Income Tax Appellate Tribunal - Amritsar
The Income Tax Officer, Amritsar. vs Sh. Surjit Singh, Amritsar. on 30 June, 2020
आयकर अपीलीय अिधकरण,
अिधकरण अमृतसर यायपीठ,
यायपीठ अमृतसर
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH AMRITSAR
BEFORE SHRI L.P. SAHU, AM & SHRI RAVISH SOOD, JM
आयकर अपील सं./ITA No.434/ASR/2016
िनधारण वष / Assessment Year : 2009-2010)
(िनधारण
ITO, Ward-5(5), Amritsar Vs. Sh. Surjit Singh,
29-D, Guru Amar Dass Avenue
Ajnala Road, Amritsar.
थायी ले खा सं . /PANNo. : ALNPS 4128 D
AND
आयकर अपील सं./ITA Nos.671, 672 & 673/ASR/2014
िनधारण वष / Assessment Year : 2009-2010 to 2011-2012)
(िनधारण
Dy.CIT, Central Circle, Jammu Vs. M/s Horizon Pvt. Ltd.,
71/4, Trikuta Nagar, Jammu
थायी ले खा सं . /PANNo. : AABCH 9269 A
(अपीलाथ /Appellant) .. ( यथ / Respondent)
राज व क" ओर से /Revenue by : Shri M.P.Singh, CIT-DR
िनधा$रती क" ओर से /Assessee by : None
सुनवाई क" तार'ख / Date of Hearing : 06/02/2020
घोषणा क" तार'ख/Date of Pronouncement : 30/06/2020
आदे श / O R D E R
Per L.P.Sahu, AM:
These four appeals have been filed by the Revenue against the order of the CIT(A)-2, Amritsar, dated 30.05.2016 and order of the CIT(A)-I, dated 12.08.2014.
2. These cases were listed for hearing on 05.02.2020, however, none appeared on behalf of the assessee on the said date. Thereafter the cases were adjourned to 06/02/2020, even on this date on the first round and second round of the proceedings, no one appeared on behalf 2 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 of the assessee. Therefore, the Bench proceeded to dispose off all the four appeals after considering the submissions of ld. DR and the material evidence available on the record.
3. The grounds of appeal raised in ITA No.434/ASR/2016 are as under:-
1. Whether the Ld.CIT(A) is right in deleting the addition of Rs.
10,83,75,750/- made by the assessing officer on account of unexplained investment by the assessee from his undisclosed sources made in purchase of land from various persons/farmers by holding that "the AO has not brought any evidence on record to show that the appellant had purchased the land from various persons/ farmers on agreements/ikrarnamas or power of attorney in his name and later transferred the same to M/s Horizon Buildcon Pvt Ltd., on power of attorney of the original owners", ignoring the detailed discussion of the same in the assessment order.
2. Whether the Ld.CIT(A) is right to hold that "the AO has also not brought any evidence on record to show that the appellant had received any payment from M/s Horizon Buildcon (P) Ltd towards sale consideration of the lands in question in the capacity of owners of land", ignoring the facts on record that M/s Horizon Buildcon (P) Ltd has made payments through cheques and in cash to Sh. Surjit Singh and all of these payments have been found recorded in the books of accounts of M/s Horizon Buildcon (P) Ltd as discussed in the assessment order by the AO as well confirmed by the Ld. CIT(A)-1, Ludhiana in his order dated 12.08.2014 in Appeal No. 1/ROL/IL/ CIT(A)-1/Ldh/2014-15 in the case of M/s Horizon Buildcon (P) Ltd.
3. Whether the Ld.CIT(A) is right to hold that "hyped ikrarnamas were executed by them to impress the company appears to be justified and is upheld", ignoring the facts that events have been happened further on the basis of these ikrarnamas as discussed in details in the assessment order and it is also against the human probability that a person transfer his right of property to someone else without taking any consideration.
4. Whether the Ld.CIL(A) is right to hold that "the MOU dated 22.01.2008 and supplementary MOU dated 18.03.2008 were remained unsigned and the said unsigned documents were of no evidentiary value in the eyes of law" when the assessing officer has discussed in detail in his assessment order that the same reflect the actual state of affairs of business transactions carried out by the 3 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 assessee as compared to what is reflected in books of accounts of the buyer company M/s Horizon Buildcon (P) Ltd.
5. Whether the Ld.CIT(A)is right in deleting the addition of Rs.
85,90,000/-made by the assessing officer on account of short term capital gain by holding that "the assessee had not purchased any land in his name and had not transferred/sold the same in the capacity of owner of land, therefore the question of charging capital gain thereon does not arise", ignoring the facts on record that M/s Horizon Buildcon (P) Ltd has made payments through cheques and in cash to Sh. Surjit Singh against purchase of land and all of these payments have been found recorded in the books of accounts of M/s Horizon Buildcon (P) Ltd as discussed in the assessment order by the AO as well confirmed by the Ld. CIT(A)-1, Ludhiana in his order dated 12.08.2014 in Appeal No. 1/ROT/IT/ CIT(A)-l/Ldh/2014-15 in the case of M/s Horizon Buildcon (P) Ltd.
6. The Appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off.
7. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.
4. The Revenue in ITA No.671/ASR/2014 for A.Y.2009-2010 has raised the following grounds :-
1. Whether the Ld.CIT(A) is right in deleting the addition of Rs.3,12,44,640/- made by the assessing officer u/s 69 /69B of the IT Act, 1961 by holding that the Documents i.e. MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which were found and seized during the time of search, though not signed by either of the parties, in this case; could not be taken as evidence of the payment of unaccounted money over and above the registration price of impugned land purchase, ignoring the detailed discussion of the same in the assessment order.
2. Whether the Ld.CIT(A) is right to hold that various ikrarnamas, photocopies of which were found and seized during search viz. A-9 DNB-1 are collusive in nature, as claimed by the assessee, when these documents have actually been seized from the premises of the assessee itself.
3. Whether the Ld.CIT(A) is right to conclude that various documents found and seized at the time of search have no evidentiary value when the assessing officer has discussed in detail in para 05(a) to
(h) of his assessment order dated 21.03.2014 that the same reflect the actual state of affairs of business transactions carried out by the assessee as compared to what is reflected in its books of accounts.4 ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014
4. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off.
5. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.
5. The Revenue in ITA No.672/ASR/2014 for A.Y.2010-2011 has raised the following grounds :-
1. Whether the Ld.CIT(A) is right in deleting the addition of Rs.
2,81,20,180/- made by the assessing officer u/s 69 /69B of the IT Act, 1961 by holding that the Documents i.e. MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which were found and seized during the time of search, though not signed by either of the parties, in this case; could not be taken as evidence of the payment of unaccounted money over and above the registration price of impugned land purchase, ignoring the detailed discussion of the same in the assessment order.
2. Whether the Ld.CIT(A) is right to hold that various ikrarnamas, photocopies of which were found and seized during search viz. A-9 DNB-1 are collusive in nature, as claimed by the assessee, when these documents have actually been seized from the premises of the assessee itself.
3. Whether the Ld.CIT(A) is right to conclude that various documents found and seized at the time of search have no evidentiary value when the assessing officer has discussed in detail in para 05(a) to
(h) of his assessment order dated 21.03.2014 that the same reflect the actual state of affairs of business transactions carried out by the assessee as compared to what is reflected in its books of accounts.
4. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off.
5. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.
6. The Revenue in ITA No.673/ASR/2014 for A.Y.2011-2012 has raised the following grounds :-
1. Whether the Ld.CIT(A) is right in deleting the addition of Rs.3,43,69,110/- made by the assessing officer u/s 69 /69B of the IT Act,1961 by holding that the Documents i.e. MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which were found and seized during the time of search, though not signed by either of the parties, in this case; could not be taken as evidence of the payment of unaccounted money over and above the 5 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 registration price of impugned land purchase, ignoring the detailed discussion of the same in the assessment order.
2. Whether the Ld. ClT(A) is right to hold that various ikrarnamas, photocopies of which were found and seized during search viz. A-9 DNB-1 are collusive in nature, as claimed by the assessee, when these documents have actually been seized from the premises of the assessee itself.
3. Whether the Ld.CIT(A) is right to conclude that various documents found and seized at the time of search have no evidentiary value when the assessing officer has discussed in detail in para 05(a) to
(h) of his assessment order dated 21.03.2014 that the same reflect the actual state of affairs of business transactions carried out by the assessee as compared to what is reflected in its books of accounts.
4. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off.
5. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.
7. In all the four appeals issues involved are similar in nature, therefore, for the sake of convenience and brevity, we are taking first the appeal for the A.Y.2009-2010 in ITA No.434/ASR/2014 and the facts and grounds mentioned therein are taken into consideration to decide all the four appeals.
8. Brief facts of the case are that the case of the assessee was reopened u/s.148 of the Act after recording reasons and duly approved. There was an information with the Income Tax Department that the assessee made investment of Rs.10,92,86,250/- for the purchase of land at village Sultanwind District Amritsar in the financial year 2008-2009 relevant to the assessment year 2009-2010. Notice u/s.148 of the Act was issued to the assessee on 19.03.2015 requiring 6 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 the assessee to file return of income within 30 days from the receipt of the said notice, which was served upon the assessee on 20.03.2015. In pursuant to the notice u/s.148 of the Act, the assessee filed return of income on 04.01.2016 for the A.Y.2009-2010 declaring an income of Rs.1,59,540/- + agricultural income at Rs.4,82,000/-. Thereafter other statutory notices were issued to the assessee and the assessee submitted required reply/information, details along with necessary documents. As per the AO the assessee filed part reply i.e. detail of bank accounts maintained by him along with complete statement of account.
Therefore, the AO required the assessee to explain as under :-
"Please refer to the assessment proceedings pending in your case for the asstt. Year 2009-10, you are requested to furnish the information as called for vide this questionnaire dated 13/1/2016. In addition to that, you are requested to furnish the following information also:-
1. As per reply dated 19/1/2016, you have filed your bank account statements accounts for the period 1/4/2008 to 31/3/2009:
S.No. Account number Name of the bank
1. 630410110001914 AXIS Bank Ltd.
2. 00871200040765 Punjab & Sind Bank
3. 00871000040710 -do-
4. 63043211000002 Bank of India
5. 07245111000072 Oriental Bank of commerce
6. 1781 Amritsar Central Cooperative Bank
7. 5503111871 State Bank of India
8. 81017340000280 Syndicate Bank
9. 81011250000964 -do-
10. 81012200013905 -do-
11. 00011250681 ICICI Bank Ltd.
You are requested to give complete narration of each debit and credit entries of these bank accounts made by you during the period under reference. Also explain the nature/type of account i.
e. saving account/current account/OD account/loan account etc. etc.
2. As per information available with this office, during the year under reference, you have purchase following land at Village Sultanwind from the persons mentioned below for a total amount of Rs. 10,92,76,250/- :-
7 ITA No.434/ASR/2016& ITA Nos.671-673/ASR/2014 s. Name of seller Khasra No. Total area Rate per Total amount Date of N Sq. Yrds paid of purchase purchase FY
1. Dilbhag Singh & 4431 3K 10M = 1900/- 33,25,000/- 7/10/2008 Hira Singh 1750Sqyrds (2008-09)
2. Fakir Singh 4436, 4566 4K5M = 2125 1650/- 35,06,250/- 15/12/08 (2008-
Sqyrds 09)
3. Harbans Kaur -4415, 4418, 4419,4427, 15K7M = 7675 1200/- 92,10,000/- 27/11/08 (2008-
4428,4430, 4436, Sqyds. 13 K = 1100/- 71,50,000/- 09)
4437, 6500 Sqrd
5506/4425,5507/4432
4. Satpal Swam, 5511/4564/5512/456 40K = 1315/- 2,63,00,000/- 7/11/2008
Amarjit Prithpal, 4, 4537, 4546, 4556, 20000 Sqyrds (2008-09)
Gurmeet, Kewal 4563, 4565,
6081/4541
5. Balbir, Jasbir & 4429 3K = 2100/- 31,50,000/- 15/12/2008
Ranjit Singh 1500Sqyrd. (2008-09)
6. Parkash Singh & 4418, 24K 5M = 2900/- 3,51,62,500/- 7/4/2008 (2008-
Baljit Singh 4419,4427,4428, 4430, 12125 09)
4432, 4436, 4437, Sqyrds
5506/4425
7. Manjit Kaur 4415, 4419, 4427, 20K 9M= 2100/- 2,14,72,500/- 15/12/2008
4428, 4430, 4432, 10225 Sqyrds (2008-09)
4436, 4437,
5506/4425
Total land purchased during FY 2008-09 61900 sqyrds 10,92,76,250/
Please explain the source of this huge investment made by you evidence and also explain the mode of payment made by you against this purchase.
Further information disclose that during the year under reference, you have also sold land at Village Sultanwind measuring 35 Kanal 2 Maria (17550 Sqyrds) for an amount of Rs. 4,05,40,500/- to M/s Horizon Buildcon(P) Ltd. New Delhi. Please explain whether any capital gain/loss shown by you on account of this transaction, if not, the reason of the same. Also explain the date of purchase of the said land.
Give the details of receipt of payment against the above said land transaction alognwith the mode of receipt.'"
In response the assessee filed his details explanation/reply vide letter dated 26/02/2016, which has been reproduced by the AO at para 2.3 as under :-
"It is most respectfully submitted that we are in receipt of your letter No. PAN ALNPS4128D Dated 13.01.2016 for submission of various details & documents in the assessment proceedings of above named assessee under section 148 of the Income Tax Act, 1961. The Point Wise reply to your notice alongwith details & documents sought by your good self are given as under: -
1. Explain your source of Income :
I wish to state and submit that I am harvesting agriculture produce on 45 Acres ancestral land and am also a partner in agricultural produce commission agency firm M/s. B.S Trading Company. Further, I was working as a properly consultant/broke during the previous year 8 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 relevant to the assessment year 2009-10. I have already explained complete sources of income in returns of income filed for the assessment year 2009-10. Copies of the individual & partnership firm returns for the A.Y. 2009-10 are enclosed herewith for your kind consideration & records.
2. Details of the Immovable assets/Property/Land purchased & sold at village Sultanwind during the year under consideration along with name & address of the persons from you have purchases the Land and to whom you have sold the said Property/Land:
I wish to state and submit that I had neither purchases nor sold any assets/property/land at village sultanwind in my personal capacity during the previous year relevant to the assessment year 2009-10. As such this question is not relevant and applicable at all.
I would like to bring to your kind notice that during the year under consideration, I had represented as power attorney holder on behalf of the various farmers as per details given below who had directly sold the land at village Sultanwinder to M/s Horizon Buildcon(P) Ltd. It is respectfully submitted that in addition to being a land lord and property consultant I am active in public life and I command respect among farmer community. These farmers approached me to obtain CLU and to represent them in order to protect their interests. Since I was not able to arrange the CLU therefore i acted as their attorney/agent without any monetary benefits.
