Tax authorities can only impose penalties on actual investors in benami transactions, necessitating cooperative behavior from all parties involved.

ORDER

PER DR. S. SEETHALAKSHMI, J.M.

This is an appeal filed by the assessee against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC) Delhi dated 16.08.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2012-13. The assessee has raised the following grounds of appeal :-

1. The ld. CIT (A), NFAC has erred on facts and in law in confirming the addition of Rs. 1,15,92,040/- made by AO on account of unexplained investment in purchase of land by not appreciating that the land under consideration is owned by Sh. Puroushottam Bairwa, investment was made by him from his own sources. Shri Purushottam Bairwa has been assessed u/s 143(3) where this addition is made in his hands and the assessee only acted as facilitator in the said transaction by making various incorrect & irrelevant observations.

2. The assessee craves to amend, alter and modify any of the grounds of appeal

3. The appropriate cost be awarded to the assessee.”

2. The brief facts of the case are that the assesseethe assessee is engaged in retail trade of stationery items. He was also a director in M/s. Gupteshwar Colonizers Pvt.Ltd. engaged in real estate business. ShriPurshottamBairwa was also a director in this company till 2010.The DDIT(Inv.), Alwar on the basis of information that Mr. PurshottamBairwa has purchased certain land amounting to Rs.1,15,92,040/-recorded his statement on 07.03.2019. Further, statement of some of the sellers to whom land was sold by him was also recorded. However, DDIT(Inv.),Alwar was of the opinion that though the land was purchased by Mr. PurshottamBairwa, the investment in purchase of land was made by the assessee. Accordingly, the AO issued notice u/s 148 on 28.03.2019 to the assessee.In course of assessment proceedings, the AOagain recoded the statement of PurshottamBairwa on 11.12.2019 where in reply to Q. No.19 (PB 117) he admitted to have purchased the land and in reply to Q. No.23 &26(PB 118) explained the source of the investment.The AO, however, at para 19 of the order presumed that ShriPurshottamBairwa was not having source to invest in purchase of land and therefore it is presumed that investment would have been made by the assessee or M/s Gupteshwar Colonizers Pvt.Ltd. and accordingly made addition of Rs.1,15,92,040/- in the hands of the assessee. On appeal by the assessee before the before the Ld. CIT(A), assessee explained that when sale deed is in the name of PurshottamBairwa, there is no evidence that investment in land was made by the him (assessee),ShriPurshottamBairwa has explained the source of investment in land as out of advance booking receipt from sale of plot and the AO has assessed such amount in the hands of Shri PurshottamBairwa vide order u/s 144 read with section 263 of the IT Act, 1961dated 28.03.2023(PB 43-48) and also in case of Gupteshwar Colonizers Pvt.Ltd. vide order u/s 144r.w.s. 263 of the Act, 1961 dated 27.03.2023 (PB 49-53), no addition can be made in the hands of the assessee. The Ld. CIT(A), however, at para 7.1.5 at page 15 observed that assessee has not furnished any details that how much facilitator charges he received for the said transaction and therefore confirmed the addition made by AO.

Now, aggrieved by the order of the ld. CIT (A), the assessee has preferred the present appeal before us.

3. Before us, the ld. A/R of the assessee submitted his written submission which are reproduced as under :-

“1. The fact that Shri Purshottam Bairwa purchased the land from various persons is evident from the sale deed placed at PB 70-92.In the sale deed the seller has specifically mentioned that he has received the sale consideration from Shri Purshottam Bairwa. Even from para 18 of the assessment order where the gist of his statement recorded by DDIT( Inv.) on 07.03.2019 is summarized