DCIT,CENTRAL CIRCLE-2(1), HYD, HYDERABAD vs. ALIYA NASSER AZIZ (LATE) L/R NASSER AZIZ, B'LORE, BANGALORE

3. (a) The CIT(A) ought to have deleted the addition of Rs.37,00,000/- made towards alleged unexplained investment in purchase of property at Horamavu village, Hubli.

(b) The CIT(A) failed to appreciate violation of principles of natural justice in denying the assessee an opportunity to cross examine the witness, on the strength of whose deposition the A.O. brought to tax the amount of Rs.37,00,000/-.

ADDITONAL GROUND. (1) "Since the assessment was completed under section 143(3) without issuing a notice under section 143(2), the assessment made is bad in Law"

4 ITA.Nos.373, 374 & 486/Hyd./2016 3. Facts of the case, in brief, are that the assessee is an individual, Architect by profession and is Managing Director of M/s. Span Design and Development Private Limited, resident of Bangalore. A search and seizure operations u/sec.132 of the Income Tax Act, 1961 [in short “the Act”] were conducted in the case of Syed Mohammad Mehdi/Nasser Aziz on the information that the assessee has purchased 4876 sq. yards of land from Mohammed Mehdi and huge on-money has been paid in cash towards the said transaction. A notice u/sec.153A of the Act was issued on 03.09.2010 requiring the assessee to file his return of income. In response to the said notice, the assessee had filed return of income on 21.12.2010 declaring income of Rs.3,29,658/- as “filed under protest”. Further, the assessee has objected for transfer of case from Bangalore to Hyderabad as arbitrary and also against the principles of natural justice. The assessee filed Writ Petition No.6452/2010 before the Hon’ble High Court of Karnataka challenging the order of PCIT, Bangalore passed u/sec.127 of the Income Tax Act, 1961, transferring the case of M/s.

5 ITA.Nos.373, 374 & 486/Hyd./2016 Span Design and Development Private Limited to ACIT, Central Circle-3, Hyderabad and the Hon’ble High Court of Karnataka vide it’s interim order dated 29.11.2010 in WP.No.6452/2010 directed the Assessing Officer that any order passed by the assessing authority shall be subject to the outcome of the writ petition. Further, the Assessing Officer observed in para-5 of his order that notice u/secs. 142(1) & 143(2) were served on the assessee. However, there is no evidence with respect to date of issue of notice and service of notice to the assessee. Finally, the assessee appeared and filed relevant details on 21.12.2010.

3.1. The assessment was completed u/sec.143(3) r.w.s.153A of the Income Tax Act, 1961 and determined the total income of the assessee at Rs.92,21,330/- by making additions towards estimated profit from profession for Rs.2,21,655/-, addition towards unexplained investment in purchase of property at Bangalore for Rs.49,70,000/- and addition of Rs.37 lakhs towards purchase of property at Bangalore from one Shri Raghavendra Rao.

6 ITA.Nos.373, 374 & 486/Hyd./2016 4. The assessee has filed appeal before the learned CIT(A) and challenged the additions made by the Assessing Officer towards estimated income from profession and addition towards undisclosed income in purchase of property at Bangalore. The learned CIT(A) after considering the relevant submissions of the assessee, allowed partial relief where the learned CIT(A) deleted a sum of Rs.4 lakhs towards additions made by the Assessing Officer toward unexplained investment in purchase of property at Bangalore and sustained the balance addition of Rs.45,70,000/-. The learned CIT(A) also sustained the addition made by the Assessing Officer towards unexplained investment in purchase of property from Shri R. Raghavendra Rao and also sustained the addition towards estimated profit from profession.

5. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.