The photocopies of the some power of Attorney given byfamers to me and as available with me as on date are enclosed here with for your kind consideration & record. The terms & condition of the Power of Attorney clearly stipulate that neither any money nor any rights/title to land or possession of land has been exchanged, between parties (i.e. between owners/farmers and Surjit Singh POA holders). It is clearly proved & evidenced that the farmers have not sold any land to me & they had given POA to me only to represent them and as such the question of selling of the land to M/s Horizon Buildcon Pvt. Ltd. in my personal capacity again reiterated that this document was never executed between us and M/s. Horizon Buildcon (P) Ltd, hence was unsigned and unexecuted.
The details of the sales deed executed by me during the previous year relevant to the assessment year 2010-11 as a Power of Attorney (POA) holder of the following farmers is given as under:
Date of Name of Seller Khasra Total Total Details of Payment Details of payments Details of POA
Registry Number Area of Sales Received by me refunded to farmers No. given by the
Agricult Consider Farmers
lure Land alion
27.5.09 Harbans Kaur 4415, 10K-1M 2261500 Reed. Rs. 10 lacs on Amt refunded to 07/04//2008/D
4418, 9/5/2008 in SB a/c farmer out of cash OC 1390
4427, with Syndicate Bank withdrawal from SB
4436 a/c Syndicate Bank.
2/3/09 ijHarbans Kaur, 4416, 17K-1M 3826500 i)Ch. No.394300 Amt.refunded to 1) 07/04/08
9
ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014
HjDilbag Singh & 4417, rcvd.for Rs.35 lacs farmers vide DOC1390
Hira Singh & 4418, and deposited on chq.no.95702.95703 & 2. 10/02/09 DOC jasbir Singh. 4427 23.3.09 in SB a/c 95704for Rs.7.50 lacs 2815
iii)Praksh Singh & 4428, with Syndicate bank Rs.6.50 lacs and 314/01/09 DOC Baljit Singh & 4430. and Rs.8.00 lacs from SB 2496 GurpreetSingh 4431 2)cash received a/cwith Syndicate 4.24.12.08 ivjPargat Singh & Rs.32500/- Bank and balance Rs. DOC2282 Jagir Singh 16.26 lacs refunded to 5.24.02.09 DOC (Through Manjit the farmers in cash 2971 Singh & Sawaraj being withdrawals Singh GPA through from SB a/cand Surjit Singh SPA v) payments received in Manjit singh cash at the time of registry 11.12.09 i) Harbans Kaur 4417.4 20K- 46.00 La Rs. 50.00 Lacs Amount refunded to i) t.he farmers out of 14/07/09/DOC3 it) Manjeet Kaur 222.44 05M cs received by me cash 33 & Hi) Fakir Singh 23.442 through cheque withdrawal from my I6/11/09/DOC2 saving bank account 725
iv) Pargat Singh & 4,4565. ii) Jagir Singh 4566.4 14/07/09/DOC
v) Rajinder Kaur 567,44 1239 alias Balwinder 37.550 iii) 12/11/09 kaur 4/4425, DOC 2700
vi) Swarn Singh, 4436, iv) 24/12/08 Amarjit Singh, 5511 DOC 2282 Gurmeet Singh, 12/456 v) 23/05/08 DOC Pritpal Singh, 4 149 Kewek Singh & Charanjit Kaur, Iqbal Kaur It is clearly evidence from the above charts that I had represented as a Power of Attorney (POA) of the above farmers and the payments received by me on their behalf has been refunded them without any monetary benefits.
The copy of the sale deed in respect of land sold by you to M/s Horizon Buildcon (P) Ltd. 8/11, Janspura Extension New Delhi as per MOU executed on 22.01.2008. Also furnish the copy of the asreement/MOU executed by you with the said company:
I wish to state and submit that I had not sold any land to Ms Horizon Buildcon (P) Ltd. 8/11. Jangpura Extension New Delhi during the previous year relevant year assessment year 2009-10 on the basis of so called MOU dated 22.01.2008. As such this question is not relevant to me. In this connection, I would like to bring your kind notices that I Surjit Singh and Sh. Baljinder Singh were doing the property dealing activities as broker for agriculture and commercial land on commission basis. As per usual practice being followed by the real estate agents we approached M/s Horizon BuildconPvt Ltd with draft/rough copy of Memorandum of Understanding (MOU) dated 22.01.2008. We also papered some imaginary biyana/agreements to sell in our names from different land owners to convince the company about our capacity to consolidate the land and in order to justify high prices of the land after proposed CLU.10 ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014 The said draft/rough copy of the MOU was not signed by any party as our terms and condition were not acceptable to the company and they were not convinced about our capacity to consolidate the land and to obtain necessary approvals for change of land use. Therefore this document is dumb document and does not have any value in the eyes of law. In this regard I have given an Affidavit dated 12/12/2013 (duly attested and verified by Notary) to M/s Horizon Builcon (P) Ltd for submission before income tax authorities in assessment/appellate proceedings. Contents of the Affidavit are being reproduced for your kind perusal as under:
"Affidavit of SardarSurjit Singh, S/o S. Harjinder Singh aged about 59 year, resident of Village Bhakha, Hari Singh Tehsil Ajnala, District Amritsar(Punjab) I, the above name deponent, solemnly affirm and state as under:
1) That I SardarSurjit Singh alonwithBaljinder Singh S/o S. Natha Singh R/o Village RamanaChak, Tehsil Baba Bakala, District Amritsar (Punjab) are broker and engaged in the property dealing activities of agriculture or commercial land on commission basis.
2) That we had approached to M/s Horizon BulidconPvt Ltd, 8/11, Hospital Road, Jangpura Ext. New Delhi 110014 with a draft copy of Memorandum of Understanding (MOU) dated 22.01.2008 with an intension to make the deal with the said company for sale of land at rate offered in the aforesaid MOU.
3) That the rates in the aforesaid MOU were quoted and offered for commercial approved land to the said company.
4) That all the costs for obtaining the approvals for change in land use (CLU) and building plans sanctioned form the appropriate authorities would have been paid and borne by us.
5) That M/s Horizon Buildcon Pvt. Ltd had stated that the rates offered as per the MOU seems to be quite high & unreasonable and further discussion can be made after detailed market studies and as such the copy of draft MOU was left with the said company.
6) That we had further approached the company M/s Horizon Buildcon Pvt. Ltd. To get the deal bargained with them but they had out rightly denied and rejected our offer because rates quoted by us were at higher side in comparisons to the rates prevailing in area at that time.
7) The deal as per the said drafted MOU could not be finalized between us and as such the drafted MOU was not signed by us as well as by any one on behalf of said company.
8) That said drafted MOU in not a valid& enforceable document as per the law.
9) That we had not received any money from M/s. Horizon Buildcon Pvt. Ltd on the basis of said drafted MOU.
1 solemnly verify that the facts stated above are true and nothing material has been concealed.
DEPONENT VERIFICATOIN 11 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 I SardarSurjit Singh the above named deponent, to hereby verify on oath that the contents of the affidavit above are true to my personal knowledge and nothing material has been concealed or falsely stated.
DEPONENT Sir, from the above it becomes amply clear that the draft MOU was never executed and is not a valid document enforceable by law. A copy of the sworn affidavit is enclosed. Regarding land at village Sutanwind, 1 would like to submit that as explained above 1 did not purchase any land during F.Y. 2008-09 or in any other financial year nor I sold any land in my individual capacity to M/s. Horizon Buildcon (P) Ltd. However, the details of the Land sold by me as a representative of farmers as Power of Attorney (POA) holders on their behalf is given in Para 2 above and the same may kindly be referred from there.
4. Furnish the Sources of investment made in the purchase of the said land and mode of payment:-
As explained above no land was purchased at Sultanwind, hence no investment was required.
5. Mode of payment received by you from the said company:-As explained above not land was sold by me during the previous year relevant to the assessment year 2009-10, hence no payment was received, by me for sale of Sultanwindland in may individual capacity. However the payments received from them for various purposes are enclosed as per copy of account received from them. The said amount was advanced by me to various farmers for the agreement to purchase on behalf of HBPL.
6. Please explain whether any short/long term capital gain has been shown by you in respect of these sale/purchase made:-
As explained above no land was sold in my individual capacity, hence no short/long term capital gain was earned by me.
7. Give the details of bank account maintained by you in your name or in the name of your wife and other family members. Furnish the bank accounts statement of all the accounts maintained for the period 01.04.2008 to 31.03.2009 :-
We are having bank arrangements with SBOP, Bank of India & OBC Bank. (Agri Limits). The copies of the statement/pass book of these bank accounts are enclosed here with for your kind consideration & records. The assessee further submitted that we are enclosing herewith the copy of the" Sale Deed" for Land at village Sultanwind (Pb) Being sold to other party by the same farmers or in dependent farmers, who had also sold the land to the Horizon BuildconPvt Ltd. On comparison of Prices of both sales deeds (i.e sales deed executed with M/s Horizon Buildcon Pvt. Ltd. and sales deeds executed with other party) your honour will appreciate the prices in the area have not increased substantially even after three years not being doubled in spite of fact that there was huge boom in real estate market during that period. Therefore, it is clearly proved & established on records that the Land was sold by the farmers to M/s Horizon Buildcon Pvt. Ltd. At the prices reflected in the sale deeds. From the above submission and justification it is also crystal clear that the Ikrarnamas/'Agreement to sale are false and fabricated documents 12 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 wherein the price of the land @ Rs. 2310/- Per Sq. have been shown by the assessee with an intention to mislead the M/s Horizon Buildcon Pvt. Ltd. For putting the proposal of sale of land at higher prices and earned more & more profit from the deal. However, the assessee could not succeed in his target to make the deal with M/s Horizon Buildcon (P) Ltd. on the basis of the falls and fabricated Ikrarnamas/Agreement to sale being prepared by him because the director of the said company are quite intelligent and having the wide knowledge & huge exposure of the real estate sector. We are also enclosing herewith the Khasra Map showing the location and rate shown in the false & fabricated Ikrarnama/Agreement. It is common knowledge that where the Khasra are undivided the rates for the same khasra are comparable and/or equal. However, in the false and fabricated Ikrarnama/Agreement to sale the rates have been taken to lure the company M/s Horizon Buildcon Pvt. Ltd for example part of the undivided khasra no. 4415 & 4419 are at the most prime location and rates in the said Ikrarnama are 1100-1200-2100-2900 per sqrds, whereas undivided khasra no. 4431 & 4429 which have no connectivity other than helicopter are available @ Rs. 1900-2100-3000/- per sqrds. It is evidence that the Ikrarnamas have been fabricated and prepared by the assessee with a view to mislead the M/s Horizon Buildcon Pvt. Ltd.
We would like to state and submit that the unsigned photocopy of the so called MOU dated. 21.02.2008 was never executed and accepted by M/s Horizon Buildcon Pvt. Ltd. because it did not include the conditions regarding the responsibility of ours to arrange and pay for the CLU charges from Agriculture to group housing. The charges for CLU from agriculture to group housing are Rs. 67.01 Lacs per acre as per notification no 17/17/01-5HG2/7639 dated 19/09/2007 (Copy enclosed).
Total Cost Total Cost 11.03 Acres Amount / Acre Amount /Sq Yard
Shown in the
MOU
Rs 2310 per sq Rs 238 Lakhs + Rs 19 Lakhs Rs 21.58 Lakhs Approx Rs 448
yard (stamp duty) = Rs. 257 Lakhs
Conversion charges for one Rs 67.01 Lakhs Approx Rs 1384
Acre for Group Housing
Notification No.17/17/01-
5HG2/6682 dated 17.08.2007
(copy enclosed)
Service charges/profit to broker Rs.23.21 Lakhs Approx Rs.478
Total cost including CLU and Rs.111.80 Lakhs Rs.2310/sq. yard
service charges
The above Chart approximately explains the hype in price calculation offered by the brokers.
The assessee further placed reliance on the following judgments of the various Hon'ble Courts: -
i) The Hon 'ble High Court of Rajasthan in the case of Commissioner of Income Tax vs. BHANWAR LAL MURWATIYA reported in (2008) 215 CTR (Raj) 489;13 ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014
ii) The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarhin the case of l.T.O. vs. Shri Mohinder Singh reported in (2008) ITR 118 (ITAT, CM.);
iii) The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh in the case of l.T.O. vs. Shri Manjit Singh reported in (2010) 128 TTJ(Chd)(UO) 82;
iv) The Hon'ble Madras High Court in the case of Sivakami Co.Pvt. Ltd.
V. CIT(1973) 88 ITR 311 (Mad);
v) The Hon 'ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Dinesh Jain HUF reported in 254 CTR (Del) 534;
vii) The Hon'ble High Court of Punjab& Haryana in the case of Commissioner of Income Tax Vs. Harpal Singh reported in (2008) 3 DTR 254;
viii) The Hon 'ble Apex Court in the case of Commissioner of Income Tax vs. P. V.Kalyanasundaram reported in (2007) CTR (SC) 97;
The assessee further submitted and placed reliance on the following judgements: -A "Suspicion however great cannot take the place of evidence." Honorable SC in Umacharan 37 ITR 271 applied by P&HHC in AnupamKapoor 299 ITR 179. In this case it was held by honorable Supreme court that "There are many surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof in these matters. "
B. "That the Additions cannot be made merely on the basis of conjectures and surmises." K.R Varghese v. ITO 131 ITR 597 (SC) C. "That the Burden to prove apparent is not real on the revenue."
