ITO WARD 3(2)(1), SURAT V. MS RASILABEN G. SUTARIYA, SURAT

ITSSA 40/SRT/2022

AI Insights

This case involves cross-appeals by the assessee, Rasilaben Ghanshyambhai Sutariya, and the revenue against the order of the Commissioner of Income Tax (Appeals)-4, Surat, concerning the assessment year 2012-13. The primary issues revolved around the additions made by the Assessing Officer under sections 68 and 153C of the Income Tax Act, 1961, related to unexplained cash credits and on-money received in land transactions. The Tribunal examined the validity of these additions, considering the evidence presented, including seized documents and statements from involved parties. The Tribunal's decision highlighted the importance of corroborative evidence and the principles of natural justice, particularly the right to cross-examine witnesses.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26424 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-10-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 03-06-2022
• Other Referred Cases: ACIT Vs Govindbhai N Patel, ACIT Vs Indrajeet Singh Suri, DCIT Vs. Mahendra Ambalal Patel, CIT Vs Fairdeal Textile Park (P) Limited, CIT Vs P.V. Kalyanasundaram
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAPNESH SHETH
• Assessee Lawyers: RITESH MISHRA
• Keywords: Set aside; Unexplained cash credit; Unexplained investment; Principle of natural justice
• Section: 143(3); 143(2); 132; 43; 113; 153C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER IT(SS)A No. 9/SRT/2022 for AY: 2012-13 (Physical hearing) Rasilaben Ghanshyambhai Sutariya, Plot No. – 1, Sahaj Park Society, Near Kailasdham Society, Vallabhacharya Marg., A. K. Road, Surat - 395003 PAN : AZVPS7101E Vs. The ITO, Ward – 3(2)(3), Surat APPELLANT RESPONDEDNT IT(SS)A No. 40/SRT/2022 for AY: 2012-13 The ITO, Ward – 3(2)(1), Surat Vs. Rasilaben Ghanshyambhai Sutariya, Plot No. – 1, Sahaj Park Society, Near Kailasdham Society, Vallabhacharya Marg., A. K. Road, Surat - 395003 PAN : AZVPS7101E APPELLANT RESPONDEDNT Appellant by Sh. Sapnesh Sheth, CA Respondent by Sh. Ritesh Mishra, CIT(DR) Date of hearing 10/10/2024 Date of pronouncement 28/10/2024 Order under Section 254(1) of Income tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These cross-appeals by Assessee and Revenue are directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat, dated 05.04.2022 for Assessment Year (AY) 2012-13. The grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in issuing notice u/s 153C of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of assessing officer by IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 2 sustaining addition to the extent of Rs.1,25,57,175/- as unexplained cash credit u/s 68 of the I.T. Act, 1961 in respect of purchase of land at block no.71, Saroli. 3. It is therefore prayed that assessment order may kindly be quashed or in the alternative addition made by assessing officer may please be deleted. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. The grounds of appeal raised by the revenue are as follows: (i) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs.3,78,00,000/- without appreciating the fact that the registered sale deed in respect of the land in question i.e. at Block No-110 was executed in the name of the assessee and the incriminating document in the form of \"Satakat\", found and seized during the course of search was also pertaining to the said land. (ii) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in not appreciating the fact that the seller of the property has admitted the factor of on-money receipt in the statement recorded on oath during the course of post search proceedings and the final registered sale deed of the property was also substantiating the involvement of the assessee in the transaction in question. (iii) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in restricting the addition of Rs. 5,25,57,457/- to Rs.1,25,57,175/- in respect of Block No.71 without appreciating the fact that the incriminating documents found and seized during the course of search proceedings in the form of \"Satakats\" clearly showed the quantum of on money payments. (iv) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the entire addition' made in respect of block No.70 of Rs.4,46,75,000/- without appreciating the fact that as per the \"Satakat found during the course of search proceedings, from the premise of the Ruchandani family wherein it was clearly mentioned that