9911796707
TMI Blog2024 (7) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... income for payment towards purchase of land and also there is no reference of society in the seized material. This fact recorded in the order of the IBS is not controverted by the revenue by bringing any contrary evidence, so we do not see any reason not allow that benefit of the investment to the trustees. Not only that there is no finding in the order of the lower authority that there is unaccounted income of the assessee trust, but contrary to that the IBS has accepted the additional income of the trustees and considered the utilization of that additional income with that of the investment made while purchasing the land in the name of the assessee trust, and trustees have been found the record of the on money and not the assessee trust. Thus, we see no infirmity in the finding of IBS allowing the benefit of on money paid by the trustee for the land purchase of land in the name of the assessee trust. CIT(A) has not appreciated the fact that two brother though has no legal right on the land purchased by the assessee but it is incorrect on part of Ld. CIT(A) to observe that no documentary or corroborative evidence has been filed to show that the money flowed from the two individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present discussions, the case of ITA No. 203/JP/2024 is taken as a lead case. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 203/JP/2024 on the following grounds; 1 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 1,77,67,000/- u/s 69 of the Act on account of alleged unexplained investment in purchase of plot by not accepting the explanation of assessee that source of such investment is out of undisclosed income offered for tax by its trustees Sh. Joginder Sunda and Sh. Piyush Sunda accepted by Hon'ble Interim Board of Settlement vide order dt. 29.05.2023 by making various incorrect, irrelevant and unwarranted observations. 2 The Ld. CIT(A) has erred on facts and in law in confirming that taxing of alleged unexplained investment u/s 69 @ 60% instead of taxing the same @30% by ignoring that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 15.12.2016 and made applicable from 01.04.2017 is not applicable to AY 2017-18. 3 The appellant craves to alter, amend and modify any ground of appeal. Necessary cost be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Mohini Devi w/o Shri Manglaram Raibari, Vill. Dula Ki Dhani at present Vill. Palwas, Tehsil- Dhod, Sikar (seller) and Vivekanand Shiksha Samiti through its president Shri Gopal Singh S/o Shri Jaisaram Sunda, Vill. Shyampura, Tehsil Dhod, Sikar (Purchaser) for sale of land admeasuring 2.40 hectares situated at Khasra No. 1061 rakba 0.35 hectare and Khasra No. 1065 rkaba 2.05 hectare at Village Kanwarpura, Tehsil- Dhod, Sikar. The sale consideration in this registered sale deed has been reported at Rs. 15,00,000/-. But as per the evidences gather during the course of search at the office premises of Prince Public School Society and Princess Academy Society image of mobile data of Shri Jogendra Singh were taken and seized. The image data contains, a page containing land data wherein at the top of the page area of land is mentioned as 2.40 hectare which is equal to 21.35 kachchi bigha. Rate of land per kachchi bigha is mentioned at Rs. 9 lakh thus total sale consideration of the land mentioned at Rs. 1,92,17,000/-. Out of total sale consideration, a sum of Rs. 10,00,000/- is reduced by writing as hold. Out of the remaining sum of Rs 1,82,17,000/-, an amount of Rs. 80,00,000/- and 87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted income earned from school fee of his prop. concern M/s Prince Defence Academy and M/s Prince Career Pinoneer. As these persons were having excess fund on account of undisclosed receipts so they offered the same as utilization of undisclosed income as investment in aforesaid property which is only a adjustment to avoid addition in hands of society. 3.5 Based on this observation the ld. AO further noted that why an Individual will invest his unaccounted money in a property of society when he cannot gain or earn from the same for his own benefit and property become a public property. Thus, with this observation the ld. AO held that the amount shown in sale deed is unexplained investment of the society itself and claiming the same as undisclosed income of Shri Jogendra Singh Sunda and Shri Piyush Sunda are nothing but an eye wash. Hence, ld. AO considered that amount of Rs. 1,77,67,000/- considered as unexplained investment of the society which is added back to the income of the society u/s. 69 of the Act. 4. Feeling dissatisfied from the finding so recorded in the order of the assessing officer, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act, 1961 The Ld. AR of the appellant explained that Jogendra Singh Sunda and Piyush