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TMI Blog2019 (3) TMI 1774X X X X Extracts X X X X X X X X Extracts X X X X ..... ng bank account of the assessee, the contention of transfer of money from saving account to the current account of proprietary concern is verified, then no addition is required on this account . The ground of the appeal is accordingly allowed for statistical purposes. Unexplained investment u/s 69 - As alleged assessee during assessment as well as Remand proceedings had failed to furnish complete documentary evidence in support of his claim - CIT-A deleted the addition - AO is claiming that no document in support of purchase agreement of the property was produced before him in remand proceeding - in view of no documents provided in support, the Assessing Officer objected to admission of the additional evidences - HELD THAT:- CIT(A) has allowed the issue in dispute without following the provisions of Rule 46A of the Rule and, therefore, we feel it appropriate to restore the issue-in-dispute to the file of the Assessing Officer for deciding the issue afresh, with the direction to the assessee to produce all the documentary evidence relied in support of its claim, before the Assessing Officer. Though the issue of dealing with Rule 46A should have been in normal course restored to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a fresh, we feel it appropriate to restore this issue also to the file of the Assessing Officer for ascertaining non-business purposes use of the telephone or car or conveyance on the basis of documentary evidences. The ground of the appeal is accordingly allowed for statistical purposes. Treating the sale of agricultural land resulting into long-term capital gain - whether the land which was sold by the assessee, was agricultural land in terms of the provisions of the Act? - admission of additional evidence - HELD THAT:- We agree with the observation of the learned DR that the handwritten certificate is not bearing any seal or name of the Patwari or the person who has issued the certificate. The learned counsel has also not produced the original return of income filed for the earlier years to establish that agricultural income was offered for rate purposes in those returns. The Assessing Officer objected admitting of the additional evidences, however, the Ld. CIT(A) admitted the evidences after giving his reasoning. But the Ld. CIT(A) was required to make compliance of the Rule 46A(3) of the Income Tax Rules, 1962 and provide opportunity to the Assessing Officer to rebut those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 90,02,000/- on account of Long Term Capital Gain overlooking the. fact the assessee had failed to discharge his onus in respect of claim as lawful and valid and also failed to prove that the land sold was genuinely agricultural land during the assessment proceedings. Also, whether the Ld. CIT(A) was right in not appreciating the fact that merely by stating that the receipts are on account of sale proceeds of agricultural land without documentary evidence does not constitute discharge of onus on the part of assessee. The appellant reserves his right to add. Amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. 2. Briefly stated facts of the case are that an memorandum of understanding (MOU) relating to transactions of purchase and sale of shares of M/s SR Resorts Private Limited was seized during the course of search action under section 132 of the Income-tax Act, 1961 (in short 'the Act') carried out on 19/02/2009 at the premises of "Koutons" group of cases. The name of the assessee was appearing as one of the 4 sellers mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminating document was found except one MOU and that too was not signed by the assessee, thus, in absence of any incriminating material qua the assessment year under consideration, the proceedings under section 153C of the Act are invalid. The Ld. counsel also submitted that no satisfaction under section 153C of the Act was recorded by the Assessing Officer of the searched person. In support of the contention the Ld. counsel relied on the decision of the Tribunal in the case of Jasjit Singh in ITA No. 1436/Del/2012, for assessment year, 2009-10. According to the learned counsel, Sh. Jasjit Singh is one of the co-seller of MOU of the sale of the shares of M/s. SR Resort Pvt. Ltd., along with the assessee. 