7 ITA.Nos.373, 374 & 486/Hyd./2016 and sustained by learned CIT(A) for Rs.45,70,000/-. The fact with regard to the impugned dispute is that, during the course of search in the residence of Shri Nasser Aziz, an agreement of sale was found. As per pages 1-4 of Annexure A/NA/08-09/01, original agreement of sale dated 04.11.2006 between Syed Shabeer Hussain and Syed Ghouse, Syed Ismail Afroze and Syed Asif was found where the property at Muniswamiappa Road, Bangalore was agreed to be sold for a price of Rs.62,50,000/-. At pages 6- 11 of the same annexure, a copy of the sale deed dated 04.12.2006 between Nasser Aziz and Aliya Nasser Aziz and Syed Shabeer Hussain was found and as per the sale deed, the same property was purchased for a consideration of Rs.16.80 lakhs. The Assessing Officer called-upon the assessee to explain as to why addition shall not be made towards unexplained investment in purchase of property for Rs.49,70,000/- being difference in sale consideration as per the agreement of sale dated 04.11.2006 and registered sale deed dated 04.12.2006 + alleged commission payment of Rs.4 lakhs to Shri Syed Asif. In response, the assessee

8 ITA.Nos.373, 374 & 486/Hyd./2016 submitted that property has been purchased from Sri Syed Shabeer Hussain vide sale deed dated 04.12.2006 for a consideration of Rs.16.80 lakhs and the same has been paid by demand draft. The assessee further submitted that, he was not aware of any sale agreement dated 04.11.2006 between Syed Shabeer Hussain and Syed Ghouse, Syed Ismail Afroze and Syed Asif. The Assessing Officer after considering the relevant submissions of the assessee and also taking note of incriminating material found in the form of sale agreement dated 04.11.2006 and sale deed dated 04.12.2006 and also taking note of statement recorded from Syed Asif dated 12.06.2009 by the ADIT (Inv.), Unit-1(2), Bangalore observed that Syed Asif has categorically stated that he and his father along with his uncle has entered into sale agreement with Syed Shabeer Hussain for purchase of property for a consideration of Rs.62.50 lakhs to show the agreement, to the prospective buyers and further they found buyer Shri Nasser Aziz and Smt. Alia Nasser Aziz who agreed to purchase the said property and the property has been sold for a consideration of Rs.62.50 lakhs. He further

9 ITA.Nos.373, 374 & 486/Hyd./2016 stated that he has received Rs.4 lakhs as commission in cash. Therefore, the Assessing Officer observed that there is a clear evidence of unexplained investment in purchase of property at Muniswamiappa Road, Bangalore and, therefore, rejected the arguments of the assessee and made addition of Rs.49,70,000/- to the total income of the assessee.

10 ITA.Nos.373, 374 & 486/Hyd./2016 property has been purchased for a price of Rs.16,80,000/- and the same has been paid by the assessee by way demand draft. The Counsel for the Assessee further submitted that Assessing Officer made addition only on the basis of statement of Syed Asif, a real-estate broker without any corroborative evidence to support the statement of Syed Asif. On the other hand, the assessee has denied to have paid any commission for purchase of property and further, the Assessing Officer does not have any evidence with him to allege that the assessee has made payment of Rs.45,50,000/- in cash. Although, the learned CIT(A) has in principle agreed that there is no evidence for payment of Rs.4 lakhs to Syed Asif and deleted the addition, but, sustained the addition of Rs.45,70,000/- even though there is no evidence with the Assessing Officer to alleged that the assessee has made cash payment of Rs.45,70,000/-. Therefore, he submitted that addition made by the Assessing Officer and sustained by the learned CIT(A) should be deleted.

11 ITA.Nos.373, 374 & 486/Hyd./2016 9. Shri B. Bala Krishna, CIT-DR, on the other hand, supporting the order of the learned CIT(A) submitted that, there is a clear evidence in the form of sale agreement dated 04.11.2006 for consideration of Rs.62,50,000/-. Further, Mr. Syed Asif who is a broker of the property, has admitted before the ADIT (Inv.), Unit-1(2), Bangalore that the sellers have sold the property for a price of Rs.62,50,000/-. He further stated that Syed Asif has received Rs.4 lakhs commission for negotiating the property. The learned CIT(A) after considering the relevant facts and also taking note of the fact that there cannot be huge reduction in property price within a month, has come to the conclusion that there is clear evidence of payment of consideration in cash as per sale agreement dated 04.11.2006. Therefore, he submitted that addition made by the Assessing Officer and sustained by the learned CIT(A) should be confirmed.

