Income Tax Appellate Tribunal - Chandigarh
Ito, Panchkula vs Sh. Jagpal Singh, Panchkula on 9 November, 2016
I N T H E I N C O M E T A X AP P EL L AT E T R I BU N A L
D I VI S I O N B EN C H , C H AN D I G A R H
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No. 542/CHD/2015
Assessment Year: 2006-07
The ITO, Vs Shri Jagpal Singh,
Ward 2, H.No. 851, Sector 11,
Panchkula . Panchkula.
PAN: AXAPS8356G
&
ITA No. 565/CHD/2015
Assessment Year: 2006-07
Shri Jagpal Singh, Vs The Addl. CIT,
H.No. 851, Sector 11, Panchkula Range,
Panchkula. Panchkula.
PAN: AXAPS8356G
(Appellant) (Respondent)
Department by : Shri S.K.Mittal
Assessee by : Shri Ajay Jain &
Shri Yogesh Monga
Date of Hearing : 02.11.2016
Date of Pronouncement : 09.11.2016
O R D E R
PER BHAVNESH SAINI,JM Both the cross appeals are directed against the order of ld. CIT(Appeals) Panchkula dated 30.03.2015 for assessment year 2006-07.
22. We have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material on record. Ld. Representatives of both the parties submitted that the major issues have already been adjudicated by ITAT Chandigarh Bench in the connected matters of ITO Vs Shri Bimal Suri and ACIT Vs Shri Shekhar Chawla in ITA Nos. 664/2011 and 680/2011 of assessment year 2006-07 vide order dated 20.09.2016, copy of the same is filed on record. It is, therefore, submitted that three issues are covered by order in the case of Shri Bimal Suri (supra). In the background of these facts, we proceed to decide the cross appeals as under.
ITA 565/2015 ( Assessee's Appeal)
3. Ground Nos. 1 and 8 are general and need no adjudication.
4. The ld. counsel for the assessee did not press ground No. 7 with regard to addition of Rs. 1,76,670/-.
This ground is dismissed as not pressed.
5. Ground Nos. 2, 4 and 5 are connected matters and read as under :
"2. That the Learned CIT(A) has erred in confirming the addition of Rs. 1,12,04,166/- on account of unexplained investment in purchase of 25 kanal 10 Marla land at Lohgarh on the basis of photocopies of forged documents found from the third party premises and without making any inquiry. The Id CIT(A) has also erred in ignoring the registered sale deed."3
"4 That the Learned CIT (A) has wrongly upheld the addition of Rs. 1,44,50,000/- on account of profit earned on sale of land of 25 Kanal 10 marlas at Lohgarh to M/s Parshav Colonisers & Consultants Pvt. Ltd. without appreciating the fact that the appellant has not sold any land to M/s Parshav Colonisers & Consultants Pvt. Ltd. and also erred by making addition on the basis of photocopies of forged documents found from the third party premises and without making any inquiry from any parties."
"5 That the Learned CIT(A) has upheld addition of Rs. 19,40,278/- on account of profit earned on sale of land of 25 Kanal 10 marlas at Lohgarh to M/s Gee City Builders Pvt. Ltd. on the basis of photocopies of forged documents found from the third party premises and without making any inquiry from any parties and also erred by ignoring the registered sale deed."
6. The brief facts of the case are that a survey operation under section 133A of the Act was conducted at the business premises of M/s Chandigarh Overseas Pvt. Ltd., Chandigarh and its sister concerns. During the course of survey, certain loose papers, copies of the agreements and other documents were found and impounded. The important impounded documents which were considered for assessment of income are as under :
i) Agreement to Sell dated 29.01.2005
ii) Backside of page 2 of the agreement to sell
dated 29.01.2005.
iii) Registered Sale Deed for 8 Kanal 10 Marla
iv) Agreement to Sell dated 19.04.2005
v) Agreement to Sell dated 29.06.2005
4
7. On perusal of these documents, it was found that assessee was in some or other way related to various papers found during the course of survey. The Assessing Officer made the above additions on the basis of photo copies of the agreement found from the premises of M/s Chandigarh Overseas Pvt.Ltd. and to its sister concerns.
8. During the course of assessment proceedings the Assessing Officer examined the documents. One of the impounded document is 'Agreement to Sell' dated 29.01.2005 executed between the sellers (i) Smt. Pushpinder Kaur (ii) Shri Gurtej Singh (iii) Preetpal Singh and the buyers; (i) Shri Gulshan Rai (ii) Shri Jagpal Singh (assessee) and (iii) Shri Bimal Suri. Other documents noted above were considered to determine profit earned on sale of lands. All issues are same in cases of assessees, Shri Bimal Suri and Shri Shekhar Chawla.
9. All the above ground Nos. 2, 4 and 5 are connected with the impounded documents found during the course of survey. Ld. Representatives of both of the parties submitted that facts and issues are identical as have been considered by ITAT Chandigarh Bench in the cases of Shri Bimal Suri and Shri Shekhar Chawla (supra) vide order dated 20.09.2016. Copy of the order is placed on record. The facts and findings in the case of Shri Bimal 5 Suri (supra) in paras 3 to 32 of the order read as under:
ITA No. 664/CHD/2011 ( Bimal Suri )"3. The Revenue has f iled the present appeal on t h e f o l l o wi n g g r o u n d s :
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,12,04,166/- on account of investment in purchase of land of 25K 10M at Lohagarh made by the A.O. in the hands of the assessee (being l/3 rd share) on the basis of said agreement on account of unexplained sources of investment in the said property.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,44,50,000/- on account of profit on sale of land of 25K 10M at Lohagarh to M/s Parsav Colonizers & Consultants (P) Ltd. in the hands of the assessee on account of profit on sale of land, the assessee having I/3rd share in such profit.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.19,65,625/- on account of profit on sale of land to M/s Gee City builders (P) Ltd. measuring 8K 10M i.e. l/3rd to total land of 25K 10M)."
4. T h e b r i e f f ac t s o f t h e c a s e a r e t h a t a s u r v e y under section 133A of the Income T ax Act, 1961 (in short 'the Act') wa s conducted by Range-4, Chandigarh at the business premises of Chandigarh Overseas Private Limited and its sister concerns. During the course of survey, certain loose papers, photocopies of a g r e e me n t and incriminating d o c u me n t s we r e found and impounded from the business premises of Chandigarh Overseas Private Limited and from the examination of these d o c u me n t s , i t wa s f o u n d t h a t t h e a s s e s s e e wa s a l s o 6 p a r t y t o v a r i o u s a g r e e me n t s f o u n d d u r i n g t h e c o u r s e of survey. T he Assessing Off icer made the ab ove additions on the basis of photocopies of the a g r e e me n t f o u n d f r o m t h e p r e m i s e s o f C h a n d i g a r h Overseas Private Limited. T h e d e t a i l s o f d o c u me n t s have been me n t i o n e d in the impugned order as below :
i) A g r e e me n t t o s e l l d a t e d 2 9 . 1 . 2 0 0 5 .
ii) B a c k s i d e o f p a g e 2 o f t h e a g r e e me n t t o
sell dated 29.1.2005.
iii) Registered sale deed for 8 kanal 10
marlas.
iv) A g r e e me n t t o s e l l d a t e d 1 9 . 4 . 2 0 0 5 .
v) A g r e e me n t t o s e l l d a t e d 2 9 . 6 . 2 0 0 5 .