Sc in 125 ITR 713-Kishanchand Chellaram; it was held the amount cannot be assessed as undisclosed income of assesee in the absence of positive material brought by Revenue to prove that the amount in fact belonged to assessee as the burden lay on the Revenue. SC in 26 ITR 775 Dhakeshari Cotton Mills;
In COMMISSIONER OF INCOME TAX vs. DAULAT RAM RAWATMULL 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC) it was held "When a conclusion has been reached on an appreciation of a number of facts, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. D. "That file containing loose sheets of papers are not books and hence entries therein are not admissible u/s 34 of the Evidence Act, 1872. V.C. Shuklavs State Through C.B.I 1980 AIR 962, 1980 SCR (2) 380 It is respectfully submitted that in addition to the above judgments a recent judgment of Honorable Gujrat High Court in the case of Commissioner of Income-tax v. Fairdeal Textile Park (P.) Ltd is directly applicable to our case as the facts are similar. It was held that "in absence of any other evidence of on-money payment, as also in absence of any, suggestion of the market value of the land purchased by the respondents being far more than what had been reflected in the sale deed, the Tribunal did not endorse the view of both the Assessing Officer and that of CIT(Appeals). Another aspect that had weighed with the Tribunal was the fact that the registered documents had been executed 14 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 at 'Jantri' value. There was no reference to the Valuation Officer to point out that the value of the land was below the market price. "
2.2 The explanation offered by the assessee has been considered sympathetically but the same found devoid of any merit. The plea of the assessee is not acceptable in view of the following facts of the case :-
i) As per information available with this office, at the time of search operation conducted in the case of M/s Horizon Buildcon(P) Ltd. on 7.4.2011, a Memorandum of Understanding (MOU) dated 22/01/2008 found, which was executed between Sh. Surjit Singh and Baljinder Singh as 1st Party and M/s Horizon Buildcon (P) Ltd. As 2nd party. As per this MOU 1st party is the owner of land measuring 50000 Sq. Yrds. of land at village Sultanwind Distt. Amritsar and has undertaken to transfer the same to the 2nd party @ Rs. 2310/- per Sq. Yrds. Further, several other documents i.e. Ikrarnamas/agreement to sell executed with various persons/farmers, are in the possession of department which clearly indicates that Sh. Surjit Singh and Baljinder Singh had purchased land from various persons at Village Sultanwind Distt. Amritsar on agreement to sell or Power of Attorney in their name or their wives and later on transferred the same land to Mls Horizon Buildcon (P) Ltd. as POA of the original land owners.
ii) Further, several agreements (lkrarnama) were were executed between the assessee Sh. Surjit Singh & Sh. Baljinder Singh and the below mentioned persons
a) Dilbhag Singh & Hira Singh R/o Village Sultanwind Amritsar.
b) Fakir Singh s/o Sh. Tarlok Singh R/o Village Sultanwind Amritsar.
c) Srnt. Harbans Kaur wlo Sh. Subheg Singh/o Village Sultanwind Amritsar.
d) Sh. Satpal Swarn, Amarjit Prithpal, Gurmeet, Kewal Singh s/o Sh. Bahadur Singh R/oVillage Sultanwind Amritsar
e) Sh. Balbir, Jasbir & Ranjit Singh s/o Sh. Gurmej Singh R/o Basant Nagar Sultanwind Road, Amritsar.
f) Sh. Parkash Singh & Baljit Singh s/o Sh. Joginder Singh and Sh. Gurpartap Singh R/o Village Sultanwind Amritsar.
g) Smt. Manjit Kaur wlo Sh. Gurmail Singh R/o Village Sultanwind Amritsar.
As per agreements (lkrarnama), the assessee purchased land from these above said persons during the year under consideration on various rates ranging from Rs. 1100/- per Sqyrds to Rs. 2900/- per sqyrds. These agreements were signed by both the parties i.e. seller and purchaser. The Khasra numbers mentioned on these agreements were same as mentioned in the MOU dated 22.01.2008. When the assessee confronted with these agreements, he submitted that these were imaginary biyanal agreements to sell land in our name from different land owners to convince the company about our capacity to consolidate the land and in order to justify high prices of the land. This plea of the assessee is totally undependable as the biyana/agreement to sell/ikrarnamas were written in full letter and spirit. Had the Ikrarnama/Agreement to sell 15 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 pseudo/fabricated, the name of the owners of the land would not have been happened to be same. So it is quite apparent that the fkrarnamas/agreements to sell are actual in the name of the owners of land and not imaginary. No any land owner can prepare a fake agreement to sell Ibiyana on a stamp paper to convince any builder for high prices. The contention taken by the assessee is an afterthought. Actually, it is a common practice in the field of real estate that the dealer/broker purchased the land from the land owner on agreement to sell/ikrarnama after making full payment and because the registration charges have to be borne by the purchaser, they obtained a power of attorney from the seller to save the registration charges, and after that further sold the land to third person on power of attorney and saved the registration expenses in addition to their regular profit. The same practice has been adopted in the instant case by the assessee. The contention of the assessee that these agreements to sell are imaginary has again feeble from the contents of these agreements to sell. "It is clearly mentioned in these agreements to sell "If the purchaser pull back, the advance given by him will be forfeited and if the seller will pull back, he has to pay double amount of advance and the purchaser has full right to get registry through Court. I being the sellers will be responsible for the fault in the ownership and the purchaser will have the fullest rights to make plots on the land, get the plans drawn on it, get the roads built-up on it and get the agreements written further or get the foundations of the plots completed up and wherever required up the signatures thereupon." The agreements to sell are written in Punjabi, the scanned copy of one of such agreement to sell which has been executed between Smt. Harbans Kaur and Sh. Surjit Singh & others is being reproduced herebelow.-
Agreement to sell incorporated by the AO in pages 9 & 10 written in Punjabi language are not readable.
The agreement to sell or Ikrarnamas were written in Punjabi. The subject of page No.2 of this agreement to sell, which have been underlined in the agreement to sell is being translated into English below:-
"Out of total sale consideration, I received a sum of Rs. 24,00,000/- as advance in the presence of witnesses at the time writing of this agreement to sell and the balance amount will be taken at the time of Registry and right of land (Kabza) has been given to the purchasers at the time of writing to this instrument but the ownership will be given at the time of registry. The balance amount will be taker at the time of final Registry and registry will be made in the name of purchaser or in the name of any person whom the purchasers will want. If the seller will pull back, she will be responsible to return the advance alongwith penalty equal to the amount of advance and then also the purchaser has right to get registry of land through Court as per law and whichever expenses would be incurred, that has been deducted from the balance amount of land to be paid to the seller. And if the purchaser will renege, the advance given by him will be forfeited. It has also been cleared that 16 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 on the aforesaid land, the purchaser has full right to make plot on the land or make roads and written further Ikrarnama and on such activity of purchaser, the seller will have no objection."
From the above, it is amply clear that the agreement to sell/Ikrarnamas were written properly after taking into consideration all legal aspects. All right of the land has been transferred to purchaser through this agreement to sell. Even it has also been written that if the seller pull back from this agreement to sell, she has to return the advanced amount alongwith the equal penalty and then also the purchaser has right to get registry of land through Court. The agreement to sell has properly been signed by both the parties alongwith witnesses. From the wording of biyana/agreement to sell, it is prima-facie clear that the agreement to sell cannot be said an imaginary/fake documents, as claimed by the assessee in his reply, but it is a legal documents in which it is clearly written that if the seller pull back from the contents written in this agreement to sell, the purchaser has full right to get registry of land through Court. Who will give such type agreement to sell to a person who is not known to him or relative and transferred all the rights of his land to such unknown person. From the plain reading of these agreements to sell, it has been clear that these documents are legal document and not an imaginary or fake documents as claimed by the assessee and also clear that the assessee purchased land from various farmers/persons on these agreement to sell or Power of Attorney and later on transferred to M/s Horizon Builcon (P) Ltd. as POA. Moreover, how can anybody use his right over the land owned by one without any consideration.
iii) During the course of assessment proceedings, the assessee was required to produce the farmers whom he has purchased land in question on agreement to sell. In response, on 22/3/2016, the assessee produced one farmer Sh. Rajinder Kumar s/o Sh. Sohan Lal Statement of Sh. Rajinder Kumar is recorded, which is reproduced as under:-
Q. I What do you do?
Ans. I am doing agricultural activities by taking land on lease. Q.2 Are you filing your ITR Ans. No Q.3 How much' agricultural land being cultivated by you by taking on lease.
Ans. I am cultivating two acres of land by taking on lease @ Rs. 35000/-
per acres.
Q4 Do you have your own land or it was in you possession now or earlier.
Ans. At present I have no my own agricultural land. Earlier I was having agricultural land measuring I Kanal 2 Marlas, which have been sold by me.
Q.5. To whom you have sold your agricultural land meas in Kanal 2 Marlas 17 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 Ans. I sold my agrcultrualland through Surjit Singh. Whom he (Surjit Singh) sold, I do know. I have taken all sale consideration from Sh.
Surjit Singh.
Q.6 By which mode you have received payment from Sh.Surjit Singh against sale of land.
Ans. I took payment in cash and total payment against sale of land was received by me amounting to Rs.2,48,000/-.
Q.7. Have you entered into any agreement for the said payment received by you.
Ans. No, no any written agreement executed but I had given Power of Attorney without any money consideration.
Q.8 When you received the payment Ans. I received the payment after registry of my said land.
Q.9 For how long do you know Sh. Surjit Singh Ans. Surjit Singh was not known to me earlier.
Q.10 How did you come in contact with Sh. Surjit Singh. Ans. I met Surjit Singh through my friend.
Q.11 Tell me name and address of your friend through which you met Sh. Surjit Singh.
Ans. The name of my friend is Nirmal Singh of Sultanwind. But his father name and house address is not known to me.
Q.12 Have you taken full payment before giving Power of Attorney to Sh.Surjit Singh Ans. No I did not take any payment before giving Power of Attorney and without any amount or consideration I have given Power of Attorney to Sh. Surjit Singh.
Q.13 At what rate you have sold your land.
Ans. I do not know the rate and no rate was settled.
Q.14 I am showing you an Ikrarnama/Agreement to sell, which have been executed between you and Sh. Surjit Singh as well Sh.Balwinder Singh, according to which you have received an amount of Rs.2,SO,000I- as advance against sale of land measuring I Kanal 2 marlas. What do you say about this. Ans. This Ikrarnama does not belong to me and I did not put any signature on it.
Q.15 What is your qualification and how many language you can read, write and understand.
Ans. I am illiterate but I can sign in only Punjabi. I am totally unaware of English language, I cannot read write and understand English language.
Sh. Rajinder Kumar slo Sh. Sohan Lal has also filed an affidavit in which he has given in writing that he has sold his land admeasuring I K2M to Mls Horizon Buildcon(P) Ltd. vide sale deed dated 11/12/2009. Now come to the contents of statement given by Sh. Rajinder Kumar and contents of Affidavit given by him. In reply to question No.S of his statement, he stated that I sold my land through SurjitSingh and whom he (Surjit Singh) sold I do not know. On the other hand, in affidavit at point No.1 he submitted that he (Raj inder Singh) sold his land admeasuring I K2M to Mls Horizon Buildcon(P) Ltd. vide sale deed dated 11/1212009. The affidavit was written on 21/3/2016 and 18 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 statement was recorded on 22/3/2016. On 21/3/2016 it was in his knowledge whom he sold his land but on 22/3/2016 he forgotten. Secondly, in reply to question No, 15, he stated that I can only put sign in Punjab and I am totally unaware about English language, I cannot read, write and understand English. Even before recorded his statement, he was asked in which language you want to record your statement and he stated that I can understand only Punjabi and my statement should be recorded in Punjabi. The person, who knows only Punjabi language and who refused to record his statement in English or even in Hindi language, given an affidavit which has totally been written in English. From this, it is proved that he did know anything about the contents of affidavit, in which he claimed that land has been sold to Mls Horizon Buildcon (P) Ltd. Actually he sold his land to S. Surjit Singh on agreement to sell after taking full payment and given him Power of Attorney, further he is totally unaware whom S. Surjit Singn sold his land because he has already sold his land to Surjit Singh on agreement to sell and took entire consideration.
Second, in reply to question No. I, he (Raj inder Kumar) stated that I am doing agricultural activities by taking land on lease and in reply to question NoA, stated that at present I have no my own agricultural land, earlier I was having agricultural land admeasuring I Kanal 2Marlas, which I have sold. Means that the only means for livelihood of Sh. Rajinder Kumar is agricultural land. He was earlier owned only agricultural land measuring I kanal 2 marlas, which was the only wherewithal of his bread and butter. The said land was sold by him, as stated in reply to question No. 5 that he has sold his land through Sh. Surjit Singh on Power of Attorney, (as per his statement and affidavit). Further in reply to question No. 12, he (Rajinder Kumar) stated I did not take any payment from Sh. Surjit Singh before giving Power of Attorney, means that he has given Power of Attorney of his only land, which he was owned, without any consideration. In question No. 9, when asked, how long do you know Sh. Surjit Singh, he (Rajinder Singh) replied that Sh. Surjit Singh was not known to me earlier. Means before giving Power of Attorney that also without any consideration, he did not know Sh. Surjit Singh. In reply to question No. 10, he stated that I met Surjit Singh through my friend and when asked vide question No. 11, to tell the name and address of your friend who met you Sh. Surjit Singh, he (Rajinder Singh) replied that my friends name is Nirmal Singh who belong to Sultanwind but his father name and residential address, I do not know. From the above, it is emerged out that Sh. Rajinder Kumar's means of livelihood is agricultural land and he was having only a piece of I Kanal 2Marlas of Agricultural land, which he has sold, as stated by him, through Sh. Surjit Singh on Power of Attorney and at the time of giving Power of Attorney he has not made any consideration or taken any amount, but he did not know Surjit Singh earlier i.e. before given Power of Attorney. Who got met him with Sh. Surjit Singh i.e. his friend namely Nirmal Singh of Sultanwind, he even did not know the address or even the father name of his friend, but on the instance of his friend and the assessee Sh.Surjit Singh he has given Power of Attorney of his only land which was the only wherewithal of his livelihood and transferred all 19 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 rights of his land to Sh. Surjit Singh that also without any consideration. Is it possible - No, not at all. Actually, Sh. Surjit Singh purchased his land admeasuring I Kanal 2 Marlas on agreement to sell after making full payment and then procured Power of Attorney of his land from Sh. Rajinder Kumar. Otherwise then, who will give Power of Attorney to a unknown person, whom he do not know before giving Power of Attoney and transferred all rights of his only land, which is the only means of his livelihood, even the right has been given through this agreement to sell that if the seller pull back, the purchaser has right to get registry of land through Court. The instrument written in such proper and legal language can never be said an imaginary or fake instrument.
Third, when as per question No. 13, he was asked to tell the rate of land at which he sold his land. Sh. Rajinder Kumar replied, he do not know about rate and rate was not settled. The reply again raised question that how it is possible that a person is being sold his property and do not know at which rate. In human probability it is not possible. When anyone make any kind of transaction, first he settle rate of the subject, but in this case, seller has no knowledge about rate and in his wording no rate was settled, which is not believable in human probability that how a transaction get mature without finalizing the rate.
Forth, Vide question No.14, Sh. Rajinder Kumar was confronted with the agreement to sell dated 15/3/2008 executed between Sh. Rajinder Kumar and Sh. Surji Singh as well Sh. Balwinder Singh. But in reply he overtly stated that this agreement to sell does not belong to him and the signature put up on it, is not of him. This is again the part of this concocted story. The signature of the agreement of sell is of the same signature put up on the above affidavit. The scanned copies of affidavit and agreement to sell also paste herebelow:-
"Affidavit and Agreement to sell incorporated by the AO in the assessment order at page 14 is not readable."
