Income Tax Appellate Tribunal - Amritsar
Sh. Rahul Bhat,, Jammu vs The Income-Tax Officer, Jammu on 17 May, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR (SMC)
BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER
I.T.A. No. 517/Asr/2014
Assessment Year: 2005-06
Rahul Bhat, vs. Income Tax Officer,
Dreamland Cooperative House Ward 1(2), Jammu
Building Society Ltd.,
Trikuta Nagar,
Jammu
[PAN: AFZPB 1564Q]
(Appellant) (Respondent)
Appellant by : Sh. M. K. Kaul (C.A.)
Respondent by: Sh. Charan Dass (D.R.)
Date of Hearing: 28.02.2019
Date of Pronouncement: 17.05.2019
ORDER
Per Sanjay Arora, AM:
This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals), Jammu ('CIT(A)' for short) dated 27.5.2014, partly allowing the assessee's appeal contesting its assessment u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) dated 27.02.2013 (wrongly mentioned as 27/2/2012 in the assessment order) for the Assessment Year (AY) 2005-06, duly served on the assessee on 28/3/2013.
2. The facts of the case in brief are that the assessee-individual was issued (and served) a notice u/s. 148(1) on 29.3.2012 on the basis of the information in its' possession with the Revenue that the assessee, who had not filed any return of 2 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO income for the relevant year, had purchased a residential flat (No. 12, Block-B, 3rd Floor, Dreamland Apartments, at Trikuta Nagar, Jammu) for Rs.20 lacs, paying Rs.11 lacs by cheque and Rs.9 lacs in cash (refer paras 1, 2 of the assessment order). The assessee had earlier not responded to letter dated 02/2/2102 qua the said investment. As the assessee did not comply with the notice u/s. 148, notice u/s. 142(1) was issued on 25.11.2012, and in view of non-representation, show caused on 08.2.2013 qua the said investment for Rs.20 lacs. The assessee providing documentary evidence only in respect of Rs.2 lacs, the Assessing Officer (AO) deemed the balance investment of Rs.18 lacs as the assessee's income by way of unexplained investment u/s. 69. In appeal, the assessee explained the purchase price to be only Rs.11 lacs, i.e., in terms of the sale deed of the said flat dated 03.5.2005 (registered on 04.5.2005) (PB pgs. 43-47), paid for as under:
(i) Rs.1,00,000/- on 23/12/2004 in cash
(ii) Rs.2,00,000/- on 02/03/2005 by cheque
(iii) 8,00,000/- on 02/03/2005 by bank draft The seized material found during search on Dreamland Cooperative House Building Society (DCHS) included a list of 46 persons who had purchased flats in the said society, along with the details of the payments and flat numbers. The said list was confirmed on examination by one, Sh. Rakesh Gupta, handling the affairs of the said society, which had in fact issued receipts for all the payments, i.e., including the cash component of the consideration as well. The payments, including that in cash, had also been confirmed by some of the buyers, as by one, Sh. Sunil Bhat, furnishing the receipts for the entire consideration (of Rs. 17.25 lacs, as against the disclosed sale consideration per the sale deed at Rs. 11.70 lacs).
The assessee accepted the booking, as also the purchase of the flat in the said society, as well as some of the payments ascribed to him. How could he, as per the 3 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO Revenue, then, possibly deny the cash payment, which he did both in the assessment and the appellate proceedings? However, as the due date for the cash payment of Rs. 9 lacs, i.e., other than that specified in the sale deed - detailed above, as mentioned in the seized document, was '23.4.2005', which date fell in the subsequent year, the ld. CIT(A) regarded the same to have been discharged on that date. He, therefore, concerned himself only with Rs.11 lacs paid, and admittedly so, by the assessee during the relevant previous year. The assessee's bank account reflecting payment of Rs.2 lacs (paid vide cheque dated 02.3.2005), the ld. CIT(A), accordingly, upheld the addition for the balance Rs.9 lacs (Rs. 11 lacs - Rs. 2 lacs). In doing so, he also met the various objections to the assessment raised by the assessee before him, including confirming the assessment u/s. 147, and not u/s. 153C. Further, directions to include the assessee's salary income, as well as allowing credit for the tax deducted at source thereon, was also given; the assessee furnishing evidence of having in fact filed his return for the relevant year u/s.139 (on 25.7.2008) (PB pg. 41). Aggrieved, the assessee is in second appeal.
