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TMI Blog2008 (6) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... ronted the seller. So, however, neither such action has been taken at the time of recording the statement and nor subsequently before completion of the assessment proceedings. The impact of the aforesaid situation is that the statement attributed to the sellers becomes suspect. Moreover, the statement of the seller given on 5th Jan., 2006 lies uncorroborated. For the reasons enumerated above we are inclined to uphold the stand of the CIT(A) that the statement of the seller is unreliable. If the evidence in the shape of the statement of the seller dt. 5th Jan., 2006 is removed from the scenario, there remains no cogent evidence with the AO to rebut the consideration stated in the sale deed. It is in this manner, in our considered opinion, the legal position emerging in the case of P.V. Kalyanasundaram [ 2006 (2) TMI 79 - MADRAS HIGH COURT] is attracted to the present case. Thus, on the basis of the parity of reasoning upheld in the case of P.V. Kalyanasundaram (supra), the impugned addition is liable to be deleted. We are in agreement with the order of the CIT(A) that the fiction created by s. 50C is for the limited purpose of computing the capital gains. It only seeks to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring 15 Bighas and 4 Biswa. The investment made by the assessee in such land is the subject-matter of dispute before us. The assessee purchased the land in Village Kunjal, Barotiwala in District Solan (HP). The agreement to sell was entered into on 14th Aug., 2003 with the three seller co-owners, namely, Shri Tilak Ram, Shri Ram Lal and Smt. Premi. The total consideration stated in the agreement to sell was ₹ 22,80,000. The final sale deed was executed and registered on 11th Nov., 2003, wherein also the stated sale consideration was ₹ 22,80,000. The AO has noticed that stamp duty was paid with reference to the market value of the land, as determined by the State Revenue authorities. The stamp duty was worked out at ₹ 11,45,600 on a market value of ₹ 95,46,451, determined by the Revenue authorities. The AO, on the basis of aforesaid, was of the opinion that the sale consideration stated in the sale deed was lower than the actual market value of the land prevailing at the time of execution of the sale deed. The AO recorded the statement of one of the sellers Shri Tilak Ram on 5th Jan., 2006. In this statement Shri Tilak Ram admitted of having received actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2003, the sellers had also executed a general power of attorney in respect of the same land in favour of one Shri Jagan Nath. The AO has observed that because of the industrialization of land in the areas around Barotiwala, the middlemen after obtaining general power of attorneys from the owners, subsequently sell the lands at higher rates to other parties and a part of the sale consideration was taken by them as their income. Therefore, insofar as the assessee was concerned, the consideration would have been paid at ₹ 95,46,451 as supported by the market value of land determined by Revenue authorities. 5. For all the above reasons, the AO inferred that the assessee had actually invested of ₹ 95,46,451 in purchase of the land as against the consideration of ₹ 22,80,000 stated in the registered sale deed. Thus, a sum of ₹ 72,66,451 has been considered by the AO as constituting unexplained investment in the purchase of land which was assessable to tax as income under the provisions of s. 69B of the Act. 6. In appeal before the CIT(A), the assessee raised various factual and legal arguments in support of its case. Factually, the assessee contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has considered various submissions of the assessee and has found it fit to delete the addition. The CIT(A) has passed an elaborate order and the gist of the decision is that both on factual and legal grounds the addition in question was not merited. 10. Against the aforesaid the Revenue is in appeal before us. According to learned Departmental Representative, in this case the inference drawn by the AO regarding the payment of consideration over and above the stated consideration was based on evidence collected in the course of assessment proceedings. The learned Departmental Representative submitted that the market value laid down by the Revenue authorities for the purpose of computing the stamp duty was a good presumption to examine the justification of price paid by the assessee. In the present case, there was evidence in the shape of the statement of the seller and copies of the bank accounts which show cash deposits on various dates. This evidence supports the case of the AO that the actual consideration paid by the assessee was more than what was shown in the sale deed in question. The learned Departmental Representative has mainly relied upon the observations of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under consideration issued by Town and Country Planning Department of Himachal Pradesh to the assessee along with proof of fees paid to them. (f) Copy of no-objection certificate dt. 15th Oct., 2003 issued by Himachal Pradesh State Environment Protection Pollution Control Board to the assessee along with proof of fees paid. (g) Copy of permission dt. 6th Nov., 2003 issued by Himachal Pradesh Government to set up industrial unit at the land under consideration. 