Income Tax Appellate Tribunal - Indore
Shri Lokesh Gadia, Jhabua vs Acit, Ratlam on 30 May, 2019
Lokesh Gadia
ITA No.854/Ind/2017
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER
AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER
ITA No.854/Ind/2017
Assessment Year 2010-11
Shri Lokesh Gadia, Asstt. Commissioner of
29, Nayapura, Village Vs. Income Tax,
Thandla, Ratlam
Jhabua
(Appellant) (Respondent )
PAN No.ABAPG6401G
Revenue by Shri K.G. Goyal, Sr.DR
Assessee by S/Shri Anil Kamal Garg & Arpit
Gaur ,CAs
Date of Hearing 15.04.2019
Date of Pronouncement 30.05.2019
ORDER
PER MANISH BORAD, AM.
This appeal filed at the instance of the assessee pertaining to Assessment Year 2010-11 is directed against the order of Ld. Commissioner of Income Tax(Appeals) (in short 'CIT(A)'), Ujjain dated 21.03.2017, which is arising out of the order u/s 143(3) r.w.s. 147 of the Income Tax Act 1961(In short the 'Act') dated 27.12.2016 framed by ACIT-Ratlam.
1 Lokesh Gadia ITA No.854/Ind/2017
2. The assessee has raised following grounds of appeal;
1.That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuing notice under s.148 of the Income- Tax Act, 1961 and framing the reassessment.
2a. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in making addition of Rs.1,75,00,000/- in the appellant's income, by invoking provisions of s. 69B of the Act in respect of alleged cash payment for purchase of Land at Village Sejwaya, Tehsil & Dist. Dhar, in the name of one company namely, M/s. Natural Gadia Real Estate Pvt. Ltd., merely on the basis of a statement given by the sellers, by disregarding ample of documentary evidences furnished by the appellant in his support. 2b.That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in making addition of Rs.1,75,00,000/- in the appellant's income, merely on the far- fetched assumptions, by erroneously correlating the making of cash deposits by the sellers in their bank accounts with the alleged cash payments by the appellant, without considering and appreciating the material fact that the sellers were having their independent sources of income and from such sources of income only, the cash deposits in bank accounts were made by them.
That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary". 2 Lokesh Gadia ITA No.854/Ind/2017
3. Brief facts of the case as culled out from the records are that the assessee is an individual deriving income from salary, house property and other income. He is director of M/s. Natural Gadia Real Estate Pvt. Ltd and also partner in two partnership firms namely M/s. Natural Construction and Developers and M/s. Gadia Investments. He filed his return of income for Assessment Year 2010-11 declaring income of Rs.1,58,290/- on 16.8.2001. Subsequently, a notice under s. 148 was issued to the appellant on 10-02-2016 and the appellant vide his letter dated 15-02-2016 requested that the original return may be regarded as the return furnished in compliance to notice u/s. 148. The appellant also made a request for supply of the reasons recorded before issuance of the notice. As per the reasons supplied to the appellant, it was alleged that during the relevant previous year, the appellant had made payment of a sum of Rs.l,75,00,000/- in cash, to two persons, namely Shri Rajendra Prasad Jhala and Shri Vishnu Prasad Jhala, for purchase of 10 Bighas Land situated at Village Sejwaya, Tehsil & Dist,Dhar on behalf of the company, M/s. Natural Gadia Real Estate Pvt. Ltd, in which the appellant is one of the directors having 30% shareholding. In the reasons supplied, the 3 Lokesh Gadia ITA No.854/Ind/2017 AO made reference of Affidavit of aforesaid Mr. Rajendra Prasad Jhala and Mr. Vishnu Jhala, furnished before the ADIT(Inv), Indore in support of the aforesaid allegation of cash payment of Rs.l75 lakhs. Against the reasons recorded, the appellant raised his objections, but such objections got to be overruled. The AO commenced assessment proceedings by way of issuance of notices u/s. 142(1) and 143(2). The appellant was required to show cause as to why the cash payments aggregating to a sum of Rs.175 lakhs be not regarded as his unexplained investment u/s. 69B of the Act. In response to the queries raised by the learned AO, the appellant made the necessary compliance by furnishing all the required details, explanations and documents vide his letter dated 16-11- 2016. Through the same letter, the appellant also made a request for cross examination of sellers of the subject Agricultural Land, on the basis of whose statements the AO had reopened the appellant's case. In response to the request of the appellant, the learned AO issued summons under Section 131 of the Act to the sellers of the land and accordingly, statement of one of the sellers, namely of Shri Rajendra Prasad Jhala, was duly recorded by him on 14-12- 2016. During the course of recording the statement, the appellant 4 Lokesh Gadia ITA No.854/Ind/2017 and his Authorized Representative were also present. The learned AO afforded the opportunity to the appellant to cross-examine Shri Rajendra prasad Jhala. Subsequently, a final Show-Cause Notice was issued by the learned AO to the appellant on 20-12-2016 and in response to the same, the appellant filed a detailed written submission on 26-12-2016, inter alia, commenting upon the various statements given by the sellers of the land. Finally, the learned A 0 framed the Assessment, under S.l43(3)/147, on 27-12- 2016 by determining the total income of the appellant at Rs.l,76,58,290/- as against the returned income of Rs.l,58,290/- thereby making an addition of Rs.l,75,00,000/- in the appellant's income on the allegation of appellant having made cash payment in respect of purchase of Land at Village Sejwaya, District Dhar, by invoking provisions of section 69B of the Act.
