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TMI Blog2005 (8) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... s as such the Departmental appeals are liable to be dismissed. The learned counsel for the assessee also referred to order of the Tribunal, Amritsar Bench in the case of Janak Raj Chauhan & Ors. vs. Asstt. CIT (2002) 75 TTJ (Asr) 260 : (2002) 257 ITR 79 (Asr)(AT). 5. We have considered the rival submissions and material available on record and the findings of the authorities below. We take the appeals ground-wise as under: 6. ITA No. 525/Asr/1997 (asst. yr. 1984-85): 6.1 Ground No.1: On this ground, the Revenue challenged the quashing of the assessment order on the point of jurisdiction. The CIT(A) following the decision of the Hon'ble Punjab & Haryana High Court in the case of Lt. Col. Paramjit Singh vs. CIT (1996) 135 CTR (P&H) 8 : (1996) 220 ITR 446 (P&H) quashed the assessment order. This issue was raised by the Revenue in ITA No. 524/Asr/1997 for the asst. yr. 1983-84 in the matter of Asstt. CIT vs. Janak Raj Chauhan (assessee). This Tribunal vide order dt. 12th July, 2005 in the aforesaid matter decided this ground in favour of the Revenue. By fOlloWing the same order, we set aside the order of the CIT(A) and order of the AO with regard to the jurisdiction is restored. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of addition of Rs. 41,900 made on account of unexplained investment made by the assessee in the name of Smt. Suhagwanti (assessee's mother) and Shri Hans Raj (assessee's father-in-law). The facts as taken from the record are that the addition was made of Rs. 41,900 on account of unexplained investment jointly made by Smt. Suhagwanti and Shri Hans Raj in purchasing plot of land on 26th May, 1983. Both of them had equal share in the property. The same was sold in the accounting period relevant to the asst. yr. 1991-92 by the assessee after obtaining the POA to dispose of the plot. While explaining the source of the investment of the assessee's mother Smt. Suhagwanti, it was submitted before the AO that she had the income from dairy-farming and regarding the source of Shri Hans Rat it was submitted that he had the savings from the business as goldsmith. The AO, however, inferred that vesting of the power to use the consideration received from the sale of the plot establishes that these persons were the benamidar of the assessee and the investment in their names in the purchase of the plot was made by the assessee which has not been satisfactorily explained. He has accordingly mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... father-in-law of the assessee had a locker account. Licence to run goldsmith business was also filed. It was submitted that he was a man of means and made the investment in the property. His withdrawal from the bank was also proved. The CIT(A) considering the material on record was of the view that the assessee has acted merely as a POA holder of his mother and father-in-law. The CIT(A) on the basis of material on record also held that both the above persons were having sources to make investment and as such the finding of the AO that assessee was benamidar is unjustified. The CIT(A) also held that the investment made by both the persons be considered in their individual cases. He has also directed the AO to initiate the proceedings against the legal heirs of Smt. Suhagwanti in case all the investments made by her from her own sources. The CIT(A) deleted the addition in the hands of the assessee. 7.2 On consideration of the above facts, we are of the view that the CIT(A) was justified in deleting the addition in the hands of the assessee. As is held above on the basis of POA, no right, title or interest is created unless it is supported by sale consideration. Nothing is proved fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiate the proceedings in the name of Smt. Suhagwanti through her legal heirs. Considering the above, we do not find it to be a fit case to interfere in the impugned order of the CIT(A) on this issue. There is no merit in this ground of appeal of the Revenue. The same is accordingly dismissed. 8. Ground No.4: The Revenue has challenged the direction of the CIT(A) with regard to the levy of interest under ss. 139(8), 215 and 217 of the IT Act. The learned representatives of both the parties have conceded that on this point the Tribunal, Amritsar Bench, in the case of the same assessee dismissed the Departmental appeal vide order dt. 12th July, 2004. By following the same order, this ground of appeal is dismissed. 9. No other ground is argued or pressed. 10. As a result, the appeal of the Revenue is partly allowed. 11. ITA No. 539/Asr/1997 (asst. yr. 1985-86): 11.1 Ground No.1: On ground No.1, the Revenue challenged the order of the CIT(A) holding that the assessee's mother Smt. Suhagwanti cannot be treated as the benamidar of the assessee. On this issue, we have dismissed the Departmental appeal in ITA No. 525/Asr/1997. By following the same order, we dismiss this ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) was also of the view that the assessee would not have had any intention to earn the profit from the investment. The CIT(A) accordingly held that the AO was not justified in treating the transaction as business transaction and further held that since the agricultural land is situated far away from the urban limits, the same is not liable even to be capital gains. The addition was accordingly deleted. 