AI Insights
The case involves multiple appeals related to alleged unexplained investments in property purchases by Sri Nasser Aziz and his wife, Smt. Aliya Nasser Aziz, during the assessment years 2007-2008 and 2009-2010. The primary legal issues revolved around the validity of additions made by the Assessing Officer under sections 143(3) and 153A of the Income Tax Act, 1961, which were contested on grounds of lack of evidence and violation of principles of natural justice. The Tribunal examined the evidences, including sale agreements, registered sale deeds, and statements from involved parties, to determine the legitimacy of the additions made.
Appeal details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 31766 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-03-2025
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB-A
Assessment Year
2009-2010
Judgement Text
"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH : HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA.Nos.373 & 374/Hyd/2016 Assessment Years 2007-2008 & 2009-2010 Sri Nasser Aziz, BANGALORE – 560 094 PAN ACYPA3968K vs. The DCIT, Central Circle-3, Hyderabad. (Appellant) (Respondent) ITA.No.486/Hyd/2016 Assessment Year 2009-2010 The DCIT, Central Circle-3, Hyderabad. vs. Smt. Aliya Nasser Aziz (late), L/R Shri Nasser Azia (Husband), BANGALORE PIN – 560 094 PAN ADJPA6314R (Appellant) (Respondent) For Assessee : CA K C Devdas For Revenue : Shri B Bala Krishna, CIT-DR Date of Hearing : 09.01.2025 Date of Pronouncement : 24.03.2025 ORDER PER MANJUNATHA G, A.M. : The above three appeals ITA.Nos.373 and 374/Hyd/ 2016 are filed by the assessee Sri Nasser Aziz, and ITA.No.486/Hyd./2016 is filed by the Revenue against 2 ITA.Nos.373, 374 & 486/Hyd./2016 the separate orders dated 09.12.2015 of the learned CIT(A)- 12, Hyderabad for the assessment years 2007-2008 and 2009-2010, respectively. Since common issues are involved in all these appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity. We, therefore, first take-up ITA.No.373/Hyd./2016 for the assessment year 2007-2008 as the “lead” appeal. ITA.No.373/Hyd./2016 – A.Y. 2007-2008 : 2. The assessee has raised the following grounds and an additional ground : 1. “The order of the Commissioner of Income tax (Appeal)- 12, Hyderabad in so far as it went against the appellant, is erroneous both on facts and in law. 2. (a) The CIT(A) ought to have deleted the entire addition of Rs.49,70,000/-(instead of Rs.4,00,000/-) made towards alleged unexplained investment in property at Muniswamiappa Road, Bangalore, since the same was made on hearsay basis without examining the owner of the property as to the correct purchase consideration involved. 3 ITA.Nos.373, 374 & 486/Hyd./2016 (b) While giving part relief to the extent of Rs.4,00,000/-, 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.49,70,000/-. 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/-. 3. The CIT(A) erred in drawing factually wrong inferences in confirming the above mentioned additions. 5. Crave Leave to urge/raise any ground that might be necessary at the time hearing.” 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. 6. The first issue that came-up for consideration from ground nos.2 and 3 of appeal is addition towards purchase of property at Muniswamiappa Road, Bangalore 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. 7. On appeal, the learned CIT(A) deleted the addition of Rs.4 lakhs towards alleged commission payment of Rs.4 lakhs to Syed Asif on the ground that there is no evidence with the Assessing Officer to prove payment of commission of Rs.4 lakhs except statement of Syed Asif and the remaining difference of Rs.45,70,000/- being difference between sale consideration as per the agreement of sale dated 04.11.2006 and sale deed dated 04.12.2006 has been sustained. 8. Shri KC Devadas, Learned Counsel for the Assessee, submitted that the learned CIT(A) was erred in sustaining addition of Rs.45,70,000/- towards alleged unexplained investment in purchase of property without appreciating the fact that as per the registered sale deed, 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. 10. Coming to the next issue of ground no.2 of assessee’s appeal is addition of Rs.37 lakhs towards alleged unexplained investment in purchase of property at Horamavu village, Hobli, Bangalore East. During the course of search, certain incriminating document was found and seized as Annexure-A/NA/08-09/01, page 21-24 and as per the seized document it was noticed that there is a MOU dated 27.03.2005 between M. Raghavendra and others and Sri. Nasser Aziz and Smt. Aliya Nasser Aziz for sale of property situated at 57/1, Horamavu village, Hubli for a consideration of Rs.1,50,00,000/-. Pages 57-61 of the same annexure also relate to the same property being sale agreement dated 27.05.2005 for sale consideration of Rs.1 crore. This document also states that payment of Rs.40 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. 