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TMI Blog2018 (3) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation from the creditor. It was also explained that amount have been received on different dates through RTGS. The A.O. noted that assessee did not explain the nature of transactions with M/s. Unitech Ltd., for which, the money was credited in the books of account of the assessee. In response to notice under section 133(6) of the Act, the Ld. A.R. of M/s. Unitech Ltd., have attended the assessment proceedings and filed requisite details before the A.O. in which it was explained that M/s. Unitech Ltd., has paid advance amount of Rs. 67.50 crores for purchase of lands situated at village Savroli and Dhamini, Taluka Khanpur, District Raigad, Maharashtra to M/s. Nucleus Steel Pvt. Ltd., (assessee). They have filed Agreement to Sell for purchase of the land as mentioned above. It was submitted that due to shortage of funds and huge repayments obligations of the debts, the Company is unable to pay the balance amount. The assessee also explained the same facts that Agreement to Sell Dated 12th March, 2010 was executed for sale of the above property, for a sum of Rs. 135 crores, out of which, a sum of Rs. 67.50 crores was received as advance from M/s. Unitech Ltd., who have also confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y producing complete documentary evidence including confirmations, bank statements, ITR and balance-sheet of M/s. Unitech Ltd., were filed before A.O. The assessee has, therefore, discharged the initial onus to prove the conditions of Section 68 of the I.T. Act. The A.O. without justification, made the addition. It was also submitted that assessee is legal and beneficial owner of the land in question. Since M/s. Unitech Ltd., approached the assessee for sale of the land in question, assessee agreed to sale and M/s. Unitech Ltd., agreed to purchase land and all the rights, interests and title thereon for a consideration of Rs. 135 crore, out of which, half of the amount was received as advance on different dates through RTGS, through banking channel. The Original Agreement was executed on plain paper on 12th March, 2010. The transaction through banking channel have not been disputed by the A.O. The A.O. merely rejected the explanation of assessee because on the Non-Judicial Stamp Paper purchased in 2012, on which date of original agreement have been mentioned. The assessee proved the source of the amount received in the books of account of the assessee and has no malafide intention. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.00 Total 67.50 To confirm the transaction AO also issued requisition u/s 133(6) to M/s Unitech Ltd., on 07.12.2012. In response Shri Kaushal Nagpal AR of M/s Unitech ltd. appeared before the AO on 19.12.2012 and 21.12.2012 and submitted as under :- "1. M/s. Unitech Ltd., has paid an advance of Rs. 67.50 crores for purchase of lands situated at Village Savroli Dhamini, Taluka Khanpur, Dist. Raigad, Maharashtra to M/s Nucleus Steel Pvt. Ltd., 2. Enclosed copy of agreement to sell entered with the company for payment of advance of Rs. 67.50 crores for purchase of land as mentioned above. 3. M/s. Unitech Ltd. has to pay balance consideration of Rs. 67.50 crores for purchase and registration of land parcel mentioned therein but due to shortage of funds and huge repayment obligations of debts, company is unable to pay the balance amount and, therefore, amount is still outstanding." In this regard, the AR of the assessee vide letter dt. 21.12.2012 submitted before the AO that the assessee company owned a piece of land measuring 3-03-40 hectors & 8-25-2 hectors situated at Taluka Khalapur, Dist. Raigad, Maharashtra, purchased during the year ended 31.03.2004 which stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010 should not be treated as fake and bogus and to explain as to why the transaction may not be treated as colorable device and treated as unexplained income for the year u/s 68 of the I.T. Act, 1961. In response the AR of the assessee vide letter dt. 26.02.2013 submitted that in the year 2009-10 the assessee company agreed to sell and "UL" agreed to purchase the said land for a total consideration of Rs. 135.00 crores, out of which one-half amounting to Rs. 67.50 crores was agreed to be paid as an advance. The said understanding was reduced to writing in the form of an Agreement to Sell which was executed into between the assessee company and 'UL' on 12.03.2010. The aforesaid agreement was executed on plain paper on 12.03.2010. Subsequently, in order to guard against any significant movement in the market rate identical agreement was executed on nonjudicial stamp paper, incorporating all the terms of the Agreement entered into on 12.03.2010. Since the assessee company