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TMI Blog2020 (2) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) and the same is upheld. - Decided against revenue Addition u/s 40A(3) - advances paid for purchase of lands - HELD THAT:- Mere payment of advances for purchase of land cannot be treated as the purchase unless the transaction is complete. As per the presumption, the notings made in the seized documents are true and correct. The assessee did not maintain the diary for the sake of the department and he maintained the diary for personal use. Therefore whatever notings made in the diary required to be considered as true and correct unless there is material to establish otherwise. In the instant case, the department did not place any evidence to show that the notings made in the diary were incorrect or partially correct. Therefore, we hold that the transactions recorded in the notings are nothing, but the token advances given for purchase of land and received back along with profit, thus, the same cannot be treated as purchase and sale transactions. Section 40A(3) is not applicable in the case of advances given for purchase of land. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the A.Y.2004-05 to 2008-09. For the sake of convenience, these appeals are clubbed, heard together and a common order is being passed as under. ITA No.553/Viz/2013, A.Y.2010-11 2. All the grounds, in this appeal are related to the cash found and seized during the course of search amounting to ₹ 2,94,17,500/-. A search u/s 132 was carried out in this case on 19.05.2009, consequent to search action, in the case of Sri Koganti Durga Prasad on 18.05.2009, while he was present at Gandhi Cooperative Urban bank Ltd., Museum Road, Vijayawada on 18.05.200 with the cash of ₹ 2,94,17,500/- in his possession. When enquired about the source of cash, he explained that the cash does not belong to him but withdrawn from the bank lockers of four persons as per the details given in page No.2 of the assessment order as under: S.No. Locker Number Name of Owner 1 B 1/2 Sri Nukkanti Sudheer Babu 2 B 1/3 Sri Vemuri Venkata Rao 3 B 3/2 Sri Abburapu Upendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.Y.2010-11 would amount to double taxation. Therefore, deleted the addition made by the AO and allowed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the revenue filed appeal before this Tribunal. 5. We have heard both the parties and perused the material placed on record. In the instant case, as observed from the order of the Ld.CIT(A), the assessee had already admitted the said sums as income for the A.Y.2009- 10. On perusal the paper book filed by the assessee in page No.2, the assessee filed the computation of income and admitted the net profit of ₹ 2,94,17,500/- and claimed that the same amount was lying in the bank lockers. He further stated that there was no business carried on by the assessee subsequently. The AO made the addition of the same amount in the A.Y.2010-11 without bringing any evidence to show that the said amount of ₹ 2.94 crores was spent by the assessee for any other purpose. Having conducted the search u/s 132, it is needless to mention that the department needs to produce the evidence to tax the sum which was already admitted as income either applied for expenditure or made as investment . No such evidence w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not carry on any business activity during the year. As per section 69A of the Act the cash found in the possession of the assessee for which the assessee fails to offer any explanation required to be taxed. In the instant case the assessee had explained the source of cash found in his possession and also offered the same for taxation in the A.Y.2009-10. The AO made the addition of same amount which was already taxed by the AO for the A.Y.2009-10 and taxing the same amount in 2010-11 is nothing but double taxation which is not permitted by the law. The department also did not place any evidence to show that the cash seized does not represent the income offered for the A.Y.2009-10. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. 6. Appeal of the revenue for the A.Y. 2010-11 is dismissed. I.T.A. 220/Viz/2014, A.Y.2009-10 7. All the grounds in this appeal are related to the addition of ₹ 8,40,00,000/- made u/s 40A(3) of the Act which was deleted by the Ld.CIT(A). In this case, search u/s 132 was conducted in the case of Sri Koganti Durga Prasad on 18.05.2009. Consequently, search action also was underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount of ₹ 8,40,00,000/- should not be brought to tax u/s 40A(3) of the Act and the assessee filed explanation stating that he has made the payment originally towards investment for short term capital gains and he has never had any intention to do the real estate business. Therefore, submitted that there is no case for making the addition u/s 40A(3) of the act. However, the AO did not accept the contention of the assessee that he was not in the real estate business and found from the conduct and the volume of transactions made by the assessee that the assessee was into real estate business, hence, held that the payment made by the assessee amounting to ₹ 8,40,00,000/- was nothing but cash purchases, hence made the addition of ₹ 8,40,00,000/- u/s 40A(3) of the Act. 8. Against which the assessee went on appeal before the CIT(A) and the Ld.CIT(A) observed