2017 (7) TMI 965 - HC - Income Tax

Nature of income - income from other sources OR capital gains - sale of land by the owners to the new purchasers - proof of genuineness of the banakhat dated 16.12.1986 - Tribunal found that the Assessing Officer was justified in disbelieving the entire transaction as projected by the assessee - Held that - The agreement to sale is dated 16.12.1986. In such document, it is recited that the owners agreed to sale the land to the assessee for a sale consideration of ₹ 10 lakhs out of which ₹ 5 lakhs was paid. This agreement to sale is neither registered nor a notarized document and is executed on a stamp paper without any further authentication. Sum of ₹ 5 lakhs is stated to have been received by the land owners piecemeal over a period of time apparently in cash. Neither the dates nor any other details of such payments are mentioned. For over 22 years, the assessee did not assert his right to purchase the land nor did the sellers demand the remaining sale consideration. The sale deed dated 10.09.2008 does show the assessee as a confirming party, but does not refer to any payment made or to be made in lieu of his surrendering his rights under the agreement to sale. In the said deed though it is stated that the assessee was in possession and in cultivation of the land in question there is no other evidence including form no.7/12 of land registers of the Revenue record suggesting possession or cultivation of the assessee. The payment of ₹ 1.32 crores is stated to have been spread over a period of time, long after the sale deed was executed and is supposed to be backed by a document titled as mutual money transaction agreement. It is quite inconcieviable that a person who claims the right to purchase a land under an agreement would sign the sale deed in favour of a third party acting as a confirming party without his consideration for such purpose being either actually paid or even promised to be paid. Multiple factors noted above when seen cumulatively leaves little doubt that the Tribunal arrived at a factual finding which calls for no interference. No question of law therefore arises. - Decided against assessee.

Summary

Issues:
1. Whether the sum received by the appellant should be treated as income from other sources or capital gains.
2. Whether the genuineness of the banakhat dated 16.12.1986 was proven by the appellant.

Analysis:
1. The primary issue in this case was the addition of a sum of ?1.32 crores by the Assessing Officer as income from other sources for the assessment year 2009-10. The appellant claimed this amount arose from the sale of an agricultural land, where he was shown as a confirming party. The Assessing Officer did not accept this claim and taxed the amount as income from other sources. The appellant argued that the sum was received in lieu of an agreement to sell the land. The Tribunal, after examining the evidence, upheld the Assessing Officer's decision, citing various discrepancies in the transaction details provided by the appellant. The Tribunal found that the appellant failed to prove the genuineness of the transaction, leading to the dismissal of the appeal.

2. The second issue revolved around the genuineness of the banakhat dated 16.12.1986, which formed the basis of the appellant's claim regarding the land transaction. The Tribunal scrutinized the evidence presented by both parties and found discrepancies in the documentation provided by the appellant. The Tribunal highlighted several key points, such as the lack of registration or notarization of the agreement to sale, the absence of specific details regarding payment timelines, and the long delay in asserting rights over the land. Additionally, the Tribunal noted inconsistencies in the payment process and the absence of concrete evidence supporting the appellant's claims. Ultimately, the Tribunal concluded that the appellant failed to establish the authenticity of the transaction, leading to the dismissal of the appeal.

3. The Tribunal's decision was based on a comprehensive analysis of the evidence and the legal aspects of the case. The judgment emphasized the importance of proving the genuineness of transactions and highlighted the critical role of documentary evidence in tax matters. The Tribunal's findings underscored the need for clear and consistent documentation to support claims related to income and capital gains. The dismissal of the appeal signified the Tribunal's adherence to established legal principles and its commitment to upholding the integrity of the tax assessment process.