Singh Sunda are trustees of the society. The assessee society has no source of income except nominal membership fees received in the year under consideration. In search also no evidence was found that assessee society has any source of income. Further the appellant society had also not started its activities except receipt of membership fees. As against this, Shri Jogendra Singh Sunda, at Para 14(h) of his Settlement Petition, have submitted that differential consideration of Rs. 1,77,67,000/- (1,92,17000 - 14,50000 ) has been paid by him and his brother Shri Piyush Sunda out of their additional income of FY 16-17 (PB 46). Further at Para 13 of the Settlement Petition filed by Shri Piyush Sunda same facts have been disclosed before the Hon'ble Settlement Commission. The same is also verifiable from the Cash Flow Statements filed by them before the Hon'ble Settlement Commission. The affidavit of Shri Jogendra Singh is also filed to AO wherein he has accepted that the amount of Rs. 1,77,67,000/- was paid by him and his brother Shri Piyush Singh Sunda from CIT(A)-4, Jaipur their undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunda which now stands taxed as per the order of Hon'ble IBS The implication of the same is that payment of unaccounted cash for the land purchased by the appellant is made by Sh. Joginder Singh and Sh. Piyush Sunda on behalf of the appellant society. This order of the honorable Interim Board of Settlement was passed after the date of passing of the assessment order and as such the matter was not settled till then. Submission of the applicants as inter-alia noted by the Hon'ble IBS in the order that If the office bearers of the society have paid the amount out of their own sources and not claimed the same from the society, it cannot be construed to be undisclosed investment of the society and if it is claimed by the office bearer, it will be only a liability of the society to pay them . In this regard, the learned AO is directed to pass on the information to the jurisdictional officers with respect to examination and applicability of sections 271D/271E of the Act as there is admission by the two individuals w.r.t. the cash loan or loan not through banking channel and the same is in connection with purchase/transfer of immovable property. The addition has been done to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be presumed. The onus is on the appellant to explain the source along with supporting s. The Id. AO has relied upon following circumstantial factors and evidences in support of the conclusion of the assessment which have not been rebutted/responded by the appellant:- (ii) The society is not a prop, concern of any individual but an association of a person which exist and works to achieve certain objectives of public utility and does not have any profit earning motive. (iii) In view of the above facts question arises why a Individual will moest his unaccounted money in a property of society when he cannot gain or earn from the same for his own benefit and property became a public property. (iv) Shri Jogendra Singh Sunda and Shri Piyush Sunda hurve filed an application before the Hon'ble Settlement Commission, New Delhi wherein he was compelled to disclosed his unaccounted income earned from school fee of his prop. concern M/s Prince Defence Academy and M/s Prince Career Pinoneer. As these persens were having excess fund on account of undisclosed receipts so they offered the same as utilization of undisclosed income as investment in aforesaid property which is enly a adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assessee, it is not necessary for the department to locate its exact source CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC) / A Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) and similar legal principle is applicable to the present facts of the case pertaining to source of unexplained investment. Since the income owned up by the two individuals in the settlement proceedings are on account of receipt of fees by them and not on account of impugned cash payment in land and rather the impugned cash payment for the land is not leading to any tax liability for the two individuals and is rather leading to the claim of relief from the tax liability by the appellant and the parties are related parties having vested interests; in such a scenario the onus is even greater on the appellant to show what has been claimed with stronger evidences. Further, even in the order of the honorable IBS there is no direction or finding that the addition in the hands of the appellant is liable to be deleted or the source stands explained. Further the appellant has not filed any docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed their written submission which is extracted in below; Facts:- 1. The assessee society was constituted on 25.03.2013 with the main object of imparting education (PB 1-18). It was in the process of acquiring land to carry out educational activity. Except for membership fees of Rs. 1,80,000/- there is no other receipt during the year under consideration (PB 21-22) and therefore since the income was below the maximum amount chargeable to tax, the return was not filed. 