Income Tax Appellate Tribunal - Panji
Sh Shagan Lal, Fazilka vs The Income Tax Officer, Abohar on 30 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
I.T.A No.425(Asr)/2015
Assessment Year:2009-10
Sh. Shagan Lal Vs. Income Tax Officer,
S/o Sh. Amar Singh, Ward-II(4), Abohar.
Jalalabad (W),
PAN:
(Appellant) (Respondent)
Appellant by: Sh. P. N. Arora (Adv.)
Respondent by: Sh. S.S. Kanwal (Ld. D.R)
Date of hearing: 11.10.2017
Date of pronouncement:30.11.2017
ORDER
PER N.K.CHOUDHRY:
The instant appeal has been preferred by the assessee, on feeling aggrieved against the order dated 30.06.2015 passed by the Ld. CIT(A), Bathinda, in Appeal No.51-IT/CIT(A)/BTI/14-15 for Asst. Year:2009-10.
2. The assessee has raised the following grounds of appeal.
"1 That the appellate order dated 30.06.2015 of Ld. CIT(A) confirming the addition of Rs.9,00,000/- to the income of Rs.9,175/- declared in the return of income by the assessee is against facts and law.
2. That the learned Ld. CIT(A) erred on facts and law in confirming the addition of Rs.9,00,000/- on account of alleged unexplained source of cash deposited in saving fund account by the assessee. The evidence furnished before the AO as well as Ld. CIT(A) has been ignored by the CIT(A). Thus the appellate order has been passed by the Id. CIT(A) without giving any proper opportunity of hearing to the assessee.
3. That the Ld. CIT(A) erred on facts and law in confirming the addition of Rs.9,00,000/- despite the fact that the only source of income of the assessee is bank interest and agri. income. Hence the only source of cash deposited by the assessee are the sale proceeds of agricultural land in 2 ITA No.425 (Asr)/2015 Asst. Year:2009-10 earlier years because the assessee has no other source of income. Moreover, where only source of income is of the assessee is from agriculture income no addition can be made under the head income from unexplained investment u/s 69 of the Income Tax Act, 1961.
4. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off."
3. The brief facts of the case are as under:
As per information available from the AIR, related to the F.Y.2008-09 to the effect that assessee had deposited Rs.25,00,000/- in cash in his Saving Bank Account, was received by the Assessing Officer and therefore, notice u/s 148 of the I.T. Act was issued and in response to the same, the assessee being an agriculturist filed his return of income to the tune of Rs.9,175/- and Agricultural Income at Rs.13,50,000/- for the Asst. Year 2009-10 on dated 05.02.2014 and thereafter, show cause notice was issued to the assessee which was replied by the representative of the assessee and finally, the assessment order was passed by making addition of Rs.2,72,973/- by treating as income from other sources by enhancing the expenses on the crops sold at 30% instead of 12% as shown by the assessee by working out (Rs.13,50,000/- - 10,78,027/- = 2,72,973/-), further Rs.9,00,000/- by treating as income of the assessee under year consideration u/s 69 of the Act.
4. On being dissatisfied, the assessment order was challenged by the assessee before the Ld. CIT (A), who however, reduced the expenses on crops @ 12% which were claimed by the Assessee, instead of @30% determined by the Assessing Officer and given partly relief by deleting the addition of Rs.2,72,973/-, however, while examining the sources of cash deposit in the assessee's book account, it was observed by the Ld. CIT(A) that in the absence of any documentary evidence, in the appellate proceedings as well as in 3 ITA No.425 (Asr)/2015 Asst. Year:2009-10 assessment proceeding, the same explanation has been reiterated without any evidence, therefore, the Ld. CIT(A) finding no infirmity in the order of the Assessing Officer, rejected the explanation of the appellant qua cash deposit Rs.9,00,000/-.
5. On feeling aggrieved against the order passed by the Ld. CIT(A), the assessee further carried the matter before this Bench.
6. The Ld. AR submitted that although in addition to the written submission submitted before the Ld. CIT(A), it was also explained during the course of hearing that addition of Rs.9,00,000/- was not called for as the said amount was received by the assessee from his father on account of gift as the assessee had power of attorney from his father Sh. Amar Singh and in rural areas the common man feels secure by keeping cash at home, hence, the credit of the sale of land may kindly be allowed. By filing a paper book, the assessee also relied upon six sale deeds, totaling to amount of Rs.6,63,000/- executed on 28.02.2007, 10.04.2006, 20.02,2006, 10.06.2005, 10.03.2005, 26.07.2004 respectively. The Ld. AR submitted that all the necessary evidences and explanations were submitted before the authorities below, therefore, no addition at all called for, hence, be deleted.
