Hindusthan Bawa Builders Vs ACIT (ITAT Bangalore)
Matter related to scrutiny of additions based on seized documents was remanded for further examination
Conclusion: Addition under Section 69B in the hands of the assessee – partnership firm for entire cash payment made to landowners as refundable security deposit under a Joint Development Agreement (JDA) should be remanded to AO for further inquiry as payment was made jointly with another party and there was no proper opportunity for cross-examination.
Held: Assessee-partnership firm in which Abdul Khader Kodi was the Managing Partner and other partners were his wife and his son. The firm was engaged in developing real estate projects. During the course of search at the residence of Abdul Khader Kodi, document belonging to present assessee i.e. M/s. Hindusthan Bawa Builders was seized. Consequently, notice u/s 153C was issued. During the assessment proceedings, assessee failed to furnish any information or counter-evidences against the proposed addition of 21,82,000/- on account of undisclosed investments made in cash out of the total payment made in connection with the Joint Development Agreement (JDA) for total consideration of Rs.43,00,000/-. The JDA was signed between one Mr. U.K. Hasanabba and Mr. U. Ibrahim on one side as landowners and Mr. Abdul Khader K (on behalf of the assessee) and Mr. K. Hussain Abbas (on behalf of the HNGC Builders and Developers). A copy of the said JDA was impounded from the office premises. As per this JDA, assessee paid Rs.21,82,000/- in cash to the landowners as part of the refundable security deposits to acquire the right of construction of commercial cum residential apartments project by assessee. Since the JDA was signed, AO deemed that the cash payments were also made at the same time and assessed the said amount of Rs.21,82,000/- as unaccounted investments u/s 69B. Accordingly, addition was made in the hands of present assessee at 21.82 lakhs in the assessment year 2014-15. CIT(A) observed that the said JDA entered between one Mr. U.K. Hasanabba and Mr. U. Ibrahim on one side as land owners and Mr. Abdul Khader Kodi (on behalf of assessee) and Mr. K. Hussain Abbas (on behalf of HNGC Builders and Developers). According to the A.R., there was no direct evidence that assessee had paid the said amount to the land owners. Even if presumed that she submitted that said amount of Rs.21.82 lakhs has been contributed by two persons and hence entire of Rs.21.82 lakhs was a refundable security deposit paid by two parties to be considered separately in each hand to that extent of amount contributed by them. Further, she submitted that even there was no opportunity of cross examination given to the assessee to establish the payment by the assessee. On appeal. It was held that since assessee claimed that the payment was made jointly with another party and there was no proper opportunity for cross-examination, the matter should be remanded to AO for further inquiry. If the assessee’s claim was found to be correct, only their share of the payment should be considered for taxation.