5. The ground No.1 raised by the Revenue is general and needs no adjudication.
6. On ground No.2, the Assessing Off icer made addition of Rs.1,12,04,166/-.
7. During the course of a s s e s s me n t proceedings the Assessing Off icer observed th at one o f t h e i m p o u n d e d d o c u me n t i s a n a g r e e me n t t o s e l l d a t e d 2 9 . 1 . 2 0 0 5 e x e c u t e d b e t we e n T H E S E L L E R S
1. Smt.Pushpinder Kaur, W/o Sh. Didar Singh.
2. Shri Gurtej Singh, S/o Shri Didar Singh.
3. Shri Pritipal Singh, S/o Shri Didar Singh, R/o 44, Ext. Guru Teg Bahadur Nagar, Jalandhar.
AND THE BUYERS
1. Shri Gulshan Rai.
2. Shri Jagpal Singh.
73. Sh. Bimal Suri (the assessee).
8. A s p e r t h i s a g r e e me n t , t h e s e l l e r h a d a g r e e d t o sell land 25 kanals 10 marlas situated at Village Lohgarh at the rate of Rs.1,18,00,000/- per acre to the buyers. The assessee is the one of the buyer a n d t o t a l c o n s i d e r a t i o n c o me s t o R s . 3 , 7 6 , 1 2 , 5 0 0 / - . T he Assessing Off icer also noticed f ro m the b ackside o f a g r e e me n t t o s e l l t h a t t h e s e l l e r s h a v e r e c e i v e d an amount of Rs.2,62,50,000/- upto 15.06.2005. The Assessing Off icer f urther, noticed from the registered sale deed that the sellers have sold l/3rd share of 25 kanal 10 marla i.e. 8 kanal 10 marlas to S/Shri Jagpal Singh, Gulshan Rai, Shekhar Chawla and Bimal Suri (Assessee) f or Rs.42.50 lacs only. T h e d e e d wa s r e g i s t e r e d i n t h e n a m e o f b u y e r i n t wo p a r t s , o n e h a l f i n t h e n a me o f S / S h r i G u l s h a n R a i Satija, Jagpal Singh and Bimal Suri and remaining o n e h a l f i n t h e n a m e o f S h r i S h e k h a r C h a wl a o n 17.06.2005. The Assessing Of f icer observed that t h e r e i s a h u g e d i f f e r e n c e i n v a l u e s h o wn i n t h e registered sale deed and a g r e e me n t to sell and made addition of Rs.1,12,04,166/-. The Assessing Off icer reproduced the assessee's explanation in p a r a 4 o f t h e a s s e s s me n t o r d e r b u t d i d n o t a c c e p t the explanation of assessee that the property was purchased by them at thro w away price in vie w of cash receipts of Rs.2,62,50,000/- me n t i o n e d in impounded documen ts and cash receip ts of Rs.2.10 c r o r e s me n t i o n e d o n t h e b a c k s i d e o f p a g e 2 o f t h e a g r e e me n t t o s e l l .
9. During the course of appellate proceedings, the Assessing Off icer produced documen t Nos.18 & 19 of Annexure B2, Page 33 of Annexure Bl, on wh i c h r e l i a n c e wa s p l a c e d b y t h e d e p a r t me n t wh i l e m a k i n g addition of unexplained i n v e s t me n t in land at 8 Village Lohgarh. The copies of d o c u me n t s were supplied to the counsel of the assessee and he clearly denied that these d o c u me n t s are forged d o c u me n t s a n d n o t r e l a t e d t o t h e a s s e s s e e a n d h e a l s o s t r o n g l y a r g u e d t h a t t h e s e d o c u me n t s a r e t h e photocopies and not found f rom the assessee's premises. Further, he also explained the i n c o n s i s t e n c y i n t h e a b o v e d o c u m e n t s a s b e l o w:
10. These d o c u me n t s are not in any wa y related to assessee and these we r e f orged d o c u me n t s and the assessee has not executed d o c u me n t N o s . 1 8 & 1 9 . Moreover, f rom the perusal o f p h o t o c o p i e s o f d o c u me n t s , i t i s c l e a r t h a t t h e a g r e e me n t i s n o t o n s t a m p p a p e r a n d s i g n a t u r e o f all parties to a g r e e me n t are missing. We also submit that part of contents mentioned in page 33 of A n n e x u r e B l h a s b e e n c o p i e d o n d o c u me n t N o . 1 9 o f Annexure B2 and, theref ore, it is clear that someone has forged the contents and prepared document Nos.18 & 19. F u r t h e r , i t wa s n o t f o u n d f r o m t h e premises of the assessee. The Assessing Officer h a s n o t e x a m i n e d a n y p a r t y t o t h e a g r e e me n t a n d n o enquiry has been conducted. Further the assessee and other buyers have purchased only 8 Kanal & 3 M a r l a s o u t o f t o t a l l a n d me a s u r i n g 2 5 K a n a l s & 1 0 M a r l a s a n d a s s e s s e e i s n o t a wa r e a b o u t t h e b a l a n c e land sold by Mrs. Pushpinder & others and consideration received by sellers. Further the Assessing Off icer has not supplied the copies of returns of sellers. Further the assessee during the course of a s s e s s me n t proceedings has already explained that the assessee and other 2 persons, n a me l y S / S h r i J a g p a l S i n g h a n d B i m a l S u r i h a d agreed to purchase 25 kanals 11 marlas Land f or consideration of Rs.1.20 crore and paid biana of Rs.40 lacs and the assessee and other 2 persons 9 c o u l d n o t a r r a n g e mo n e y a n d a g r e e d t o p u r c h a s e only 1/3 share of land f or consideration of Rs.41.25 lakhs in order to save his original biana. The Assessing Off icer is only relying on photoco pies of forged d o c u me n t s , wh i c h we r e found from the premises of third party.
