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2023 (4) TMI 194
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....K.J. Thomas and the assessee, of the second part (as sellers), for sale of 384.5 cents of land at Village Ayyanthole, Pukunnam, Puzhakkal Road, Thrissur, at the rate of Rs. 2,24,000 per cent, i.e., for a sum of Rs. 861.28 lacs, was found and seized from the residence of Dr. Ramakrishna Ambadi (PB-1, pgs. 17-25). The sale consideration per the registered sale deeds in respect thereof, executed subsequently, was however at Rs. 170.27 lacs. There was, thus, an escapement of income from assessment at Rs. 691.01 lacs. Per the instant assessment, initiated u/s. 153C, income in respect of 276.87 cents of this land, registered (separately) in the name of the four sellers, i.e., other than the assessee, is brought to tax, which has been done by the Revenue substantively in the hands of the assessee and protectively in the hands of the respective sellers. 3. The matter being principally factual, we shall proceed by discussing the evidences that led the Assessing Officer (AO) to his adjudication and, then, to that by the ld. CIT(A) in deleting the same, and which stands impugned before us. 4.1 The Bench observing that the capital gain assessed did not include that on 107.63 cents, i.e., the....
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.... past on the request of the assessee to enable adjudication by the first appellate authority in the case of the sellers, assessed protectively. The same stand since decided following adjudication by the first appellate authority in the assessee's case for AY 2007-08, i.e., qua quantum. As regards ownership, there is no definite finding by the ld. CIT(A) vide his near identical orders dated 03/2/2021 (PB-2), merely directing the AO to adopt the rate of rs.1 lac per cent, i.e., as in the case of the assessee. While two sellers have accepted the same, the other two (P.M. Vijayan & A.A. Balachandran) have kept the matter alive by preferring second appeal before the Tribunal, whose order in the instant case, being represented, again, by Sh. Warrier, would equally apply thereto. The stand of the parties, as explained, being the same, hearing in the matter was proceeded with, with the consent of the parties, on this premise. 4.3 The issue/s that therefore survives, and on which it was contested, is: a) the person/s in whose hands income on sale of land is to substantially assessed; b) the quantum of capital gains. On being enquired in the matter, a seller admitted to being benamidar....
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....r persons. In fact, during the assessment proceedings for the Assessment Year 2009-10, the issue of sale of land and assessment of capital gains had cropped up. (xxiv) In view of the above, assessee was the real owner of 384.5 cents of land, part of which he apportioned among his own benamidars with the intention of suppression of income. Therefore, I am justified to treat the assessee as the real owner of 384.5 cents of land the capital gains arising from the transaction of property during the year is assessed substantively in the hands of the assessee and protectively in the hands of the persons by whom the documents have been registered, viz. Sri. KJ Thomas, Sri. P Manoj, Sri. AA Balachandran and Late PM Vijayan, for the Assessment Year 2008-09, sale value taken @ 2,24,000/- per cent as per copy of the signed agreement seized.' 4.4 Long-term capital gain was accordingly assessed by reducing from the sale consideration of Rs. 620.19 lacs, i.e., @ Rs. 2.24 lac per cent, the indexed cost of acquisition for each of the four sellers, at Rs. 6,13,25,694 (Rs. 613.26 lacs). The same stands deleted in first appeal by the ld. CIT(A), holding as under: (pgs.25-26) '10. I have gone thr....
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....e and facts of this case, in my opinion, the Assessing Officer was not justified in treating these four people as benamidars of the appellant and assessing the whole of capital gains in the hands of the appellant on substantive basis. The addition is hereby deleted. The appeal is allowed.' The same stands assailed before us, raising the following grounds: '1. The Commissioner of Income Tax (Appeals) erred in deleting additions of Rs.6,13,25,694/- on account of capital gains arising from the sale of 276.87 cents of land at Ayyanthole by four benamidars in the hands of Shri T.G. Chandrakumar. 2. The Commissioner of Income Tax(Appeals) overlooked that an agreement dated 03/01/2007 was seized during search which showed that property having areas 384.5 cents at Ayyanthole, of which the properties in the name of the 4 individuals were a part, was agreed to be sold to Dr. P.H. Abdul Majeed and Smt. Laxmi Devi Gopinathan for a consideration of 2.24 lakhs per cent. 3. The Commissioner of Income Tax (Appeals) overlooked that each of the sellers of property, had stated under oath that land in their names actually belonged to Shri T.G. Chandrakumar. 4. The Commissioner of Income Tax....
