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TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1711
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....e the notice u/s 143(2) of the Act is bad in law. 2. The ld. ITO erred in adding Rs. 1,29,15,000 u/s 68 of the Act on the ground that the cash deposit in bank accounts are unexplained. 2.1. The Ld. CIT(A) failed to appreciate the fact that the cash was deposited out of cash withdrawn from the bank accounts and advance received back from Three persons to whom advance was given by the assessee in preceding year for the purchase of agricultural land, who confirmed the return of advance to the assessee in response to notice u/s 133(6) of the Act and subsequently in their statement recorded by the Id. ITO u/s 131 of the Act. 2.2 The Ld. CIT(A) failed to appreciate the fact that the Assessee has income only from "Other sources'- bank interest and 'Agricultural and the Assessee has no business; and therefore, the Assessee is neither required by law nor is maintaining book of accounts and therefore, addition u/s 68 of the Act is bad in law; and without prejudice the deposit in Bank account cannot be added u/s 68 of the Act. 3. The Id. ITO erred in adding Rs. 26,15,000 u/s 69B of the Act as well as Ld. CIT(A) erred in sustaining that addition although the purchase consideration as d....
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....to sale , copy of the income tax return and bank statement of those parties. No specific details about the date and the purpose of cash payments were also filed. Therefore, the Ld. A.O. held that this amount deposited by the assessee is unexplained income of the assessee. With respect to the agricultural income, assessee filed only evidence in the form of a letter from Sarpanch that assessee is having agricultural land. The Assessing Officer did not accept the fact, however, because of the holding of the land the A.O. allowed a sum of Rs. 30 lacs as income from agricultural produce. The balance sum of Rs. 7,85,000/- was also added along with the bank deposits u/s 68 of the Act. Therefore, out of the cash deposited in the bank accounts of Rs. 1,59,15,000/-, ld A.O. made an addition of Rs. 1,29,15,000/-. 04 The Assessing Officer further found that during the year the assessee has purchased property of Rs. 73.85 lacs as per the sale deed furnished. For the purpose of the valuation, matter was referred to the DVO. However, valuation could not be obtained because of non-cooperation by the assessee. Therefore, the A.O. deputed an Inspector who submitted a report on 10 March ....
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....e assessee has given cash for purchase of agricultural land earlier. The assessee submitted the date wise chart of cash deposit and the source of deposit of the cash. He further stated that summons u/s 131 was issued to all three persons who attended and they confirmed that they have received the money from the assessee in Assessment Year 2007 to make arrangement for purchase of an agricultural land and, therefore, as the land could not be purchased sum was returned. The Ld. CIT(A) has dealt with the whole issue vide Para No. 8 & 9 of his order as under. "8. I have considered the facts of the case, remand report of the AO and submissions of appellant. Firstly, I take the issue of explaining the source of cash deposits out of money received from Sh. Devi Dass, Sh. Rajbir Singh & Sh. Dalbir Singh amounting to Rs. 41,90,000/-, Rs. 50,40,000/- and Rs. 29,00,000/- respectively. During the assessment proceedings, no submissions were given by appellant in this regard but during appellate as well as remand proceedings, it has been submitted that money was advanced by appellant to these three persons for purchase of land and since the purchase was not materialized, money was r....
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....ed that despite having bank account, he did not deposit the money of such a large sum, but kept with him only. Here also, Sh. Rajbir Singh submitted a letter dated Nil, similar to one submitted by Sh. Devi Dass, allegedly written to erstwhile AO was neither found on the record nor any evidence could be produced by Sh Rajbir Singh to establish that any such letter was furnished by him. In the case of Shri Dalbir Singh, son of the appellant Sh. Inder Singh, he has admitted to have income below taxable limit. He also has claimed to receive Rs. 29 Lakhs from his father to purchase the land in 2007 but did not remember the date or month. He also has repeated the same reason for not purchasing the land and returning the money to appellant that the joint owners of the land could not reach a common consensus for selling the land. He also admitted in the statement that he has no document/evidence to establish the aforesaid transactions. Thus, in all three cases, none of the persons could furnish any real time evidence, which could be verified from the transactions allegedly entered into by the appellant and these persons. All the three persons and appellant have concocted the story of advan....