2. A search u/s 132 was carried out on Prince Group, Sikar on 10.03.2018 of which assessee is one of the entity. In response to notice u/s 153C return was filed declaring total income of Rs. 1,51,250/- which is below the maximum amount chargeable to tax (PB 19-20). 3. The AO at Pg 2, Para 7 of the order observed that in search of the premises of Sh. Joginder Sunda, Sh. Piyush Sunda and Smt. Urmila, a registered sale deed/ loose paper was found at Page 1 to 7 of Annexure AS, Exhibit 18 (PB 23-29). According to the sale deed land measuring 2.40 hectare situated at Village Kanwarpura, Dhod, Sikar was purchased by M/s Vivekanand Shiksha Samiti for total sales consideration of Rs. 15,00,000/- (Rs.50,000/- paid in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave claimed that if the office bearers of society have paid the amount out of their own sources and not claimed the same from society, it cannot be construed to be undisclosed investment of the society and if it is claimed by the office bearers, it will be only liability of the society to pay them and therefore AO is directed to examine the applicability of section 271D/271E of the Act. Further in none of the submissions the assessee has made any categorical statement that payment of unaccounted cash for the land was made by the two individuals on its behalf. The two individuals have no right on such asset. No documentary or corroborative evidence has been filed to show the money flow from the two individuals and the same cannot be presumed. The statements of two individuals have not been produced. There is no evidence on record that cash from earlier years as per cash flow statement was accumulated and not spent. There cannot be a reverse onus on the AO as it is a settled law that where assessee failed to prove satisfactorily the onus and the nature of credit entries in his books, it is the income of assessee and it is not necessary for the department to locate its exact source. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its order are incorrect. The same is explained hereunder:- (i) The Ld. CIT(A) at Pg 8 of the order has directed the AO to pass the information to the jurisdictional officers to examine the applicability of section 271D/271E of the Act. This means that the Ld. CIT(A) has accepted that amount is not paid by the society out of income but by arranging funds from Joginder Singh Sunda and Piyush Sunda. Therefore, addition confirmed is prima facie incorrect. (ii) Right from the inception assessee has claimed that the difference amount was paid by Joginder Singh Sunda and Piyush Sunda out of their undisclosed income offered before the Hon ble Settlement Commission. This is noted by AO at Para 7.3 of his order. Thus it is incorrect on the part of Ld. CIT(A) to observe that in none of the submissions the assessee has made any categorical statement that payment of unaccounted cash for the land was made by the two individuals on its behalf. (iii) Of course the two individuals have no legal right on the land purchased by the assessee but it is incorrect on part of Ld. CIT(A) to observe that no documentary or corroborative evidence has been filed to show that the money flowed from the two ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of authorities below cannot be affirmed. I, therefore, direct the AO to delete the impugned addition. Thus, ground raised by the assessee in this appeal is allowed. Krishna Agarwal Vs. ITO (2021) 63 CCH 0048 (Jodh.) (Trib) Para 14 of the decision is reproduced as under:- 14. In this regard, it is noted that the assessee has explained that out of earlier year's cash withdrawals from her bank account which were available as cash balance as on 01/04/2016, the assessee had deposited a sum of Rs. 68,95,000/- in her bank account during the year under consideration. It has been submitted that the assessee has sold a property, transferred in her name after the death of her husband, for a consideration of Rs 1,31,45,200/- during the financial year 2015-16 and the sale consideration has been received in installments during the financial year 2014-15 and financial 2015-16 directly in her bank account which has been subsequently withdrawn from time to time and due to non-fulfillment of purpose for which the cash was withdrawn, it was again re-deposited in the bank account during the year under consideration. In this regard, it is noted that the assessee in her return of income for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO and CIT(A) have proceeded purely on assumption and surmises that cash would not be lying