Income Tax Appellate Tribunal - Amritsar
Sh. Raman Kumar S/O. Sh. Kamal Kishore,, ... vs The Income-Tax Officer, Ward 2(3), ... on 8 January, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT (THIRD MEMBER) ITA Nos.660/ASR/2017 Assessment Years : 2002-03 Shri Arvind Kumar Vs The ITO S/o Sh. Kamal Kishore Ward 2(3) 292/11, Gali Lambanwali Amritsar Chaurasti Attari, Amritsar PAN NO: AAXPK1892K Appellant Respondent ITA Nos.661/ASR/2017 Assessment Years : 2002-03 Smt. Usha Rani Vs The ITO W/o Sh. Kamal Kishore Ward 2(3) 292/11, Gali Lambanwali, Amritsar Chaurasti Attari, Amritsar PAN NO: AEBPR4056E Appellant Respondent ITA Nos.662/ASR/2017 Assessment Years : 2002-03 Sh. Raman Kumar, 292/11, Vs The ITO Gali Lamban Wali,Chaurasti Attari Ward 2(3) Amritsar Amritsar PAN NO: AIUPK4454A Appellant Respondent Assessee by : Shri Subhash Mahajan, Advocate Revenue by : Shri Charan Dass, Sr. DR Date of Hearing : 15/10/2019 Date of Pronouncement : 08/01/2020 आदे श/Order PER N.K. SAINI, VICE PRESIDENT On account of difference of opinion between the Ld. Accountant Member and Ld. Judicial Member of the ITAT, Amritsar Bench, this matter has been referred to me by the Hon'ble President ITAT for consideration and disposal 2 under section 255(4) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). It may be noted that even while framing the point of difference there was a difference of opinion and different questions have been framed by both the Ld. Members. The Ld. Judicial Member formulated the following questions:
(i) Whether in the instant case photocopy of agreement to sell having more value as relied upon by the revenue authorities than the registered sale deeds executed as per Circle rate as prescribed by the Government Authority ?
(ii) Whether in the above referred cases, the addition made on the basis of the photocopy of the agreement to sell, while ignoring the registered sale deeds based upon the Circle rates as applicable to the subjected area, is sustainable in law or not ?
2. The Ld. Accountant Member formulated the following questions while referring the matter to the Hon'ble President.
(1) Whether the photocopy of the sale agreement dated 13.10.2001 is, in the given facts and circumstances of the case, a relevant material for the purpose of making assessment and determining the capital gains arising to the assessee/s on the sale of the subject property?
(2) Whether the assessee/s has effectively rebutted the reliance by the Revenue on the said agreement, or otherwise shown it to have not been acted upon by the parties.
(3) Could the sale deed, admittedly executed in conformity with the circle rate, or other sale deeds, differing vastly in the sale rates, be determinative of the matter.
(4) (a) Is the market rate of the subject property a relevant fact in as much as the basis of taxation, both for the buyer and the seller, is the actual sale consideration, i.e, the amount agreed upon and that actually exchanges hands?
(b) Has the assessee/s, in any case of the matter, been able to, in the facts and circumstances of the case, exhibit the actual market rate of the subject property?
(5) Could, in any case of the matter, the assessee's case be said to be proved ?
3. From the aforesaid questions framed by both the Ld. Members it is clear that the controversy to be resolved relates to the valuation of the property for the purposes of capital gain i.e; as to whether it is to be taken on the basis of 3 photocopy of the sale agreement or according to the sale deed executed as per Circle Rate. In the present case although facts have been discussed by the Ld. Members in their respective orders. However for the clarity the facts in brief are narrated as mentioned in the orders of the authorities below.
4. The facts in brief in the case of Shri Arvind Kumar (one of the Assessees) are that an original assessment was framed by the A.O. under section 143(3) r.w.s 147 of the Act on 05/10/2009 at an income of Rs. 6,07,178/- as against returned income of Rs. 1,29,680/- filed by the assessee on 11/09/2002. Accordingly an addition of Rs. 4,77,498/- was made on account of unexplained investment in purchase of 1/3rd share in the immovable property located at Dashonda Singh Road, Near Jamun Wali Gali, Amritsar.