that there was no purchase or sale transaction in the instant case. The assessee had only entered into agreement by giving token advance as per seized diaries and the entries in diaries also does not suggest the purchase or sale of land. The Ld.CIT(A) found that as per the Transfer of Property Act, in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered agreements. Therefore, the presumption of the Ld.CIT(A) that the assessee has not completed the purchase and sale transaction is incorrect. Since the assessee is engaged in the real estate business and made the payments for purchase of lands in excess of ₹ 20,000/- otherwise than crossed cheque, the entire payments made in the guise of advances required to be disallowed u/s 40A(3) of the Act. Thus, the Ld.DR argued that the AO rightly held that the payment made for purchase of lands to the extent of 8.40 crores attracts the provisions of section 40A(3) of the Act. The Ld.DR further submitted that as discussed earlier in this order, the assessee has not maintained the books of accounts but recorded the entire transactions in the note book. Therefore, the AO compiled the sales ledger and purchase ledger and profit and loss account, hence the same cannot be found fault with the AO. When the entire information is available on record, the AO is free to compile the information, therefore, argued that the information made available in the loose sheets or in the note book required to be considered as books of accounts. Accordingly requested to set aside the order of the Ld.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale transaction, hence requested to uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. 11. We have heard both the parties and perused the material placed before us. The limited issue in this case is whether the token advances made by the assessee for purchase of land constitute the expenditure for purchase of land or not? The department s contention is that, since, the assessee had received back the advance along with the profit, the advance given by the assessee constitutes purchases and the advance received back along with the profit, constitutes sale transaction. In the instant case, no evidence was found during the course of search evidencing any purchase or sale of land with the registered/unregistered documents such as sale deed, sale agreement, or purchase agreement or sale agreement cum possession etc. either for purchase of land or for sale of land. The only material found by the department was the diary containing the details of land advances given by the assessee on various dates as mentioned in the assessment order in the earlier paragraphs. In the diary there was noting of advance paid for the lands of Nanakramguda, Kokapet , Serilingampally e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /municipality/panchayat/revenue etc. Unless the property gets registered and possession is taken, the buyer do not get the title over the property and is barred from entering into any transaction with the third party. So long as the title does not vest with the buyer, he cannot transfer the title to the any other party. For the purpose of acquiring any immovable property, the details such as name of the person from whom the property is purchased, description of the property, extent of land, survey number, location, boundaries etc., are required and to be reduced in writing on purchase document. It is also necessary to verify with regard to encumbrance, legal title held by the vendor before purchase of the property. More or less, the same process is required for sale of the property. Sale transaction completes as and when the consideration is received, the document registered transferring the property in favour of the buyer and delivering the possession of the property to the buyer. Any immovable property with the value of over and above ₹ 100 required to be registered as held by the Ld.CIT(A). The Ld.CIT(A) discussed at length in his order, how the immovable property is trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an equity himself that can not be resisted on the mere grounds of absence of formality in the evidence or contract of such a transfer . The essentials of part performance u/s 53A are asunder: a) There must be a written contract for transfer of an immovable property signed by or on behalf of the transferor. The doctrine can not be applied if there is a void agreement or no agreement. b) There must be consideration; c) The contracts should give out the terms of the transfer with reasonable certainty; d) The transferee must have taken possession as a result of this contract or continued in possession if he was already in possession of the property; e) The transferee must have done some act in furtherance of the contract. Acts done prior to the agreement or independent of it can not be deemed to be part performance of the contract; and f) The transferee should have performed his part of the deal or be willing to perform it. In the instant case, notings made by the assessee in the diary do not satisfy the conditions of transfer either as per transfer of property act or Income Tax Act. Even the same cannot held as transfer within the meaning of Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also constitutes business. In the instant case, the material was found indicating the advances paid by the assessee during the course of search. Mere payment of advances for