2020 (4) TMI 219 - AT - Income Tax

Long Term Capital Gain - sale of agricultural land by the co-owners - sale consideration received in cash by the assessee and other co-owners as per the information received from the Investigation Wing Jaipur - True payment of sale consideration to the sellers of the land - HELD THAT - As clearly stated that except the sale considerations as recorded in the sale deeds and received through cheques no other payment was received. Therefore when the transactions recorded in the seized material has no connection and particularly has no contemporaneous relation with the transaction of sale through sale deeds dated 24.08.2006 then the assumption of the AO that these transactions are pertaining to the sale consideration received by the assessee is without any basis. Once Shri Madan Mohan Gupta during his statement recorded by the AO has clearly denied having paid any cash to the assessees then there is no basis for coming to the conclusion that the assessees have received the alleged cash against the sale of agricultural land in question. Except the statement of Shri Madan Mohan Gupta recorded during the course of search and post search enquiry the alleged seized documents do not reveal any such transaction except the entries of the amounts under the head RPS and that too not related to the period or the transaction in question. The statement of Shri Madan Mohan Gupta as recorded during the search and seizure action cannot be the basis of the addition in the hands of the assessees when in his examination during the course of assessment proceedings he has denied the alleged payment of cash to the assessee. AO has not brought on record any material or facts to show that the land in question carries a value of more than 12 crores as alleged and thereby the assessees have suppressed the sale consideration as reported in the Sale Deeds. On the other hand the assessees have brought on record a sale instance whereby M/s. Shri Kalyan Buildmart Pvt. Ltd. through its Director Shri Madan Mohan Gupta purchased adjoining land bearing Khasra nos. 403 404/148 measuring 0.58 hectare vide Sale Deed dated 04.04.2007 for a consideration of 72, 00, 000/-. This subsequent sale instance and sale consideration as well as the stamp duty valuation of the land in question clearly corroborates the prevailing fair market value as claimed by the assessees and declared in the Sale Deeds. Subsequent sale of the adjoining land and purchased by the same party M/s. Shri Kalyan Buildmart Pvt. Ltd. as well as the stamp duty valuation of the land corroborates sale consideration shown in the sale deeds executed by the assessees. Therefore addition made by the AO is devoid of any substance or merit but solely on the presumption and surmises which is not sustainable when Shri Madan Mohan Gupta himself during the assessment proceedings has denied. Accordingly the addition is deleted. - Decided in favour of assessee.

Issues Involved:
1. Validity of additions of ?1,47,85,500/- as sustained by the CIT (Appeals).
2. Findings of CIT (Appeals) regarding the actual transactions and the intention of the seller to escape tax liabilities.
3. Contradiction in the statement regarding receipt of ?12 lac through cheque.
4. Correct share of the assessee in the sold agricultural land.
5. Double addition of alleged cash payment by Madan Mohan Gupta.

Detailed Analysis:

1. Validity of Additions of ?1,47,85,500/-:
The assessees contested the additions made by the AO on account of alleged "On Money" received for the sale of agricultural land. The AO based the addition on the statement of Shri Madan Mohan Gupta, recorded during a search operation, which claimed a total sale consideration of ?12,30,84,000/-, including ?11,34,84,000/- in cash. The Tribunal found that the AO did not provide any documentary evidence to corroborate the alleged cash payment. The Tribunal emphasized that the statement of Shri Madan Mohan Gupta, which was subsequently retracted, could not be solely relied upon without corroborative evidence. Consequently, the Tribunal concluded that the addition made by the AO was not justified and legally sustainable.

2. Findings of CIT (Appeals) Regarding Actual Transactions:
The CIT (Appeals) had held that the transactions recorded in the seized documents were actual transactions related to the payment of sale consideration. However, the Tribunal found that the entries in the seized documents did not have any nexus with the sale of agricultural land by the assessees. The entries were dated much later than the sale deeds, making it improbable that they pertained to the same transaction. The Tribunal also noted that Shri Madan Mohan Gupta, during the assessment proceedings, denied making any cash payments to the assessees. Thus, the Tribunal found the CIT (Appeals)'s findings to be arbitrary and without basis.

3. Contradiction in the Statement Regarding Receipt of ?12 Lac:
The CIT (Appeals) had noted a contradiction in the assessee's statement about receiving ?12 lac through a cheque. The Tribunal observed that the assessees had shared the sale consideration with other co-owners and had declared the sale consideration received by cheque. The Tribunal found that there was no documentary evidence to show that the assessees received any consideration in cash. Therefore, the Tribunal dismissed the CIT (Appeals)'s finding as false and far from the truth.

4. Correct Share of the Assessee in the Sold Agricultural Land:
The CIT (Appeals) had sustained the assessee's share in the sold agricultural land at 1/8th part, whereas the assessees contended that their correct share was 1/16th part. The Tribunal noted that the land was an ancestral property, and the mutation in the revenue record was in the names of the brothers and cousin brothers. The Tribunal found that the CIT (Appeals) erred in sustaining the assessee's share at 1/8th part and held that the correct share was indeed 1/16th part.

5. Double Addition of Alleged Cash Payment:
The assessees argued that the addition on account of alleged cash payment was made twice – once in the hands of all the co-owners proportionately and again in the hands of the power of attorney holder, Shri Radhey Shyam Sharma. The Tribunal found that the AO had not brought any positive material or proof to establish that the seized material revealed the payment of sale consideration in cash over and above the sale consideration recorded in the sale deeds. The Tribunal also noted that the Department had not made any addition on account of this "On Money" payment in the hands of Shri Madan Mohan Gupta, except for a protective assessment. This indicated a double standard applied by the Department. Therefore, the Tribunal held that the addition was not sustainable.

Conclusion:
The Tribunal concluded that the additions made by the AO were based on presumptions and surmises without any corroborative evidence. The Tribunal found that the statement of Shri Madan Mohan Gupta, recorded during the search, could not be the basis of the addition in the hands of the assessees when he had denied the alleged cash payment during the assessment proceedings. The Tribunal deleted the addition of ?1,47,85,500/- in the hands of each assessee and allowed the appeals. The other grounds of appeal raised by the assessees were rendered infructuous as the main issue was decided in their favor.

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