3.1 The assessee's submissions during hearing, was that while Rs. 1 lac, paid cash, was out of the savings of the family, Rs. 8 lacs was paid by the assessee's grandmother, Indra Bhat, by purchasing a bank demand draft from her saving bank account with PNB, Indrapuram, Ghaziabad on 02/3/2005. The assessee be allowed an opportunity to exhibit the same and, thus, explain the source of the said payment. It was explained by Sh. Kaul, the assessee's counsel, that the assessee was working abroad at the relevant time, as was evident from his passport (copy on record); the same explains the signing of the appeal by, as well as the appearance before the AO of, Sh. Rajiv Bhat, his father. The family had migrated to Jammu because of disturbed conditions in Kashmir valley, with in fact a part of the family being at Noida. It was on account of these factors, dislocating the working, that 4 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO proper representation in this regard could not be made earlier. The family had, he continued, pooled resources to purchase the flat. The matter, for verification of the source of Rs.8 lacs paid through bank draft, be restored back to the AO. As regards the balance Rs.1 lac, paid cash on 23.12.2004, the same was explained to be out of savings, which could surely be attributed to the family; the assessee himself being an assessee for several years.
3.2 The ld. Sr. DR would, on the other hand, submit that the relief of Rs.9 lacs allowed by the ld. CIT(A), i.e., qua the cash component of the consideration (besides Rs.1 lac admittedly paid on 23.12.2004), has not been, as would be evident from a reading of the impugned order, on merits, but on the ground that the said payment would presumably have been made on the due date, i.e., in the following year. The ld. CIT(A) ought to have in fact directed for, in view of the same, the assessment of Rs.9 lacs for AY 2006-07, i.e., u/s. 150. For the balance Rs.9 lacs paid during the current year, no evidence having been led at any stage despite abundant opportunity. There is no merit in the plea for restoration, as made out, for production of additional evidence.
4. I have heard the parties, perused the record, and given a careful consideration to the matter.
4.1 Though the appeal raises a legal issue as regards the non-issue of notice u/s. 143(2), the same was not pressed during hearing by Sh. Kaul, clarifying to be pressing the appeal only on quantum. No arguments qua the legal issue were, accordingly, raised nor, correspondingly, responded to by the other side. It needs though to be clarified that the assessee has admittedly not furnished any return in response to the notice u/s. 148(1). There was, accordingly, no occasion for the AO 5 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO to have issued the assessee a notice u/s. 143(2) in respect of the assessment proceedings, initiated thus. The assessment, thus, is u/s. 144.
4.2 On quantum, the first thing that arises for consideration is if the detail of 46 allottees of flats (of different sizes), along with the consideration therefor, and the details of payments, found during search proceedings on DCHS, and confronted to the assessee, could be relied upon, i.e., as an authentic document. In my opinion, the answer is an emphatic yes. The same being found during search proceedings, would attract section 292C, providing for a statutory presumption as to the truth of its' contents. The presumption, though rebuttable, has not been by any material brought on record by the assessee. Further, the assessee, whose name appears therein, is indeed the buyer of the flat, specified therein to have been purchased by him. The payments, other than in cash, stated therein, are admitted, with in fact one in cash, i.e., on 23/12/2004, being also admitted. How could, then, as the ld. CIT(A) also wonders, the balance cash payment be denied? In fact, the society has issued receipts for the entire amount received, including in cash, though, as it appears, not recorded the cash component in its' regular books of account, but only that as mentioned in the sale deeds, resulting in a surrender of Rs.125 lacs, spreading it over two years, by DCHS. These facts get corroborated by the statement of Sh. Rakesh Kumar, the person handling the affairs of the said society, clarifying of only a part of the total consideration, i.e., as stated in the sale deed/s, being disclosed by the parties, as well as by the disclosure by some buyers, as Sh. Sunil Bhatt, producing the receipts for the entire consideration - both in cash and by cheque. The veracity of the document/s seized during hearing, bearing the names of the purchasers of the flats, including the assessee, as well as the relevant details, besides being governed by section 292C, gets established. The assessee 6 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO stating of having paid Rs.11 lacs during the purchase of the subject property, thus, cannot be accepted.