5. Against the said assessment order the assessee preferred an appeal before the Ld. CIT(A), Amritsar who confirmed the view taken by the A.O.
6. Thereafter the assessee preferred an appeal before the ITAT, Amritsar Bench wherein vide order dt. 18/09/2015 the matter was restored to the A.O. Accordingly, fresh assessment proceedings were initiated, the A.O. observed that S/Shri Satish Kumar, Ashwani Kumar S/o Shri Des Raj sold property measuring 250 Sq. Yards @ 10800/- sq. yard to three co-owners i.e; Smt. Usha Rani, Raman Kumar and Shri Arvind Kumar (the present Assessees)vide agreement to sell dt. 13/10/2001. He further observed that against the said agreement to sell, three sale deeds selling 1/3rd share equally to all three persons were executed dt. 13/02/2002 @ 4940/- per sq. yards. According to the A.O., one of the seller i.e; Shri Satish Kumar admitted in the written submissions addressed to ITO 4(1) that total consideration of property was Rs. 27 Lacs (10800*250) and similar were the submissions by the other seller of the property i.e; Shri Ashwani Kumar.
6.1 The A.O. also observed that notice under section 131 of the Act was issued to Shri Satish Kumar, in compliance to which he appeared on 21/12/2016 4 and his statement was recorded wherein he admitted the sale of alleged property at Rs. 27 Lacs and confirmed that he had filed his return of income on the basis of sale considerations of Rs. 27 lacs against which ½ share comes at Rs. 13,50,000/-.
He further admitted having received the payment in cash and did not pay any tax on LTCG arising out of the sale of such property as he had complied with the provisions of Section 54 of the Act.
6.2 The A.O. pointed out that the statement of another co-owner of the property i.e; Shri Ashwani Kumar was recorded on 21/12/2016. He also admitted sale proceeds at Rs. 27 Lacs in cash and his ½ share of the aforesaid amount was shown in his return of income, he also did not pay any tax as LTCG arising out of the said property as he complied with the provisions of Section 54 of the Act. The A.O. afforded the Counsel of the Assessee Shri Subhash Mahajan for cross examination of S/Sh Satish Kumar and Ashwani Kumar on 22/12/2016. In their statements it was submitted that the property having ½ share was sold but the exact year in which it was sold was not known and that the name of the person to whom it was sold was not known even they did not remember the date of agreement to sell and sale deed but both documents existed, they did not have documents in original. However they remembered that it was sold for Rs. 26 to 27 lacs approximately. It was stated that out of sale proceeds part was deposited in bank and part was kept for construction of house, the sale consideration was received in cash but he was not sure whether he received part by cheque also or not. The said statement given by Shri Satish Kumar was also signed by Shri Ashwani Kumar, therefore the A.O drew inference that property was sold for Rs. 27 Lacs by the seller.
6.3 The A.O. reproduced the submission of the assessee in para 4 of the assessment order dt. 29/12/2016 which read as under:
5"a) That certain answers to some of the questions put to S/Satish Kumar and Ashwani Kumar on 21.12.2016 and 22.12.2016 don't match.
b) That original copies of agreement to sell or sale deed not at all shown to assessee during assessment or re-assessment proceedings.
c) That photo stat copy of both above documents are admissible as- an evidence only when originals are produced.
d) That circle rates near about date of sale transaction are much lower than Rs. 5000/- per sq yards
e) That cross examination statements recorded were dictated by their CA Sh.Rajan Kumar.
f) That returns of income revised by Sh. Satish Kumar and Sh. Ashwani Kumar are invalid in the eyes of law.
g) That it is duty of A.O. to bring material on record to prove that on money has passed on to seller from buyer."
6.4 The A.O, however, treated the sale transactions at Rs. 27 Lacs on the basis of admission by seller of the property in statement recorded under section 131 of the Act. The A.O. was of the view that non availability of original sale deed / agreement to sell due to any reasonable reasons as per the circumstances could not have been permited to buyers to ignore amount of sale consideration. He also observed that filing of return by the seller showing consideration amount of Rs. 27 Lacs was further like legal stamping of their admission that the sale transaction took place at Rs. 27 Lacs and that the prevailing circle rate near about date of transaction were less than Rs. 5000/- per sq yard was no legal help to the assessee when the sellers themselves admitted the sale consideration at Rs. 27 Lacs. The A.O. accordingly made the addition of Rs. 4,77,498/- in the hands of each of the assessees.
