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TMI Blog2020 (8) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... on record which I notice have remained largely ignored and the Compromise Deed entered with by the assessees and parties, find that the assessees have more than adequately explained the sources of deposits of ₹ 40 lacs each in their accounts. No contrary fact or evidence has been referred to by the tax authorities to justify the discarding of the evidences and the claims. The orders based on mere suspicions, conjectures and infact biases cannot be upheld. Satisfied by the explanation offered, the additions are directed to be deleted. - Decided in favour of assessee. - ITA No. 123/CHD/2020, 124/CHD/2020 (Assessment Year: 2016-17) - - - Dated:- 13-7-2020 - SMT. DIVA SINGH, JUDICIAL MEMBER Assessee by: Shri Tej Mohan Singh, Advocate Revenue by: Shri Arvind Sudershan, JCIT-DR ORDER These two appeals have been filed by different assessees and are being taken up together for the sake of convenience. 2. In the respective appeals, the assessees assail identical orders of the CIT(A) Hisar dated 30.12.2019 pertaining to 2016-17 assessment year on identical grounds. It was a common stand of the parties before the Bench that the lead order is in the case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that cash received represented consideration received against sale of agricultural land and as such entire cash could not have been brought to tax as income of the appellant 2.6 That the learned Commissioner of Income Tax (Appeals) has proceeded to sustained impugned addition without appreciating the settled position of law that, it is not for the appellant to explain the source of source of the creditor and therefore, any addition made and sustained on irrelevant and extraneous considerations is illegal, unjustified and hence untenable. 2.7 That further reliance placed on the judgment of the Hon'ble Apex Court in the case of CIT v. Durga Prasad More reported in 82 ITR 540 is wholly inapplicable on the facts of the assessee. 2.8 That the entire addition made and sustained is based on surmises, conjectures and suspicion and therefore illegal, invalid and unsustainable. 2.9 That the learned Commissioner of Income Tax (Appeals) has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific grievance of the assessee for which purposes, attention again was invited to para 1.13 extracted at page 27 which was again highlighted. Attention was also drawn to para1.16 at page 28. These documents read alongwith the Paper Book wherein the copy of the reply before AO at pages 12 to 13, copy of the Ikrarnama available at pages 19 to 21 it was argued, would show that it was entered into on 15.05.2015. It was agreed that it is a matter of fact and not in dispute that the date of the original agreement was extended multiple times and ultimately there was a compromise in 2019 involving a Panchayat and its members wherein it was agreed that in the event of nonconclusion of the contract/non execution of the Sale Deed for lack of payment or lack of available funds with the purchasers, 50% of the advance payment made would be forfeited. For the specific purpose, it was submitted he would want to invite attention to the Compromise Deed entered into by the purchasers and the sellers. It was highlighted that the purchasers and sellers are strangers. Attention was invited to Paper Book page 37 on which a lot of hue and cry have been made by the Department. Referring to the docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajesh Kumar accepts that he has paid Smt. Monika Gupta ₹ 40 lacs on 15.05.2015. Referring to Paper Book page 26, it was submitted that he explains that the Agreement to Purchase was signed in the house of Shri Sita Ram who was Sarpanch of Gaon-Handi Bheda, Sirsa and as alleged by the tax authorities that the document was witnessed by Seller s witness, it was submitted, that facts have been selectively ignored. Shri Sita Ram, it was submitted, was Shri Rajesh Kumar s sister s husband and infact after extending the date of execution a few times, ultimately the matter was settled before a Panchyat wherein his brother-in-law Shri Sita Ram was present and thus Agreement has been recorded and made available to the tax authorities and is available at Paper Book pages 35 to 36. Attention was further invited to question No. 4 wherein in response to the same, it was submitted that Shri Rajesh Kumar was further asked to elaborate the source of investment. It was submitted that this was clarified that it was from sale of land owned by him for which ₹ 7.5 lacs was received and ₹ 14 to 15 lacs was available from agricultural sources and some have been taken on loan from near re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement recorded on 10.12.2018 he submitted that he still has time up to 31.01.2019 to raise funds by