4. Aggrieved assessee preferred appeal before CIT(A) but could not succeed as Ld. CIT(A) confirmed the addition observing as follows;
"I have considered the facts of the case carefully. It is an admitted fact that the appellant has purchased 10 bighas of agricultural land from Shrl Rajendra Prasad Jhale and his brother in village Mhow (Khasara No. 5 Lokesh Gadia ITA No.854/Ind/2017 397/1, 2, 3, 4, 5) situated at Village Sejwaya, Tehsil & Distriet-Dhar. The appellant has shown the. value of the land at Rs.95,OO,OOO/- in its return whereas after making enquiries from the sellers of the) properties and entries "in their bank account, it is established by the AO that actual price of the property was at Rs.2,70,00,000/-. The AO has added the difference of Rs.l,75,OO,000/-(Rs.2~70,00,000 - Rs.95,00,000) in the taxable income of the appellant u/s 69B treating it as unexplained investment.
The AO has issued summons to all the sellers and recorded their statements u/s 131 on 14.12.2016. In their statement they have admitted that during the year under consideration they have sold the property to the appellant measuring 10 bighas @ Rs.27 lacs per bigha. They have received the sale consideration in cash as well as cheque from the appellant. In their statement they have not stated the sale of any other property belonging 10 them. They have not only given the statements, but also filed the letter dated 01.12.2016 in support of their contention that they have received amount from the appellant @Rs.27 lacs per bigha as per the agreement which was later on taken by the appellant after the registry. The amount which they have received was deposited by them in the bank. The amount which have received was deposited by them in the bank. The amount was deposited on the same dates in cash on which the appellant has made the payment to the sellers. The amount was deposited in cash on 31.12.2009 in Syndicate Bank, Mhow.
The AO has not made the addition only on the basis of the statement of the sellers, but he has verified the entries and dates of deposit in the bank account of the sellers. Once the sellers have admitted and filed their rectum with the department) the contention of the appellant that addition was made in its case only on the basis of statement is not acceptable.
The suspicion of the appellant that sellers have deposited the. cash 6 Lokesh Gadia ITA No.854/Ind/2017 in their bank accounts.· from undisclosed sources have no force because the allegation of the appellant without any evidence in support of its contention. Moreover, sellers were not having any other source of income except agriculture income which was not liable to tax. The appellant has not brought anything on record which may prove that then. sellers have sold any other land except the land which was sold to appellant. Further it would not be a coincidence that cash deposited in the bank account of the sellers on the same date on which appellant has made payment to the sellers. Thus; all the evidences are against the appellant and it proves· that appellant has made payment over and above the registered amount for the purchase of the land.
The contention .of the appellant· that no addition can be made in its case u/s 69B is not correct as appellant has to explain the source of investment in the purchases and if it failed to explain the source of investment, deeming provision of sec.69B would come into effect. In the case of the appellant it has not recorded amount of investment in its books of account and is not .n:Ild)t to accept the truth inspite of having .all the evidences against it. It is also the known fact that in real estate businesses properties are being purchased and sold over and above the consideration recorded as per the registered document. However, additions could not be made due o not having any evidence of purchasers and sellers of on money paid/ received on the transactions, but in the case of the appellant situation is different. Reliance were placed on the following judgments/ decisions;
(i) Hon'ble Kerala High Court in the case of CIT vs. Anandrajan (1997) 228 ITR 664 (Ker).
(ii) Hon'ble ITAT Chennai Bench in the case of ITO vs. Sundari Chemicals 124 ITYD 460.
(iii) Hon'ble Delhi High Court in the case of Bela Juneja vs. CIT (2012)20 taxmann.com 392 (Delhi) 339 ITR 144.7
Lokesh Gadia ITA No.854/Ind/2017
(iv) Hon'ble Calcutta High court in the case of Unit Construction Ltd. Vs. JCIT (2003) 260 ITR 189.
Regarding contraction and infirmities in the statement of the sellers on which appellant has raised objection and submitted that no addition can be made when there are contradictions in the statements of the sellers. It is observed that appellant has not understood the statement of the sellers. In the statement which was recorded by the ADIT u/s 131, letter which they have filed on 01.12.2016 and before AO and cross examination by the appellant on 14.12.2016, they have admitted that they sold the land to the appellant @ Rs.27 lacs per bigha. No other land was sold by them during that period and they !lad deposited the amount in the bank account which was received from the appellant either through cheque or cash. The sellers are not having any other major source of earning during the year other than selling the agricultural land. Therefore, if there is no contradiction on the basic issue related to sale price of the property, the other infirmities have no relevance and bearing on the case.
The AO has not only provided the copy of the statement of the sellers but also provided opportunity to the appellant to explain the source of investment on account of difference of investment of purchase of property. Opportunity to cross examine was also allowed to !he appellant, therefore, there is no merit in the contention of. the appellant that statement was recorded at its back and all the material was not provided to it. In the letter sellers had admitted the same facts which they had stated in the statement.
Considering the above facts and various judicial decisions, the AO is justified in making addition of Rs.1,75,00,000/- in the taxable income of the appellant on account of unexplained investment u/s 69B of the IT Act and it is hereby confirmed. Therefore, the appeal on this ground is dismissed."
8 Lokesh Gadia ITA No.854/Ind/2017
5. Now the assessee is in appeal before the Tribunal.
6. Ld. Counsel for the assessee argued at length referring to following submissions:-
"Your Honours, after receipt of the statement of the reasons, the appellant through his counsel's letter dated 16.08.2016 (kindly refer PB Page No.44 to 49), objected the very issuance of the notice under s. 148 and as also the reopening of the assessment proceedings. The appellant also requested the AO to provide him the copy of the affidavit of Shri Vishnu Jhala which was relied upon by the AO while recording the reasons.
