RAMESH DEORA,MUMBAI vs. DCIT, MUMBAI

Brief facts of the case: Assessee filed his return of income on 31.03.2017, declaring total income of Rs. 3,57,550/-, showing income from salary and other sources. A property was sold by the assessee during the year for a consideration of Rs. 2,90,00,000/-, but such transaction was not shown in the return filed. This led the revenue to reopen the case of assessee. Notice u/s 148 was issued, in response assessee furnished ROI declaring the taxable income at Rs. 3,90,600/- including income from capital gains. To examine the transaction of sale of property and taxable capital gain, assessee was asked to furnish copy of MOU, sale deed, purchase deed, bank statement, cost of development etc. Initially assessee failed to response but later compliance was made. Considering the Ramesh Deora information and documents furnished on 12.03.2022, assessee was show caused vide notice dated 23.03.2022, proposing the addition detailed in the draft assessment order. The addition was proposed based on digital document detained during the survey u/s 133 of Act, in the case of Dave Group (M/s Parmanand Healthcare and Research) on 13-06-2020, wherein from the laptop of Shri Ravi Dave, soft copy of a MOU (reproduced in the assessment order) was found between the assessee and his wife (the vendor) and Dr. Pareshbhai Vamanrao Dave and Ravibhai Dave (Purchaser) stating therein the total consideration of Rs. 2,90,00,000/-, including part cash payment of Rs. 1,01,00,000/- and cheque payment of Rs. 5lac plus Rs. 25Lac. Further, soft copy of sale deed was also found in the digital data, reproduced in the assessment order. On an analysis of the MOU and Sale deed, ld. AO observed that the sale consideration shown by the assessee along with his wife is only 1,45,00,000/- as against the actual receipt of Rs. 2,90,00,000/-. Assessee on the other hand requested for copy of MOU and cross examination of the persons to whom the cash supposedly was paid. Ld. AO denied the request of assessee, stating that the copy of MOU is already scanned in the assessment order and cross examination cannot be provided as concerned persons was mot done. It is inferred by the Ao that the veracity of the MOU is verifiable from the fact that the payments reflected in the sale deed are coincided with details of payment in MOU. It is then concluded that the assessee had concealed the transaction of sale of immovable property in original return and have furnished incorrect capital gain in return filed in response to notice u/s 148. 3 Ramesh Deora Finaly an addition of Rs. 72,50,000/- was made to the income of assessee, taking half of the total consideration received jointly by assessee and his wife at Rs. 2.90 Crore.

The assessee, to challenge the aforesaid order and reasoning of the Ld CIT(A), has filed the present appeal before us.

At the outset, the Authorised representative of the assessee (Ld. AR) submitted that, the copy of document i.e., the soft copy of MOU used against the assessee, was not provided to him for rebuttal, also the said document was an 4 Ramesh Deora unsigned / unnotarized document, which the assessee was unaware, so cannot be a document enforceable in the eyes of law. Further, the cross examination of persons sought by the assessee, from where the alleged incriminating material was found was not permitted by the Ld. AO, as well as the Ld. CIT(A). Such act of the authorities was against the principle of natural justice. Also, the assessment of assessee’s wife, also the co-owner and joint vendor in the subjected transaction of sale of immovable property, u/s 147 r.w.s. 143(3) was completed on 19.03.2022 on same facts with no addition qua the capital gain, so there could not be different stand of the revenue for same transaction in the case of two co- owners. In view of such facts and circumstances, it was the prayer that addition made by the Ld. AO for capital gain in the hands of assessee, does not hold good and liable to be deleted.

Per contra. Ld. DR representing the revenue, reiterated the facts from the orders of revenue authorities, supported the same and requested to uphold.

We have heard the rival contentions, perused the material on record and considered the relevant jurisprudence. Admittedly, in present case the assessee had made request to provide the copies of document used against him as well as cross examination of the persons concerned, having possession of the incriminating material. Such request was made by the assessee by his reply dated 12.03.2022, whereas the assessment was completed on 27.03.2022, so it cannot 5 Ramesh Deora be said that the assessee demanded something at the fag end of the time barring date. Even the ld. CIT(A), having powers coterminous with that of the powers of AO, so would have provided such opportunity to the assessee. In this case, nothing is coming out qua the independent enquiries, to establish the veracity of the incriminating material, by way of proceedings u/s 133(6) or any statement u/s 132(4) of the concerned persons, further the denial of cross examination grossly contravenes the scheme of act, more over the relevant documents are first time shown to the assessee by extracting in the assessment order itself. Such actions by the revenue authorities, vitiates the entire proceedings, violative to the principle of natural justice and failed to conclusively prove the alleged transaction of payment of cash received by the assessee. We, thus, are unable to subscribe to the view expressed by the Ld. CIT(A), based on Ld. AO’s findings under conscious and reasonable estimate following the principle of preponderance of probabilities, but unsubstantiated by any conclusive evidence or admission by the parties or assessee. In back drop of such facts, circumstances and interpretations, as observed herein above, we find material flaws in the decision of ld. CIT(A) in confirming the addition made by the AO, also the addition made by Ld. AO without providing the material against the assessee and to deny the cross examination, goes against the settled legal principles, so would be liable to be struck down. The relevant ground of appeal of assessee there for stands allowed.

In result the appeal of assessee is allowed, in terms of our aforesaid observations. Order pronounced in the open court on 27-01-2026.