the seller is Mr. Pitamber Ruchandani and the purchaser is assessee. (v) It is therefore, prayed that the order of the Ld. CIT(A) may be set aside and that assessing officer may be restored to the above extent. (vi) The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 3. Brief facts of the case are that a search action under section 132 of the Act, was carried out on 05.03.2014 on Diamond Group of Surat. In the search action various sub-groups were covered including Pitambar Ruchandani sub-Group wherein various incriminating documents were found and seized. Some of the documents were considered to be belonging to assessee. On the basis of such IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 3 incriminating material, notice under section 153C dated 23.03.2015 was served upon the assessee for filing return of income for AY.2012-13. In response to notice under section 153C, the assessee filed her reply / letter dated 11.12.2015 and submitted that original return of income filed on 31.03.2013 declaring income of Rs.4,86,220/- may be treated as return in response to such notice. In the return of income the assessee offered income from house property, share of profit from partnership firm Dobaria Developers and business income was offered under section 44AD. The Assessing Officer after serving notice under section 143(2) proceeded for assessment. The assessing officer completed assessment under section 153C r.w.s 143(3) on 30.03.2016. The assessing officer while passing assessment order apart from other addition made three additions which are subject matter of these cross appeals, consisting addition of unexplained cash credit of Rs. 3.78 Crore on account of purchase of land in block No. 110 at Saroli, unexplained cash credit of Rs. 5.25 crore against purchase of land at Block No. 71 Saroli and unexplained credit of Rs. 4.46 Crore on purchase of Block No.70. The assessing officer made all these additions by taking view that in the search action on Ruchandani Group incriminating material in the form of satakat relating to Block No. 68, 69,70,71 and 110 of Saroli. The land in all these blocks were sold by Ruchandani family for Rs. 29.00 Crore, out of which Rs. 21.65 Crore on money was involved. Out of these five blocks the assessee purchased land in three blocks viz; 70,71, & 110. The Assessing Officer made addition of Rs.3.78 Crore for purchase of land at Block No.110, Saroli by taking view that as per value of satakat of land was shown as Rs.4.68 Crore, whereas the sale consideration as per sale deed is only IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 4 Rs.90.00 lakhs (Rs.4.68 – Rs.90.00 = Rs.3.78). The AO also noted that the assessee was also involved in purchase of land in Block No. 70 & 71 of Saroli. The Assessing Officer noted that as per information received from investigation wing that total on money involved in the transaction of five block was Rs. 21.87 Crore and after excluding the land in block No.110, it left Rs. 17.87 Crore. As per the report of investigation wing total sale consideration of four blocks were Rs. 7.98 Crore, the sale consideration of Block No. 71 was Rs. 2.34 Crore. Thus, Assessing Officer worked out on money factor of Block No. at Rs. 5.25 Crore on proportionate basis in the following manner; “Rs. 2.34 Crore X17.87 Crore/ Rs. 7.89 Crore = Rs. 5.25 Crore.” The amount of Rs. 5.25 Crore was added in the hand of assessee on substantive basis as the property was purchased from Babubhai Kevadia, so addition on protective basis was made in the hand of Babubhai Kevadia. Sale consideration of Block No. 70 was of Rs. 2.00 Crore, thus, the Assessing Officer applied same formula and made addition of Rs. 4.46 Crore in the hand of assessee in the following manner; “ Rs. 2.00 Crore X Rs.17.87 Crore/ Rs. 7.89 Crore= Rs. 4.46 Crore”. The amount of Rs. 4.46 Crore was added on protective basis in the hand of assessee and substantive basis in the hand of Babubhai Kevadia. The Assessing Officer passed assessment order under section 143(3) r.w.s. 153C on 28.03.3016, without making reference that if it was passed with prior approval of Joint Commissioner of Income Tax or not. 4. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Against the addition of Rs.3.78 Crore on account of Block IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 5 No.110, Saroli the assessee submitted that Assessing Officer grossly erred in presuming that assessee paid on-money of Rs.3.78 Crore for purchase of land at Block No.110, Saroli. The addition is made as per value of satakhat of impugned land which was shown as Rs.4.68 Crore, whereas the sale consideration as per sale deed is only Rs.90.00 lakhs (Rs.4.68 – Rs.90.00 = Rs.3.78). Such satakhat was not executed by assessee. Such fact was explained to Assessing Officer vide reply dated 30.03.2016, filed during assessment. It was stated that said satakhat was executed by family member of Ruchandani family with the family member of Ganpathrai Patel. The assessee is not a party to said satakhat nor signed it, so there is no question of making any addition on the basis of such satakhat. The Assessing Officer failed to give any reason and for rebutting the contention of assessee. The Assessing Officer simply concluded that assessee’s arguments are not acceptable as on-money is received by Ruchandani family and they agreed to pay tax during post-search proceeding. The assessee further stated that she purchased property from Ganpatrai Patel as evident from register sale deed. Though, there are 8 co- owners of impugned land, the Assessing Officer made reference to the statement of one co-owner only, that on-money was paid. No confirmative statement was obtained from other co-owners. No addition can be made against the assessee on the basis of satakhat to which the assessee is not a party. Against the addition in respect of Block No.71, Saroli of Rs.5.25 Crore, the assessee submitted that Assessing Officer erred in making such huge addition to the income of assessee. The addition is made with similar reason as of land IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 6 at Block No.70 of Saroli. The assessee stated that on the difference on Block No.70 and 71 is that assessee did not purchase Block No.70 but actually purchased land out of Block No.71. There is no corroborative evidence which indicates that assessee has paid huge amount. The assessee while referring the contents of satakhat dated 11.05.2011 showing the value at Rs.6.67 Crore and considering the fact that the assessee did not purchase land at Block NO. 70, the value of such Block is required to be excluded from the amount of Rs. 6.67 crores and further document consideration of land of Block NO. 71 of Rs. 2.34 crores is also to be excluded from the above value mentioned in the Satakhat. Ater excluding the above amount, there is no justification of estimating on- money at Rs. 5.25 crores in respect of land at block No. 71. These facts clearly indicates that huge addition has been made without any cogent evidence which is also exceeding the payment component mentioned in the Satakhat value and the total value as per Satakhat. It was stated that the assessee explained earlier that Satakhat dated 11/05/2011 was cancelled and revised Satakhat was executed, thus in view of the execution of revised Satakhat there is on-money involved for land at Block No. 70 and 71. The huge addition is made on the basis of information received from the Investigation Wing in relation to search case in respect of Ruchandani Group and case of assessee was reopened under Section 153C. In without prejudice submission, the assessee stated that even the Satakhat, which was cancelled indicates actual payment to the extent of Rs. 1.66 crore by three parties including of assessee. Thus, there is no justification for adopting figure of on-money of Rs. 21.65 crores in absence of any evidence of alleged payment or any other document either bearing signature on the IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 7 handwriting of assessee. Addition can only be made only on the basis of evidence and not on conjecture and surmises. On the addition of protective basis of Rs. 4.46 crores in respect of Block No. 70, Saroli, the assessee stated that such addition is not sustainable. There is no question of making any addition with regard to land at Block No. 70, as the assessee has not purchased the impugned land. Such land is purchased by Dhirajlal Madhavji Bhai and two others. In support of such contention, the assessee filed sale deed dated 18/06/2012 in favour of Dhirajlal Madhavji Bhai and two others. The basis of addition is that in the course of search in case of Pitamber Ruchandani, a Satakhat dated 11/05/2011 was found and the assessee is one of the partners with two other persons. The said Satakhat was cancelled and new Satakhat was executed on 27/05/2011 due to various disputes in the impugned land. In revised Satakhat, such