From this it is clear that the signature marked on affidavit and agreement to sell are of the same person. But Sh. Rajinder Kumar clearly refused that this agreement to sell does not belong to him. For what reason, best known by Sh. Rajinder Kumar. In other words, if it is accepted that this agreement to sell does not belong to Sh. Rajinder Kumar. The assessee in his reply in point No. 3 submitted that "we also prepared some imaginary biyana/agreement to sell in our names from different land owners to convince the company". The assessee himself admitted that they had prepared imaginary biyana/agreements to sell. But Sh. Rajinder Kumar the one of the owner of land in question, refused to prepare any such documents, which again feeble the claim of the assessee that the affidavit are imaginary and proved that the assessee has purchased the land in question from the farmers on agreement to sell or Power of Attorney after making full payment and then transferred the same land to M/s Horizon Buildcon(P) Ltd. as POA.
The asssessee's Authorised Representative further asked to produce the remaining persons for their examination. He stated that the remaining 20 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 persons will be produced on 23/3/2016. On 23/3/2016, the Authorized Representative of the assessee Sh. Daljeet Singh Marwaha CA attended and filed a letter which the reproduced below:-
"It is submitted that we have tried to contact the farmers as per your let and have already submitted affidavits of the :-
Mr. Parkash Singh slo Sh.Joginder Singh Mr. Baljit Singh slo Sh. Joginder Singh Mr. Gurpreet Singh slo Sh.Shamsher Singh Mr. Rajinder Singh slo Sh. Sohan Lal Mrs. Rajwinder Kaur wlo Sh. Baljider Singh We have already done the statement of Mr. Rajinder Kumar, the other persons we are contacting, are away to Anandpur Sahib and shell be available after 24/312016 i.e.Holi. Smt. Harbans Kaur is an old aged lady of 85 years, as such she cannot come to our office. After local enquiries, it has come to our notice that Sh.Balbir Singh has died and other two brothers have moved to other places. However, we shall be still truing our level best to contact some more farmers and bring for the physical attendance."
On the request of Counsel of the assessee, the case adjourned to 28/02/2016 and it has been cleared vide order sheet entry dated 23/3/2016 that since the assessment in this case is barred by time on 31/3/2016, this is the final opportunity and no further adjournment will be granted and in case of non attendance and non-filing of reply and non-producing of the persons the amount of Rs.10,92,76,250/- invested in purchase of land from various persons will be added in your taxable income treating the same your income from undisclosed sources. On 28/3/2016, Sh. Daljit Marwaha CA attended alongwith Sh.Pardeep Gandotra CA and filed certain document regarding payments made by M/s Horizon Buildcon (P) Ltd. to various persons, map of land sold by Sh. Surjit Singh to M/s Horizon Buildcom(P) Ltd. and copy of Remand Report sent by DCIT(CC), Jammu to CIT(A)(C), Ludhiana. On going through the documents filed, the same does not find having any merit in any way.
However, no any person/farmers was produced on the 28/3/2016 for examination by the assessee. After enjoying sufficient opportunity and time, the assessee failed to produce any of the person/farmer except Sh. Rajinder Kumar whose statement was recorded on 22/3/2016 . Non-producing of the persons for cross verification also clearly established that the assessee purchased the land from these persons on agreement to sell/Ikrarnama and now refrained them from personal examination on one pretext or another. However, instead of producing the persons/farmers, the assessee filed affidavit in respect of some of the farmers/persons, wherein they have claimed that they have sold agricultural land through Sh. Surjit Singh to M/s Horizon Buildcom(P) Ltd. The assessee failed to produce the persons for cross verification and the contents in the affidavit are without any documentary evidence and are self serving and cannot be held as acceptable. The Hon'ble 21 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 Alllahabad High Court in the case of Sri Krishan Vs.CIT(AII.) 142 ITR 618 has held that Affidavit need not always be accepted as correct. It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable.
Further on 28/3/2016, the assessee filed written reply claiming that the assessee is working as commission agent right from the beginning and have been declaring a commission of approximately 2.5% consistently in return of M/s B.S. Trading Company in which I am 50% partner. I have duly declared commission income from property consultancy after finishing of transaction with M/s Horizon Buildcon(P) Ltd. Copies of return enclosed. The submission given by the assessee has been considered but the same found sans merit. The assessee furnished return of income alongwith reply for the AY 2006-07 to 2011-12. On perusal of the computation of income, it is seen and clear that the assessee has not shown any commission income from property commission for the AY 2006-07 to 2010-11. In AY 2011-12, the assessee shown commission income from property but there is nowhere mentioned that the commission has been received from M/s Horizon Buildcon (P) Ltd.; Merely, mentioning declaring income on account of commission on property, cannot proved that the commission is on account of this alleged transaction. Moreover, it cannot be said that a person who is doing the business of commission agent as property dealer, cannot make any investment in purchase of property. Therefore, the submission of the assessee that he is showing income from property consultancy has no relevancy in respect of investment made by him in purchase of property from various persons on agreement to sell/biayana.
iv) The copies of Power of Attorneys furnished by the asses se, which have been obtained from all sellers of the land, wherein they have mentioned that they have given the power of attorney to the assessee only because of faith on him without any money consideration, is also not having any weight and the same is an afterthought. This fact also established from the statement of Sh. Rajinder Kumar s/o Sh. Sohan Lal recorded on 22/3/2016. No any person can give the power of attorney and transferred all rights to an unknown person without any consideration, to sell his property or land, when the assessee neither the relative of the sellers nor family members. Furthermore, while preparing a Power of Attorney, it is mandatory to mention/write these lines that no money consideration has been done in lieu of this Power of Attorney. Hence, the contention of the assessee that Power of Attorney was prepared without any consideration, has become ineffective. Actually, the assessee purchased the land from the actual land owners after making full payments on agreements/biyanas or Power of attorney and later on transfer the same land to M/s Horizon Buildcon (P) Ltd. as POA.
v) On going through the bank account statements of the assessee, it is seen that huge transactions were made in these bank accounts. When asked to explain the source of the same, the assessee submitted that 22 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 since he sold the land of the actual owner of the land on power of attorney, the amount came in my account and then I distributed the same to the actual owners of the land. The contention of the assessee is again inconsiderable in view of the facts that assessee failed to prove that the amount received by him from M/s Horizon Buildcon(P) Ltd. has been distributed the persons from whom he purchased land. So far as the payments made through cheques to farmers are concern, the assessee received an amount of Rs. 35 lacs from M/s Horizon Buildcon (P) Ltd through cheque on 23/3/2009, and further a sum of Rs. 22 lacs have been withdrawn on 26/3/09 but it is not mentioned or cleared that whom these payments have been given. As submitted by the assessee in his reply that he is doing the business of sale/purchase of property and commission agent, therefore, it cannot be said that the funds withdrawn were given to the persons whom he has purchased the land in question or withdrawn for his day to day business use.
vi) Further, the documents found at the business premises of M/s Horizon Buildcom(P) Ltd. prepared with the title "Accounts of Sh. Surjit Singh" and according to this document total payments to Sh. Surjit Singh was made at Rs. 11,67,73,370/-. Documents mentioned as Page- 72 titled as 'Annexure' also mentioned that" Schedule of payments made against MOU dated 22.01.2008 between Sh. Surjit Singh s/o Sh. Harjinder Singh Village Bhakaha Hari Singh Tehsil Ajanala, Amritsar, S. Baljinder Singh s/o Sh. Natha Singh Village Ramana Chakk Amritsar and M/s Horizon Buildcon (P) Ltd. As per these documents, the company again made payment of Rs. 1,50,00,000/- through various cheques and Rs. 25,00,000/- in cash. When these documents confronted to the assessee vide order sheet entry dated 8/3/2016, the assessee in reply submitted that these are unsigned documents and therefore, does not have any value in the eyes of law. The plea given by the assessee is not acceptable being entirely baseless and cannot be relied upon. The claim of the assessee that the MOU dated 22/01/2008 is not signed and have no weight in the eyes of the law, is not acceptable, due to the reasons that on the basis of this MOU dated 22/1/2008 the assessee further executed an Agreement Deed between the assessee and the company M/s Horizon Buildcom(P) Ltd., which has signed by both the parties, in which the company has taken congnizance of this MOU dated 22/1/2008. Hence, it cannot be said that the unsigned MOU has no weight in the eyes of law when the purchaser and seller has taken congnizance of this MOU in their further transaction. Further, the other documents i.e. 'Account of Sh.Surjit Singh and Schedule of payment', are the documents of unaccounted transactions made between assessee and the company, which prepared only for remembering purpose and due to that reason, these documents had not been signed by any other party. The contention of the assessee that these unsigned documents have no weigh in the eyes of law is not acceptable in view of this factual position.
Form the above, it has been cleared that though these documents were not signed by any of the party, but the authenticity of these documents cannot be denied in view of the fact that the things have been happened 23 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 further according to the said MOU and according to other documents found at the business premises of M/s Horizon Builcon (P) Ltd. Reliance is placed on the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More (1971 82 ITR 540(SC) wherein it has been held that where a partly relies of self serving recitals in a documents it is for that party to establish the truth of these recitals. The tax authorities are entitled to look into the surrounding circumstances are discussed hereinafter. Moreover, the question is that what was the need to prepare these documents by the company when no transactions have been made with the assessee. Hence, these documents also established that the assessee has taken land from various farmers/persons on agreement to sell/biyana or POA and then transferred the same land to the company as POA.
vii) The facts of the case law quoted by the assessee have also been taken into consideration but found that facts of the cases quoted by the assessee are not identical to the facts of the case of assessee. The case law quoted by the assessee are in respect of difference in rate of land as per sale deed and rate of land mentioned in seized documents and there is no relevancy of these case laws in respect of assessee's case. In the case of the assessee, the agreement to sell/biyana made between assessee S. Surjit Singh, S. Baljinder Singh and the various persons/farmers who were actual owner of the land, were clearly proved that the land was actually purchased by the assessee S. Surjit Singh and Balinder Singh from its actual owners on agreement to sell/Ikrarnamas after making full payments because these agreements/biyanas were written in full letter and spirit, which in any way cannot e said as imaginary biyanas as claimed by the assessee in his reply.
viii) Further the assessee's plea that all the addition made in the case of M/s Horizon Buildcon(P) Ltd. by the Assessing Officer has been deleted by the Ld. CIT(A)(C), have also no relevancy with the case of the assessee. In the case of M/s Horizon Buildcon(P) Ltd, the issue of addition was difference in sale rate of land as per MOU and as per Registration Deed. Therefore, there is no relevancy of the case of M/s Horizon Buildcon (P) Ltd with the case of the assessee.
Accordingly, the AO framed the assessment after observing as under :-
2.3. In view of the above facts and circumstances of the case, it is clearly established that the assessee has purchased land from various persons/farmers on agreement/ikrarnama or Power of Attorney in his name and later transferred the same land to M/s Horizon Buildcon(P) Ltd as POA of the original owners. The Khasra numbers mentioned in the registration deeds are the same as in the agreements to sell.
However, on going through the record, it is noticed that out of total land of 61900 Sqyrds purchased by the assessee during the year under consideration, land measuring 200Sqyrds is in the name of Smt. Amarjeet Kaur who is the wife of the assessee value of which are at Rs.2,63,000/- @ 1315 per Sqrds and further land measuring 425 Sqyrds rate of which is RS.15001- per Sqyrds, total value Rs. 6,37,500/- belongs 24 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 to Sh. Ranjit Singh and Sh.Ranjit Singh had sold the said land directly to the company. Hence, in the interest of natural justice, the amount of Rs. 900500/-(263000+637500/-), being not related to assessee, is excluded from the total investment made by the assessee in purchase of land. The balance amount of Rs. 10,83,75,750/- is added to the taxable income of the assessee treating the same unaccounted investment of the assessee in purchase of land from various persons on agreement to sell or Power of Attorney, which later on transferred to company M/s Horizon Buildcon(P) Ltd. as POA.
I am satisfied that the assessee has concealed true particulars of his income to the tune of Rs.10,83,75,750/-, therefore, penalty proceedings u/s 271(1)(c ) of the Income Tax Act, 1961 for concealment of income is being initiated separately.
3. Further, as per information, the assessee during the year under consideration sold land measuring 17550 Sqyrds (35Kanals 2 Marlas) to Mls Horizon Buildcon(P) Ltd. @ Rs. 2310/- per Sq.Yards as per MOU dated 22.1.2008, for an amount of Rs. 4,05,40,500/-. On going through the records, it has been noticed that the assessee has sold, total land measuring 27Kanal 2Marlas and out of balance 7K 19 Marlas sold by Sh.Baljinder Singh as POA and balance by the farmers directly. The land measuring 27K 2 M (13550 Sqyrds) sold has been purchased by the assessee for an amount of Rs. 2,27,10,500/- and further sold to the company @ 2310/- per Squrds for a consideration of Rs. 3,13,00,500/- as per below details:-
Date of Khasra No. Total Area Rate per Total Date of Total purchase Sqrds sale/ @ Rs.
2310/-per Sqyrds.
7.4.2008 4415, 10K IM 5025 1200/- 60,30,000/- 27/5/2008 1,16,07,750/-
4436, 4418 Sqyrds 7.3.2008 4416,4417 4K IM 2025 3920/- 79,38,000/- 2/3/2009 46,77,750/-
Sqyrds 27.11.2008 4418,4427 3K17M 1925 1200/- 23,10,000/- 2/3/2009 44,46,750/-
Sqyrds 27.11.2008 4428, 4430 5K13M 2825 1100/- 31,07,500/- 2/3/2009 65,25,750/-
Sqyrds 7.10.2008 4431 3 K 10M 1750 1900/- 33,25,000/- 2/3/2009 40,42,500/-
Sqyrds 27K2M(13550sqyrds) 2,27,10,500/- 3,13,00,500/- The assessee has earned short term capital gain on this transaction amounting to Rs. 85,90,000/-, but the same has not been shown in his taxable income. When asked to explain the reasons for the same, the assessee submitted that since he had not purchased or sold any property, there is no question of short term capital gain. Since, as discussed in para-2 above in detail, the assessee purchased the land during the year under consideration and earlier year out of which he had sold land measuring 27 Kanals 2 Marks i.e. 13550 Sqyrds. During the year under consideration, on which he has earned short term capital gain of Rs. 85,90,000/-, which he had not shown for taxation purposes. Hence, the amount of Rs. 85,90,000/-, is added to the income of the assessee as short term capital gain.
25 ITA No.434/ASR/2016& ITA Nos.671-673/ASR/2014 I am satisfied that the assessee has concealed true particulars of his income to the tune of Rs.1,20,61,750/-, therefore, penalty proceedings u/s 271 (1)( c ) of the Income Tax Act, 1961 for concealment of income is being initiated separately.