and 'UL' were merely entering into a mirror agreement of the earlier agreement dt.12.03.2010 the Director of the assessee company did not notice the error of the wrong date mentioned in the agreement to sell and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as on 31.03.2010. Since the market value of the property as on 31.03.2010 was only Rs. 24.20 crores, therefore, AO was of the view that the agreement could not have been made by the assessee at a consideration of Rs. 135 crores and the same reflects malafide intentions of the assessee company and M/s Unitech Ltd. AO also issued commission u/s 131(1)(d) to the Addl. DIT (Inv), Thane who intimated that the market rate of the land of 11.28 hectare at (Savroli and Dhamini) as on 31.03.2010 was Rs. 2,78,72,880/- (Rs.10 lacs per acre) which was purchased by the assessee in Aug, 2003 for a consideration of Rs. 48.44,104/-. AO observed that the market value of the property is just Rs. 2.78 crores as against the agreement to sell for sale consideration of Rs. 135 crores out of which Rs. 67.50 crores has been claimed to be received as an advance. AO was of the view that M/s Unitech ltd. a leading player in property development would make an agreement with the assessee company for purchase of land on such high, inflated and unreasonable price and as such the agreement shows the mala-fide intention of the assessee company. Other than the advance of Rs. 67.50 crores no further payments/sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itle therein, for a total consideration of Rs. 135.00 crores, out of which one- half amounting to Rs. 67.50 crores was agreed to be paid as an advance. It was confirmed by both the parties that the said understanding was reduced to writing in the form of an Agreement to Sell which was executed into between the Appellant Company and M/s Unitech Limited on 12.03.2010. Pursuant thereto; advance consideration of Rs. 67.50 crores was received by the Appellant Company from M/s Unitech Limited and which was transferred online through RTGS. Appellant submitted that subsequently, in order to guard against any significant movement in the market rate of the said land, the parties, in order to protect their respective interests, decided to execute the aforesaid Agreement on non-judicial stamp paper. Accordingly, identical agreement was executed on non-judicial stamp paper to incorporate fully and completely all the terms of the Agreement entered into on 12.03.2010. Appellant explained that since the Appellant Company and M/s Unitech Limited were merely entering into a mirror agreement of the earlier Agreement dated 12.03.2010, the error of the wrong date being mentioned on the first page of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome on account of cash credits is called and that the Appellant had discharged the onus on him to explain the nature and the source of cash credit in question by placing, on record :- * Confirmation letters of cash creditors, * Their affidavits; * Their full address and GIR nos. and permanent account numbers. In Mod Creations Pvt. Ltd., vs. ITO (2012) 354 ITR 282 (Del.), Hon'ble Delhi High Court have held that :- "Section 68 of the Income-tax Act, 1961, only sets up a presumption against the assessee whenever unexplained credits are found in the books of account of the assessee. The presumption is rebuttable. In refuting the presumption raised, the initial burden is on the assessee. This burden, which is placed on the assessee, shifts as soon as the assessee establishes the authenticity of transactions as executed between the assessee and its creditors. It is no part of the assessee's burden to prove either the genuineness of the transactions executed between the creditors and the sub-creditors nor is it the burden of the assessee to prove the creditworthiness of the sub-creditors." Similarly, in the case of CIT v. Real Time Marketing Pvt. Ltd. [(2008) 306 ITR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect and we are inclined to agree with it. (ii) If the Court finds that notwithstanding a series of legal steps taken by an Appellant, the intended legal result has not been achieved, the court might be justified in overlooking the intermediate steps, but it would not be permissible for the court to treat the intervening legal steps as non-est based upon some hypothetical assessment of the 'real motive' of the assessee. In our view, the court must deal with what is tangible in an objective manner and cannot afford to chase a will-o-thewisp. (iii) We are unable to agree with the submission that an act which is otherwise valid in law can be treated as non-est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interest, as perceived by the respondents. 