facts are categorically mentioned and thus consideration of Block No. 70 and 71 was revised and it was further mentioned that amount of Rs. 1.66 crore in the earlier Satakhat dated 11/05/2011 as earnest money was not actually paid. Secondly, the assessee has not purchased land in Block No. 70, thus there is no question of any payment. This fact was brought in the notice of Assessing Officer who has not accepted, thus, disbelieving the explanation of assessee is against the equity and fair play. The assessee further explained that on-money worked by the Assessing officer at Rs. 4.46 crore is not correct as Satakhat was cancelled and payment mentioned on Satakhat dated 11/05/2021 allegedly made by assessee and two other parties and rest of the payment was to be made in three equal instalments. Thus, even by going the contents of Satakhat, there IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 8 was three parties including the assessee and 1/3rd of Rs. 1.66 crore is only Rs. 55.64 lacs and the Assessing Officer made addition of huge on-money aggregating to Rs. 9.72 crores (4.46 crore + 5.25 crore) in respect of Block No. 70 and 71. Such fact clearly indicates that the Assessing Officer made addition without application of mind and disregarding the submission made by assessee and the material available on record. All the additions are based on presumption and without allowing opportunity to assessee to cross examine the person who statement was relied by Assessing Officer for making baseless addition. The assessee while explaining the seized material which was made basis for making addition on account of on-money in respect of Block No. 68, 69, 70, 71 and 110 of Rs. 21.65 crores, the assessee submitted that the said document cannot be relied for making addition to the income of assessee, as the said document was found from the third party. The said are not in the handwriting nor contained signature of assessee or Ghanshyam Sutariya (husband of assessee). The said paper appears to be signed by Radhakrishna Ruchandani and Kanhaiya Lal Ruchandani which has no co-relation with the facts of assessee as they are not the owner of Block NO. 70 and 71. When the persons who has signed impugned document are not owner of the land, how presumption can be drawn that on-money has been paid to them and that too by the assessee. There are no details or particulars of such huge payment. In without prejudice submission, the assessee stated that total payment claimed to have been received from Ghanshyam Sutariya in impugned document is only of Rs. 5.57 crores and there is no further detail as to the date on which impugned amount of Rs. 5.57 crore was paid or the alleged Rs. 16.08 crore was paid. The IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 9 Assessing Officer committed a mistake by presuming the total on-money for land at various blocks of Rs. 21.65 crores and thereafter working out on-money against various blocks on proportionate basis. There is no corroborative evidence which indicates that huge payment has been made by assessee. To support various contentions, the assessee relied upon the decision of Hon’ble Gujarat High court in ACIT Vs Govindbhai N Patel 215 Taxman 575 (Guj), ACIT Vs Indrajeet Singh Suri 85 CCH 140 and DCIT Vs. Mahendra Ambalal Patel 40 DTR 243 (Guj) 5. The ld. CIT(A) after considering the submissions of assessee noted that the Assessing Officer made addition of Rs. 5.25 crores on account of Block No. 71 and Rs. 4.46 crore against Block No. 70 on account of unexplained cash on purchase of land at Saroli as that such amount was received by Ruchandani family in FY 2011-12. The Assessing Officer made the addition on the basis of page No. 9 to 16 of Satakhat dated 11/05/2011 seized vide Annexure-A-1, from the premises of Ruchandani family. This Satakhat is signed by Pitamber Ruchandani as seller and assessee as purchaser. As per the record, the land at Block No. 70 and 71 was owned by Pitamber Ruchandani as he has executed the sale deed. Page No. 110 and 113 of Annexure-A/1 contains the evidence of cash receipt. In respect of five blocks of land at Saroli to the tune of Rs. 4.57 crore is confirmed in the hands of Ruchandani family. Though, the Satakhat contained the amount of sale of Block No. 70 and 71 as Rs. 6.67 crores, but the sale deed of the said blocks shows the consideration at Rs. 2.00 crore and 2.34 crore respectively. The assessee purchased only Block No. 71. Block No. 70 was