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TMI Blog2023 (10) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is invested in new land and since loan was repaid afterwards out of the sale consideration received therefore deduction u/s 54B cannot be denied. Reliance was placed on case of Inshar Singh Chawada [ 2010 (3) TMI 1116 - ITAT MUMBAI] and Dr. P. S. Pasricha [ 2009 (10) TMI 898 - BOMBAY HIGH COURT] Ld. AO s contention that the Sahmati / Kabja Patra was not notarized can be treated as an irregularity but cannot term the document as false or vain, so as to deny the deduction u/s 54B, dehors any supporting material to prove that the said document was a bogus document, while the assessee s contentions are supported with the fact that advances were received through banking channel duly recorded in the Sahmati / Kabja Patra as well as in the registered sale deed, therefore, we are convinced with the submission of the assessee. Accordingly, as per settled position of law, we are of the considered opinion that assessee has appropriately claimed the deduction u/s 54B and Ld. CIT(A) s decision and deleting the addition made by Ld. AO is found to be a rational conclusion. Resultantly, ground No. 1 to 5 of the revenue are dismissed. Addition u/s 68 - assessee has received on secured loan - HEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither before or on the date of transfer of land at Sejbahaar in contravention to section 54 B? 2. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs. 91,80,111/- made on account of deduction claimed u/s 54B of the Act thereby ignoring the fact that the Bikri Ikrarnama between the assessee along with Shrichand Golechha and Smt. Chandu Bai Jain and M/s Satyam Developers was duly notarized which was also accepted by the assessee in reply filed on 26.12.2017, whereas the Sahmati Patra and Kabja Patra dated 10.09.2014 was not notarized and also in view of fact that there is no any mention of Sahmati Patra, Kabja Patra and the Bikri Ikrarnama in the sale deed executed on 30.03.2015 for Rs. 1,94,40,000/-? 3. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of 91,80,111/- on account of deduction claimed u/s 54B of the Act thereby ignoring the fact that in the Sahmati Patra and Kabj Patra dated 10.09.2014 it is mentioned that the seller has given the possession of the land to the purchaser only for the purpose of executing agricultural work but not otherwise handed over full possession and owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es turnover reported in audit report and ITR. 5. During the F.Y. 2014-15 relevant to A.Y. the assessee has jointly sold land with Shri Shrichand Golechha s/o Shri Pukhraj Golechha a land at Sejbahar Kh. No. 481/1 area 1.215 hectare to M/s Satyam Developer for Rs. 1,94,40,000/- on 30.03.2015. As mentioned in the deed the entire sales consideration was received by cheques as under:- Date Cheque no. State Bank of India Amount 02.09.2014 771035 State Bank of India Rs. 1000000/- 15.09.2014 771036 State Bank of India Rs. 100000/- 15.09.2014 771037 State Bank of India Rs. 370000/- 13.05.2015 771041 State Bank of India Rs. 1000000/- 08.07.2014 389873 State Bank of India Rs. 1000000/- 06.09.2014 413227 State Bank of India Rs. 500000/- 06.09.2014 413228 State Bank of India Rs. 1000000/- 13.09.2014 413229 State Bank of India Rs. 500000/- 20.03.2015 021076 Allahabad Bank Rs. 6000000/- 21.03.2016 21098 Allahabad Bank Rs. 97500/- 15.09.2016 320961 Allahabad Bank Rs. 972500 Total Rs. 19440000/- 6. The total land sold at Sejbahar was undisputedly an agricultural land which is situated within 8 Km. of the limit of Municipal Corporation, Raipur, hence, the land sold was a capital asset. The deed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Shrichand Golechha and M/s Satyam Developers. The said agreement was found to be neither registered nor notarized. In the agreement the Kh. No. 481/1 and area 1.618 hectare is mentioned to be sold @ Rs. 65,00,000/- per Acre and the details of advance payment of Rs. 60,00,000/- is mentioned as under :- Amount Cheque no. Bank Name Rs. 2000000/- 320960 Bank name not date not given Rs. 1000000/- 413227 Bank name not date not given Rs. 1000000/- 771035 Bank name not date not given Rs. 1000000/- 389873 Bank name not date not given Rs. 1000000/- 389872 Bank name not date not given Total Rs.6000000/- Bank name not date not given 8. On going through the payment details in the sale deed consisting of total consideration at Rs. 1,94,40,000/-, the AO found that there is no mention of cheque No. 320960 for Rs. 2000000/- and cheque no. 389872 for Rs. 1000000/- in the deed. Also, the amount of Rs. 5,00,000/- is mentioned in the sale deed against the cheque no. 413227 dated 06.09.2014. In response to the summons issued to M/s Satyam Developers, a written reply a/w copies of sale deed for Rs. 1,94,40,000/-. Rs. 1,81,02,500/- and Rs. 1,22,85,000/- and an agreement of sale between the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.09.2014 when as agreement was exacted and following payments where received through bank before the date of agreement which payments are also mentioned in the relevant registry copy of bank statement enclosed to evident the credit entries. Date Cheque No. Amount 