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2021 (11) TMI 31 - AT - Income TaxUndisclosed investment u/s 69 - co-ownership - addition of 1/3rd amount of the total sale consideration - whether the documentary evidence oral evidence and the circumstantial evidence adduced by the assessee are sufficient to substantiate his contention that no payment was made by him towards sale consideration to Mr. Tejinder and Mr. Prabhu Parmatama and to further rebut the presumption that the sellers transferred the land in question to the assessee and two others for a total consideration as recorded in the sale deed? - HELD THAT - We hold that the assessee and his co-purchasers had not paid any money towards sale consideration to their uncle Mr. Tejinder Singh or the other co-owners when the land in question was transferred in their names. The circumstantial evidence that the two purchasers transferred back their share to Mr. Tejinder Singh without any consideration further corroborates the contention of the assessee that the purchasers had not paid sale consideration to Mr. Tejinder Singh when the said land was transferred in their names. So far as the legality or permissibility of such transaction is concerned, the same is not the subject matter of this appeal. As per the settled law income tax is levied on the real income of the assessee. In the present case, since the assessee has adducing cogent and convincing evidence to demonstrate that no money was paid towards sale consideration or otherwise to Mr. Tejinder, the action of the Ld. CIT(A) is not sustainable in law. The copies of assessment orders dated 25.12.2019 27.09.2019 passed by the concerned AOs u/s 147 read with section 143(3) in the case of the co- purchasers Sh. Gurjit Singh and Sh. Jagdeep Singh respectively, show that the concerned AOs have accepted the identical contention raised by the assessee during assessment proceedings and accepted their nil returns. But in the case of the assessee the AO rejecting the same contention made addition of 1/3rd amount of the total sale consideration. Proceedings u/s 263 of the Act are being contemplated in the cases of Gurjit Singh and Jagdeep Singh is concerned, it is clear from the copies of official correspondences placed on record that the Ld. AICT Patiala Range and the Ld. JCIT Panchkula have sent proposals for initiating proceedings u/s 263 of the Act in the case of Jagdeep Singh and Sh. Gurjit Singh to the concerned Principal Commissioners on 28.12.2020 and 31.12.2020 respectively. As pointed out by the Ld. counsel, these proposals have been moved by the concerned officers during arguments of the present appeal before the Tribunal. Under these circumstances, the action of the Ld. CIT(A) cannot be justified. In the case of Smt. Amarjit Kaur 2019 (6) TMI 1645 - ITAT CHANDIGARH following the ratio laid down by the Hon ble Supreme Court in the case of Berger Paints India Ltd. 2004 (2) TMI 4 - SUPREME COURT and in the case of Leader Valves Ltd. 2007 (1) TMI 70 - HIGH COURT, PUNJAB AND HARYANA has deleted the addition sustained by the Ld. CIT(A) in violation of the principle of consistency. CIT(A) has passed the impugned order without taking into consideration the direct and circumstantial evidence placed on record by the assessee to substantiate his contention. Further, since the Ld. CIT(A) has passed the impugned order without taking into consideration the view taken by the department in the cases of co-purchasers, the impugned order passed in violation of principle of consistency is also bad in law. Hence, in view of the discussions made on facts, evidence on record and the cases discussed in the foregoing paras, we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A). Accordingly, we direct the AO to delete the addition. - Decided in favour of assessee.
Issues Involved:
1. Reopening of the case under Section 147 of the Income Tax Act. 2. Proper service of notice under Section 148. 3. Addition of ?1,26,00,000 as undisclosed investment under Section 69. 4. Reliance on the judgment of the Punjab and Haryana High Court in the case of Paramjit vs. ITO. Issue-Wise Detailed Analysis: 1. Reopening of the Case under Section 147: The assessee initially challenged the reopening of the case under Section 147, arguing there was no reason to believe that income had escaped assessment. However, during the proceedings, the assessee chose not to press this ground. Consequently, the Tribunal dismissed this ground as not pressed. 2. Proper Service of Notice under Section 148: The assessee also contested the proper service of notice under Section 148 and the mechanical approval by higher authorities for reopening the case. Similar to the first issue, the assessee did not pursue this ground during the hearing, leading to its dismissal as not pressed. 3. Addition of ?1,26,00,000 as Undisclosed Investment under Section 69: The primary contention revolved around the addition of ?1,26,00,000 as undisclosed investment under Section 69. The assessee argued that the transaction was part of a family settlement to help Mr. Tejinder Singh avoid asset sharing during his divorce proceedings. The assessee claimed no actual payment was made for the land, and the stamp duty was paid by Mr. Tejinder Singh. The Tribunal examined various pieces of evidence, including affidavits, blood relation transfer deeds, and statements from involved parties. The Tribunal found merit in the assessee's contention, noting that the evidence supported the claim that no money was exchanged for the land transaction. The Tribunal concluded that the assessee and co-purchasers did not pay any consideration for the land, thereby rejecting the addition made by the AO. 4. Reliance on the Judgment of the Punjab and Haryana High Court in the Case of Paramjit vs. ITO: The CIT(A) had relied on the judgment in the case of Paramjit vs. ITO to support the addition. However, the Tribunal found this reliance to be misplaced. The Tribunal distinguished the facts of the current case from the Paramjit case, noting that the latter involved a straightforward sale with recorded consideration, whereas the current case involved a family arrangement with no actual payment. The Tribunal emphasized that the evidence presented by the assessee, including the subsequent transfer of land back to Mr. Tejinder Singh without consideration, corroborated the claim of no payment. Conclusion: The Tribunal allowed the appeal filed by the assessee, setting aside the impugned order passed by the CIT(A). It directed the AO to delete the addition of ?1,26,00,000, concluding that the assessee had successfully demonstrated that no money was paid towards the sale consideration. The judgment highlighted the importance of consistency and the need for the department to consider all relevant evidence and circumstances in such cases.
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