9911796707
TMI Blog2019 (5) TMI 1924X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,75,00,000/- in the appellant's income, by invoking provisions of s. 69B of the Act in respect of alleged cash payment for purchase of Land at Village Sejwaya, Tehsil & Dist. Dhar, in the name of one company namely, M/s. Natural Gadia Real Estate Pvt. Ltd., merely on the basis of a statement given by the sellers, by disregarding ample of documentary evidences furnished by the appellant in his support. 2b.That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in making addition of Rs. 1,75,00,000/- in the appellant's income, merely on the farfetched assumptions, by erroneously correlating the making of cash deposits by the sellers in their bank accounts with the alleged cash payments by the appellant, without considering and appreciating the material fact that the sellers were having their independent sources of income and from such sources of income only, the cash deposits in bank accounts were made by them. That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary". 3. Brief facts of the case as culled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, namely of Shri Rajendra Prasad Jhala, was duly recorded by him on 14-122016. During the course of recording the statement, the appellant and his Authorized Representative were also present. The learned AO afforded the opportunity to the appellant to cross-examine Shri Rajendra prasad Jhala. Subsequently, a final Show-Cause Notice was issued by the learned AO to the appellant on 20-12-2016 and in response to the same, the appellant filed a detailed written submission on 26-12-2016, inter alia, commenting upon the various statements given by the sellers of the land. Finally, the learned A 0 framed the Assessment, under S.l43(3)/147, on 27-122016 by determining the total income of the appellant at Rs.l,76,58,290/- as against the returned income of Rs.l,58,290/- thereby making an addition of Rs.l,75,00,000/- in the appellant's income on the allegation of appellant having made cash payment in respect of purchase of Land at Village Sejwaya, District Dhar, by invoking provisions of section 69B of the Act. 4. Aggrieved assessee preferred appeal before CIT(A) but could not succeed as Ld. CIT(A) confirmed the addition observing as follows; "I have considered the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome except agriculture income which was not liable to tax. The appellant has not brought anything on record which may prove that then. sellers have sold any other land except the land which was sold to appellant. Further it would not be a coincidence that cash deposited in the bank account of the sellers on the same date on which appellant has made payment to the sellers. Thus; all the evidences are against the appellant and it proves* that appellant has made payment over and above the registered amount for the purchase of the land. The contention .of the appellant* that no addition can be made in its case u/s 69B is not correct as appellant has to explain the source of investment in the purchases and if it failed to explain the source of investment, deeming provision of sec.69B would come into effect. In the case of the appellant it has not recorded amount of investment in its books of account and is not .n:Ild)t to accept the truth inspite of having .all the evidences against it. It is also the known fact that in real estate businesses properties are being purchased and sold over and above the consideration recorded as per the registered document. However, additions could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is hereby confirmed. Therefore, the appeal on this ground is dismissed." 5. Now the assessee is in appeal before the Tribunal. 6. Ld. Counsel for the assessee argued at length referring to following submissions:- "Your Honours, after receipt of the statement of the reasons, the appellant through his counsel's letter dated 16.08.2016 (kindly refer PB Page No.44 to 49), objected the very issuance of the notice under s. 148 and as also the reopening of the assessment proceedings. The appellant also requested the AO to provide him the copy of the affidavit of Shri Vishnu Jhala which was relied upon by the AO while recording the reasons. In response to the objections raised by the appellant, the learned AO passed an order dated 19.10.2016 rejecting the objections of the appellant against issuance of the notice under s. 148 (kindly refer PB Page No.50 to 56). However, the AO, instead of providing the copy of any affidavit, provided a copy of the statements of Shri Vishnu Jhala, as recorded under s.131 of the Act, by the DDIT(Inv.), Indore, at some earlier occasions (kindly refer PB Page No.57 to 69). 