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2022 (3) TMI 241 - AT - Income TaxReopening of assessment u/s 147 - Addition of on-money received by the assessee on sale of land - whether or not the lower authorities are right in law and the facts of the case in acting upon the copy of the agreement to sell , dated 25.02.2008, for concluding, that the assessee had sold the land in question for a consideration of ₹ 7.19 crore (approx.), as therein stated, and not for the consideration as stated in the registered sale deed, dated 08.10.2008, and thus, had received an earnest money of ₹ 1.50 crore on 25.02.2008 i.e during the year under consideration? - HELD THAT - We are unable to subscribe to the standalone reliance placed by the lower authorities on the contents of the uncertified copy of the agreement to sell , dated 25.02.2008. At this stage, we may herein observe, that the sale consideration disclosed in a registered sale deed has to be accepted to have been received by the seller, and once the said registered document contains all the terms and conditions, then, no oral evidence is permissible to be given in an attempt to prove that the consideration disclosed in the said registered document had not changed hands. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Punjab Haryana in the case of Paramjit Singh 2010 (2) TMI 262 - PUNJAB HARYANA HIGH COURT - We, thus, in terms of our aforesaid observations are of the considered view, that the sale consideration qua the transaction of sale of land in question, as disclosed in the registered sale deed, dated 08.10.2008, could not have been dislodged by the A.O on the basis of the contents of an uncertified copy of an agreement to sell , dated 25.02.2008, which on the basis of our aforesaid observations would not even be in the nature of a secondary evidence within the meaning of Sec. 63 of the Indian Evidence Act, 1872. Deposits in bank account of assessee's husband - The observations of the A.O that the cash deposits in the bank accounts of Shri. Kulwant singh (Assessee's husband) were sourced from the on-money that was received by the assessee, being devoid and bereft of any substance and, being nothing short of an allegation in the thin air, cannot be subscribed on our part. We, thus, in the backdrop of our aforesaid deliberations vacate the observations of the A.O that the alleged on-money received by the assessee on sale of the land in question was deposited by her in the bank accounts of her husband, viz. Shri. Kulwant Singh (supra). Circle rate of the property - Assessee from, viz. the circle rate of the property in question that was prevailing at the time of execution of the sale deed; and the rate at which an adjoining piece of land during the relevant period was sold, undeniably had a strong bearing in not only proving that the land in question was sold as per the consideration disclosed in the registered sale deed, but was also indispensably instrumental in proving the falsity of the agreement to sell , dated 25.02.2008, and the contents thereof. We, thus, are not inclined to subscribe to the view taken by the lower authorities that the aforesaid circle rate and the comparative sale transaction had no bearing on the adjudication of the issue in hand. Suppressed sale consideration/on-money as the assessee s unexplained money u/s 69 - Receipt of on-money cannot be brought within the meaning of unexplained investment. But then, on a careful perusal of the assessment order, we find, that the A.O had triggered the provisions of Sec. 69, for the reason, that the assessee had deposited the on-money in the bank accounts of her husband, viz. Shri. Kulwant Singh. However, as we have already vacated the view taken by the lower authorities that the alleged amount of on-money received by the assessee was parked in the bank accounts of her husband, viz. Shri. Kulwant Singh, therefore, the applicability of Sec. 69 of the Act is ousted on the said count itself. Be that as it may, as we have already vacated the addition made by the A.O on the basis of the contents of the uncertified copy of a agreement to sell , dated 25.02.2008, which has been held by us as a dumb document that could not have been acted upon by the A.O, therefore, we refrain from adverting any further qua the validity of invocation of Sec. 69 We, herein, holding the agreement to sell , dated 25.02.2008 as a dumb document, thus, set aside the order of the CIT(A) and vacate the addition of ₹ 1.50 crore (supra) made by the A.O.- Decided in favour of assessee.