11. During the course of search, the assessee could not satisfactorily explain the consideration paid for purchase of property at Horamavu village. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain as to why addition shall not be made towards difference in value of property as per MOU dated 27.03.2005 and as per registered sale deed. In response, the assessee submitted that, he along with his wife had purchased the property at Horamavu village from Raghavendra and others for a total consideration of Rs.53 lakhs and the same has been duly accounted for in his books of accounts. The Assessing Officer after considering 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. 12. On appeal, the learned CIT(A) sustained the addition made by the Assessing Officer towards alleged unexplained investment in purchase of property at Horamavu village, Hobli, Bangalore East. 13. Shri KC Devdas, Learned Counsel for the Assessee, submitted that the learned CIT(A) was erred in 17 ITA.Nos.373, 374 & 486/Hyd./2016 sustaining the addition made by the Assessing Officer towards alleged investment in purchase of property of Rs.33 lakhs without appreciating the fact that the sole basis for the Assessing Officer to make the addition is the statement of Shri Raghavendra and others, but, the fact remains that the statement has not been given to the assessee for his comments for rebuttal and also for cross-examination. In absence of satisfactory fulfilment of principles of natural justice, the addition made by the Assessing Officer cannot be sustained. In this regard, he relied on the decision of Hon’ble Supreme in the case of Kishanchand Chellaram vs. CIT 123 ITR 713 (SC). Learned Counsel for the Assessee further submitted that, although, as per the MOU dated 02.03.2005, the agreement is for purchase of 18750 sq.ft of land, but, as per the registered sale deed dated 24.05.2006 the extent of land purchased was 12006 sq.ft only, because there is a dispute on extent of the land and finally after survey and measurement, the available land for sale was only 12006 sq.ft. If we consider the agreement made of Rs.90 lakhs as admitted by Raghavendra and others for 18 ITA.Nos.373, 374 & 486/Hyd./2016 18750 sq.ft, the proportionate cost worked-out to Rs.64,31,178/- only, but not as admitted by Raghavendra and others. If we consider the proportionate cost of Rs.64,31,178/- and reduced the amount of investment by the assessee of Rs.53 lakhs, the balance unexplained investment was only at Rs.11,31,178/. Further, as per the seized document, the assessee has made payment of Rs.7 lakhs on 06.05.2005 and if we consider the said payment, the remaining differential amount is only at Rs.4,31,178/-, but, not Rs.37 lakhs as estimated by the Assessing Officer. Therefore, he submitted that addition made by the Assessing Officer should be sustained to the extent of Rs.4,31,178/- only. 14. Shri B. Bala Krishna, CIT-DR, on the other hand, supporting the order of the learned CIT(A) submitted that, as per the sale agreement and admission of Raghavendra and others, the assessee has agreed to purchase 16800 sq.ft of land. Although, the assessee claims that it has purchased only 12006 sq.ft, but, there is no clarity as to what is the extent of land registered as per the registered sale deed. The 19 ITA.Nos.373, 374 & 486/Hyd./2016 learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer towards unexplained investment in purchase of property. Therefore, the order of the learned CIT(A) should be sustained. 15. We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that as per seized document there is a MOU dated 02.03.2005 between Raghavendra and others and appellant-assessee for purchase of 18750 sq.ft land at Horamavu village. It is also an admitted fact that, as per the registered sale deed dated 24.05.2006, the extent of land purchased by the assessee was only 12006 sq.ft for a consideration of Rs.53 lakhs. The Assessing Officer never disputed these facts. However, the Assessing Officer made addition only on the basis of statement of Raghavendra recorded by the ADIT (inv.), Unit- 1(2), Bangalore during the course of search or post-search proceedings, where he admitted to have sold property for a consideration of Rs.90 lakhs and received Rs.40 lakhs by 20 ITA.Nos.373, 374 & 486/Hyd./2016 cheque and Rs.50 lakhs by cash. The Assessing Officer on the basis of statement of Raghavendra has made addition of Rs.37 lakhs being difference between admitted sale consideration of Rs.90 lakhs and sale consideration as per the registered sale deed of Rs.53 lakhs. 