9.01 Your Honour, now it is submitted that during the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patently far from truth. Many of the points, which were raised by the appellant before the AO, remained unaddressed/un-countered/uncontroverted by the AO. The vital points raised by the appellant before the AO are summarized as under: It is the Company who is the registered owner of the subject lands and not the appellant. The learned AO failed to appreciate that the Company has made subject investment in the land and not the appellant. The appellant was only holding 30 shares in the above said company and the remaining 70 shares were held by other persons who were not related to the appellant. It is submitted that since it is only the company and not the appellant who is the registered as well as the absolute beneficial owner of the subject property, any addition on the basis of allegation of unexplained investment could have been made only in the hands of the company and in any situation, such addition could not have been made in the hands of the appellant. For such proposition, now reliance is placed on the following judicial pronouncements: a) CIT vs. K. Mahim Udma (2000) 242ITR 133 (Ker.) b) Samurai Software (F) Ltd. vs. CITi (2008) 299ITR 324 ii) Two Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature on duly executed and registered documents, in an unequivocal term, had admitted the sales consideration of the subject land at Rs. 95,00,000/- only and therefore, their subsequent oral statements without having any corroborative evidence have no legs to stand and deserves to be discarded at the threshold itself [kindly refer PB Page No. 147 to 162]. vii) The Guideline Value of the subject property was only of Rs. 95 lakhs and at such guideline value only, the actual sale transaction had taken place. If for the sake of argument, the theory of cash payment of Rs. 1,75,00,000/- is taken to be correct, then the actual market value of such property would result into a sum of Rs. 2,70,00,000/- which is almost 3 times of the guideline value. It is submitted that by any theory of imagination, such a vast difference in the actual market price and Stamp Guideline Value cannot be estimated. Once this being the position, the allegation of the sellers of having received cash payments of Rs. 1,75,00,OOO/- over and above the stated consideration of Rs. 95,00,000/- deserved to be negated on this count alone. 12.00 Your Honours, in the entire assessment Order, the learned AO has heavily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 1990. Shri Rajendra Prasad Jhala evaded such fact even before his Assessing Officer who framed the assessment in his case for A.Y. 2010-11. The AO ought to have confronted Mr. Jhala for having any other income from carrying out practice as an Advocate. iv) Despite being specifically required by the AO, Shri Rajendra Prasad Jhala failed to produce many documents such as copy of his pay-in slips, counter foil of cheques, copies of purchase deeds of the various lands purchased by him for claiming any deduction under Sec. 54B of the Act. This vital fact was completely ignored by the AO. Shri Rajendra Prasad lhala changed his stand frequently and he stated that the alleged agreement for Rs. 2,70,00,000/- was taken back by the appellant upon execution of registered agreements for Rs. 95,00,000/-. Earlier, it was stated by Shri Jhala that the alleged agreement of Rs. 2,70,00,000/- was taken back at the time of execution of registered sale deeds. Thus there is a clear contradiction in two versions of Shri Rajendra prasad Jhala himself (kindly refer PB Page No. 83). vi) There is also contradiction in the statement of Shri Rajendra Prasad Jhala as regard to the date of alleged rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 0351 (Del) (viii) CIT vs. Anupam Kapoor (2008) 299 ITR 0179 (P&H) (ix) Sheo Narain Dulichand vs. CIT (1969) 72 ITR 0766 (AO) (x) CIT vs. Suresh Kumar Goyal (2004) 270 ITR0050 (Raj.) (xi) K.P. Verghese vs. ITO (1981) 131 ITR 597 (SC) (xii) Brijmoni Devi & Ors. Vs. CIT (1983) 142 ITR 427 (Cal. HC) (xiii) CIT Vs. Balram Prasad (1984) 150 ITR 687 (All HC) (xiv) Prem Narayan & Co. Vs. CIT (2006) 287 ITR 0056 (P&H) (xv) CMS Computers (P) Ltd & Anr. Vs. Appropriate Authority & Ors. (2008) 76 CCH 685 (MUmHC) (xvi) Indian Dyestuff Industries Ltd vs. Inspecting Assistant Commissioner & Anr. (1994) 206 ITR 0485 (GUJHC) (xvii) C.B. Gautam vs. Union of India & Ors. (1993) 199 ITR 530 (SC) 8. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to by both the parties. 9. Through Ground No.1 the assessee has challenged the finding of Ld. CIT(A) confirming the action of Ld. A.O of issuing notices u/s 148 of the Act and framing the reassessment. We observe that the assessee being an individual earned income from salary, house property and other income. Return of income was filed on 17.3.2011 declaring inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he objection for issuing notice u/s. 148 on 22.08.2016. The objection filed has been discharge by the AO. The appellant has filed the letter dated 19.02.2016 in response to notice u/s 148 stating that original return tiled on 17-03-2011 may be treated as return in compliance to notice u/s. 148. Subsequently notice u/s 143(2) and 142(1) has been issued and appellant have complied the above notices. The AO has followed the proper procedure before issuing the notice U/S 148. Therefore, the appeal on these grounds is Dismissed". 