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TMI Blog2023 (6) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had deposited cash amounting to Rs. 43,15,000/- as auction money with M/s. GLADA against sale of trees standing at Sidwa Kanal to MC Limit Ferozepur Road, Ludhiana. Basis the said information, the reasons for reopening were recorded and notice under section 148 was issued and served on the assessee on 30/03/2018. In response to the notice, the assessee filed his return of income on 05/09/2018 declaring total income of Rs. 1,59,910/-. Subsequently, notices under section 143(2), 142(1) and detailed questionnaire were issued, and after taking into consideration the submissions and documentation filed by the assessee, the AO made an addition of Rs. 43,15,000/- being amount paid to M/s. GLADA for purchase of trees/ timber treating the same as unexplained investment under section 69 of the Act. 3. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who have since confirmed the said addition and against the findings of the Ld. CIT(A), the assessee is in appeal before us. 4. During the course of hearing, the Ld. AR submitted that the assessee has made a cash payment of Rs. 43,15,000/- to M/s. GLADA against sale of trees during the period 14/03/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to the said Agreement. 4.6. Regarding the findings of the AO that both the Affidavits of the witnesses and the buyer talks about two shops instead of one shop, it was submitted that the same was an inadvertent clerical mistake committed by the Counsel of the assessee during the course of assessment proceedings. It was submitted that the Affidavit of the witnesses namely Mr. Naveen Goyal was written by the Counsel of the assessee and electronic copy was given to him which was then printed on a Stamp Paper and signed by him. Instead of writing one shop, the Counsel of the assessee by mistake has wrote two shops. In this regard it was submitted that a fresh Affidavit from Mr. Naveen Goyal is hereby submitted which may be taken on record. 4.7. Regarding the Affidavit of the buyer, it was submitted that the assessee approached him telephonically to provide the above said Affidavit confirming the facts given in above Agreement to Sell. Initially he was not ready to give but later on agreed and called for the format of the Affidavit from the Counsel of the assessee as the copy of Agreement to Sell was not traceable due to huge time gap of eight years. The Counsel of the assessee sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit, it was submitted that Mr. Ashwani Jolly is the most renowned Notary Public in the New Courts, Ferozepur Road, Ludhiana and his premises are at the entrance of the Courts and therefore most of the people go to him for Notary Public services and therefore the fact that the sae Notary Public has attested both the Affidavits cannot be a reason to reject the Affidavit and non mentioning of the Serial Number on the Affidavit, if at all is mistake the same is on the part of such Notary Public and the assessee again cannot be penalized for such technical breach in the Affidavit so submitted. 4.13. It was accordingly, submitted that the assessee has furnished the necessary explanation regarding the source of the money deposited by way of Auction Money M/s. GLADA against sale of trees and therefore the addition so made by the AO and confirmed by the Ld. CIT(A) be directed to be deleted and the appeal of the assessee be allowed. 5. Per contra, the Ld. DR submitted that it is incorrect to assert that the Assessing Officer had erred in making addition of 43,15,000/- for the A.Y. 2011-12. As per information available on record, M/s. GLADA has received cash amounting to Rs. 43,15,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2010 was Rs. 43,87,272/-. (iv) Certified copy of sale deed/registration deed of shop sold in lieu of agreement mentioned above has not been filed by the assessee. 5.4. It was submitted that other important facts/observations as per the assessment order are as under:- i. Agreement to sell shop for total sale consideration of Rs. 50,00,000/- is written on 01.03.2010. ii. As per this agreement out of the total sale consideration Rs. 45,00,000/- is received in cash as advance on 01.03.2010. iii. It is agreed to get the registered sale deed executed by 30.04.2012. iv. It is very illogical and fails the test of probability that 90% of the payment is received in advance in cash and the sale deed is to be executed after two years gap. v. No evidence of sale deed having been executed in respect of this sale is filed during the course of assessment proceedings, even through the Assessing Officer specifically asked for it. 5.5. From the above observations, it is abundantly clear that the assessee made an un-successful attempt to build up the cash in hand as on 01.04.2010 to explain/give source of the payment made in cash to GLADA as auction money against sale of standing trees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been purchased by the by Sh. Naveen Goyal on 24.12.2018 from the Anil Kumar stamp vender and the affidavit has been written on 18.12.2018 which is quite impossible. iv. The affidavit sent by Sh. Kuldeep Singh S/o Sh. Puran Singh R/o Village and post office, Threeke, Ludhiana has itself turned down as he is aware that the agreement to sell was executed for one shop measuring 100 sq. yard and also in the light of facts mentioned in para(iii) above. v. Both the affidavits have been attested by Sh. Ashwani Jolly Notary Public, Ludhiana. Sr. number of register has been not the mentioned of affidavit. Affidavit of Sh. Kuldeep Singh has been attested on 24.12.2018 and the affidavit of has been attested on 25.12.2018." 5.8. Both the facts of the case and the circumstantial evidences go to prove that the appellant has made an unsuccessful attempt to create the cash in hand in the books to explain the source of the payment made to GLADA of Rs. 43,15,000/-. 5.9. As the assessee has failed to explain the source of Rs. 43,87,272/-shown as opening balance in the cash book as on 31.03.2011 therefore, the Assessing Officer has treated the investment of Rs. 43,15,000/- made in purchase of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst sale of two shops. Both of the affidavits have been found to be contradictory to each other. The agreement has been written on plain paper -sale of paper, and has not been registered with any competent authority. 5.5 After carefully considering the facts of the case, in my considered view, the assessee has not been able to satisfactorily explain the source of huge cash balance appearing in his books of accounts as opening cash in hand as on 01/04.2011.The assessee has not been able to produce clinching and cogent evidence in support of its contention, that the huge advance of Rs. 45,00,000/- has been received by him on account of advance against agreement to sale of one shop. The assessee has not been able to contradict the anomalies found by the Assessing Officer at the time of assessment proceedings. In my considered view the assessee has merely filed two affidavits at the time of assessment proceedings. The assessee could have produced alleged purchaser Shri Kuldeep Singh at the time of assessment proceedings along with the witness Shri Naveen Goel in support of his contention. The assessee has also not been able to contradict the anomalies found by the Assessing Officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having satisfied the essential attributes is an enforceable agreement as per the Indian Contract Act. We are intrigued by the fact that the agreement to sell relates to transfer of an immoveable property wherein 90% of the agreed consideration has already exchanged hands at the time of entering into such agreement and at the same time, the handing over the possession has been deferred to the time of registration and which has eventually not happened in the instant case and thus, prima facie reflects a situation which is apparently one-sided at the cost of another party. Having said that, it is relevant to determine the enforceability of such agreement to sell against the assessee in terms of the Indian Contract Act as well as the applicability of the provisions of Transfer of Property Act, Indian Registration Act and Indian Stamp Act. The explanation of the assessee explaining the source of cash payment have to be tested on the touchstone of enforceability of such agreement to sell as per relevant statue and only where it is determined that such an agreement to sell is enforceable in hands of both the parties and/or the parties have actually taken certain steps to enforce their re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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