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. 16. The assessee has filed additional ground challenging validity of assessment order passed by the Assessing Officer u/sec.143(3) r.w.s.153A of the Income Tax Act, 1961 dated 31.12.2010 in absence of issue of notice u/sec.143(2) of the Income Tax Act, 1961. Although, the assessee has challenged the issue in light of report 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. 17. In the result, appeal ITA.No.373/Hyd./2016 for the assessment year 2007-2008 of the Assessee is partly allowed. ITA.No.374/Hyd./2016 – A.Y. 2009-2010 : 18. Facts of the case, in brief, are that, a search and seizure operation u/sec.132 of the Income Tax Act, 1961 [in short “the Act”] dated 07.02.2009 were conducted in the case of Syed Mohammad Mehdi and on assessee viz.,Nasser 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. 19. The Assessing Officer after considering the submissions of the assessee, made various additions including additions towards unexplained investment in purchase of property at Shamshabad for Rs.3.45 crores from Syed Mohammad Mehdi; unexplained investment in purchase of property from Sri Nayeemullah Hussaini for Rs.8 lakhs; addition towards payment made to Mrs. Siddiqua Sultana for Rs.12 lakhs; addition of Rs.18,19,000/- towards receipts seized during the course of search in connection with purchase of property from Mr. Prakash V. Goud; addition of Rs.65,10,000/- towards purchase of property; addition of Rs.83 lakhs towards bad 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. 20. On appeal filed by the assessee before the learned CIT(A), the learned CIT(A) deleted the additions made by the Assessing Officer towards estimated consideration paid for purchase of property at Shamshabad of Rs.4,70,03,000/- ; addition of Rs.66 lakhs towards unexplained investment in purchase of property at Bangalore. The learned CIT(A) had also deleted addition of Rs.4 lakhs out of total addition of Rs.8 lakhs made by the Assessing Officer as unexplained investment in purchase of property from Sri Nayeemullah Hussaini; deleted Rs.6 lakhs out of addition of Rs.18.90 lakhs towards investment in purchase of property; deleted Rs.38,64,000/- out of 27 ITA.Nos.373, 374 & 486/Hyd./2016 Rs.65,10,000/- and also deleted addition of Rs.52,50,000/- out of addition of Rs.83 lakhs towards bad debts. 21. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal. 22. The first issue came up for consideration from ground no.2 of assessee’s appeal is addition of Rs.3,45,00,000/- made towards alleged unexplained investment in purchase of property at Shamshabad, Hyderabad. The facts with regard to the impugned dispute are that during the course of search on 07.02.2009, certain rough notings were found which was seized as Annexure- A/SMM/RES/03 which contains various details of 16 plots purchased by the assessee from Sri Syed M. Mehdi at Mehdi Garden, Shamshabad, Hyderabad. The seized documents contains details of plot sold, extent of plots, consideration paid in cheque and cash. Further, during the course of search a sum of Rs.85 lakhs cash was seized from B.B. Cancer Hospital and on enquiry, Shri Syed Iqbal Mehdi stated that the said cash belongs to Shri Syed Mohd. Mehdi. 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. 23. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain as to why addition shall not be made towards on-money payment of Rs.3.45 crores for purchase of 16 plots for total area of 4,876 sq. yards at Mehdi Garden, Shamshabad, Hyderabad. In response, the assessee submitted that he along with his wife Smt. Aliya Nasser Aziz has purchased 16 plots from 29 ITA.Nos.373, 374 & 486/Hyd./2016 Shri Syed Mohd. Mehdi, GPA Holder for a negotiable rate of 2000 per sq. yard and paid consideration in cheque and cash duly supported by relevant evidences. Although, Shri Syed Mohd. Mehdi stated that he has sold plots @ Rs.10,500/- per sq. yards, but, the fact remains that Shri Syed Mohd. Mehdi himself has sold plots to other parties @ Rs.2000/- per sq. yard. He has denied the statement of Shri Syed Mohd. Mehdi and argued that he has not aware of the statement of Shri Syed Mohd. Mehdi and cash seized from B.B. Cancer Hospital. The Assessing Officer after considering the submissions of the assessee and also taking note of relevant incriminating material found during the course of search observed that, there is a clear evidence of payment of on-money of Rs.3.45 crores towards purchase of 16 plots at Mehdi Garden, Shamshabad, Hyderabad which is further supported by cash seized at B.B. Cancer Hospital of Rs.85 lakhs as on the date of search, which contains the details of Kotak Mahindra Bank A/c, where the assessee was operating bank account. Further, Shri Syed Iqbal Mehdi and Shri Syed Mohd. Mehdi admitted to have received cash 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. 24. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee reiterated his submissions made before the Assessing Officer and further submitted that there is no evidence of payment of Rs.3.45 crores to Shri Syed Mohd. Mehdi as claimed to have been received by him and there is no basis for payment of Rs.10,500/- per sq.yard as admitted by Shri Syed Mohd. Mehdi in his statement. Shri Syed Mohd. Mehdi’s credibility is in doubt as he himself has sold several plots @ Rs.2000/- per sq. yard. Although, the Assessing Officer took support 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. 25. The learned CIT(A), after considering the submissions of the assessee and also taken note of relevant incriminating material found during the course of search observed that the documents found during the course of search coupled with the statement recorded from Shri Syed Mohd. Mehdi clearly establishes payment of Rs.3.45 crores 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. 26. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal. 27. Shri K.C. Devdas, Learned Counsel for the Assessee, submitted that the learned CIT(A) erred in sustaining the addition made by the Assessing Officer towards alleged on-money payment for purchase of property ignoring the fact that there is no evidence with the Assessing Officer to allege that there is on-money payment. Learned Counsel for the Assessee referring to various documents submitted that, out of 16 plots claims to have been sold by Shri Syed Mohd. Mehdi to the assessee, the assessee and his wife have purchased 15 plots and one plot was sold by Shri Syed Mohd. Mehdi directly to Mrs. Kanchana L. Rao during the same period at the cost of Rs.2000 per sq. yard. Further out of 15 plots, 9 plots have 34 ITA.Nos.373, 374 & 486/Hyd./2016 been registered in the name of the assessee and his wife and remaining 6 plots are pending for registration. The assessee has filed a Specific Performance suit in local Court which is pending for adjudication. Further, the Assessing Officer has referred the valuation of the property to the DVO and the DVO determined the fair market value of the plot at Rs.2000/- per sq. yard. There are few instances of sale to outsiders @ Rs.2000/- per sq. yard during the same period. The assessee has negated the observation of the Assessing Officer with regard his presence in Hyderabad on the date of search and also cash seized from B.B. Cancer Hospital in light of Kotak Mahindra Bank account particulars on cash bundles and in fact, during remand proceedings, the Assessing Officer confirmed that there is no sufficient cash withdrawn from Kotak Mahindra Bank account at that point of time. Although, the assessee has furnished all evidences, the learned CIT(A) confirmed the addition only on the basis of some loose sheets found in the possession of Shri Syed Mohd Mehdi even though the said documents is not in the hand-writing of the assessee. Therefore, he submitted that 35 ITA.Nos.373, 374 & 486/Hyd./2016 the addition made by the Assessing Officer and sustained by the learned CIT(A) should be deleted. 28. The Learned CIT-DR, Shri B Bala Krishna, on the other hand, supporting the order of the learned CIT(A) submitted that search has been conducted in the case of assessee on the specific information with the Department that the assessee is purchased 16 plots from Shri Syed Mohd Mehdi and paid on-money for purchase of plots. During the course of search, the assessee was intercepted by the Department and also simultaneous search was conducted at various places including B.B. Cancer Hospital where a sum of Rs.85 lakhs cash was found. A statement was recorded from Shri Syed Iqbal Mehdi and in response, he stated that cash belongs to Shri Syed Mohd. Shri Syed Mohd was examined and statement was recorded, where he confirmed to have received Rs.85 lakhs cash from assessee towards sale of plots at Mehdi Garden, Shamshabad, Hyderabad. The documents found in the possession of Shri Syed Mohd clearly shows sale of 16 plots to assessee with various particulars including extent of plots, rate per sq. 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. 29. