TaxTMI 
TaxTMI 
2022 (8) TMI 1432
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....udicating the ground wherein the assessing officer had arbitrarily made an addition of Rs. 1,70,000/- being agricultural income for rate purposes which is arbitrary and unjustified. 4. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. 3. Ground No. 4 is general in nature, and Ground No. 3 was not pressed therefore these grounds do not require any comment on our part. 4. Vide Ground No. 1 & 2 the grievance of the assessee relates to the sustenance of addition of Rs. 1,32,90,000/- and Rs. 22,50,000/- on account of cash deposited in bank account. 5. Facts of the case in brief are that the assesse filed his return of income declaring an income of Rs. 1,42,300/- on 08/08/2011 which was processed at the returned income on 10/02/2012. Later on the case was selected for scrutiny. 5.1 During the course of assessment proceedings the AO noticed that the assessee had deposited an amount of Rs. 5,92,00,000/- in his saving bank account with State Bank of Patiala, Patran, Dist. Patiala and Rs. 58,00,000/- in State Bank of India, Dhanaula on different dates as per following deta....
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.... was received in cash as advance and promised to get sale deed registered before 05/01/2011. The AO asked the assessee to submit copy of original agreement as the copy of the agreement submitted was not registered with Revenue Department and even back of the stamp papers did not bear date of issue, name of vendor and its registered serial number. In response the assessee stated that the original agreement was torn out at the time of maturity of deal and that he was not having photocopy of the back of the stamp paper showing name of vendor, signature of the person who purchased the stamp paper and serial number of register of vendor. It was also admitted that the agreement was not registered with the Revenue department. However the assessee stated that the amount was received @ Rs. 21 lacs per acre for 12 acres in cash and out of this deal i.e; agreement dt. 30/04/2010 and the sale deed dt. 03/01/2011 the cash was deposited in his bank account. 5.4 The AO asked the assessee to submit a copy of sale deed registered with the State Revenue Department in context of agreement executed on 30/04/2010 and as per this agreement the sale deed was required to be executed before 05/01/2011. ....
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....t was made to Shri Sukhwinder Singh in lieu of purchase of land. The source of payment of Rs. 40,00,000/- made on account of agreement executed with the assesse was also submitted alongwith the relevant documents. The assessee produced one of the witness of the agreement dt. 30/04/20410, Shri Bhola Singh S/o Shri Karnail Singh Village Pharwahi, distt. Barnala on 09/01/2014. His statement was recorded in which he admitted the execution of agreement to sell agricultural land @ Rs. 21 lacs per acre for about 12 acres of land. He also admitted that the advance money of Rs. 40 lacs was paid in cash by Shri jaggar Singh S/o Shri Jang Singh to the assessee in his presence on 30/04/2010. He admitted that he put his thumb impression on the sale agreement. When the AO had shown photocopy of the agreement to sell Shri Bhola Singh stated that he being an illiterate was not able to tell whether this agreement to sell was the same or not. He was also asked to explain whether remaining payment of Rs. 2,12,00,000/- was made in his presence and he was present at the time of registration of the sale deed of the agricultural land in question. In response he stated that he was not available at that....
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....,000/- consequent upon title deed dated 03-01-2011. A copy of statement is enclosed herewith for necessary action at your end. The land in question has been purchased by Sh. Jaggar Singh alongwith his family members Sh. Jasbir Singh, Sh. Jagroop Singh S/o Sh. Jaggar Singh and Sh. Mahinder Singh S/o Sh. Jang Singh R/o Barnala. Hence, the source of investment explained by you with regard to cash deposited on 04-01-2011 in SBOP, Patron at Rs. 2,05,50,000/- cannot be accepted for the following reasons:- i) The purchaser of land Sh. Jaggar Singh has admitted in his statement payment of cash Rs. 72,60,000/- only on 03-01-2011 instead of Rs.2,05,50,000/-. ii) One of the witness of the agreement to sell agriculture land dated 30-04- 2010, Sh. Bhola Singh S/o Sh. Karnail Singh R/o Vill. Pharwahi has admitted in his statement dated 09- 01-2014 that the payment ofRs. 40,00,000/- was made in his presence and denied to admit remaining payment in his presence. He was also cross examined by you. iii) Sh. Bhola Singh could not identify the copy of sale agreement dated 30-04-2010 bearing his thumb impression when it was shown to him in your presence. iv) The copy....
