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TMI Blog2003 (1) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain. 4. The relevant and material facts for the disposal of ground No. 1 of appeal in ITA No. 277/Chandi/1997; asst. yr. 1993-94, filed by the Revenue, are that the assessee sold his residential house No. 34, Club Road, Ludhiana, to Shri Vijay Kumar, his wife Smt. Sneh Lata and their two sons Shri Avinash Kumar and Shri Rajnish Kumar for a total sum of Rs. 36,80,000 as agreed vide agreement dt. 18th July, 1992. 4.1 A search and seizure operation took place at the residence of the assessee and Shri Vijay Kumar, and the copy of agreement dt. 18th July, 1992, was seized from the residence of the assessee but certain loose papers indicating the following payments totalling to Rs. 35,68,000 in cash and through bank pay orders were seized from the premises of Shri Vijay Kumar: 15-7-1992 Kapoor 50,000 18-7-1992 Kapoor 4,50,000 2-9-1992 Manmohan 7,84,000 11-9-1992 Kapoor 7,84,000 16-2-1993 34, Club Road 15,00,000 In addition to above, it was further revealed that a sum of Rs. 6 lacs was paid through four pay orders. So, the AO held that the total sale consideration of Rs. 41,68, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been mentioned whereas in respect of other payments, Shri Vijay Kumar has mentioned the name of the assessee. The assessee further contended that this date of 16th Feb., 1993, was not relevant to the date of any event and so, it cannot be said that this amount was paid by the purchaser Shri Vijay Kumar to the assessee. 4.5 The assessee further contended that in fact this payment of Rs. 15 lacs shown on 16th Feb., 1993, by Shri Vijay Kumar can only be explained by Shri Vijay Kumar as to why he has withdrawn this amount and as to how this amount has been utilised by him and so, the AO cannot ask the assessee to explain the payment of this amount by Shri Vijay Kumar. 4.6 Lastly, the assessee contended that since the AO failed in proving that Shri Vijay Kumar has made this payment to the assessee on 16th Feb., 1993, so he was not justified in taking the sale consideration of the house at Rs. 41,68,000 against Rs. 36,80,000 shown by the assessee and making the impugned addition on account of long-term capital gain. 4.7 Learned CIT(A), after considering the submissions of both the parties made before him, came to the conclusion that the sale consideration of the house was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in terms of 'Manmohan' or 'Kapoor' is written whereas in respect of payment of Rs. 15 lacs, words '34 Club Road' are written. He further observed that the AO recorded the statement of Shri Avinash Maini, Broker, through whom transactions were entered into but he also confirmed that sale consideration of this property was Rs. 36,80,000. He also has filed a suit in the civil Court on 21st March, 1994, wherein recovery of commission from both the parties has been claimed on sale consideration of Rs. 36,80,000. Thereafter, the CIT(A) observed that the AO has not been able to make out a case against the assessee because according to the CIT(A) as to how the amount of Rs. 15 lacs withdrawn by Shri Vijay Kumar, purchaser, and how it was utilised by him, can only be explained by the purchaser, Shri Vijay Kumar and not by the assessee. The CIT(A) further observed that even the receipt of cash to the tune of Rs. 36,80,000 has been accepted by the Asstt. CIT in wealth-tax cases for the asst. yrs. 1993-94 and 1994-95 as cash in hand and so, in these circumstances, the addition made on this account by the AO was deleted by the CIT(A)." 4.8 Before us, learned Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully gone through the orders of the tax authorities below. 4.13 In this case, in order to give a finding on the ground of appeal involving the addition of Rs. 3,39,048 made on account of long-term capital gain, we are required to resolve the issue whether the sale consideration declared by the assessee at Rs. 36,80,000 is correct or the sale consideration taken by the AO at Rs. 41,68,000 is correct. The AO, while coming to the conclusion that the total sale consideration of the house was Rs. 41,68,000, relied upon the payments of Rs. 35,68,000 shown to have been made by Shri Vijay Kumar either through cash or through bank payorder from 15th July, 1992 to 16th Feb., 1993, revealed from the loose papers seized from the residence of Shri Vijay Kumar. Secondly, the AO placed reliance on other payments amounting to Rs. 6 lacs paid through bank pay orders by Shri Vijay Kumar. In view of these documents, the AO drew a presumption that the payments were made by Shri Vijay Kumar to the assessee in respect of the sale of the house in question and so, he took the total value of the house at Rs. 41,68,000 against Rs. 36,80,000 declared by the assessee. It is important to mention here th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these payments also pertained to the dates either shown, to have been reflected on the dates of agreements executed between the assessee and Shri Vijay Kumar or pertained to the dates of payments made at the time of execution of sale deeds, whereas the date 16th Feb., 1993, is not related to any of the date of agreement to sale or the execution of sale deed because the sale deeds in respect of the balance property were completed on 29th March, 1993 and 2nd April, 1993, on which dates the balance amount of Rs. 10,20,000 in cash along with pay orders was received by the assessee. 4.16 The presumption of the assessee that the purchaser Shri Vijay Kumar may have withdrawn this amount of Rs. 15 lacs reflected in the loose papers against the date 16th Feb., 1993, partly for making the balance payment of Rs. 10,12,000 to the assessee in future at the time of execution of the sale deed on 29th March, 1993 and 2nd April, 1993, and the balance amount was withdrawn by him for utilisation of the same for renovation of the house 34 Club Road, and that the entire amount of Rs. 15 lacs was not paid to the assessee, also does not seem to be incorrect because Shri Vijay Kumar in his case has ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while processing the return for the asst. yr. 1994-95 he found that on 15th July, 1992 and 18th July, 1992, i.e., before and at the time of first sale agreement, the assessee is shown to have received Rs. 5 lacs and at the time of execution of second sale agreement executed on 1st Oct., 1992, the assessee is shown to have received another amount of Rs. 5 lacs and this also cropped up in the comments offered by the AO during the course of appellate proceedings before the CIT(A) for the asst. yr. 1993-94 when the AO, on the basis of these two agreements, sought to enhance the sale value of the house to Rs. 46,68,000 against Rs. 41,68,000 taken by him in the asst. yr. 1993-94 while passing the assessment order. 4.20 We may mention here that even this discrepancy raised by the AO on the basis of which he sought to enhance the sale consideration received by the assessee to Rs. 46,68,000 from Rs. 41,68,000 was also satisfactorily explained by the assessee before the CIT(A), wherein the assessee submitted that in fact there was no new payment made by Shri Vijay Kumar in the second agreement dt. 1st Oct., 1992, but the payment was only reflected in the agreement shown to have been rece ..... 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