9.1. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. The Assessing Officer made addition towards unexplained investment for purchase of property

12 ITA.Nos.373, 374 & 486/Hyd./2016 for Rs.49,70,000/- on the basis of sale agreement dated 04.11.2006 and sale deed dated 04.12.2006 and as per the agreement between the seller of the property Syed Shabeer Hussain, Syed Ghouse, Syed Ismail Afroze and Syed Asif the property was agreed to be purchased for Rs.62,50,000/-. The Assessing Officer had also took support from the statement of Syed Asif recorded by the ADIT (Inv.) Wing, Bangalore during the course of post-survey investigation. According to the Assessing Officer, there is a clear evidence in the form of sale agreement coupled with the statement of Syed Asif for payment of consideration in cash over and above the stated consideration as per the registered sale deed between the seller of the property Shri Syed Shabeer Hussain and the assessee. We have gone through the reasons given by the Assessing Officer in light of various averments of the Learned Counsel for the Assessee and we find that the Assessing Officer made addition solely on the basis of statement of Syed Asif and the purported sale agreement between the seller and the third parties even though there is no corroborative evidence with the 13 ITA.Nos.373, 374 & 486/Hyd./2016 Assessing Officer to suggest payment of consideration in cash as alleged by the Assessing Officer in excess of stated consideration as per the registered sale deed. Further, the Assessing Officer believed the statement of Syed Asif who was the broker for the property between the seller and the assessee, but, neither examined the seller of the property nor the assessee along with statement of Syed Asif to ascertain the correct selling price of the property. In our considered view, unless the Assessing Officer examined the seller of the property or the purchaser of the property, merely based on the statement of third party who is no longer related to or concerned with the property, no addition can be made. Although, the learned CIT(A) in principle agreed that, the statement of Syed Asif cannot be relied in toto and also allowed partial relief in respect of addition towards alleged commission payment to Syed Asif by the assessee, but, sustained the addition towards difference in consideration as per the sale agreement and sale deed even though there is no corroborative evidence to support the allegation of the Assessing Officer. Therefore, we are of the 14 ITA.Nos.373, 374 & 486/Hyd./2016 considered view that the Assessing Officer and the learned CIT(A) are erred in sustaining the addition towards alleged consideration paid in cash for purchase of property. Thus, we direct the Assessing Officer to delete the addition of Rs.45,70,000/- towards alleged consideration paid for purchase of property in cash.

15 ITA.Nos.373, 374 & 486/Hyd./2016 lakhs was already made, out of which Rs.10 lakhs is by way of cash. Pages 62-66 of the same Annexure also relate to the same property for a consideration of Rs.90 lakhs, out of which Rs.53 lakhs is paid as advance including Rs.23 lakhs paid in cash. Pages 48-56 of the same Annexure is a copy of sale deed and as per the said document, the total sale consideration is mentioned as Rs.40 lakhs and there is no reference of Rs.33 lakhs paid by cash.

16 ITA.Nos.373, 374 & 486/Hyd./2016 the relevant submissions of the assessee and the statement of Mr. Raghavendra, recorded by ADIT (Inv.), Unit-1(2), Bangalore, observed that the seller Raghavendra and others has admitted to have sold the property for a consideration of Rs.90 lakhs and received Rs.40 lakhs by way of demand draft/ cheque and the remaining amount of Rs.50 lakhs was received by way of cash. Therefore, observed that since there is a clear evidence in the form of sale agreement and also statement of Raghavendra and others-seller of the property, the Assessing Officer has taken sale consideration for purchase of property at Rs.90 lakhs and after reducing the consideration paid by the assessee by cheque/DD of Rs.43 lakhs, balance amont of Rs.37 lakhs has been treated as unexplained investment for purchase of property.