selling land etc. and was hopeful of raising funds : 10. In the light of the above detailed questions and answers given, it was his submission that the decisions relied upon by the ld. CIT(A) were not applicable. In the facts of the present case, the assessee being the owner of specific piece of land undertook to sell the same to the identified parties who were strangers. They have explained their sources from which the agreement was contemplated to be fulfilled but lack of funds due to fall in the price of agricultural land which was being sold is not something which is in the hands of the parties and the fact that the purchaser was hopeful of still acting on the agreement would show that the departmental belief that it is an after-thought has no legs to stand on. The tax authorities reasons for denying relief is entirely based on suspicions, conjectures, surmises and biases. The statement recorded by the AO itself is discarded without bringing on record any contrary evidence except suspicions. For this purpose, attention was invited to para 1.16 at page 28 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctures and surmises and not rebutted by any specific evidence. It was his submission that the Revenue s case based on suspicion is on the ground that in the records of the Stamp Seller, there is over-writing. Referring to the specific pages in the Paper Book of the two assessees, it was his submission that there is no over-writing available. The stamp papers were purchased on different dates by the husband and wife and the requisite entries are clear. The tax authorities case is also built on the incorrect allegation that the Agreement to Sell has been witnessed only by the Seller s advocate. It was his submission that for reasons best known to the AO and the ld. CIT(A), the specific questions put to the purchasers which demonstrated that the Agreement to Sell were made at the residence of Shri Sita Ram, the relative of Shri Rajesh Kumar is conveniently ignored. It is also conveniently ignored that the Compromise Agreement is signed by all the parties including the two so called witnesses of the assessee as well as the Sarpanch and the other Panchayat Members and the Sarpanch is the relative of one of the purchasers. The fact that the Compromise Agreement duly correctly records the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trangers. Even otherwise, it was his submission that source of source cannot be enquired into in a case like the present case for which purposes, he would rely upon the decision of the jurisdictional High Court in the case of CIT v. Ram Narain Goel [1997] 224 ITR 180 (Punj. Haryana). For similar proposition, reliance was placed upon Sumer Chand Jain Vs CIT 292 ITR 241 (M.P) where mere evidence of identifying the purchase was held to be sufficient. The Court held that it was not for the seller to identify the sources of his funds. It was argued that it was placing an impossible burden on a seller. It was also his submission that the gap of 11 months contemplated in the Agreement to Sell in the eyes of the Revenue was considered to be very abnormal. It was his submission that by what yardstick gap of 3 months fixed is reasonable. The parties arrived at a conclusion keeping the practicalities and realities of the purchaser who had to first sell his lands to raise the funds. The sellers agreed to wait out for 11 months, ultimately the land could not be sold due to fall in prices in the land which the purchasers had planned to sell them, even 11 months were not sufficient. The facts h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is aggrieved by the fact that all documents in support of the claim were available and the lack of presence of the purchasers before the Land Revenue Authorities on 19.01.2017 is a matter of record. The assessee relied on a Compromise Deed recorded before the Panchayat amongst the purchasers and the sellers also regarding the fact that similar two attempts at compromise failed earlier. It has already been extracted in the earlier part of this order. The AO required the purchasers to be present. They were questioned and as per the assessee's version the confirmation of all these facts by the purchasers was recorded by the AO and still discarded and the addition was made. The evidences were considered to be an after-thought. The AO questioned the time lag. He questioned the need of the purchasers attempting to settle at a place much distant to where they originally stayed i.e. village Shekh Pura, Hansi and relocating to Mangala, Sirsa. The documents relied upon in support of the payment of money wherein the witnesses were the witnesses of the seller and not the purchasers were questioned. At this juncture, it would be apposite to extract the relevant statement of Shri Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agreement for the sale of agriculture land, it is noticed that the assessee has enters into the agreement for sale of agriculture land measuring aprox. 