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...., on the buyer realising that a part of the subject land was 'puramboku', i.e., land not in the name of any person, right over which therefore vests with the Government. The deal was, accordingly, settled at Rs. 1 lac per cent, for which a revised agreement was entered into on 07/3/2007, with sale for 107 cents being registered vide sale deed dated 28/05/2008 for Rs. 107 lacs, of which Rs. 50 lacs was received by the assessee on 16/3/2007 on delivery of possession of 50 cents. 6.1 Our first observation in the matter is that the ld. CIT(A) has not met any of the observations/findings by the AO vide para 9 [(i) to (xxiv)/pgs. 4-16] of his order, part of which is reproduced hereinbefore, and it is this that, as afore-noted, stands sought to be highlighted by the Revenue per its various Grounds, save Gd. 8, which assails the admission of additional evidences by him as being without following the procedure prescribed in its respect. There is, further, no reference in his order and, consequently, no finding as to the cancellation of the Agreement dated 03.1.2007, which forms the cornerstone of the assessee's case, particularly qua quantum. Likewise for the orders by the first appellate ....
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....family and Dr. Majeed, as well as the four sellers other than the assessee-respondent, are conspicuous by their absence in the new Agreement, and neither is there anything to suggest the presence of the three brokers, and which cannot be. As afore-noted, there is no evidence of the cancellation of the earlier Agreement. In fact, it stands acted upon, with all but one sale deed (for 107 cents) being executed within the validity period of the Agreement (04/10/2007), with time being not of essence. Further, the entire advance of Rs. 100 lacs, admittedly paid on entering it on 03.1.2007, is paid cash, as is it's return, stated to be on its cancellation on 17.01.2007. Likewise, for the payment of commission to the brokers at Rs. 10 lacs, again, a no mean sum. Why, one may ask, if it was indeed meant to be disclosed? There are no answers, and at any stage, to these questions. There is, further, no recording of this cash receipt/payment and, thus, it's stated return, in the personal books of the assessee or of his several concerns, or any of the four sellers. Why? And if this is not enough, the agreement dated 07.03.2007, is, as the AO observes (at para 9(xx)), executed on a stamp paper d....
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.... the deal is not denied, even as it stands confirmed on the basis of the letter by Dr. Abdul Majeed to the Circle Inspector, East Nadar PS, in 2007. Each of them per their statements u/s. 131, i.e., dated 09/01/2014 (Shri C.R. Joseph), 10/01/2014 (Shri K.K. Sunil) and 20/01/2014 (Shri Ratheesh Vega), i.e., during the period the search proceedings were on, and the final part of which stands extracted earlier, confirmed as under:- a) the negotiations for transfer of the subject land (384.5 cents) at Ayyanthole, which is a single plot, were done in their presence; b) these negotiations were between Dr. Abdul Majeed and TGC, the assessee, at the latter's residence at Punkunnam, Thrissur, as a single transaction; c) that the subject land belonged to the assessee; d). that they did not know any of the other sellers; e) a rate of Rs. 2.50 lac per cent was initially proposed by the assessee, though finally agreed at Rs. 2.24 lac per cent between the parties; d) a token advance of Rs. 1 lac was paid cash, and the balance advance (Rs. 99 lac) was to be paid to the assessee on signing the agreement; and e) that brokerage of Rs. 10 lac (approx.) was received from the assessee in ....
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....urchased in the name of Sh. Arun Majeed, s/o Dr. Abdul Majeed, and LG, his sister. (para 9(xii)/pg.9 of the assessment order) This was also confirmed by Dr. Majeed per his statement u/s. 131 dated 15/1/2015, who had not only represented the buyers in negotiations with the assessee-seller, but also admittedly handled the entire financial aspect of the transaction, both on behalf of his son, Shri Arun Majeed (refer answer to Q.5 of his statement dated 07/1/2015), as well as the Menon family (as had indeed been confirmed earlier by LG on 06/02/2014 in answer to Q.7), also giving details of the consideration paid (Rs. 729.12 lac) in respect of 325.5 cents registered in the name of his son. The assessee, on being confronted therewith, and extended opportunity to cross-examine Dr. Majeed, declined to vide his letter dated 25/02/2015 (para 14/pg. 19 of the assessment order for AY 2007-08). There is no whisper of cancellation of the Agreement by any of the 3 brokers in their statements. Thus, even as we proceeded by stating of the buyer being an interested party, whose statement the....
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.... 17/01/2007 on cancellation (PB-1, pg.26). To what effect, one may ask, the same when there is, in the first place, no evidence of receipt of Rs. 100 lac as advance on 03/01/2007, which is being refunded back on 17/01/2007? The production of receipt of Rs. 100 lacs dated 17/01/2007 on 'cancellation' of agreement would be of no consequence in view of the restoration of agreement on 20/01/2007. We have already stated that the theory of cancellation of the agreement and execution of new one on 07/03/2007 is no more than a hoax, an afterthought. None of the brokers retracted their statements qua sale consideration, with, rather, Dr. Majeed stating of restoration of the Agreement on 20/01/2007, so that it obtains. There is in fact no question of any retraction on this aspect, as the rate of Rs. 2.24 lac per cent is admitted, and it is only subsequently that the same is claimed to have been revised. Why, noting a defect, one would rescind the agreement, giving notice to the other side, and that would be the end of the matter, particularly where the advance stands, as stated, returned back. The revised agreement, if at all, would be by and between the parties to the Agreement, on a fresh ....