sold by Pitamber Ruchandani to Dhirajlal Madhavji and others, thus the total IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 10 on-money received by Ruchandani family in two blocks is of Rs.2.32 crore (6.67 – 2.00- 2.34 crore). Thus, as per block No. 70 and 71 are concerned, as per seized material, the on-money amount is Rs. 2.32 crore only. Since the assessee purchased only block No. 71, therefore, proportionate on-money paid to Ruchandani family needs to be taxed in the hands of assessee. On the basis of aforesaid observation, the ld. CIT(A) sustained addition on account of unexplained investment in land in respect of Block No. 71 to the extent of Rs. 1.25 crore on proportionate basis (Rs. 2.32/4.35 x 2.34 Crore). The ld. CIT(A) treated the addition under Section 69, instead of Section 68. So far as unexplained investment in respect of Block No. 70 is concerned, the ld. CIT(A) held that said block is not purchased by assessee, thus, entire addition was deleted with respect of said block of land. Against the addition of Rs. 3.78 Crore, which relates to Block No. 110, the ld CIT(A) held that the assessee purchased this land from Ganpat Rai Patel and two others for a sale consideration of Rs.90.00 lacs. During assessment the assessee objected for making addition by contending that the satakat is not in the name of assessee, nor it bears signature of assessee. During assessment the assessee sought cross examination of both the parties but same was nor allowed by Assessing Officer, which is against the principal of natural justice. No evidence of payment of on money was found during the search action on Ruchandani family. The addition is made only on the basis of presumption by the Assessing Officer. If the Assessing Officer was relying on the statement of Paresh Patel, his cross examination should have been allowed. No allowing cross examination is against the decision of Supreme Court in Andaman IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 11 Timbers (281 CTR 241-SC). There is no difference of jantri rate and the sale consideration, thus, the addition of Rs. 3.78 Crore cannot be sustained. 6. Further aggrieved, both the parties have filed their respective appeals. The assessee in its appeal has challenged the action of CIT(A) in sustaining part addition on account of unexplained investment in respect of Block No. 71. On the other hand, the Revenue/Assessing Officer has challenged the action of ld. CIT(A) in deleting the addition of unexplained investment in respect of Block No. 110, 70 and in restricting part addition in respect of Block No. 71. 7. We have heard the submissions of ld. CIT-DR for the revenue and the learned Authorised representative (ld. AR) of the assessee and have gone through the orders of the lower authorities carefully. The ld. CIT-DR for the revenue submits that a search action under Section 132 was carried out on 05/03/2013 in a diamond group Surat. In the search action, Ruchandani group was also covered. During the search action in his premises, various incriminating documents found and seized. Ruchandani family were engaged in sale and purchase of lands. Out of seized material, incriminating material relating five blocks No. 68, 69, 70, 71 and 110 was found and seized. From the incriminating material, it was found that there was Satakhat in respect of land purchases and sold by Ruchandani group. The assessee purchased Block No. 110, Ganpatrai Patel. The seized document with respect to Block No. 110 contained the reference of sale consideration of Rs. 4.68 crore, though, the assessee has shown sale consideration of Rs. 90.00 lacs only. Thus, the Assessing Officer made addition of difference of Rs. 3.78 crore (Rs. 4.68 Cr. – 90.00 lacs) vis-a vis consideration shown on the seized material and the consideration shown by IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 12 assessee. Apart from the said land the assessee was also involved in purchase of two lands of Block No. 70 and 71 from or through Ruchandani family. The Assessing Officer also made addition in respect of both the blocks of land on the basis of sale consideration shown on the Satakhat found at the residence of Ruchandani. The ld. CIT(A) allowed relief to the assessee in respect of Block No. 110 by holding that such land was not purchased from Ruchandani family. However, with regard to land at Block no. 70, the ld. CIT(A) deleted the entire addition with respect to Block No. 70 by holding that said land was not purchased by assessee. The ld CIT(A) restricted the addition of unexplained investment on proportionate basis qua Block No. 71. Though there is sufficient evidence in form of seized material that there was payment of on-money on sale of both the block of land. The seized material found during the search action is admissible in evidence. The Assessing Officer made addition on the basis of evidence found during search action. The ld. CIT-DR for the revenue submits that order passed by the Assessing Officer may be restored by reversing the order of ld. CIT(A). 