With these observations, total income of the assessee is computed as under:-
Returned income as filed in response to notice us/ 148 1,59,540/-
Add: As discussed above in para-2 10,83,75,750/-
As discussed above in para-3 85,90,000/-
Total taxable income 11,71,25,290/-
Agricultural income for rate purposes 4,82,000/-
Tax on assessed income 3,51,87,187/-
Surcharge @ 10% 35,18,719/-
3,87,05,906/-
Education cess @ 3% 11,61,177/-
3,98,67,083/-
Less: Agrl. rebate 97,438/-
Balance 3,97,69,645/-
Intt.u/s.234A@9% 35,89,268/-
Intt. u/s.234B @84% 3,34,06,502/-
Total tax payable 7,67,65,415/-
Penalty notice uns/ 271(l)(c) of the Act for concealment of income as mentioned above in para-2 and 3, have been issued separately.
Assessed at income of Rs. 11,71,75,290/- + 4,82,000/- agrl. income. Charge u/s 234A, 234B and 234C as per provisions of Act. Issue demand notice and other requisite documents.
9. Against the above order of CIT(A), the assessee preferred appeal before the CIT(A) and the CIT(A) allowed the appeal of the assessee relying on its own order for the A.Y.2008-2009 and the observations made therein are as under :-
6. I have considered the assessment order, the grounds of appeal and written submissions of the appellant and the grounds of appeal are disposed off as under:-
(i) The ground of appeal no. 1 and 2 are against the addition of Rs 79,50,000/- on account of suspected investment in purchases of land from undisclosed sources.
During the course of assessment proceedings the assessee filed details of bank accounts maintained by him. As per information available with the AO, the assessee along with Shri Surjit Singh had purchased the 26 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 following lands at village Sultanwind from the persons mentioned below for a total =^v, amount of Rs 1,93,45,000/-
Name of Total area Rate per sq Total amount Date of Date of
seller yards paid for purchase sale
purchase
Rajwinder 5 K 6M=2650 3000/- 79,50,000/- 07/03/08 2-3-09
Kaur yrds FY 07-08 FY 08-09
Pargat 5K=2500 sq 3290/- 98,00,000/- 07-03-08 2-3-09
Singh & yrds (07-08) (08-09)
Jagir Singh 10-12-10
(10-11)
Rajvinder 1K 2M=550 2900/- 15,95,000/- 15-03-08 11-12-08
Kaur yrds (FY 07-08)
Total 5700 sq yrds 193,45,000/-
The AO asked the assessee to explain the source of this huge investment of Rs 1,93,45,000/- alongwith documentary evidence. In response the assessee replied that the assessee had neither purchased nor sold any assets/property/ land at village Sultanwind in his personal capacity during the previous year relevant to the assessment year 2008-09. The AO considered the reply of the assessee which is reproduced in the assessment order, and rejected the same for the following reasons as discussed in the assessment order :-
(i) As per information available with the AO, at the time of search operation conducted in the case of M/s Horizon Buildcon (P) Ltd on 07-04-2011, a memorandum of understanding (MOU) dated 22-01-2008 was found which was executed between Shri Surjit Singh and Shri Baljinder Singh as first party and M/s Horizon Buildcon (P) Ltd as 2nd party. As per this MOU the first party is the owner of land measuring 50,000 sq.yrds of land in village Sultanwind, District Amritsar and had undertaken to transfer the same to the second party @ Rs 2310 per Sq. yrds. Further .several other documents such us Ikramamas/agreements to sell executed with various persons/ farmers, are in the possession of the department winch clearly indicates that Shri Surjit Singh and Shri Baljinder Singh had purchased land from various persons at Village Sultan wind, Amritsar on agreement to sell or power of attorney in their name or their wives and later on transferred the same land to M/s Horizon Buildcon (P) Ltd as POA of the original land owners. (ii) That several agreements to sell (Ikrarnama) were executed between the assessee Shri Surjit Singh and Shri Baljinder Singh and the persons mentioned below:-
(a) Smt. Rajwinder Kaur w/o Shri Balwinder Singh, village Raman Chakk Teh Baba Bakala, Amritsar.
(b) Shri Pargat Singh and Shri Jagir Singh' s/o Shri Kunclan Singh, village Sultanwind, Amritsar.
(c) Shri Rajinder Kumar s/o Shri Sohan Lai R/o 638 Chowk Gali Village Majitha, Amritsar.27 ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014 As per the agreements to sell (Ikrarnama), the assessee purchased land from the above said persons during the year under consideration on various rates rangmgfrom Rs 2900/-per sq yrds to Rs 3920/- per sq yrds. These agreements were signed by both the parties ie seller and purchaser. The khasra numbers mentioned on these agreements were the same as mentioned on the MOU dated 22-01-2008.
When the assessee was confronted with these agreements he stated that these were imaginary biyana/agreements to sell in their names from different land owners to convince the company about their capacity to consolidate the land and in order to justify high prices of land. This plea of the assessee Vuwas held by the AO to be totally undependable as the biyana/agreement to sell/ ikrarnamas were written ip letter and spirit. The AO held that had the ikrarnama/agreement to sell been pseudo/fabricated, the name of the owners of land would not have happened to be the same. Therefore the AO held that apparently the ikrarnama/ agreement to sell are actually in the name of the owners of land are not imaginary. That no land' owner can prepare a fake agreement to sell/biyana on a stamp paper to convince any builder for high prices. The contention taken by the assessee is therefore an after though.
The AO stated that actually, it is a common practice in the field of real estate that the dealer / broker purchased the land from the land owner on agreement to sell/ikrarnama after making full payment and because the registration charges have to borne by the purchaser, they obtained a power of attorney from the seller to sell the registration chares and after that, further sold a land to the third person on power of attorney and saved the registration expenses in addition to their regular profit. The same practice has been adopted in the instant case by the assessee. The AO observed that the contention of the assessee that these agreement to sell are imaginary is feeble from the contents of these agreement to sell as it is clearly mentioned in these agreement to sell " if the purchaser pull back, the advance given by him will be forfeited and if the seller will pull back, he has to pay double amount of advance and the purchaser has full right to get registry through Court. I being the sellers will be responsible for the fault in the ownership and the purchaser will have the fullest rights to make plots on the land, get the plans drawn on it get the roads built up on it and get the agreements return further or get the foundations of the plots completed up and wherever required up the signatures thereupon".
Therefore the AO observed that it is amply clear that the agreements to sell/ikrarnamas were written properly after taking into consideration all the legal aspects. All the rights of the land had been transferred to the purchaser through these agreements to sell. The agreements to sell have properly being signed by both the parties alongwith witnesses. From the wording of the biyana / agreement to sell it is prima facie clear that the agreement to sell cannot be said to be 28 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 an imaginary and fake document as claimed by the assessee in his reply but is the legal document in which it is clearly written that if the seller pull back from the contents written in this agreement to sell, the purchaser has full right to get registry of the land through Court.
Therefore the AO held that the from the plain reading of these agreements to sell it is clear that these documents are legal documents and are not imaginary or fake documents as claimed by the assessee and it is clear that the assessee purchased land from various farmers/persons on these agreements to sell/ power of attorney and later on transferred to M/s Horizon Buildcon Pvt Ltd as POA.
The AO rejected the power of attorneys because the same was given without money consideration and only because of good faith for the reason that while preparing the power of attorney, it is mandatory to mention/write lines that no money consideration has been done in lieu of this power of attorney. The AO did not believe that power of attorney was done without consideration and held that the assessee had purchased land from the actual owners of land after making full payments on agreements/biyanas and on power of attorney and thereafter transferred the same land to M/s Horizon Buildcon (P) Ltd.
The AO also verified the bank account of the assessee and found huge cash transactions. The AO held that the assessee had failed to prove that he had not made any transactions with M/s Horizon Buildcon Pvt Ltd and had not distributed to the persons from whom he purchased the lands.
The observed that document no. 72 titled "Annexure" also mentioned the schedule of payments made against MOU dated 22-01-2008 between Shri Surjit Singh and Shri Baljinder Singh with M/s Horizon Buildcon (P) Ltd. As per this "Annexure" M/s Horizon Buildcon (P) Ltd again made payment of Rs 1.5 Crore to cheques and Rs 25,00,000/- in cash. The assessee was confronted vide order sheet entry dated 08/03/2016 in response to which the assessee replied that these are unsigned documents and have no value in the eyes of law. This contention of the assessee was rejected by the AO because on the basis of MOU dated 22- 01-2008, the assessee further executed an agreement deed between the assessee Shri Surjit Singh and M/s Horizon Buildcon (P) Ltd, which was signed by both the parties in which the company had taken the cognizance of the MOU dated 22-01-2008.
That the AO held that the agreements to sell/biyana between the assessee and Shri Baljinder Singh with various persons/farmers, who were the actual owners of land clearly proves that land was actually purchased by the assessee from actual owners or power of attorney after making full payments.
The AO held that the assessee had purchased land from various farmers/persons on agreements/ikrarnamas or power of attorney in his name and later transferred the same to, M/s Horizon Buildcon (P) Ltd 29 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 as POA of original owners and also relied on the fact that the khasra numbers mentioned on the registration deeds are the same as mentioned in the agreement to sell.
Accordingly after excluding the investment of Rs 1,13,95,000/- related to Shri Surjit Singh, the AO added back Rs (1,93,45,000 - 1,13,95,000) - Rs 79,50,000/- as his unaccounted investment in purchase of land from his wife Smt Rajwinder Kaur on agreement to sell or power of attorney, which was later on transferred to company M/s Horizon Buildcon Pvt Ltd as per MOU dated 22-01-2008.
Decision:- The facts of the case under appeal are the same as in the case of Shri Surjit Singh S/o Shri Harjinder Singh, 29-D Guru Amardas Avenue, Amritsar (PAN ALNPS4128D) for AY 2008-09. The nppeal in the ease of Shri Surjit Singh against the assessment order dated 28-03-2016 for AY 2008-09 has been decided by the undersigned vide order dated 31-05-2016 in appeal no. 283/15-16 in favour of the appellant.
Therefore following the said appellate order dated 31-05-2016 in appeal no. 283/15-16 in the case of Shri Surjit Singh S/o Shri Harjinder Singh, 29-D Guru Amardas Avenue, Amritsar (PAN ALNPS4128D) for A Y 2008-09 decided by the undersigned and for the same reasons given therein, the appeal of the appellant on the issue under consideration is decided in his favour and the addition of Rs 79,50,000/- on account of his unaccounted investment in purchase of land , from his wife Smt. Rajwinder Kaur and various persons on agreement to sell or power of attorney, which was later on transferred /sold to company M/s Horizon Buildcon Pvt Ltd as POA on basis of MOU, is deleted.
(iii) The ground of appeal no. 3 is against the addition of Rs 19 Lacs on account of investment in .property from money received from his brother through normal banking channels. As per the assessment order the assessee had made total investment of Rs 23,00,000/- during the! year as mentioned in the assessment order. The source of; the investment was claimed out of sale proceeds of agriculture produce and out of money received from his brother residing abroad. During the year under consideration the assessee had disclosed agriculture income of Rs 402,864/- whose credit was given by the AO to the extent of Rs 4 Lacs. Since the assessee had not filed documentary evidence of receipts from his brother who lives abroad, the AO added back Rs 19. Lacs as income from undisclosed sources u/s 69 of the Act. In the written submissions the appellant argued that the AO has simply ignored the fact that assessee had fully explained during assessment proceedings that he has received remittance from his close relatives living abroad through normal banking channels. The fact that the assessee is having adequate sources for making investments was fully explained to the AO. Further the assessee has also produced books of accounts and other necessary evidences during assessment proceedings and the AO gave the impression that he was fully satisfied with the replies but suddenly chose to make the addition of Rs 19 Lacs to the returned income.
30 ITA No.434/ASR/2016& ITA Nos.671-673/ASR/2014 The details of the funds received from relatives for investment in immovable property explained to the AO was reproduced as under:-
Name of Payment ID Date Amount Bank A/c No.
relative
Rajwi rider 070110B71105 00 15 Lac SBI Town 30111828254
Singh, 8 Hall,
CH DU Amritsar
Souvenir,
Krkland,
QC
H9H5L6
--do- 071120B63736 00 29-11-07 10 Lacs --do--
The appellant relied upon several decision "of hon'ble Cotirts including -
1. CIT vs Jai Kumar Bakliwal 366 ITR 217 (Raj). 2. CIT vs Kamdhenu Steel and Alloys Ltd 361 ITR 220 (Del)
3. Mod Creation Pvt Ltd vs ITO 354 ITR 282 (Del)
4. CIT vs Mayavati 338 ITR 563 (Del)
5. CIT vs Ram Narain Goel 224 ITR 180 (P & H) Decision:- The details of the funds amounting to Rs 19 Lacs received by the appellant from his relative Shri Rajwinder Singh, as given above through banking channels clearly establishes the genuineness of the transactions and the source of receipts of Rs 19 Lacs, The copy of the bank account no. 30111828254 of the appellant in SBI, Town Hall, Amritsar was called for from the appellant and the above transactions of remittance from vk abroad therein were verified by the undersigned.
The appellant also submitted the copy of confirmation of the above remittances from Canada to his brother Sh. Baljinder Singh (appellant). Accordingly there is no justification for the addition of Rs 19 Lacs on account of income from Undisclosed sources u/s 69 of the Act and the addition of Rs 19 Lacs is deleted.
7. In the result, appeal is allowed.
10. Finally, the CIT(A) decided the present appeal of the assessee after observing as under :-
DECISION- The facts of the case under appeal are the same as in the case of the appellant for AY 2008-09. The appeal of the appellant against the assessment order dated 28-03-2016 in its case for AY 2008- 09 has been decided by the undersigned vide order dated 31-05-2016 in appeal no. 283/ 15-16.
Therefore following the said appellate order dated 31-05-2016 in appeal no. 283/ 15-16 in the case of the appellant for A Y 2008-09, the appeal of the assessee on the issue under consideration is decided in his favour and the addition of Rs 10,831,75,750/- as his unaccounted 31 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 investment in purchase of land from various persons on agreement to sell or power of attorney, which was later on transferred to company M/s Horizon Buildcon Pvt Ltd as POA, is deleted.
The ground of appeal no. 2 is addition of Rs 85,90,000/- on account of suspected short term capital gain from sale of property.
As per assessment order, the assessee had sold land measuring 17550/- sq yards (35K 2M) to M/s Horizon Buildcon Pvt Ltd @Rs 2310/- per sq yards as per MOU dated 21-01-2008 for an amount of Rs 405,40,500/-. On going through the records the AO noticed that the assessee had sold total land measuring 27 Kanal 2 Marias and out of the balance 7K 19M sold by Shri Baljinder Singh as POA and balance by farmers directly.
The AO observed that the land i measuring 27K 2M (13550 sq yards) sold had been purchased by the assessee for an amount of Rs 2,27,10,500/- and further sold to the company @2310/- per sq yards for consideration of Rs 3,13,00,500/- as mentioned in the assessment order. Therefore the AO held that the assessee had earned short term capital gain on this transaction of Rs 185,90,000/- but the same has not been shown in the taxable income. When asked to explain the reason for the same, the assessee had replied that since he had not purchased or sold any property, there is no question of short term capital gain.
