TMI Blog2008 (3) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered for the purposes of assessment and ordinarily not on the basis of statement of a third party, unless there is a material to corroborate that statement is available on record. The mere fact that somebody made a statement by itself cannot be treated as having resulted in an irrebuttable presumption against the assessee. The burden of showing that the assessee had disclosed income is on the revenue and that burden cannot be said to be the charged by merely referring to the statement of a third party in connection with the transaction, therefore, such statement cannot be made the sole foundation that the assessee deliberately suppressed his income. Even otherwise, if the explanation of the assessee is not acceptable, the onus shifts to the revenue to prove the same with corroborating material. Identical ratio was laid down by the Hon ble Madras High Court in the case of CIT v. N. Swamy [ 1998 (9) TMI 27 - MADRAS HIGH COURT] . No specific infirmity has been pinpointed by the revenue in the impugned order, nor any adverse material has been brought on record by the Assessing Officer to substantiate its contention that the assessee paid any underhand money except the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under section 143(1)(a) of the Act on the returned income and later on re-opened by issuance of notice under section 148 on the basis of the statement of Shri Gulzar Singh from whom the agriculture land was purchased. The impugned addition was made on account of alleged difference in the consideration paid for the purchase of the impugned land by placing reliance upon the statement of Shri Gulzar Singh, admittedly, at the back of the assessee. The impugned land was registered for ₹ 1,95,000 whereas as per the department there was information that the consideration was ₹ 17,00,000 per acre (total ₹ 34 lakhs). As per the revenue, the income of ₹ 32,05,000 escaped assessment , therefore, notice under section 148 was issued, in response to which the assessee field the return on 22-4-2004 showing the income of ₹ 1,67,728. The assessment was framed on a total income of ₹ 33,72,728. On appeal, the impugned addition was deleted against which the revenue is in appeal before the Tribunal. However, the Tribunal in the case of Dy. CIT v. Dr. Simrankaur Wander [IT Appeal Nos. 679 and 680 (Chd.) 2005 dated 26-11-2007] dismissed the appeal of the revenue. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the land from Bank of India, Humbran in which the Assessing Officer found huge deposits during the months of April 1997 to December 1997. The Assessing Officer has given the details of deposits of the bank accounts of the co-owners in the assessment order. On the basis of the above information from the Bank of India, Humbran, the Assessing Officer issued summons under section 131 to the various co-owners and their statements were recorded. The co-owners of the land had deposed before the Assessing Otficer that the deposits in their bank accounts were on account of sale of land and agricultural income earned from the land owned by the family members and also land taken on lease. Shri Gurnam Singh , Shri Hargurbinder Singh and Shri Maninder Singh had further stated that Shri Gurmail Singh was head of their family in the year of sale of land and the deal relating to sale of land was settled by him and, therefore, the sale rate and other details are known to Shri Gurmail Singh only. The Assessing Officer has referred to the statement (recorded by ADI) of Shri Gurmail Singh dated 26-11-2001 in which he has stated that the land sold to Dr.Gurpreet Singh Wander and Dr. Simran Kaur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agriculture income and the sale of land. (ii) That the assessee has purchased the land at the rate mentioned in the registered deeds and no amount was paid over and above the amount stated in the registered documents and that the amounts deposited in the bank accounts of sellers have to be explained by them independently as the land was purchased by the assessee from six different co-owners and Shri Gurmail Singh was only one of them. According to the assessee at the very first instance Shri Gurmail Singh could not be deposed on behalf of other co-owners. The assessee further submitted that the agreement was only executed between the sellers and the assessee on 8-7-1997 and it was on the basis of the same agreement that the registration deeds were executed. (iii) That Shri Gurmail Singh in his statement no where mentioned the name of Dr. Gurpreet Singh and that as per statement of Shri Gurmail Singh, Dr.