INCOME TAX ACT, 1961

Section 153A Section 153C Sections 69C & 143(3)

Search and seizure - Assessment under section 153A - Unexplained investment in lands - Addition in hands of partners, instead of assessee-firm

It was noted by the AO that the assessee S.D. Kotian was a partner in the firm M/s. Om Sai Riddhi Siddhi along with M.N. R Kumar and this firm was engaged in the development of Real Estate Projects. In Para 3.1 of the same assessment order. It was noted by AO that the firm M/s. Om Sai Riddhi Siddhi had purchased three sets of plots for the construction of residential complexes in Navi Mumbai. It was also noted that the real estate projects Exotica, Nakshatra and Paradise sit on these particular pieces of land. Held: As noted by the AO in the assessment order, the investment in lands in question was reflected in the books of account of the firm. It proves that the owner of these lands in question was the firm, and not the partners of the firm. This was also not a finding of the AO that the cash component is paid by the partners out of their own funds by giving a break-up of how much was from own source of which partner. The assessee had stated that actual investment in this regard as per the regular books of account maintained by the firm and he had not invested any cash as alleged in the notice and request was made that the assessee can obtain confirmation from the vendor and the assessee also requested for the opportunity for cross-examination of the vendor but the AO jumped to the conclusion on this basis that the assessee had not produced any material to show that the admission made by the assessee was incorrect in any way other than denying the payments stating that he was under stress. Even the so-called admission as noted by the AO in para 3.1 of the assessment order was this much only that cash payment was indeed made. Even if one accepts this admission as sacrosanct, the said cash payment can be added in the hands of the firm, and not in the hands of the partners without bringing cogent material on record to show that such cash payment was made by the partners out of their own funds by giving a break-up of how much was from own source of which partner. Under these facts, addition might have been made in the hands of the firm, and not in the hands of the partners and Tribunal had, therefore, deleted the addition made by the AO in the hands of the partners.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12 to 2017-18

INCOME TAX ACT, 1961

Section 153A

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