11. That the assessee had never executed any a g r e e me n t t o s e l l d a t e d 2 9 . 1 . 2 0 0 5 f o r p u r c h a s e o f 25 kanals 18 marlas @ Rs.1.18 crores per acre f or the total consideration of Rs.3,76,00,000/-. H o we v e r , t h e a s s e s s e e h a s e n t e r e d i n t o a g r e e m e n t to sell f or the purchase of 25 kanals 18 marlas f or t h e t o t a l c o n s i d e r a t i o n o f R s . 1 . 2 0 c r o r e s wi t h M r s . Pushpinder Kaur, S/Shri Gurtej Singh & Pritpal Singh. Under the said agreement to sell, i.e. f or total consideration of Rs.1.20 crores, the assessee along wi t h o t h e r p e r s o n s , n a m e l y , S / S h r i J a g p a l Singh and Gulshan Rai Satija. The assessee and o t h e r t wo p e r s o n s h a s p a i d t o t a l s u m o f R s . 4 0 l a c s in equal proportion as on 29.01.2005. The Assessing Off icer has mad e add ition of Rs.1,12,04,166/- on t h e b a s i s o f f o r g e d p h o t o c o p y o f a g r e e me n t o f t o t a l consideration of Rs.3,76,00,000/-, wh i c h the assessee and two other persons has never executed. I t wa s f u r t h e r s u b m i t t e d t h a t t h e p h o t o c o p i e s o f t h e d o c u me n t s we r e not found at the premises of a s s e s s e e a n d i t wa s f o u n d d u r i n g t h e c o u r s e o f survey conducted at the premises of third party, i.e., not party to the a g r e e me n t . Further, the Assessing Off icer collected the evidence at the back o f a s s e s s e e a n d n o o p p o r t u n i t y wa s g i v e n t o t h e a s s e s s e e t o c r o s s e x a m i n e t h e p e r s o n s wi t h w h o m the alleged a g r e e me n t wa s entered into. The assessee had already denied the contents of a g r e e me n t o n t h e b a s i s o f wh i c h t h e a d d i t i o n w a s made. The Assessing Off icer had not made any 10 enquiry f ro m an y of the parties to verif y the tr uth. T h e a s s e s s e e e a l o n g wi t h o t h e r t wo p e r s o n s t o t h e a g r e e me n t h a s p a i d i n p r e v i o u s f i n a n c i a l y e a r 2 0 0 4 - 05 Rs.40 lacs in cash against the total consideration of Rs.1.20 crores and due to f inancial constraint, it w a s b e y o n d t h e c o n t r o l o f a s s e s s e e a n d o t h e r t wo parties to f ulf ill the balance consideration of Rs.80 l a c s a n d t h e y o f f e r e d M r . S h e k h a r C h a wl a t o t a k e 50% share of the deal. The assessee and other p e r s o n s t o t h e a g r e e me n t c o u l d n o t p a y t h e b a l a n c e s u m a s p e r t e r m s o f a g r e e me n t a n d t h e s e l l e r a g r e e d t o s e l l l / 3 r d o f l a n d i n t h e n a me o f a s s e s s e e a s we l l as other persons to the agreement. So, the land c o n s i s t i n g o f 8 k a n a l s 1 0 m a r l a s wa s r e g i s t e r e d i n t h e n a me o f S / S h r i Gulshan Rai, Jagpal Singh & Bimal Suri (having 50% share) and Shri Shekhar C h a wl a (having 50% share) for the total sales consideration of Rs.42,50,000/-. The registered sale deed for the same wa s executed as on 17.06.2005. The copy of the registration deed is e n c l o s e d h e r e wi t h f o r y o u r k i n d r e f e r e n c e . T h e r e s t o f a r e a o f l a n d i . e . 2 / 3 r d o f t h e t o t a l l a n d wa s n o t s o l d t o a s s e s s e e a n d t h e a s s e s s e e i s n o t a wa r e o f t h e f a c t s t o wh o m a n d a t wh a t r a t e t h e s a i d r e s t o f l a n d wa s s o l d . T h e A s s e s s i n g O f f i c e r me n t i o n e d that the sellers had f iled their returns of Income w i t h D C I T J a l a n d h a r s h o wi n g t h e s a l e c o n s i d e r a t i o n received by them at Rs.3.76 crore. In this regard, t h i s f a c t wa s n e v e r c o n f r o n t e d t o a s s e s s e e d u r i n g t h e c o u r s e o f a s s e s s me n t p r o c e e d i n g s a n d mo r e o v e r the assessee had purchased very small share in t o t a l l a n d a n d w a s n o t a wa r e a b o u t t h e r e s t o f l a n d s o l d b y s e l l e r s a n d n o wh e r e i t i s me n t i o n e d t h a t t h e assessee has paid mo r e a mo u n t than s h o wn in registered sale deed. Further, the counsel argued that the presumption is only wi t h regard to the p e r s o n f r o m wh o s e p o s s e s s i o n a n d c o n t r o l t h e b o o k s 11 o f a c c o u n t s a n d d o c u me n t s a r e f o u n d . M o r e o v e r , t h i s presump tion is rebuttable presump tion. The p r e s u m p t i o n wi t h r e s p e c t o f p h o t o c o p y o f d o c u m e n t s found f rom the third parties premises could not be made against assessee.
12. The assessee along wi t h t wo other p e r s o n s h a d p u r c h a s e d l a n d me a s u r i n g 4 k a n a l s 5 marlas f or consideration of Rs.21.25 lakhs through registered sale deed. The counsel also placed r e l i a n c e o n t h e j u d g me n t o f K e r a l a H i g h C o u r t i n t h e case of C IT V s . S m t . K . C . A g n e s 1 2 8 T a x m a n n 8 4 8 (Kerala). The amount stated in the sale deed cannot be ignored on the basis of agreement of sale unless i t i s p r o v e d t h a t t h e a g r e e me n t o f s a l e wa s a c t e d u p o n a n d t h e a m o u n t s t a t e d i n t h e a g r e e me n t w a s a c t u a l l y p a i d . O n t h e b a s i s o f a g r e e me n t t o s e l l , i t c a n n o t b e c o n c l u d e d t h a t t h e p r i c e me n t i o n e d i n t h e sale deed is not correct.
13. The counsel of assessee also placed reliance on j u d g e me n t g i v e n b y M a d r a s H i g h C o u r t i n c a s e o f C IT V s P . V . K a l y a n a S u n d a r a m , 2 8 2 I T R 259 concluding that in absence of any independent enquiry, Assessing Off icer wa s not justif ied in m a k i n g a d d i t i o n t o wa r d s p u r c h a s e c o n s i d e r a t i o n o f l a n d me r e l y o n t h e b a s i s o f s t a t e m e n t o f s e l l e r , wh o gave conf licting statements. He also stated that that t h e H o n ' b l e S u p r e me C o u r t af f i r m e d t h e d e c i s i o n o f Madras High Court quoted supra.
14. The counsel also placed reliance on f o l l o wi n g j u d g e m e n t s : -
- Ram Saroop Saini, HUF vs. Assistant C o m m i s s i o n e r o f i n c o me T a x r e p o r t e d a t 12 15 SOT 470 (Del). In this case the Hon'ble Tribunal concluded as under:
- M o o s a S M a d h a & A z a m S M a d h a V s C IT
r e p o r t e d i n 8 9 IT R 6 5 ( s c ) .
- PRARTHANA CONSTRUCT ION P LTD Vs
D C IT 7 0 T T J 1 2 2 .
- CIT Vs RAM KUMAR 163 TAXMAN 253
(P&H)
- 19 TTJ 546, 77 TTJ (MUMBAI)(TM) (1) ,
59TTJ 574.
15. T h e l e a r n e d C IT ( A p p e a l s ) c o n s i d e r i n g t h e material on record deleted the entire addition. His f indings in p ar as 20 to 23 of the impugned order are reproduced as under :
(a) The incriminating documents were not found from the assessee's premises as these documents were found from Chandigarh overseas Private Limited & the assessing officer has not proved any connection with the appellant & therefore onus was on the department to prove that these document belong to appellant.
(b) The documents found are only photocopies & no original documents were found & as Supreme Court decision in case of Moosa S Madha & Azam S Madha Vs CIT 89 ITR 65(Sc) the photocopies have little evidentiary value.
(c) The survey team & assessing officer has not made any enquiry from the sellers , buyers Pararsav Colonisers & Consultant Limited & Gee City Builders Pvt Limited with respect to purchase of any land from the appellant or from the original sellers directly and consideration paid by appellant & other buyers & simply recorded the 13 statement of appellant during course of assessment proceedings .
(d) The assessing officer relied on the return of income filed by the buyers & there were no details with respect to sale consideration received from original buyers & new buyers & during the course of appellate proceedings no such returns were produced.
(e) The appellant & other buyers had not purchased the entire land as shown in agreement to sell dated 29-01-
2005 & even in registered sale deed 1/3 share of total land was purchased by original buyers & other party & therefore it is clear that they had not acted upon the agreement to sell dated 29-01-2005.
(e) The agreement relied upon by AO i.e. Document no 18 & 19 of Annexure B 2 is not on stamp paper & signature of all parties to agreement are missing & moreover document no 33 of Annexure B l(agreement)is on the stamp paper for sale of same land & no consideration was mentioned on this document.
(f) The part of contents mentioned in page 33 of Annexure Bl has been copied on document no 19 of Annexure B2 & therefore probability of forging the contents to prepare document No. 18 & 19 cannot be entirely ruled out.