In response to the objections raised by the appellant, the learned AO passed an order dated 19.10.2016 rejecting the objections of the appellant against issuance of the notice under s. 148 (kindly refer PB Page No.50 to
56). However, the AO, instead of providing the copy of any affidavit, provided a copy of the statements of Shri Vishnu Jhala, as recorded under s.131 of the Act, by the DDIT(Inv.), Indore, at some earlier occasions (kindly refer PB Page No.57 to 69).
9.01 Your Honour, now it is submitted that during the assessment proceedings, the appellant furnished ample of documentary evidences, which directly proves, beyond all doubts, the claim of the appellant that he along with his company had made an aggregate payment of Rs.95,00,000/- only towards purchase of land in contrast to the sum of Rs.2,70,00,000/- [Rs.95 lakhs in cheque + Rs.175 lakhs in cash] alleged by the learned AO. The details of documentary evidences furnished by the appellant are as under :
i)Copies of registered sale agreements executed between the appellant and the sellers evidencing total agreed sales consideration of Rs.95 lakhs [PB 9 Lokesh Gadia ITA No.854/Ind/2017 Page No. 107 to 124];
ii) Copies of Affidavits of the sellers of the land deposed before Hon'b1e Court of S.D.M. Collectorate, Dhar confirming the sales consideration of Rs.95 lakhs [PB Page No. 129 to 132);
iii) Copy of Public Notices issued by the S.D.M. (Revenue), Dhar for subject land [PB Page No.133 & 134);
iv) Copies of the Note Sheets evidencing the proceedings carried out before the office of the District Collector regarding sale of land [PB Page No. 135 to 140);
v) Copies of Orders of District Collector, Dhar for authorizing sale of land for a consideration around Rs.50 lakhs [PB Page No. 141 to 146);
vi) Copies of registered sale deeds of the land stating the agreed sales consideration ofRs.95 lakhs [PB Page No. 147 to 162).
vii) Copies of bank statements of the appellant and the Company reflecting the subject payments [PB Page No. 163 to 166); 10.00 The learned AO, at para 17 of page no. 16 to 20 of the impugned Order, has also made a gist of the various points raised by the appellant. However, the AO could not controvert the various explanations offered by the appellant which were fully supported by the necessary documentary evidences as aforesaid. Miserably, the AO, by simply relying on the statement of the sellers, in preference to various documentary evidences, chose to make the addition of Rs.l,75,00,000/- in the appellant's income on account of alleged cash payment.
11.00 Your Honour, the addition so made by the learned AO is based only and only on incredible statements of sellers, without having any cogent 10 Lokesh Gadia ITA No.854/Ind/2017 and adverse material on record.
11.01 Your Honour, during the course of the assessment proceedings, the appellant had established that the statements given by the sellers of the land are self-serving evidences which are patently far from truth. Many of the points, which were raised by the appellant before the AO, remained unaddressed/un-countered/uncontroverted by the AO. The vital points raised by the appellant before the AO are summarized as under:
It is the Company who is the registered owner of the subject lands and not the appellant. The learned AO failed to appreciate that the Company has made subject investment in the land and not the appellant. The appellant was only holding 30 shares in the above said company and the remaining 70 shares were held by other persons who were not related to the appellant. It is submitted that since it is only the company and not the appellant who is the registered as well as the absolute beneficial owner of the subject property, any addition on the basis of allegation of unexplained investment could have been made only in the hands of the company and in any situation, such addition could not have been made in the hands of the appellant.
For such proposition, now reliance is placed on the following judicial pronouncements:
a) CIT vs. K. Mahim Udma (2000) 242ITR 133 (Ker.)
b) Samurai Software (F) Ltd. vs. CITi (2008) 299ITR 324
ii) Two Sale Agreements (kindly refer PB Page No. 147 to 162), each for a sale consideration of Rs.47.50 lakhs only, were duly entered into between the appellant representing his proposed company and the sellers. These agreements were duly signed by both the parties and were executed in presence of two independent witnesses. These 11 Lokesh Gadia ITA No.854/Ind/2017 agreements were duly registered with the concerning Sub-Registrar of Properties after payment of due Stamp Duty and Registration Fees. Such agreements have not been regarded, much less of proved, as sham or bogus agreements by the Assessing Officer.
Further, existence of any other sale agreement could not be proved either by the sellers or by the AO. It is submitted that this was the first occasion when the sellers, in writing, confirmed the total transaction value of the subject land at Rs.95,OO,OOO/-.
iii) The entire purchase consideration of Rs. 9 5,00,000/- in respect of the subject land has been paid by the appellant! company through banking channels only which are evidenced from the documentary evidences but there is no single documentary evidence in support of payment of any consideration in form of cash [kindly refer bank statements at PB Page No. 166).
iv) Again, for the second time, while obtaining permission from the Hon'ble Court of Collector, Dhar for sale of subject land, the sellers, in written form, have admitted to sell the land for a total consideration of Rs.95,00,000/- [kindly refer PB Page No. 129 to 132]. The sellers have not only admitted but deposed before the Revenue Authorities that they were proposing to sell the subject land to the Company for a consideration of Rs.95 lakhs only. It is submitted that subsequently, by deviating their own Affidavits, the sellers have committed a crime which is punishable under s. 195 of the Indian Penal Code.