12. It was thus pointed out that the sale consideration settled on 14th Aug., 2003 was with respect to agricultural land and it was subsequently got converted by the assessee into industrial land. The subsequent execution of sale deed dt. 14th Nov., 2003, therefore, cannot be taken as the date of transaction so as to evaluate the justification of the stated considered with reference to the market value. 13. In any case, the learned counsel pointed out that the land in question was not free from encumbrances when it was purchased by the assessee. The land was disputed and in fact, it was only after a protracted litigation that the title of the land could be cleared. In this connection, our attention was invited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the provisions of s. 69B of the Act with respect to the investment made by the assessee in purchase of land at Barotiwala. Sec. 69B of the Act provides for a deeming fiction. It is provided in the section that where the AO finds that the amount expended on making investments in any bullion, jewellery or other valuable articles exceeds the amount recorded in this behalf in the books of account maintained by the assessee, and the assessee either offers no explanation or the explanation offered is not found satisfactory by the AO, such excess is liable to be deemed as income of the assessee assessable in the financial year wherein the assessee is found to be the owner of such bullion, jewellery or other valuable articles. In this case, undisputedly, the assessee has undertaken purchase of land in the instant year and the consideration recorded in the books of account is ₹ 22,80,000. The agreement to sell with the sellers was recorded on 14th Aug., 2003 whereas the sale deed has been registered on 11th Nov., 2003. The charge of the AO is that the assessee has expended a sum of ₹ 95,46,451 for purchase of land. Therefore, the difference of ₹ 72,66,451 has been broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment from the Revenue. The Hon'ble High Court held that the burden of proving actual consideration in such transactions was on the Revenue which was not discharged. The High Court further observed that the AO had merely relied on the statements of the seller which were unreliable and no independent inquiries were conducted in this regard. The Hon'ble Supreme Court has approved the said decision of the Madras High Court. 17. In our opinion, the proposition of law emerging from the case of P.V. Kalyanasundaram (supra) is clearly applicable in the present case also. In this case too, the AO has primarily relied upon the statement of the seller admitting of having received higher consideration than stated in the sale deed. The AO, no doubt, in the present case, has sought to justify such admission by the seller on the basis of the bank accounts of the seller. So, however, it is pertinent to note the following objections taken by the assessee and which have already been considered by CIT(A) to lable the statement of the seller as unreliable : (a) The seller has nowhere mentioned that he owned 26 Bighas and 12 Biswa of land out of which only a part of land has been sold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the course of recording of statement by the AO of the sellers on 5th Jan., 2006. Again, the consideration, as averred in the affidavit made by the sellers before the Civil Judge (Junior Division), Nalagarh, on 25th Nov., 2003 (placed in the paper book at pp. 49 to 58) reiterates the consideration of ₹ 22,80,000 i.e. as stated in the sale deed. Quite clearly, the statements of the sellers are not only inconsistent but are contradictory. We are also conscious of the fact that both the stands of the sellers were before the AO. Therefore, while recording the statements of the sellers on 5th Jan., 2006, the AO should have made appropriate query and confronted the seller. So, however, neither such action has been taken at the time of recording the statement and nor subsequently before completion of the assessment proceedings. The impact of the aforesaid situation is that the statement attributed to the sellers becomes suspect. Moreover, the statement of the seller given on 5th Jan., 2006 lies uncorroborated. For the reasons enumerated above we are inclined to uphold the stand of the CIT(A) that the statement of the seller is unreliable. 19. If the evidence in the shape of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to execute the sale of land subsequently, at higher prices. However, the same is only a presumption unsupported by any material or evidence. In fact, although the AO has identified the middlemen, but no effort has been made to examine the said persons. Therefore, the action of the AO to this extent is purely based on surmises and conjectures. 21. In nutshell having regard to the aforesaid limited discussion itself, we are satisfied that no addition under s. 69B is warranted in the present case since the AO has failed to discharge the onus of proof cast on him to establish that the assessee has paid consideration higher than that stated in the sale deed. In this connection we conclude by affirming the order of the CIT(A), particularly the following concluding portion of his order, which is reproduced as under : 9(v) The AO arrived at the finding that there is understatement of purchase consideration on the part of the appellant, hence the onus of proof lies on the AO to establish his finding or assertion. The general rule is that the onus of proof is always on the party who asserts a proposition or fact, which is not self-evident. The onus to prove that the apparent is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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