12.5 The learned Departmental Representative could not contribute much on this issue. No material is filed before us to contradict the findings of the CIT(A). 12.6 On the other hand, the learned counsel for the assessee relied upon the submissions made before the CIT(A) and also relied upon the decisions mentioned in the synopsis. In the case of G. Venkataswami Naidu & Co. vs. CIT (1959) 35 ITR 594 (SC), the Hon'ble Supreme Court held: "If a person invests money in land intending to hold it, enjoy its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade." The Hon'ble Punjab & Haryana High Court in the case of Kaur Singh vs. CIT (1982) 31 CTR (P&H) 958 : (1983) 144 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a land was developed near Ludhiana as a residential colony called Shastri Nagar. The assessee in his statement stated that he purchased the land in 1974 for about Rs. 72,000 per acre, which was converted into about 200 plots measuring 100 sq. yds. to 200 sq. yds. and sold @ Rs. 35 to Rs. 36 per sq. yd. and the area was developed as New Shastri Nagar. Later on, in the course of the assessment proceedings, he submitted that the land in fact was purchased by his wife, Smt. Kamaljit and mother Smt. Suhagwanti and he only acted as 'Mukhtar' (power of attorney holder). The AO, however, treated them as his benamidars and found that as per the registered sale deeds found in the course of the search, the assessee has received the sale price in the year under consideration. 16.2 The addition was challenged before the CIT(A) and it was submitted that the possession of the plot was handed over in 1974 to 1980 after receipt of the instalments but due to the provisions of land ceiling the sale deed could not be executed at that time which were executed much later. The sale consideration mentioned in the deed did not pass on to the assessee as the payment was received much earlier at lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record, was of the view that transactions for transfer of the land in plots were completed upto the year 1980 and considerations were also received. The CIT(A) relied upon s. 53A of the Transfer of Property Act as well as amended provisions in s. 2(47) of the IT Act and stated that transfer includes as mentioned in s. 53A of the Transfer of Property Act. The CIT(A) also relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Podar Cement (P) Ltd. (1997) 141 CTR (SC) 67 : (1997) 226 ITR 625 (SC) in which it was held that the requirement of registration of sale deed in the context of s. 22 is not warranted. The CIT(A) considering the entire material on record was of the view that the plots were sold prior to 1980, therefore, no addition could be made in the year under consideration merely because sale deeds were executed in this year. The CIT(A) accordingly, deleted the addition and allowed the appeal of the assessee. 16.4 The learned Departmental Representative relied upon the order of the AO and the learned counsel for the assessee relied upon the order of the CIT(A). 16.5 On consideration of the above facts, we do not find any justification to interfere in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No other ground is argued or pressed. 19. As a result, the appeal of the Revenue is dismissed. 20. ITA No. 541/Asr/1997 (asst. yr. 1987-88): 20.1 Ground No.1: The Revenue challenged the findings of the CIT(A) holding that Smt. Suhagwanti cannot be treated as the benamidar of the assessee. On this issue, we have dismissed the Departmental appeal above. By following the same order, we dismiss the above ground of appeal of the Revenue. 20.2 Ground No.2: On ground No.2 the Revenue challenged the findings of the CIT(A) directing the AO to allow the deduction under s. 80T of the IT Act to the tune of Rs. 46,900 on the sale of shop. 20.3 Briefly, the facts are that the assessee is dealer in the property. The AO treated the sale of shop also as income from business or profession. The AO, therefore, disallowed the assessee's claim to treat the same as the long-term capital gain and also rejected the assessee's claim for deduction under s. 80T of the IT Act. 20.4 The addition was challenged before the CIT(A) and it was explained as to how the transactions have been entered into without any intention of trading in land and building. It was also submitted that these transactions were int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the Revenue. 21. Ground No.3 : On this issue, the Revenue has challenged the deletion of addition of Rs. 5,91,096 made by adding 1/3rd share of the assessee and also 1/3rd share of his mother, Smt. Suhagwanti by treating her as assessee's benamidar in the profit from the sale of the land at village Mussadabad, Nazafgarh, New Delhi. 21.1 Briefly, the facts are that the AOP was formed by the assessee, his mother Smt. Suhagwanti and his brother Shri Jagdish Raj Chauhan for sale of the land at village Mussadabad, Nazafgarh, New Delhi. The AO has added not only the 1/3rd share of the assessee but also 1/3rd share of his mother, Smt. Suhagwanti by treating her as assessee's benamidar. The AO has taken the share of the profit of the assessee in a sum of Rs. 2,95,548 and his mother, Smt. Suhagwanti at Rs. 2,95,548 (Rs. 5,91,096). 