v) Even the Orders passed by the District Collector, Dhar on 18- 03- 2010, for authorizing the sellers of the land to make the sale to the company, contained the sales consideration around at Rs.50,00,000/- each [kindly refer PB Page No. 141 to 146). 12 Lokesh Gadia ITA No.854/Ind/2017
vi) Further, on the third occasion, while executing and registering the sale deeds, before a Government Authority, the sellers have stated and admitted the total sales consideration of the subject land at Rs.95,00,000/-. Thus, in nutshell, as many as on three occasions, the sellers, by way of affidavits/ putting signature on duly executed and registered documents, in an unequivocal term, had admitted the sales consideration of the subject land at Rs.95,00,000/- only and therefore, their subsequent oral statements without having any corroborative evidence have no legs to stand and deserves to be discarded at the threshold itself [kindly refer PB Page No. 147 to 162].
vii) The Guideline Value of the subject property was only of Rs. 95 lakhs and at such guideline value only, the actual sale transaction had taken place. If for the sake of argument, the theory of cash payment of Rs.1,75,00,000/- is taken to be correct, then the actual market value of such property would result into a sum of Rs.2,70,00,000/- which is almost 3 times of the guideline value. It is submitted that by any theory of imagination, such a vast difference in the actual market price and Stamp Guideline Value cannot be estimated. Once this being the position, the allegation of the sellers of having received cash payments of Rs.1,75,00,OOO/- over and above the stated consideration of Rs.95,00,000/- deserved to be negated on this count alone.
12.00 Your Honours, in the entire assessment Order, the learned AO has heavily relied upon the statements of the sellers of the land namely of Shri Rajendra Prasad Jhala and his brother Shri Vishnu Prasad Jhala. However, during the course of the assessment proceedings itself, it was brought to the notice of the learned AO that the statements of the sellers are not true and just for escaping 13 Lokesh Gadia ITA No.854/Ind/2017 themselves from the enquiry in respect of the sources of unexplained cash deposits made in their bank accounts, they had cooked up the story for having received the cash consideration. F or negating the statements of the sellers, the appellant had brought various discrepancies in the statements of the sellers, some of which are being summarized as under:
i)It was submitted before the learned AO that the sellers were having other taxable sources of income wherefrom they might have generated cash and such cash was deposited by them in their bank account which was not purported to be disclosed. However, upon being caught and detected with such bank account, Shri Rajendra Prasad Jhala, for explaining the sources of his cash deposits, came out with a story of cash payments by the appellant. It is submitted that initially, Shri Rajendra Prasad Jhala posed himself to be a simple agriculturist without having any other source of income. However, only upon cross-examination, it could be unearthed that Shri Jhala was having income from carrying out the profession of legal practice. Shri Jhala, mischievously, attempted to take the benefit of theory of preponderance of human probability before the Revenue Authorities. In such circumstances, no credence was required to be attached to the statement of the sellers [kindly refer PB Page No. 80 & 81].
ii) During the course of giving statement before the learned AO, the sellers confessed that they were not having any documentary evidences in support of their claim of having received on-money from the appellant [kindly refer PB Page No. 57 to 691. In contrast to no documentary evidence brought on record by the AO, the appellant furnished ample of evidences in support of his claim that neither he himself nor his company ever made any payment over and above that of Rs.95,00,000/- stated in the registered sale deeds.
iii) In the Affidavit filed by Shri Rajendra Prasad Jhala along with his 14 Lokesh Gadia ITA No.854/Ind/2017 brother Shri Vishnu Prasad Jhala, this vital fact was concealed that Shri Rajendra Prasad Jhala is an Advocate by profession since 1990. Shri Rajendra Prasad Jhala evaded such fact even before his Assessing Officer who framed the assessment in his case for A.Y. 2010-11. The AO ought to have confronted Mr. Jhala for having any other income from carrying out practice as an Advocate.
iv) Despite being specifically required by the AO, Shri Rajendra Prasad Jhala failed to produce many documents such as copy of his pay-in slips, counter foil of cheques, copies of purchase deeds of the various lands purchased by him for claiming any deduction under Sec. 54B of the Act.
This vital fact was completely ignored by the AO.
Shri Rajendra Prasad lhala changed his stand frequently and he stated that the alleged agreement for Rs.2,70,00,000/- was taken back by the appellant upon execution of registered agreements for Rs.95,00,000/-. Earlier, it was stated by Shri Jhala that the alleged agreement of Rs.2,70,00,000/- was taken back at the time of execution of registered sale deeds. Thus there is a clear contradiction in two versions of Shri Rajendra prasad Jhala himself (kindly refer PB Page No. 83).
vi) There is also contradiction in the statement of Shri Rajendra Prasad Jhala as regard to the date of alleged receipt of on-money of Rs.I,75,00,000/-. In reply to Q. no. 28 before the AO, Shri Jhala stated that he had received cash amount of Rs.I,75,00,000/- one day before execution of the registered sale agreement whereas, at the same breath, in reply to Q. no. SO, he stated that he received the amount of Rs.l,75,00,000/- on the same day on which draft sale agreements were brought to by the appellant for their signature [kindly refer PB Page No. 84 & 87).
vii) Shri Rajendra Prasad Jhala stated that he was having no past relationship with the appellant. In such circumstances, it is highly 15 Lokesh Gadia ITA No.854/Ind/2017 improbable that any person of ordinary prudence, without getting proper documents executed, would handover such a huge sum in cash to an almost stranger.
viii) Shri Jhala has alleged to have received on-money on sale of land, as the so called normal trend in the real estate transactions but he has not admitted that similar kind of on-money was also paid by him at the time of purchase of such land. If, it is a normal presumption that every land transaction involves payment of on-money then Shri Jhala ought to have disclosed the source of on-money paid by him at the time of purchase of the subject land.
ix) The sellers of the land have claimed a complete exemption on sale of the subject land made by them. The subject land was situated within the prescribed municipal limits and further it was an industrial land. Accordingly, it was not eligible for claim of any exemption from being a capital asset under clause (14) of section 2 of the Act. Despite such fact, it is a matter on record that the sellers have not paid any single penny tax on sale of the subject land.