10. From going through the above findings of Ld. CIT(A) and in the light of the fact stated above, we observe that explanation 2(b) of Section 147 of the Act which deals with the cases where income chargeable to tax is deemed to be escaped for assessment, applies on the given facts which provides that "where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Ld. A.O that the assessee has under stated the income or has claimed excessive loss, deduction, allowance or relief in the return". Same is the situation in the case of the assessee wherein the Ld. A.O received the information which indicated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/-. An advance of Rs. 5,00,000/- was given vide Cheque No.284340 & 284343 dated 23.12.2009 of SBI, Indore. As the land in question is situated in District Dhar which is declared as a tribal District therefore written permission from District Collector is needed prior to the sale of land. Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala made two separate applications on 24.12.2009 and District Collector accorded the permission on 13.1.2010. Subsequently the sellers executed two separate sale deeds in favour of purchaser company namely Natural Gadia Real Estate Pvt. Ltd (through its Director Mr. Lokesh Gadia, the assessee) for a consideration of Rs. 47,50,000/- each which totalling to Rs. 95,00,000/-. So the ransaction of sale of land was completed on 25.3.2010 by the sale deed duly signed by all the parties for total consideration of Rs. 95,00,000/-. 13. Now the controversy arised when the information was received by the revenue authorities from ADIT(Investigation) that Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala deposited cash of Rs. 1,82,00,000/- in their joint saving bank account with Syndicate Bank, Mhow. In the statement given to the revenue authorities it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... har confirming the sale consideration of Rs. 95,00,000/-. Public notices were issued for the said land. Note sheet evidencing proceedings carried out before the office of the District Collector regarding sale of land. Necessary approval was given by Collector Office for carrying out the sale transaction on 18.3.2010 stating the sale consideration of Rs. 95,00,000/- out of which Rs. 5,00,000/- was given in advance and the remaining amount to be given at the time of registering the sale deed. So there is sufficient material placed on record by the Ld. Counsel for the assessee in support of its contention that the transaction of sale of alleged land was for a sale consideration of Rs. 95,00,000/- only and there is no iota of evidence which could indicate that the actual sale consideration was Rs. 2,70,00,000/- and also there is no evidence to prove that the assessee on behalf of the company of which he is the Director paid cash of Rs. 1,75,00,000/- over and over the sale consideration. 15. Ld. Counsel for the assessee also stated that no independent enquiry was conducted by the revenue authorities to value the alleged land measuring 10 bighas by Government approved valuer authority i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous years relevant to assessment years 2005-06, 2006-07 and 2007-08 respectively. However, to the extent of Rs. 11, 00, 0001-, the Tribunal was of the view that the agreement was material to conclude payment of such amount and that the assessee had failed to show that the amount of Rs. 11, 00, 0001- was paid by him to Shri Somabhai Prajapati by cheque and not by cash and accordingly confirmed the addition to that extent for assessment year 2005-06. 8. For the reasons stated hereinabove, this court is in complete agreement with the findings recorded by the Tribunal upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their income-tax returns, the circumstances do raise a suspicion. However, as held by the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the consideration. We find that in the present case, it was not the contention of the Revenue that the property was sold by the assessee to his daughter-in-law and five of his children for a consideration which was more than the sum of Rs. 16,500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the IT authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of Rs. 16,500. Therefore, on the construction placed by us, sub-s, (2) had no application to the present nd the 1TO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under 5, 148, The order of reassessment made by the 1TO pursuant to the notice issued under s. 