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that during the course of search in the residential/office premises of the assessee no cash was found, except, Rs.1.5 lakhs which was duly explained with books of accounts and source of income. On the contrary, whatever cash found at B.B. Cancer Hospital and Shri Mohd. Iqbal Mehdi’s response is not connected with the assessee. Although, Sri Mohd. Iqbal Mehdi stated that cash belongs to Shri Syed 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. 30. Admittedly, Shri Syed Mohd Mehdi is GPA Holder of various plots at Mehdi Garden, Shamshabad, Hyderabad. Although, Shri Syed Mohd Mehdi claims that he had sold 16 plots to assessee and his wife, but, the fact remains that the assessee has agreed to purchase 15 plots from Shri Syed Mohd Mehdi and remaining one plot was sold to Mrs. Kanchana L. Rao. Further, out of 15 plots, the registration of 9 plots has been completed in favour of the assessee and his wife and the remaining 6 plots are still pending for registration which is evident from a Specific Performance suit filed in L.B. Nagar Court, Hyderabad by the assessee. 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. 31. Coming back to the document found in the possession of Shri Syed Mohd Mehd. During the course of search, rough notings in a paper was found in the possession of Shri Syed Mohd Mehdi which was marked as Annexure-A/SMM/RES/1230. The Assessing Officer alleged that as per the notings contained in the rough sheets, details of working in assessee’s hand-writing towards purchase of 16 plots @ Rs.10,500/- per sq. yard is found. The Assessing Officer on the basis of notings found in the possession of Shri Syed Mohd Mehdi has worked-out the on-money payment of Rs.3.45 crores towards purchase of 16 plots by considering Rs.10,500/- per sq. yard as per the admission of Shri Syed Mohd Mehdi in the statement recorded during the course of search and arrived at on- money payment of Rs.3.45 crores. The assessee denied 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. 32. We find that, first of all, the working of on-money by the Assessing Officer is lacks credence because, the Assessing Officer observed that, assessee has purchased 16 plots and also paid full consideration @ Rs.10,500/- per sq. yard. On the other hand, the evidences filed by the assessee clearly shows that, he has purchased only 15 plots and one plot is directly sold by Shri Syed Mohd Mehdi to Mrs. Kanchana L. Rao. Further, out of 16 plots, only 9 plots has been registered in the name of assessee and his wife and remaining 6 plots registration is pending and the assessee has filed a Specific Performance suit in the Court of Law, 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. 33. Coming back to the cash seized from B.B. Cancer Hospital and purported un-signed cash receipt found in the premises of Shri Syed Mohd Mehdi. There is no dispute that a sum of Rs.85 lakhs was found at B.B. Cancer Hospital and in response to a specific question, Shri Syed Iqbal Mehdi has admitted that the said cash belongs to Shri Syed Mohd Mehdi. Shri Syed Mohd Mehdi admitted to have received Rs.85 lakhs from the assessee. This fact has been strengthened because of Kotak Mahindra Bank, Bangalore’s seal on the cash bundles found in B.B. Cancer Hospital. The Assessing Officer on the basis of said evidences linked cash found at B.B. Cancer Hospital to the assessee and purchase of plots from Shri Syed Mohd Mehdi. The assessee has negated the observation of the Assessing Officer in light of relevant evidences including the remand report submitted by the Assessing Officer. In the remand report, the 43 ITA.Nos.373, 374 & 486/Hyd./2016 Assessing Officer clearly admitted that there is no enough cash withdrawn from Kotak Mahindra Bank, Bangalore to support payment of Rs.85 lakhs on the date of search. Further, the alleged cash receipt is found from the premises of Shri Syed Mohd Mehdi. The assessee has filed relevant copies of seized documents and as per the said documents these are pertains to consideration paid in cash for purchase of the property and it has been duly recorded in the books of accounts. From the reasons given by the Assessing Officer, we find that the Assessing Officer has linked cash found in B.B. Cancer Hospital to the transaction of the assessee without there being any supporting evidence to allege that said cash belongs to assessee. Except statement of Shri Syed Mohd Mehdi, there is no other evidence to link Rs.85 lakhs to assessee. Even the allegation of the Assessing Officer that, cash was drawn on Kotak Mahindra Bank, Bangalore and delivered at Hyderabad is also negated by the assessee with relevant evidences. Therefore, in our considered view, the allegation of the Assessing Officer that assessee has paid Rs.85 lakhs 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. 