purchase of land cannot be treated as the purchase unless the transaction is complete. As per the presumption, the notings made in the seized documents are true and correct. The assessee did not maintain the diary for the sake of the department and he maintained the diary for personal use. Therefore whatever notings made in the diary required to be considered as true and correct unless there is material to establish otherwise. In the instant case, the department did not place any evidence to show that the notings made in the diary were incorrect or partially correct. Therefore, we hold that the transactions recorded in the notings are nothing, but the token advances given for purchase of land and received back along with profit, thus, the same cannot be treated as purchase and sale transactions. Section 40A(3) is not applicable in the case of advances given for purchase of land. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the course of search, the AO has not found any incriminating material evidencing the unaccounted income and for the assessment year 2004-05, 2008-09, the additions were made without having the seized material. Therefore, argued that the additions made without having seized material required to be deleted as per the decided case laws. The assessee also relied on the following decisions of this Tribunal : (a) ITAT Delhi in the case of Amar Chand Gupta I.T.A.No.3401/Del/2009 (b) ITAT Visakhapatnam in the case of L Suryakantham, I.T.A. No.300/Viz/012 (c) ITAT Visakhapatnam in the case of Bhashyam Ramakrishna, I.T.A.No.440/Viz/2013 (d) ITAT Hyderbad in the case of Midwest Gold Ltd., , I.T.A. No.1064/H/2014 (e) Hon ble High Court of Calcutta in the case of Giridharilal Goenka, , I.T.A. No.179 ITR 122 (Cal) (f) Hon ble High Court of Delhi in the case of Pepsico India Holdings (P) Ltd. 50 Taxmann.com 299 (g) ITAT, Hyderabad in the case of Rajkumar Birla, I.T.A. No.945/Hyd/2012 (h) ITAT, Hyderabad in the case of Anil Kishore Agarwal, I.T.A. No.493/Hyd/2011 16.1. The Ld.AR further argued that the assessee is an agriculturist and has not maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 2004-05 to 2008-09 the time limit for issue of notice u/s 143(2) got expired by the time search conducted. Since the time limit for issue of notice u/s 143(2) was expired, the assessments for the A.Y.2004-05 to 2007-08 required to be considered as unabated and completed assessments. As per the decided case laws, the AO is not permitted to make addition in the case of completed assessment without having the seized material. Identical issue was considered by the Tribunal in the case of Sri Rayapati Venkata Koteswara Prasad Vs. ACIT, Central Circle, Vijayawada in I.T.A. No.566/Viz/2014 dated 27.09.2017 and held that no addition is permitted in the case of completed assessments without having the seized material. For the sake of clarity and convenience we extract relevant part of the order of this Tribunal in para No.7, 8, 9 and 10 which reads as under : 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. In this case, search u/s 132 of the Act was carried out on 8.2.2006 and by the time search was conducted, the time limit for issue of notice u/s 143(2) of the Act got expired. The return was pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(2) of the Act, the proceedings initiated by filing the return are closed. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed by absence of issue of intimation under section 143(1) of the Act or by not issuing notice u/s.143(2) of the Act within the time limit laid down in the proviso to Sec.143(2) of the Act, results in an assessment proceedings and where such assessment proceedings are completed prior to the date of search then they do not abate in terms of the Second Proviso to section 153A(1) of the Act. The decision of the ITAT Kolkata Bench rendered in the case of Shri Bishwanath Garodia (supra) on identical facts of the case as that of the Assessee in the present case, clearly supports our conclusions as above. 26. In the light of the discussion above, our conclusion is that in the present case, the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessment u/s 153A of the Act will be made on the basis of incriminating material. Therefore, the argument of the Ld. D.R. lacks merit on this issue. As discussed earlier, in this appeal no addition was made on the basis of seized material and the assessment got completed and the assessee s case is squarely covered by the decision of this Tribunal cited (supra) and the decision of Hon ble special bench in the case of All Cargo Global Logistics Limited. Therefore, we set aside the orders of the Ld. CIT(A) and allow the appeal of the assessee. 19.1. Similar view was taken by this Tribunal in the case of L.Suryakantham Vs. ACIT in I.T.A. No.300 to 305/Viz/2012 dated 19.04.2016 and Y.V.Anjaneyulu Vs. DCIT, Central Circle in I.T.A. No.513 514/Viz/2013 dated 09.06.2017 and by the Coordinate Bench of Hyderabad in the case of Midwest Gold Ltd. in I.T.A. No.1288/H/2014 to 1293/H/2014. In the instant case, as seen from the order of the AO as well as the CIT(A), the AO made the addition disbelieving the agricultural income as well as the unexplained cash deposits from the bank account. No evidence was brought on record with regard to incriminating material found during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X
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