7. Ld. Counsel for the assessee placed and relied on the following decisions;
(i) Hon'ble High Court of Gujarat, in case of Pr. Cl'T vs. Vivek Prahlad Bhai Patel (2016) 237 Taxman 0331 (Guj.)
(ii) Hon'ble Madras High Court in the case of CIT Vs. P.V. Kalyanasundaram (2006) 282 ITR 259 (MadHC)
(iii) The aforesaid decision of Hon'ble High Court of Madras has also been affirmed by the Hon'ble Supreme Court in 16 Lokesh Gadia ITA No.854/Ind/2017 Civil Appeal No.4262 of 2007 (2007) 294 ITR 0049 (SC)
(iv) ITAT Bangalore Bench in the case of ACIT vs. Ashad Valmark (2014) 40 CCH 0076 (Bang Trib)
(v) CIT Vs. Daulatram Rawatmull (1964) 53 ITR 0574 (SC)
(vi) Umachandran Shaw & Bros vs. CIUT (1959) 37 ITR 0271 (SC)
(vii) CIT Vs. Kapil Nagpal (2016) 381 ITR 0351 (Del)
(viii) CIT vs. Anupam Kapoor (2008) 299 ITR 0179 (P&H)
(ix) Sheo Narain Dulichand vs. CIT (1969) 72 ITR 0766 (AO)
(x) CIT vs. Suresh Kumar Goyal (2004) 270 ITR0050 (Raj.)
(xi) K.P. Verghese vs. ITO (1981) 131 ITR 597 (SC)
(xii) Brijmoni Devi & Ors. Vs. CIT (1983) 142 ITR 427 (Cal.
HC)
(xiii) CIT Vs. Balram Prasad (1984) 150 ITR 687 (All HC)
(xiv) Prem Narayan & Co. Vs. CIT (2006) 287 ITR 0056 (P&H)
(xv) CMS Computers (P) Ltd & Anr. Vs. Appropriate Authority & Ors. (2008) 76 CCH 685 (MUmHC) (xvi) Indian Dyestuff Industries Ltd vs. Inspecting Assistant Commissioner & Anr. (1994) 206 ITR 0485 (GUJHC) 17 Lokesh Gadia ITA No.854/Ind/2017 (xvii) C.B. Gautam vs. Union of India & Ors. (1993) 199 ITR 530 (SC)
8. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to by both the parties.
9. Through Ground No.1 the assessee has challenged the finding of Ld. CIT(A) confirming the action of Ld. A.O of issuing notices u/s 148 of the Act and framing the reassessment. We observe that the assessee being an individual earned income from salary, house property and other income. Return of income was filed on 17.3.2011 declaring income of Rs.1,58,290/- which was processed on 11.8.2011. The case was not selected for scrutiny, therefore no regular assessment was framed u/s 143(3) of the Act. An information was received by Ld.A.O from ADIT(Investigation)-II, Indore. This investigation was initiated for seeking information for the source of cash of Rs.1,82,00,000/- deposited by two persons namely Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala in their joint bank account on 13.12.2009. When the statements were recorded these two persons stated that out of the cash deposited 18 Lokesh Gadia ITA No.854/Ind/2017 Rs.1,82,00,000/-, a sum of Rs.1,75,00,000/- relates to the cash received on sale of agriculture land. Investigating Officer further revealed that these two persons sold land to M/s. Natural Gadia Real Estate Pvt. Ltd. The assessee Mr. Lokesh Gadia who the Director of Natural Gadia Real Estate Pvt. Ltd entered into two separate sale deeds on 25.3.2010 for the purchase of land. On the basis of this information the Investigation Officer sent it to the Ld. A.O of the assessee stating that the land deal was actually entered into for Rs 2,75,00,000/- out of which consideration of Rs.95,00,000/- was received through Demand Draft and cheques and balance sum of Rs.1,75,00,000/- was given in cash by the assessee to Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala. On the basis of this information the Ld. A.O issued notice u/s 148 of the Act to reassess the income of the assessee. Reasons were recorded and supplied to the assessee. Now whether reassessment proceedings initiated by the Ld. A.O u/s 147 of the Act by initiating the notices u/s 148 of the Act as valid?. We observe that Ld. CIT(A) dismissed the assessee's ground challenging the validity of issuance of notice u/s 148 of the Act observing as follows;
19Lokesh Gadia ITA No.854/Ind/2017 "4.1 Ground No.1 & 2:: Through these grounds of appeal the appellant has challenged the issuance of notice u/s 148 of the LT. Act. The notice u/s 148 was issued to the appellant on 10.02.2016. The notice u/s 148 has been issued after recording the reasons. The appellant has been provided the reasons recorded u/s 148 of the LT. Act. As far as the adequacies of reasons are concerned in my opinion, they are adequate and based QP relevant facts and material. The need to issuing notice arose due to noticing of vast amount of cash payment made by the appellant to the sellers of land. The appellant filed the objection for issuing notice u/s. 148 on 22.08.2016. The objection filed has been discharge by the AO. The appellant has filed the letter dated 19.02.2016 in response to notice u/s 148 stating that original return tiled on 17-03-2011 may be treated as return in compliance to notice u/s. 148. Subsequently notice u/s 143(2) and 142(1) has been issued and appellant have complied the above notices. The AO has followed the proper procedure before issuing the notice U/S 148. Therefore, the appeal on these grounds is Dismissed".
