TMI Blog2019 (5) TMI 1924X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the assessee - We therefore find no reason to interfere in the finding of Ld. CIT(A) and dismiss assessee s Ground No.1. Addition u/s 69B - Addition will not stand for under the provisions of Section 69B of the Act, firstly because the alleged land is not purchased by the assessee but is purchased in the name of another assessee namely Natural Gadia Real Estate Pvt. Ltd and secondly the assessee who is earning income from salary, house property and income from other sources is not maintaining any books of accounts and for making any addition u/s 69B of the Act there should be specific finding by Ld. A.O that the investment made by the assessee exceeds the amount recorded in the books of accounts maintained by the assessee for any source of income and the assessee offers no explanation about such excess amount or the explanation offered by the assessee is not, in the opinion of the A.O, satisfactory. In the instant case the assessee is not maintaining any books of accounts nor the land in question is purchased by him. Even otherwise the amount of investment in land shown by Natural Gadia Real Estate Pvt. Ltd is duly supported by various documentary evidences referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e action of the AO in making addition of ₹ 1,75,00,000/- in the appellant's income, merely on the farfetched assumptions, by erroneously correlating the making of cash deposits by the sellers in their bank accounts with the alleged cash payments by the appellant, without considering and appreciating the material fact that the sellers were having their independent sources of income and from such sources of income only, the cash deposits in bank accounts were made by them. That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary . 3. Brief facts of the case as culled out from the records are that the assessee is an individual deriving income from salary, house property and other income. He is director of M/s. Natural Gadia Real Estate Pvt. Ltd and also partner in two partnership firms namely M/s. Natural Construction and Developers and M/s. Gadia Investments. He filed his return of income for Assessment Year 2010-11 declaring income of ₹ 1,58,290/- on 16.8.2001. Subsequently, a notice under s. 148 was issued to the appellant on 10-02-2016 and the appellant vide his letter dated 15-02-2016 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements given by the sellers of the land. Finally, the learned A 0 framed the Assessment, under S.l43(3)/147, on 27-122016 by determining the total income of the appellant at Rs.l,76,58,290/- as against the returned income of Rs.l,58,290/- thereby making an addition of Rs.l,75,00,000/- in the appellant's income on the allegation of appellant having made cash payment in respect of purchase of Land at Village Sejwaya, District Dhar, by invoking provisions of section 69B of the Act. 4. Aggrieved assessee preferred appeal before CIT(A) but could not succeed as Ld. CIT(A) confirmed the addition observing as follows; I have considered the facts of the case carefully. It is an admitted fact that the appellant has purchased 10 bighas of agricultural land from Shrl Rajendra Prasad Jhale and his brother in village Mhow (Khasara No. 397/1, 2, 3, 4, 5) situated at Village Sejwaya, Tehsil Distriet-Dhar. The appellant has shown the. value of the land at ₹ 95,OO,OOO/- in its return whereas after making enquiries from the sellers of the) properties and entries in their bank account, it is established by the AO that actual price of the property was at ₹ 2,70,00,000/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the land. The contention .of the appellant that no addition can be made in its case u/s 69B is not correct as appellant has to explain the source of investment in the purchases and if it failed to explain the source of investment, deeming provision of sec.69B would come into effect. In the case of the appellant it has not recorded amount of investment in its books of account and is not .n:Ild)t to accept the truth inspite of having .all the evidences against it. It is also the known fact that in real estate businesses properties are being purchased and sold over and above the consideration recorded as per the registered document. However, additions could not be made due o not having any evidence of purchasers and sellers of on money paid/ received on the transactions, but in the case of the appellant situation is different. Reliance were placed on the following judgments/ decisions; (i) Hon ble Kerala High Court in the case of CIT vs. Anandrajan (1997) 228 ITR 664 (Ker). (ii) Hon ble ITAT Chennai Bench in the case of ITO vs. Sundari Chemicals 124 ITYD 460. (iii) Hon ble Delhi High Court in the case of Bela Juneja vs. CIT (2012)20 taxmann.com 392 (Delhi) 339 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO to provide him the copy of the affidavit of Shri Vishnu Jhala which was relied upon by the AO while recording the reasons. In response to the objections raised by the appellant, the learned AO passed an order dated 19.10.2016 rejecting the objections of the appellant against issuance of the notice under s. 148 (kindly refer PB Page No.50 to 56). However, the AO, instead of providing the copy of any affidavit, provided a copy of the statements of Shri Vishnu Jhala, as recorded under s.131 of the Act, by the DDIT(Inv.), Indore, at some earlier occasions (kindly refer PB Page No.57 to 69). 