21.2 The CIT(A) was of the view that this issue has already been decided for the asst. yrs. 1987-88 to 1989-90 in the case of assessee's brother Shri Jagdish Raj Chauhan in which AO was directed to initiate proceedings for the assessment of the AOP if he has jurisdiction to assess the AOP. It was also argued that the AO should follow the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raj Chauhan and others and in pursuance thereof the AOP assessed separately. We may also mention that Smt. Suhagwanti cannot be held to be the assessee's benamidar as held by us above on different grounds as she was having independent source of income. Therefore, the entire findings of the AO on this issue are erroneous and the CIT(A) was justified in deleting the addition on this issue. There is no merit in the appeal of the assessee (sic-Revenue) on this issue. The same is accordingly, dismissed. 22. No other ground is argued or pressed. 23. As a result, the appeal of the Revenue is dismissed. 24. ITA No. 542/Asr/1997 (asst. yr. 1988-89): 24.1 Ground No.1: On ground No.1, the issue as regards Smt. Suhagwanti is benamidar of the assessee, we have already dismissed the Departmental appeal above. By following the same order, this ground of appeal of the Revenue is dismissed. 25. Ground No.2: On ground No.2, the Revenue has challenged the deletion of addition of Rs. 81,750 made on account of profit on sale of the plots in the residential colony named Shastri Nagar, Ludhiana. On this issue, we have dismissed the Departmental appeal in ITA No. 540/Asr/1997. By following the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears whereas for the asst. yr. 1990-91, the income was estimated at Rs. 30,000 in each case. The AO did not take any action on those invalid returns filed beyond the time of filing of the return but the estimated income declared in their case was included in the hands of the assessee. He also held his two sons as the benamidar of the assessee in respect of the various assets/income acquired in their names. The CIT(A) considering the submissions of the assessee and material on record deleted the entire addition. His findings in paras 10.2 are reproduced for reference as under: "10.2 I have considered the facts of the case and also gone through the elaborate written submissions filed by the assessee. During the accounting period relevant to the asst. yrs. 1988-89 and 1989-90 for which the estimated income from property dealings has been declared in the name of the two sons, they were minors. They were not legally competent to enter into an agreement for the purchase and sale of the property, though in their names the guardian can make the sale and purchase of the property not detrimental to their interest. Similarly, they can also not execute any power of attorney to dispose of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings of the AO, therefore, clearly established that no income has been earned or accrued in favour of sons of the assessee, i.e., Shri Raj Kumar and Shri Rakesh Kumar. If no income accrued or earned according to the AO by the sons of the assessee, then we fail to understand how the addition on such income can be made in the hands of the assessee. We may also mention here that the AO failed to appreciate/consider the relevant provisions of law applicable to the assessment year under appeal in respect of making addition in the hands of the assessee in respect of the income allegedly earned by the minors. The addition in the case of the assessee in respect of alleged income earned/accrued to the minors could be made with the aid of s. 64 of the IT Act. The relevant provisions in s. 64 of the IT Act in the relevant years 1988-89 and 1989-90 in appeal did not allow addition of the above nature of alleged income to be made in the hands of the assessee. We accordingly do not find any justification to interfere in the order of the CIT(A). This ground of appeal of the Revenue is, therefore dismissed. 28. No other ground is argued or pressed. 29. As a result the appeal of the Revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd equal amount for the assessee's mother. The total profit comes to Rs. 31,540. It was argued that sale of the agricultural land is exempt from the tax. However, the AO treated it to be the business of the assessee and made the addition. 34.1 The addition was challenged before the CIT(A) and it was submitted that the assessee had purchased agricultural land in July, 1985 for cultivation. He carried on the cultivation operation and derived income from agriculture at Rs. 5,000 for the asst. yrs. 1986-87, 1987-88 and 1988-89 and the same were declared in his returns of income and assessed by the AO. It was submitted that due to terrorists activities the land was sold, therefore, inference of the AO is unjustified that the assessee is engaged in the business activities of dealing in agricultural land. It was further submitted that the AO has not pointed out any material to justify the treatment of sale of such land as income from business when the said land was neither purchased as stock-in-trade nor treated as such by the assessee and purchase and sale of agricultural land was never a regular and systematic activity of the assessee. The CIT(A), accordingly, deleted the addition. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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