Issues Involved:
1. Validity of the reassessment proceedings under Section 147/143(3) of the Income Tax Act, 1961. 2. Addition of ?1,50,00,000 as unexplained money under Section 69 for A.Y 2008-09. 3. Addition of ?5,33,21,805 as long-term capital gain for A.Y 2009-10. 4. Reliance on a photocopy of the "agreement to sell" and its admissibility as evidence. 5. Non-provision of the original "agreement to sell" to the assessee. 6. Statements of witnesses recorded at the back of the assessee and non-facilitation of cross-examination. 7. Non-drawing of adverse inferences in the case of the alleged purchaser. 8. Use of cash deposits in the bank account of the assessee's husband as evidence. 9. Consideration of the circle rate and comparative sale transactions. Detailed Analysis: 1. Validity of Reassessment Proceedings: The reassessment proceedings were initiated based on information received from the Dy. Director of Income-tax (Investigation), Ludhiana, regarding an "agreement to sell" dated 25.02.2008, where the assessee allegedly received ?1.50 crore as earnest money. The A.O believed that the income chargeable to tax had escaped assessment and thus reopened the case under Section 147. The assessee challenged the validity of the reassessment, but the CIT(A) upheld it, stating that the reasons recorded were in conformity with the evidence placed on record. 2. Addition of ?1,50,00,000 as Unexplained Money (A.Y 2008-09): The A.O added ?1.50 crore as unexplained money under Section 69, based on the "agreement to sell." The assessee contended that the document was a forgery and that the land was sold via a registered sale deed on 08.10.2008. The CIT(A) upheld the addition, relying on the cash deposits in the bank accounts of the assessee's husband and the statements of witnesses. However, the ITAT found that the "agreement to sell" was an uncertified photocopy, not admissible as evidence under the Indian Evidence Act, 1872. The ITAT also noted that the statements of witnesses were recorded at the back of the assessee without cross-examination, violating principles of natural justice. Thus, the addition was vacated. 3. Addition of ?5,33,21,805 as Long-Term Capital Gain (A.Y 2009-10): For A.Y 2009-10, the A.O added ?6,83,21,705 as LTCG based on the same "agreement to sell," later reducing it by ?1.50 crore already taxed in the previous year. The CIT(A) upheld this addition. The ITAT, applying its findings from A.Y 2008-09, vacated the addition, holding the "agreement to sell" as a dumb document and not reliable evidence. 4. Reliance on Photocopy of "Agreement to Sell": The ITAT emphasized that an uncertified photocopy of a document is not admissible as evidence. The Hon'ble Supreme Court in Smt. J. Yashodha vs. Smt. K. Shobha Rani held that photocopies without originals have no evidentiary value. Thus, the reliance on such a document by the lower authorities was unjustified. 5. Non-Provision of Original "Agreement to Sell": The original "agreement to sell" was never provided to the assessee despite repeated requests. The Dy. DIT (Inv.), Ludhiana, confirmed that the original was not available. The ITAT found that this failure to provide the original document further weakened the case against the assessee. 6. Statements of Witnesses and Cross-Examination: The statements of witnesses to the "agreement to sell" were recorded at the back of the assessee, and cross-examination was not facilitated despite requests. The ITAT held that such statements could not be used to draw adverse inferences, citing the Hon'ble Supreme Court's decision in Andaman Timber Industries vs. Commissioner of Central Excise. 7. Non-Drawing of Adverse Inferences in Purchaser's Case: The reassessment proceedings against the alleged purchaser, Shri Surjit Singh, were dropped, which the assessee argued supported her claim of the document being a forgery. The ITAT noted this but refrained from drawing conclusions due to incomplete details. 8. Cash Deposits in Husband's Bank Account: The A.O linked cash deposits in the bank accounts of the assessee's husband to the alleged on-money from the sale. The ITAT found this connection to be baseless, noting that the husband's accounts were duly disclosed and assessed without any adverse findings. 9. Circle Rate and Comparative Sale Transactions: The assessee argued that the sale consideration in the registered sale deed was genuine, supported by the circle rate and a comparative sale transaction of adjoining land. The ITAT found merit in this argument, noting that the sale consideration disclosed in the registered sale deed should be accepted. Conclusion: The ITAT vacated the additions made by the A.O for both A.Y 2008-09 and A.Y 2009-10, holding the "agreement to sell" as a dumb document and not admissible as evidence. The appeals filed by the assessee were allowed, and the orders of the CIT(A) were set aside.
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