02.09.2014 771035/- Rs. 1000000/- 09.09.2014 389873 Rs. 1000000/- Deduction u/s 54 is already discussed in our submission dated 21.09.2014. The reply and plea of the assessee were not found acceptable by the Ld AO for the following reasons- a) The Bikri Ikramama between the assessee along with Shrichand Golechha and Smt. Chandu bai jain and M/s Satyam Developers was duty notarized which is also accepted by the assessee in reply filed on 26.12.2017. b) The Sahmati Patra and Kabja Patra dated 10.09.2014 was not notarized. c) There is no any mention Sahmati Patra and Kabja Patra and also the Bikri Ikramama in the sale deed executed on 30.03.2015 for Rs. 19440000/- d) In the Sale/purchase deed dated 30.03.2015 there is also no mention that the kabja on the land was handed over to the purchase on 10.09.2014. In the contrary it has been mentioned in page 5 of the deed that the sellers are in need of money for household/busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been allowable only when the assessee would have purchased the agricultural land after 30.03.2015, consequently, the claimed u/s 54-B was disallowed. The cost of the acquisition of land sold at Sejbahar is taken at Rs. 2,73,635/- as furnished by the assessee in his reply and indexed cost is worked out to Rs. 5,39,889/- (F.Y. 2006-07 Rs. 273635/519 x 1024 = 5,39,889). finally, the AO calculated the taxable long term capital gain at Rs. 91,80,111/-. 10. Aggrieved with the above order of the AO, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) deleted the addition made by the AO by observing as under :- 2.3 I have gone through the submission of the appellant and also perused the assessment order. As per the AO the land from Shri Gurdeep Singh was purchased on 30/03/2015 whereas the land at Sejbahar was sold on 31/03/2015, therefore the claim u/s 54B is not allowable since date of purchase is later than date of sale. This finding is not correct. Because the AO has himself mentioned in para 3.2 that the land at Sejbahar was sold on 30/03/2015. Therefore, the date 31/03/2015 mentioned at para 3.4 is not correct. Further the money on sale of Sejbahar land was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital assets under the said section, the assessee, being an individual or his parents or a HUF, should have purchased any other land being used for agricultural purpose, immediately preceding the date on which the transfer of such capital asset took place. 12. It was the submission of Ld. Sr. DR that Ld. CIT(A) has grossly erred in deleting the addition ignoring fact that the Bikri Ikrarnama between the assessee along with Shrichand Golecha and others M/s Satyam developers was duly notarized and the assessee is also a party to the same and accepted the same. Whereas, the Sahmati Patra and Kabja Patra dated. 10/09/2014 was not notarized. Moreover, the Sahmati Patra / Kabja Patra and the Bikri Ikrarnama were not referred in the sale deed executed on 30/03/2015. Another argument of the department was that the Sahmati Patra/ Kabja Patra which was the basis for claiming the deduction u/s 54B was not having any discussion that the seller had given the full possession or the ownership right of land to the purchaser, rather the possession of the land was conditional one i.e. only for the purpose of performing of agricultural work. It is the contention of revenue that possession for li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer page no 38 of PB ). ➢That in view of spirit of CBDT Circular issued dated 10.05.1983 for claiming deduction u/s 54E (refer page no 40 of PB ) and in view of various case laws, it is to submit that if the advance amount is utilized for purchase of another land even through the registry has taken place subsequently, the assessee is eligible for deduction u/s 54B.That in the present case, the assessee has utilized the advance amount for purchase of land and is eligible for deduction u/s 54B of the Income Tax Act, 1961. The assessee relies on the following case laws: Pankaj Kumar Agrawal VS. ITO [54 CCH 544] (ITAT Raipur Bench) (Refer page no 108-109 of PB) (Covered Case) Inderjeet Singh Mann vs. ACIT [ITA No. 1136/CHD/2014] (ITAT Pune Bench)(Refer page no 93-105 of PB) Ramesh Jakhadi vs. ITO [41 ITD 368] (ITAT Chandigarh Bench) (Refer page no. 106-107 of PB) CIT vs. Subhash Vinayak Supnekar [(2016) 97 CCH 0250] (High Court of Bombay) (Refer page no 91-92 of PB) In view of above facts and circumstances the addition made by the AO has correctly been deleted by CIT(A). 