8. On the other hand, the ld. AR of the assessee with regard to addition in respect of Block No. 110 submits that the assessee has not purchased the said land from Ruchandani family rather purchased from Ganpatrai Patel. In the seized Satakhat, neither the name of assessee is mentioned nor the assessee was a party to said Satakhat. The Satakhat was found from third party. There is no corroborative evidence either in the form of statement of person from whose possession, the said Satakhat was recovered or any third party to connect the assessee that the assessee was involved directly or indirectly in execution of IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 13 impugned Satakhat which was relied by Assessing Officer. Against the deleting the entire addition in respect of Block No. 70, the ld. AR of the assessee submits that the assessee has not purchased any portion of land in the said Block, thus, making addition against such block No. on account of unexplained investment was without any basis. The ld. CIT(A) appreciated the fact and allowed relief to the assessee. So far as restricting the addition on proportionate basis in respect of Block No. 71, the ld. AR of the assessee submits that additions is not based on seized material rather on the basis of presumption. The assessee is not the signatory of said Satakhat nor it is in the handwriting of assessee. Thus, no cognizance can be taken for making addition on presumption and ad hoc basis on account of unexplained investment. The ld. AR of the assessee submits that the addition restricted to the extent of Rs.1.25 crore is also liable to be deleted. There is no evidence that the assessee has ever made any unaccounted money in addition to the sale consideration shown against the land which is reflected in registered sale deed. The registered sale deed was executed on a higher price than the prevailing Jantri rate. The ld. AR of the assessee submits that on the basis of similar seized material (satakat), similar addition was made in case of Pitamber Ruchandani on account of unaccounted money as well as undisclosed capital gain. However, on appeal before the ld. CIT(A), either such additions were deleted and/ or partial restricted, but deleting such addition and partial addition of capital gain in respect of Block No. 70 & 71 was also deleted on further appeal before the Tribunal, in IT(SS)A No. 19 and 31/Srt/2022 dated 10/11/2023, copy of said IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 14 decision is placed on record. Once the addition is deleted in case of seller, no addition is to be sustained particularly in respect of Block No. 71. 9. The ld. AR of the assessee submits that he has already placed on record the copy of impugned document/ satakat found during the course of search action in case of Ruchandani alongwith its true English translation. The assessee has also filed copy of revised Satakhat dated 27/05/2011 in respect of land at Block No. 70 and 71 of village Saroli, copy of sale deed dated 18/06/2022 in respect of Block NO. 70 in favour of assessee, purchased from Dhirajlal Madhavji Bhai and two others, copy of sale deed dated 18/06/2022 in respect of land at Block No. 71 in the name of assessee for a sale consideration of Rs. 2.34 crore, registered sale deed dated 26/03/2012 in respect of Block No. 110 of Saroli. To support his various contentions, the ld AR of the assessee relied on the following decisions;  CIT Vs Fairdeal Textile Park (P) Limited (2014) 43 taxmann.com 393 (Guj),  CIT Vs P.V. Kalyanasundaram (2007) 294 ITR 49-SC/ 164 Taxman 78(SC). 