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....ing coowners of the agricultural land and their statements were recorded on oath on 18/02/2014 which had been reproduced at page no. 12 to 16 of the assessment order, for the cost of repetition the same is not reproduced herein. 5.7 The AO observed that the father of the assessee Shri Balkar Singh and his brother Shri Jaswinder Singh admitted that the land in question was owned by all the three persons and the sale proceeds were deposited in the bank account of Shri Sukhwinder singh and that out of the sale proceeds, the land was purchased in the name of Smt. Charanjit Kaur who is mother of the assessee. The AO also recorded the statement of Smt. Charanjit Kaur W/o Shri Balkar Singh which had been reproduced in para 3.12 at page no. 18 to 21 of the assessment orders for the cost of repetition the same is not reproduced herein. 5.8 The AO observed that Smt. Charanjit kaur admitted in her statement that the registration of title deed on 09/02/2011 with Tehsildar Patran was for Rs. 74,73,000/- but she had no source of income and amount in lieu of purchase of land at village Dutal had been paid by Shri Sukhwinder Singh who obtained the same on account of sale of land on 03/01/201....
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.... is registered before State Revenue Authority which becomes final and copy of agreement dated 30-04-2010 cannot be relied upon in the absence of any legal documentary evidence. ix) As per statement of the assessee dated 19-03-2014, he has admitted that cash was carried out by himself through Car of a relative from Dhanaula to Patran and deposited himself in SBOP, Patran which is also evident from the signatures on pay-in-slips. Photocopy of pay-in-slips obtained from the bank have been placed on record. He could not submit any documentary evidence to prove the source of excess cash deposited in the bank account. x) He also could not submit any documentary evidence of investment from the withdrawals made by him at Rs. 1,76,00,000/- on 09/02/2011, Rs. 4,00,000/- on 04/02/2011, Rs. 15,00,000/- on 23/02/2011 and Rs. 17,50,000/- on 28/02/2011 except land purchase at Rs. 74,73,000/- and stamp duty paid at Rs. 2,24,200/- in the name of his mother Smt. Charanjit kaur on 09/02/2011. He simply stated that remaining amount was used for personal purpose and it is still has been kept with them which shows that he is having cash about Rs. One crore with him even after lapse of ....
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....s borne by the purchaser of the immovable property. The Ld. CIT(A) further observed that the sale price as per the registered deed was much less than the agreed price and yet it was accepted by the assessee in as much as stamp papers of the value commensurate with the sale price of Rs. 1,12,60,000/- only was purchased by the assessee's father as co-owner of the land in question which clearly pointed towards the agreement and connivance between both the parties i.e; the seller and buyer to defraud the rightful dues of the Government in terms of stamp duty or purchase tax and that it was a clear pointer to the fact that payment must have been made of the agreed amount to the assessee by the buyer, without which the assessee would not agreed to the execution of sale deed and could have simply refused to append his signature as transferor, should the purchaser had reneged on the agreed price. The Ld.CIT(A) referred to the decision of ITAT Chandigarh Bench in the case of Shri Mohinder Singh and Shri Malkiat Singh in ITA Nos 665 & 474 and reproduced the extract from the aforesaid order of the Tribunal in para 12 of the impugned order which read as under: As discussed above, t....
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.... amount received? As discussed above, the same cannot be said to be the amount received towards sale consideration of the land, rather, the same will constitute the extra money paid as consideration for the execution of the registered deed of sale of land and not for the sale of land itself. The same under the circumstances has to be taxed as income from other sources. Such an amount received over and above the sale consideration mentioned in the registered document, partakes the character of taxable gift. Our above view also find support from the following para of the judgement of the Hon'ble Supreme Court in the case ofK.P. Varghese reported in[1981j 7 taxman 13 (SC): "This construction which we are placing on subsection (2) also marches in step with the Gift Tax Act, 1958. If a capital asset is transferred for a consideration below its market value, the difference between the market value and the full value of the consideration received in respect of the transfer would amount to a gift liable to tax under the Gift Tax Act, 1958, but if the construction of sub- section (2) contended for on behalf of the Revenue were accepted, such difference would also be liable to be added a....
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.... the due respect, decision of the jurisdictional Punjab and Haryana High Court in the case of Paramjit Singh (supra) holding the inadmissibility of oral evidence in the presence of registered deed is binding on this Tribunal. Under the circumstances and in the light of the above referred to statutory provisions and case laws, the nature of receipt of the income over and above the registered sale consideration in the hands of the seller Sh. Mohinder Singh is ordered to be assessed as 'income from other sources'. In view of the discussion made above, the amount received by Sh. Mohinder Singh, over and above the sale consideration mentioned in the registered document, is ordered to be assessed as income from other sources. The order of the CU (A), in the case of Sh. Mohinder Singh is hereby set aside. The Appeal of the revenue is accordingly treated as allowed. 6.2 The Ld. CIT(A) by following the aforesaid referred to order observed that even when there was an overwhelming preponderance of probability that the amount represented by cash deposited in the assessee's bank account were sourced from sale consideration received in cash by the purchaser, the assessee could not be ....
