PALLADAM KRISHNASAMY GANESHWAR,TIRUPUR vs. DCIT, CC-3,, COIMBATORE

(िनधा9रणवष9 / Assessment Year: 2019-20) Shri Palladam Krishnasamy Ganeshwar DCIT बनाम/ 21, Shri Ganesa Textiles, Pollachi Road, Central Circle-3 Vs. Palladam, Tirupur-641 664. Coimbatore. �थायीलेखासं./जीआइआरसं./PAN/GIR No. ADFPG-6476-N (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ� कीओर से/ Appellant by : Shri S. Sridhar (Advocate)-Ld.AR � थ� की ओर से/Respondent by : Shri R. Clement Ramesh Kumar (CIT)-Ld. DR सुनवाई की तारीख/Date of Hearing : 10-09-2024 घोषणा की तारीख /Date of Pronouncement : 19-11-2024 आदेश / O R D E R Per BENCH:

Assessment Proceedings 2.1 Consequent to search action on assessee group on 06-03-2019, notice u/s 153A was issued to the assessee. The assesseee being resident individual is stated to be engaged in textiles businesss in proprietorship concern namely Shri Ganesha Textile Mills. During search, a stock statement was found. The physical stock was found in excess of Rs.190.90 Lacs. 2.2 During the course of assessment proceedings, the assessee submitted that excess stock was sourced from suppressed receipts in hotel business and other unaccounted receipts. The assessee admitted the stock out of cash flow generated on account of additional income disclosed in the previous years. The same could be tabulated as under: - A.Y. Date of Original Original Return of Date of Agri Addl. notice return of return of income as per return of income income issued income as income date 153A income disclosed u/s.153A per 139(1) filed filed u/s.153A 2011-12 06.02.2020 -110177310 30.09.2011 -110177310 18.08.2020 765400 Nil 2012-13 06.02.2020 375100 29.09.2012 10605100 18.08.2020 825700 10230000 2013-14 06.02.2020 23354770 29.09.2013 51315770 18.08.2020 1025600 27961000 2014-15 06.02.2020 43979575 29.09.2014 43979575 18.08.2020 877000 - - 2015-16 06.02.2020 5470260 02.10.2015 5470260 18.08.2020 303500 2016-17 06.02.2020 8329460 10.10.2016 8875360 18.08.2020 314600 545900 2017-18 06.02.2020 14322420 07.11.2017 14322420 18.08.2020 412600 - 2018-19 06.02.2020 28136770 27.09.2018 28136770 18.08.2020 463050 - 2019-20 143(2) 2364868 19.08.2020 NA NA NA NA During assessment proceedings, the net inflows were computed by the assessee as Rs.217.11 Lacs which was sourced to purchase excess stock. The computations thereof have been extracted on Page No.4 of the assessment order. 2.3 The Ld. AO partially accepted the claim of the assessee. The assessee claimed that it advanced sum of Rs.277.78 Lacs in cash to the various sellers viz. Visvanathan, Ramathal and Sundarasamy for purchase of 52.78 acres of agricultural land. However, the assessee purchased only 22.50 acres for Rs.140.37 Lacs which was disclosed in the regular books of accounts of M/s Booma Realty Pvt. Ltd. The amount of Rs.144.41 Lacs for remaining portion of land which was not purchased, was received back. In support, the assessee furnished unregistered sale agreement with Ramathal to support the fact that the amount of Rs.277.78 Lacs was meant for 52.78 acres of lands. 2.4 However, Ld. AO alleged that the whole amount of Rs.277.78 Lacs was paid for 22.50 acres of land and not for 52.78 acres as claimed by the assessee. The amount of Rs.144.41 Lacs was to be considered as on-money. Therefore, the assessee could not take the credit of the same. The sale agreement was unregistered one. There should have been subsequent notings in the seized material detailing the repayment of the money by the sellers. Accordingly, the amount of Rs.144.41 Lacs was added to the income of the assessee as unexplained investment. The explanation with respect to remaining addition was accepted. Appellate Proceedings 3.1 During appellate proceedings, the assessee reiterated that the source of undisclosed stock was amount refunded by the seller. The agreement was originally entered for 52.78 acres of land. However, the land to the extent of 22.5 acres only was purchased. The excess amount as paid to the sellers was offered to tax in AY 2013-14. The same was refunded by the sellers which constituted source of the undisclosed stock. The assessee filed confirmation of the refund of such sum forming part of the agreement. 