TaxTMI 
TaxTMI 
2008 (6) TMI 607
X X X X Extracts X X X X
X X X X Extracts X X X X
....l) whereas the vendors themselves have admitted to have received Rs. 46,50,000 instead of Rs. 22,80,000 as is evident from their statement recorded by the AO and entries found in their bank accounts. Therefore, addition to the extent of Rs. 23,70,000 at least (Rs. 46,50,000-Rs. 22,80,000) should have been sustained." 2. The brief facts leading to the stated dispute are as follows. The assessee is a partnership firm which filed its return of income for the asst. yr. 2004-05 declaring nil income. The return of income filed was picked up for scrutiny assessment by the AO. The assessee, in the previous year relevant to the assessment year under consideration, was engaged in establishing an industrial undertaking at Jharmajari (Barotiwala), an industrial area in District Solan of Himachal Pradesh. However, no manufacturing operations have been carried out in the year since it was in the process of establishing the factory. The assessee purchased land for the said purpose measuring 15 Bighas and 4 Biswa. The investment made by the assessee in such land is the subject-matter of dispute before us. The assessee purchased the land in Village Kunjal, Barotiwala in District Solan (HP). The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....., 2005; that Smt. Premi had deposits of Rs. 5,76,154 in her bank account on 3rd Sept., 2003; (d) That Shri Tilak Ram and Shri Ram Lal, the co-sellers also admitted to have purchased lands by using a part of the aforestated difference in sale consideration. 3. The AO held that the evidence on record clearly showed that the land in question was purchased by the assessee for consideration of more than Rs. 22,80,000. That the actual consideration was Rs. 95,46,450, the value determined by the State Revenue authorities as market value for the purpose of payment of stamp duty. 4. The AO has also sought to explain the difference between Rs. 95,46,451, determined by the Revenue authorities and the receipt of actual consideration admitted by the sellers at Rs. 46,50,000 on account of the presence of the middlemen in the transaction. According to the AO, at the time of entering into the agreement to sell on 14th Aug., 2003, the sellers had also executed a general power of attorney in respect of the same land in favour of one Shri Jagan Nath. The AO has observed that because of the industrialization of land in the areas around Barotiwala, the middlemen after obtaining general ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2003 itself, i.e. the date of entering of agreement to sell. In support s. 2(47) of the Act was relied upon. It was also submitted that the AO was not justified in comparing the market value on the subsequent date of 10th Nov., 2003, which date was merely the date of execution of sale deed. 8. Further, the statement of the seller regarding the receipt of consideration over and above what was shown in the sale deed was also assailed by the assessee before the CIT(A). According to the assessee, the statement of the seller was unreliable because the seller himself had sworn an affidavit before the District Court that the sale consideration was only Rs. 22.80 lacs. In this regard the assessee also argued that there was no cross-examination of the seller allowed to the assessee before the assessment was completed by drawing adverse inference on the basis of the statement of the seller. 9. The CIT(A) has considered various submissions of the assessee and has found it fit to delete the addition. The CIT(A) has passed an elaborate order and the gist of the decision is that both on factual and legal grounds the addition in question was not merited. 10. Against the aforesaid the Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Nov., 2003. Our attention has been drawn to the various documents in support of the above which have been placed in the paper book, the same are detailed as under : (a) Copy of agreement to sell dt. 14th Aug., 2003 along with copy of cheques issued to the vendors in pursuance to the above agreement. (b) Copy of power availability certificate at the land under consideration issued by Himachal Pradesh State Electricity Board dt. 8th Oct., 2003 to the assessee along with proof of fee deposited with them. (c) Copy of no-objection certificate dt. 13th Oct., 2003 obtained from Gram Panchayat by the assessee to set up the industrial unit at the land under consideration. (d) Copy of essentiality certificate dt. 14th Oct., 2003 issued by Government of Himachal Pradesh to assessee for the land under consideration. (e) Copy of certificate for change of land use dt. 11th Oct., 2003 of the land under consideration issued by Town and Country Planning Department of Himachal Pradesh to the assessee along with proof of fees paid to them. (f) Copy of no-objection certificate dt. 15th Oct., 2003 issued by Himachal Pradesh State Environment Prote....