2017 (2) TMI 733 - AT - Income Tax

Onus of proving genuineness of the banakhat in question - income from other sources OR capital gains - Held that - MOU stating the assessee to be in cultivating possession is neither supported by the banakhat in question dated 16.12.1986 nor the sale deed dated 10.09.2008. There is further no evidence in the case file in the nature of form 7/12 that the assessee ever remained in cultivating possession of the lands sold. We observe in these peculiar facts that the assessee has failed to prove veracity/genuineness of the banakhat in question dated 16.12.1986. We thus find force in Assessing Officer s observations on the latter aspect of the issue that the assessee had failed in proving any advance payment of ₹ 5lacs in question by way of any supportive material; whatsoever. Assessee s contention that the CIT(A) has rightly held the assessee to have proved the above stated banakahat indicating advance payment of ₹ 5lacs fails to concur because of the fact that the very banakhat itself is in dispute between the parties. Once we have held the same to be not supported by any evidence, the relevant terms therein cannot be relied upon. We accordingly reject assessee s contention. Assessee s next argument that AO ought to have summoned the vendors in question in case he had any doubt about the banakhat in question finds no merit in this plea as well as the said vendors had already paid the amount in question to the assessee. They hardly had any further explanation to make in view of their action making the payment in question to the assessee. We further make it clear that there is no dispute about the fact as to whether or not the assessee has received the payment or not but the issue herein is about genuineness of his claim of having executed the banakhat dated 16.12.1986. We thus reject instant argument as well. We are of the opinion in given facts of the case that it is not the sale deed which is in dispute but the issue herein is about genuineness of assessee s claim to have entered into the above stated banakhat dated 16.12.1986. Assessee contention that AO had erred in rejecting assessee s explanation on the ground that the above stated banakhat was not a registered document is rendered academic as we have already held on merits that he has failed in proving veracity of the banakhat in question dated 16.12.1986. We accordingly conclude that the Assessing Officer had rightly acted in treating the above sum received as income from other sources instead of capital gains in assessee s computation. - Decided in favour of revenue

Summary

Issues:
Revenue's appeal against CIT(A)'s order allowing assessee's claim of capital gains, dispute over genuineness of banakhat dated 16.12.1986, failure to prove advance payment of ?5lacs, rejection of assessee's explanation by Assessing Officer, CIT(A)'s findings in favor of assessee, rejection of vendor summoning argument, rejection of registered document argument, rejection of non-registration argument.

Issue 1: Revenue's Appeal Against CIT(A)'s Order:
The Revenue appealed against the CIT(A)'s order allowing the assessee's claim of receiving a sum of ?1,32,42,418/- as capital gains instead of income from other sources. The dispute arose from the treatment of the sum in question in the assessment order for the year 2009-10 under the Income Tax Act, 1961.

Analysis: The appeal was based on the disagreement between the Revenue and the CIT(A) regarding the nature of the sum received by the assessee, whether it should be considered as capital gains or income from other sources. The CIT(A) accepted the assessee's explanation, leading to the Revenue's appeal challenging this decision.

Issue 2: Dispute Over Genuineness of Banakhat Dated 16.12.1986:
The primary issue revolved around the genuineness of the banakhat dated 16.12.1986, which the assessee claimed to have executed with the vendors of the capital asset. The Assessing Officer raised doubts about the authenticity of the document due to lack of registration and evidence of advance payment.

Analysis: The dispute centered on the authenticity of the banakhat document, with the Assessing Officer questioning its validity based on non-registration and absence of proof of advance payment. The CIT(A) sided with the assessee, emphasizing the document's validity and the lack of concrete evidence to refute its authenticity.

Issue 3: Failure to Prove Advance Payment of ?5lacs:
Another critical aspect of the case was the failure of the assessee to provide evidence of the alleged advance payment of ?5lacs mentioned in the banakhat dated 16.12.1986. The Assessing Officer highlighted this lack of proof as a reason for treating the sum received as income from other sources.

Analysis: The failure to substantiate the advance payment claim was a significant factor in the Assessing Officer's decision to categorize the sum as income from other sources. The absence of supporting documentation for the payment played a crucial role in the assessment of the transaction.

Issue 4: Rejection of Assessee's Explanation by Assessing Officer:
The Assessing Officer rejected the assessee's explanation regarding the ownership and payment details related to the capital asset. This rejection was based on various grounds, including the non-registration of the banakhat document and the lack of evidence supporting the claim of advance payment.

Analysis: The rejection of the assessee's explanation by the Assessing Officer stemmed from discrepancies in the documentation provided and the failure to meet the burden of proof regarding ownership and payment details. The decision to treat the sum as income from other sources was influenced by the inadequacy of the evidence presented.

Issue 5: CIT(A)'s Findings in Favor of Assessee:
The CIT(A) supported the assessee's contentions, emphasizing the validity of the banakhat document and dismissing the Assessing Officer's doubts regarding its authenticity. The CIT(A) accepted the assessee's claim of capital gains based on the evidence presented.

Analysis: The CIT(A) played a crucial role in the resolution of the dispute by siding with the assessee and validating the authenticity of the banakhat document. By accepting the assessee's arguments, the CIT(A) overturned the Assessing Officer's decision and allowed the claim of capital gains.

Issue 6: Rejection of Vendor Summoning Argument:
The argument raised by the assessee regarding the Assessing Officer's failure to summon the vendors involved in the transaction was rejected. The contention was that the vendors had already paid the amount in question to the assessee, making further verification unnecessary.

Analysis: The rejection of the vendor summoning argument indicated that the Assessing Officer's decision was based on the available evidence and documentation, rather than additional testimonies from the vendors. The rejection of this argument reinforced the Assessing Officer's assessment of the transaction.

Issue 7: Rejection of Registered Document Argument:
The argument related to the registration status of the banakhat document was dismissed, with no mandatory requirement found for such registration. The rejection of this argument was based on the lack of relevance to the genuineness of the transaction in question.

Analysis: The dismissal of the registered document argument highlighted the focus on the substance of the transaction rather than procedural requirements. The decision emphasized the need to establish the authenticity and validity of the transaction based on the available evidence.

Issue 8: Rejection of Non-Registration Argument:
The Assessing Officer's decision to treat the sum received as income from other sources was supported by the rejection of the non-registration argument regarding the banakhat document. The lack of registration was considered alongside other factors in determining the nature of the transaction.

Analysis: The rejection of the non-registration argument reinforced the Assessing Officer's position regarding the treatment of the sum received by the assessee. The decision highlighted the importance of comprehensive evidence and documentation in establishing the legitimacy of financial transactions.

In conclusion, the judgment delves into the intricacies of the transaction, focusing on the authenticity of the documentation, proof of payment, and the burden of proof on the assessee. The decision to categorize the sum received as income from other sources instead of capital gains was based on a thorough analysis of the evidence presented and the legal requirements under the Income Tax Act, 1961.