2019 (1) TMI 1836 - AT - Income Tax

Addition on account of deposits in the bank account stated to be sourced from sale of agricultural land stood confirmed in appeal - HELD THAT - Tax authorities have proceeded to take action qua the transactions against the most vulnerable person. There is nothing on record to show that the assessee having sold his land continued to have any hold over the purchasers. AO having full authority to call for their production in the peculiar facts instead of disbelieving the assessee ideally should have cross-checked the facts from the purchasers who consciously chose not to appear before the Department and may have reason to not address the correct facts. In the facts of the present case, admittedly 30 Kanal 12 Marla have been sold in village Ferozepur Bangar, Distt. Mohali on 28.01.2011 as per the Sale Deed which has been taken note of by the Department. The fact that it reflected an amount of ₹ 47,81,250/- is a matter of fact. The short issue for consideration was the value of the land sold at the relevant point of time. The AO in the facts of the present case should have carried out necessary enquiries as he had the PAN details of the purchaser. Accordingly, we find that in the peculiar facts and circumstances of the present case, the Tax Authorities have failed to exercise their powers which they are vested with and in the face of the inability of the assessee to produce the concerned purchasers, the Department who has the PAN numbers and has traced the parties in Amritsar should have no hesitation in calling forth and examining the issues as the purchasers may be front-men of some builders etc. having deep pockets. The relevant facts in the form of the value of the specific property at the relevant point of time may also be a relevant aspect to be taken into consideration. Accordingly, in the interest of justice, the issue is restored back to the file of the AO with a direction to pass a speaking order - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Assessment of addition made by AO on account of deposits in bank account sourced from sale of agricultural land.

Analysis:
The appellant challenged the order of CIT(A)-2 Chandigarh regarding the addition made by the AO on account of deposits in the bank account sourced from the sale of agricultural land. The appellant contended that necessary evidences on record were not correctly appreciated. The AO considered the appellant to be an agriculturist with declared agriculture income but found significant deposits in the bank account sourced from the sale of agricultural land. The appellant explained that the deposits were from the sale proceeds of agricultural land in question. However, the summons issued to the purchasers returned undelivered, raising doubts on the source of cash deposits.

The CIT-DR argued that the appellant failed to substantiate the claim adequately. The affidavit filed by an eye-witness related to the transaction was dismissed as irrelevant due to being the sister of the appellant. The appellant's affidavit stated the details of the land sale and the subsequent bank deposits. The AO traced the PANs of the purchasers but did not conduct further verification. The tax authorities were criticized for not thoroughly investigating the transactions and relying on the appellant to produce purchasers who were beyond the appellant's control.

The Tribunal found that the tax authorities did not adequately exercise their powers in verifying the transactions. Given the inability of the appellant to produce the purchasers, the tax department should have taken steps to examine the issues further, especially considering the PAN details available. The case was remanded back to the AO for a detailed examination and a speaking order after providing the appellant with a fair opportunity to present all relevant facts and evidence. The appeal of the appellant was allowed for statistical purposes, emphasizing the need for a thorough investigation into the source of deposits in the bank account.