10. We have considered the rival submissions of both the parties and have gone through the order of lower authorities carefully. Ground No. 1 and 2 in revenue’s appeal relates to addition of unexplained investment in Block No. 110. We find that the Assessing Officer made addition of Rs. 3.78 crores on the basis of alleged Satakhat found from Pitamber Ruchandani. The Assessing Officer made addition by taking view that as per seized Satakhat, the consideration for Block No. 110 is Rs. 4.68 crores, however, the assessee in the sale deed has shown only consideration of Rs. 90.00 lacs. The ld. CIT(A) deleted the addition by holding that the land at Block No. 110 was purchased IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 15 by assessee from Ganpatrai Patel. In the post search investigation, statement of Paresh Patel son of Ganpatrai Patel was recorded, who stated that his father received cash amount of Rs. 3.78 crores. The ld. CIT(A) deleted the addition by holding that the assessee has purchased the land from Ganpatrai Patel on a consideration of Rs. 90.00 lacs. The impugned Satakhat was between Ruchandani and Ganpatrai Patel and the assessee has no connection as neither the name of assessee nor her signature appeared in the impugned Satakhat. The assessee sought cross examination of parties to the Satakhat but no such opportunity was provided which is against the principle of natural justice. The Assessing Officer was required to provide opportunity, such action is against the principle of natural justice. The Assessing Officer made addition on the basis of transaction between Ruchandani and Ganpatrai Patel, the presence of assessee is absent in such transaction. In the incriminating material, there is no evidence of any on-money payment, thus the Assessing Officer made addition on the basis of assumption that the assessee made payment of on-money on purchase of land at Block NO. 110 on the basis of Satakhat to which the assessee is not a party. The Assessing Officer relied on the statement of Paresh Patel, son of Ganpatrai Patel who was not allowed cross examination by assessee. The Hon’ble Supreme Court in Andaman Timber (281 CTR 241-SC) held that not allowing cross examination is against the principle of natural justice. Further, addition cannot be made on the basis of document, which is not in the handwriting of assessee nor it bears the signature of assessee. There is not difference between the jantri Rate and sale consideration shown by assessee. IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 16 11. Being a search case, we have independently examined the facts of the present case. It is a matter of record that assessee is not a party or signatory in any capacity to the alleged Satakhat. The said satakat was never acted upon. The Assessing Officer solely relied upon the statement of a person namely Paresh Patel who is neither a party in the said Satakhat nor a signatory. Even he is not a seller of the land to the assessee. Making a basis of addition on the basis of statement, without giving opportunity to the assessee is not sufficient. Statement is admissible only when it is tested by cross examination. A statement can be used against a person to whom, opportunity of cross examination is provided. Thus, with our aforesaid observation, we affirm the order of ld. CIT(A). In the result, ground No. 1 and 2 of revenue’s appeal is dismissed. 12. Ground No. IV in revenue’s appeal relates to deleting the addition of unaccounted investment in respect of Block No. 70. The Assessing Officer made addition of unexplained investment against Block No. 70 on the basis of Satakhat found and seized from the premises of Pitamber Ruchandani. The ld. CIT(A) deleted the addition on his categorical finding that land in Block No. 70 was not purchased by assessee. Thus, no addition can be made in respect of such Block number. On independent examination of facts and contention of parties, we find that the revenue failed to bring any evidence in our notice to substantiate the addition of unexplained investment in Block No. 70 by assessee. The Assessing Officer has not brought any material on record to show that the satakat found and seized in the search action was really acted upon. The Jurisdictional High Court in CIT Vs Fairdeal Textile Park (P) Limited (supra) IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 17 also held that no addition can be made only on the basis of agreements to sell found in search, which were not acted upon. Thus, we affirm the order of ld. CIT(A) on our additional observation. In the result, ground No. IV of revenue’s appeal is dismissed. 