TaxTMI 
TaxTMI 
2006 (1) TMI 166
X X X X Extracts X X X X
X X X X Extracts X X X X
....ale of land. In the return of income filed, the assessee had shown capital gain on the sale of one residential house at Gopal Nagar, Amritsar, which was acquired on 27th Nov., 1979 for Rs. 21,500 and sold for Rs. 51,000 in the year 1989. After claiming deduction under s. 48 of the IT Act, 1961 (in short 'the Act'), the assessee had shown capital gains on the sale of this house. Similarly, the assessee had purchased shops at Basti Sheikh, Jalandhar, in 1979 and sold in 1989. The resultant surplus was also shown as long-term capital gains. The AO observed that the assessee has been carrying on substantial transactions for purchase and sale of agricultural lands, plots etc. and, therefore, the intention of the assessee was to earn profit. According to him, these transactions were adventure in the nature of trade and, therefore, fell in the definition of profession under sub-s. (36) of s. 2 of the IT Act. The AO, therefore, treated the resultant surplus on the sale of a residential house and shops at Basti Sheikh as business profit and taxed the same accordingly. 3. Being aggrieved, the assessee impugned the addition in appeal before the CIT(A). It was submitted before the CIT(A) that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ever, due to subsequent development i.e. terrorist activities, where Amritsar was one of the worst affected District, the assessee changed his mind to shift to Amritsar and sold the property in 1989. Similarly, he stated that shops at Basti Sheikh Jalandhar, were purchased in the year 1979 and given on rent. The intention of the assessee was to earn rental income, which was duly reflected in the returns of income filed. However, in the year 1989, the assessee sold the shops and offered the surplus as long-term capital gains. Thus, he submitted that the order of the learned CIT(A) does not merit any interference. 6. We have heard both the parties and carefully considered the rival submissions and gone through the orders of the authorities below. As regards the residential house at Amritsar, the contention of the assessee that the same was purchased for the purpose of his own residence and later the same was sold after a gap of 10 years because of terrorist activities at Amritsar, the same appears to be correct. The Revenue has not placed any material on record that after the purchase of this house, the assessee took some further steps for use of this property for commercial purpose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m property dealings was an attempt to explain the availability of source for investment in properties purchased in their names. He observed that in the assessment year under consideration, the assessee has himself purchased one plot in Dayal Nagar for Rs. 30,000 on 17th April, 1989 in the name of his two minor sons S/Sh. Raj Kumar and Rakesh Kumar and another property was purchased in Lal Bazar, Jalandhar, in their names for Rs. 56,900. Thus, the total investment made in the minor children aggregated to Rs. 86,900. These investments have obviously been made by the assessee in the names of minor children. He deleted the addition of Rs. 60,000 made on estimate basis by the AO, but sustained the addition of Rs. 86,900 being investment made in the name of two minor sons. The Revenue is aggrieved by the order of the CIT(A). Hence, this appeal before us. 7.2 At the outset, the learned counsel for the assessee and the learned Departmental Representative conceded before us that this issue is covered in favour of the assessee and against the Revenue by the Tribunal, Amritsar order dt. 30th Aug., 2005 in assessee's own case in ITA Nos. 525, 539 to 543/Asr/1997 for the asst. yrs. 1984-85 to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s ground of appeal of the Revenue is, therefore, dismissed." This order was also followed in ITA No. 542/Asr/1997 of the order of the Tribunal. The facts of the case for the assessment year under reference are similar to the facts for the earlier assessment years. Therefore, respectfully following the same, we uphold the order of the CIT(A) and reject this ground of appeal of the Revenue. 8. The next ground of appeal for the asst. yr. 1990-91 relates to deletion of addition of Rs. 1,02,617 made on account of assessee's mother's share in the AOP in the profit from the sale of land developed as colony at New Ashok Nagar, Jalandhar, by treating assessee's mother as Benamidar. This ground is also common (Sl. No.1) for the asst. yr. 1991-92 where an addition of Rs. 1,02,617 was again made on the same ground. The facts of the case are that for the asst. yr. 1989-90, the AO made an addition on account of assessee's mother's share in AOP in profit from, sale of land developed as colony in New Ashok Nagar, Basti Sheikh, Jalandhar, by treating assessee's mother as his Benamidar. On appeals, the learned CIT(A) deleted the addition by relying on his orders for the earlier assessment years. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....age of the daughter are generally on higher side because of some items of gifts in the form of gold ornaments, electronics goods and arrangements for reception of the Barat etc. which are required to be given/made. He, therefore, estimated the marriage expenses at Rs. 1,25,000 and made the addition accordingly. 9.1 The assessee impugned the addition in appeal before the CIT(A). It was submitted before the CIT(A) that assessee's daughter was first child in the family and was brought up by assessee's mother. It was also submitted that the expenses were incurred by assessee's mother and the marriage was solemnized at the residence of the assessee. It was contended that the AO was not justified in estimating the expenses of marriage at Rs. 1,25,000, which was solemnized before 4 years ago. It was also argued that the mother of the assessee had sufficient income and also had 1/3rd share in the AOP when marriage took place. The learned CIT(A) considered these submissions and rejected the contention of the assessee that expenses estimated by the AO were arbitrary or excessive. The learned CIT(A) held that marriage expenses of Rs. 1,25,000 appeared to be fair and reasonable. However, he p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceedings, he submitted that the land in fact was purchased by his wife Smt. Kamaljit and mother Smt. Suhagwanti and he only acted as a Mukhtiar, power of attorney holder. The AO, however, treated them as his Benamidar in the hands of the assessee. Similar additions were made for the asst. yrs. 1991-92 and 1992-93 also. 10.1 Aggrieved, the assessee filed appeals before the CIT(A), who deleted the additions by relying on his order for the earlier assessment years. The Revenue is aggrieved by the order of the CIT(A). Hence, this appeal before us. 10.2 At the outset, the learned Departmental Representative and the learned counsel for the assessee were fair enough to concede that this issue is covered in favour of the assessee and against the Revenue vide Tribunal's order dt. 30th Aug., 2005 in assessee's own case for the asst. yrs. 1984-85 to 1989-90 respectively. 10.3 We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. We find that this issue is squarely covered in favour of the assessee and against the Revenue by our aforesaid order dt. 30th Aug., 2005, in assessee's own case where in para 16.5 on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made on account of the sale of plots held in the name of assessee's mother, Smt. Suhagwanti and assessee's father-in-law Sh. Hans Raj. 12.1 At the outset, both the learned Departmental Representative and learned counsel for the assessee conceded before us that this issue is also covered in favour of the assessee and against the Revenue vide Tribunal, Amritsar Bench, Amritsar's, order dt. 30th Aug., 2005 for the asst. yrs. 1984-85 to 1989-90 where in para 7.2 and 7.3 on pp. 6 and 7, it was held as under: "7.2 On consideration of the above facts, we are of the view that the CIT(A) was justified in deleting the addition in the hands of the assessee. As is held above on the basis of power of attorney, no right, title or interest is created unless it is supported by sale consideration. Nothing is proved from record to show that if assessee acquired any right, title or interest in the property because of power of attorney. His finding is proved that power of attorney was subjected to consideration or was supported by any sale agreement. The assessee merely acted as a power of attorney holder on behalf of his mother and father-in-law. The Hon'ble Allahabad High Court in the matter of Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r consideration are also similar to the facts of the aforesaid assessment year. Therefore, respectfully following the aforesaid order of the Tribunal, we confirm the order of the CIT(A) and reject this ground of appeal of the Revenue. 13. Ground No.6 for the asst. yr. 1991-92 relates to deletion of addition of Rs. 80,000 made on account of sale of booth belonging to assessee's mother, Smt. Suhagwanti, by treating her as Benamidar of the assessee. The facts of the case are that there was a commercial property in the name of assessee's mother, which was sold for Rs. 80,000 by sale deed dt. 27th Dec., 1991. Since the AO treated the assessee's (mother) as his Benamidar, the entire amount of the sale proceeds was treated as the income of the assessee. 