4.1.7. In view of the above factual and legal position, I am of the opinion that the irregularities pointed out by the AO in respect of the impugned agreement to sale are not of much relevance under the Income Tax Act. Because once the fact of a certain advance made by assessee 'A' to assessee 'B' is acknowledged by both of them and so long as the three i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source from which the tenant gets the amount to pay as a deposit/advance. When persons take premises on rent variably they will organise the funds required to pay an advance or deposit, rather, as the lessee/tenant will always be available for verification as he will be in occupation of the premises, the fact whether he has paid the deposit or it can be easily verifiable. Therefore, in regard to deposits from tenants, it is sufficient if the assessee proves the identity of the tenant and the genuineness of the transaction under which the deposit is made. It will not be necessary for the assessee to prove the capacity of the tenant to make the deposit/advance. Therefore, where the tenancy is established and the tenant is actually in occupation of the premises and a lease deed or tenancy agreement produced showing the amount agreed to be paid as deposit and the deposit paid by cheque or demand draft and is duly accounted for in the books of account of the assessee as also the tenant, then the assessee has discharged his burden under section 68 of the Income-tax Act, 1961. If the Assessing Officer still wants to treat such amount as unexplained income of the assessee, then the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the SLP filed by the "The assessee was a firm engaged in the business of dealings in land. During the assessment year under consideration the assessee had taken loans from various parties and during the course of assessment proceedings, the assessee had furnished the loan confirmations giving full addresses, GIR numbers/permanent account numbers, etc., of all the depositors. The Assessing Officer however issued summons to some of the creditors and also conducted inquiries into the genuineness or otherwise of the loans taken by the assessee. After considering the evidence, the Assessing Officer made an addition of Rs. 12,85,000/- to the returned income of the assessee. This was confirmed by the Commissioner of Income-tax (Appeals). On further appeal to the Tribunal, the Tribunal held that the phraseology of section 68 of the Income-tax Act, 1961, was clear, that the Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to Income-tax as the income of the assessee of that previous year, that the legislature mandate is not in terms of the words "shall be charged to income tax as the income of the assessee of that pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to slate a case." 8. In this case, assessee received an amount of Rs. 67.50 crores from M/s. Unitech Ltd., as advance against the sale of the property. The assessee filed confirmation from M/s. Unitech Ltd., along with its bank statement and acknowledgment of filing of the ITR with balance sheet. The amount in question is received against the sale of the property through RTGS, through banking channel. M/s. Unitech Ltd., appeared before the A.O. in response to the notice under section 133(6) of the I.T. Act, in which, they have confirmed the same facts before A.O. for making advance payment to the assessee against sale of the property. The copy of the balance-sheet of M/s. Unitech Ltd., is also filed to show that they have given loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction between the parties. The assessee also explained that the creditor is a listed and public owned and reputed company which fact has also not been disputed by the A.O. The A.O. rejected the contention of assessee because Non-Judicial Stamp Paper was purchased later on, on which, Agreement to Sell was executed. The Ld. CIT(A) noted in his findings that the fact that land was purchased by the assessee originally has been confirmed by Additional DIT (Investigation) for a consideration of Rs. 48.44 lakhs. The assessee filed copy of the confirmation, bank statement and income tax return of the creditor, in the paper book, which support the explanation of the assessee that assessee received genuine amount from M/s. Unitech Ltd. Later on, on cancellation of the Agreement to Sell, the amount in question, was returned to the creditor through banking channel. The A.O. did not doubt existence of creditor and its creditworthiness. Thus, A.O. accepted identity of creditor and its creditworthiness and genuineness of the transaction. For proving case under section 68, assessee is required to prove identity of creditor, its creditworthiness and genuineness of the transaction, which asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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