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....nd at 107.63 cents is ascribed to the assessee (TGC), and 326.5 cents to Arun Majeed, eliminating the difference. We are only stating the extent to which, if at all, the defect of puramboku could be possible; the sale deed executed by the assessee (not on record) on 28/05/2008 being stated to be for 107 cents. 6.6 We are also conscious that for two sellers (i.e., A.A. Balachandran (151 cents) and P.M. Vijayan (116 cents)), the sale deeds were executed at Rs. 0.20 lac per cent, while that for other three, i.e., P. Manoj (5.4 cents); K.J. Thomas (4.47 cents); and the assessee (107 cents), at Rs. 1 lac per cent. The land, map of which is drawn in the separate appellate orders dated 03/2/2021 of the four sellers (PB-2), is confirmed by the Brokers as a single plot, and the agreement, a single transaction. Two commercial buildings were being planned at the consolidated land, as confirmed by Dr. Majeed on 14/2/2014. Even if therefore the Agreement had been cancelled, i.e., assuming so, the revised Agreement would be, as the earlier one, at a uniform rate. We also observe Dr. Majeed stating the rate of rs. 2.24 lac per cent as only for bank purposes, and that the assessee alleges that he....
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....ent dated 07/1/2014 to working as an office boy in Gemco Rubber Pvt. Ltd., earning Rs. 80,000 annually. He had, admittedly, no means to buy land, which was transferred to him by the assessee on 18/12/2006 for Rs. 1.02 lacs. He, on being questioned, had no clue of the sale details, further stating of having been informed by the assessee of purchasing about 5 cents of land at Ayyanthole in his name, sold in fy 2007-08, as had indeed been the case for the other three sellers. His subsequent retraction, unevidenced, is per written submissions furnished by the assessee on 15/12/2014. The same is to be per his sworn affidavit, which could then be subject to cross examination. Two, no reason is given for 'retraction' inasmuch as stating the earlier statement as having been given under the influence of alcohol, only needs to be stated to be rejected. He admitted to having not received any part of the sale consideration. The assessee has stated of transferring land to 'help' him. This falls in face of his admission of having not received any part of the sale consideration. Help, understandable as he had 10 years relations with the assessee, is where money, to fulfil a need, as his sister's ....
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....sides Rs. 8,000 p.a. as bonus. He further states of having purchased land from Kallada Group for Rs. 2,400 per cent (appx.), though could not tell the name of the person who represented the said Group in the said purchase. The sale deed, however, revealed the land to have been purchased instead from: - Jacob V. Elias and John V. Elias, sons of xxxxxx, 25 cents for Rs. 57,500, i.e., at the rate of Rs. 2300 per cent and; - Dilip s/o xxxx, 75 cents at Rs. 69,000, i.e., at the rate of Rs. 920 per cent. Or, at an average rate of Rs. 1265 per cent. None of them are stated, much less shown, to be of Kallada Group. He is thus unaware of the person/s from whom, as well as the rate at which, he purchased the land, he is stated to be the owner of, some years ago. How could this be? Further, though he admits to signing the Agreement dated 03/1/2007 bearing the sale rate at Rs. 2.24 lac per cent (Q.7), he had no explanation for the sale being effected at a rate less than 10% thereof. This is unconceivable if he had actually sold the land. He was, further, unable to tell the bank account in which the sale proceeds were deposited. Equally, the name of the person who paid him cash, or of the ....
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.... entire stated sale consideration (rs. 30.20 lacs) is withdrawn through the capital account on 25.8.2007, the sale date. That is, the day it is deposited in the firm. The withdrawal of money immediately makes its deposit in the first place as of no consequence. The same is only a book entry, made with an ulterior purpose of depicting cash receipt. The business of the firm stands ceased much earlier, and the cash has not gone to swell his capital in the firm. That is, one is still clueless about the destination of cash. No creditor is paid despite liabilities as on 31/3/2008 being at rs. 18.48 lacs, nor is it banked. In fact, the bank account on record (PB-1, pg. 91) was opened only later on 26/9/2007, i.e., after and closure of the firm, as well as the sale on 25/8/2007. Further still, even the capital-gains tax of Rs. 6.40 lacs, paid on 31.07.2008, a year later, is not out of the cash received, but out of Rs. 7.40 lacs deposited in July, 2008 by cheque, which was traced to T.C. Praveen, the assessee's son! His return (PB-1, pgs. 84-85), as also the assessment order u/s. 143(3) dated 31/12/2010 (PB-1, pgs. 92-95), reflects no salary income, but miscellaneous income, described in ac....