The AO however held that since the assessee had purchased land during the year under consideration arid earlier year out of which he had sold land measuring 27 kanal 2 Maria during the year under consideration therefore he earned short term capital gain of Rs 85,90,000/- which was added back to the total income.
Decision:- The appeal of the assessee on the issue of suspected investment in purchase of land was decided in his favour while deciding the ground of appeal no. 1 above and the addition of Rs 10,83,75,750/- as his unaccounted investment in purchase of land from various persons on agreement to sell or power of attorney, which was later on transferred to company M/s Horizon Buildcon Pvt Ltd as POA, was deleted.
Since it has been held above that the appellant had not purchased any land in Sultan wind, District Amritsar from the farmers/ persons on agreements/ikrarnamas or power of attorney in his name and had not transferred/sold the same to M/s Horizon Buildcon Pvt Ltd during the year under consideration in the capacity of owner of land, therefore the question of charging capital gain thereon does not arise. Accordingly the addition of Rs 85,90,000/- on account of short term capital gain is deleted.
11. Aggrieved from the above order of CIT(A), the Revenue is in appeal before the Income Tax Appellate Tribunal.
32 ITA No.434/ASR/2016& ITA Nos.671-673/ASR/2014
12. Ld. DR before us submitted his written submissions which read as under :-
1. In this case , a search u/s 132 of the I.T. Act, was conducted on 07.04.2011 on the assessee who is a builder. It was found that assessee had purchased approx. 50,000/- Sq yards of land (11 Acres) at Vill.
Sultanwind, Amritsar. During the course of search action at office of the assessee one document was found and seized as per Annexure DNB-1, A-2, Pages 26-30 (Now marked as Annexure -A). This document is a unsigned copy of a memorandum of Understanding (MOU) dated 22-01- 2008 between Sh. Surjit Singh S/o Sh. Harjinder Singh and Baljinder Singh S/o Sh. Natha Singh as 1st Party and M/s. Horizon Buildcon P Ltd. as 2nd party.
2. As per this MOU, the 1st party is the owner of a land measuring 50,000/- Sq Yards at Sultanwind, Amritsar and has undertaken to transfer the same to the second party @ Rs. 2310/- per Sq. Yard. The total sale consideration worked out to Rs. 11.55 Crores. As per the same document, first part has received a sum of Rs. 1,75,00,000/- as advance being 15% of the total amount of consideration. The rest of the amount is to be paid with 10 months and in the meanwhile 2nd party can submit and obtain necessary sanction from the statuary authorities for the building of their project on this land.
3. The amount of advance paid by the second party has also been evidenced by another document found and seized as per DNB-1, A-2, Page -72 (Now marked as Annexure-B). This single page document is a schedule of payments made against MOU dated 21st of Januray 2008 between Sh. Surjit Singh S/o Sh. Harjinder Singh r/o Village Bhakha Hari Singh, tehsil Ajnala, Amritsar and S. Baljinder Singh S/o Sh. Natha Singh R/o Village Ramanna chakk, Amritsar and M/s. Horizon Buildcon P Ltd. The total amount mentioned on this document is Rs. 1.75 crores out of which Rs. 1.50 Crores has been paid by cheque to different persons and Rs. 25 Lakhs paid by cash. This clearly shows that although the MOU is unsigned but the same has been acted upon by the parties in letter and spirit.
4. There is another document seized as per DNB-1, A-2, Page-75 (Now marked as Annexure-C). There is complete details of area of land of each person (aggregating to 49524) from whom the land has been purchased and amount of advance to be paid to each of them is noted. Few of the names are common in DNB-1, A-2, Page -72 and DNB-1, A- 2, Page-75. The rate has been same @ Rs 2310/- per Sq yard. This also shows that although the MOU is unsigned but the same has been acted upon by the parties in letter and spirit.
5. There is one more document seized as per DNB-1, A-9, Page-45 (Now marked as Annexure-D). This is a complete schedule of land made 33 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 against MOU dated 22-01-2008. The total land noted is 50075 Sq yards. The khasra numbers mentioned on this page are same as those on the registration deeds for the purchase of land by the assessee.
6. Further, another MOU dated 18.03.2008 was executed between the above parties which was seized as per document DNB-1, A-1, P- 133-138 (Now marked as Annexure-E), in which it is mentioned that the terms of the MOU dated 22.01.2008 have been complied with and hence this supplementary MOU is being executed. The terms of the MOU dated 22.01.2008 have been further reiterated in this document. This document is also however unsigned.
7. As per one more documents seized as per DNB-1, A-9, P-168 (Now marked as Annexure-F), detail of payments made for this land is noted under the heading "Accounts of Sh. Surjit Singh". As per it total payments of Rs. 11,94,37,570/- has been worked out. After making certain deductions the balance is struck at Rs. 11,67,73,370/-.
8. As per document DNR, A-4, P-1&2 (Now marked as Annexure- G), found from the residence of the assessee several payments in the name of Sh. Surjit Singh have been noted.
9. As per certain documents found and seized during search as DNB-1, A-1 & A-2 which are copies of various agreements to sell, as per which Sh. Surjit Singh and Sh. Baljinder Singh have purchased the land from various persons in their own name or in the name of their wives, Amarjit Kaur and Rajwinder kaur. The details of these agreements to sell were part of assessment order as Annexure-A (now marked as Annexure -H).
10. Assessee has finally shown to have purchased the above land (as per registration deeds seized as DNB-1, A-9 and A-10), from Surjit Singh and baljinder Singh or their wives as power of attorney holder. The khasra numbers are same as mentioned in the agreements to sell as per above para but the rates as per these registration deeds are much lower than the rate as per the MOU dated 22-01-2008 or the rates as per the agreements to sell as mentioned in above para (now marked as annexure-I).
11. Thus relying upon the above documents and the facts emanating from them, the AO was of the opinion that assessee has purchased the entire land for Rs. 11,94,37,570/- but has claimed to have paid only Rs. 2,38,03,500/- as cost and Rs, 19,00,140/- totaling Rs. 2,57,03,640/- as registration charges as per the registration deeds of the same land. He concluded that an amount of Rs. 9,37,33,930/- has been paid for the purchase of land out of unexplained sources.
12. The land measuring 103 kanal 14 marlas was purchased in 3 years relating to Assessment years 2009-10 , 2010-11 & 2011-12 and 34 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 accordingly the unaccounted payment was divided in each year on the proportion of land purchased in these years, as per details given below :-
Sr.No. Land purchased Land Unaccounted amount purchased involved for purchase of during the A. Y. property.
1 35 kanal 2 marlas 2009-10 Rs.3,12,44,640/-
2. 31 kanal 13 marlas 2010-11 Rs.2,81,20,180/-
3. 37 Kanal 4 marlas 2011-12 Rs.3,43,69,110/-
Total Rs.9,37,33,930/-
13. Accordingly, assessments u/s 153A r.w.s. 143(3) were completed on 21.03.2014 and total income of the assessee was assessed at Rs.3,12,44,640/-, 2,81,20,180/- & Rs. 3,59,83,500/- for the assessment year 2009-10, 2010-11 & 2011-12 as against nil income shown in the assessment year 2009-10 & 2010-11 and returned income of Rs.16,14,390/- for the A.Y 2012-13, as during the course of assessment proceedings.
14.1 Assessee preferred appeal before the CIT(A)-5, Ludhiana against the assessment orders. Before the CIT(A), assessee claimed that the MOU dated 22-01-2008 was rejected as the rates quoted by the vendor were too high. Assessee also claimed that the quoted rates were inclusive of the liability on the part of the brokers to obtain CLU from PUDA i.e., change of land use for commercial purpose, which could never be obtained by the brokers. In its claim, an affidavit from Sh. Surjit Singh dated 12-12-2013 was relied upon whereby it was claimed that surjit singh had testified that the MOU was not executed and that rates in the above mentioned MOU were quoted and offered for commercial approved land and that all the cost for obtaining the approvals for change in land use (CLU) and building plans sanctioned from appropriate authorities would have been paid and borne by the brokers.
However, no such clause was given in the MOU. In fact as per the para 1 of the MOU the second party after signing the MOU was free to prepare, submit and obtain sanctions of the plan, change of land use, license for construction of the project from statutory authorities in its own name. Nowhere in the MOU, such liability has been dwelled upon the brokers. Moreover, no evidence was produced by the assessee that any CLU was applied by the brokers from PUDA on behalf of the assessee company.
14.2 Assessee further claimed before CIT(A) that the agreements to sell relied upon by the AO were unregistered ikraar naamas and were generally manipulated by the brokers to justify the higher prices quoted by them. It was further claimed that these rate as per three of the agreements to sell were so inflated that they were even higher than the rate quoted in the MOU. However, it is quite logical that when such a large chunk of land has to be purchased, certain pieces of land are 35 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 bought at unpleasant prices which are quite higher than the rest of the land. This is sometimes due the location of the land and at times because of the fact that the sellers have realized that the buyers cannot afford not to purchase their land for want of continuity of the larger piece of land. Thus this puts them into a better bargaining position. Even assessee has also purchased 17 Marlas of land at a rate which is almost three times the rate of rest of the land (Registration deed at Sr. No. 5 of the Annexure B to the assessment order).
15.1 However, agreeing with the arguments of the assessee, CIT(A) has deleted the entire addition of Rs. 9,37,33,930/- spread over all the three years. As per the CIT(A), both the MOU dated 22-01-2008 and 18- 03-2008 are unsigned and cannot be relied upon as an evidence. As per CIT(A), MOU dated 22-01-2008 is unsigned but is a starting point for the AO. However, since the second MOU dated 18-03-2008 is also unsigned therefore it cannot lend any credence to the 1st MOU.
15.2 He has also discussed the document at page No. 168, A-9, DNB- 1 (Now marked as Annexure -F) whereon aggregate payments of Rs. 11,94,37,570/- have been recorded and have been held by the AO to be corroborating with the sale consideration recorded on MOU amounting to Rs. 11.55 Cr. CIT(A) has held that the payments on this document have been recorded for in the books of accounts as substantial payments out of the same have been made to specific parties through cheques and the same has been verified by the AO during remand proceedings. Therefore this document does not give any support to Ao's view of purchase consideration being 11.55 Cr.
15.3 Similarly he has rejected the AO's contention with regard to document as per pages 1 & 2 of A-2, DNR (Now marked as Annexure -G) which records various payments to Sh. Surjit Singh for the reason that all these payments have been found recorded in the books of accounts of the assessee and verified during remand proceedings by the AO.
15.4 As regards the Agreements to sell (ikraar namas) relied upon by the AO which were seized as A-1 and A-2 of DNB-1 (Now marked as Annexure -H), CIT(A) has agreed to the claim of the assessee that these have been wrongly recorded as sale deeds by the AO. CIT(A) has held that there is enough evidence as per which these ikraar namas entered into between the brokers Sh. Surjit Singh and others and the original owners of land are collusive in nature to hold the assessee to agree to unusually high price of land for purchase and had been submitted by the brokers alongwith unsigned copy of the MOU. It has been agreed upon by the CIT(A) that on realizing the high price quoted in MOU through such ikraar namas, the assessee decided not to sign the MOU. It was alleged by the assessee and agreed upon by the CIT(A) that these Ikraarnamas were prepared in such a haste that three of them pertaining to 34 Kanals of land out of 103 kanals have quoted prices 36 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 much higher than the price quoted in the MOU. Thus CIT(A) has rejected the ikraar namas as valid support in favour of the AO.
15.5 Finaly CIT has referred to certain judgments in order to hold that the addition made by the AO cannot sustain on the mere presumption that consideration of Rs. 11.55 Cr has been paid by the assessee. Hence he deleted the entire addition of Rs. 9,37,33,930/- spread over A. Y. 2009-10 to 2011-12.
16. The Ld.CIT(A), has erred in holding that the documents found at the time of search do no establish the payment of unaccounted money for the purchase of land and these are not admissible as evidence. While holding so, following facts have been ignored which clearly establish that the documents relied upon by the AO during the course of assessment proceedings corroborate with each other to show that unaccounted money has been transferred to Sh. Surjit singh in lieu of purchase of land through him.
i. CIT(A) has ignored DNB-1, A-2, Page -72 (Now marked as Annexure-B) which is a schedule of payments made against 1st MOU wherein payments of Rs. 1,50,00,000/- through cheques has been paid to various persons from the period 21-10-2007 to 21-01-2008 and cash of Rs. 25,00,000/- has also been paid aggregating to Rs. 1.75 Crores which is exactly as per the amount of advance mentioned in MOU equivalent to 15% of the amount. Moreover, most of the payments have been made prior to the date of 1st MOU which also corroborates with the terms of the MOU. It is pertinent to mention that names mentioned on these documents are same as per Ikraarnamas details of which have been recorded on Annexure-A to assessment order (Now marked as Annexure
-H). Assessee has wrongly alleged that these amounts have been paid to Sh. Surjit Singh as advance for obtaining CLU in his reply (Now marked as Annexure-J) to document 168, A-9, DNB-1 (Now marked as Annexure -F). These payments have been paid by cheque and have gone to the original owners of land whose names have been mentioned on the ikraarnamas as per Annexure-A to assessment order (Now marked as Annexure -H). These payments cannot be advance made to Surjit Singh for obtaining CLU. This documents shows that the advance equivalent to 15% of the gross amount mentioned on 1st MOU has been paid directly to the original land owners from whom the land has to be purchased.
ii. Similarly CIT(A) has ignored document DNB-1, A-2, Page-75 (Now marked as Annexure-C) on which amount of advance to be paid to the land owners has been calculated @ 15% of the gross payment as per total Sq. Yards @ Rs. 2310/- per Sq. yard. The aggregate amount of advance worked out is exactly 1.75 crores. It is pertinent to mention that in the 9 Ikraarnamas, all these persons whose names are mentioned on this document, are the co-owners of the land. The assessee has admitted in his submissions before the CIT(A) that this amount has been entered in the books of accounts, but has claimed that it is advance paid to Sh. Surjit singh for obtaining CLU from PUDA. However, if this 37 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 document is examined in light with the names mentioned on Ikraarnamas and also as per schedule of payment recorded in DNB-1, A-2, Page -72 (Now marked as Annexure-B), the same cannot be an advance for CLU but advance paid to original Land owners @ 15% of the rate fixed as per 1st MOU.
iii. CIT(A) has also ignored document DNB-1, A-9, Page-45 (Now marked as Annexure-D) on which details of all the Khasra No. has been recorded alngwith details of area of land in Kanals and marlas / Sq yards against each Khasra. It is also recorded that it is a corrected schedule as per mutual discussion in continuation of MOU dated 22-01- 2008. The aggregate Sq. yards as per this documents are 50075 which is as per the terms of MOU. Hence it is not acceptable that there has been no efforts to execute the MOU and it was rejected by the parties for exorbitant rates quoted by the broker and also for want of CLU from PUDA.
iv. In fact the 2nd MOU dated 18-03-2008 DNB-1, A-1, P-133-138 (Now marked as Annexure-E) is the testimony to the fact that the agreement between the two parties has been executed. This document clearly records that the term and condition of the 1st MOU have been complied with and that now the first party shall transfer the land described in that document to the second party. In fact, the land purchased by the assessee through the registration deeds as per A-9 & A-10 DNB-1 (Now Marked as Annexure-I) has actually been procured through the same brokers or their family members as P.O.A. holders.
v. Further, the perusal of document 168, A-9, DNB-1 (Now marked as Annexure -F) reveals that it bears a heading "ACCOUNTS OF Shri Surjit Singh". Thereafter, there is a sub-heading "cash before 4 acres"
whereunder details of aggregate expenses/ payments of Rs. 4.08 crores have been recorded. Then there is another subheading "cash for 7 acres" whereunder details of expenses / payments aggregating to Rs. 7,86,50,774/- have been recorded. All these headings clearly suggest that this documents has been prepared to record the details of payments to/ through Sh. Surjit Singh in respect of 11 Acres of land, which is approximate area of land purchased by the company. Assessee has vide its explanation has filed reply (Now marked as Annexure-J) explaining each entry and has submitted the following summary which has also been made part of the his order by the Ld. CIT(A) at page 42 of his order:-
Particulars Amount Remarks
1. Payments for land 23282036/- (*) Rs. 2421504/- incurred on
purchase Amritsar registration & other exps and
hence the total amount come to
Rs. 25703540/-
2. Advance to Surjit Singh for 27611856/- (#)
CLU
38
ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014
3. Advanve to Surjit Singh & 17500000 (@) Rs. 1864334 incurred on earth others for CLU purchased on various dates & debited to the account of Advance paid for land Amritsar.