15.1. We find that, although, Raghavendra admitted in his statement recorded during the course of search that, he has sold the property of an extent of 16.800 sq. ft. for a consideration of Rs.90 lakhs, but, on perusal of the relevant sale deed dated 24.05.2006, the extent of land so purchased by the assessee was only 12006 sq. feet for a consideration of Rs.40 lakhs + additional sum of Rs.20 lakhs for conversion charges etc. The assessee claimed that, although, he has agreed to purchase 16800 sq.feet of land as per the agreement to sell dated 12.04.2005, but, there is a shortage of land available for sale and after final survey and measurement, the remaining land available for sale after exclusion of Kharab land was only 12006 sq.ft only. We find that as per the registered sale deed, there is no 21 ITA.Nos.373, 374 & 486/Hyd./2016 dispute of land purchased by the assessee was only 12006 sq.ft. Assuming for a moment, the statement of Raghavendra is correct and the agreed consideration for purchase of property was at Rs.90 lakhs for 18750 sq.feet, if we works-out the proportionate cost for 12006 sq.ft, the average cost works-out at Rs.533/- per sq. feet and for total actual land purchased by the assessee i.e., 12006 sq.ft, the consideration worked-out to Rs.64,31,178/-. The assessee has accounted total investment of Rs.53 lakhs for purchase of the property and there is no dispute on this aspect from the Assessing Officer and the learned CIT(A). If we consider proportionate cost of Rs.64 lakhs and reduced actual investment made by the assessee of Rs.53 lakhs, the remaining unexplained investment worked-out at Rs.11,31,178/- only. Although, these evidences filed before the Assessing Officer and the learned CIT(A), both the authorities ignored the claim of the assessee and sustained additions only on the basis of statement of Raghavendra. Therefore, in our considered view, the additions made by the Assessing Officer cannot be sustained only on the basis of 22 ITA.Nos.373, 374 & 486/Hyd./2016 statement of Raghavendra for two reasons i.e., (1) The statement of Raghavendra was not given to the assessee for his rebuttal and cross-examination and (2) there is a difference in extent of land agreed to be sold and extent of land finally sold by Raghavendra. Therefore, we are of the considered view that there is merit in the arguments of the assessee and thus, we are of the considered view that the Assessing Officer and the learned CIT(A) erred in making addition of Rs.37 lakhs towards unexplained investment in purchase of property on the basis of agreement of sale and statement of Raghavendra. We, thus, direct the Assessing Officer to sustain addition to the extent of Rs.11,31,178/- out of total addition of Rs.37 lakhs and the remaining addition of Rs.25,68,822/- is herby deleted.

23 ITA.Nos.373, 374 & 486/Hyd./2016 submitted by the Assessing Officer on issue of notice u/sec.143(2) of the Act and submitted that in absence of proper notice is issued u/sec.143(2) of the Act, the assessment order passed by the Assessing Officer u/sec.143(3) is bad in law and liable to be quashed. But, in our considered view, the additional ground taken by the assessee becomes mere academic in nature and it does not require specific to adjudication at this point of time because, we have decided the issues involved in appeal on merits. Therefore, the additional ground filed by the assessee is dismissed as infructuous.

ITA.No.374/Hyd./2016 – A.Y. 2009-2010 :

24 ITA.Nos.373, 374 & 486/Hyd./2016 Aziz on the information that the assessee has purchased 16 plots admeasuring 4876 sq. yards at Mehdi Garden, Shamshabad, Hyderabad for a negotiated rate of Rs.2000 per sq.yard. However, Syed Mohammad Mehdi admitted that he has received a sum of Rs.3.45 crores in cash from the assessee/appellant. Accordingly, notice u/sec.142(1) of the Act was issued on 03.09.2010 to the assessee calling to file his return of income. The assessee filed return of income on 30.09.2009 declaring income of Rs.39,13,405/- before ITO, Ward-8(1), Bangalore, though, the case was centralised with ACIT, Central Circle-3, Hyderabad. Further, the assessee has objected for transfer of case from Bangalore to Hyderabad as arbitrary and also against the principles of natural justice. The assessee filed Writ Petition No.6452/2010 before the Hon’ble High Court of Karnataka challenging the order of PCIT, Bangalore passed u/sec.127 of the Income Tax Act, 1961, transferring the case of M/s. Span Design and Development Private Limited to ACIT, Central Circle-3, Hyderabad and the Hon’ble High Court of Karnataka vide it’s interim order dated 29.11.2010 in 25 ITA.Nos.373, 374 & 486/Hyd./2016 WP.No.6452/2010 directed the Assessing Officer that any order passed by the assessing authority shall be subject to the outcome of the writ petition. Further, the Assessing Officer observed in para-5 of his order that notice u/secs. 142(1) & 143(2) were served on the assessee. However, there is no evidence with respect to date of issue of notice and service of notice to the assessee. Finally, the assessee appeared and filed relevant details on 21.12.2010.

