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TMI Blog2016 (8) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. The purchase deed of the assessee was registered with the Registrar at Jalandhar. In the assessee’s purchase deed, the rate mentioned was of 4 crore per acre = 2.50 lakhs per marla, as against that of 11.05 crore per acre, as mentioned in the agreement seized. Action on the basis of the agreement seized was warranted in the cases of the parties thereto, due to the presumption u/s 132(4A) of the Act, which presumption, noticeably, is rebuttable. No such action can be taken in the case of a party whose transaction was with regard to land contiguous or similarly situated to the land mentioned in the agreement seized. No action is called for in a case of transaction consequential to the transaction mentioned in the agreement seized.There is no evidence of unaccounted investment by the assessee. The AO himself clarified to the assessee that the sale consideration in the agreement seized was taken for the purpose of comparative rate only.The land purchased by the assessee was different from that mentioned in the agreement seized.It is the burden of the department to prove under-statement of sale consideration. This burden has not been discharged.There is no positive evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of consideration declared by the assessee then it is for the AO to prove that the value declared by the assessee is understated. Whereas three cheques dated 10.05.2007 No.148467 ₹ 15 lacs No.148468 ₹ 15 lacs, No.148469 ₹ 10 lacs as mentioned in the page 2 of the said photocopy of agreement have been found debited in bank account of Sh.Mohinder Singh Bajwa, bank statement of which were obtained u/s 133(6) of the I.T. Act, 1961 from the Citizen Urban Cooperative Bank Limited, Mithapur Road, Jalandhar. This copy of agreement is very valid evidence to prove that the value declared by the assessee is understated. b. Whether the ld. CIT(A) is right to hold that the AO is entirely dependent upon the documents found and seized not in the case of the appellant but from unrelated party. The ld. CIT(A) failed to consider the issue that question of value of property of the appellant is one of the same chunk of land of M/s. PISCO Ltd. only which is very well mentioned in the said seized copy of agreement. c. Whether the ld. CIT(A) is right to hold that how various payments in cheques as well as in cash have been made by the impugned buyer to M/s. PISCO Ltd; and the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment is in appeal before this Bench against the order of the ld. CIT(A). 5. The ld. DR relied on the order of the Assessing Officer. However, as regards the first issue relating to deletion of addition of ₹ 2,27,00,000/-, he submitted that the addition was made by the AO on account of unaccounted and undisclosed investment u/s 69B of the I.T. Act, by considering the photocopy of agreement to sell as an evidence, when some of the cheques mentioned in the said agreement were found debited in the bank statement of Sh. Mohinder Singh Bajwa (Purchaser). He further submitted that the ld. CIT(A) is not justified in deleting the addition. 6. The ld. counsel for the assessee, on the other hand, strongly supported the impugned order. He contended that the addition was made on account of an agreement which was neither found from the residence of the assessee, nor was the assessee was a party to this agreement, and as such, the ld. CIT(A) was justified in deleting the addition of ₹ 2,27,000/- . He submitted that during the course of assessment proceedings, statements of Sh. Ramesh Inder Singh, Chairman of PISCO and Sh. Vinay Kumar, Accountant of the assessee were also recorded u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound from the appellant during the course of search operation which could even suggest that there has been unaccounted investment in the purchase of land to the tune of ₹ 2.27 Crore. The presumption made by the Assessing Officer on the basis of the seized documents in the case of M/s PISCO Ltd. in respect of the impugned deal recorded in the said document could definitely be made but same presumption can not be extended to in the case of every other consequentiaI sale of land by "M/s PISCO Ltd. The Assessing Officer has clearly observed in the assessment year that the sale consideration as recorded in the seized copy of agreement of sale has been taken for the purposes of comparative rate at village Birring only and the land purchased by the appellant was different than the one mentioned in the impuqned seized documents. This issue has been clarified by the Assessing Officer at para 4.6 in the assessment order. This further underlines the basis of Assessing Officer's presumption Here it is important to consider the facts of the case in the light of Judicial Pronouncements in similar cases wherein the documents relied upon by the Assessing Officer had been seized in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made not found at the residence of the assessee but at the residence of a third party- Same have not been specifically confronted to the assessee before making the addition-Explanation given by assessee not controverted by AO-AO has not given any reason for either not accepting the explanation of the assessee