43 Kanal 11 marie 2 Sarsai located in village Mangaala, sirsa with Sh. Ravinder Kumar S/o Sh. Nathu Ram and Sh. Rajesh Kumar s/o Sh. Nathu Ram resident of village Sekupura, hansi on 15.05.2015. The date of registration of agriculture land was fixed for 19.04.2016. The agreement for the sale was made at the rate of ₹ 30 lakh per acre. The assessee has received ₹ 40,00,000/'- as earnest money on the time of entering into the agreement. The assessee has stated that on the dale of registration i.e. 19.04.2016, sale deed could not be executed. The purchasers Sh. Ravinder and Rajesh could not arrange the required funds on the date of registration of land. Therefore, with mutual agreement between the assessee and purchasers Sh. Ravinder and Rajesh could not arrange the required funds on the dale of registration. Therefore, with mutual agreement between the assessee and purchaser, the date of registration of land was extended till 30.09.2016. On the new date fixed for registration i/e. 30.09.2016, again/due to insuffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and having agriculture income of 12-15 lakh from the said agriculture land. Further, they are involved in the diary business and posses 12-13 cows / bufalloes each and having the diary income from the sale of milk and sale purchase of cows and bufalloes. But, both the purchasers had not filed their return of income for any financial year. The dairy income earned by the assessee comes under the purview of taxation. But, both the purchasers did not file the return of income of any financial year. They were also required to file the documentary evidences in support of source of purchase of land from assessee. But, both the purchasers have not submitted any documents in support of diary business conducted by them. 2.8 further, during the statement, it was asked as to why they wanted to purchase the agriculture land located in Mangla, sirsa far from their native place i.e. Kukrawali Fatehabad. They replied that there is insufficient availability of water in agriculture land located in village shekupura, Hansi and they have to arrange the water from, far place through pipeline to cultivate the corps. Both the brothers wanted to purchase the, land located in Mangala because there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey could not sell their agriculture land to arrange the funds on registration. Normally, a person first arranges the funds for the registration and then think about making such a huge deal in property. A prudent person never makes an agreement and paid a huge sum of money when he is doubtful for arranging such a large amount of money in a short span of time. 2.12 From the perusal of sale agreement, it is notices that there is gap of around 11 months between agreement and registration of land. IN normal course , there is a gap of 3 months between agreement and registration of land, further, on the agreement total sale consideration for the sale of land is not mentioned. In normal course, it is mentioned in the agreement. Assessee's spouse Sh. Rajive Gupta has also entered into an agreement for sale of land, on 27.04.2015 and dale of registration is same in both the cases i.e. 19.04.2010. These facts prove that agreement of sale between the assessee and purchasers was not authentic. 2.13 Both the purchasers were asked to produce the following documents on the date fixed i.e. 05.12.2018: 1. Copy of income tax return alongwith computation of income for the A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These facts prove that agreement of sale between the assessee and purchasers was not authentic. 2.17 The assessee is reputed person and having bank accounts. Even then the assessee had not deposited the cash in her bank account upto the demonetization period i.e. 08.11.2016. Furher, it is noticed that during the proceedings financial, years, the assessee has shown very nominal cash in hand, the assessee has substantially increased the figure of cash in hand during the year under consideration and further held this cash balance till the demonetization period. 