34. The next issue that came-up for consideration vide ground no.3 of assessee’s appeal is addition of Rs.8 lakhs towards unexplained investment in purchase of property. 35. During the course of search, page-51 of Annexure-A/SMM/RES/03 contains details of payment of Rs.8 lakhs to Shri Nayeemullah Hussaini for purchase of property. As per the said document, the Assessing Officer 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. 36. On appeal, the learned CIT(A) allowed partial relief to the assessee, where the learned CIT(A) deleted the addition to the extent of Rs.4 lakhs paid for purchase of property from registered deed because, the assessee was able to explain source to the extent of Rs.4 lakhs and the balance amount of Rs.4 lakhs paid in cash has been treated as unexplained investment. 37. Learned Counsel for the Assessee submitted that, the learned CIT(A) has erred in sustaining the addition made by the Assessing Officer towards alleged investment in purchase of property without appreciating the fact that, although, the assessee has agreed to purchase of property for Rs.8 lakhs, but, after studying market conditions, has finally negotiated the property for Rs.4 lakhs. The consideration has been paid by cheque. The agreement to sell only specifies payment of advance of Rs.1 lakhs. There is no evidence for payment of cash consideration available 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. 38. The Learned CIT-DR, on the other hand, supporting the order of the learned CIT(A) submitted that, although, the assessee has explained the source of Rs.4 lakhs paid by cheque, but, could not explain the remaining Rs.4 lakhs paid in cash. There is a clear evidence in the form of sale agreement, as per which, assessee agreed to purchase the property for a consideration of Rs.8 lakhs and also paid Rs.1 lakh advance. The Assessing Officer on the basis of relevant evidences, has rightly made addition towards cash consideration and the order of the Assessing Officer should be upheld. 39. We have heard both the parties, perused the material on record and gone through the orders of the 48 ITA.Nos.373, 374 & 486/Hyd./2016 authorities below. There is no dispute that, during the course of search, a sale agreement dated 12.11.2008 between the assessee and Shri Nayeemullah Hussaini was found and as per the said sale agreement, assessee has agreed to purchase property for a consideration of Rs.8 lakhs and also paid Rs.1 lakh as advance in cash. The said property has been registered in favour of the assessee on 27.11.2008 for a consideration of Rs.4 lakhs. Although, the assessee claims that it has purchased the property for a consideration of Rs.4 lakhs, but, there is a clear evidence in the form of sale agreement dated 12.11.2008 which shows actual consideration of Rs.8 lakhs and also payment of advance of Rs.1 lakh in cash. Therefore, we are of the considered view that there is clear evidence in the form of sale agreement for payment of cash consideration of Rs.4 lakhs which was not recorded in the sale deed. The Assessing Officer and the learned CIT(A) after considering the relevant facts has rightly made addition toward alleged on-money payment of Rs.4 lakhs for purchase of property from Shri Nayeemullah Hussaini. Thus, we are inclined to 49 ITA.Nos.373, 374 & 486/Hyd./2016 uphold the findings of the learned CIT(A) and reject the ground taken by the assessee. 40. The next issue came-up for consideration from ground nos 4 of the assessee’s appeal is addition towards unexplained investment in purchase of property from Prakash V. Goud on the ground that assessee could not explain source for purchase of property. It was the argument of the assessee that the said property has been purchased by his wife Smt. Aliya Nasser Aziz for a consideration of Rs.6 lakhs and the same has been reflected in her books of accounts for the assessment year 2009- 2010. 41. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. Admittedly, the property has been registered in the name of assessee’s wife Smt. Aliya Nasser Aziz and as per the registered sale deed, the consideration paid for purchase of property was at Rs.6 lakhs for which relevant payment details are also available. In fact, there is 50 ITA.Nos.373, 374 & 486/Hyd./2016 no dispute from the Assessing Officer on these aspect. The only dispute is with regard to receipt of Rs.10,000/- advance found during the course of search in the premises of Shri Syed Mohd Mehdi. As per the said receipt, the assessee has paid Rs.10,000/- as advance towards the total consideration of Rs.19 lakhs for purchase of Plot-31 at Mehdi Garden,Shamshabad, Hyderabad. Except receipt, there is no evidence with the Assessing Officer to allege that assessee has paid total consideration