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (vi) CIT vs. P.S. Kuppuswamy 1978 CTR (Mad) 73 : (1978) 112 ITR 1012 (Mad); (vii) Dy. CIT vs. Dr. Gurpreet Singh Wandr (ITA No. 536/Chd/2006, dt. 26th Nov., 2007); (viii) Amarjit Singh Bakshi (HUF) vs. Asstt. CIT (2003) 81 TTJ (Del) 169 : (2003) 86 ITD 13 (Del); (ix) Smt. Neena Syal vs. Asstt. CIT (2000) 69 TTJ (Chd) 516 : (1999) 70 ITD 62 (Chd); (x) Indian Oil Corporation vs. ITO (1986) 58 CTR (SC) 83 : (1986) 159 ITR 956 (SC); (xi) CIT vs. P.V. Kalyanasundaram (2006) 203 CTR (Mad) 449 : (2006) 155 Taxman 454 (Mad); (xii) CIT vs. P.V. Kalyanasundaram (2007) 212 CTR (SC) 97: (2007) 164 Taxman 78(SC). 15. We have carefully considered the rival submissions and perused the orders of the lower authorities, as also the material to which our attention has been drawn during the course of the hearing. On the basis of the aforesaid, we proceed to dispose of the issue in dispute before us in the following lines. The short issue before us relates to the justification of the AO in invoking the provisions of s. 69B of the Act with respect to the investment made by the assessee in purchase of land at Barotiwala. Sec. 69B of the Act pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 4.10 lacs as stated in the sale deed and further stated that the earlier statement given before the authorities was not true. Subsequently, the seller again submitted a letter to the AO withdrawing this affidavit. The seller was again examined by the AO wherein he reiterated that the actual sale consideration received was Rs. 34.85 lacs as against Rs. 4.1 lacs stated in the sale deed. For the above reasons, the AO made an addition of Rs. 30,75,005 in the hands of the assessee as consideration stated to have been paid outside the books of accounts. The Hon'ble Madras High Court upheld the deletion of addition made by the Tribunal. According to the Hon'ble High Court, the statement given by the seller was unreliable inasmuch the same was inconsistent and was also in conflict with the IT return filed by him. The Tribunal had come to a finding that the action of the seller in admitting higher sale consideration subsequently was nothing but an effort to save himself from further harassment from the Revenue. The Hon'ble High Court held that the burden of proving actual consideration in such transactions was on the Revenue which was not discharged. The High Court further ob....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e perusal of the above, it is clear that insofar as the bank accounts of the sellers are concerned, there is no clinching linkage between the cash deposits in the banks and the alleged flow of unrecorded consideration from the assessee. Moreover, it is also a plausible inference that the seller was attempting in explain the sources of his own investment in lands, a factor which has been admitted by the seller himself in the statement recorded by the AO on 5th Jan., 2006. Moreover, the sellers have purportedly not filed any return of income-tax, either voluntarily or in spite of the notice issued by their AO under s. 148 of the Act. This aspect is emerging from the document filed by the learned Departmental Representative in the course of the hearing. It is also factually appropriate to deduce that the sellers have made contradictory assertions, assumptions regarding the actual amount of sale consideration received from the buyer assessee. The consideration mentioned in the sale deed differs from the consideration admitted in the course of recording of statement by the AO of the sellers on 5th Jan., 2006. Again, the consideration, as averred in the affidavit made by the sellers befo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....We may also notice here that the stand of the AO is that the actual sale consideration paid by the assessee for purchase of land is Rs. 95,46,451. The case made out by the AO is that Rs. 46,50,000 have been paid by the assessee to the sellers in question and the balance of Rs. 48,96,451 have been actually paid by the assessee to the middlemen. In fact, for having made the payment of Rs. 48,96,451 to the middlemen there is not even an iota of evidence on record except the presumption outlined in s. 50C of the Act. Insofar as such presumption is concerned, we have already noted that the same cannot be invoked in the hands of a buyer for the section deals with only case of computation of capital gains under s. 48 which is applicable only in the case of seller. In any case, insofar as amount of Rs. 48,96,451 is concerned, even the statement of the seller does not admit of the same. Although the AO has referred to modus operandi by way of which middlemen obtained power of attorney from the original owner to execute the sale of land subsequently, at higher prices. However, the same is only a presumption unsupported by any material or evidence. In fact, although the AO has identified the ....