9.01 Your Honour, now it is submitted that during the assessment proceedings, the appellant furnished ample of documentary evidences, which directly proves, beyond all doubts, the claim of the appellant that he along with his company had made an aggregate payment of ₹ 95,00,000/- only towards purchase of land in contrast to the sum of ₹ 2,70,00,000/- [₹ 95 lakhs in cheque + ₹ 175 lakhs in cash] alleged by the learned AO. The details of documentary evidences furnished by the appellant are as under : i)Copies of registered sale agreements executed between the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above said company and the remaining 70 shares were held by other persons who were not related to the appellant. It is submitted that since it is only the company and not the appellant who is the registered as well as the absolute beneficial owner of the subject property, any addition on the basis of allegation of unexplained investment could have been made only in the hands of the company and in any situation, such addition could not have been made in the hands of the appellant. For such proposition, now reliance is placed on the following judicial pronouncements: a) CIT vs. K. Mahim Udma (2000) 242ITR 133 (Ker.) b) Samurai Software (F) Ltd. vs. CITi (2008) 299ITR 324 ii) Two Sale Agreements (kindly refer PB Page No. 147 to 162), each for a sale consideration of ₹ 47.50 lakhs only, were duly entered into between the appellant representing his proposed company and the sellers. These agreements were duly signed by both the parties and were executed in presence of two independent witnesses. These agreements were duly registered with the concerning Sub-Registrar of Properties after payment of due Stamp Duty and Registration Fees. Such agreements have not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line value only, the actual sale transaction had taken place. If for the sake of argument, the theory of cash payment of ₹ 1,75,00,000/- is taken to be correct, then the actual market value of such property would result into a sum of ₹ 2,70,00,000/- which is almost 3 times of the guideline value. It is submitted that by any theory of imagination, such a vast difference in the actual market price and Stamp Guideline Value cannot be estimated. Once this being the position, the allegation of the sellers of having received cash payments of ₹ 1,75,00,OOO/- over and above the stated consideration of ₹ 95,00,000/- deserved to be negated on this count alone. 12.00 Your Honours, in the entire assessment Order, the learned AO has heavily relied upon the statements of the sellers of the land namely of Shri Rajendra Prasad Jhala and his brother Shri Vishnu Prasad Jhala. However, during the course of the assessment proceedings itself, it was brought to the notice of the learned AO that the statements of the sellers are not true and just for escaping themselves from the enquiry in respect of the sources of unexplained cash deposits made in their bank accounts, they had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , copies of purchase deeds of the various lands purchased by him for claiming any deduction under Sec. 54B of the Act. This vital fact was completely ignored by the AO. Shri Rajendra Prasad lhala changed his stand frequently and he stated that the alleged agreement for ₹ 2,70,00,000/- was taken back by the appellant upon execution of registered agreements for ₹ 95,00,000/-. Earlier, it was stated by Shri Jhala that the alleged agreement of ₹ 2,70,00,000/- was taken back at the time of execution of registered sale deeds. Thus there is a clear contradiction in two versions of Shri Rajendra prasad Jhala himself (kindly refer PB Page No. 83). vi) There is also contradiction in the statement of Shri Rajendra Prasad Jhala as regard to the date of alleged receipt of on-money of Rs.I,75,00,000/-. In reply to Q. no. 28 before the AO, Shri Jhala stated that he had received cash amount of Rs.I,75,00,000/- one day before execution of the registered sale agreement whereas, at the same breath, in reply to Q. no. SO, he stated that he received the amount of Rs.l,75,00,000/- on the same day on which draft sale agreements were brought to by the appellant for their signature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs. CIT (2006) 287 ITR 0056 (P H) (xv) CMS Computers (P) Ltd Anr. Vs. Appropriate Authority Ors. (2008) 76 CCH 685 (MUmHC) (xvi) Indian Dyestuff Industries Ltd vs. Inspecting Assistant Commissioner Anr. (1994) 206 ITR 0485 (GUJHC) (xvii) C.B. Gautam vs. Union of India Ors. (1993) 199 ITR 530 (SC) 8. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to by both the parties. 