4. The Ld. DR objected raising of the additional ground without filing any application under Rule 27 of the ITAT Rules. The Ld. DR submitted that the assessee is required to follow the due procedure laid down in ITAT rules. Accordingly, he objected to raising of additional ground by the Ld. counsel of the assessee. On the issue of no satisfaction noted by the Assessing Officer of the searched person, the learned DR submitted that in the instant case, the Assessing Officer of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 1,15,27,000/- and ₹ 36,00,000/- respectively. The Ld. CIT(A) was of the view that this amount was sufficient to finance the complete addition of ₹ 11,26,672/- in the capital account of M/s Sanjay plastic industries. The Ld. CIT(A) held that no opportunity of being heard was provided to the assessee and thus the addition made was highly unjustified and arbitrary and totally against the principle of natural Justice and bad in law. The Rrevenue in its grounds has challenged this finding of the Ld. CIT(A) that addition was made in violation of principle of natural Justice. 7.1 Before us, the Ld. DR submitted that before the Assessing Officer no explanation as to the credit of ₹ 11,26,672/- in the capital account was given by the assessee. But before the Ld. CIT(A), the assessee explained for the first time that money was transferred from the saving account of the assessee, however no opportunity was provided by the Ld. CIT(A) to the Assessing Officer to rebut or verify this claim of the assessee. On the contrary, the Ld. counsel of the assessee relied on order of the Ld. CIT(A) and submitted that the assessee has already explained the source of the money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the year under consideration. This property was shown to have been purchased for ₹ 35,00,918/-. The Assessing Officer asked about the date of the purchase of said property and source of investment. According to the Assessing Officer, the assessee failed to explain the source of investment as well as to file documentary evidence supporting the investment. Before the Ld. CIT(A), the assessee filed details of investment along with an affidavit, claiming that the investment was made partially through bank account of proprietary concern, M/s Sanjay plastic industries, whose accounts were duly audited and audit report along with the balance sheet and profit and loss account was duly submitted before the Assessing Officer. Further, remaining part of payment was made from bank account of M/s 'Katyani Construction' on behalf of the assessee. According to the assessee, the cheque number and amount of payment made by the 'Katyani Construction' was duly provided in the affidavit submitted. The Ld. CIT(A) forwarded the explanation and the documents in the form of additional evidences filed by the assessee under Rule 46A of Income Tax Rules, 1962, to the Assessing Officer. Before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de and therefore the Assessing Officer was justified in treating the investment in property as unexplained investment under section 69 of the Act. In support of the contention, the Ld. DR relied on number of decisions cited in the written submission filed including decision of the Hon'ble Supreme Court in the case of R. Mallika Vs. CIT (2017) 79 taxmann.com 117 (SC). The learned DR submitted that assessee may be directed to file all the evidence before the Assessing Officer and then issue may be decided in accordance with law. 8.2 On the contrary, the learned counsel of the assessee filed a paperbook containing pages 1 to 45. He relied on the finding of the Ld. CIT(A) on the issue in dispute and submitted that the Assessing Officer ignored the explanation in support of mode and source of payment etc. filed with him in remand proceeding. The learned counsel referred to page 27 of the paper-book, which is a copy of the affidavit filed by the assessee and page 28 of the paper-book, which is a copy of ledger account of Pearls Developer Limited in the books of account of the assessee, to whom the said property was sold. According to the learned counsel provision of section 69 are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of ₹ 1731450/- was made by the Katyani Construction on our behalf in the inter party adjustment account. The relevant documents for sales & purchase has been not traceable by me despite of my best efforts. (Emphasis supplied externally by us) 8.5 On perusal of the above submission, it is clear that the assessee did not provide purchase and sale agreement in respect of this property. The ledger account of M/s Pearl Developers Ltd., also shows transaction of ₹ 17,69,468/- as against claim of sale proceed of ₹ 36,00,000/-. In view of no documents provided in support, the Assessing Officer objected to admission of the additional evidences. The relevant part of remand report, which is available on page 29 of the paper-book, wherein he provided many opportunities to the assessee , is reproduced as under : "2. In this connection it is submitted that in the course of assessment proceedings the assessee filed three copies of sale deeds for ₹ 2625000/-, ₹ 7032000/- & ₹ 1345000/-. In respect of sale deeds of ₹ 7023000/- & ₹ 1345000/- photocopies submitted were not containing photocopy of reverse side of the documents. Only photocopies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has allowed the