7. On the other hand, the Ld. DR submitted that the assessee, except of filing some copies of the sale deed does not file any documents in support of his contention to the effect that his father had given gift of Rs.9,00,000/- to the assessee. Further, the Ld. DR submitted that not a single document has ever been produced by the assessee, by which, it can be construed that the said amount of Rs.9,00,000/- had been received as gift from his father and in the absence of substantive and or supportive material, the authorities below rightly added Rs.9,00,000/- in the income of the assessee u/s. 69 of the Act.
4 ITA No.425 (Asr)/2015Asst. Year:2009-10
8. We have gone through with the facts and circumstances of the case, relevant documents and rival submissions of the parties as in the instant case as per AIR information, it was revealed that during the F.Y.2008-09, the assessee had deposited Rs.25,00,000/- in cash in his Saving Bank Account and therefore, proceedings under Income Tax Act have been started and out of 25,00,000/- the amount of Rs.9,00,000/- remained unexplained, therefore, the addition was made by ld. A.O., which was subsequently confirmed by the Ld. CIT(A). The assessee in support of its case, relied upon various sale deeds, of which total amounts comes to Rs.6,63,000/- allegedly executed from 26th July, 2004 to 28th Feb. 2007 on different dates. It is common parlance that the property can be sold by power attorney holder but still money has to go back to the owner of the property and from the documents it does not reflects that money was handed over by the assessee to his father by which, it can be proved that after sale of the property by the assessee, the consideration amount was given to his father and thereafter, the same was gifted by the assessee father to the assessee. Even otherwise, no documentary evidence has been filed with regards to the receiving of money by the asessee's father and /or any document such as gift deed or any tenements to the effect that the amount of Rs.9,00,000/- was given by the assesee's father to the assessee.
We are also conscious to observe the facts that even the purported sale deeds have been executed much prior to the date of deposits, even in some of the cases 4 or 5 years back which creates the doubts in the authenticity of the claim of the assessee. Even otherwise, after the amendment in the Registration Act in 2001, the unregistered documents cannot be relied upon.
5 ITA No.425 (Asr)/2015Asst. Year:2009-10 We recently dealt with unregistered documents in the case of Gurdev Singh Vs, Income Tax Officer, I.T.A No.202(Asr)/2016 decided on 08.10.2017 , while relying upon the recent judgment delivered by the Hon'ble apex court , in the case of Commissioner of Income Tax Versus Balbir Singh Maini, (Civil Appeal No. 15619 OF 2017), in which while dealing with unregistered Agreement, the Apex court laid down the following ratio:-
17. The relevant sections that are necessary for us to decide the present matter are as under:
Transfer of Property Act "53A. Part performance. -
Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
Income Tax Act Section 2 - Definitions In this Act, unless the context otherwise requires, - (47) "transfer", in relation to a capital asset, includes, -
(i) to (iv) xxx xxx xxx
(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or
(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.
45. Capital gains -
6 ITA No.425 (Asr)/2015Asst. Year:2009-10 (1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.
48. Mode of computation -
The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:
(i) expenditure incurred wholly and exclusively in connection with such transfer;
ii) the cost of acquisition of the asset and the cost of any improvement thereto:"
18. Section 53A, as is well known, was inserted by the Transfer of Property Amendment Act, 1929 to import into India the equitable doctrine of part performance. This Court has inShrimant Shamrao Suryavanshi & Anr. v. Pralhad Bhairoba Suryavanshi (D) by LRs. & Ors., (2002) 3 SCC 676 at 682 stated as follows:
"16. But there are certain conditions which are required to be fulfilled if a transferee wants to defend or protect his possession under Section 53- A of the Act. The necessary conditions are: (1) there must be a contract to transfer for consideration of any immovable property;
(2) the contract must be in writing, signed by the transferor, or by someone on his behalf;
(3) the writing must be in such words from which the terms necessary to construe the transfer can be ascertained;
(4) the transferee must in part-performance of the contract take possession of the property, or of any part thereof;
(5) the transferee must have done some act in furtherance of the contract;
and (6) the transferee must have performed or be willing to perform his part of the contract."
