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2016 (5) TMI 806

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..... d delete the addition - Decided in favour of assessee Addition in respect of advance money received from the buyers - Held that:- According to the agreement, the buyer shall have to get Sale Deed registered and to pay the balance amount by 05.01.2007. It is admitted fact that no sale deed was executed and terms of the agreement were not complied with. The assessee claimed to have refunded advance money of ₹ 50,000/- to the buyer but no evidence have been produced in support of the contention that actually assessee refunded amount of ₹ 50,000/- to the buyer. Mere entry in the cash book without supporting document is not enough to prove the return of the amount in question, therefore, authorities below as per agreement, rightly inferred that amount in question have been forfeited and as such had become income of the assessee. - Decided against assessee Addition on account of 15% disallowance out of development charges - Held that:- No merit in this ground of appeal of the assessee. The assessee pleaded before ld. CIT(Appeals) that he is not investigating agency and has no power to call any person for investigation. The explanation of the assessee shows that assessee .....

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..... ion Wing of the Department and from the Ld. Commissioner of Income Tax, Karnal regarding purchase and sale of land carried out by the assessee during the year. As per this information, assessee carried out 61 transactions during the year which included four transactions relating to purchase of the land and 57 transactions relating to the sale of land. On perusal of the copies of Registration Deed, the Assessing Officer noted that 17 transactions of sale of land, situated at Azad Nagar, Darra Khera (Thanesar) were made by the assessee as General Power of Attorney of Shri Bhupinder Pal, Ishwar Dayal, Ved Parkash, all sons of Shri Jyoti Parsad and Shri Ghansham and Shri Babu Ram S/o Shri Bhupinder Pal village Sehla Tehsil Barara, District Ambala. The Assessing Officer asked the assessee to explain the nature of transactions, to furnish affidavits of these persons duly attested from Notary and to produce them before Assessing Officer. It was contended that assessee does not have any relation with these persons but being neighbours and their properties were situated adjacent to the property of the assessee and his wife, assessee sold their properties as an agent. Regarding furnishing of .....

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..... ssessing Officer summarized these facts in the assessment order and held that land measuring 18 K and 16 M in Darra Khera, Kurukshetra was purchased by the assessee in benami names by investing his own money and accordingly worked out the capital gain earned by assessee with respect to the land sold during the year resulting in an addition of ₹ 45,57,569/-. The findings of the Assessing Officer have been referred to by the ld. CIT(Appeals) in the impugned order. 5. The addition was challenged before ld. CIT(Appeals) and written submission of the assessee is reproduced in the appellate order in which the assessee briefly reiterated the same facts as were pleaded before A.O. and also submitted that the assessee conducted the transactions as General Power of Attorney holder. The assessee is not benami owner of the properties. The persons have confirmed the assessee being GPA holder before Sub Registrar in their replies. The assessee performed the acts and obligations as General Power of Attorney holder only and there was no element of profit involved in the transactions carried out by the assessee. The Assessing Officer did not conduct the inquiry properly. During short span .....

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..... ur of the original owners dated 25.10.2005 and 21.10.2005. PB-51 to 73 are the sale deeds executed by the assessee as GPA holder on behalf of the owners of the property and ld. counsel for the assessee submitted that there is no evidence on record that the sale consideration received on behalf of the owners have been used by the assessee as owners of the properties. The Assessing Officer issued summons under section 131 of the Act against the owners but they did not appear before the Assessing Officer and Assessing Officer has not taken any coercive method against them. Therefore, no fault can be attributed against the assessee. PB-34 to 37 are the correspondence by Sub Registrar, Bhind, Madhya Pradesh and Sub Registrar, Kurukshetra in which the Sub Registrar, Bhind addressed the letter to the original owners of the property, Shri Bhupinder Pal and others seeking their confirmation of executing Power of Attorney in his office and the original owners have confirmed in their written reply before Sub Registrar, Bhind, MP confirming execution and registration of the Power of Attorney by them in favour of the assessee. Same facts were also brought to the notice of Sub Registrar, Kuruksh .....

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..... the assessee is filed at PB-202 in which assessee explained that properties have been sold by him as GPA holder on behalf of the original owners as explained above and copies of the sale deeds executed by him as GPA holder were filed and it was explained that assessee performed the act of agent as GPA holder and charged the commission. PB-206 is the assessment order dated 20.04.2015 under section 143(3)/147 for subsequent assessment year 2008-09 in the case of the assessee in which returned income of ₹ 96,970/- have been accepted and no addition have been made on account of capital gain for selling the properties on behalf of the original owners above as GPA holder. He submitted that on principle of consistency, no addition should be made against the assessee in the assessment year under appeal. 7. On the other hand, ld. DR submitted that assessee is colonizer and developer of the properties. There was no relation between assessee and the owners, therefore, it is highly unbelievable that assessee would act as GPA holder. No commission have been charged by the assessee in this year for selling the properties, therefore, assessee is not able to prove its case before Assessi .....