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....ar from the submissions of appellant, he has submitted the copies of documents in support of ownership of land. However, there are prescribed rules for computing the agricultural income to be shown as exempt in the return of income. As per Rule 2 of the Finance Act of that year, agricultural income of the nature referred in sub- clause (b) or sub-clause '(c) of clause (1A) of Section 2 of I.T. Act 1961. shall be computed as if it were income chargeable to income tax under the Act under the head "Profits and Gains of Business and Profession" and the provisions of Sections 30, 31, 32, 36, 37,38,40,40A [other than sub section (3) and (4) thereof], 41,43,43A,43B and 43C of I. T. Act shall, so far as may be, apply accordingly. Thus, the agricultural income has also to be computed as business income and profit and loss has to be prepared by assessee. But in the case of appellant, he has merely disclosed the net figure of agricultural income but failed to disclose the gross receipts out of sale from the agricultural produce. He has not even furnished the details of various expenses incurred by him under the head such as purchase of seeds, irrigation expenses, labour expenses, purchase....
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....sed on the valuation of property based on local inquires by the Income Tax Inspector who is not a competent person to make valuation of the properties. He further submitted that the Ld. CIT(A) has also confirmed the addition on the said available material. He, therefore, submitted that the addition made by the A.O. based on the valuation report of the Inspector is not sustainable. 12 The Ld. Departmental Representative vehemently relied upon the order of the Ld. Lower Authorities. He submitted that Assessee has thwarted the inquiry by DVO by not replying him or not giving information called for . Hence, AO did not have any other sources to make inquiry and he deputed the Inspector for local Inquiries. He stated that inspector has not valued the property but it is his inquiry made which shows that market value of the property purchased is much higher. 13 We have carefully considered the rival contentions and find that the assessee has invested substantial sum in purchasing of several immovable properties for Rs. 7385000/-. The Assessing Officer tried to find out the correct valuation of the properties and, therefore, he referred the matter to the Ld. District Valuation Officer. Be....
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....he Act. 15. It is submitted that the Report of the Inspector states that the Inspector on the directions of the Id. ITO visited the plots purchased by the Assessee, and enquired the estimated value of the said plots from the local residents and was informed the estimated value, mentioned in the Report. In this regard, at the outset, it is submitted that there is no direction by the Id. ITO to the Inspector to visit the plots and find the estimated value. It is further submitted that the Inspector has not mentioned the name of any local resident or. property dealer, from whom the purported enquiry was made. It is also submitted that out of the six plots under consideration the sale of the deed is only in respect of plort at serial No.3 (AO page 2) and in respect of other plots there is no sale deed, but agreement to sell,etc. are there: and therefore, the statement that the sale deeds were shown to the local residents and proprety dealers is factually incorrect. 16. The Inspector s Report, it is submitted on the basis of the purported local inquiries has given only approximate purchase consideration and it is pertinent to mention that the same does not even allege that the....
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....this fact by bringing seme material on record." "We feel that the Tribunal was correct in holding that merely because counsel for the assessee made a statement in a civil court that the total investment in the property was Rs. 13 crores and odd, it would not be sufficient material to come to the conclusion that the said figure represents the actual investment." (6) Ms. Madhu Sharma V. ITO. (2004)91 TTJ 894 (DEL) "we have also examined the legal position whether the sale consideration declared by the assessee can be discarded by the Revenue without bringing anything on record. For this issue we may refer to the order of the Tribunal till the case of Sanjay Chawla v. ITO. (2004) 82 TTJ 407 (Del) in which the Tribunal has examined various judgments including the landmark judgment of the apex Court till the case of K. P. Varghese V.ITO (supra) on this issue and arrived at a conclusion that without bringing anything on record that some money over and above have passed over to the seller the A.O. cannot estimate his own fair market value. The Tribunal has gone to the extent by saying that even if the market value of the property appears to be higher than the consideration declare....
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....e procedure adopted by AO for valuation of property though he himself did not follow any procedure laid down by the income tax law will stop the onus was on appellant to counter the procedure adopted by AO and valuation of the property estimated by him, but he failed to do so. In view of this, I hold that the addition made by AO is justified. The ground taken by the appellant is dismissed." 14 On careful analysis of the order of the Ld. CIT (A), it is noted that appellant has never disputed that how the valuation of properties backed by local enquiries by the inspector is incorrect. The issue raised by the assessee that Inspector reports were not made available to him by the AO and therefore that cannot be refuted before him. However, this argument is devoid of any merit, as even before the CIT appeal or before us, it was not stated that which property was valued higher by the assessing officer. It is further affect that most of the properties are merely backed by agreement to sell and therefore there cannot be any document price for sale. However, the argument of the assessee with respect to property No. 551, 552 and 553 at village Dindarpur which were purchased in the auction fr....