TMI Blog2006 (1) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment only. As regards the shops, it is not in doubt that the shops were given on rent and such rental income was disclosed in the returns as income from property in the earlier assessment years. This shows that the intention of the assessee was to earn rental income. This intention is further strengthened from the fact that the shops were held for a period of 10 years. In the case of G. Venkataswami Naidu Co. vs. CIT [ 1958 (11) TMI 5 - SUPREME COURT] , the Hon'ble Supreme Court has held that if a person invested money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from adventure in the nature of trade. Even if the assessee was extensively dealing in purchase and sale of land yet it does not mean that it could not hold certain properties for the purpose of investment. Thus, we do not find any fault with the order of the CIT(A). The same is upheld and this ground of appeal is rejected. Sale of plots out of the land inherited by the assessee through the Will of late Sh. Kashmiri Lal - It is obvious that Late Sh. Kashmiri Lal had executed the Will on 15th Sept., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house at Amritsar and shops. The facts of the case are that the search and seizure action had been carried out at the premises of the assessee, which revealed that the assessee was carrying on extensive business in purchase and sale of land. In the return of income filed, the assessee had shown capital gain on the sale of one residential house at Gopal Nagar, Amritsar, which was acquired on 27th Nov., 1979 for Rs. 21,500 and sold for Rs. 51,000 in the year 1989. After claiming deduction under s. 48 of the IT Act, 1961 (in short 'the Act'), the assessee had shown capital gains on the sale of this house. Similarly, the assessee had purchased shops at Basti Sheikh, Jalandhar, in 1979 and sold in 1989. The resultant surplus was also shown as long-term capital gains. The AO observed that the assessee has been carrying on substantial transactions for purchase and sale of agricultural lands, plots etc. and, therefore, the intention of the assessee was to earn profit. According to him, these transactions were adventure in the nature of trade and, therefore, fell in the definition of profession under sub-s. (36) of s. 2 of the IT Act. The AO, therefore, treated the resultant surplus on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reiterated the submissions, which were made before the authorities below. He submitted that the residential house at Gopal Nagar, Amritsar was purchased on 27th Nov., 1979 because the assessee wanted to shift to Amritsar. However, due to subsequent development i.e. terrorist activities, where Amritsar was one of the worst affected District, the assessee changed his mind to shift to Amritsar and sold the property in 1989. Similarly, he stated that shops at Basti Sheikh Jalandhar, were purchased in the year 1979 and given on rent. The intention of the assessee was to earn rental income, which was duly reflected in the returns of income filed. However, in the year 1989, the assessee sold the shops and offered the surplus as long-term capital gains. Thus, he submitted that the order of the learned CIT(A) does not merit any interference. 6. We have heard both the parties and carefully considered the rival submissions and gone through the orders of the authorities below. As regards the residential house at Amritsar, the contention of the assessee that the same was purchased for the purpose of his own residence and later the same was sold after a gap of 10 years because of terrorist act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1 On appeal, the learned CIT(A) referred to his order for the earlier assessment years where he had agreed with the AO's observation that the returns of income filed in the names of minors showing as estimated income from property dealings was an attempt to explain the availability of source for investment in properties purchased in their names. He observed that in the assessment year under consideration, the assessee has himself purchased one plot in Dayal Nagar for Rs. 30,000 on 17th April, 1989 in the name of his two minor sons S/Sh. Raj Kumar and Rakesh Kumar and another property was purchased in Lal Bazar, Jalandhar, in their names for Rs. 56,900. Thus, the total investment made in the minor children aggregated to Rs. 86,900. These investments have obviously been made by the assessee in the names of minor children. He deleted the addition of Rs. 60,000 made on estimate basis by the AO, but sustained the addition of Rs. 86,900 being investment made in the name of two minor sons. The Revenue is aggrieved by the order of the CIT(A). Hence, this appeal before us. 7.2 At the outset, the learned counsel for the assessee and the learned Departmental Representative conceded before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-89 and 1989-90 in appeal did not allow addition of the above nature of alleged income to be made in the hands of the assessee. We accordingly do not find any justification to interfere in the order of the CIT(A). This ground of appeal of the Revenue is, therefore, dismissed." This order was also followed in ITA No. 542/Asr/1997 of the order of the Tribunal. The facts of the case for the assessment year under reference are similar to the facts for the earlier assessment years. Therefore, respectfully following the same, we uphold the order of the CIT(A) and reject this ground of appeal of the Revenue. 