26 ITA.Nos.373, 374 & 486/Hyd./2016 debts and estimated addition of Rs.4,70,03,000/- for purchase of property at Shamshabad, Hyderabad and addition of Rs.66 lakhs towards investment in purchase of property at Bangalore and determined the total income of the assessee at Rs.11,07,16,405/- as against the returned income of Rs.39,13,405/- vide order dated 31.12.2010 passed u/sec.143(3) of the Income Tax Act, 1961.

28 ITA.Nos.373, 374 & 486/Hyd./2016 During the course of search, a statement on oath was recorded from Shri Syed Mohd. Mehdi and confronted the document found during the course of search and also cash seized from the B.B. Cancer Hospital and called-upon the assessee to explain the material and also source for cash found during the course of search at B.B. Cancer Hospital and more particularly, in light of statement of Shri Syed Iqbal Mehdi. In response, Shri Syed Mohd. Mehdi stated that he has sold 16 plots to Shri Nasser Aziz and Smt. Alia Nasser Aziz and received consideration in cash and cheque. Further, Shri Syed Mohd. Mehdi admitted that cash found at B.B. Cancer Hospital is paid by Shri Nasser Aziz towards purchase of plot sold at Shamshabad.

30 ITA.Nos.373, 374 & 486/Hyd./2016 from the assessee for sale of plots. The Assessing Officer further noted that as per the seized document and more particularly, pages 12 and 13, there is a clear working in respect of total consideration paid by the assessee including cash consideration for purchase of plots which clearly shows payment of on-money of Rs.3.45 crores. Therefore, rejected the arguments of the assessee and made addition of Rs.3.45 crores as unexplained investment for purchase of plots.

31 ITA.Nos.373, 374 & 486/Hyd./2016 from cash seized from B.B. Cancer Hospital, but, the same was seized from third party and it was for them to explain the source and not the assessee. The cash receipt of Rs.85 lakhs dated 07.01.2009 was seized from the residence of Shri Syed Mohd. Mehdi and not from the assessee. Further, three cash receipts of Rs.50 lakhs are actually pertains to payment made by assessee by cheque for Rs.30 lakhs which are recorded in the books. Therefore, he submitted that there is no basis for the Assessing Officer to make addition of Rs.3.45 crores towards alleged on-money payment for purchase of plots at Mehdi Garden, Shamshabad, Hyderabad. Therefore, he submitted that the Assessing Officer has erred in making addition and that the addition made by the Assessing Officer should be deleted.

32 ITA.Nos.373, 374 & 486/Hyd./2016 of on-money for purchase of 16 plots at Mehdi Garden, Shamshabad, Hyderabad. This is further supported by cash seized of Rs.85 lakhs during the course of search at B.B. Cancer Hospital where Shri Syed Iqbal Mehdi confirmed that, cash belongs to Shri Syed Mohd. Mehdi and further Shri Syed Mohd. Mehdi has admitted to have received from assessee for sale of plots. The cash bundles contains seal of Kotak Mahindra Bank, Bangalore where the assessee operates bank account, which also supports the case of the Assessing Officer that the assessee has paid cash for purchase of plots. The presence of assessee in Hyderabad on 07.02.2009 is also goes to prove beyond doubt that the assessee was in Hyderabad to handover cash to Shri Syed Mohd. Mehdi for registration of plots and on the basis of such information, the Department has conducted searches in the case of Shri Syed Mohd. Mehdi and the assessee. All evidences gathered during the course of search coupled with statement recorded from the parties clearly establish the fact payment of cash was made for purchase of property and, therefore, the learned CIT(A) opined that there is no 33 ITA.Nos.373, 374 & 486/Hyd./2016 merit in the arguments advanced by the assessee that there is no evidence of payment of on-money and thus, rejected the explanation of the assessee and confirmed the additions made by the Assessing Officer towards addition on account of on-money payment for purchase of plots.

36 ITA.Nos.373, 374 & 486/Hyd./2016 yard, consideration in cash and consideration paid in cheque or DD. The Assessing Officer after considering relevant facts has rightly made addition towards on-money payment for purchase of property. The learned CIT(A) after considering the relevant facts including the fact that there is clear evidence in the form of incriminating document coupled with statement of various parties, has rightly confirmed the addition made by the Assessing Officer. Therefore, he submitted that the addition made by the Assessing Officer should be sustained.