9. Through Ground No.1 the assessee has challenged the finding of Ld. CIT(A) confirming the action of Ld. A.O of issuing notices u/s 148 of the Act and framing the reassessment. We observe that the assessee being an individual earned income from salary, house property and other income. Return of income was filed on 17.3.2011 declaring income of ₹ 1,58,290/- which was processed on 11.8.2011. The case was not selected for scrutiny, therefore no regular assessment was framed u/s 143(3) of the Act. An information was received by Ld.A.O from ADIT(Investigation)-II, Indore. This investigation was initiated for seeking information for the source of cash of ₹ 1,82,00,000/- deposited by two persons namely Mr. Rajen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant have complied the above notices. The AO has followed the proper procedure before issuing the notice U/S 148. Therefore, the appeal on these grounds is Dismissed . 10. From going through the above findings of Ld. CIT(A) and in the light of the fact stated above, we observe that explanation 2(b) of Section 147 of the Act which deals with the cases where income chargeable to tax is deemed to be escaped for assessment, applies on the given facts which provides that where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Ld. A.O that the assessee has under stated the income or has claimed excessive loss, deduction, allowance or relief in the return . Same is the situation in the case of the assessee wherein the Ld. A.O received the information which indicated that the assessee has understated income or has not disclosed the investment properly. These reasons was sufficient to apply the above provisions on the assessee alleging that he has not declared proper income or investment and escaped the tax assessment. Therefore in our considered view Ld. A.O has rightly issued the notice u/s 148 of the Act to frame the reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made two separate applications on 24.12.2009 and District Collector accorded the permission on 13.1.2010. Subsequently the sellers executed two separate sale deeds in favour of purchaser company namely Natural Gadia Real Estate Pvt. Ltd (through its Director Mr. Lokesh Gadia, the assessee) for a consideration of ₹ 47,50,000/- each which totalling to ₹ 95,00,000/-. So the ransaction of sale of land was completed on 25.3.2010 by the sale deed duly signed by all the parties for total consideration of ₹ 95,00,000/-. 13. Now the controversy arised when the information was received by the revenue authorities from ADIT(Investigation) that Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala deposited cash of ₹ 1,82,00,000/- in their joint saving bank account with Syndicate Bank, Mhow. In the statement given to the revenue authorities it was accepted that out of ₹ 1,82,00,000/- a sum of ₹ 1,75,00,000/- was the cash received from sale of agriculture land measuring 10 beghas at Village Sejwaya, Tehsil Dist. Dhar which is over and above the sale consideration of ₹ 95,00,000/- received through cheque/draft. In the statement they stated that Mr. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out the sale transaction on 18.3.2010 stating the sale consideration of ₹ 95,00,000/- out of which ₹ 5,00,000/- was given in advance and the remaining amount to be given at the time of registering the sale deed. So there is sufficient material placed on record by the Ld. Counsel for the assessee in support of its contention that the transaction of sale of alleged land was for a sale consideration of ₹ 95,00,000/- only and there is no iota of evidence which could indicate that the actual sale consideration was ₹ 2,70,00,000/- and also there is no evidence to prove that the assessee on behalf of the company of which he is the Director paid cash of ₹ 1,75,00,000/- over and over the sale consideration. 15. Ld. Counsel for the assessee also stated that no independent enquiry was conducted by the revenue authorities to value the alleged land measuring 10 bighas by Government approved valuer authority in order to prove that the market price of the land was more than the sale consideration stated in the registered sale deed. Ld. Departmental Representative also could not controvert this fact. Therefore it is an undisputed fact that the revenue authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee had failed to show that the amount of ₹ 11, 00, 0001- was paid by him to Shri Somabhai Prajapati by cheque and not by cash and accordingly confirmed the addition to that extent for assessment year 2005-06. 8. For the reasons stated hereinabove, this court is in complete agreement with the findings recorded by the Tribunal upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their income-tax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Income-tax v. Daulatram Rawatmull, (1964) 53 ITR 574 (SC), even if circumstances raise a suspicion, suspicion cannot take the place of evidence. 9. In the light of the above discussion, it is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the sum of ₹ 16,500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the IT authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of ₹ 16,500. Therefore, on the construction placed by us, sub-s, (2) had no application to the present nd the 1TO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under 5, 148, The order of reassessment made by the 1TO pursuant to the notice issued under s. 