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..... nd it is clearly mentioned in the sale deeds that the owners of the properties out of their own funds and sources, purchased the properties from different parties. There is no mention of name of assessee in the sale deed in their favour. No evidences have been brought on record to prove that assessee in fact purchased the properties in October,2005 in his own right or out of his own source. No evidence has also been brought on record that by executing GPA in favour of the assessee, assessee in-fact purchased the properties from the owners by paying the sale consideration. Therefore, there is no evidence on record to prove that assessee was benami owner of the property in questions. 9. We may also note here that after enactment of Benami Prohibition Act, nothing could be proved that assessee was benami owner of the property in question. The assessee specifically pleaded before the authorities below that report of the Inspector was not confronted to the assessee. The report of the Inspector is noted in the impugned order in which he has explained that he made local enquiries only. It appears from the report that he did not even meet the owners of the property. There is no mention .....

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..... nce between Sub Registrar, District Kurukshetra and Sub Registrar, Distt. Bhind (MP) in respect of execution and registration of the GPA under consideration. These facts would clearly show that the original owners of the property have executed GPA genuinely in favour of the assessee for specific purposes as mentioned in the GPA. The assessee, on execution and registration of the GPA would not become owner of the property. 9(ii) The authorities below have drawn adverse presumption against the assessee because assessee failed to produce the owners of the properties before Assessing Officer for examination or for filing confirmation or affidavits by the owners of the properties, thereby issuing summons under section 131 of the Act. PB-83 to 84 are the penalty orders passed by JCIT, Kurukhetra in the cases of original owners S/Shri Ishwar Dayal, Ved Parkash, Ghanshyam Dass Bhupinder Pal under section 272(A)(1)(c) of the Act whereby penalty proceedings for non-compliance of the summons under section 131 have been dropped after considering their replies. It would show that the original owners exist and are genuine persons and in the penalty proceedings appeared before JCIT, Kurukshe .....

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..... e been made and returned income of ₹ 96,970/- have been accepted. 10(i) It is well settled law that Income Tax authorities shall have to follow rule of consistency. We rely upon decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs CIT 193 ITR 321, decision of Madhya Pradesh High Court in the case of Godavari Corporation Ltd. 156 ITR 835 and decision of Hon'ble Punjab Haryana High Court in the case of Vikas Chemi Gum (India) 276 ITR 32. The ld. DR contended that in assessment year 2008-09, assessee charged commission from the original owners for executing sale deeds as GPA holder but in assessment year under appeal i.e. 2007-08, no commission have been charged, therefore, facts are distinguishable. We do not accept contention of ld. DR because facts are identical as have been considered in assessment year under appeal 2007-08 and subsequent assessment year 2008-09 because it was found that assessee sold the properties as GPA holder on behalf of the same original owners. Therefore, the character of transaction would not change even if commission charged or not. Considering the above facts, it is clear that when revenue has accepted contention .....

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..... oney but later on, above deal was cancelled and compromise was done through her brother-in-law Shri Mohinder Sharma and assessee returned the money and noted the same facts in the cash book. 12(i) The ld. CIT(Appeals) did not accept contention of the assessee. As per agreement, in case the buyers do not pay balance amount on the fixed date, advance money will be treated as forfeited . However, assessee claimed to have returned advance of ₹ 50,000/- to the buyer but no evidence has been filed therefore, according to agreement, when amount is forfeited, the same is liable to be added in the hands of the assessee. The ld. CIT(Appeals) dismissed this ground of appeal of the assessee. The ld. counsel for the assessee referred to Agreement. PB-85 and 89 is the copy of the cash book to show that ₹ 50,000/- have been returned to the owner. On the other hand, ld. DR relied upon orders of the authorities below. 13. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the assessee. According to the agreement, the buyer shall have to get Sale Deed registered and to pay the balance amount by 05.01.2007. It is admitted fact that no sa .....

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..... made of ₹ 12,000/-. The ld. CIT(Appeals), on the same reasoning confirmed addition. 15(i). After hearing rival contentions, we do not find any merit in this ground of appeal of the assessee. The assessee failed to produce any evidence of payment of the commission. No particulars were given and no evidence have been filed as to what services have been rendered by the agent on behalf of the assessee. In the absence of any evidence, we do not find any merit in this ground of appeal of the assessee. The same is dismissed. 16. On ground No. 4(d), assessee challenged addition of ₹ 2,58,004/- made out of interest of ₹ 8,94,340/- by disallowing proportionate interest on account of interest free loans for non business purposes. It is noted by the authorities below that assessee claimed interest of ₹ 8,94,340/-. During assessment proceedings, Assessing Officer noted that assessee made interest free loans to some persons for non business purposes. The Assessing Officer proposed to disallow proportionate interest on account of interest free loans made for non business purposes. The assessee furnished the details and made submissions which was not found tenable by .....

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