37 ITA.Nos.373, 374 & 486/Hyd./2016 Mohd Mehdi and further Shri Syed Mohd Mehdi admitted that cash has been received from the assessee for sale of plots, but, the statement of Shri Syed Mohd Mehdi was not given to the assessee for his rebuttal or cross-examination. Therefore, the credibility of statement of Shri Syed Mohd Mehdi needs to be examined in light of other evidences found during the course of search and explanation of assessee with regard to purchase of plots at Mehdi Garden, Shamshabad, Hyderabad.

38 ITA.Nos.373, 374 & 486/Hyd./2016 Therefore, the allegation of the Assessing Officer that the assessee has purchased 16 plots and paid on-money to the extent of Rs.3.45 crores is lacks relevant evidence, except, the statement of Shri Syed Mohd Mehdi and document found in his possession during the course of search.

39 ITA.Nos.373, 374 & 486/Hyd./2016 having paid any on-money over and above the consideration stated in the registered sale deed and as per the assessee, he has purchased plots @ Rs.2000/- per sq. yard. The assessee supports his arguments in light of other evidences including third party sale by Shri Syed Mohd Mehdi to Mrs. Kanchana L. Rao during the period @ Rs.2000/- per sq. yard. The assessee had also supports his contentions in light of DVO report where the DVO has determined the fair market value of the property @ Rs.2000/- per sq. yard.

40 ITA.Nos.373, 374 & 486/Hyd./2016 which is pending. Therefore, in our considered view, there is a difference in working done by the Assessing Officer towards on-money payment by the assessee which cannot be accepted. Be that as it may, the Assessing Officer alleged that the assessee has paid Rs.10,500/- per sq. yard. The basis for the Assessing Officer to adopt the said rate is as per the statement of Shri Syed Mohd Mehdi. Admittedly, the statement made Shri Syed Mohd Mehdi was not given to the assessee and also no cross-examination was allowed by the Assessing Officer. Further, now the question of cross- examination would not arise because, Shri Syed Mohd Mehdi is expired. Therefore, in our considered view, the addition made by the Assessing Officer on the basis of statement of Shri Syed Mohd Mehdi cannot be sustained because, even if we consider the question of examining him, it is not possible as he is no more available for cross- examination. Secondly, the document found in the form of loose/rough sheet is in the premises of Shri Syed Mohd Mehdi and Shri Syed Mohd Mehdi needs to explain the said document. Although, he has stated that, it pertains to sale

41 ITA.Nos.373, 374 & 486/Hyd./2016 of plots to the assessee, but, the assessee has denied the said document. Since there is lack of credibility on the documents found in the possession of Shri Syed Mohd Mehdi, the other surrounding evidences needs to be examined to ascertain whether the Assessing Officer is right in adopting rate of Rs.10,500/- per sq. yard. Admittedly, there are few instances of third party sales @ Rs.2000/- per sq. yard during the same period. Further, the Department has referred valuation of property to the DVO and the DVO has determined the fair market value of the property @ Rs.2000/- per sq. yard. Therefore, once there are enough evidences to confirm the third party sales and DVO report to justify the rate paid by the assessee @ Rs.2000/- per sq. yard, in our considered view, the allegation of the Assessing Officer that the assessee has paid Rs.10,500/- per sq. yard cannot be accepted, unless the Assessing Officer justifies the said rate with relevant evidences. Since there is no evidence with the Assessing Officer, other than the statement of Shri Syed Mohd Mehdi, in our considered view, the rate adopted by the Assessing Officer to work-out on-

42 ITA.Nos.373, 374 & 486/Hyd./2016 money for purchase of plots cannot be accepted. Therefore, we are of the considered view that Assessing Officer is erred in making addition towards alleged on-money payment of Rs.3.45 crores without there being any supporting evidence.

44 ITA.Nos.373, 374 & 486/Hyd./2016 to Shri Syed Mohd Mehdi and delivered at B.B. Cancer Hospital is devoid of merit and cannot be accepted. Although, the assessee has explained all these evidences, the learned CIT(A) without appreciating the relevant facts, simply sustained the addition made by the Assessing Officer towards alleged on-money payment for purchase of property. Thus, we reverse the findings of the learned CIT(A) on this issue and direct the Assessing Officer to delete the addition made towards on-money of Rs.3.45 crores paid towards purchase of plots at Mehdi Garden, Shamshabad, Hyderabad.