4.3 The next question, given that the assessee has paid Rs.20 lacs toward the flat purchased, is the extent to which the same can be regarded as out of explained sources, deeming the balance as unexplained income u/s. 69/69A. The secondary question would be the year for which the same would be subject to tax. The assessee has disclosed the payment at Rs.11 lacs, i.e., as stated in the sale deed dated 03.5.2005, detailed above, of which Rs.1 lac is in cash. The balance Rs.9 lacs, ostensibly paid in cash, so that the cash component is Rs.10 lacs (and not Rs. 9 lacs), has not been admitted, even as the same has not been accepted by the ld. CIT(A) and, in my view, rightly so. It is, however, not clear as to the date/s on which payment/s of Rs.9 lacs has been discharged, being not recorded in the sale deed. Now, without doubt, the primary onus to lead material/s in respect of an addition u/s. 69/69A is on the Revenue. The ld. CIT(A) has regarded the same as '23.04.2005', being the due date of the payment, with the balance consideration being in cash. This date also agrees with the date of the execution of the sale deed, i.e., 03.5.2005, in-as-much as the same would only be upon payment of the full consideration. At the same time, this (date) cannot be a matter of presumption. Rather, the document found during search is not made a part of the tribunal's record (by either the appellant or the respondent), which, as stated, reflects the dates of the payment (of the purchase consideration), so that it would be of this sum of Rs.9 lacs as well. Why, it is stated that DCHS issued receipts for all the payments and, thus, the same should be available for this sum also and, in any case, find reflection in the material found during or as a result of search, even if from the payee, who had offered the additional sum as on account of on money received. However, if the document of this payment of Rs.9 lacs is not 7 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO forthcoming, without doubt, the payment can be presumed to have been made by 23.4.2005 or, latest by 03.5.2005, the date of the sale deed, in which either case the impugned payment shall be the subject matter of assessment for AY 2006-07. I am in full agreement with the ld. Sr. DR in this regard. The ld. CIT(A) having found the assessee to have purchased the flat for Rs.20 lacs, paying full consideration, he, in the absence the precise date/s of payment/s, which should be a matter of record and, in any case, in the knowledge of the assessee, regarded as discharged by the due date, as stated, or would in any case be by 03.5.2005, ought to have directed the AO for bringing the same to tax for AY 2006-07. The assessee has throughout denied this payment. The question of his explaining any source thereof, being even otherwise in cash, does not arise. Issue of such a direction was incumbent on the ld.CIT(A) in-as-much as it follows his treating or finding of the consideration to that extent (Rs.9 lacs) as discharged in the following year, i.e., by 23.4.2005. In fact, w.e.f. 01.6.2016, the law itself deems an assessment for a particular year, made on the basis of a finding that the income was not assessable for another year, but that year, would be deemed to have been made in consequence or to give effect to such a finding (Explanation 2 to section 153). Reference in this regard may also be made, inter alia, to the decision in Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC), wherein the Apex Court clarified that the appellate authority has jurisdiction as well as the duty to correct all errors in the proceedings under appeal, and to issue, if necessary, appropriate direction/s to the authority against whose decision the appeal is preferred to dispose the whole or any part of the matter afresh, unless forbidden for doing so by the statute. The ld. Sr. DR, despite the Revenue being not in appeal, is fully competent to raise this plea, for which reference be made to rules 11 and 27 of the Income Tax (Appellate Tribunal) Rules, 1963, as well the decision by the higher courts of law in respect of the nature of the appellate proceedings under the Act as well as the scope of the power 8 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO of the Appellate Tribunal, and toward which I may, for ready reference, cites some, viz. Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC); Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 (Bom-FB); CIT v. Indian Express (Madurai) Pvt. Ltd. [1983] 140 ITR 705 (Mad). Why, the decision in Kapurchand Shrimal (supra) is equally applicable to the appellate tribunal. Here I am also reminded of, and it may be relevant to state the dictum laid down by the Apex Court in CIT v. Walchand & Co. Pvt. Ltd. [1967] 65 ITR 381 (SC). Speaking in the context of jurisdiction of the tribunal, it explained that it is to determine all the questions which arise out of the subject matter of the appeal in light of the evidence, and consistently with the justice of the case.