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....hat the Ld. CIT(A) was not justified in sustaining the addition when in the agreement to sell, the rate of the land was clearly mentioned and the purchaser insisted to get the registration done on circle rate to save the stamp duty. It was contended that the assessee sold the agricultural land measuring 12 acres @ Rs. 21,00,000/- per acre for a consideration of Rs. 2,52,00,000/- out of which advance of Rs. 40,00,000/- was received on the day of agreement and the balance amount was received on the day of registration of the sale deed i.e; 03/01/2011 and the amount was deposited in the bank out of the proceeds received from the sale of land. It was also submitted that the Ld. CIT(A) sustained the addition on relying the decision of the ITAT in the case of Shri Mohinder singh but the facts of the said case are different from the facts of the assesee's case because in the said case no agreement to sell was found, the amount was recovered by the police and the deposit was made after 90 days while in the case of the assessee the amount was deposited on the next day of receipt and there was also an agreement to sell, therefore the decision relied by the Ld. CIT(A) is distinguishable on fa....
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....s not disputed either by the AO or by the purchaser of the land. The only dispute related to the total consideration which according to the sellers i.e; the assessee his brother and father was Rs. 2,52,00,000/- where as the purchaser Shri Jaggar Singh claimed that the total consideration for the land was only Rs. 1,12,60,000/- and stamp duty of Rs. 5,63,000/- was paid for the said amount and that the stamp papers were purchased by the assessee's father being the co-owner of the agricultural land. In the instant case the AO as well as the purchaser admitted that the advance of Rs. 40,00,000/- was paid as mentioned in the agreement to sell but did not agree to the payment of the total amount mentioned as a sale consideration of Rs. 2,52,00,000/- . In our opinion when the AO accepted that the amount of Rs. 40,00,000/- was paid to the seller, the purchaser also accepted that he had paid the sum of Rs. 40,00,000/- as an advance money for purchase of the agricultural land measuring 12 acres as mentioned in the agreement to sell dt. 30/04/2010, the cost of the said land as per the agreement to sell was @ Rs. 21,00,000/- per acre which is evident from page no. 1 of the assessee's compilati....
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....course of search under Section 132(4) cannot be relied upon against the respondent- assessee. Besides hearing counsel on both sides, we have also gone through the orders of the lower authorities. We are unable to uphold the order of the Tribunal for the reason that it is just based on a retracted statement given by the purchaser, namely, Sri. Satyabalan in cross-examination. It is the admitted position that besides giving statement under Section 132(4) before the Inspecting Officers, the purchaser, namely, Sri. Satyabalan, returned Rs. 41 lakhs being the differential price which according to him was paid to the respondent- assessee for purchase of land and building over the value declared in the sale document and paid tax thereon. Unfortunately the first appellate authority as well as the Tribunal failed to take note of this very important aspect, that is, returning of Rs. 41 lakhs and payment of tax thereon by the purchaser consistent with the statement given by him to the department under Section 132(4) of the Act. We do not think the subsequent statement given by the purchaser, namely, Satyabalan in crossexamination, contrary to his earlier statement to the department under Sect....
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....eclared by the purchaser may represent either investment or expenditure, we find from the records that he has clearly stated that Rs. 41 lakhs offered by him is additional consideration paid by him for the property purchased from respondent-assessee over the value shown in the sale deed. It is a notorious fact that on account of high stamp duty prevalent in the State undervaluation is a normal course adopted by the parties to avoid stamp duty and huge expenditure on transfer of property. We are of the view that the Tribunal and the first appellate authority went wrong in just relying on the statement in cross- examination and in accepting the case of the respondent that the hospital building and large extent of over 1 acre of land was sold for the price declared in the document. We therefore reverse the order of the Tribunal and that of the first appellate authority on this issue and hold that capital gains has to be computed on the sale price at Rs. 71 lakhs. However, since the other issues, namely, baseyear market value of the land for determining long term capital gains and the contest against quantum assessment, were not gone into by the first appellate authority, we set aside ....