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it. 19. The Hon'ble AlIahabad High Court in the case of CIT vs, Balram Prasad (1984) 150 lTR 687, following the decision in the case of K.P. Varghese (supra), held that the onus is on the Revenue for showing tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the office premises of Polimer Net Work, certain notings were found in the seized material RK/S/B D/25. In the statement recorded on 08.12.98, the assessee stated that he did not remember for what purpose he had made notings, which was confirmed by the assessee in a subsequent statement recorded on 11.12.1998. The land was purchased from one Shri Rajarathinam. His statement was also recorded on the date of search i.e. 08.12.1998 and also on 11.12.1998. In the sworn statement dated 08.12.1998, in question No.3, Shri Rajarathinam admitted that he had received ₹ 4.10 lakhs as sale consideration but in question No.4, he admitted that he had received ₹ 34.35 lakhs. Again in the statement recorded on 11.12.1998, Shri Rajarathinam, the seller admitted that a total consideration of ₹ 34.85 lakhs was received from the assessee out of which ₹ 4.10 lakhs was received in demand draft and the balance in cash. In the affidavit given on 08.01 .1999 by Shri Rajarathinam, it was mentioned that the sale consideration received by him from Sri P.V.Kalyanasundaram i.e. the assessee, was only ₹ 4.10 lakhs and the earlier statements given before the Income Tax authorities w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle old family debts, ₹ 4 .80 lakhs for construction of house in Pullkasi Village and the balance was advanced to parties for keeping ₹ 2 lakhs and ₹ 3 lakhs in the house for family expenses and educational expenses of his daughter, respectively. It was also noted that the revised return was filed by the seller wherein he had shown approximately ₹ 2.5 lakhs being available with him in cash. Even after giving the retraction and admitting that he had sold the property for a sale consideration of ₹ 4.10 lakhs, the seller filed his I.T. Return on 28.01.2000 wherein he did not admit the cash on money consideration for the sale transaction. Subsequently he revised the I.T. Return wherein he admitted the sale consideration and showing ₹ 4.80 lakhs out of the above as utilised for construction of residential house property and consequently claiming exemption under Section 54, the seller filed the computation of income paying ₹ 1,83,576/- as tax, which was quite evident from the conflicting statements given by the seller and the conflicting I.T. Returns filed by him that his action of admitting sale consideration and paying tax was nothing but an ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of income of two sellers or on money receipt from sale of land. On the other hand there is long list of documentary evidences corroborating the transactions of sale of land for ₹ 95,00,000/- which are duly signed by the sellers namely Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala on multiple occasions. These documents includes agreement to sale dated 24.12.2009 executed between the purchasing company and the sellers for sale of said land, agreeing for sale consideration of ₹ 95,00,000/-, copies of the application dated 24.12.2009 made by the sellers before the Collector, Dhar, Affidavit dated 13.1.10 duly signed in by the sellers placed before the SDM Collector, Dhar, copies of public notices dated 1.1.2010 issued by the SDM(Revenue) for the purpose of sale of subject land, copies of the note sheets evidencing the proceedings carried out before the office of the District Collector regarding sale of land, copies of orders dated 18.3.2010 passed by District Collector, Dhar authorising the seller of land to make the sale to M/s. Natural Gadia Real Estate Pvt. Ltd, copies of relevant extracts of bank statement of the company reflecting the payment of sale consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclined to hold that the sale consideration for sale of land in question was only ₹ 95,00,000/- and revenue authorities failed to bring any credible material on record to prove that the sale consideration was ₹ 2,70,00,000/- and not ₹ 95,00,000/-. 27. Even otherwise the addition of ₹ 1,75,00,000/- made by the Ld. A.O u/s 69B of the Act will not stand for under the provisions of Section 69B of the Act, firstly because the alleged land is not purchased by the assessee but is purchased in the name of another assessee namely Natural Gadia Real Estate Pvt. Ltd and secondly the assessee who is earning income from salary, house property and income from other sources is not maintaining any books of accounts and for making any addition u/s 69B of the Act there should be specific finding by Ld. A.O that the investment made by the assessee exceeds the amount recorded in the books of accounts maintained by the assessee for any source of income and the assessee offers no explanation about such excess amount or the explanation offered by the assessee is not, in the opinion of the A.O, satisfactory. 28. In the instant case the assessee is not maintaining any books o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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