4.4 With regard to the payments admittedly made during f.y. 2004-05, the ld. CIT(A) ought to have, in my view, regarded the cash payment of Rs.1 lac on 23.04.2012 as reasonably explained. This is as it is not unreasonable to presume the family to have contributed toward the purchase, and to have, accordingly, accumulated savings to that extent. For the balance Rs.8 lacs, I am again inclined to accept the assessee's plea of being allowed an opportunity to adduce the evidence toward satisfactorily explaining the source thereof. This is in view of the same being, in fact, a part of the disclosed consideration of Rs.11 lacs. Then, again, it is to be borne in mind that it is not uncommon in India for the family members to contribute to accommodation, with the payment in fact having been made through the banking channel.
5. In view of the foregoing, I direct as under:
(a) deletion of the addition of Rs.1 lacs paid cash on 23.12.2004;
(b) opportunity to the assessee by the AO in the set aside proceedings to satisfactorily explained the source of payment of Rs.8 lacs, claimed to be 9 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO contributed by the assessee's grandmother, Indra Bhat, from her savings through her saving bank account, as well as, by his sister;
(c) the AO shall, on the basis of the material on record, including that may be furnished by the assessee, issue a definite finding of fact as to the date/s of the cash payment of the balance Rs.9 lacs and, on that basis, proceed to assess the same for the right year. Here it may be relevant to state that the assessment for AY 2006-07 could made on 27.02.2012 - the date of the assessment and, therefore, is not barred by time (section 150(1) r/ws. 150(2)).
The AO shall, however, whether he proceeds to assess the aforesaid amount of Rs.9 lacs for AY 2005-06 or AY 2006-07 (or in other year), or partly in one and partly in the other, allow the assessee a final opportunity to state his case, including qua the year of assessment. This, as would be apparent, by way of abundant caution, so as to avoid any prejudice being caused, even as the assessee has throughout denied the said payment, made in cash, so that the question of his explaining the source thereof, much less satisfactorily, ordinarily does not arise. Again, the assessment in the set aside proceedings, shall be completed within time frame provided by law. I decide accordingly.
6. In the result, the assessee's appeal is partly allowed for statistical purposes.
Order pronounced in the open court on May 17, 2019 Sd/-
(Sanjay Arora) Accountant Member Date: 17.05.2019 /GP/Sr. Ps.
Copy of the order forwarded to:
(1) The Appellant: Rahul Bhat Dreamland Cooperative House Building Society Ltd., Trikuta Nagar, Jammu (2) The Respondent: Income Tax Officer, Ward 1(2), Jammu (3) The CIT(Appeals), Jammu (4) The CIT concerned (5) The Sr. DR, I.T.A.T 10 ITA No. 517/Asr/2014 (AY 2005-06) Rahul Bhat v. ITO True Copy By Order