21 Further the ITAT, I Delhi Bench judgment in case of Ram Saroop Saini, HUF vs. Assistant Commissioner of income Tax reported at 15 SOT 470 (Del) has dealt the case relating to agreement to sell, statement & understatement of 14 sale consideration case. In this case the Hon'ble Tribunal concluded as under:
In the absence of any material, understatement of sale consideration could not be implied in respect of certain transactions of sale of land merely on the basis of unverified statement of a property agent and copies of agreements to sell relating to some other transactions; understatement of sale consideration cannot be said to have been established even in respect of those transactions in relation to which AO was in possession of copies of agreement to sell which disclosed higher sale consideration as the purchasers have not signed on the first page of the documents, requisite Court fee stamp is not affixed, AO did not possess the originals and the assessee was not given any opportunity to cross-examine the property agent who had allegedly made an adverse statement and, therefore, no addition can be sustained. "
22 In view of above discussion & Judgement given by Kerala High court reported at 128 Taxman 848. Amount stated in the sale deed can not be ignored on the basis of agreement of sale unless it is proved that the agreement of sale was acted upon and the amount stated in the agreement was actually paid. On the basis of agreement to sell it can not be concluded that the price mentioned in the sale deed is not correct & also placed reliance on judgement given by Madras High Court in case of CIT Vs P.V. Kalyana Sundaram 282 ITR 259 (affirmed by Supreme Court) concluded that in absence of any independent enquiry, AO was not justified in making addition towards purchase consideration of land.
23. The addition so made is therefore deleted, allowing assessee's appeal on this ground."
1516. On ground No.3, the Assessing Off icer made addition of Rs.1,44,50,000/-. The Assessing O f f i c e r a l s o n o t i c e d t h a t t h e d o c u me n t N o s . 1 5 a n d 1 6 o f A n n e x u r e B - 2 i s a n a g r e e me n t t o s e l l d a t e d 19.04.2005 of the same land i.e. 25 kanal 10 marlas a n d a s p e r t h e s e d o c u me n t s , t h e l a n d h a s b e e n further agreed to be sold to M/s Parsav Colonisers and Consultants Pvt. Ltd. at a rate of 2,54,00,000/- per acre and also noticed that it is mentioned in the a g r e e me n t t h a t a n a m o u n t o f R s . 7 5 . 0 0 l a c s h a d b e e n paid as advance mo n e y by Parsav Colonisers, Director Shri Shekher C h a wl a , wh i c h includes Rs.3.00 lacs by cheque No.165251 of Andhra Bank a n d R s . 7 2 . 0 0 l a c s b y c a s h . T h i s i s a l s o me n t i o n e d that an amount of Rs.25 lacs wi l l be paid by 15.4.2005 and the date of registry h ad been f ixed on 15.6.2005.
17. D u r i n g t h e c o u r s e o f a s s e s s me n t p r o c e e d i n g s , i n f o r m a t i o n wa s c a l l e d u n d e r s e c t i o n 1 3 3 ( 6 ) o f t h e Act from Andhra Bank, Sector 34-A, Chandigarh branch. It wa s c o n f i r me d from the inf ormation received that the Ch. No.165251 had been issued in f avour of Smt.Pushpinder Kaur (seller) by debit to the account of M/s Parsav Colonisers. It established b e y o n d d o u b t t h a t t h e a g r e e me n t t o s e l l i n q u e s t i o n was correct and the entire amount of consideration at Rs.8,09,62,500/- proved.
18. Thus the sellers i.e. S/Shri Gulshan Rai Satija, Jagpal Singh and Bimal Suri have earned p r o f i t o n s a l e o f t h i s l a n d a s b e l o w: -
Sale consideration as per Agreement to sell @ Rs. 8,09,62,500/- 2,54,000 per acre 8k 10 M To M/s Parsav Colonisers through its Managing Director Sh. Shekhar Chawla Less: Cost of acquisition as mentioned in para A(-) 3,76,12,500/-16
Profit 4,33,50,000/- 1/3rd share of the assessee 1,44,50,000/-
19. T he Assessing Off icer mainly relied upon t h e i m p o u n d e d D o c u me n t N o s . 1 5 & 1 6 o f A n n e x u r e B2 found from the premises of third party. The counsel during the course of appellate proceedings submitted that the assessee had not entered into any a g r e e me n t dated 19.4.2005 and that these d o c u me n t s we r e f o r g e d & b o g u s a n d we r e n o t f o u n d from the premises of assessee. Further the d e p a r t me n t did not make any enquiry from M/S Parsav Colonisers & Consultant Limited to know the truth.
20. During the course of appellate proceedings, the counsel of assessee submitted that M/s Parshav Colonisers and Consultants Pvt. Ltd.
had not purchased any land at Lohgarh f rom the assessee & Other t wo persons till date and theref ore, the question of prof it on sale of land at Lohgarh to M/s Parshav Colonisers and Consultants P v t . L t d . d o e s n o t a r i s e . T h e d e p a r t me n t r e l i e d u p o n t h e a g r e e me n t a n d f r o m t h e p a r a - C o f A s s e s s i n g Off icer's order, it is clear th at the de par tmen t has calculated the prof it only on the basis of agreement w i t h o u t a s c e r t a i n i n g t h e f a c t t h a t wh e t h e r t h e l a n d in question wa s actually sold to M/s Parshav Colonisers and Consultants Pvt. Ltd or not. The assessee hereby undertook that no land at Lohgarh was ever sold to M/s Parshav Colonisers and Consultants Pvt. Ltd. T h e r e i s n o e v i d e n c e wi t h t h e d e p a r t me n t t h a t t h e l a n d wa s a c t u a l l y p u r c h a s e d b y M/s Parshav Colonisers and Consultants Pvt. Ltd. from the assessee. Further, it was submitted that 17 the assessee had not sold any land at Lohgarh to Parshav Colonizers and Consultants Pvt. Ltd. till date and theref ore, the question of prof it on sale of l a n d d o e s n o t a r i s e . W i t h o u t p r e j u d i c e t o af o r e s a i d submissions, the assessee submitted that the prof it on sale of land can only be determined af t e r co mpletion of sale trans ac tion and not only on the basis of advance. Further the Assessing Off icer relied upon the payment received f rom the Parshav colonizers & Consultants Private Limited and there i s n o r e l a t i o n b e t we e n p a y m e n t r e c e i v e d a n d t e r ms & c o n d i t i o n o f a g r e e me n t r e l i e d b y t h e A s s e s s i n g Off icer. The Assessing Off icer relied upon p h o t o c o p y o f f o r g e d & b o g u s d o c u me n t s wh i c h d o not relate to assessee and not executed by a s s e s s e e a n d wh i c h we r e c o l l e c t e d a t t h e b a c k o f assesse from the premises of third parties not related to assessee. Further the Assessing Off icer had not made any inquiry from original sellers, buyers & comp anies to kno w th e truth. Further the Assessing Off icer has not made any enquiry f rom parshav Coloniser consultants Private Limited to kno w the tru th and purchase consideration paid if any to assessee and other alleged o wn e r s . The assessee has not sold any land to Parshav Colonisers Consultants Private Limited and, theref ore, question of prof it does not arise.
21. The learned CIT (Appeals), h o we v e r , deleted the entire addition. His f indings in par a 11 of the order are reproduced as under:
"11 I have gone through the assessment order & submission made by appellant & it is clear that the AO has calculated the profit on the basis of photocopies of agreement to sell without ascertaining the fact whether the deal has matured or not. In the assessment order in para 5 it is mentioned 18 advance has been given & date of registry has been fixed on 15- 06-2005 & it is shocking that no effort was made to know the completion of transaction & simply on the fact that cheque of Rs 3 issued in favour of Pushpinder Kaur has been issued by debiting the account of Parsav Colonisers addition has been made. The assessing officer has not brought any material on record to prove sale of land to Parsav Colonisers & Consultant Private Limited & in view of my observation in respect of photocopies of document , impounded from third party premises, absence of enquiry in preceding paras there is no justification to sustain the addition on account of sale of land to Parsav Colonisers & Consultant Private Limited. The addition so made is deleted, allowing assessee's plea on this ground."
