TaxTMI 
TaxTMI 
2025 (4) TMI 1044
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....relevant observations. 2. The Ld. CIT(A) has erred on facts and in law in confirming the above addition by not admitting the additional evidences filed by the assessee showing repayment of amount of Rs. 20,01,000/-by account payee cheque on 03.02.2020 and selling the plot to other party on 06.02.2020 by holding that it is a colorable device created to avoid the legitimate tax. 3. The assessee craves to amend, alter and modify any of the grounds of appeal. 4. The appropriate cost be awarded to the assessee." 3. Succinctly, the fact as culled out from the records is that a search and seizure action u/s 132 of the Income Tax Act, 1961 ("the Act") was carried out by the Income Tax Department on the members/concerns of Gupta Group, Alwar on 22/09/2017 of which the Assessee is one of the members. In that action cash, jewellery, valuables, stock-in-trade, documents, books of account and/or loose papers were found and/or seized from the premises of the members of the Gupta Group of which one such member happens to be the Assessee. The case of the assessee has been opened u/s 153C after drawing necessary satisfaction and thereby the jurisdiction was transferred to Central Circle, Alw....
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....f remaining amount of Rs. 67,49,000/-. However, buyer has not paid any subsequent amount, hence no sale deed has been executed till date. Assessee is pursuing him for making payment of remaining amount and get the sale deed executed. In this regard assessee has given public notice to buyer for cancellation of agreement to sale on account of non-fulfillment of terms & conditions of the agreement. Copy of ledger account in the books of assessee showing receipt of Rs. 20.01 lacs and newspaper cutting showing legal notice to buyer is enclosed. Assessee has simply received advance amount of Rs. 20.01 lacs and neither remaining payment has been received nor possession has been handed over to the buyer and sale deed has also not yet executed. Hence no capital gain income is liable for tax in respect of the aforesaid transaction." As per assessment order, the reply of the assessee has been considered carefully by the ld. AO. From that he observed that the page no. 66 to 68 seized from M/s Gupta Iron Store is related to Exhibit-1 which was inadvertently written as Exhibit-5 in the note sheet. As observed by AO, further, the fact is that the seized paper is an affidavit signed by Shri Ash....
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....ic notice to buyer for cancellation of agreement to sale on account of non-fulfilment of terms & conditions of the agreement. Copy of ledger account, and newspaper cutting showing legal notice to buyer were filed. The Id. AO observed that in the agreement it is mentioned that if the party no. 2 fails to get registered the documents up to 27/12/2017 than the amount so received as advance will be forfeited. It is further seen that this sale was neither finally registered nor the payment was returned back. This shows that the amount received as advance has been forfeited. Accordingly the Id. AO by applying the provisions of section 56(2)(ix) made the addition of Rs. 20,01,000/- The appellant has contended that the appellant has entered into an agreement with Sunil Kumar Gupta for sale of ½ share of residential Plot no. 27-B under Moti Dungri Yojna situated at Alwar for Rs. 87,50,000/-, Out of this advance of Rs. 20,01,000/- was received in the current FY. As per this agreement, the registry of the plot was to be carried out by 27.12.2017 after paying the balance amount. At the time of sale agreement, a dairy business was running by a person named Shokat Khan Bandipura on this....
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....en stated that the negotiations were still going on. No agreement to extend the validity of the agreement to sell and validity of advance has been filed. The registry of the plot was to be carried out by 01.12.2017 after paying the balance amount. The assessment has been done in Dec. 2019. No rational person would exchange a land advance and would wait for such a long period without any written document It is also interesting that the appellant also gave newspaper advertisement to the buyer for forfeiture of the advance. Had there been any negotiations going on why the newspaper advertisement was given? Even during the search action, no such statement has been made regarding the encroachment and dispute etc. as as nothing in this regard has been highlighted by the appellant. A party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open t....
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....way of cheque, is invariably sacrosanct." In the case of CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31 (Calcutta)/[1994] 208 ITR 465 (Calcutta)/[1994] 121 CTR 20 (Calcutta) [14-06- 1993] (Hon'ble Calcutta High Court) it was held that "Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine." In view of the above discussion the addition made in the assessment order is hereby sustained and this ground of appeal is hereby dismissed. 5. Ground of Appeal No. 2 is as under:- Ground No.2: The assessee craves right to add, alter or amend any of the grounds of appeal. 5.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly, such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off. 6. In the result, the appeal of the appellant is dismissed." 5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds rais....
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....ansaction. 5. The Ld. CIT(A), however, at Para 4.6 of the order held that during assessment proceedings sufficient opportunity was provided to assessee but it has not filed any evidence that there was issue of encroachment. Accordingly he held that documents filed under Rule 46A are colourable device, not bonafide and are created to avoid the payment of legitimate tax and thus the additional evidence are not admitted. Thereafter Ld. CIT(A) by referring to section 56(2)(ix) of the Act upheld the addition made by AO. Submission:- 1. It is submitted that assessee has entered into a notarized agreement on 05.07.2017 (PB 27-33) with Sunil Kumar Gupta for sale of ½ share of residential Plot No.27-B under Moti Dungri Yojna situated at Alwar for Rs. 87,50,000/-. Out of it, advance of Rs. 20,01,000/- was received by cheque dt. 01.12.2017. As per the agreement the registry of plot is to be done by 01.12.2017 after receipt of the balance amount. At the time of agreement Sh. Shokat Khan Bandipura was running a dairy on this plot. Sh. Shokat Khan Bandipura assured Sh. Sunil Kumar Gupta that he would vacate the plot before registry but since he did not vacate the plot and requested ....
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.... in transfer of such capital asset." From the above provisions it can be noted that the clauses (a) and (b) of section 56(2)(ix) of the Act are not mutually exclusive since the word "and" has been used in between. Thus to attract the said provisions, both the clauses (a) and (b) should be satisfied together. Any amount can be taxed under this section only when the assessee has forfeited the amount on cancellation of the agreement to sale. In the present case, assessee has neither cancelled this agreement during the year under consideration nor forfeited any such amount. Rather the agreement was cancelled in the year 2020 and the amount was returned back by cheque on 03.02.2020. The lower authorities have not brought any evidence on record to prove that assessee has forfeited the advance received. Only because as per the sale agreement, the sale deed was to be executed in December, 2017 after receipt of the balance amount, it would not mean that the advance amount stood forfeited in December, 2017. Hence provisions of section 56(2)(ix) do not apply in the present case. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 6. To support the contention so ....