issue in dispute without following the provisions of Rule 46A of the Rule and, therefore, we feel it appropriate to restore the "issue-in-dispute" to the file of the Assessing Officer for deciding the issue afresh, with the direction to the assessee to produce all the documentary evidence relied in support of its claim, before the Assessing Officer. Though the issue of dealing with Rule 46A should have been in normal course restored to the Ld. CIT(A), but we have already restored the issue in dispute involving Ground No. 1 to the Assessing Officer, thus to avoid proceedings at multiple level, we have restored this issue also to the file of the Assessing Officer. The ground of the appeal is accordingly allowed for statistical purposes. 9. The ground No. 3 relates to disallowance of ₹ 17,265/- out of the interest paid on bank borrowings, which according to the Assessing Officer were not used for the purpose of the business. The Assessing Officer noticed that interest-free advances of ₹ 41,19,468/- i.e. whole of the money borrowed from bank were advanced to parties including M/s Reliance LIC Ltd. and M/s Katyani Construction Company and assessee failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t submitted as for what purposes these advances were made, whether it was advanced for purchase or whether any sales were made to these parties and payment from them was due. During the first appellate proceeding also, no such details ware provided. Even before us, also except the claim that borrowed funds were utilized for the purpose of the business, no detail about the money advanced to Reliance LIC Company Limited and M/s Katyani Construction company were provided. On the perusal of the balance sheet available on page 32 of the paperbook, we find that assessee has taken secured loan from Punjab and Sindh Bank, the closing balance of which is ₹ 4,51,255/- and there are unsecured loan of ₹ 15,72,100/-. As it is not clear from the submission filed by the assessee before the lower authorities or before us as how the loan fund received from bank and unsecured loan was utilized for the purpose of the business. In the balance sheet, there is no comparison of the earlier years, which could indicate the investment made during the year or money advanced during the year. In view of the above facts and circumstances, we feel it appropriate to restore this issue also to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o restore this issue also to the file of the Assessing Officer for ascertaining non-business purposes use of the telephone or car or conveyance on the basis of documentary evidences. The ground of the appeal is accordingly allowed for statistical purposes. 10. The next ground relate to addition of ₹ 90,02,000/-made by the Assessing Officer treating the sale of agricultural land resulting into long-term capital gain. The Assessing Officer observed sale of property of ₹ 1,15,27,000/- which was acquired by the assessee at ₹ 25,25,000/- resulting into capital gains of ₹ 90,02,000/-, which the assessee claimed as exempt being sale consideration received on sale of agricultural land. The Assessing Officer has noted that sale deeds amounting to ₹ 1,10, 02,000/- (₹ 13,45,000 + 70,32,000 + 26,25,000) were only produced. According to the Assessing Officer no documentary evidence supporting that the land was situated beyond a distance of 8 kms of Municipal Limit limit nor any agricultural income from the said land was shown in earlier years in the return of income. Thus, he treated the amount of ₹ 90,02,000/- as long-term capital gain liable to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as agricultural land in terms of the provisions of the Act. The assessee was required to prove that land was situated beyond 8 kms. from the municipal limit and agricultural activity was carried out by the assessee on the said land. Before us, the assessee has referred pages 43 to 45 of the paperbook, which are handwritten certificate issued by the Patwari (Land Revenue Authority). We agree with the observation of the learned DR that the handwritten certificate is not bearing any seal or name of the Patwari or the person who has issued the certificate. The learned counsel has also not produced the original return of income filed for the earlier years to establish that agricultural income was offered for rate purposes in those returns. The Assessing Officer objected admitting of the additional evidences, however, the Ld. CIT(A) admitted the evidences after giving his reasoning. But the Ld. CIT(A) was required to make compliance of the Rule 46A(3) of the Income Tax Rules, 1962 and provide opportunity to the Assessing Officer to rebut those evidences as held by the Hon'ble Delhi High Court in the case of Manish Buildwell Private Limited (supra). In view of the above facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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