or for finding the explanation as unsatisfactory-Thus, AO did not comply with the conditions stipulated in s. 69-Addition deleted-Remand of the case not called for-Power of remand under s. 254 is required to be exercised in a disciplined and responsible manner-Same cannot be invoked in a case where AO has not cared to follow the basic provisions of s. 69/69B." 13. The decision of the jurisdictional ITAT Amritsar in the case of ITO vs. Sh. Surinder Singh is directly on the similar facts as certain documents seized from the third party M/s Dreamland Co-operative which was seller in said case and the documents in question had recorded certain amounts received by M/s Dreamland Co- operative Society from the assessee on account of sale of flat. It is further to be noted that Sh. Rakesh Kumar C/o Dreamland Cooperative Society had given statement to the effect that amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to others. Accordingly, the Ld. CIT(A) has rightly deleted the addition made by the Assessing Officer and we find no infirmity in his order. Thus all the grounds of the revenue are dismissed." 14. The issue of alleged understatement of sale consideration in the registration deed has to be proved by the revenue and the same can be done by leading positive evidence either in the form of some documents found during the course of search or otherwise which could prove that consideration over and above the registration deed had been passed on from buyer to seller. The evidence relied upon by the Assessing Officer in the instant case represents a photocopy of an agreement to sell with regard to a deed between two other persons in respect of different piece of land and on a different date. The Assessing Officer on the basis of the said seized documents, which has been denied by all the constituents mentioned therein, could definitely make a presumption on sale price being higher than what was stated in the registration deed by the appellant. However, the said presumption has to be backed up by the some evidence of transfer of such consideration from the buyer to seller. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration actually received by the assessee. That would in most cases be difficult, if not impossible, to show and hence sub-section (2) relieves the Revenue of all burden of proof regarding the extent of understatement or concealment and provides a statutory measure of the consideration received in respect of the transfer. It does not create any fictional receipt. It does not deem as receipt something which is not in fact received. It merely provides a statutory best judgment assessment of the consideration actually received by the assessee and brings to tax capital gains on the footing that the fair market value of the capital asset represents the actual consideration received by the assessee as against the consideration untruly declared or disclosed by him. 15. The said judgment of Hon'ble Apex Court has been consistently followed various High Court and Tribunals on the issue of understatement of sale consideration in respect of cases following under the Income Tax Act, 1961. For instant the Hon'ble Delhi High Court in the case of CIT Vs. Smt. Suraj Devi 328 ITR 604 held as under:- "It is settled law that the primary burden of proof to prove understatement or conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of a contract, grants or other disposition of property have been reduced to the form of a document then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the document itself or the secondary evidence thereof. According to section 92 of the 1872 Act once the document is tendered in evidence and proved as per the requirements of section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting, varying, adding to or subtracting from its terms. According to illustration 'b' to section 92 if there is an absolute agreement in writing between the parties where once has to pay the other a principal sum by specified date then the oral agreement that the money was not to be paid till the specified date cannot be proved. Therefore, it follows that no oral agreement contradicting/varying the terms of a document could be offered. Once the aforesaid principle is clear then ostensible sale consideration disclosed in the sale deed dated 24th Sept., 2002 has to be accepted and it cannot be contradicted by adducing any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is on revenue. No addition can be made on the basis of the photocopy of a document when the transaction is separately evidenced by a registered sale deed." 20. The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh in the case of I.T.O. v. Shri Manjit Singh reported in (2010) 128 TTJ (Chd)(UO) 82, held:- "In the absence of any evidence to show that the assessee had received any consideration over and above what is stated in the sale deed, addition could not be made by disregarding the 'full value of the consideration' declared by the assessee simply because another portion of land has been sold by the assessee along with his brother at a higher rate," 21. The Hon'ble Madras High Court in the case of Sivakami Co. Pvt. v. CIT (1973) 88 ITR 311 (Mad) has held that the burden of proving that certain sales were effected with the object of avoidance or reduction of tax on capital gains