idle with the Assessee for such a long time. The Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. Therefore, addition is deleted. Ramilaben B. Patel Vs. ITO (2019) 71 ITR (Trib) 0048 (Ahd.) Certain credit entries were reflecting the cash deposit in the bank account of the assessee. But the assessee failed to substantiate his claim for the source of such cash deposit. Therefore, the same was treated as undisclosed income and added to the total income of the assessee. The CIT(A) subsequently confirmed the view taken by the AO. CIT(A) rejected the contention of the assessee that the cash was deposited out of the cash withdrawal from the bank without adducing the cogent reasons. The cash withdrawal has not been doubted by the lower authorities, and nothing has been brought on records suggesting that the cash withdrawn from the bank has been incurred either as revenue expenses or capital expenses. In the absence of any documentary evidence, we can safely presume that the cash withdrawn from the bank was available with the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, implying AY 2018-19. The same, for substantive amendments, as in the instant case, represents the first day of the assessment year, i.e., AY 2017-18, which explains the assessee s grievance of it being thus effective for fy 2016-17 or, w.e.f. 01/4/2016. Enacting it mid-year and, further, making it applicable at once , becomes meaningless if the same is to take effect retrospectively, or is made effective from a later date (01/4/2017), which could in that case be by Finance Act, 2017. True, the amendment, where so read, does gives rise to a peculiar situation inasmuch as two tax rates would obtain for the current year, i.e., one from 01/04/2016 to 14/12/2016, and another from 15/12/2016 to 31/03/2017, but, then, that is no reason to read retrospectivity where the applicable date is clear and, further, there is nothing to suggest retrospectivity. Further, extraordinary and supervening circumstance of the Demonetization Scheme, 2016, brought out by the Government of India in November, 2016, explains the urgency in bringing an amendment mid-year. Further, the tax rate being in respect of incomes which are imputed with reference to a transaction/s, it is possible to administer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was purchased by M/s Vivekanand Shiksha Samiti. The sale deed records the total sales consideration of Rs. 15,00,000/-, Rs. 50,000/- paid in cash and Rs. 14,50,000/- paid by cheque. Based on the image found by the search team from the mobile data of Shri Jogindar Singh Sunda [ reproduced at Pg 3 of the assessment order] it is observed that (i) it is dated 30.06.2016 which is also the date of sale deed (ii) the area of land mentioned on it is same as mentioned in the sale deed and (iii) as per the image the total consideration is Rs. 1,92,17,000/- out of which amount paid by cheque is Rs. 14,50,000/- which is same as mentioned in the sale deed. Accordingly, AO concluded that the actual sales consideration of the property purchased is Rs. 1,92,17,000 /- whereas the consideration recorded in the sale deed is Rs. 14,50,000/-. On that finding it was held that the difference of Rs. 1,77,67,000/- paid in cash by the society. 7.1 In the proceeding u/s. 153C of the Act after filling the return, in the assessment proceeding it was not disputed that the purchase of land. But in fact even the source of the same was claimed to have been paid by Shri Jogendra Singh Sunda for Rs. 77,67,000/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee trust and it is obvious that the same has been paid by the trustees. In support of the contention the ld. CIT(A) has not appreciated the order of the Interim Board of Settlement (IBS) and affidavit placed on record. When the capitalization has been allowed by the IBS there is no meaning to again add as income of assessee. In the written submission the ld. AR of the assessee dealt with all the objection raised by the ld. CIT(A) and the same read by him while arguing the appeal of the assessee. The ld. AR of the assessee to support his contention he also relies on the various judicial precedence in the written submission. Ground no. 2 being consequential he relied upon the written submission. 8. Per contra, the ld. DR is heard who relies on the orders of the lower authority. The ld. DR submitted that by the trust and trustees are separate legal entity the income disclosed by the trustee cannot be allowed to be set off against the undisclosed assets of the trust. The contention so raised by the assessee before the Interim board for settlement is nothing but an afterthought and to avoid the legitimate tax by the assessee. Further in none of the submissions the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) as per the image the total consideration is Rs. 1,92,17,000/- out of which amount paid by cheque is Rs. 14,50,000/- which is same as mentioned in the sale deed and rest amount was paid in cash. Thus, it is concluded by the ld. AO that the actual sales consideration is Rs. 1,92,17,000 /- whereas the consideration recorded in the sale deed is Rs. 14,50,000/- and thus the difference of Rs. 1,77,67,000/- is paid in cash which was considered as unexplained investment of the assessee. 