22. On ground No.4, the Assessing Off icer made addition of Rs.19,65,625/-. The Assessing O f f i c e r a l s o o b s e r v e d f r o m t h e i m p o u n d e d d o c u me n t s 23-30 of Annexure B-2 that on the back side of d o c u me n t N o . 3 0 a n a mo u n t o f R s . 1 , 3 0 , 0 1 , 1 0 0 / - h a s b e e n r e c e i v e d a s a d v a n c e mo n e y b y S / S h r i G u l s h a n Rai, Jagpal Singh, Bimal Suri (assessee) & Shekhar C h a wl a .
23. As per details av ail able on back side of D o c u me n t No.30 of Annexure B:2, an amount of Rs.22,00,000/- by cheque has been received by Shri S h e k h a r C h a wl a , a n a m o u n t o f R s . 2 2 , 0 0 , 0 0 0 / - b y Cheque has been received by the seller, i.e. Party No.2 and another amount of Rs.85,00,000/- by cheques has been received by the Party No.1 and a n o t h e r a mo u n t o f R s . 1 , 0 1 , 0 0 0 / - h a s b e e n r e c e i v e d in cash by Party No.1. I t i s a l s o me n t i o n e d t h a t o r i g i n a l o wn e r i . e . S m t . P u s h p i n d e r K a u r a n d o t h e r wo u l d g e t l a n d r e g i s t e r e d i n t h e n a me o f p a r t y N o . 3 . A s p e r P o i n t N o . 2 8 o f t h i s a g r e e me n t , t o t a l s a l e consideration of the land has been f ixed @ of 19 Rs.3,65,00,000/- per acre. The total value of the L a n d t h u s c o me s t o R s . 1 1 , 5 8 , 8 7 , 5 0 0 / - . As per point 27 of this Agreement, Party No.1 and 2 are bound to g e t a d d i t i o n a l l a n d me a s u r i n g 2 5 0 0 s q u a r e y a r d s arranged and transf erred on the same rate i.e. Rs.3.65 lac per acre and get it registered in the n a me o f p a r t y N o . 3 wi t h i n s i x m o n t h s i r r e s p e c t i v e of t h e r a t e a t wh i c h t h e l a n d i s a r r a n g e d f r o m t h e o r i g i n a l o wn e r . This additional land is adjoining to the main land purchased by party No.3. Af ter that a d d i t i o n a l p a y m e n t o f R s . 1 . 5 9 l a c s wi l l b e m a d e b y p a r t y N o . 3 a s p a r t y p a y me n t wi t h i n s e v e n d a y s f r o m the date of execution of sale deed pertaining to l and m e a s u r i n g 2 5 0 0 s q u a r e y a r d s . T h e a g r e e me n t d a t e d 29.6.2005 wi t h Gee City Consultant Pvt. Ld. e x t r e me l y i m p o r t a n t a n d c a n b e t a k e n a s t r u e a n d o n e t h a t wa s a c t e d u p o n . I t s a u t h e n t i c i t y i s p r o v e d b y t h e f o l l o wi n g f a c t s : -
• T h i s a g r e e me n t c o n t a i n s r e f e r e n c e t o t h e original agreement to sell dated 29.01.2005 and its terms and conditions that the buyers S/Shri Gulshan Rai, Jagpal Singh & Bimal Suri can have the l a n d r e g i s t e r e d i n t h e i r o wn n a m e o r i n any other n a me . This indeed wa s the intention of the buyers, the assessee being one of them, to f urther sell the land a t p r o f i t wi t h o u t g e t t i n g i t r e g i s t e r e d i n i t s o wn n a m e . T h i s w a s a c o m m o n o c c u r r e n c e around the period wh e n prices of real e s t a t e we r e e s c a l a t i n g b y t h e d a y i n t h e a r e a s a r o u n d Z i r a k p u r a n d t h e r e wa s a f r a n t i c g r o wt h o f r e s i d e n t i a l C o m me r c i a l Estates in the area by Private Builders.20
• It refers to the agreement dated
2 0 . 0 4 . 2 0 0 5 wi t h P a r s a v C o l o n i s e r s .
• It has ref erence to the registered sale
deed dated 17.06.2005 of l/3rd share of 25 kanals 10 marlas (8 kanal 10 marlas).
In this connection, it is pertinent to mention that out of 25K 10 Marlas of land, this sale deed wa s registered on 1 7 . 0 6 . 2 0 0 5 i n t h e n a me o f S / S h r i B i m a l Suri, Jagpal Singh & Gulshan Rai, ½ share and the remaining ½ share in the n a me o f S h r i S h e k h a r C h a wl a . I n o t h e r wo r d s , t h e a s s e s s e e S h r i B i m a l S u r i wa s having l/6th share in this land measuring 8 k a n a l 1 0 m a r l a s , wh i c h wa s a s p e r t h e a g r e e me n t d a t e d 2 9 . 0 6 . 2 0 0 5 , wa s s o l d t o Gee City Consultants P. Ltd. The cost p r i c e o f t h i s l a n d wa s @ R s . 2 , 5 4 , 0 0 , 0 0 0 / -
p e r a c r e wh i c h c o me s t o R s . 2 , 6 9 , 0 0 , 0 0 0 / -
adopted as per the a g r e e me n t dated 19.04.2005. The sale price of this land c o me s to Rs.3,87,81,250/- calculated @ Rs.3.65 crores per acre as per the a g r e e me n t d a t e d 2 9 . 0 6 . 2 0 0 5 .
24. In vie w of this, the prof it on sale of t h i s l a n d me a s u r i n g 8 k a n a l 1 0 m a r l a s i s calculated as under:-
Sale consideration @ Rs. 3.65 Crores per 3,87,81,250/- acre Cost price @ Rs. 2.54 crores per acre 2,69,87,500/- Short term capital gain 1,17,93,750/-
Assessee' s share (l/6th) 19,65,625/-
25. The learned counsel f or the assessee submitted th at the Assessing Off icer has made add ition on the 21 b a s i s o f T r i p a r t i t e a g r e e me n t ( a s me n t i o n e d i n o r d e r ) among Gee City Builders Pvt. Ltd., Parshav Colonizers and Consultants Pvt. Ltd. and Shekhar C h a wl a a n d G u l s h a n R a i & O t h e r s , wh i c h wa s n e v e r executed by the assessee. Further, no such d o c u me n t s we r e p r o c u r e d f r o m t h e p r e m i s e s o f t h e assessee. The Assessing Off icer has not made any enquiry from Gee City Builders Pvt. Ltd, and b y r e l y i n g o n t h e p h o t o c o p y o f d o c u me n t s wh i c h w a s n o t e x e c u t e d b y a s s e s s e e a n d m a d e a d d i t i o n wi t h o u t any enquiry f rom Gee City Builders Pvt. Ltd. Further in photocopy, all parties to a g r e e me n t have not signed and, theref ore, it can not be relied upon. The counsel also placed reliance upon the Jurisdictional H i g h C o u r t J u d g e me n t i n c a s e o f C IT V s R A M K U M A R 163 TAXMAN 253. I n t h i s c a s e , i t wa s h e l d t h a t A s s e s s i n g O f f i c e r d i d n o t r e c o v e r t h e d o c u me n t s f r o m the possession of assessee nor the assessee c o n f r o n t e d wi t h t h e s e i z e d m a t e r i a l .
