2020 (2) TMI 1138 - AT - Income Tax

Addition u/s 69 - amount received as advance / earnest money for sale of land which was deposited in the bank - additional evidence in the shape of bank statement of HDFC bank and copy of Cancellation agreement dated 21.02.2011 were furnished under rule 46A of the I.T. Rules - HELD THAT - As per the copy of the agreement placed on record at page 53, the sellers i.e. assessee and other co-sharers of land and the purchasers namely Zora Singh, Darvesh, Lakshan Mirdha and Barinder belong to the same city i.e. Narwana. As per the said agreement the amount of ₹ 50 lacs was received by the assessee and other co-sharers on 18.12.2010 and an amount of ₹ 50 lacs was agreed to be received on 15.1.2011 and further an amount of ₹ 50 lacs on 15.2.2011. The sale deed was to be executed on 20.2.2012 on which date the remaining sale consideration was to be paid. A perusal of the cancellation deed dated 21.2.2011 reveals that the said agreement was cancelled and that the purchasers had received back the entire amount which was paid by them as earnest money to the assessee and others. However, surprisingly, the said cancellation deed does not bear signatures of the alleged purchasers. A bare perusal of the same shows that the same is a fictitious document, whereupon, the signatures have been put on of certain persons which do not match at all with the signatures on the agreement to sell. Even in the alleged Pancayati Rajinama there is no signature of the alleged / concerned purchasers. These documents appeared to have been prepared by the assessee for self-serving purposes. Since the aforesaid cancellation deed does not bear signatures of the any of the purchasers, hence, no reliance can be placed on it. Further, despite the fact that the alleged purchasers belonged to the same city i.e Narwana, the assessee failed to furnish any confirmation from the buyers about the alleged transactions of sale of land and cancellation deed etc. The Ld. CIT(A) has held that the facts of this case are different from the case laws relied upon by the assessee in following ways (i) No confirmations from the buyers were submitted; ii) Identity proofs of buyers were not provided; iii) Nobody attended in response to the summons issued by the Assessing Officer; iv) The documents of ikrarnama and cancellation deed do not bear the same signatures of buyers; and vi) Bank statements of buyers have not been produced to justify the source of deposits. Under the circumstances, the assessee has miserably failed to prove his case. - Decided against assessee.

Summary

Issues Involved:
Appeal against addition of ?74,95,000 under section 69 of the Income Tax Act, 1961; Challenge of non-consideration of additional evidence under Rule 46A of the Income Tax Rule.

Analysis:
1. The appeal was filed against the Commissioner of Income Tax (Appeals) Hissar's order upholding the addition of ?74,95,000 made by the Assessing Officer under section 69 of the Act.
2. During the assessment, it was found that the assessee had received cash deposits in his bank accounts, explained as advance money for land sale but failed to provide sufficient documentary evidence.
3. Additional evidence, including bank statements and a cancellation agreement, was submitted during appellate proceedings under Rule 46A of the I.T. Rules.
4. The Assessing Officer considered the bank statements genuine but rejected the Ikrarnama and cancellation deed as they were not registered documents.
5. The assessee failed to produce the purchasers or provide confirmations for the sale arrangement, and no one attended in response to summons issued.
6. The CIT(A) dismissed the appeal, noting the lack of substantial proof to explain the cash deposits and withdrawals, emphasizing the onus on the assessee to prove the source of income.
7. The assessee, in the appeal before the Tribunal, reiterated submissions and provided additional documents to support the earnest money receipt and cancellation of the agreement.
8. The Tribunal analyzed the agreement and cancellation deed, finding discrepancies and lack of buyer confirmations, concluding that the documents were fictitious and self-serving.
9. Due to the absence of buyer signatures, failure to provide identity proofs, and lack of attendance or bank statements from buyers, the Tribunal upheld the CIT(A)'s decision to dismiss the appeal.
10. The Tribunal found the assessee failed to prove the case and upheld the CIT(A)'s order, ultimately dismissing the appeal against the addition of ?74,95,000.

This detailed analysis highlights the progression of the case, the arguments presented, the consideration of evidence, and the ultimate decision by the Tribunal to uphold the addition under section 69 of the Income Tax Act.