11. In the year under consideration assessee except the income of the membership fees for an amount of Rs. 1,80,000/- there is no other income which supports the source of purchase of property for the differential amount of Rs. 1,77,67,000/-. But the assessee explained that the cash consideration was paid by Shri Jogendra Singh Sunda Rs. 77,67,000/- and by Shri Piyush Sunda Rs. 1,00,00,000/- out of their additional income for Financial year 2016-17. They have consequent to the search offered for tax before the Hon ble Settlement Commission, New Delhi and contended by filling a cash flow statement filed the income thereof and the utilization of that income. The assessee also submitted the affidavit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e IBS, there is no direction or finding that addition in the hands of assessee is liable to be deleted or the source stands explained. No document is filed to show how the effect of order of Hon ble IBS has been given between the two individuals and the assessee. Based on these contentions the addition made by the ld. AO was confirmed by the ld. CIT(A). 13. The bench noted that Shri Jogendra Singh Sunda and Shri Piyush Sunda are office bearers of the assessee society. The assessee trust was constituted on 25.03.2013 with the main object of imparting education. The assessee was in process of acquiring the land to carry out the educational activity. During the year under consideration except for the membership fees of Rs. 1,80,000/- there is no other receipt. There are no records seized which suggest the unaccounted income of the assessee trust or any other loose paper found or seized. The only image found from the mobile data of Shri Joginder Singh Sunda which records the accounted and unaccounted transactions pertaining to the purchase of property made in the name of the assessee trust. In the proceeding consequent to the search the assessee claimed and contended that to start the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following for the consideration of IBS. i) The land was purchased by the society and the asset is in the name of the society Hence, the investment made thereon has to be considered in the hands of the society. ii) The society is an Association of a person iii) The question arises why the individual has invested his unaccounted money when he cannot gain or earn from the same. iv) Assessment of the society has been completed u/s. 1530 of the Act for AY 2016-17 and appropriate addition has been made in its hands, 9.6.2 In this regard, the applicant stated that the society has no Income for payment towards purchase of land and also there is no reference of society in the seized material. It clearly shows that the office bearer of the society has paid extra sale consideration but the, sale deed was executed in the name of society, if the office bearers of the society have paid the amount out of their own sources and not claimed the same from the society it cannot be construed to be undisclosed investment of the society and if it is claimed by the office bearer, it will be only a liability of the society to pay them. In view of the said facts, the reasons cited by the PCIT in the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed to show that the money flowed from the two individuals when the working of the on money is found from the mobile of Shri Joginder Singh Sunda. The source for making the payment once considered in the hands of that two brother and trustees as it is evident form the order of the IBS the same sourced investment again cannot be taxed in the hands of the assessee. As regards the non-submission of the statement recorded, the same were not submitted as there is no question raised by the search team. This contention was raised by the assessee was not controverted by the ld. DR. Further no material has been brought on record by the lower authorities to establish that the cash as per the cash flow statement has been spent elsewhere. Therefore, it cannot be presumed by ld. CIT(A) that the same was not available in payment of on money by these persons. In fact, it is the onus of the ld. AO to prove that the same has been spent elsewhere. Thus, considering the overall facts presented, content written in the seized document found from Shri Joginder Singh Sunda we are of the considered view that the payment of on money paid for purchase of land cannot be added in the hands of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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