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....s at page No. 4 and 5 of the assessment order as under: The dates of deposit of cash as well as cheques in the bank accounts of the sellers, their sons, grandsons and wife are clearly matching to the dates of agreement to sell and sale deed i.e. 11/5/2005 and 11/8/2005. All the deposits of cash in the bank accounts of these persons were made on the very next day of execution of agreement and sale deed respectively. In absence of any other source of income of the sellers, the only inference which can be drawn from the details of the bank accounts and particularly the deposits made on the particular dates which is just one day after the execution of the agreement to sell and sale deeds that the cash deposits in the bank accounts of the sellers and their relatives is only from the sale consideration received against the sale of agricultural lands in question. There is no other transaction either on those dates or in around those dates of deposits in the bank accounts other than the present transaction of sale of lands by the sellers. Further the Assessing Officer has reproduced the statements of the branch manager wherein the amounts were deposited as well as ....
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....ceived by them from M/s Om Plantation on sale of their land to M/s Om Plantation (Page No. 5 to 9 of the assessment order). The ITO, Ward - 7(2) was in possession of the copy of agreement to sale made by the assessee with the seller Shri Bhagwat Meena on 11.05.2005. In the agreement, there is mention of cash payment as well as payment by cheque. The payments by cheque recorded in the agreement is also found recorded in the bank statement of the seller. Thus, the genuineness of the agreement cannot be doubted. During the course of appellate proceedings, the AO was directed to allow the appellant, the opportunity to cross examine the sellers. The AO in the remand report dated 19.09.2017 has mentioned that the appellant instead of cross examining the sellers took adjournment on one pretext or another and it chose not to cross examine any of the seller. Hence, in view of the facts discussed by the AO in the assessment order, specifically at para 5.4 and 5.5 (page no. 13 to 16) of the assessment order, I am of the considered view that the appellant did make payment of Rs. 2,23,10,000/- in cash over and above the sales consideration recorded in the sales deeds, source of which remained u....
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.... the assessee's paper book which is the copy of the cash flow statement and claimed that it was furnished before the AO as well as the Ld. CIT(A). It was submitted that the amount in question was deposited out of the cash withdrawal which was available with the assessee as per the cash flow statement however neither the AO nor the Ld. CIT(A) appreciated the facts under consideration in right perspective and neither the AO nor the Ld. CIT(A) commented upon the cash flow statement furnished by the assessee. He requested to restore this issue back to the file of the AO to be adjudicated afresh after considering the cash flow statement of the assessee. 16. In his rival submissions the Ld. DR strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the observations made by the AO in para 3.17 of the assessment order. 17. We have considered the submissions of both the parties and perused the material available on the record. In the present case it appears that the cash flow statement claimed to be furnished by the assessee was not considered either by the AO or by the Ld. CIT(A) as there was no discussion either in assessment order or in the impugned order abou....
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....t given by Sh. Jaggar Singh and, whereas the assessee has files the copy of the agreement, which has been accepted by Sh. Jaggar Singh then that agreement has been acted upon and not cancelled. Sh. Bhola Singh has confirmed the payment of Rs.40 lacs in cash on 30.04.2010 and also recognized his thumb impression on the sale agreement as per answer to question No. 5 & 6. He has also confirmed the currency notes, which were of Rs.500/- denomination as per answer to question No. 8. Thus, he has confirmed that the agreement was entered into and part payment was made and once the agreement is confirmed, then, the consideration of Rs.2.52 crores has been accepted. Regarding, the balance payment made at the time of registration of sale deed, he has only stated that he was not available on that day, meaning thereby that he has not denied any payment not being made. Thus, the Assessing Sh. Bhola Singh (Witness of agreement to sell) could not identify the copy of the agreement dated 30.04.2010 bearing his thumb impression when it was shown to him in the presence of assessee. Officer has wrongly mentioned that he ....
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....e cycs to before the agreement of Rs.2.52 crores, against which, after eight months, the registration is effected only for Rs.1.12 crores and the reason given by the purchaser of the land is alleged recession, which is wholly falsified, since no proof of cancelation of earlier agreement has been given nor the justification falls, where more than 60% of the consideration stated to have been reduced State Revenue Authority which becomes final and copy of the agreement, dated 30.04.2010 cannot be relied upon in the absence of any legal documentary evidence. on the basis of alleged recession. It is a fact that during that time, there was boom in the real estate business, what to talk of recession. Thus, the observation of the Assessing Officer is not correct. As per statement of the Even Sh. Sukhwinder Singh stated in question assessee dated 19.03.2014, No.2 of the statement recorded on 19.03.2014 he has admitted that cash that he carried the cash Patran in Ritz Car and was carried out by himself deposited with State Bank of Patiala on the same through Car of a relative from day in the late evening hours. The....