26. The learned CIT (Appeals), h o we v e r , deleted the entire addition. His f indings in paras 28 and 29 of his order are reproduced as under :
"28. In vie w of above discussion & J u d g e me n t given by Kerala High court reported at 128 T axman 848. Amount stated in the sale deed c a n n o t b e i g n o r e d o n t h e b a s i s o f a g r e e me n t o f s a l e u n l e s s i t i s p r o v e d t h a t t h e a g r e e me n t o f s a l e wa s a c t e d u p o n a n d t h e a m o u n t s t a t e d i n t h e a g r e e me n t w a s a c t u a l l y p a i d . O n t h e b a s i s o f a g r e e me n t t o s e l l i t c a n n o t b e c o n c l u d e d that the price mentioned in the sale deed is not c o r r e c t & a l s o p l a c e d r e l i a n c e o n j u d g e me n t g i v e n b y M a d r a s H i g h C o u r t i n c a s e o f C IT V s P.V. Kalyana Sundaram, 2 8 2 I T R 2 5 9 ( af f i r me d B y S u p r e me C o u r t ) concluded that in absence 22 of any independent enquiry, AO wa s not jus tif ied in mak ing addition on account of prof it on sale of land to M/S Gee City Builders Private Limited.
29. In vie w of the above discussion, the plea on this ground is accepted, deleting the addition so made."
27. We have heard the learned representatives of both the parties. The learned D.R. ref erred to P a p e r B o o k f i l e d b y t h e D e p a r t m e n t i n wh i c h c o p i e s of t h e a g r e e me n t s t o s e l l i n q u e s t i o n have been f iled. T he learned D.R. sub mitte d th at even if these a r e c o p i e s o f t h e o r i g i n a l a g r e e me n t t o s e l l , b u t copies of the sale a g r e e me n t being secondary evidence are admissible under the Evidence Act. The learned D.R. ref erred to sections 63, 64 and 65 of the Evidence Act. The learned D.R. submitted t h a t o n t h e p h o t o c o p y o f t h e a g r e e me n t t o s e l l , t h e r e are signature of the assessee in wh i c h it was provided that sale deed can be executed in the name of any person. The learned D.R. submitted that the CIT (Appeals) should not have deleted all the above additions.
28. On the other hand, the learned counsel f or the assessee reiterated the submissions made bef ore the authorities below and submitted that no a g r e e me n t t o s e l l o r a n y i n c r i m i n a t i n g d o c u me n t w a s found f rom the possession of the assessee. These we r e found f rom the third party, i.e. M/s Chandigarh Overseas Private Limited. No original d o c u me n t wa s f o u n d o r r e c o v e r e d d u r i n g t h e c o u r s e of survey or later on. Theref ore, photocopy of the original is not ad missible as evidence and relied upon unreported decision of Delhi High Court in the 23 case of C IT V s . M o o r t i D e v i i n I T A N o . 9 7 9 / 2 0 1 0 d a t e d 2 0 . 9 . 2 0 1 0 , i n wh i c h d e p a r t me n t a l a p p e a l w a s dismissed observing that the original d o c u me n t s we r e n e v e r c o n f r o n t e d t o t h e a s s e s s e e a n d n o t h i n g h a s b e e n b r o u g h t o n r e c o r d a s t o wh a t h a p p e n e d t o the original documents. There is no material even to indicate that photocopies are the copies of the o r i g i n a l d o c u me n t s . The learned counsel f or the assessee also submitted that no enquiry wa s conducted f rom any par ty, i.e. buyer or seller to the a g r e e me n t t o s e l l . In the case of one of the buyers, M/s Gee City Builders Private Limited, the Assessing Off icer passed order under section 153A r . w. s . 1 4 3 ( 3 ) ) o f t h e A c t f o r a s s e s s me n t y e a r 2 0 0 6 - 07 but no addition have been made in this case. T h e c o p y o f t h e a s s e s s me n t o r d e r d a t e d 3 1 . 1 2 . 2 0 1 0 is placed on record. The learned counsel f or the assessee submitted that all the parties have not signed any a g r e e me n t , theref ore, additions have b e e n r i g h t l y d e l e t e d b y t h e l e a r n e d C IT ( A p p e a l s ) .
29. We have considered the rival submissions. It i s n o t i n d i s p u t e t h a t s u r v e y wa s c o n d u c t e d a t t h e premises of Chandigarh Overseas Private Limited and its s is ter concerns and during the course of survey, certain loose papers including copies of a g r e e me n t to sell in question we r e impounded. Thus, no agreement to sell or any incriminating d o c u me n t s we r e f o u n d f r o m t h e p o s s e s s i o n o f t h e assessee. There is no recovery of any incriminating d o c u me n t f r o m t h e p o we r and possession of the assessee. T he Assessing Off icer has not brought any material on record to prove any connection of the assessee wi t h t h e s e d o c u m e n t s / a g r e e me n t to sell. T h e A s s e s s i n g O f f i c e r wa n t e d t o r e l y u p o n t h e p h o t o c o p i e s o f t h e a g r e e me n t t o s e l l i n q u e s t i o n . T h e r e f o r e , t h e o n u s wo u l d b e u p o n t h e A s s e s s i n g 24 O f f i c e r t o p r o v e t h a t t h e d o c u me n t s f o u n d d u r i n g t h e course of survey f rom third party, belonged to the assessee. The original of the photocopies we r e never recovered in survey proceedings or in post survey proceedings. The documents f ound are only p h o t o c o p i e s a n d n o o r i g i n a l d o c u me n t s we r e f o u n d . T h e r e f o r e , p h o t o c o p i e s o f t h e d o c u me n t s wo u l d h a v e little evidentiary value. It is also admitted f act that t h e s u r v e y p a r t y a s we l l a s A s s e s s i n g O f f i c e r h a s not made any enquiry f rom any seller or buyer, M/s Parsav Colonisers and Consultants Private Limited and M/s Gee City Builders Private Limited with respect to sale/purchase of any land from the assessee or f rom any original sellers directly or indirectly. No material have been brought on record i f t h e a s s e s s e e wa s c o n n e c t e d wi t h a n y d e a l a s a l l e g e d i n t h e p h o t o c o p i e s o f t h e a g r e e me n t t o s e l l . No details of any sale consideration or actual amount received or paid by the assessee have been brought on record. No evidence have been brought o n r e c o r d i f a g r e e me n t s t o s e l l i n q u e s t i o n we r e acted upon by the parties. T h e a g r e e me n t t o s e l l dated 29.1.2005 is not on any stamp paper. The Hon'ble Delhi High Court in the case of C IT V s . Murti Devi (supra) wh i l e d i s m i s s i n g d e p a r t m e n t a l appeal ref erred to the f indings of the Tribunal in wh i c h it wa s held that the photocopies of the d o c u me n t s h a v e v e r y l i t t l e e v i d e n t i a r y v a l u e a n d i n t h e a b s e n c e o f o r i g i n a l d o c u me n t s , p h o t o c o p i e s o f t h e d o c u me n t s a r e n o t a d m i s s i b l e a n d c a n n o t b e t h e basis f or making addition. It is, theref ore, a fac t t h a t n o o r i g i n a l a g r e e me n t s t o s e l l we r e f o u n d f r o m any person and original documents we r e never conf ronted to the assessee. Theref ore, there is no question of preparing copies from the original a g r e e me n t t o s e l l . T heref ore, photocopies of the a g r e e me n t t o s e l l c a n n o t b e c o m p a r e d wi t h o r i g i n a l 25 d o c u me n t s . Reliance of the learned D.R. thus on sections 63, 64 and 65 of the Evidence Act is clearly misplaced. T h e r e wa s t h u s n o b a s i s t o m a k e a n y addition against the assessee on account of i n v e s t me n t or earning any prof its out of any sale transaction alleged to have been recorded in the a g r e e me n t to sell. Since the d o c u me n t s were impounded f rom th ird par ty and no enquiry have been made f rom them or f rom any party related to the a g r e e me n t to sell, theref ore, there wa s no jus tif ication to make any addition against the a s s e s s e e o n t h e b a s i s o f s u c h a g r e e me n t t o s e l l . Even in the case of M/s Gee City Builders Private Limited, the Assessing Off icer passed regular a s s e s s me n t o r d e r u n d e r s e c t i o n 1 5 3 A r . w. s . 1 4 3 ( 3 ) ) of the Act but no addition have been made in this case. The learned C IT (Appeals) on proper appreciation of f acts and material on record correctly deleted the additions.