3.2 The Ld. CIT(A) noted that the claim of the assessee was based on unregistered sale agreement dated 19-07-2012 between the assessee and Ramathal for 52.78 acres of land for consideration of Rs.277.78 Lacs. The cash payment of Rs.144.41 Lacs was not mentioned in the sale agreement. The assessee claimed that cash was paid on 18-07- 2012 to three family members. The evidence of refund was self-signed declaration of receipt of amount of Rs.144.41 Lacs from Viaswanathan on 15-03-2013. The assessee did not file confirmation of the sellers. The assessee filed undertaking deed dated 03-10-2020 from three individuals. Shri Vishwanathan has undertaken to sell 22 acres of land in survey nos. 243/1, 243/2, 243/3, 243/4 & 243/5. He received consideration of Rs144.41 Lacs on 18-07-2012 from the assessee, He stated the amount was repaid on 15-03-2013 since he could not sell the land to the assessee. However, there were discrepancies in the undertaking deed and sale agreement and therefore, these documents as furnished by the assessee were held to be mere after-thought. The only evidence found during search was payment of Rs.277.78 Lacs whereas the amount of Rs.140.37 Lacs was reflected in the books of accounts. No entry relating to refund of Rs.144.41 Lacs was found during search. Therefore, the action of Ld. AO was confirmed. The alterative argument to estimate profit element on unaccounted stock was also not accepted by Ld. CIT(A). Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 4. It emerges that excess stock of Rs.190.90 Lacs was found from the premises of the assessee. Accordingly, the assessee was required to explain the source of the same. The assessee furnished cash flow statement and arrived at net inflows of Rs.217.11 Lacs which was stated to be sourced to purchase excess stock. The computations thereof have been extracted on Page No.4 of the assessment order. Upon perusal of the same, it could be seen that there was net cash outflow of Rs.279.61 Lacs during AY 2013-14 which has been offered as additional income in that year. The assessee made payment of Rs.144.41 Lacs to the three sellers on 18.07.2012. The same constitute part of additional income as offered by the assessee. The advances to the extent of Rs.362.41 Lacs is stated to be received back by the assessee which has been used to make payment of Rs.145.29 Lacs. The net inflows thus arrived at are Rs.217.11 Lacs out of which the assessee is stated to have sourced unaccounted stock of Rs.190.90 Lacs. Thus, there is still excess cash inflow of Rs.26.21 Lacs. The Ld. AO has substantially accepted this working and has only doubted the refund of Rs.144.41 Lacs which is stated to be received back by the assessee since the transaction had not materialized. It was submitted that the assessee advanced sum of Rs.277.78 Lacs in cash to the various sellers viz. Visvanathan, Ramathal and Sundarasamy for purchase of 52.78 acres of agricultural land. However, the assessee purchased only 22.50 acres for Rs.140.37 Lacs which was disclosed in the regular books of accounts of M/s Booma Realty Pvt. Ltd. The amount of Rs.144.41 Lacs for remaining portion of land which was not purchased by the assessee, was received back. In support, the assessee furnished unregistered sale agreement with Ramathal to support the fact that the amount of Rs.277.78 Lacs was meant for 52.78 acres of lands. The copy of the same has been placed on record on Page No.819, Paper book Volume II. This agreement has been entered on 19-07-2012 for purchase of 52.78 acres of land along with right of way. On the backside of the agreement, noting has been made as under: -