of Rs.19 lakhs. Since the property has been registered in the name of Smt. Aliya Nasser Aziz, in our considered view, any on-money payment for purchase of property also needs to be considered in her hands and not in the hands of the assessee. Further, the Assessing Officer has made addition towards on-money only on the ground that the prevailing market rate of property was at Rs.10,500/- per sq. yard which is further supported by the statement of Shri Syed Mohd Mehdi. On the other hand, the evidences filed by the assessee including third party sale and DVO’s report clearly shows the fair market value of the property was at Rs.2000/- per sq. yard. If we 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/-. 43. Shri KC Devdas, Learned Counsel for the Assessee, submitted that the learned CIT(A) erred in not allowing relief to the assessee, even though, there is no evidence with the Assessing Officer to allege that the assessee has paid consideration @ Rs.10,500/- per sq. yard towards purchase of property from Tayyaba Begum and, therefore, even though there is no evidence to allege that the assessee has paid consideration over and above the sale deed. Further, the Assessing Officer has erred in adopting Rs.10,500/- per sq. yard even though the fair market value of the property as on that date was only Rs.2000/- per sq. yard which is further supported by DVO’s report. Therefore, he submitted that the learned CIT(A) simply sustained the addition made by the Assessing Officer and thus, the order 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. 44. The learned CIT-DR Shri B. Bala Krishna, on the other hand, supporting the order of the learned CIT(A) submitted that, although, there is no adequate evidence for payment of Rs.65,10,000/-, but, going by the statement of Shri Syed Mohd Mehdi, it is very clear that prevailing fair market value of the property was at Rs.10,500/- per sq. yard whereas, the assessee has paid Rs.2000/- per sq. yard and thus, the Assessing Officer has rightly computed unexplained investment on the basis of admission of Shri Syed Mohd Mehdi. The learned CIT(A) after considering the relevant facts, has rightly allowed partial relief to the assessee and thus, the order of the learned CIT(A) should be upheld. 45. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. Admittedly, document found during the course of search is registered sale deed for purchase of Plot 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. 46. The next issue came up for consideration vide ground no.6 of assessee’s appeal is, addition made by the Assessing Officer towards unaccounted bad debts of Rs.83 lakhs and sustained by the learned CIT(A) to the extent of Rs.30,50,000/-. 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. 48. Before the learned CIT(A), the assessee has filed additional evidences and argued that out of additions made by the Assessing Officer of Rs.83 lakhs, the assessee has accounted a sum of Rs.37,50,000/- in his books of accounts, for which, the assessee has filed relevant evidences. The learned CIT(A) remanded the additional evidences filed by the assessee to Assessing Officer for re- examination and report. As per the remand report from the Assessing Officer, a sum of Rs.37,50,000/- were recorded in the books of accounts of assessee. Therefore, the learned CIT(A) after considering the relevant remand report of Assessing Officer and also considering the amount claimed 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. 49. Shri KC Devdas, Learned Counsel for the Assessee submitted that, there is no dispute with regard to the fact that whatever amount recorded in the books of accounts, the learned CIT(A) has given relief to the assessee. However, in respect of remaining unidentifiable parties even the assessee could not explain what is the nature of entries and even Assessing Officer could not identify whether it is an investment or expenditure etc. In absence of any details as to the nature of entry recorded in the documents found during the course of search, no addition can be made. Therefore, he submitted that addition made by the Assessing Officer and sustained by the learned CIT(A) should be deleted. 50. The learned CIT-DR Shri B. Bala Krishna, on the other hand, supporting the order of the learned CIT(A) 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. 51. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. We have also considered page-52 of Annexure-A. On perusal of the said document, we find that there is no details as to what is the nature of payment and parties of payment in few cases. In few cases, the assessee has explained the payment and also recorded in the books of accounts and explained source for the relevant assessment year. In fact, the Assessing Officer in the remand proceedings has accepted that the assessee has recorded a sum of Rs.37,50,000/- towards various payments including payment for purchase of plot at Lisha Vistara and payment of Heights Apartment. In respect of 61 ITA.Nos.373, 374 & 486/Hyd./2016 remaining entries i.e. payment to Jayalaxmiamma Restaurant and hotel scrap sales, the learned CIT(A) allowed relief. There is no details as to when said payment was made and what is the purpose of payment. In respect of remaining payment of Rs.30,50,000/- the Assessing Officer and the learned CIT(A) considered only one entry of Gangadhar Reddy for Rs.25 lakhs claimed to have paid on 31.05.2007. If we go by the date of payment for a moment, then it pertains to financial year 2007-2008 relevant to assessment year 2008-2009. Therefore, to this extent, addition cannot be made for assessment year 2009-2010, that too only on the basis of a date of entry i.e., 02.01.2009 in page-52 of the seized document. Therefore, we direct the Assessing Officer to delete further additions sustained by the learned CIT(A) to the extent of Rs.25 lakhs and entry contained in the name of Gangadhar Reddy also claimed to have been paid on 31.05.2007. If we delete Rs.25 lakhs out of Rs.30,50,000/-, the remaining amount left for consideration is Rs.5,50,000/-. The sum of Rs.5,50,000/- is considered of two parts, one is Rs.3,50,000/- in respect of 62 ITA.Nos.373, 374 & 486/Hyd./2016 payment to Lisha Vistara plot and Rs.2 lakh payment in case of office furniture and scrap. There is no details as to date of payment and person to whom the said payment is made in the seized document. Even the assessee could not explain what is the nature of payment, when the said payment was made. Therefore, we are of the considered view that, although, the assessee has recorded the said payment as ‘bad debt’, but, could not explain the nature of payment and date of payment. Even the Assessing Officer could not link the said payment to any person or any previous year. In absence of any details, only on the basis of jottings in a sheet found in the course of search, addition cannot be sustained. Therefore, we are of the considered view that the Assessing Officer is erred in making addition towards ‘bad debts’ as unexplained investment. The learned CIT(A), although, allowed relief to the assessee to the extent of Rs.52.50 lakhs, but, erred in sustaining the addition made to the balance sum of Rs.30.50 lakhs. We, thus, delete the entire addition of Rs.83 lakhs. 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]: 53. This appeal filed by the Revenue by raising two grounds i.e.,,(1) learned CIT(A) erred in deleting the protective addition made on unexplained investment of Rs.3.45 crores and (2) learned CIT(A) erred in deleting protective addition made on unexplained investment of Rs.18,90,000/- to the extent of Rs.13 lakhs in the case of Smt. Aliya Nasser Aziz [Wife of the Assessee]. 54. The above additions are deleted in assessee’s husband hands viz., Shri Nasser Aziz. These additions made by the Assessing Officer on protective basis have been deleted by the learned CIT(A) on the ground that very same additions has been considered and sustained in the hands of Shri Nasser Aziz, spouse of the assessee. Since the issue has been considered in the hands of Shri Nasser Aziz on substantive basis, the protective additions made by the 64 ITA.Nos.373, 374 & 486/Hyd./2016 Assessing Officer cannot be sustained. The learned CIT(A) after considering relevant facts has rightly deleted the additions made in the hands of assessee. Thus, we are inclined to uphold the findings of the learned CIT(A) and dismiss the appeal filed by the Revenue. 55. In the result, ITA.No.486/Hyd./2016 for the assessment year 2009-2010 of the Revenue is dismissed. 56. To sum-up, appeals ITA.Nos.ITA.Nos.373 & 374/Hyd/2016 of the assessee are partly allowed. And ITA.No.486/Hyd./2016 of the Revenue is dismissed. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 24.03.2025. Sd/- Sd/- [K. NARASIMHA CHARY] [MANJUNATHA G] JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 24th March, 2025 VBP 65 ITA.Nos.373, 374 & 486/Hyd./2016 Copy to 1. Sri Nasser Aziz, No.46, Azia Cottage, 60 ft. road, Bhoopasandra Layout, Sanjay Nagar Post, BANGALORE – 560 094 2. Smt. Aliya Nasser Aziz (late), L/R Shri Nasser Azia (Husband), Azia Cottage, 60 ft. road, Bhoopasandra Layout, Sanjay Nagar Post, BANGALORE - 560 094 3. The DCIT, Central Circle-3, Hyderabad. 4. The CIT(A)-12, Hyderabad 5. The Pr. CIT (Central), Hyderabad 6. The DR ITAT ‘A” Bench, Hyderabad 7. Guard File //By Order// //True Copy// "