13.1 Being aggrieved, the assessee carried the matter in appeal before the CIT(A). It was submitted before the CIT(A) that assessee's mother had purchased the property for Rs. 24,500 on 20th Oct., 1980 and sold the same on 27th Dec., 1991. for Rs. 80,000. It was submitted by no stretch of imagination that entire sale could have been treated as profit of the assessee. However, the learned CIT(A) by referring to appellate order for the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome of Rs. 1.5 lakh for the asst. yr. 1991-92 being income of the past years earned in the name of Sh. Raj Kumar. The assessee also disclosed income of Rs. 2 lakhs on behalf of his other son, namely, Sh. Rakesh Kumar i.e. Rs. 1 lakh each in respect of each assessment years i.e. 1991-92 and 1992-93. No returns of income were filed by Sh. Raj Kumar and Sh. Rakesh Kumar before search operation. However, subsequently, both S/Sh. Raj Kumar and Rakesh Kumar filed returns on the same date, i.e., 30th June, 1995 for the asst. yrs. 1988-89 to 1994-95 in each of the two cases, amount offered on their behalf by their father in the statement recorded under s. 132(4) was not disclosed. The amount of income disclosed by the assessee in his statement was retracted and was also not included in the income of the assessee. However, the AO observed that the properties were acquired in the names of minor sons out of the income/investment of the father made in the name of sons when they were minors. Accordingly, he treated both the sons as Benamidar of the assessee. The AO, however, made protective assessment in the hands of both sons S/Sh. Raj Kumar and Rakesh Kumar for the asst. yrs. 1991-92 and 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....considered the facts of the case and the submissions of the assessee. In my opinion, the amount disclosed by the assessee on behalf of his sons is not in respect of any asset found in the course of the search. There appears to be no basis for arriving at the amount of the income disclosed. I see no valid basis for making this addition except the statement of the assessee under s. 132(4) of the Act which was rightly contended by the assessee was given under confused state of mind. The quantum of the income disclosed in the statement must represent the equal value of some asset found in the course of the search. I find that in the accounting year period relevant to asst. yr. 1990-91 the two investments in the name of the minor sons was Rs. 86,900, which has been directed by me to be added in the hands of the assessee in the accounting year relevant to asst. yr. 1991-92. There is an investment of Rs. 45,000 for renovation and construction over the property of Lal Bazar and another investment of Rs. 73,000 in acquisition of agriculture and on 11th Jan., 1991. Thus, in the name of the two sons investment in the immovable property amounts to Rs. 11,800. There is another investment of Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on constitutes a valid piece of evidence until proved otherwise. Thus, he stated that the learned CIT(A) was not justified in reducing the additions made by the AO. 14.3 The learned counsel for the assessee, on the other hand, reiterated the submissions made before the authorities below. He submitted that the assessee was in a confused state of mind at the time when his statement was recorded. He drew our attention to p. 9 of the paper book where the AO has reproduced the extracts of the statement. He submitted that the assessee disclosed income of Rs. 3.5 lakhs on behalf of his son Sh. Raj Kumar for the asst. yrs. 1991-92 and 1992-93. Again he disclosed another income of Rs. 1.5 lakh in the name of his son for the asst. yr. 1991-92 being income earned in the earlier assessment years. He submitted that this only shows confused state of mind of the assessee. He further stated that immediately after the search on 31st July, 1992, the assessee retracted from the statement in August, 1992. He submitted that there was no evidence in the form of assets or income earned in the names of two sons. In fact, the learned CIT(A) has held that the addition should be sustained only to the extent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....67 TTJ (Del) 588, where it was held that the statement recorded under s. 132(4) surrendering certain amount is legally relevant, but it is open to a party who made an admission to explain clearly and demonstrate on the basis of positive material under and what