8. The next ground of appeal for the asst. yr. 1990-91 relates to deletion of addition of Rs. 1,02,617 made on account of assessee's mother's share in the AOP in the profit from the sale of land developed as colony at New Ashok Nagar, Jalandhar, by treating assessee's mother as Benamidar. This ground is also common (Sl. No.1) for the asst. yr. 1991-92 where an addition of Rs. 1,02,617 was again made on the same ground. The facts of the case are that for the asst. yr. 1989-90, the AO made an addition on account of assessee's mother's share in AOP in profit from, sale of land developed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the asst. yr. 1994-95 where a note was appended that the marriage of assessee's son was solemnized on 18th April, 1993 on which expenses of Rs. 1,60,000 were shown. The AO observed that the expenses on the marriage of the daughter are generally on higher side because of some items of gifts in the form of gold ornaments, electronics goods and arrangements for reception of the Barat etc. which are required to be given/made. He, therefore, estimated the marriage expenses at Rs. 1,25,000 and made the addition accordingly. 9.1 The assessee impugned the addition in appeal before the CIT(A). It was submitted before the CIT(A) that assessee's daughter was first child in the family and was brought up by assessee's mother. It was also submitted that the expenses were incurred by assessee's mother and the marriage was solemnized at the residence of the assessee. It was contended that the AO was not justified in estimating the expenses of marriage at Rs. 1,25,000, which was solemnized before 4 years ago. It was also argued that the mother of the assessee had sufficient income and also had 1/3rd share in the AOP when marriage took place. The learned CIT(A) considered these submissions and rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was purchased in 1974 for about Rs. 72,000 per acre, which was converted into 200 plots measuring 100 sq. yards to 200 sq. yards sold at Rs. 35 to 36 per sq. yard. Later, during the course of assessment proceedings, he submitted that the land in fact was purchased by his wife Smt. Kamaljit and mother Smt. Suhagwanti and he only acted as a Mukhtiar, power of attorney holder. The AO, however, treated them as his Benamidar in the hands of the assessee. Similar additions were made for the asst. yrs. 1991-92 and 1992-93 also. 10.1 Aggrieved, the assessee filed appeals before the CIT(A), who deleted the additions by relying on his order for the earlier assessment years. The Revenue is aggrieved by the order of the CIT(A). Hence, this appeal before us. 10.2 At the outset, the learned Departmental Representative and the learned counsel for the assessee were fair enough to concede that this issue is covered in favour of the assessee and against the Revenue vide Tribunal's order dt. 30th Aug., 2005 in assessee's own case for the asst. yrs. 1984-85 to 1989-90 respectively. 10.3 We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier assessment years, these grounds of the Revenue have been dismissed. Therefore, the same did not warrant any further discussion. 12. Ground No.5 deals with the deletion of addition of Rs. 13,500 made on account of the sale of plots held in the name of assessee's mother, Smt. Suhagwanti and assessee's father-in-law Sh. Hans Raj. 12.1 At the outset, both the learned Departmental Representative and learned counsel for the assessee conceded before us that this issue is also covered in favour of the assessee and against the Revenue vide Tribunal, Amritsar Bench, Amritsar's, order dt. 30th Aug., 2005 for the asst. yrs. 1984-85 to 1989-90 where in para 7.2 and 7.3 on pp. 6 and 7, it was held as under: "7.2 On consideration of the above facts, we are of the view that the CIT(A) was justified in deleting the addition in the hands of the assessee. As is held above on the basis of power of attorney, no right, title or interest is created unless it is supported by sale consideration. Nothing is proved from record to show that if assessee acquired any right, title or interest in the property because of power of attorney. His finding is proved that power of attorney was subjected to considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order of the CIT(A) on this issue. There is no merit in this ground of appeal of the Revenue. The same is accordingly dismissed." The facts of the case for the assessment year under consideration are also similar to the facts of the aforesaid assessment year. Therefore, respectfully following the aforesaid order of the Tribunal, we confirm the order of the CIT(A) and reject this ground of appeal of the Revenue. 