(Mrs.) Simran Kaur Wander W/o Dr. Gurpreet Singh Wander of DMC Ludhiana gave cash of ₹ 18,50,000 in April, 1997 and the assessee submitted that in April, 1997 the assessee was not known to the seller as the agreement for purchase of land by the assessee from six co-owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad recorded the statement of Shri Gurmail Singh on 26-11-2001 as well as on 24-12-2004. So however, the Assessing Officer has relied upon the statement of Shri Gurmail Singh recorded on 26-11-2001 and ignored his statement recorded on 24-12-2004. According to the learned Commissioner of Income-tax (A) the statement of Shri Gurmail Singh cannot be relied upon without any corroborative evidence. Reliance has been placed on the decision of the Punjab and Haryana High Court in the case of Hira Lal Ram Dayal v. CIT 122 ITR 461 to support the finding that the registered sale deed is a conclusive evidence of sale as well as sale consideration. Reliance has also been placed on the decision of the Hon ble Bombay High Court in the case of CIT v. Mrs. R.R. Sood 161 ITR 92 to support the finding that when the price for the land is reflected in the agreement for purchase there was no question of the market value of the same to be ascertained as on the date of conveyance. The learned Commissioner of Income-tax (A) has also pointed out that the power of the Assessing Officer to ascertain market value of land under section 52 of the Income-tax Act,.1961 has been omitted with effect from 1-4-1988. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been rebutted. It was accordingly pleaded that the order of the Commissioner of Income-tax (A) may be set aside and that of the Assessing Officer restored. 9. The learned counsel for the assessee on the other hand, contended that the ADI (Inv.) had recorded the statement of Shri Gurmail Singh on 26-11-2007 in which the sale consideration for the land was stated to be at the rate of ₹ 18 lakhs per acre. The statement of several co-owners had also been recorded. The statement of Shri Gurmail Singh was again recorded on 24-12-2004. According to the learned counsel for the assessee, there is contradiction in the sale rate indicated in the two statements of Shri Gurmail Singh. The Assessing Officer has ignored the statement of Shri Gurmail Singh recorded on 24-12-2004. It was also pointed out that the sellers of land had categorically stated that the deposits in their respective bank accounts were on account of sale proceeds of the land and income from agriculture. The Assessing Officer has not cared to find out the quantum of agricultural income. Moreover, there are deposits in the bank account of the assessee much before the sale of the land which, in any case, could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has also given several instances where the land has been sold in the range of ₹ 18 lakhs per acre in the period in which the respondents had purchased the land. In regard to the deposits in bank accounts of the sellers in the period before execution of sale deed it was submitted that it is common knowledge that the money is paid in advance of purchase of land and the sale deeds are registered subsequently. Therefore, the deposits in the bank accounts of the sellers are related to the sale of land made by the owners of the land. The Assessing Officer according to the learned D.R., was thus justified in taking the sale of land at the rates as indicated by Shri Gurmail Singh and the Commissioner of Income-tax (A) was wrong in deleting the addition. 12. We have given our careful consideration to the rival contentions. In this case, The Assessing Officer has invoked the provisions of section 69 for making the addition. Section 69 of the Income-tax Act, 1961 provides that where in the financial year immediately the preceding assessment year the assessee has made investments which are not recorded in the books of account and the assessee offers no explanation or exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sole basis for making the addition. In certain cases, the assessee might be able to purchase the property below market price and where there is no evidence to establish understatement of consideration in the sale deed, the difference between the market price and the declared consideration cannot be assessed to tax. 14. We, therefore, have to consider as to whether in this case, the Assessing Officer had any material to hold that the assessee had paid more consideration than disclosed in the sale deeds and also as to whether there is any evidence to substantiate the quantum of the consideration allegedly paid by the respondents. The Assessing Officer has relied upon the statement of S. Gurmail Singh who is one of the co-owners of land and head of the family. One statement of S. Gurmail Singh was recorded by ADI (Inv.) on 26-11-2001. Subsequently, another statement was also recorded by the Assessing Officer on 24-12-2004. As per the statement of S. Gurmail Singh, Dr. Simran Kaur, Wander and Dr. Gurpreet Singh Wander had purchased the land at the rate of ₹ 18 lakhs per acre and Smt. Kamla Jain had purchased the land at the rate of ₹ 11 lakhs per acre. In the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s having been sold at the same rate at which the respondents had declared the transactions. On the other hand, the Assessing Officer is relying upon the statement of S.Gurmail Singh alongwith some sale instances prevalent at the time of purchase of land. The respondents were confronted with the statement of S.Gurmail Singh. However, as indicated earlier, the assessee had not demanded the cross-examination of S. Gurmail Singh. So however, once the respondents had denied the allegations and given instances of 11 to 12 transactions of sale of land approximate at same rate at which the respondents purchased the land, The truthfulness of the statement of S. Gurmail Singh cannot be taken for granted. The Assessing Officer in our view, has wrongly accepted the version of S. Gurmail Singh and rejected the version of the respondents. 