circumstances, the admission was made or to prove that what was stated was not correct. Reliance was also placed on the decision of the Tribunal, Jaipur Bench in the case of Maheshwari Industries vs. Asstt. CIT (2003) 81 ITJ (Jp) 914. This decision was also followed by SMC Bench in the case of ITO vs. Bua Dass. Now in this case, we find that apart from disclosing income of Rs. 3.50 lakhs in the asst. yrs. 1991-92 and 1992-93 on behalf of Sh. Raj Kumar, the assessee again disclosed income of Rs. 1.5 lakhs being income earned in the name of Sh. Raj Kumar in the past assessment years. We find that the assessee was being assessed to tax right from asst. yr. 1984-85. If the income was earned in the earlier assessment years relating to 1984-85 to 1990-91. the assessee could have disclosed such income in those assessment years rather than disclosing the same for the asst. yr. 1991-92. Moreover, the Department has not brought any evi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the assessee through the Will of late Sh. Kashmiri Lal. The facts of the case common to all the assessment years are that the seized material revealed sale of various plots at Basti Danishmandan, Jalandhar. The assessee had received sale consideration amounting to Rs. 1,55,000, Rs. 4,12,900 and Rs. 1,24,000 for sale of plots during the asst. yrs. 1991-92, 1992-93 and 1993-94 respectively. In the returns filed by the assessee, the profit from sale was shown under the head capital gains. It was explained by the assessee that agricultural land was inherited from Sh. Kashmiri Lal who made a Will in favour of the assessee on 15th Sept., 1981, which was registered on 16th Jan., 1989. Late S. Kashmiri Lal died on 2nd Aug., 1985 and thus by virtue of the Will, the land in question was passed on to him. However, the AO observed that Sh. Kashmiri Lal had three sons doing small business in Kurukshetra and it was unusual that the deceased would execute Will in favour of the assessee in exclusion of his three sons. Thus, he doubted the genuineness of the Will and after allocating 10 per cent towards development expenses, the AO treated the resultant surplus as business profits for three asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the correctness of the computation made by the assessee under the head capital gain and also the correctness of the deduction etc. claimed. Thus, this issue is restored back to the file of the AO for all the three years to decide the matter afresh after considering the submissions of the assessee as extracted above and after allowing the assessee a reasonable opportunity of being heard. In this view of the matter, the additions made by the AO for the difference between the income declared by the assessee as computed under s. 45(2) of the Act and as determined by the AO should be treated as deleted until the issue is decided by the AO afresh." Accordingly, he restored the issue to the file of the AO for determination of correct capital gain as per provisions of the Act. The Revenue is aggrieved by the order of the CIT(A). Hence, these appeals before us. 15.2 The learned Departmental Representative heavily relied on the orders of the AO and submitted that considering the extent of land holdings and the facts on record, the learned CIT(A) ought to have upheld the additions made in the hands of the assessee by treating transaction as business profit. The learned counsel for the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of action was in conformity with the provisions of the Act. Under these circumstances, we do not find any justification to interfere with the orders of the CIT(A) and the same are upheld and respective grounds of appeals of the Revenue are dismissed. 16. We now take up appeal in ITA No. 599/Asr/1997 for the asst. yr. 1992-93. In this appeal, the Revenue has taken three grounds. The first ground relates to deletion of an addition of Rs. 1,24,500 made on account of profit from the sale of plots in the residential colony named Shastri Nagar, Ludhiana, the second ground relates to reducing the addition from Rs. 2,75,000 to Rs. 1 lakh, being income disclosed by the assessee on behalf of his sons in the statement-recorded under s. 132(4) of the Act and the last ground relates to setting aside the issue regarding an addition of Rs. 3,71,610 made by the AO in respect of sale of plots out of land claimed to have been inherited by the assessee through Will of Sh. Kashmiri Lal and directing the AO to compute the sale under the head 'capital gains'. 17. Similarly in ITA No. 600/Asr/1997 for the asst. yr. 1993-94, the Revenue has taken two grounds. The first ground of appeal relates to set....