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Facts
An assessee engaged in real estate business had a search conducted which revealed documents suggesting a cash payment of Rs.4,55,000/- for land purchase, not recorded in books. The assessee denied this payment.
Held
The Tribunal found that the seized documents suggested a cash payment for land purchase. However, due to issues regarding finality of the addition and contentions raised by the assessee, the matter was set aside.
Key Issues
Whether cash payments made for land purchase, not recorded in books, can be added as unexplained investment based on seized documents when the assessee disputes the genuineness and amount.
Sections Cited
143(3), 14A
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 23.12.2024 passed by Ld. CIT(A), Pune-12 [‘Ld. CIT(A)’] for the assessment year 2015-16.
Facts of the case, in brief, are that the assessee is an individual engaged in the business of real estate and construction of residential projects and has furnished its return of income on 29.09.2015 declaring total income of Rs.1,60,22,040/-. A search was conducted in the case of the assessee on 09.01.2015 and certain documents were found and seized from the office premises of the assessee. Bundle No.8 contains documents relating to purchase of Shirwal Land, Gat No.3/1 purchased jointly by the assessee with Shri Sanjay Jasuja. The seized bundle contains the details of the payment made in cheque as well as in cash and according to the above seized bundle an amount totalling to Rs.4,55,000/- in cash was paid by the assessee to land-owners. 2.1 During the course of assessment proceedings, the assessee denied to have made payment of above said sum to any of the land-owner. Not being satisfied with the reply of the assessee, Assessing Officer made addition of Rs.4,55,000/- as income of the assessee as unexplained investment. The Assessing Officer also made other additions of Rs.32,34,623/- and vide order dated 30.1.2016 completed the assessment u/s 143(3) of the Act by determining total income at Rs.1,97,11,660/- as against the income returned by the assessee at Rs.1,60,22,040/-. The above assessed income includes addition of Rs.4,55,000/- on account of cash payments made in the purchase of land not shown in the books of accounts and also addition of Rs.32,34,623/- on account of disallowance under section 14A of the Act.
Being aggrieved assessee preferred an appeal before Ld. CIT(A). After considering the reply Ld. CIT(A) confirmed the addition of Rs.4,55,000/- made on account of cash payment paid to land-owners not recorded in the books of accounts and with regard to other addition of Rs.32,34,623/- directed the Assessing Officer to recalculate the disallowance. The assessee is now in appeal before this Tribunal challenging the confirmation of addition of Rs.4,55,000/- by Ld. CIT(A).
We have heard Ld. counsels from both the sides and perused the material available on record including the paper book furnished by the counsel of the assessee. In this regard, we find that during search and seizure operation certain documents were seized which suggests that an amount of Rs.4,55,000/- in cash was paid to the land-owners which was not recorded in the books of accounts of the assessee. We also find that the land was purchased jointly by the assessee with one other person namely Shri Sanjay Jasuja, against whose name also similar cash amount of Rs.4,55,000/- was mentioned in the seized documents as paid by him to the same parties. In this regard, it was the contention of Ld. counsel of the assessee that various negotiations are being made before finalising the land purchase deals and the notings only refers the proposed amounts and not the final figures. It was also the contention that no such alleged cash payment was paid by the assessee to the land- owners instead it was contended by him that the assessee has paid more than the amount mentioned in the seized documents and therefore the notings made in the seized documents cannot be said to be correct. In support of this contention, various charts and comparison were produced before the Bench.
Since the major addition has been restored to the file of the Assessing Officer for re-computation and since the finality of the addition of Rs.4,55,000/- in hands of one of the co-owners is not known, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to set-aside the order passed by Ld. CIT(A) with regard to limited issue of confirmation of addition of Rs.4,55,000/- to the file of the Assessing Officer to decide the above issue afresh and after providing reasonable opportunity of hearing to the assessee. Thus,