45 ITA.Nos.373, 374 & 486/Hyd./2016 noted that assessee has purchased property from Shri Nayeemullah Hussaini for Rs.8 lakhs and the same has been registered for Rs.4 lakhs. Therefore, called-upon the assessee to explain as to why addition shall not be made towards unexplained investment in purchase of property. In response, the assessee submitted that he has purchased property from Shri Nayeemullah Hussaini for Rs.4 lakhs and paid consideration through proper banking channel. The document found in the possession of Shri Nayeemullah Hussaini and relevant contents is not belongs to the assessee and whatever stated in the said document cannot be linked to the assessee. The Assessing Officer after considering the relevant submissions of the assessee and also taking not of incriminating document found during the course of search, observed that the assessee has purchased property from Shri Nayeemullah Hussaini for Rs.8 lakhs and the same has been registered for a consideration of Rs.4 lakhs. The assessee could not explain the source for purchase of property. Therefore, rejected the arguments of 46 ITA.Nos.373, 374 & 486/Hyd./2016 the assessee and made addition of Rs.8 lakhs towards purchase of property as unexplained investment.

47 ITA.Nos.373, 374 & 486/Hyd./2016 in the agreement to sell or any evidence. Therefore, he submitted that when the sale deed shows actual consideration of Rs.4 lakhs, there is no reason for the Assessing Officer to make addition of Rs.8 lakhs without there being any evidence. Therefore, he submitted that addition made by the Assessing Officer should be deleted.

51 ITA.Nos.373, 374 & 486/Hyd./2016 consider Rs.2000/- per sq. yard, then, the extent of land purchased by assessee is matches with the total consideration shown in the sale deed. Therefore, in our considered view, once property has been registered in the name of Smt. Aliya Nasser Aziz, wife of the assessee and further there is no evidence in the possession of the Assessing Officer to allege that the assessee has paid extra consideration over and above the sale deed, in our considered view, the Assessing Officer cannot make additions towards alleged on-money in the hands of assessee. The learned CIT(A) without considering relevant facts, simply sustained the addition to the extent of Rs.13 lakhs after reducing actual consideration paid of Rs.6 lakhs as unexplained investment in the hands of the assessee. Thus, we set aside the order of the learned CIT(A) and direct the Assessing Officer to delete the addition made towards unexplained investment for purchase of property from Prakash V. Goud amounting to Rs.13 lakhs.

52 ITA.Nos.373, 374 & 486/Hyd./2016 42. The next issue came up for consideration vide ground no.5 of assessee’s appeal is, addition towards alleged unexplained investment for purchase of Plot 63 and 64 at Mehdi Garden from Tayyaba Begum for Rs.65,10,000/- and sustained by the learned CIT(A) to the tune of Rs.26,46,000/-. The Assessing Officer made addition of Rs.65 lakhs towards purchase of Plot No.63 and 64 from Tayyaba Begum on the basis of page108 to 118 of Annexure-A/SMM/RES/02 which is nothing but the sale deed for purchase of two plots for a consideration of Rs.12,40,000/-, for which, it has been registered. The Assessing Officer had considered the market rate at Mehdi Garden which was taken at Rs.10,500/- per sq. yard and on the basis of statement recorded from Shri Syed Mohd Mehdi and observed that the assessee has paid total consideration of Rs.65,10,000/- for purchase of 2 plots and, therefore, made addition of Rs.65,10,000/- as unexplained investment for purchase of property. On appeal, the learned CIT(A) has allowed partial relief to the assessee by adopting the prevailing rate at Rs.6300/- per sq. yard on the basis of 53 ITA.Nos.373, 374 & 486/Hyd./2016 purchase of property from Prakash V. Goud at the very same rate at same time and further allowed relief towards actual consideration paid by the assessee and worked-out the difference amount of unexplained investment at Rs.26,46,000/-.

54 ITA.Nos.373, 374 & 486/Hyd./2016 of the learned CIT(A) should be set aside and the addition made by the Assessing Officer should be deleted.