30. Considering the above discussion and t o t a l i t y o f f ac t s a n d c i r c u ms t a n c e s , we d o n o t f i n d any inf irmity in the order of the learned CIT (Appeals) in deleting all the above three additions.
31. T h e d e p a r t me n t a l a p p e a l h a s n o m e r i t , t h e s a me i s a c c o r d i n g l y , d i s m i s s e d o n a l l t h e g r o u n d s .
32. T h e d e p a r t me n t a l a p p e a l i s d i s m i s s e d . "
10. Ld. Representatives of both the parties, therefore, submitted that these grounds are covered in favour of the assessee by order of ITAT Chandigarh Bench in the case of Shri Bimal Suri (supra). We find that issue and facts are identical in the case of the assessee as have 26 been considered in the case of Shri Bimal Suri (supra) in which ld. CIT(A) deleted all these additions and Tribunal dismissed departmental appeal on same facts.
Following the order in the case of Shri Bimal Suri (supra), we set aside the orders of authorities below and delete all the additions. Ground Nos. 2, 4 and 5 of appeal of the assessee are allowed.
11. On ground No. 3, assessee challenged the addition of Rs. 1,07,084/- on account of investment in registration of purchase deed. During the assessment proceedings, the Assessing Officer noted that 1/3rd share of the land was got registered on 17.06.2005 at Rs. 42,50,000/- by the three original buyers ( ½ share) and Shri Shekhar Chawla, Director, Parshav Colonisers (½ share). In addition to sale consideration, Rs.
3,82,500/- and Rs. 10,000/- were paid towards stamp duty and registration fees respectively by the buyers.
The Assessing Officer computed assessee's 1/6th share in the investment (1/3rd of ½ ) as under :
i) Addl. Investment in land Rs. 2,50,000/-
(Rs. 42,50,000/- - Rs.40 lacs)
ii) Stamp Duty Rs.3,82,500/-
iii) Registration Fee Rs. 10,000/-
--------------------
Rs. 6,42,500/-
iv) 1/6 th share of assessee Rs. 1,07,084/-
12. It was noted that since the assessee was unable to show any corresponding withdrawal of the amount either out of his bank accounts or in cash book, Assessing 27 Officer made the addition of Rs. 1,07,084/- on account of unaccounted investment for registration of land.
13. During the appellate proceedings, assessee submitted that the Assessing Officer has ignored the fact that sum of Rs. 42,50,000/- has been paid through account payee cheques.Only stamp duty and registration fees have been paid in cash, therefore, whole addition is unjustified. Further, in the remand proceedings, it was submitted before Assessing Officer that cost of the land including registration expenses have been reflected in the books of account, therefore, no undisclosed investments have been shown. The ld. CIT(Appeals), however, did not accept contention of the assessee and dismissed this ground of appeal of the assessee.
14. After considering rival submissions, we are of the view matter requires re-consideration at the level of the Assessing Officer. The explanation of the assessee that Rs. 42,50,000/- have been paid through banking channel and other expenses are reflected in the books of account, have not been adjudicated by the ld.
CIT(Appeals) through any speaking order. The ld.
CIT(Appeals), has not given any finding of fact on the same. The ld. counsel for the assessee also submitted that assessee has shown investment on these items of his share i.e. 1/6th, therefore, addition is wholly unjustified. However, these contentions of the assessee have not been adjudicated by the authorities below. We, 28 therefore, set aside the orders of authorities below and restore this issue to the file of Assessing Officer with direction to re-decide this issue by giving reasonable sufficient opportunity of being heard to the assessee.
The Assessing Officer shall pass speaking order on the basis of material produced on record by the assessee.
This ground of appeal of the assessee is allowed for statistical purposes.
15. On ground No. 6, assessee challenged the addition of Rs. 24,83,333/- on account of unexplained bank credits. The revenue on ground No. 2 challenged the order of ld. CIT(Appeals) in deleting the addition.
During assessment proceedings, Assessing Officer noted that assessee Shri Jagpal Singh, Shri Gulshan Rai Satija and Shri Bimal Suri have joint bank account with Andhra Bank Sector 34, Chandigarh. The information about the account was called under section 133(6) of the Act and assessee was asked to explain the source of the cash deposited on various dates in the bank account, details of which are noted in the impugned order in a sum of Rs. 74,50,000/-. Since assessee did not furnish any explanation about the credits, therefore, same were considered as unexplained cash credits and 1/3rd share of the credit i.e. Rs. 24,83,333/- was added to the returned income of the assessee.
16. The assessee challenged the addition before ld.
CIT(Appeals) and written submission of the assessee is 29 reproduced in the impugned order in which the assessee explained that DCIT, Circle 6(1) accepted source of deposit in joint account in the case of Shri Bimal Suri therefore, Assessing Officer cannot adopt a different yardstick for making addition. The assessee also explained that there are deposits of Rs. 4,50,000/- + Rs.
9,00,000/- + Rs. 9,00,000/- ( Rs. 22,50,000/-) as on 28.06.2005, total share of the assessee comes to Rs. 15 lacs. The assessee has deposited Rs. 6 lacs out of cash available in his books of account and Rs. 8 lacs have been received by the assessee from M.B. Coscure Pvt.
Ltd. Chandigarh as advance against sale of property on 28.06.2005 and balance was deposited by the assessee out of cash available with him. Further, there is addition of Rs. 5,75,000/- and Rs. 21,25,000/- in bank as on 31.08.2005 and 03.09.2005 which sum comes to Rs. 27 lacs. The assessee has made withdrawals of Rs.
27 lacs from the bank on 11.08.2005 which was re-
deposited with the bank. There is a deposit of Rs. 22 lacs as on 28.06.2005 and the said amount has been received from Shri Sumesh Chawla against advance of Rs. 22 lacs already made to him which is made through the same bank account. It was, therefore, submitted that whole addition is unjustified.
16(i) The ld. CIT(Appeals) called for the remand report from the Assessing Officer in which it is stated that no explanation regarding these credits were filed at 30 assessment stage. The assessee at the appellate stage attempted to bring additional evidence on this issue in violation of Rule 46A of IT Rules. The ld. CIT(Appeals) noted that the joint account is operated by the assessee alongwith two other persons which was used for purchase and sale transaction of the land and ultimately sold to M/s Gee City Builders. No explanation is filed at the assessment stage. The explanation submitted by assessee is not supported by any documentary evidence and is after thought. The ld.
CIT(Appeals), however, considering that Assessing Officer computed the addition of Rs. 1,44,50,000/- as assessee's share of profit earned on sale consideration as per agreements therefore, telescoping benefit was given and addition was deleted for statistical purposes.
16(ii) Both the parties agitated findings of ld.
CIT(Appeals) in their respective grounds of appeal.
17. After considering rival submissions, we are of the view matter requires re-consideration at the level of the Assessing Officer. The Assessing Officer has mentioned in the remand report that assessee has not furnished any explanation on these credits at assessment stage which fact is also mentioned in the assessment order.
The Assessing Officer in the remand report contended that these are additional evidences under Rule 46A of IT Rules. The ld. CIT(Appeals), instead of deciding the issue on merit, deleted the addition because Assessing 31 Officer has made addition on account of profit earned by assessee and given telescoping benefit of addition of Rs.