Hence final balance comes to rs.
19364334/-. Kindly refer
advance for land Amritsar
Account lying in DCIT records)
4. Advance to Gurpartap 2000000
Singh
5. Advance to Prakash Singh 5000000
6. Advance to SS Steel for 14044400
Land
7. Security to Praksh 5000000
shuttering
8. Amount incurred for Civil 19995692 ($)
Work- WIP
9. Amount incurred for Land 1517250
Development
10. Amount paid to Sarovar 1500000
Portico
11. Impressed to Ambika 2000000
Sharma (Director)
Total 119451228
(*) In fact it is only Rs. 2,29,82,036/-
(#) In fact it is Rs. 2,79,11,856/- and includes Rs. 2,42,50,000/- on account of surrender made by Sh. Naresh Sabharwal Director in the A. Y. 2012-13, in spite of the fact that payments have been shown to have been made in the F. Y. 2010-11. There is no clause for obtaining CLU in the 1st and 2nd MOU.
(@) In fact this payment has been made to various parties through cheques for Rs. 1.50 Crores plus Rs. 25 lakhs in cash as per Now Annexure -B. There is no clause for obtaining CLU in the 1st and 2nd MOU.
($) Includes Rs. 7.5 lakhs on account of surrender made by Sh. Naresh Sabharwal Director in the A. Y. 2012-13, inspite of the fact that payments have been shown to have been made in the F. Y. 2009-10.
Ld CIT(A) has agreed to the contentions of the assessee, relying upon the above chart and the accompanying reply, that most of the payments/ expenses above are made through cheques and are entered in books of accounts. CIT(A) has held in view of the same that this document does not help the case of the AO that assessee has not paid any amount other than amounts as per registration deeds of land. However, following has not been considered by the Ld. CIT(A):-
a. The amount of Rs. 2,76,11,856/- as per Col. 2 above and Rs. 1,75,00,000/- as per Col.3 above has been claimed to be given to Sh.39 ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014 Surjit Singh as advance for arranging CLU from PUDA for commercial use of the land. It has also been alleged that since Sh. Surjit Singh has not been able to obtain CLU, that was one of the reasons for rejecting MOU. Assessee also claimed that the quoted rates were inclusive of the liability on the part of the brokers to obtain CLU from PUDA i.e., change of land use for commercial purpose, which could never be obtained by the brokers. In its claim, an affidavit from Sh. Surjit Singh dated 12-12- 2013 was relied upon whereby it was claimed that surjit singh had testified that the MOU was not executed and that rates in the above mentioned MOU were quoted and offered for commercial approved land and that all the cost for obtaining the approvals for change in land use (CLU) and building plans sanctioned from appropriate authorities would have been paid and borne by the brokers. However, non obtaining of CLU cannot be a ground for rejecting MOU because there is no clause in the term and conditions recorded in the MOU. No where in the 1st and 2nd MOU, it has been mentioned that first party will procure CLU from PUDA as a pre condition. In fact as per the para 1 of the MOU the second party after signing the MOU was free to prepare, submit and obtain sanctions of the plan, change of land use, license for construction of the project from statutory authorities in its own name. Nowhere in the MOU, such liability has been dwelled upon the brokers. Moreover, no evidence was produced by the assessee that any CLU was applied by the brokers from PUDA on behalf of the assessee company. Therefore, Ld CIT(A) has erred while accepting the claim of the assessee that Rs. 2,76,11,856/- were paid to Sh. Surjit Singh as advance to procure CLU from PUDA. Infact, this is an afterthought and since Sh. Surjit Singh is party to the payment of money in excess of the registration deeds, it is quite obvious that he is in help of the assessee to concoct the story.
Although some part of this amount has been recorded in books of accounts and has been paid through banking channels but it does not negate the fact that amount in excess of the amounts as per registration deeds of land has been paid by the assessee company, thereby lending credence to the evidentiary status of the unsigned MOU.
b. It is pertinent to mention here that amount of Rs. 2,76,11,856/- includes cash payment of Rs. 2,42,50,000/- which has been shown to have paid during the F. Y. 2010-11, has been claimed to have been surrendered by Sh. Naresh Sabharwal and invested in company as share application money during the F. Y. 2011-12 as unexplained payment. The mere fact that unexplained payments were made to Sh. Surjit Singh is a clear evidence that excess money has been paid to the brokers for purchase of land and that the unsigned MOU is not merely a rejected piece of document without any evidentiary importance. Further assessee has claimed that since the amount of Rs. 2,42,50,000/- has been put to taxation with the surrender, it cannot be added during assessment. This argument of the assessee has also been accepted by the Ld. CIT(A), however, he has missed the point that a payment made during the F. Y. 2010-11 cannot be surrendered for the F. Y. 2011-12 relevant to A. Y. 40 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 2012-13. Therefore, it cannot be considered that these payments have been put to taxation by the assessee.
Further all the registration deeds have been registered in the F. Y. 2008- 09 and 2009-10, therefore how can it be accepted that an advance for CLU will be paid in the F. Y. 2010-11 and still further that how can a MOU be rejected in January to March 2008 for want of CLU when the advance is still being paid in the F. Y. 2010-11. These fact clearly show that the entire issue of CLU and rejection of MOU is a concocted story by the assessee with the connivance of the broker.
c. Similarly, the amount of Rs. 1,75,00,000/- as per Col. No 3 above can also not be considered as advance for obtaining CLU. This amount has been recorded in DNB-1, A-2, Page -72 (Now marked as Annexure- B) where payments have been made to various original owners of the land clearly as per the terms and conditions of the MOU, being 15% of the gross amount as per MOU. Out of Rs. 1.75 Cr , Rs. 1.5 crores have been paid through cheques and the rest of the amount of Rs. 25 Lakhs has been paid in cash. Again, there is no clause in the term and conditions recorded in the MOU regarding obtaining CLU by the brokers. No where in the 1st and 2nd MOU, it has been mentioned that first party will procure CLU from PUDA as a pre condition. Infact as per the para 1 of the MOU the second party after signing the MOU was free to prepare, submit and obtain sanctions of the plan, change of land use, license for construction of the project from statutory authorities in its own name. Nowhere in the MOU, such liability has been dwelled upon the brokers. Moreover, no evidence was produced by the assessee that any CLU was applied by the brokers from PUDA on behalf of the assessee company. Therefore, Ld CIT(A) has erred while accepting the claim of the assessee that Rs. 1.75 Crores/- were paid to Sh. Surjit Singh as advance to procure CLU from PUDA.
Although this amount has been recorded in books of accounts and has been paid through banking channels but it does not negate the fact that amount in excess of the amounts as per registration deeds of land has been paid by the assessee company, thereby lending credence to the evidentiary status of the unsigned MOU.
d. As per Col 4 & 5 payments of Rs. 20 lakhs and 50 lakhs have been made to Sh. Gurpartap Singh and Sh. Parkash Singh respectively as advance. Sh. Gurpartap Singh S/o Sh. Shamsher Singh S/o Sh. Joginder Singh R/o Vill. Sultanwind Asr, Sh. Parkash Singh and Sh. Baljit Singh both S/o of Sh. Joginder Singh, R/o Vill. Sultanwind Asr are members of the same family. Total land purchased from these three persons being part of land purchased vide two registration deeds alongwith other persons is 3 K- 12 M and 8K-13 M totaling 12 K- 1M i.e., around 6000 Sq Yards (Deeds mentioned at Sr. No. 2 and 7 of annexure B to assessment order). As per the rate of land mentioned in these two deeds total payment to these three persons should be Rs. 27,00,000/- (6000 X450 = 41 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 27,00,000), whereas they have been paid around Rs. 1,31,00,000/- plus cash out of Rs. 25 lakhs as per DNB-1, A-2, Page -72 (Now marked as Annexure-B), which is quite as per the rate of Rs. 2310/- per Sq yards as per MOU ( 6000 X 2310 = 1,38,00,000).
Although this amount has been recorded in books of accounts and has been paid through banking channels but it does not negate the fact that amount in excess of the amounts as per registration deeds of land has been paid by the assessee company, thereby lending credence to the evidentiary status of the unsigned MOU.
e. As regards payment of Rs. 1,40,44,400/- in Col No. 6 above, shown to have been paid to S. S. Steel as advance against land at Asr, assessee has not explained as to why advance to S. S. Steel has been paid as advance against purchase of land. It has no where been explained that who is the owner of S. S. Steel and how is he related to the land deal and on what account this advance has been paid. Prima facie it also appears to be an afterthought to discredit the authenticity of this document by showing that these payments have been recorded in books of accounts and such cannot be support to AO in making the impugn addition in this case. Even if the claim of the assessee is accepted, for argument sake, still the fact remains that these advances were paid in excess of the amount as per registration deeds at the same time when land was purchased through registered sale deed.
f. Therefore from the above facts it is quite clear that although not all the payments recorded in this document 168, A-9, DNB-1 (Now marked as Annexure -F) are made in connection with the purchase of land and also that some of them have been through cheques and recorded in books of accounts, yet it can be clearly inferred from this document that assessee has made payments in excess of amount as per registered deeds and that the unsigned MOU is a valid piece of evidence in this regard.
vi. Further A-1 & A-2, DNB-1, (Now marked as Annexure -H) has been rejected by the Ld. CIT(A) which is copies of agreement to sell as being collusive in nature and submitted by the brokers alongwith copy of MOU to hold the assessee to agree to unusually high price of land for purchase. However, Ld CIT(A) has missed the vital point that these agreement to sell wherein receipt of advance from brokers by the land owners have been recorded and are signed by the same persons who are the owner of the land. It is beyond comprehension that so many owners will put their signatures on a fake agreement to sell which is prepared on a STAMP PAPER, which bears the exact details of their land and also has details of advance having received by them. No normal owner of land will give his signature on such a document just to facilitate a person who in their own knowledge is using the same document to fraud a third person. It will definitely be considered that one who can deceive a third person can easily deceive them. Therefore, while rejecting the said agreements to sell without considering the Ld. CIT(A) has erred in 42 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 this regard. The authenticity of these agreements to sell seems genuine in view of the payments made to Sh. Parkash Singh, Baljit Singh and Sh. Gurpartap Singh as discussed above in para v(d) above.
It was further held that the rates as per three of the agreements to sell were so inflated that they were even higher than the rate quoted in the MOU. However, it is quite logical that when such a large chunk of land has to be purchased, certain pieces of land are bought at unpleasant prices which are quite higher than the rest of the land. This is sometimes due the location of the land and at times because of the fact that the sellers have realized that the buyers can't afford not to purchase their land for want of continuity of the larger piece of land. Thus this puts them into a better bargaining position. Even assessee has also purchased 17 Marlas of land at a rate which is almost three times the rate of rest of the land (Registration deed at Sr. No. 5 of the Annexure B to the assessment order).
vii. As per documents DNB-1 A-9 (Now marked as Annexure -I), which are copies of registered sale deeds, assessee has purchased same land from the same owners through Sh. Surjit Singh or his family members as Power of Attorneys land holders. The Khasra Nos. mentioned in the registration deeds are the same as in the agreements to sell as per A-1 & A-2, DNB-1(Now marked as Annexure -H), at the rates which are much lower than the rates mentioned on the agreements. The complete details of these purchases are contained in Annexure B to the assessment order. The POAs mentioned in all the registered deeds are registered with sub registrar, Asr. This clearly shows that the broker has earlier purchased the land from owners through agreement to sell at higher rates but got the POAs registered with the sub registrar instead of agreements to sell in order to conceal the actual amounts paid by him to the land owners. Later he has got the sale deeds registered with the assessee at much lower price. Had a search not taken place, only the POAs and the registered sale deeds would have become the part of official revenue record and not the agreements to sell which got unearthed due to the search and seizure action.
viii. In view of the above facts and arguments, it is clear that Ld CIT(A) has erred while holding that AO has invoked section 69 merely on presumption based surmises and conjuctures that assessee has made payments in accordance with the terms of the MOU. In fact, the documents relied upon by the AO clearly show that assessee has made payments in excess of the amounts mentioned in the registered sale deed and in all probability as per the terms and conditions of the MOU.
14. In addition to the above written submissions, ld. CIT-DR filed paper book containing copies of seized documents including MOU etc., 43 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 which is placed on record and made detailed and elaborate arguments and vehemently submitted that the learned CIT(A) has not considered the provisions of Section 2(47) of the Income Tax Act, 1961 as well as Section 47 of the Income Tax Act, 1961 properly. As per Section 2(47) of the Act, the requirement of transfer of property was completed in favour of the assessee. Further the provision of Section 2(47)(vi) of the Act, reads as under :-
"(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property."
He also relied on the decisions of Hon'ble Supreme Court in the case of Balbir Singh Maini (2017) 251 Taxman 202/398 ITR 531 (SC) and submitted that the Hon'ble Supreme Court in the said case has observed that object of section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. He has also did not the rebutted the findings recorded by the Assessing Officer.