7. Being aggrieved the assessee carried the matter to the Ld. CIT(A) who sustained the addition made by the A.O. by observing that the statements of the sellers had been properly cross examined and that the sellers had at all stages stated that the sale consideration was at Rs. 27 Lacs and in the cross 6 examination they stated that it was around Rs. 26 to 27 Lacs. The Ld. CIT(A) also observed that the sellers filed the return of income taking Rs. 27 Lacs as consideration which was enough evidence to prove the sale consideration. Against the order passed by the Ld. CIT(A) dt. 21/06/2017, the Assessees preferred an appeal before the ITAT, Amritsar Bench in ITA No. 660 - 662/Asr/2013 wherein the Ld. JM observed that the A.O. in the instant case mainly relied upon the Photostat copy which was having less evidentiary value and secondly the statement of the sellers was to be discarded in the absence of any corroborative evidence. He also observed that the A.O. failed to consider the assessees complete reply in explanation and to establish on money having been paid or received. He was also of the view that the A.O. failed to consider the registered sale deed which was based on prevailing circle rate in the concerned area and the other sale instances of the same area. He also referred to the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Fairdeal Textile Park Pvt. Ltd. (2014) 362 ITR 494 wherein the Hon'ble High Court affirmed the deletion of addition by the Tribunal and it was held as under:
" where two agreements were found and seized and on the basis of the said documents and statement, the Assessing Officer considered the same as undisclosed income and sum was added to the taxable income of the assessee and in the 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, and also registered document have been executed at "Jantri" value (circle rate) and there was no reference to the valuation officer to point out that the value of the lands was below the market price."
Accordingly the addition made by the A.O. was deleted.
7.1 On the contrary the Ld. Accountant Member in his dissenting order was of the view that nothing had been placed on record to exhibit that the market rate had reduced to Rs. 5,000/- in February 2002 from that in the range of Rs. 10,000/- to Rs. 11,000/- ostensibly obtaining in October 2001 and why the market rate a few months ago should also be the same as there was nothing to suggest 7 that the market rate had declined much less drastically over the intervening four months. He was of the view the sale rate as per the registered documents was no indicator of market rate as in that case the registered documents itself become the proof of the market rate.
8. The Ld. Accountant Member held that infact the levy and calculation of the stamp duty at the prescribed (circle) rate, irrespective of the document price is itself premised on the assumption that the sale document may not necessarily record the correct bargain price and that the sellers in their statement confirmed to have received the amount as per the agreement to sell dt. 13/10/2001, nothing survives in absence of any positive evidence brought on record by the assessee buyers in support of their case. He was of the view that the statement of the sellers supported by the agreement dt. 13/10/2001 could not be dismissed, with its non reference in the subsequent sale deed, even as the right to execute the same arises only by virtue of the said agreement which itself clarified the intent of the parties to not to disclose the agreed consideration.
9. The Ld. AM pointed out that at any stage including before the Tribunal it was argued that the actual agreement entered into between two parties was manipulated, forged etc. but rather, admitted as being precisely what it purports to be i.e; a replica (photo copy) of the original agreement. The reliance was placed on the judgment of the Hon'ble Apex Court in the case of Dhakeswari Cotton Mills Ltd. Vs. CIT [1954] 26 ITR 775 wherein it was held that in making the assessment under section 23(3) (S. 143(3)) of the Act the ITO is not fettered by the technical rules of evidence and complexities and was entitled to act on material which may not be accepted as evidence in a court of law.
10. The Ld. AM observed that the seller retained neither the sale agreement nor the sale deed, so that nothing turns on the inability on the part of the seller/s 8 to furnish the original sale agreement was retained by the buyers and that the truth of the agreement being admitted i.e., of having been entered at the rate stated therein the order even otherwise looses significance. He also noticed that there was no claim by either side of the documents being false or not a True copy of the original in which case the documents would be regarded as proof even in the civil proceedings.