2.18 From the above facts, it is very much clear that assessee had created a fictitious story in the form of agreement of sale of land and introduced the unexplained cash of ₹ 40,00,000/ - in his books. Therefore, cash amounting ₹ 40,00,000/'- introduced in his books of accounts are disallowed as per provisions of section 68 of the i.t. Act, 1961 and added the taxable income of the assessee 15.4. The assessee assailing the action before the CIT(A) as per page 9 of the impugned order relied upon the following documents : S.No. Evidence Page pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upset or rebutted. The assessee's submissions further summed up in para 1.10 to 1.16 are reproduced hereunder : 1.10 In nutshell, the submission of the appellant is that during the gear under consideration assessee sold her agriculture land of village Mangala and an agreement for sale of his agriculture land of village mangala measuring 43 kanals 11 marla 2 sarsai at the rate of ₹ 30,00,000/ per .acre was made in the instant year with Shri Ravinder Kumar son of Nat hit Ram and Rajesh Kumar son of Nethu Ram resident of village Shekupra (Hansi) on 15.05.2015 and received a sum of ₹ 40,00,000/'- as earnest money on the same date in the presence of the witnesses. That the date was fixed 19 04 2016 for registration and on that date balance payment was payable by the purchaser to the assessee. That on that date purchaser could not arrange the balance amount and as such with the mutual of both the parties date was extended to 30.0 9 2016 and on that date the purchaser could not arrange the balance amount and with the mutual consent of the seller- assessee and purchasers the date of agreement/final registration was extended to 19.01.2017. That on the said dale pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred that there is overwriting on entry number 439 of register of stamp vendor from whom stamps were purchased for execution of agreement Thai the Ld Income Tax Officer failed to appreciate that there is no overwriting as alleged by her rather and the name of assessee Monika wife of Rajiv Gupta, Sirsa through Rajiv Gupta and agreement is clearly mentioned in the entry and also there is signature of Rajiv Gupta (husband of assessee who purchased the stamp papers) and there is no overwriting as held by the Assessing Officer. That the Ld. Income Tax Officer also failed to appreciate that the Register of regularly check by the office of Deputy Commissioner Sirsa on monthly basis and no one can purchase stamp paper on back/future date as alleged by her. 1.14 That the Ld. Income Tax Officer also failed, to appreciate that both the purchasers have appeared before her and their statement was also recorded and in their statement was also recorded. They have also produce their ID. They have also confirmed the execution of agreement and have also y confirmed the earnest money for amounting to ₹ 40,00,000/-given by them They have also explained the source of earnest money give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Compromise Deed before Panchayat, the statements of the purchasers etc. It is also seen that no reasoning has also been placed on record to show how the evidences relied upon can be outrightly discarded. For the sake of repetition, it need be mentioned that the Compromise Deed is a deed wherein the signatories to the documents are not all related to the sellers, infact the erstwhile Sarpanch Shri Sita Ram is a relative of the purchaser. The other witnesses/Panchayat Members are all at arm s length partners. The tax authorities further ignored the fact that though in the Agreement to Sell, witnesses are known to the sellers, however, the fact that the Agreement to Sell was recorded in the residence of Shri Sita Ram, relative of Shri Rajesh Kumar, one of the purchasers is again conveniently ignored. This fact is recorded by the AO himself which gives cause to raise the allegation of selective reasoning. For reasons best known to the tax authorities, they did not want to address the fact that justifiable reasons are given by the purchasers for contemplating sale of their agricultural land and purchasing land under consideration stated to be close to their relatives. The argument tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not own the specific land contemplated for sale and that the prices infact did not drop and were infact relatively stable or rising. In the absence of any evidence whatsoever upsetting the plethora of evidences placed on record, I find no good reason to accept the claim of the revenue based on suspicion, surmises and conjectures. What is normal for a person today may vary from what is contemplated to be normal in another day and time. So for the tax authorities to conclude that three months time lag was a normal time, no facts or reasoning has been brought on record. Further, no such discretion or authority has been given by the Statute to arbitrarily and randomly conclude what is a reasonable time without caring to refer to relevant facts. Accordingly, on a careful consideration of the orders of the tax authorities, the reasons set out therein, the consistent arguments on behalf of the assessee, extracted in the impugned order and canvassed in the present appeals alongwith the statements of the purchasers on record which I notice have remained largely ignored and the Compromise Deed entered with by the assessees and parties, I find that the assessees have more than adequatel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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