TMI Blog1998 (8) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... contended by the appellant. 3. Briefly the facts are that the assessees in all these three appeals are three brothers who are being assessed as Karta of their HUFs in respect of income derived from rent, interest, etc. A search under s. 132(1) of the Act was carried out at their residence on 12th Sept., 1995. During the course of search statements of the assessees were recorded on 12th Sept., 1995, and again on 27th Sept., 1995. In these statements the assessee had admitted to have earned unaccounted capital gain on sale of a piece of land which they had made jointly along with their uncle Late Mohanlal Girdharilal. It was admitted that a piece of land admeasuring 1,800 sq. mtrs. was sold by them to Shri Harji Bechar Patel and others for a total consideration of Rs. 36 lakhs and out of that amount a part consideration of Rs. 15 lakhs was received which was evenly appropriated by the three brothers as Karta of their respective HUFs. 4. Consequent upon detection of undisclosed income on the basis of statements recorded under s. 132(4) during the course of search, notices under s. 158BC were issued to the assessees and in response to the notices the assessees filed returns of undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ceremony was performed in May, 1994, and the entire amount of Rs. 36 lakhs was to be paid before June, 1994, in instalments although the sellers could make payment of Rs. 15 lakhs only and the balance amount was still unpaid, held that the capital gain was assessable in the asst. yr. 1994-95 because the handing over the possession of land along with the receipt of part-payment took place in November, 1993, which fell in asst. yr. 1994-95. Accordingly, the capital gain was assessable in the asst. yr. 1994-95 in terms of provisions of s. 2(47)(v). Accordingly, he worked out the unaccounted capital gain on the sale of land in the asst. yr. 1994-95 included in the block period instead of asst. yr. 1996-97 shown by the assessees and applied the cost inflation index at 244 for asst. yr. 1994-95 as against 281 for asst. yr. 1996-97 adopted by the assessee. 6. Accordingly one of the disputes in these appeals as projected in ground No. 2 is that the AO has erred in holding that the capital gain in respect of sale of land fell in the asst. yr. 1994-95 and not in the asst. yr. 1996-97 as contended by the assessees. 7. The next point of dispute as projected in ground No. 3 is with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per sq. mtr./yd. Accordingly, the sale price was only Rs. 36 lakhs. However, the AO in para 17 of the assessment order has referred to another aspect of this case that during the simultaneous search action at the premises of one of the three purchasers of the land viz. Shri Harji Bechar Patel, several papers indicating the transaction of sale through the brokers were found and seized. One of such paper No. 32 of loose paper file No. B-7 contained details of some land and conditions of its sale. The writing on this paper was as under: (i) Rate per sq. yd. Rs. 77.11 (when decoded it will be read as Rs. 7,711). (ii) First amount of Rs. 70 to be paid within one month. (iii) Balance amount in five instalments of six months. (iv) Scrap, etc. to be given to landlord. (v) Name to be given of father and uncle. (vi) Plan of the project to be put up nearby Mohannagar. (vii) Documentation to be made on completion of the account. The AO observed in para 17 of the assessment order that although this paper was not signed by anybody nor it was containing any specification of location, area of land, etc. it appeared that it was pertaining to the purchase of land by Shri Harji Becha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not connected with our property and not an evidence at all and, therefore, request you to drop your idea of adopting the rate on that basis and accept your statement and return of income filed by us." 12. However, the AO after considering the submissions of assessees, rejected the same and adopted the sale price of the land which is the subject-matter of computation of unaccounted capital gain in these three appeals at Rs. 7,711 per sq. mtr./yd. for reasons given in paras 21 to 23 of the assessment order which are as under: "21. Although the seized paper No. 32 is not signed by anybody, it does indicate that it was written in connection with negotiations for purchase and sale of some land. The fact that the purchaser Shri Harji Bechar had preserved it for pretty long time is also indicative of the fact that it pertained to some transaction entered into by him. It is also a fact that Shri Harji Bechar has not purchased any other land except the land for M.D. Tower. Hence, it he had accepted the proposal, it can be presumed that the writing in this paper is pertaining to M.D. Tower land. The other indicative factors are point Nos. 3 and 4. That is, the construction is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was submitted that according to the AO the transaction was chargeable in asst. yr. 1994-95 on the ground that the possession of land was handed over in November, 1993. It was submitted that according to the AO the provisions of s. 2(47)(v) were applicable to the facts of the case. The learned representative of the assessee, however, submitted that s. 2(47)(v) have no application because that section specifically refers to the transactions involving "allowing of possession of any immovable property to be taken or retained in part-performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882". It was submitted that s. 53A of the Transfer of Property Act presupposes existence of a written agreement followed by possession. It was pleaded that in the present case undisputedly no written agreement was executed in 1993 and the same came to be executed only on 18th April, 1996, as per the copy of the agreement to sale in Gujarati, a copy of which has been furnished to us at pp. 17 to 21 of the paper-book and English translation of which was also furnished by the assessee along with covering letter dt. 30th June, 1998. The above facts were confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the capital gain was declared by the assessee. Reliance was placed on CIT vs. Asha Land Corpn. (1981) 25 CTR (Guj) 249 : (1982) 133 ITR 55 (Guj). 