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2014 (1) TMI 1904 - AT - Income TaxAddition u/s 69B - fair market value of a property - unexplained investment in connection with purchase of land at Hanumanpura Distt. Jaipur - Addition u/s 40A(3) - Payment made over and above disclosed payments - HELD THAT - We have come to a clear cut finding that the assessee is only a broker and not the purchaser of the land in question. The agreement found between MTPDPL to whom the land was to be supplied by the company of the assessee and therefore this evidence strongly helps the case of the assessee. From these agreements it is clearly established that the assessee was acting as a broker for the company of one Shri R.K. Tripurari. Ultimately the part of the land purchased by the company in the name of Shri Prakash Chand Vasitha has been sold to Shri Pappu Lal (for the assessment year 2008-09 and 2009-10.Shri Pappu Lal is a person of Shri R.K. Tripurari whose company is MTPDPL. As a broker the assessee can be charged only on brokerage earned on the supply of land. The money got from Shri R.K.Tripurari have to be transferred to Shri Surender Singh Rajawat in connection with purchase of land. The source of investment is also from Shri R.K.Tripurari. At best the assessee can be held as a mediator holding the land temporarily in the name of Shri Prakash Chand Vasitha and thereafter transfer in the name of Shri Pappu Lal a nominee of Shri R.K.Tripurari - the adoption of the value of consideration at a flat rate of 5.45 lacs per bigha on the entire purchase of 53 bigha 16 biswa land is not justified. When such lands are located at different places and has been purchased from different persons on different dates then the land will be of different nomenclature different nature different type and different quality. CIT(A) has also committed the error in confirming the impugned addition. The documents seized from Shri Surender Singh Rajawat cannot be utilized against this assessee as no corroborative evidence / papers were found or seized during the search conducted in this case of the assessee - AO has not brought on record any statement of Shri Surender Singh Rajawat for explaining the relevant position on the issue - we are satisfied that entire addition in question deserves to be deleted - provision of Section 40A(3) of the Act are not applicable to payments allegedly made over and above disclosed payments. Accordingly Ground No. 2 and 3 of the assessee appeal are allowed. Addition u/s 69B of the Act on account of undisclosed/unexplained investment in agricultural land at Sarsani (Distt. Nagaur) - HELD THAT - Sale deed squarely shows that quality of land is different. There is a difference of quality in fertility of Doyam and Baran land. Under these circumstances non-production of Shri Khiv Singh for examination does not attract the presumption of Section 132(4A) of the Act. The AO has power to summon him u/s 131 of the Act. The AO has not even examined the Notary Public Shri Kedar Nath Gupta. Further when we have already held that provision of Section 69B of the Act is not applicable to the facts of this case. AR has correctly relied upon the decision in the case of case of CIT vs. Smt. K.C. Agnes 2003 (1) TMI 48 - KERALA HIGH COURT in which it has been held that in case sale deed shows lower sale consideration than the consideration mentioned in the agreement to sell and both the documents were found during search sale deed may be accepted as actual price for sale. Accordingly we confirm the impugned findings of the ld. CIT(A) and we find no infirmity in his order. Thus the Ground No. 1 of the Revenue is dismissed. Addition on account of treating sale of agricultural land as adventure in the nature of trade - HELD THAT - AO has changed the consideration of sale by adopting the cost of land @ 5.45 lacs per bigha . As we have discussed in assessment year 2007-08 that this impugned aditon cannot be survived in this year also. Accordingly with similar reasonings we order to delete the impugned addition and allow the Ground No. 2 of this appeal. We also hold that the land transaction in question cannot be treated as adventure in the nature of trade. On the basis of the statement of the assessee recorded on 29-01-2010 u/s 132(4) of the Act the AO has concluded by relying on a part of the statement. The assessee has categorically stated in this statement that he earned only 30.00 lacs in the entire transaction. The law is settled that no addition can be made by relying on a statement on selective basis. The statement has to be read in its entirety. In our considered opinion the AO has wrongly held that this transaction is an adventure in the nature of trade only because this purchase and sale was within short interval. The assessee has not been doing any trade or business as we have discussed in assessment year 2007-08 except in these solitary transaction of purchase and sale of land. There is no history of the assessee for carrying out trading activity in plots land or agricultural land. The assessee has been held only as a broker only. Accordingly this appeal of the assessee is allowed on merits.
Issues Involved:
1. Validity of assessment order under Section 143(3)/153A of the Income Tax Act, 1961. 2. Addition of Rs. 2,61,57,380/- as unexplained investment under Section 69B of the Income Tax Act, 1961. 3. Applicability of Section 40A(3) of the Income Tax Act, 1961. 4. Deletion of addition of Rs. 12,71,000/- as unexplained investment under Section 69B of the Income Tax Act, 1961. 5. Treatment of profit from the sale of agricultural land as business income or agricultural income. Detailed Analysis: 1. Validity of Assessment Order: The assessee challenged the validity of the assessment order framed under Section 143(3)/153A of the Income Tax Act, 1961, claiming it to be void ab initio. However, this ground was not pressed by the assessee during the hearing, leading to its dismissal. 2. Addition of Rs. 2,61,57,380/- as Unexplained Investment: The AO made an addition of Rs. 2,61,57,380/- under Section 69B, claiming it was unexplained investment in land at Hanumanpura. The assessee argued that the actual investment was Rs. 24,79,630/-, and the AO's estimation was based on incorrect assumptions and documents found during a survey of a third party. The Tribunal found that the assessee acted as a broker for MTPDPL, arranging land purchases through Shri Prakash Chand Vasitha, and did not make the investment himself. The Tribunal held that Section 69B was not applicable as the assessee did not maintain regular books of account, and the AO's estimation lacked evidence. Consequently, the addition was deleted. 3. Applicability of Section 40A(3): The AO applied Section 40A(3) to disallow payments made in cash over and above disclosed payments. The Tribunal found that since the assessee did not make the investments himself, Section 40A(3) was not applicable. Thus, this ground of the assessee's appeal was allowed. 4. Deletion of Addition of Rs. 12,71,000/-: The Revenue appealed against the deletion of Rs. 12,71,000/- added by the AO as unexplained investment in agricultural land at Sarsani. The Tribunal noted that the AO's valuation was based on an unsigned agreement and lacked corroborative evidence. The Tribunal upheld the CIT(A)'s decision to delete the addition, stating that the AO failed to prove the investment exceeded what was shown in the sale deed. The Tribunal also referenced the Kerala High Court's decision in CIT vs. Smt. K.C. Agnes, which supported accepting the sale deed's consideration as actual. 5. Treatment of Profit from Sale of Agricultural Land: The AO treated the profit from the sale of agricultural land as business income, considering it an adventure in the nature of trade. The assessee contended that the transactions were agricultural and not business-related. The Tribunal found that the assessee was primarily a broker and did not engage in regular trading of land. The Tribunal held that the transactions were not an adventure in the nature of trade and deleted the additions for the assessment years 2008-09 and 2009-10. Conclusion: - The appeals of the assessee were partly allowed, with significant deletions of additions made by the AO. - The appeal of the Revenue was dismissed. - The Tribunal emphasized the lack of evidence and incorrect application of legal provisions by the AO in making the additions.
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