is on Revenue and it is not enough in 3 explanation offered by the assessee was not acceptable and there e strong suspicion as to the real motive, which prompted the ssessee to sell the assets. There must be something positive to suggest that the sales wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced by Finance Act 2002 , w.e.f. 1.4.2003 and has been titled "special provision for full value of consideration in certain cases" which means that the full value of consideration can be substituted only if the conditions as stipulated in the provisions of section 50C are fulfilled. Apart from the provisions of section 50C, the sale consideration as reflected in the registered document can be substituted by a higher figure if there is evidence on record to suggest that amount over and above the one recorded in the registered documents had passed on from the buyer to the seller." 23. The Hon'ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Dinesh Jain HUF reported in 254 CTR (Del) 534, held:- "Section 69B in terms requires that the Assessing Officer has to first "find" that the assessee has "expended" an amount which he has not fully recorded in his books of account. It is only then that the burden shifts to the assessee to furnish a satisfactory explanation. Till the initial burden is discharged by the Assessing Officer, the section remains dormant. A "finding" obviously should rest on evidence. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax contrary to the strict visions of Article 265 of the Constitution of India and Entry 82 in List 1 of the seventh schedule thereto which deals with "Taxes on income other than agricultural income." For the purposes of Section 69B it is the burden of the Assessing Officer to first prove that there was understatement of the consideration (investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth Tax Act. The error committed by the Income Tax authorities in the present case is to jump the first step in the process of applying section 69B- that of proving understatement of the investment- and reply the measure of understatement. If anything, the language employed in section 69B is in stricter terms than the erstwhile section 52(2). It does not even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking into consideration the evidence/material available on the record to the effect that before the Assessing Officer there was no material or evidence to conclude that the assessee had paid a consideration and above the amount mentioned in the registered sale deed, i.e. @ ₹ 2.30 lacs per acre and the addition made by him was without any basis. The only evidence/material available before the Assessing Officer was the so called statement of 'S', which was recorded by the Asstt. Director of IT (Inv.), on 18th Sept., 2001 in which he had deposed that he had sold the land in question @ ₹ 4 lacs per acre, and apart from the amount mentioned in the registered sale deed, he had received ₹ 72 lacs cash from the assessee in five installments. Undisputedly, said 'S' subsequently retracted from his statement the Asstt. Director of IT (Inv.) itself whereby he had confirmed that he had not received any amount over and above the consideration stated in the sale deed. Further, it is also undisputed position that before the Assessing Officer said 'S' did not appear and made any statement nor an opportunity was granted to the assessee to confront the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier portion and deposed that the sale price was ₹ 34.85 lakhs. The AO concluded that the sale consideration was actually ₹ 34.85 lakhs and not ₹ 4.10 lakhs as had been recited in the sale deed. He accordingly adopted the aforesaid enhanced figure for the purpose of assessment and made an addition of ₹ 3,75,005 as undisclosed income for the broken period Ist April, 1998 to 8th Dec., 1998. The matter was thereafter taken to the CIT(A), who after examining the entire matter, observed that the statements given by Rajarathinam could not be relied upon more particularly as the floor price fixed by the authorities for such property was much lower than the value which would result if the sale deed had been registered at ₹ 34.85 lakhs. The CIT accordingly deleted the addition made. An appeal was thereafter preferred by the Revenue against the order of the CIT before the Tribunal. The Tribunal in its order dt. 6th July, 2005 held that the notings on the loose pieces of paper on the basis of which the initial suspicion with regard to the undervaluation had been raised were vague and could not be relied upon as it appeared that the total area with respect to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was therefore appropriate that the matter be remitted for fresh decision. The learned counsel representing the assessee respondent has however pointed out that the CIT in particular, had after a very elaborate discussion of the matter, concluded on a finding of fact with regard to the nature of the transaction and this view had been accepted by the Tribunal as well, has accordingly submitted that no substantial questions of law have been raised in this matter and the issues raised were purely questions of fact. We have heard the learned counsel for the parties and have gone through the record. It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal and the CIT and passed them off as if they were themselves the authors. We feel that quoting from an order of some authority particularly specialized one cannot per se be faulted as this procedure can often help in making for brevity and precision, but we agree with Mr. Vahanavati to the extent that any 'borrowed words' used in a judgment must be acknowledged as such in any appropriate manner as a courtesy to the true author(s). Be that as it may, we are of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction mentioned in the agreement seized. xviii) There is no evidence of unaccounted investment by the assessee. xix) The AO himself clarified to the assessee that the sale consideration in the agreement seized was taken for the purpose of comparative rate only. xx) The land purchased by the assessee was different from that mentioned in the agreement seized. xxi) It is the burden of the department to prove under-statement of sale consideration. xxii) This burden has not been discharged. xxiii) There is no positive evidence against the assessee. xxiv) Thus, the AO's presumption did not materialize into conclusive evidence against the assessee. xxv) Such a presumption cannot be accorded the status of foolproof evidence against the assessee. xxvi) Such a presumption cannot lead to a conclusion of under investment by the assessee, liable for addition. 9. The ld. CIT(A) has duly considered all the above said facts as well as the relevant case laws. There has been no effective rebuttal to the well reasoned elaborate findings recorded by the ld. CIT(A). 10. In view of the above discussion, we are of the considered view that the ld. CIT(A) has passed a detailed, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the relative persons as sundry debtors, sister concerns of the assesee and also to the outsider to the tune of ₹ 1,16,59,000/- listed in para 5 at page no. 12 of the assessment order and on this outstanding amount of ₹ 1,16,59,000/- as on 31.03.2009 interest @ 12% to the tune of ₹ 14,00,000/- has been disallowed. Sir, it is submitted that while framing assessment the Ld. Assessing Officer stated that "no explanation on the above issue has been received till date, since the assessee has used the interest bearing funds for non-business purpose by the way of loan/advances to the Relative/sister concern of the assessee as discussed in para 2 of show cause dated 13.01.2014. In view of the above, it is proved that the assessee has nothing to say in this regard as the issue raised on account of disallowance of interest amounting to ₹ 14,00,000/- as discussed above is disallowed u/s 36(i)(iii) of the Act, 1961 by relying upon the decision of Abhishek Industries vs. CIT and ₹ 14,00,000/- is being added to the total income of the assessee".Sir, in this regard it is submitted that assessee has duly filed his submission before the Ld. Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance sheet there was a further availability of ₹ 398.19 crores including ₹ 180 crores of share capital. In this context, the finding of facts recorded by CIT(A) and tribunal as to availability of interest free funds really cannot be faulted. If there be interest free funds available with assessee which is sufficient to meet its investment and at the same time the assessee had raised a loan it can be presumed that investment were from the interest free funds available. Sir, facts of the case cited above are similar to our case as in our case assessee company is having about ₹ 2,84,34,305/- interest free funds whereas if for argument sake it is admitted that assessee advance ₹ 1,16,59,000/- as interest free loans even then following the decision of Hon'ble Bombay high court no addition can be made. But in the present case we have not made advances which are interest free but these are trade advances so, it is requested that addition made by the Ld. Assessing Officer may kindly be deleted." 27. The AR of the appellant further submitted calculation of interest in respect of amounts given free of interest and interest in respect of amounts taken fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the appellant has avoided to give data from the books of account to show the business use of interest bearing funds. In the circumstances the view of the Assessing Officer that the interest bearing funds have been diverted to advance interest free loans cannot be said to be arbitrary. In the circumstances the disallowance is restricted to ₹ 10,,95,795/-, in view of the comments of the undersigned in para 21 of this appellate order." 15. It is seen that the ld. CIT(A) has duly taken into consideration and given credit to the assessee, of interest payable @ 12% on credit balances of Himsons Exports ₹ 36,000/-, Jalandhar Construction Co. Ltd. ₹ 60,000/-, Jaswant Singh & Sons ₹ 60,000/-, Rajindra Deposits & Advances Ltd. ₹ 66,960/- and Harpreet Singh ₹ 1,62,000/-. The ld. CIT(A) has also taken cognizance of the interest chargeable @ 12% on the debit balances of advance for Satpal Cold ₹ 12,000/-, Dalbir Singh ₹ 12,000/-, Gurbachan Singh ₹ 50,400/-, Harman Builders Pvt. Ltd., ₹ 8,96,835/-, Inderpal Singh ₹ 24,000/-, Jagjit Singh ₹ 36,000/-, Narotam Singh ₹ 6,000/-, Raminder Kaur ₹ 3,11,520/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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