19. It is also well-settled by this Court that the protection provided under Section 53A is only a shield, and can only be resorted to as a right of defence. See Rambhau Namdeo Gajre v. Narayan Bapuji Dhgotra (Dead) through LRs. (2004) 8 SCC 614 at 619, para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be executed through a registered instrument. This position was changed by the Registration and Other Related Laws (Amendment) Act, 2001. Amendments were made simultaneously in Section 53A of the Transfer of Property Act and Sections 17 and 49 of the Indian Registration Act. By the aforesaid amendment, the words "the contract, though required to be registered, has not been registered, or" in Section 53A of the 1882 Act have 7 ITA No.425 (Asr)/2015 Asst. Year:2009-10 been omitted. Simultaneously, Sections 17 and 49 of the 1908 Act have been amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. Section 17(1A) and Section 49 of the Registration Act, 1908 Act, as amended, read thus:
"17(1A). The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then they shall have no effect for the purposes of the said Section 53A." "49. Effect of non-registration of documents required to be registered. No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall-
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1887 (1 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument."
20. The effect of the aforesaid amendment is that, on and after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act. This being the case, we are of the view that the High Court was right in stating that in order to qualify as a "transfer" of a capital asset under Section 2(47)(v) of the Act, there must be a "contract" which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. The ITAT was not correct in referring to the expression "of the nature referred to in Section 53A" in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub- section (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi (supra), that the Section applies, and this is what is meant by the expression "of the nature referred to in Section 53A". This expression cannot be stretched to refer to an amendment that was made years later in 2001, so as to then say that though registration of a contract is required by the Amendment Act of 2001, yet the aforesaid expression "of 8 ITA No.425 (Asr)/2015 Asst. Year:2009-10 the nature referred to in Section 53A" would somehow refer only to the nature of contract mentioned in Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no "transfer" can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted on the facts of this case, we need not go into any other factual question.
22. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression "enabling the enjoyment of" takes color from the earlier expression "transferring", so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof. The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact.
23. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to The maxim "noscitur a sociis" has been repeatedly applied by this Court. A recent application of the maxim is contained in Coastal Paper Limited v. Commissioner of Central Excise, Visakhapatnam, (2015) 10 SCC 664 at 677, para 25. This maxim is best explained as birds of a feather flocking together. The maxim only means that a word is to be judged by the company it keeps qwnership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose , the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction.
24. The matter can also be viewed from a slightly different angle. Shri Vohra is right when he has referred to Sections 45 and 48 of the Income Tax Act and has then argued that some real income must "arise" on the assumption that there is transfer of a capital asset. This income must have been received or have "accrued" under Section 48 as a result of the transfer of the capital asset.
27. In the facts of the present case, it is clear that the income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, for want of permissions, the entire transaction of development envisaged in the JDA fell through. In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act.
28. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the 9 ITA No.425 (Asr)/2015 Asst. Year:2009-10 necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains "arose" from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act.
From the observation of the Apex Court it can be easily construed that if an agreement to sell is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act and that in order to qualify as a "transfer" of a capital asset under Section 2(47)(v) of the Act, there must be a "contract" which can be enforceable in law under Section 53A of the Transfer of Property Act. Any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882) can only be subjected to taxation. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law that as unregistered Agreement, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. therefore it can be easily construed as has been stated above, there is no contract in the eye of law in force under Section 53A after 2001, unless the said contract is registered.
While coming to the instant case, undisputedly the agreement to sell was not registered and in law without registering agreement to sell and /or the sale deed, the same can not be relied upon for any purposes, therefore claim of the Assessee that the Asseeee got money from his father on the basis of agreement to sell which undisputedly unregistered, can not be relied upon, hence claim of the Asseeee qua unregistered documents does not survive.
10 ITA No.425 (Asr)/2015Asst. Year:2009-10 Considering the peculiar facts and circumstances of the case in hand, we are of the considered opinion that at the maximum, the amount which generated from the registered sale deeds can be taken into consideration to be received by the Assessee's father and given to the assessee as gift. Hence, we feel it appropriate to remand the case to the file of the Assessing Officer to examine the registered sale deeds only and deduct the consideration amount thereof, from the amount of Rs.9,00,000/- as added in the assessment orders.
In view of the aforesaid directions, the appeal is allowed for statistical purposes. However, it is clarified that Assessing Officer is restricted to deal with the issue under consideration as observed above only but not otherwise and the assessee is also not entitled to raise any other ground or issue before the Assessing Officer.
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 30.11.2017.
Sd/- Sd/-
(T. S. KAPOOR) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:30.11.2017.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By order