14. Ld. AR also submitted a chart showing details pertaining to the claim of deduction u/s 54B of the I.T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of the said Sahmati/ Kabja patra the assessee has received advance amount for sale of the said land which is evident from registered deed wherein the said advance amount along with some other amount is utilized for the purpose of purchasing the agricultural land. Therefore, the assessee has rightly claimed the deduction u/s 54B. Ld. AR further drew our attention to CBDT s Circular dated 10/05/1983 referring to clarification pertaining to section 54E of the Act, which is extended to the reliefs claimed u/s 54B also. According to the said circular CBDT has clarified that the Board have decided that if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption u/s 54E. The board has further clarified that same consideration would apply for relief u/s 54B also. Copy of the CBDT s Circular is extracted as under: SECTION 54E l EXEM PTION OF LONG-TERM CAPITAL GAINS WHEN CONSIDERATION IS INVESTED IN SPECIFIED ASSETS 436. Assessee investing earnest money in specified assets before date of transfer - Whether amount so invested qualifies for exemption 1. Section 54E provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit, so to say. REFERRED TO IN - The above circular was referred to in B.K. Chadha v. ITO [1987] 27 TTJ (Del. - Trib.) 485, with the following observations : The Circular No. 359 issued by the CBDT on 10-5-1983 also does not help the assessee s case. That circular of CBDT applies to a situation where a part of net consideration received on sale of property is invested in a specified asset prior to the date of the execution of the sale deed. It has been stated by the Board that even when the investment in specified assets is made on a date prior to the date of the execution of the sale deed the exemption under section 54E should not be denied on the ground that the investment is not made within a period of six months after the date of transfer. That situation does not obtain in the present case (p. 489) EXPLAINED IN - Dy. CIT v. Tollygunj Club [1995] 52 ITD 166 (Cal.) with the following observation : The CBDT s Circular No. 240, dated 17-5-1978 advisedly and significantly did not stipulate that sub-section (3) would be applicable from the assessment year 1978-79, which was normally done in such circulars explaining the newly introduced statutory provisions. It only stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also proved that when substantial amount was received against the sale of land, it is available to the assessee for making investment in purchases of land. The assessee claimed that he has made investment of Rs. 51,80,000f- in the purchase of another land vide purchased deed dated 9.6.2008. Therefore, authorities below cannot deny deduction claimed u/s 54B of the I.T. Act. Since the assessee has invested the advance money in purchase of land before the date of transfer of the land, the amount invested will qualify for exemption u/s 54B of the I.T. Act. The evidence and material on record clearly prove that payment for purchase of land was made out of advance received by the assessee against sale of land, in the year under consideration. The claim of the assessee for deduction u/s 54B is thus supported by the Board Circular No. 359 (supra)and the decisions relied upon by the assessee. The authorities below were, therefore, not justified in denying the deduction claimed u/s 54B of the Act for a sum of Rs. 51,80,000/-. In view of the above discussion and in the light of the Board's Circular and the decisions cited above, we direct the Assessing officer to grant deduction claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset therefore the same is qualified for exemption u/s 54B, in the present case since the purchase of the new capital asset in the form of agricultural land was made out of the advances received from the sale of agricultural land therefore all such amounts incurred for the purchase of land are eligible for exemption u/s 54B. To demonstrate that the advances received on account of sale of agricultural land, possession of the same was already given to the buyer as mentioned in Sahmati / Kabja Patra on 10/09/2014, a statement showing such transactions is furnished at page no. 39 of the assessee s paper book the same is extracted as under: 18. In terms of aforesaid submissions Ld. AR submitted that Ld. CIT(A) has rightly appreciated the facts and circumstances of the case by deleting the addition incorrectly imposed by the Ld. AO, therefore, the same justifies to be sustained. 19. We have considered the rival contentions, perused the material available on record and case laws furnished before us for our consideration. On consideration of the factual matrix of the issue and after going through the orders of revenue authorities, the primary facts emerged are that the assessee has enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year the assessee has received on secured loan of Rs. 1,25,21,000/-. This transaction was examined by the AO and has observed that the assessee has purchased agricultural land at village Dhanelli by investing of a sum of Rs. 1,24,74,889/- through cash payments towards entire amount of the said purchase including stamp duty and registration expenses. Ld. AO doubted the said transaction and so asked to assessee to explain the source of such cash investments with supporting documents. In response personal balance sheet for the A.Y. 2014-15 and 2015-16 along with personal cash book were furnished. On verification of the balance sheet and cash book, it is found that assessee has shown unsecured loan of Rs. 1,25,21,000/- in the name of 16 loan creditors. Ao observed that all the said unsecured loans were new. Confirmation from loan creditors and copy of acknowledgment of their return of income were filed by the assessee, to enquire further Ld. AO asked the assessee to file copy of personal