10.1 The Ld. Accountant Member was of the view that it was an admitted position that the parties negotiated a price of Rs. 10,800/- per sq. yards the onus was heavy on the assessee to show that he firstly agreed to a price rate higher than the actual market price and therefore not acted upon and which he had completely failed to rescind the transactions and that a concomitant of the non-reference of the sale agreement in the sale deed, apart from the non disclosure of the bargain price was also that all the amounts which admittedly exchanged hands thereat i.e., while entering the agreement. According to the Ld. Accountant Member the non reference of the sale agreement betrays the actual intent in entering the same (sale agreement) on the sale deed at different rates i.e; to avoid disclosure of the actual price negotiated between the parties which becomes all the more relevant as a difference (Rs. 5,800) worked out to 116% of the stated sale consideration (Rs. 5,000/-) (or nearly 54% of the bargain price) and in its absence, the bargain price itself was a clear indicator of the market price and the burden was on the assessee to show that the bargain price was not the market price.
10.2 The Ld. Accountant Member accepted the revenue's case of the agreement to sell dt. 13/10/2001 having been infact acted upon and the transaction completed at the agreed price i.e. as against that which was stated in the subsequent sale deed and the assessee had not been able to rebut the Revenue's case.
911. Since there is a difference of opinion between the Ld. Members, the case has been referred to me by Hon'ble President under section 255(4) of the Act.
11.1 The Ld. Counsel for the Assessee reiterated the earlier submissions and supported the view taken by the Ld. Judicial Member and stated that addition in the assessment order was based on the copy of agreement to sell and not on the basis of the sale deed. It was further submitted that the assessees purchased the property in question at the rate which has mentioned in the registered sale deed, therefore the addition made by the A.O. was not justified, particularly when original agreement to sell was not produced at any stage. It was also stated that in the cross examination of Shri Satish Kumar nothing was said about the amount received at the time of agreement to sell, therefore the reliance placed on the said document i.e; agreement to sell for making the addition was not justified.
12. In his rival submissions the Ld. DR submitted that assessee accepted the agreement to sell and the sellers disclosed the amount mentioned in the agreement to sell in their respective returns of income and even in their statement recorded after issuing summons under section 131 of the Act that the property in question was sold@ Rs. 10,800/- as mentioned in the agreement to sell. Therefore the addition being the difference in the actual amount received and mentioned in the sale deed was rightly made by the A.O. and sustained by the Ld. CIT(A).
13. I have considered the submissions of both the parties and perused the material available on the record alongwith the orders passed by the Ld. Members. In the present case, it is an admitted fact that in the agreement to sell dt. 13/10/2001 the rate of the property was mentioned at Rs. 10,800/- per square yard. The assessee nowhere stated that the said agreement was fake or the contents of the said agreement were fabricated. The only plea taken by the 10 assessee is that the original of the said agreement was not produced on the contrary the sellers of the property in their statements on oath recorded by the A.O. on 21/12/2016 categorically stated that total sale value was Rs. 27,00,000/-. The said amount was also disclosed by the sellers of the property in their respective returns of income. At the same time the sale deed was executed at the rate of Rs. 5,000/- per square yard which was near to the circle rate. In my opinion, only on this basis that the sale deed was executed at Rs. 5,000/- per square yard which was near to the circle rate, it cannot be presumed that the amount mentioned in the agreement to sell was not correct, particularly when the sellers admitted that the said amount was received by them. I therefore, considering the totality of the fact concur with the view of the Ld. Accountant Member that agreement to sell dt. 13/10/2001 was acted upon wherein the price of the land was mentioned at Rs. 10,800/- per square yard particularly when the assessee failed to show that the agreed price in the agreement to sell was much higher than the actual market price and therefore not acted upon. Now these appeals would be placed before the regular Bench for giving effect to the opinion of the majority.
Sd/-
एन.
एन.के.सैनी, ी, ( N.K. SAINI) उपा य / VICE PRESIDENT AG Date:08/01/2020 आदे श क ितिल प अ े षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु#/ CIT
4. आयकर आयु# (अपील)/ The CIT(A)
5. वभाग ीय ितिनिध, आयकर अपीलीय आिधकरण, अम,तसर/ DR, ITAT, AMRITSAR
6. ग ाड, फाईल/ Guard File