of Row House No.8. In this document, on the right hand side, the total amount has been mentioned as Rs. 58.00 lacs and as per this document, the total amount that has been alleged to have been paid was Rs. 20,25,000/-. This amount was paid in cash by the assessee and received by Shri Janardhan Kamble. The 2

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh signatures of both the assessee as well as Janardhan Kamble appear in this paper. That, further the statement of assessee‟s wife was also recorded on 22/08/2018 wherein she stated that the payments were made to book a Row House on the occasion of Gudi Padwa (Marathi New Year) and Rs.25,000/- was paid to Shri Janardhan Kamble in cash as token amount. The wife of the assessee had also stated that initially Row House No.8 was booked which was later on changed and purchased Row House No.9. The AO, in the assessment order, has thereafter observed that as per the seized document, the consideration for Row House was at Rs. 58.00 lacs and that the seized paper was nothing, but payment receipt dated 30/10/2014 as it is a common practice for any person to sign any paper on execution of the deal or making of payment. Therefore, it was held by the AO that there was no doubt that payment of Rs. 20,25,000/- was actually paid in cash for purchase of Row House by the assessee and the same was duly received by Shri Janardhan Kamble. The assessee had also submitted copy of deed of cancellation of the oral sale agreement executed between the assessee-Shri Shrikant Deshmukh, Smt. Jayshree Deshmukh (wife of assessee) and Shri Janardhan Kamble. Regarding this document, the AO noted the date is 28/10/2014. Regarding this cancellation of sale agreement, the AO observed that where the seized paper actually dated 30/10/2014, then on what basis the cancellation agreement is dated 28/10/2014 i.e. 2 days prior to the date of payment receipt (seized paper), the cancellation agreement has been 3

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh made, which in all human probability, is a made up document since it is not possible to cancel something even prior to its occurrence. Considering these factors, the AO had disallowed the amount of Rs. 20,25,000/- as unexplained investment and added to the income of the assessee u/sec. 69 of the Act.

4.

The ld. CIT(A) has confirmed the findings of the AO as per the detailed reasoning appearing in his order.

5.

At the time of hearing, ld.AR for the assessee submitted that initially it was decided to purchase Row House No.8, for which the total consideration was fixed for at Rs.58.00 lacs as per oral agreement between assessee, his wife and Janardhan Kamble and the seized document dated 30/10/2014 is with regard to that said agreement. The ld.AR also stated that only Rs. 25,000/- was advanced and later on vide deed of cancellation dated 30/10/2014, this oral transaction for purchase of Row House No.8 was cancelled and the assessee had in fact purchased Row House No.9, which was lesser priced at Rs. 40.00 lacs. In this regard, ld.AR submitted copy of deed of cancellation, but could not file original of it. That, as per the deed of cancellation, which refers to the oral agreement of purchase vis-a-vis the payment advance receipt for purchase of Row House No.8 dated 30/10/2014, which is the seized document in this case, there appears a date at the top of the stamp paper which is 28/10/2014. It appears that this is the stamp vendor‟s date, on which stamp paper was 4

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh purchased/issued and not the date on which the cancellation agreement was entered into which is dated 30/10/2014. However, since the original cancellation deed has not been produced before us, conclusively it cannot be said what exactly is the correct date of this agreement. Even if it is assumed that deed of cancellation is dated 30/10/2014 then it would amount to the fact that the assessee had written the payment receipt dated 30/10/2014 whereas even the last payment made of Rs. 10.00 lacs is also dated 30/10/2014 and thereafter on the same date itself, the assessee had cancelled the said transaction. Whether a reasonable person intending to actually cancel a particular transaction on that very date would first enter the payment receipt on that date itself and also make substantial amount payment of Rs. 10.00 lac on that same date i.e. on 30/10/2014 and again on that very date, he will cancel the entire transaction, whether this kind of human thought process could be called as a genuine or not applying test of human probabilities is the question to be examined through factual verification. The revenue authorities have not brought out any conclusive evidence, firstly, regarding the cancellation deed produced and since there were two dates, in that regard, there is no clear cut finding by the revenue authorities which is the applicable date and they have presumed the date of 28/10/2014 as the date of cancellation agreement. Secondly, regarding the test of human probability proper verification also needs to be done. Before us, registered sale deed has been produced which signifies that Row 5

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh House No.9 has been purchased by the assessee and his wife from M/s. Gangami Industries & Construction Ltd. represented though its Managing Director Shri Ranjeet Padmakar Mulay for Rs. 40.00 lacs as appearing (details regarding the property purchase) at page 3 of the said sale deed. We further find that a deed of declaration has been made by M/s.Gangami Industries & Construction Ltd. through its Managing Director Shri Ranjeet Padmakar Mulay which is dated 20/12/2012 wherein, as per annexure, Row House Nos. 8 & 9 both belong to the said company. However, in the seized paper, where it is mentioned that Rs.20,25,000/- has been paid by the assessee, it is signed by Shri Janardhan Kamble and signature of Shri Ranjeet Padmakar Mulay is not there. When as per the said declaration deed, property Row House Nos. 8 & 9 both belong to the said company then what is the validity of signature of Shri Janardhan Kamble in the said seized paper and done in what capacity. These facts are also not brought out by the orders of the subordinate authorities. We find it, this is a fit case for remanding back to the file of the ld. CIT(A) for detail verification on these issues as we have observed hereinabove, and only after the correct verification of facts as would be thereafter brought out, then only it can be decided as per law whether addition u/sec. 69 can be sustained in the hands of the assessee or not. These issues goes into the root of the matter and has to be verified first. In view thereof, we set aside the order of the ld. CIT(A) and remand the matter back to his file with the direction of verification on all the issues 6

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh of their case as have been observed by this Tribunal and after bringing out the facts through clear examination, the ld. CIT(A) shall decide as per law complying with the principles of natural justice. The grounds of appeal stands allowed for statistical purposes.

6.

In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in open Court on 26th September, 2023.

Sd/- Sd/- (DIPAK P. RIPOTE) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 26th September, 2023 vr/- Copy to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT concerned. 4. The DR, ITAT, “B” Bench Pune. 5. Guard File. By Order

// TRUE COPY // Senior Private Secretary ITAT, Pune.

IT (SS) A No.113/PUN/2022 Shrikant Gunwantrao Deshmukh

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