10. From going through the above findings of Ld. CIT(A) and in the light of the fact stated above, we observe that explanation 2(b) of Section 147 of the Act which deals with the cases where income chargeable to tax is deemed to be escaped for assessment, applies on the given facts which provides that "where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Ld. A.O that the assessee has under
stated the income or has claimed excessive loss, deduction, allowance or relief in the return". Same is the situation in the case 20 Lokesh Gadia ITA No.854/Ind/2017 of the assessee wherein the Ld. A.O received the information which indicated that the assessee has understated income or has not disclosed the investment properly. These reasons was sufficient to apply the above provisions on the assessee alleging that he has not declared proper income or investment and escaped the tax assessment. Therefore in our considered view Ld. A.O has rightly issued the notice u/s 148 of the Act to frame the reassessment in the case of the assessee. We therefore find no reason to interfere in the finding of Ld. CIT(A) and dismiss assessee's Ground No.1.
11. Now we take up Ground No. 2(a) & 2(b) of the assessee's appeal which reads as follows;
2a. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in making addition of Rs.1,75,00,000/- in the appellant's income, by invoking provisions of s. 69B of the Act in respect of alleged cash payment for purchase of Land at Village Sejwaya, Tehsil & Dist. Dhar, in the name of one company namely, M/s. Natural Gadia Real Estate Pvt. Ltd., merely on the basis of a statement given by the sellers, by disregarding ample of documentary evidences furnished by the appellant in his support. 2b.That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in making addition of Rs.1,75,00,000/- in the appellant's income, merely on the far- 21 Lokesh Gadia ITA No.854/Ind/2017 fetched assumptions, by erroneously correlating the making of cash deposits by the sellers in their bank accounts with the alleged cash payments by the appellant, without considering and appreciating the material fact that the sellers were having their independent sources of income and from such sources of income only, the cash deposits in bank accounts were made by them.
12. In the above two grounds the transaction in question is for the land deal between the sellers namely Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala and the buyer Natural Gadia Real Estate Pvt. Ltd (through its Director Mr. Lokesh Gadia, the assessee). Land is situated at Village Sejwaya, Tehsil & Dist. Dhar measuring 2.091 hectre (1.046 hec + 1.45 hec) and in bighas the area is 10 bighas) was jointly owned by Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala. Agreement for sale was entered on 24.12.2009 between the two parties ( seller & buyer) agreeing for a total sale consideration of Rs.95,00,000/-. An advance of Rs.5,00,000/- was given vide Cheque No.284340 & 284343 dated 23.12.2009 of SBI, Indore. As the land in question is situated in District Dhar which is declared as a tribal District therefore written permission from District Collector is needed prior to the sale of land. Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala 22 Lokesh Gadia ITA No.854/Ind/2017 made two separate applications on 24.12.2009 and District Collector accorded the permission on 13.1.2010. Subsequently the sellers executed two separate sale deeds in favour of purchaser company namely Natural Gadia Real Estate Pvt. Ltd (through its Director Mr. Lokesh Gadia, the assessee) for a consideration of Rs. 47,50,000/- each which totalling to Rs.95,00,000/-. So the transaction of sale of land was completed on 25.3.2010 by the sale deed duly signed by all the parties for total consideration of Rs.95,00,000/-.
13. Now the controversy arised when the information was received by the revenue authorities from ADIT(Investigation) that Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala deposited cash of Rs.1,82,00,000/- in their joint saving bank account with Syndicate Bank, Mhow. In the statement given to the revenue authorities it was accepted that out of Rs.1,82,00,000/- a sum of Rs.1,75,00,000/- was the cash received from sale of agriculture land measuring 10 beghas at Village Sejwaya, Tehsil & Dist. Dhar which is over and above the sale consideration of Rs.95,00,000/- received through cheque/draft. In the statement they stated that 23 Lokesh Gadia ITA No.854/Ind/2017 Mr. Logesh Gadia who is the Director of Natural Gadia Real Estate Pvt. Ltd completed the transaction and they alleged that the cash of Rs.1,75,00,000/-was received from the assessee. The only documentary evidence with the revenue authorities for the alleged addition for unexplained investment u/s 69B of the Act at Rs.1,75,00,000/- in the hands of the assessee Mr. Lokesh Gadia are the statement given by Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala. In the statement it was stated that cash of Rs.1,82,00,000/- inter alia including the alleged cash of Rs.1,75,00,000/- was deposited in their joint bank account few months before the date of sale deed. To be more specific the cash was deposited on 31.12.2009 and sale deed was registered on 25.3.2010. However the application for getting the permission to make the sale transaction was made on 24.12.2009. So the only basis with the revenue authorities for making the impugned addition of Rs.1,75,00,000/- are the statements of two persons of receiving the cash of Rs.1,75,00,000/- over and above the sale consideration of Rs.95,00,000/- shown in the registered sale deed. 24 Lokesh Gadia ITA No.854/Ind/2017
14. Ld. Counsel for the assessee placed detailed submissions with supporting evidence contending that the sale transaction actually took place between the seller and Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala and the purchaser company Natural Gadia Real Estate Pvt. Ltd. The assessee is Director of the company with 30% share holding in this company. The transaction of sale of land took place through registered sale deed duly signed by both the sellers as well as the companies authorised representative. Before this transaction actually took place agreement to sale was duly executed agreeing for consideration of Rs.95,00,000/-, the prior permission was also taken from the Collector showing the sale consideration of Rs.95,00,000/-. The sale consideration was not less than the guideline value of the property. Ld. Counsel for the assessee further stated that both the sellers have given affidavits before the SDM Collector, Dhar confirming the sale consideration of Rs.95,00,000/-. Public notices were issued for the said land. Note sheet evidencing proceedings carried out before the office of the District Collector regarding sale of land. Necessary approval was given by Collector Office for carrying out the sale transaction on 18.3.2010 stating the sale consideration of Rs.95,00,000/- out of 25 Lokesh Gadia ITA No.854/Ind/2017 which Rs.5,00,000/- was given in advance and the remaining amount to be given at the time of registering the sale deed. So there is sufficient material placed on record by the Ld. Counsel for the assessee in support of its contention that the transaction of sale of alleged land was for a sale consideration of Rs.95,00,000/- only and there is no iota of evidence which could indicate that the actual sale consideration was Rs.2,70,00,000/- and also there is no evidence to prove that the assessee on behalf of the company of which he is the Director paid cash of Rs.1,75,00,000/- over and over the sale consideration.