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Block Period was 01.04.1988 to 08.12.1998. The assessee had purchased land at Brindavan Road, Fairlands, Salem on 26 .10.1 998. The land was registered for Rs. 4.10 lakhs. During the course of search in the office premises of Polimer Net Work, certain notings were found in the seized material RK/S/B&D/25. In the statement recorded on 08.12.98, the assessee stated that he did not remember for what purpose he had made notings, which was confirmed by the assessee in a subsequent statement recorded on 11.12.1998. The land was purchased from one Shri Rajarathinam. His statement was also recorded on the date of search i.e. 08.12.1998 and also on 11.12.1998. In the sworn statement dated 08.12.1998, in question No.3, Shri Rajarathinam admitted that he had received Rs. 4.10 lakhs as sale consideration but in question No.4, he admitted that he had received Rs. 34.35 lakhs. Again in the statement recorded on 11.12.1998, Shri Rajarathinam, the seller admitted that a total consideration of Rs. 34.85 lakhs was received from the assessee out of which Rs. 4.10 lakhs was received in demand draft and the balance in cash. In the affidavit given on 08.01 .1999 by Shri Rajarathinam, it was mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the Revenue. In a subsequent submission, the seller claimed on 20.11.2000 that he had paid Rs. 15 lakhs out of the sale proceeds to settle old family debts, Rs. 4 .80 lakhs for construction of house in Pullkasi Village and the balance was advanced to parties for keeping Rs. 2 lakhs and Rs. 3 lakhs in the house for family expenses and educational expenses of his daughter, respectively. It was also noted that the revised return was filed by the seller wherein he had shown approximately Rs. 2.5 lakhs being available with him in cash. Even after giving the retraction and admitting that he had sold the property for a sale consideration of Rs. 4.10 lakhs, the seller filed his I.T. Return on 28.01.2000 wherein he did not admit the cash on money consideration for the sale transaction. Subsequently he revised the I.T. Return wherein he admitted the sale consideration and showing Rs. 4.80 lakhs out of the above as utilised for construction of residential house property and consequently claiming exemption under Section 54, the seller filed the computation of income paying Rs. 1,83,576/- as tax, which was quite evident from the conflicting statements given by the seller and the conflicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,75,00,000/- in the joint bank account of sellers may be either from their own undisclosed sources of income of two sellers or "on money" receipt from sale of land. On the other hand there is long list of documentary evidences corroborating the transactions of sale of land for Rs. 95,00,000/- which are duly signed by the sellers namely Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala on multiple occasions. These documents includes agreement to sale dated 24.12.2009 executed between the purchasing company and the sellers for sale of said land, agreeing for sale consideration of Rs. 95,00,000/-, copies of the application dated 24.12.2009 made by the sellers before the Collector, Dhar, Affidavit dated 13.1.10 duly signed in by the sellers placed before the SDM Collector, Dhar, copies of public notices dated 1.1.2010 issued by the SDM(Revenue) for the purpose of sale of subject land, copies of the note sheets evidencing the proceedings carried out before the office of the District Collector regarding sale of land, copies of orders dated 18.3.2010 passed by District Collector, Dhar authorising the seller of land to make the sale to M/s. Natural Gadia Real Estate Pvt. Ltd, copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the facts and documentary evidences placed before us are inclined to hold that the sale consideration for sale of land in question was only Rs. 95,00,000/- and revenue authorities failed to bring any credible material on record to prove that the sale consideration was Rs. 2,70,00,000/- and not Rs. 95,00,000/-. 27. Even otherwise the addition of Rs. 1,75,00,000/- made by the Ld. A.O u/s 69B of the Act will not stand for under the provisions of Section 69B of the Act, firstly because the alleged land is not purchased by the assessee but is purchased in the name of another assessee namely Natural Gadia Real Estate Pvt. Ltd and secondly the assessee who is earning income from salary, house property and income from other sources is not maintaining any books of accounts and for making any addition u/s 69B of the Act there should be specific finding by Ld. A.O that the investment made by the assessee exceeds the amount recorded in the books of accounts maintained by the assessee for any source of income and the assessee offers no explanation about such excess amount or the explanation offered by the assessee is not, in the opinion of the A.O, satisfactory. 28. In the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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