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.... in the cash statement (PB-1, pg. 107) at Rs. 28.45 lacs. Even the cash entered in accounts gets reflected at rs. 12.94 lacs as on 31/3/2009, so that it remains unutilized even after over 19 months of receipt! Reflecting cash-in-hand, rather, proves its non-utilization. It is only a cash flow statement, including cash receipt from all sources, including odd jobs, and that expended, paid, or deposited, that would qualify to be a proper account of cash, and exhibit it's utilization toward proving the beneficial ownership of cash. Why, even this would stand to be verified for its veracity, examining the various persons to whom it is, not routed through bank, stated as paid. The money trail is completely missing. 6.11 We next consider the case of Sh. P.M. Vijayan, represented, in view of his demise, by his wife, Smt. Komalam Vijayan. Her statement (u/s. 131, dated 22.01.2014) is characterized by the words: 'I don't know', i.e., ignorance. The same would therefore necessarily have to be guided by the material on record. The principal document being relied upon is the balance-sheet (as on 31/3/2008) of his proprietary concern, M/s. Prasun Industries (PB-1, pgs. 108-111). No tax return h....
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....acs, i.e., nearly 25 times! Sure, there are matching assets, but it is clear that they are not realizable as else they would not continue outstanding years after closure of business. The difference of rs. 2 lacs, though not material, is not understood, even as the same having not been referred to during hearing, there was no occasion to seek explanation in its respect. In short, the destination of 'cash receipt' of rs. 23.20 lacs remains unknown, even as he is debt ridden, and even as such a sum, as the AO also observes, would make a drastic change in their life. The same is included in the cash flow statement (pg. 116) at rs. 3.58 lacs instead of rs. 23.20 lacs. Why? Reflecting it, in whole or in part, as cashin- hand, stated at rs. 4 lacs (as on 31/3/2008), is of no consequence; rather, confirms non-utilization. The same surprisingly does not even include tax paid at rs. 3.45 lacs. Why? Further, Sh. Vijayan admittedly advanced rs. 18 lacs as interest-free loan to Sh.T.C. Praveen s/o TGC (assessee), as soon as it is received from Dr. Majeed (on 19/3/2007 & 21/3/2007/refer bank statement at pg. 114), in two instalments of rs. 9 lacs each. Needless to add, no satisfactory explanatio....
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....he contract. The entire case is a made-up. In sum 7.1 The issue arising, in sum, is the validity of the deletion of the impugned addition in law, in the facts and circumstances of the case. The matter was examined from the stand-point of both - the ownership of the subject land by the assessee, in whose hands substantive assessment stands made, as well as the quantum of the capital gains. Qua the latter aspect, in the absence of any finding per the impugned order, reliance was placed by the assessee-respondent on the order by the first appellate authority, being incidentally the same person, in the assessee's own assessment for AY 2007-08 (refer para 4.2), which in turn stands followed by the first appellate authority for the current year in case of the ostensible sellers, assessed protectively. There is, however, no specific finding therein as to ownership, being sans any finding qua the relevant aspects viz. the validity of the agreement dated 03/01/2007; it's cancellation; retraction; utilisation of sale proceeds, etc. Our examination, which is, as is to be the case, on the basis of the material on record, leads to a unequivocal finding of the assessee being the owner of the s....
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....010 (refer assessment order dated 28/03/2016 of Shri K.J. Thomas for AY 2008-09/PB-2, pgs.85-96). Even if subsequently scaled down to Rs. 4.80 lacs per cent, as Dr. Majeed clarifies (vide his statement u/s. 132(4) dated 18/12/2013 / PB-1, pgs.27-36); the said difference not concerning us here, the lower figure again represents a 114% increase over the agreed price of Rs. 2.24 lacs per cent within 3 years of the Agreement dated 03/1/2007, justifying the same. The return of the capital gain by two sellers is of no consequence; the same being only be give effect to the benami transitions (refer: ITO v. Rattan Lal [1984] 145 ITR 183 (SC); Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244 (SC)). Why, the money to pay the tax is itself either unexplained (Rs. 3.45 lacs) or comes from the assessee (or his family member) (Rs. 6.40 lacs), who stands the benefit by off-loading his tax liability. Scrutiny of the material led to demonstrate utilization of sale proceeds, not banked, reveals it to be sans evidence; rather, an attempt to mislead. Though, therefore, liable to be ignored to the extent it stands adduced as additional evidence, having been admitted without recording any satisfaction....