15. Ld. Counsel for the assessee also stated that no independent enquiry was conducted by the revenue authorities to value the alleged land measuring 10 bighas by Government approved valuer authority in order to prove that the market price of the land was more than the sale consideration stated in the registered sale deed. Ld. Departmental Representative also could not controvert this fact. Therefore it is an undisputed fact that the revenue authorities has not conducted any independent enquiry for the valuation of the agriculture land to support their addition of Rs.1,75,00,000/- being 26 Lokesh Gadia ITA No.854/Ind/2017 sale consideration given over and above the declared sale consideration of Rs.95,00,000/-.
16. Now the above stated facts needs to be considered in the light of judicial pronouncements. Hon'ble High Court of in case of Pr. Cl'T vs. Vivek Prahlad Bhai Patel (supra) discarded the statement as regard to receipt of a higher sales consideration by the seller observing as follows;
"7. The Tribunal, in the impugned order has found that the statements of Somabhai Prajapati and the assessee are contradictory. No material has been brought on record to substantiate the factum that the lands were sold to Ajay Patel at the instance of the assessee as claimed by Somabhai Prajapati. The Tribunal has further noted that Shri Somabhai in his statement has stated that the amount received by him from the actual purchasers at the time of execution of sale deed was returned by him to the assessee; however, no material was brought on record to show that the sale consideration received by Somabhai Prajapati was paid to the assessee. The Tribunal found that according to Somabhai Prajapati while the agreement to sell was for nine specific plots, subsequently three plots bearing No. 540, 487 and 497 were exchanged in place of plots bearing No.512, 510 and 513; but no material had been brought on record to show that there was an agreement with the assessee for such exchange of plots. The Tribunal was of the view that in the absence of any such material, it cannot be assumed that the statement of Somabhai Prajapati was sacrosanct and not a self serving statement more so, when the alleged amount which he claimed to have received was claimed by him as non-27
Lokesh Gadia ITA No.854/Ind/2017 taxable receipt being exempt under section 54B of the Act. Upon appreciation of the entire material on record, the Tribunal has come to the conclusion that the revenue had failed to bring on record any reliable material to prove that the assessee had made actual investment of Rs.3,25,51,0001-, Rs.6,51,00,0001-and Rs.3,25,50, 0001- in the previous years relevant to assessment years 2005-06, 2006-07 and 2007-08 respectively. However, to the extent of Rs. 11, 00, 0001-, the Tribunal was of the view that the agreement was material to conclude payment of such amount and that the assessee had failed to show that the amount of Rs. 11, 00, 0001- was paid by him to Shri Somabhai Prajapati by cheque and not by cash and accordingly confirmed the addition to that extent for assessment year 2005-06.
8. For the reasons stated hereinabove, this court is in complete agreement with the findings recorded by the Tribunal upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their income-tax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Income-tax v. Daulatram Rawatmull, (1964) 53 ITR 574 (SC), even if circumstances raise a suspicion, suspicion cannot take the place of evidence.
9. In the light of the above discussion, it is evident that the conclusion arrived at by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel for the appellant, despite strenuous efforts, is not in a position to point out any 28 Lokesh Gadia ITA No.854/Ind/2017 perversity in the findings recorded by the Tribunal. Under the circumstances, in the absence of any material to the contrary being brought to the notice of the court so as to dislodge the findings of fact recorded by the Tribunal, the impugned order of the Tribunal being based upon concurrent findings of fact recorded after appreciating the evidence on record, does not give rise to any question of law, much less, a substantial question of law so as to warrant interference. The appeals, therefore, fail and are accordingly dismissed. 11 (emphasis supplied)
17. The Co-ordinate Bench Bangalore in the case of ACIT vs. Ashad Valmark (supra)' has held that no addition can be made by the Ld. AO on account of unexplained investment in land merely relying upon the statement one of the member of AOP, in absence of any corroborative documents/evidences on record.
18. Judgment of Hon'ble Apex Court in the case of K.P. Varghese vs. ITD (1981) 131 ITR 597 (SC) in similar type of issue lays down following ratios:-
"18. We must, therefore, hold that sub-so (2) of S. 52 can be invoked only where the consideration for the transfer has been understated by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an understatement or concealment is on the Revenue. This burden may be discharged by the Revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration 29 Lokesh Gadia ITA No.854/Ind/2017 received by him and there is an understatement or concealment of the consideration in respect of the transfer. Sub- s. (2) has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of the consideration. We find that in the present case, it was not the contention of the Revenue that the property was sold by the assessee to his daughter-in-law and five of his children for a consideration which was more than the sum of Rs. 16,500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the IT authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of Rs. 16,500. Therefore, on the construction placed by us, sub-s, (2) had no application to the present nd the 1TO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under 5, 148, The order of reassessment made by the 1TO pursuant to the notice issued under s. 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it. "
19. The Hon'ble AlIahabad High Court in the case of CIT vs, Balram Prasad (1984) 150 lTR 687, following the decision in the case of K.P. Varghese (supra), held that the "onus is on the Revenue for showing that the assessee actually received more than what was declared by him".