17. Taking the totality of the facts and circumstances of the case into consideration, we are of the view that the Assessing Officer was also required to enquire from the vendors the source of bank deposits prior to the sale of land to the respondents. It is observed that there are bank deposits in the banking accounts of the vendors in April 1997 when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deeds. The Commissioner of Income-tax (A) was, therefore, justified in deleting the additions. We, therefore, dismiss the appeals of the Revenue. 19. In the result, the appeals of the Revenue are dismissed. The Tribunal In the case of ITO v. Harpal Singh [ITA Nos. 363 and 364/(Chd.) of 2005, dated 9-3-2007, held that there is no justification in making the impugned addition in the hands of the assessee on identical facts. The relevant portion is reproduced herewith: We find it convenient to dispose off the two appeals by a common order since they relate to the same assessee and involve a common issue. Since the facts, circumstances and issue raised is identical in both the assessment years, we take up for discussion the assessment year 2001-02. 2. In ITA No. 363/CHD/2005, the issue is with regard to an addition of ₹ 38.65 lakh made by the Assessing Officer under section 69B of the Income-tax Act, 1961 (in short the Act ). 3. Briefly stated, the facts are that the aforesaid Shri Harpal Singh is General Power of Attorney (GPA) holder of his brother-in-law (Sh. Avtar Singh) and sister (Smt. Satinder Kaur) both non-resident Indians (NRIs) who purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hiana and that the assessment of the seller also could be re-opened by the revenue under the enabling provisions of the Act. Therefore, the factum of the assessment finalised in the case of Sh. Satinder Pal Singh, i.e., the seller could not be held to be conclusive. 5. On the other hand, the ld. counsel for the respondent assessee has relied upon the findings of the CTI(A) in Para 6, of his order in support of the plea of the assessee. The ld. counsel pointed out that the alleged admission of the seller has since been retracted before ADI (Inv.), Ludhiana itself whereby the seller has confirmed, that he has not received any amount over and above the stated consideration. The ld. counsel has taken us through tha paper book filed on behalf of the assessee which inter alia contains the copies of replied furnished by the assessee to the Income-tax authorities, copy of the affidavit of Sh. Avtar Singh on whose behalf the lands have been purchased, copy of the order of assessment dated 8-9-2003 passed under section 143(3) of the act in the case of Sh. Satinder Pal Singh etc. On the basis of aforesaid, it is reiterated by the ld. counsel that there was no evidence or material with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the alleged statement of the seller. Therefore, the said statement has been put to use by the revenue without it being tested. For all the above reasons, we are inclined to affirm the conclusion of the CIT(A) that the aforesaid piece of evidence cannot be used to justify the impugned addition 8. Apart from the aforesaid, the issue can also be seen from a different angle. In this case, it is an accepted position that the CPA holder has purchased the property for and on behalf of two NRIs. In this connection, the NRI namely, Sh. Avtar Singh explained before the assessing authority the details of the sources of funds. It is evident from the submissions made before the Income-tax authorities that the funds for investment in land purchase came out of the bank accounts maintained by the said NRI with State Bank of India, Sector 17, Chandigarh. The entire credit and debit emeries in the said accounts were also sought to be explained. The said Sh. Avtar Singh also placed an affidavit to state that the entire amount used for purchasing the land was remitted from abroad. Therefore, the entire factual position in this regard was before the assessing authority. In the face of such evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is conclusive evidence of sales as well as sales consideration. Identical ratio was laid down in the cases of CIT v. Smt. R.R. Sood [1986] 161 ITR 92 (Bom.) and various other decisions, clearly supports the case of the assessee. It is further seen that the ld. Assessing Officer has merely put stress on the statement of Sh. Guljar Singh, which was also recorded at the back of the assessee. Even the comparable cases, relied upon by the assessee has been discussed in the assessment order and identical plea has been reiterated in the impugned order. The decision of the Hon ble Apex Court in the case of Kishinchand Chellaram v. CIT [1980] 125 ITR 713 wherein it was held that if any evidence used against the assessee is not shown to him and no opportunity is provided to controvert the same, that evidence shall not be admissible in support of the addition further supports the case of assessee. The decision in the case of CIT v. Radhey Shyam Sita Ram [ ] 22 IT Rep 667 (Punj. Har.) and the decision of the Tribunal in the case of Sangrur Vanaspati Mills Ltd. v. Asstt. CIT [ ] 23 IT Rep 572 further supports the case of the assessee to the effect that the assessment made on the basis of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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