1.44 Cr on which we have deleted the addition on ground No.4 following the order of ITAT Chandigarh in the case of Shri Bimal Suri (supra). The revenue has contended that such a benefit should not be given to the assessee but it is a fact that once addition have been deleted of the profit earned by assessee on account of agreement to sell, then this ground shall have to be decided and adjudicated upon on merits and no such benefit could be extended to the assessee for deleting the addition for statistical purposes. We find that assessee has prima-facie case for deletion of the addition because the assessee had made specific submission before ld. CIT(Appeals) that addition is liable to be deleted because similar addition was deleted in the case of Shri Bimal Suri and assessee explained that same amount was withdrawn and re-deposited in the same bank account and certain amounts were available to the assessee therefore, it should be decided on the basis of the evidence and material already on record. Since according to the Assessing Officer, no explanation was filed on this ground before him at assessment stage, therefore, this issue requires re-
consideration at the level of the Assessing Officer. In this view of the matter, we set aside the findings of the authorities below and restore this issue to the file of Assessing Officer with direction to re-decide this ground 32 in accordance with law strictly on merits by giving reasonable sufficient opportunity of being heard to the assessee. The Assessing Officer shall re-decide this ground considering the material produced on record by the assessee. This ground of appeal of the assessee and revenue are allowed for statistical purposes.
18. There is no other ground left in assessee's appeal.
18(i) Assessee's appeal is partly allowed.
ITA 542/2015 ( Departmental Appeal )
19. Ground No. 2 in departmental appeal for deleting addition of Rs. 24,83,333/- have already been adjudicated in assessee's appeal above.
20. The only ground left for consideration is ground No. 1 in departmental appeal, which reads as under :
"Whether on the facts and circumstances of me case the Ld. CIT(A) has erred by deleting the addition of Rs. 32,91,383/- as assessee's share on account of profit generated from the registration of 2500 sq. yards land belonging to various parties".
21. During the assessment proceedings, Assessing Officer noted that as per agreement to sell dated 29.06.2005 with M/s Gee City Builders, Shri Gulshan Rai & others and Parashav Colonizers were under obligation to arrange additional land of 2500 sq.yds.
and transfer the same at the same rate of Rs. 3.65 Cr per acre to M/s Gee City Builders. The Assessing 33 Officer noted from the impounded documents that six properties were sold by different sellers namely S/Shri Surjan Singh, Karam Chand, Manjit Singh, Karamjeet, Bhagwant Singh, Deepak Sharma and Ishar Singh Nagpal. All six properties were registered in the name of buyer M/s Gee City Builders. Although the sale amounts as per registered sale deed were lower as reflected in the chart noted in the assessment order but the Assessing Officer computed the sale value by applying rate of Rs. 3.65 Cr per acre. Accordingly, the profit in each transaction being difference of computed value and the value as per sale deed was calculated. The Assessing Officer as per tripartite agreement, computed assessee's share as 1/5th and thus, made addition of Rs.
32,91,383/- as assessee's share on account of profit generated on arrangement of additional land.
22. The assessee challenged the addition before ld.
CIT(Appeals) and written submission of the assessee is reproduced in the impugned order in which the assessee briefly submitted that Assessing Officer has relied upon tripartite agreement which the assessee has never executed. Further, even if photo copy found from the premises of third party, though not admitted, the signature of the assessee is missing. It was submitted that Assessing Officer in the case of Shri Bimal Suri did not make the similar addition. It was also submitted that Assessing Officer made this addition on the basis of 34 agreement which was never executed by the assessee.
The assessee explained party-wise that in all the six cases, assessee has not entered into any agreement for purchase or sale of the land and no profit is generated in the hands of the assessee. Whatever profit was generated, was in the hands of seller only. The submissions of the assessee were forwarded to the Assessing Officer for his comments in which Assessing Officer reiterated the facts stated in the assessment order and submitted that Assessing Officer made the addition on the basis of tripartite agreement discussed by the Assessing Officer in the assessment order.
23. The ld. CIT(Appeals) considering material on record, deleted the entire addition. His findings in para 11.3 of the impugned order are reproduced as under :
"11.3 I have gone through the facts of the case, written submission filed by the appellant, remand report of the AO and the assessment record. It is noted that the AO on the basis of obligation to arrange additional land of 2500 sq. yds. for Gee City Builders as per tripartite agreement to sale dated 29.06.2005 applied the rate of Rs.3.65 Crores per acre and computed the profit generated on account of arrangement of additional land through 6 registered sale deeds from various sellers in the name of Gee City Builders. In sale of 4 properties as per documents the A.O. noted the sellers have been through Shri Gulshan Rai Satija. In respect of two properties, the A.O. has mentioned the buyers as Gee City Builder through Sh. Gulshan Rai Satija. The AO has noted that Gulshan Rai Satija has acted as middle man. On the other hand, the appellant has 35 submitted that the AO has made addition on account of notional profit on the basis of the registration of 2500 sq. yds. land belonging to various parties surrounded to 25 kanal 10 marla land. The properties were sold by the respective persons by entering into agreement directly with Gee city Builders and the appellant has never entered into any agreement with the six persons for purchase of properties and subsequent sale to the Gee City Builders. Even if, any profit is generated it can be assessed in the hands of the seller only. After considering the appellant submissions and facts of the case, it is noted from the details of property transactions as given in the chart by the AO in the assessment order; these are agreements from individual person for sale of property in the name of Gee City Builders. There is no evidence that the appellant was involved in such deals either through any document as agreement to sell or any other evidence showing that the appellant and other and Parshav Colonisers made any purchase of these properties as additional land and sold to Gee City Builders. The AO has also not conducted any further enquiry to find out any involvement of the appellant in the purchase and sale of the additional land through 6 registered sale deeds. In the absence of such evidence or any further inquiry, the AO was not justified in making the share of the appellant as notional profit in arrangement of additional land of 2500 sq. yds. Although, the AO has noted name of Sh. Gulshan Rai Satija acting as: middle man in four transactions and purchase and sale of land in one transaction; with Sh. Ishar Singh Nagpal to Gee City Builders but the AO has not found the name of appellant in any of six properties purchased and sold to Gee City Builders either as purchaser or seller or as middle man. Therefore, in the absence of any evidence regarding earning profit or commission on such arrangement of additional land of 2500 sq. yds. to Gee City Builders, the A.O. was not justified in calculating the notional profit earned on account of such registration of 2500 36 sq.yds. land belonging to various other parties. Therefore, the addition of Rs. 32,91,383/- as appellant share of profit is deleted. This ground of appeal is allowed".
24. After considering submissions, we do not find any merit in this ground of appeal of the revenue. The Assessing Officer made the above addition on the basis of tripartite agreement to sell dated 29.06.2005. The ld.
CIT(Appeals) noted that properties were sold by the respective persons by entering into agreement directly with M/s Gee City Builders and assessee has never entered into any agreement with six persons for purchase of properties. This fact is also mentioned by Assessing Officer in the assessment order that sellers entered into transaction directly with the buyer M/s Gee City Builders. If any profit is to be assessed or generated, it should be assessed in the hands of seller only. The Assessing Officer in the assessment order has noted that these are agreements from individual persons for sale of property in the name of M/s Gee City Builders. No evidence was found against the assessee that he was involved in any deal either through any document or agreement to sell. The Assessing Officer has not conducted any further inquiry to find out the involvement of assessee in any purchase and sale of land through six registered sale deeds. In the absence of any evidence on record against assessee to act as middleman or conduit, ld. CIT(Appeals) was justified in 37 deleting the addition. This ground of appeal of the revenue has no merit. Same is, accordingly, dismissed.
25. In the result, appeal of the revenue is partly allowed for statistical purposes.
26. In the result, appeal of the assessee is partly allowed and departmental appeal is partly allowed for statistical purposes.
Order pronounced in the Open Court.
Sd/- Sd/-
( ANNAPURNA GUPTA) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 9th November, 2016.
'Poonam'
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT,DR
Assistant Registrar,
ITAT/CHD