18. We have considered the rival submissions and have also gone through the orders passed by the AO. It is undisputed that there was no agreement in writing transferring the land in dispute in the accounting year relevant to asst. yr. 1994-95 but it is also undisputed that the possession of the land was handed over in November, 1993, and all the three assessees have admitted to have received a sum of Rs. 15 lakhs (Rs. 5 lakhs each) as a part consideration of the sale price while handing over the possession to the prospective buyers. The provisions of s. 2(47)(v) can be applied only if there is a written contract coupled with the transfer of possession in terms of s. 53A of the Transfer of Property Act. In English law, the contract to which the doctrine of part-performance applies may be oral. However, s. 53A of the Transfer of Property Act expressly requires that the contract must be in writing by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. Thus, s. 53A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the block period, the same should be accepted by the AO. This disposes of ground of appeal No. 2. 20. Coming to ground No. 3 with regard to the determination of market value of the land as on 1st April, 1981, the same was not seriously argued by the learned representative of the assessees at the time of hearing. Accordingly we will uphold the order of the AO in this regard which is based upon the report of the Valuation Officer and the fact that major part of the land was tenanted. Accordingly this ground is adjudicated against the assessee. 21. Coming to ground of appeal No. 4 which relates to the question as to whether the amount realised on the transfer of land was Rs. 1,38,79,800 or Rs. 36 lakhs only, the learned representative of the assessees submitted that the AO has come to the conclusion that the total price of the land stipulated was Rs. 1,38,79,800 and not Rs. 36 lakhs. It was submitted that the above finding of the AO has been reached on the basis of a piece of paper found at the residence of one Shri Harji Bechar Patel who is one of the purchasers to whom the property is agreed to be sold by the assessees. It was submitted that: (a) At the time of search operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a sum of Rs. 15 lakhs as the amount paid to the appellants. Reference was made to the assessment order of Shri Kalubhai Becharbhai. (iii) "Balance amount in five instalments of six months." Admittedly even this clause is not complied with. Therefore this can not apply to the land in question. (iv) "Scrap, etc. to be given to landlord." Even in the whole assessment order there is no allegation that any such scrap was given to the appellants. This clause also could not apply. (v) "Name to be given of father and uncle." It was submitted that the AO has assumed that just because on the plot of land agreed to be sold to Shri Harjibhai Becharbhai, etc. the scheme is to be put up with the name "M.D. Tower" this piece of paper must pertain to the land in question because "M" would stand for Mohanbhai (uncle) whereas "D" would stand for "Dahyabhai" (father of the appellants). It was submitted that this could at the most be a sheer coincidence and it would be hazardous to assume that merely because two initials correspond with two initials of uncle and father, this piece of paper covers the land in question. (vi) "Plan of the project to be put up near Mohan Nagar." It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO (1991) 39 ITD 183 (Del); (ii) Rajpalsingh Ramavtar vs. ITO (1991) 39 TTJ (Del) 544; (iii) Brijlal Rupchand vs. ITO (1991) 40 TTJ (Ahd) 560; and (iv) Amar Natwarlal Shah vs. Asstt. CIT (1997) 57 TTJ (Ahd) 454 : (1997) 60 ITD 560 (Ahd). 22. The learned Departmental Representative supported the order of the AO and submitted that the seized paper found from the residence of one of the purchasers viz., Shri Harjibhai Becharbhai apparently pertains to this very land because of clause of cl. (v) of the paper which refers to the names to be given of father and uncle and the project finally put on the land was given the name of M.D. Tower. It was further submitted that it is a known fact that the transaction in immovable property involves payment of large amount of unaccounted money which are always recorded on piece of paper in code form and as such the AO was justified in decoding 77.11 as 7,711. He accordingly supported the order of the AO. 23. We have considered the rival submissions and have also gone through the orders passed by the AO. Chapter XIV-B was introduced in the IT Act in order to make the procedure of assessment of search case more effective. Under the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch will indicate that they have received such a large amount as a sale consideration. In fact, all the concerned parties admitted that the three brothers before us have received only a sum of Rs. 15 lakhs and the balance is yet to be paid/received out of the total consideration of Rs. 36 lakhs which was the sale price agreed between the parties. It is pertinent to note that in the assessment of Shri Kalubhai the same AO has taxed only a sum of Rs. 15 lakhs paid by him to the three assessees and as such cl. (ii) of this paper on the face of it could not be applicable because according to this Rs. 70 lakhs were required to be paid to the three brothers within one month. Thus, taking into consideration the totality of the facts and circumstances of the case we are of the opinion that no addition can be made on the basis of piece of paper referred by the AO in para 17 of the assessment order because it cannot be held that the paper pertains to the transaction of land dealt with by the assessees. Accordingly, we hold that the AO was not justified in taking the sale consideration at Rs. 1,38,79,800 on the basis of a piece of paper which is not in the handwriting of any of the assessees b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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