13. Ground No. III in revenue’s appeal and ground No. 2 of assessee’s appeal relate to restricting the addition of unaccounted investment in Block No. 71. The Assessing Officer made addition of Rs. 5.25 crore which was restricted by the ld. CIT(A) to Rs. 1.25 crore, thus, the revenue is agitating in restricting the addition to that extent. On the other hand, the assessee has also challenged the remaining addition of Rs. 1.25 crore. We find that the Assessing Officer made addition on account of unexplained investment in Block No. 71 on the basis of seized document found in search action on Pitamber Ruchandani wherein a Satakhat relating to five blocks were found. Out of which two blocks i.e. Block No. 70 and 71 owned by Ruchandani family. The Assessing Officer made addition of Rs. 5.25 crores by taking view that as per registered sale deed consideration is of Rs. 2.34 crore. However, as per report of investigation, the on-money payment in respect of four block Nos. 68, 69, 70 and 71 is of Rs. 17.87 crores and total sale consideration by purchaser as per details received from Investigation Wing is Rs. 7.98 crores. Thus, proportionate addition of Rs. 5.25 crore was made. The Assessing Officer worked out the addition by taking the sale consideration of Block No. 68 and Rs. 2.67 crore, Block No. 69 at Rs. 96.00 lacs, Block NO. 70 at Rs. 2.00 crore and for Block No. 71 at Rs. 2.34 crore and thereby applied the following formulae: “2,34,72,000 x 17,87,00,000 = Rs. 5,25,57,457” 7,98,06,000 IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 18 14. The ld. CIT(A) restricted the addition to the extent of Rs. 1.25 crore by taking view that Block No. 71 was purchased by assessee. The sale consideration of Block No. 71 is Rs. 2.34 crore. The ld. CIT(A) noted that Ruchandani family received on-money of these blocks at Rs. 2.32 crore (Rs. 6.67 Cr – 2.00 Cr. – 2.34 Cr). Since the assessee has purchased only Block NO. 71, the ld. CIT(A) decided to restrict proportionate addition against Block No. 71 in the hands of assessee. The ld. CIT(A) further restricted the addition on proportionate basis by taking the figure of Rs. 6.67 crore of on-money in respect of Block No. 70 and 71 and by reducing the sale consideration of both the blocks worked out the addition of Rs. 1.25 crore in the following manner: “2,32,74,000/4,35,04,000 x 2,34,72,000 = Rs. 1,25,57,175 “ 15. We find that the ld. CIT(A) while restricting the addition also presumed the payment of on-money instead of pointing out any evidence to strengthen his view. The finding of ld CIT(A) qua this addition is contrary to his own finding on two other additions, wherein he has clearly held that no evidence of on money was found in the search action. It is settled law that while making addition the authorities below must rely on the evidence instead of making addition on presumption basis. On independent examination of fact, we find that the Assessing Officer as well as ld. CIT(A) instead of bringing any corroborative evidence on record, presumed the payment of unexplained money on the transaction of land in block No. 71. We find that addition of transaction with regard to Block No. 70 & 71 Saroli is solely on the basis of report of investigation wing, the Assessing Officer has not carried out any independent investigation of fact, nor independently appreciated the facts. IT(SS)A 09 & 40/SRT/2022 Rasilaben Ghanshyambhai Sutariya Vs ITO 19 16. We also find that in case of Pitamber Ruchandani, the Assessing Officer on the basis of same document, made addition of on-money, however, such addition was deleted by Tribunal in order dated 10/11/2023 in IT(SS)A No. 19 and 39/Srt/2022. Thus, we do not find any justification in restricting the addition of unexplained investment even to the extent of Rs. 1.25 crore. Thus, the addition restricted to Rs. 1.25 crore is also deleted. In the result, corresponding ground of appeal raised by assessee is allowed and ground of appeal raised by revenue is dismissed. 17. Ground No. 1 is assessees appeal relates to validity of notice under section 153C. No submissions were made by ld AR of the assessee in support of this ground at the time of his submissions, therefore, this ground of appeal is treated as not pressed. Resultantly dismissed as not pressed. 18. In the result, the appeal of the assessee is partly allowed and appeal of the revenue is dismissed. Order pronounced on 28/10/2024 in the open court. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 28/10/2024 *Ranjan Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By Order // True Copy // Assistant Registrar/Sr.PS/PS, ITAT, Surat "