capital account and balance sheet for the AY 2013-14, 2014-15 and 2015-16. On perusal of confirmations Ld. AO observed that the amounts shown on the credit side of the confirmation has ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income capital account. Balance sheet and bank statement of the creditors. As per the copy of a/c filed all the loans have been shown as received during the A.Y. 2015-16. As such the creditworthiness of the loan creditors, mode of the transactions and genuineness of the transactions have not proved by the assessee. Onus to prove the creditworthiness of the creditors., mode of transactions and genuineness of transaction was on the assessee, but the assessee failed to discharge his onus. Therefore, the amount of Rs. 12521000/- introduced in the balance sheet in the form of unsecured loans from above persons., is treated as unexplained credit u/s 68 of the Income Tax Act, 1961 and added to the total income of the assessee. Reliance is also placed on the decision of Commissioner of Income Tax Vs. Sofia finance Ltd. Dated 27.08.1993 [DELHC] and Commissioner of Income Tax Vs. Nova Promoters Finalease Pvt. Ltd. Dated 15.02.2012 [DEL HC]. Penalty proceedings u/s 27(l)(c) are imitated for furnishing inaccurate particulars of income. 3.3 Facts being as above, the AO has treated unsecured loan received by the assessee as assessee s income u/s 68. The AO has noted that the assessee has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Orient Trading Company Ld vs CIT 49 ITR 723 honorable Bombay HC held that once assessee has discharged its onus by furnishing documents to identify third party it was not for the assessee to establish the creditworthiness of third party. The jurisdictional Chhattisgarh High Court in the case of Pawan Kumar Agrawal vs ITO has on similar facts held that the first appellate authority was fully justified in taking the view that it was open to the department to take recourse of section 131 or section 133(6) of the Act if they were to further proceed. That not having done so, the FAA was within its jurisdiction to conclude on facts and law, in favor of assessee. Following these decisions, and considering above facts, I held that the AO has made addition without making any inquiry to disprove the documents provided by the assessee. The addition is therefore deleted . 22. At the outset, Ld. Sr. DR on the issue of deleting the addition made by AO u/s 68 on account of failure of assessee in discharging the onus cast upon it to prove the creditworthiness, and genuineness of the transaction, submitted that Ld. AO was not convinced with the submissions of the assessee with respect to the loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition can be made on surmises and presumption. The assessee relies on the following case laws: Pawan Kumar Agrawal vs. Income Tax Officer, Ward 2(2), Bilaspur, Tax case No. 24 of 2011, High Court of Chhattisgarh (Refer page no 130-132 of PB) Commissioner Of Income Tax Vs. Mark Hospitals (P) Ltd. (2014) 91 CCH 0008 Chen HC (Refer page no 110-111 of PB) CIT Anr vs. Russian Technology Centre Pvt. Ltd Anr. [ 300 CTR 5011 Delhi High Court (Refer page no 114-115 of PB) Red Pro Motors Pvt. Ltd. Vs. Income Tax Officer, (2020) 60 CCH 0450 Del Trib (Refer page no 118-120 of PB) In view of above facts and circumstances the addition made by the AO has correctly been deleted by CIT(A). It is prayed accordingly. 24. It was further submitted by the Ld. AR that all the unsecured loan received by the assessee during the AY 2015-16 were repaid to the respective loan creditors, therefore, there should not be any doubt with respect to genuineness of the said loans. Copy of the chart furnished before us is extracted as under: Unsecured loan receipt and repayment Status (Rekh Chand Jain)-A.Y. 2015-16 Loan Received Detail Loan Repayment Detail Name of the Amount Page no of Page no in Amount Cheque Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay High Court on the case of Orient Trading Company Ltd. Vs. CIT 49 ITR 723, wherein it was held that once the assessee has discharged his onus by furnishing the documents to identify third party it was not for the assessee established the creditworthiness of the third party. In the case of Pawan Kumar Agarwal Vs. ITA Hon ble Jurisdictional High Court of Chhattisgarh has held that the first appellate authority was fully justified in taking the view that it was open to the department to take recourse of section 131 or section 133(6) of the Act, if they were to further proceed. That not having done so, the FAA was within its jurisdiction to conclude on facts and law, in favour of assessee. In the present case, the assessee has further substantiated by submitting the information pertaining to repayment of all the loans in the following AY 2016-17 along with copies of bank statement of the assessee showing all such repayments, such facts shows that the doubt of Ld. AO with respect to genuineness of the transaction was excessive, without proper independent enquiries, based on surmises/presumptions, thus, the assessee cannot be penalised for the same. Under such facts and circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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