55 ITA.Nos.373, 374 & 486/Hyd./2016 nos.63 and 64 at Mehdi Garden from Tayyaba Begum for a consideration of Rs.12,40,000/-. It is also an admitted fact that assessee has paid consideration by cheque and the same has been recorded in the books of accounts. In fact, there is no dispute on these aspect. The learned CIT(A), after considering relevant facts, has rightly considered the investment made by the assessee. The Assessing Officer made addition on the basis of statement of Shri Syed Mohd Mehdi where he has admitted to have sold plots in Mehdi Gardens @ Rs.10,500/- per sq. yard. The learned CIT(A) scaled down the additions by adopting Rs.6300/- per sq. yard on the basis of purchase of property from Prakash V Goud. In our considered view, the Assessing Officer and the learned CIT(A) are clearly erred in making addition without there being any evidence to suggest that the assessee has paid on-money for purchase of property in cash. Further, the Assessing Officer has referred to the statement of Shri Syed Mohd Mehdi where he has admitted to have sold the plot @ Rs.10,500/- per sq. yard, whereas the evidences filed by the assessee clearly shows that the fair market value of 56 ITA.Nos.373, 374 & 486/Hyd./2016 the property was at Rs.2000/- per sq. yard. Going by the documents filed by the assessee, there is no basis for the Assessing Officer to make addition towards unexplained investment. Even with the learned CIT(A), there is no basis except the price paid to Prakash V. Goud for purchase of property. In our considered view, there cannot be any uniform rates for properties and it depends on various factors including seller and the time gap etc. In absence of any evidence, we are of the considered view that, based on some surrounding evidences, no addition can be made. The learned CIT(A) without appreciating the fact simply sustained the addition to the extent of Rs.26,46,000/-. Thus, we direct the Assessing Officer to delete the addition made towards unexplained investment for purchase of Plot nos.63 and 64 at Mehdi Garden from Tayyaba Begum.

57 ITA.Nos.373, 374 & 486/Hyd./2016 47. During the course of search, incriminating material was found which was marked as Annexure- A/SMM/RES/02. As per the said seized material, page-52 contains certain amount in the name of various persons as bad debts. The Assessing Officer called-upon the assessee to explain the contents of seized material. In response, the assessee submitted that out of total amount recorded in the documents, one entry pertains to investment made in purchase of plot at Lisha Vistara and out of Rs.21 lakhs, he has paid Rs.17,50,000/- and the same has been recorded in the books of accounts. In respect of entry at Sl.No.3, the assessee submitted that Sri Bhairhanumaiah is a broker and he agreed to pay Rs.5 lakhs if the deal gets through. Similarly, at Sl.No.4, a sum of Rs.13 lakhs shown to have paid to Jayalaxmiamma Restaurant. In this regard, the assessee submitted that, there was a proposal to open a Restaurant with Jayalaxmiamma, for which, she was ready to pay him deposit of Rs.13 lakhs. However, the said business failed. Money was neither received nor paid back. In respect of remaining entries, the assessee could not 58 ITA.Nos.373, 374 & 486/Hyd./2016 explain as to the nature and contents of the said recording. The Assessing Officer after considering the submissions of the assessee, observed that the assessee has made investment in various properties including advance for various persons. The same was not recorded in the books of accounts of the assessee. Thus, rejected the arguments of the assessee and made addition of Rs.83 lakhs to the total income of the assessee.

59 ITA.Nos.373, 374 & 486/Hyd./2016 to have paid to Jayalaxmiamma of Rs.13 lakhs and regarding entry of Rs.2 lakhs for scrap value of tables and chairs, deleted the additions to the extent of Rs.52,50,000/- and balance amount of Rs.30,50,000/- has been sustained.

60 ITA.Nos.373, 374 & 486/Hyd./2016 submitted that the seized document page-52 clearly shows various payments and assessee could not explain the contents and also said investment was not recorded in the books of accounts of assessee. The learned CIT(A) after considering the relevant facts, has rightly sustained the addition to the extent of Rs.30,50,000/- and thus, the order of the learned CIT(A) should be upheld.

63 ITA.Nos.373, 374 & 486/Hyd./2016 52. In the result, ITA.No.374/Hyd./2016 for the assessment year 2009-2010 of the Assessee is partly allowed.

ITA.No.486/Hyd./2016 – A.Y. 2009-2010 [Revenue Appeal]:

Order pronounced in the open Court on 24.03.2025.