13. Ground No.6 for the asst. yr. 1991-92 relates to deletion of addition of Rs. 80,000 made on account of sale of booth belonging to assessee's mother, Smt. Suhagwanti, by treating her as Benamidar of the assessee. The facts of the case are that there was a commercial property in the name of assessee's mother, which was sold for Rs. 80,000 by sale deed dt. 27th Dec., 1991. Since the AO treated the assessee's (mother) as his Benamidar, the entire amount of the sale proceeds was treated as the income of the assessee. 13.1 Being aggrieved, the assessee carried the matter in appeal before the CIT(A). It was submitted before the CIT(A) that assessee's mother had purchased the property for Rs. 24,500 on 20th Oct., 1980 and sold the same on 27th Dec., 1991. for Rs. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Chauhan and Rakesh Kumar Chauhan. The assessee also disclosed income of Rs. 3.5 lakhs on behalf of his son Sh. Raj Kumar for the asst. yrs. 1991-92 and 1992-93. He further disclosed income of Rs. 1.5 lakh for the asst. yr. 1991-92 being income of the past years earned in the name of Sh. Raj Kumar. The assessee also disclosed income of Rs. 2 lakhs on behalf of his other son, namely, Sh. Rakesh Kumar i.e. Rs. 1 lakh each in respect of each assessment years i.e. 1991-92 and 1992-93. No returns of income were filed by Sh. Raj Kumar and Sh. Rakesh Kumar before search operation. However, subsequently, both S/Sh. Raj Kumar and Rakesh Kumar filed returns on the same date, i.e., 30th June, 1995 for the asst. yrs. 1988-89 to 1994-95 in each of the two cases, amount offered on their behalf by their father in the statement recorded under s. 132(4) was not disclosed. The amount of income disclosed by the assessee in his statement was retracted and was also not included in the income of the assessee. However, the AO observed that the properties were acquired in the names of minor sons out of the income/investment of the father made in the name of sons when they were minors. Accordingly, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sst. yr. 1991-92 and from Rs. 2,75,000 to Rs. 1,00,000 for the asst. yr. 1992-93. The relevant findings recorded by the CIT(A) in para 7.5 of the impugned order are as under: "7.5 I have considered the facts of the case and the submissions of the assessee. In my opinion, the amount disclosed by the assessee on behalf of his sons is not in respect of any asset found in the course of the search. There appears to be no basis for arriving at the amount of the income disclosed. I see no valid basis for making this addition except the statement of the assessee under s. 132(4) of the Act which was rightly contended by the assessee was given under confused state of mind. The quantum of the income disclosed in the statement must represent the equal value of some asset found in the course of the search. I find that in the accounting year period relevant to asst. yr. 1990-91 the two investments in the name of the minor sons was Rs. 86,900, which has been directed by me to be added in the hands of the assessee in the accounting year relevant to asst. yr. 1991-92. There is an investment of Rs. 45,000 for renovation and construction over the property of Lal Bazar and another investment of Rs. 73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Ker) where it was held that the assessment made on the basis of voluntary statement made by the partner regarding suppression of stock was valid. He further stated that the confession constitutes a valid piece of evidence until proved otherwise. Thus, he stated that the learned CIT(A) was not justified in reducing the additions made by the AO. 14.3 The learned counsel for the assessee, on the other hand, reiterated the submissions made before the authorities below. He submitted that the assessee was in a confused state of mind at the time when his statement was recorded. He drew our attention to p. 9 of the paper book where the AO has reproduced the extracts of the statement. He submitted that the assessee disclosed income of Rs. 3.5 lakhs on behalf of his son Sh. Raj Kumar for the asst. yrs. 1991-92 and 1992-93. Again he disclosed another income of Rs. 1.5 lakh in the name of his son for the asst. yr. 1991-92 being income earned in the earlier assessment years. He submitted that this only shows confused state of mind of the assessee. He further stated that immediately after the search on 31st July, 1992, the assessee retracted from the statement in August, 1992. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere being any documentary proof cannot be used in evidence against the person, who made such statement. The Tribunal also relied on the decision of R.P. Locks vs. Dy. CIT (2000) 67 TTJ (Del) 588, where it was held that the statement recorded under s. 132(4) surrendering certain amount is legally relevant, but it is open to a party who made an admission to explain clearly and demonstrate on the basis of positive material under and what circumstances, the admission was made or to prove that what was stated was not correct. Reliance was also placed on the decision of the Tribunal, Jaipur Bench in the case of Maheshwari Industries vs. Asstt. CIT (2003) 81 ITJ (Jp) 914. This decision was also followed by SMC Bench in the case of ITO vs. Bua Dass. Now in this case, we find that apart from disclosing income of Rs. 3.50 lakhs in the asst. yrs. 1991-92 and 1992-93 on behalf of Sh. Raj Kumar, the assessee again disclosed income of Rs. 1.5 lakhs being income earned in the name of Sh. Raj Kumar in the past assessment years. We find that the assessee was being assessed to tax right from asst. yr. 1984-85. If the income was earned in the earlier assessment years relating to 1984-85 to 1990-91. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 1992-93 and 1993-94 relate to deletion of additions of Rs. 1,39,500, Rs. 3,71,610 and Rs. 1,15,200 respectively made on account of sale of plots out of the land inherited by the assessee through the Will of late Sh. Kashmiri Lal. The facts of the case common to all the assessment years are that the seized material revealed sale of various plots at Basti Danishmandan, Jalandhar. The assessee had received sale consideration amounting to Rs. 1,55,000, Rs. 4,12,900 and Rs. 1,24,000 for sale of plots during the asst. yrs. 1991-92, 1992-93 and 1993-94 respectively. In the returns filed by the assessee, the profit from sale was shown under the head capital gains. It was explained by the assessee that agricultural land was inherited from Sh. Kashmiri Lal who made a Will in favour of the assessee on 15th Sept., 1981, which was registered on 16th Jan., 1989. Late S. Kashmiri Lal died on 2nd Aug., 1985 and thus by virtue of the Will, the land in question was passed on to him. However, the AO observed that Sh. Kashmiri Lal had three sons doing small business in Kurukshetra and it was unusual that the deceased would execute Will in favour of the assessee in exclusion of his three sons. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in assessee's submissions and hence the AO is directed to treat the land as capital asset for the purpose of the computation of the capital gain. He will scrutinize the correctness of the computation made by the assessee under the head capital gain and also the correctness of the deduction etc. claimed. Thus, this issue is restored back to the file of the AO for all the three years to decide the matter afresh after considering the submissions of the assessee as extracted above and after allowing the assessee a reasonable opportunity of being heard. In this view of the matter, the additions made by the AO for the difference between the income declared by the assessee as computed under s. 45(2) of the Act and as determined by the AO should be treated as deleted until the issue is decided by the AO afresh." Accordingly, he restored the issue to the file of the AO for determination of correct capital gain as per provisions of the Act. The Revenue is aggrieved by the order of the CIT(A). Hence, these appeals before us. 15.2 The learned Departmental Representative heavily relied on the orders of the AO and submitted that considering the extent of land holdings and the facts on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date when he converted into stock-in-trade by taking the fair market value was shown as capital gain and further surplus was shown as business profit. Such course of action was in conformity with the provisions of the Act. Under these circumstances, we do not find any justification to interfere with the orders of the CIT(A) and the same are upheld and respective grounds of appeals of the Revenue are dismissed. 16. We now take up appeal in ITA No. 599/Asr/1997 for the asst. yr. 1992-93. In this appeal, the Revenue has taken three grounds. The first ground relates to deletion of an addition of Rs. 1,24,500 made on account of profit from the sale of plots in the residential colony named Shastri Nagar, Ludhiana, the second ground relates to reducing the addition from Rs. 2,75,000 to Rs. 1 lakh, being income disclosed by the assessee on behalf of his sons in the statement-recorded under s. 132(4) of the Act and the last ground relates to setting aside the issue regarding an addition of Rs. 3,71,610 made by the AO in respect of sale of plots out of land claimed to have been inherited by the assessee through Will of Sh. Kashmiri Lal and directing the AO to compute the sale under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