15. After considering the submissions of ld. DR and perusing the material available on record, we find that the AO during the course of assessment noted that the documents found at the business premises of M/s Horizon Buildcon(P) Ltd. prepared with the title "Accounts of Sh. Surjit Singh" and according to this document total payments to Sh.
Surjit Singh was made at Rs. 11,67,73,370/-. Documents mentioned as 44 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 Page-72 titled as 'Annexure' also mentioned that" Schedule of payments made against MOU dated 22.01.2008 between Sh. Surjit Singh s/o Sh. Harjinder Singh Village Bhakaha Hari Singh Tehsil Ajanala, Amritsar, S. Baljinder Singh s/o Sh. Natha Singh Village Ramana Chakk Amritsar and M/s Horizon Buildcon (P) Ltd. For the clarity we would like to reproduce the contents of Annexure mentioned at page 72 which reads as under :-
ANNEXURE Schedule of payments made against MOU dated 21st January 2008 between Sh Surjit Singh s/o S.Harjinder Singh r/o village Bhakha Hari Singh, Tehsil Ajnala, Amritsar, S.Baljinder Singh S/o S Natha Singh R/o village-Ramanna Chakk, Amritsar and M/s Horizon Buildcon Private Limited.
Sl.N Name of Party Cheque No. Date Amount
o.
1. Parkash Singh 096851 21.10.07 5,00,000/-
2. Parkash Singh 096852 01.12.07 5,00,000/-
3. Parkash Singh 096860 07.01.08 2,00,000/-
4. Parkash Singh 096866 21.01.08 10,00,000/-
5. Surjit Singh 096853 01.12.07 5,00,000/-
6. Surjit Singh 096864 07.01.08 5,00,000/-
7. Manjit Kaur 096855 22.12.07 10,00,000/-
8. Amarjit Kaur 096856 22.12.07 4,50,000/-
9. Jagir Kaur 096857 22.12.07 4,50,000/-
10. Rajwinder Kaur 096858 22.12.07 4,50,000/-
11 Baljit Singh 096861 07.01.08 11,00,000/-
12. Gurpratap Singh 096862 07.01.08 11,00,000/-
13. Harbans Kaur 096863 07.01.08 10,00,000/-
14. Harbans Kaur 096865 21.01.08 40,00,000/-
15. Prithipal Singh 096867 21.01.08 7,50,000/-
16. Charanjit Singh 096868 21.01.08 7,50,000/-
17. Gurmit Singh 096869 21.01.08 7,50,000/-
Total 1,50,00,000/-
18. Cash 25,00,000/-
Grand 1,75,00,000/-
Total
Surjit Singh Baljinder Singh Horizon Buildcon
Private Limited
Further the Accounts of Shri Surjit Singh mentioned in Annexure-4 reads as under :-45 ITA No.434/ASR/2016
& ITA Nos.671-673/ASR/2014
16. As per these documents, the company has made payment of Rs.
1,75,00,000/- through various cheques and in cash and various other payments to the assessee, which are indicated in the above annexures.
Therefore, it cannot be relied that the MOU signed by him on 22/01/2008 has no value between the parties. We further noted from the order of the Assessing Officer that on the subsequent deeds executed between both the parties which has been signed by both the 46 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 parties referring to the MOU dated 22/01/2008. When these documents confronted to the assessee vide order sheet entry dated 8/3/2016, the assessee in reply submitted that these are unsigned documents and therefore, does not have any value in the eyes of law.
The plea given by the assessee is not acceptable being entirely baseless and cannot be relied upon. The claim of the assessee that the MOU dated 22/01/2008 is not signed and have no weight in the eyes of the law, is not acceptable, due to the reasons that on the basis of this MOU dated 22/01/2008 the assessee further executed an Agreement Deed between the assessee and the company M/s Horizon Buildcon (P) Ltd., which has signed by both the parties, in which the company has taken congnizance of this MOU dated 22/01/2008. Hence, it cannot be said that the unsigned MOU has no weight in the eyes of law when the purchaser and seller has taken congnizance of this MOU in their further transaction. Further, the other documents i.e. 'Account of Sh.Surjit Singh and Schedule of payment', are the documents of unaccounted transactions made between assessee and the company, which prepared only for remembering purpose and due to that reason, these documents had not been signed by any other party. The contention of the assessee that these unsigned documents have no weigh in the eyes of law is not acceptable in view of this factual position.
47 ITA No.434/ASR/2016& ITA Nos.671-673/ASR/2014
17. We also observed from the order of the Assessing Officer at para No.2.3 in which the submissions of the assessee have been incorporated by the Assessing Officer, which reads as under :-
"I would like to bring to your kind notice that during the year under consideration, I had represented as power attorney holder on behalf of the various farmers as per details given below who had directly sold the land at village Sultanwinder to M/s Horizon Buildcon(P) Ltd. It is respectfully submitted that in addition to being a land lord and property consultant I am active in public life and I command respect among farmer community. These farmers approached me to obtain CLU and to represent them in order to protect their interests. Since I was not able to arrange the CLU therefore i acted as their attorney/agent without any monetary benefits.
The photocopies of the some power of Attorney given byfamers to me and as available with me as on date are enclosed here with for your kind consideration & record. The terms & condition of the Power of Attorney clearly stipulate that neither any money nor any rights/title to land or possession of land has been exchanged, between parties (i.e. between owners/farmers and Surjit Singh POA holders). It is clearly proved & evidenced that the farmers have not sold any land to me & they had given POA to me only to represent them and as such the question of selling of the land to M/s Horizon Buildcon Pvt. Ltd. in my personal capacity again reiterated that this document was never executed between us and M/s. Horizon Buildcon (P) Ltd, hence was unsigned and unexecuted.
The details of the sales deed executed by me during the previous year relevant to the assessment year 2010-11 as a Power of Attorney (POA) holder of the following farmers is given as under:
Date of Name of Seller Khasra Total Area Total Details of Payment Details of payments Details of POA No. Registry Number of Sales Received by me refunded to farmers given by the Agricult Consider Farmers lure Land alion 27.5.09 Harbans Kaur 4415, 10K-1M 2261500/- Reed. Rs. 10 lacs on Amt refunded to 07/04//2008/D 4418, 9/5/2008 in SB a/c farmer out of cash OC 1390 4427, with Syndicate Bank withdrawal from SB a/c 4436 Syndicate Bank.
2/3/09 ijHarbans Kaur, 4416, 17K-1M 3826500/- i)Ch. No.394300 Amt.refunded to 1) 07/04/08 HjDilbag Singh & 4417, rcvd.for Rs.35 lacs farmers vide DOC1390 Hira Singh & 4418, and deposited on chq.no.95702.95703 & 2. 10/02/09 DOC jasbir Singh. 4427 23.3.09 in SB a/c 95704for Rs.7.50 lacs 2815
iii)Praksh Singh & 4428, with Syndicate bank Rs.6.50 lacs and 314/01/09 DOC Baljit Singh & 4430. and Rs.8.00 lacs from SB 2496 GurpreetSingh 4431 2)cash received a/cwith Syndicate 4.24.12.08 48 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 ivjPargat Singh & Rs.32500/- Bank and balance Rs. DOC2282 Jagir Singh 16.26 lacs refunded to 5.24.02.09 DOC (Through Manjit the farmers in cash 2971 Singh & Sawaraj being withdrawals from Singh GPA through SB a/cand payments Surjit Singh SPA v) received in cash at the Manjit singh time of registry 11.12.09 i) Harbans Kaur 4417.4 20K- 46.00 Lacs Rs. 50.00 Lacs Amount refunded to i) the farmers out of cash 14/07/09/DOC3 it) Manjeet Kaur 222.44 05M received by me withdrawal from my 33 & saving bank account I6/11/09/DOC2 Hi) Fakir Singh 23.442 through cheque 725
iv) Pargat Singh & 4,4565. ii) Jagir Singh 4566.4 14/07/09/DOC
v) Rajinder Kaur 567,44 1239 alias Balwinder 37.550 iii) 12/11/09 DOC kaur 4/4425, 2700
vi) Swarn Singh, 4436, iv) 24/12/08 DOC Amarjit Singh, 5511 2282 Gurmeet Singh, 12/456 4 v) 23/05/08 DOC Pritpal Singh, 149 Kewek Singh & Charanjit Kaur, Iqbal Kaur It is clearly evidence from the above charts that I had represented as a Power of Attorney (POA) of the above farmers and the payments received by me on their behalf has been refunded them without any monetary benefits."
Further, the Assessing Officer has observed in page No.9 of his order from the submissions of the assessee, which reads as under :-
"It is clearly mentioned in these agreements to sell "If the purchaser pull back, the advance given by him will be forfeited and if the seller will pull back, he has to pay double amount of advance and the purchaser has full right to get registry through Court. I being the sellers will be responsible for the fault in the ownership and the purchaser will have the fullest rights to make plots on the land, get the plans drawn on it, get the roads built-up on it and get the agreements written further or get the foundations of the plots completed up and wherever required up the signatures thereupon."
18. From the above submissions of the assessee and findings recorded by the Assessing Officer, both are contradictory and these issues have not been properly dealt with by the ld. CIT(A) while allowing the appeal of the assessee. Further, the CIT(A) wrongly held that the AO has not brought any evidence on record to show that the 49 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 assessee had purchased the land from various persons/ farmers on agreements/ikrarnamas or power of attorney in his name and later transferred the same to M/s Horizon Buildcon Pvt Ltd., on power of attorney of the original owners", ignoring the detailed discussion of the same in the assessment order. On going through the assessment order and the submissions of the assessee and the Revenue, we are of the opinion that the AO has rightly held that documents in question were not signed by any of the party, but the authenticity of these documents cannot be denied in view of the fact that the things have been happened further according to the said MOU and according to other documents found at the business premises of M/s Horizon Builcon (P) Ltd. Further the AO has rightly placed reliance on the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More (1971 82 ITR 540(SC) wherein it has been held that where a partly relies of self serving recitals in a documents it is for that party to establish the truth of these recitals. The tax authorities are entitled to look into the surrounding circumstances are discussed hereinafter. Moreover, the question is that what was the need to prepare these documents by the company when no transactions have been made with the assessee.
Hence, these documents also established that the assessee has taken land from various farmers/persons on agreement to sell/biyana or POA and then transferred the same land to the company as POA. We 50 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 found strong substance on the submissions of ld. DR that there was a transfer in the name of the assessee as per Section 2(47) and Section 47 of the Act. We are also in agreement with the decisions relied on by the ld. DR in the case of Balbir Singh Maini(supra), wherein the Hon'ble Supreme Court observed that the form and substance of the provisions pertaining to section 47 of the Registration Act 1908 undisputedly provided that a registered document will be operative in law from the date of its execution and not from the date of registration. It was also held by the Hon'ble Supreme Court in the said case that the objection of section 2(47)(vi) of the Act appears to be to bring within the tax net a de facto transfer of any immovable property. The expression 'enabling the enjoyment of' takes colour from the earlier expression "transferring", so that it was clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof, the maxim "noscitur a sociis" has been repeatedly applied by the Hon'ble Supreme Court.
19. In this particular case, the assessee received payment from M/s Horizon Buildcon Pvt. Ltd. which are evident from the records seized by the revenue authorities during the course of search and seizure and the statements of accounts were also found, which is also discernible from the assessment order as well as the documents considered by the AO during the course of assessment. However, the CIT(A) has ignored 51 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 the legal position which were applicable in the present case in hand.
Accordingly as per above discussions the Capital Gain calculated by the Assessing Officer is also correct. Accordingly, we dismiss the impugned order passed by the CIT(A) and allow the appeal of Revenue for A.Y.2009-2010 in ITA No.434/ASR/2016. Thus, ITA No.434/ASR/2016 is allowed.
20. Since the issues involved in other appeals of the Revenue are similar to the appeal decided by us in the case of assessee-Surjit Singh in ITA no.434/ASR/2016, wherein we have dismissed the impugned order passed by the CIT(A) and allowed the appeal of the Revenue, therefore, our observations made therein shall apply mutatis mutandis to the appeals of the Revenue in case of M/s Horizon Buildcon Pvt. Ltd.
in ITA Nos.671-673/ASR/2014 for the assessment years 2009-2010 to 2011-2012. Thus, ITA Nos.671-673/ASR/2014 are allowed.
21. Now, a procedural issue comes before us that though the hearing of the captioned appeal was concluded on 06.02.2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the Income tax Appellate Tribunal Rules, 1962, which envisages the procedure for pronouncement orders, provides as follows:
52 ITA No.434/ASR/2016& ITA Nos.671-673/ASR/2014 34(5) The pronouncement may be in any of the following manners: -
(a) The Bench may pronounce the order immediately upon the conclusion of hearing.
(b) in case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date of pronouncement.
(c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.
As such, "ordinarily", the order on an appeal should be pronounced by the Bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble High Court in the case of Shivsagar Veg Restaurant vs ACIT (2009) 319 ITR 433 (Bom), wherein, it was, inter alia, observed as under:
"We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now),all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment".
In the rules so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the 53 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 order within a period of 90days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances.
22. We also find that the aforesaid issue has been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai 'F' Bench in DCIT, Central Circle-3(2), Mumbai vs JSW Limited & ors (ITA No.6264/Mum/18 dated 14.5.2020, wherein, it was observed as under:
" 9. Let us in this light revert to the prevailing situation in the country. On 24th March,2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also afew more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, 54 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period.
10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words"
ordinarily", in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. "
23. Respectfully following the above judicial decision of Hon'ble Bombay High Court and the Tribunal, we are of the considered view that the period during which the lockdown was in force shall stand excluded for the purpose of working out the time limit for 55 ITA No.434/ASR/2016 & ITA Nos.671-673/ASR/2014 pronouncement of orders, as envisaged in Rule 34(5) of the Appellate Tribunal Rules, 1963."
24. In the result, all four appeals of the Revenue are allowed.
Order pronounced in pursuance with Rule 34(4) of ITAT Rules, 1963 by putting the copy of the same on Notice Board on 30/06 /2020 at Amritsar.
Sd/- Sd/-
(RAVISH SOOD) (L.P.SAHU)
याियक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
अमृतसर/
सर Amritsar; ,दनांक Dated 30/06/2020
Prakash Kumar Mishra, Sr.P.S.
आदे श क" ितिल-प अ.े-षत/Copy
षत of the Order forwarded to :
1. अपीलाथ / The Appellant-
2. यथ / The Respondent-
3. आयकर आयु/(अपील) / The CIT(A),
4. आयकर आयु/ / CIT
5. -वभागीय ितिनिध, आयकर अपीलीय अिधकरण, अमृतसर/DR, ITAT, Amritsar
6. गाड फाईल / Guard file.
स या-पत ित //True Copy// आदे शानुसार/ BY ORDER,
(Senior Private Secretary)
ITAT Amritsar Bench, Amritsar