30 Lokesh Gadia ITA No.854/Ind/2017
20. Similarly, the Hon'ble High Court of Punjab & Haryana in the case of Prem Narayan & Co. vs ClT (2006) 287 ITR 0056 (P&H) has also held that "in absence of any finding that the assessee actually received any consideration more than the value recorded in the documents, no addition can be made".
21. The Hon'ble High Court of Gujarat in the case of Indian Dyestuff Industries Lid. vs, Inspecting Assistant Commissioner & Anr, (1994) 206 lTR 0485 has held that "there must be some material with the competent authority to suggest that some amount over and above the consideration stated in the sale deed was passed between the sellers and the purchaser".
22. Similar issue came up before the Hon'ble Madras High Court in the case of CIT vs. P. V Kalyanasundaram (supra) wherein also addition was made in the appellants income towards purchase consideration of land merely on the basis of statement of sellers who gave contradictory statements. No independent enquiry was carried out to value the property in order to support the addition. For proper understanding we are reproducing the issue involved, facts and the judgment as follows;
31 Lokesh Gadia ITA No.854/Ind/2017 "A) Whether or not when the Returns and the Statements of the seller admit higher sale consideration actually received, the revenue is justified in fixing the sale consideration at the higher amount than what has been declared?
B) When the Assessee did not give any explanation to the notings found and at the same time the revenue is able to corroborate the same with the statement of the seller for the purpose of determination of actual sale value, would the lower authority be justified in interfering with the same? C) When consistent sworn statements were taken into consideration along with evidences found at the time of search, would all be liable to be rejected on the basis of one statement in between contradicting the earlier ones which was also explained away as a result of intimidation?"
2. The facts leading to the above questions of law are as under:
i) The assessment was made under Section 158BC of the Income Tax Act.
The relevant Block Period was 01.04.1988 to 08.12.1998. The assessee had purchased land at Brindavan Road, Fairlands, Salem on 26 .10.1
998. The land was registered for Rs.4.10 lakhs. During the course of search in the office premises of Polimer Net Work, certain notings were found in the seized material RK/S/B&D/25. In the statement recorded on 08.12.98, the assessee stated that he did not remember for what purpose he had made notings, which was confirmed by the assessee in a subsequent statement recorded on 11.12.1998. The land was purchased from one Shri Rajarathinam. His statement was also recorded on the date of search i.e. 08.12.1998 and also on 11.12.1998. In the sworn statement dated 08.12.1998, in question No.3, Shri Rajarathinam admitted that he had received Rs.4.10 lakhs as sale consideration but in question No.4, he admitted that he had received Rs.34.35 lakhs. Again in the statement recorded on 11.12.1998, Shri Rajarathinam, the seller admitted that a total consideration of Rs.34.85 lakhs was received from the assessee out 32 Lokesh Gadia ITA No.854/Ind/2017 of which Rs.4.10 lakhs was received in demand draft and the balance in cash. In the affidavit given on 08.01 .1999 by Shri Rajarathinam, it was mentioned that the sale consideration received by him from Sri P.V.Kalyanasundaram i.e. the assessee, was only Rs.4.10 lakhs and the earlier statements given before the Income Tax authorities were not true. On 10.08.2000, the seller Sri Rajarathinam submitted a letter before the Assessing Officer withdrawing the affidavit given on 08.01.1999. In the subsequent sworn statement recorded before the Assessing Officer on 20.11.2000, Sri Rajarathinam had mentioned that the sale consideration of Rs.34.85 lakhs which was received by him from the purchase consideration was actually Rs.34.85 lakhs, as against Rs.4.10 lakhs stated in the registered deed for purchase of land. In the cash flow statement for the assessment year 19 99-2000 i.e. block period 01.04.1998 to 08.12.1998, the Assessing Officer adopted the sum in the cash flow relating to purchase of land at Rs.35.45 lakhs as against Rs.4,69,995/- disclosed by the assessee in his cash flow statement. This had resulted in an addition of Rs.3 0,75,005/- as undisclosed income for the Block Period 01.04.1998 to 0 8.12.1998.
ii) Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income Tax (Appeals). The Commisioner of Income Tax ( Appeals), noted that due to conflicting nature of the statements given by the seller, his statement could not be relied upon and hence he deleted the addition made by the Assessing Officer. Aggrieved by the order of the C.I.T. (A), the Revenue filed an appeal before the Income Tax Appellate Tribunal. The Tribunal dismissed the Revenue's appeal and confirmed the order of the C.I.T. (A). The learned counsel for the Revenue submitted that the value declared by the assessee for the purchase of the plot was Rs.100/- per sq.ft. even when the guideline value was Rs.400/- per sq.ft. and hence the order of the Tribunal was perverse, wrong and without basis.
33 Lokesh Gadia ITA No.854/Ind/2017
3. We heard the counsel. The seller had initially given conflicting statement about the sale consideration he received. When confronted by the Revenue on 11.12.1998, the seller admitted that he had deposited Rs.4.10 lakhs received through draft in the bank and the rest amount was held by him in cash. The Revenue authorities could well have seized the cash invoking Section 132 of the Act, but for obvious reasons this was not done. Had the cash been seized from the seller, the matter would have been concluded in favour of the Revenue. In a subsequent submission, the seller claimed on 20.11.2000 that he had paid Rs.15 lakhs out of the sale proceeds to settle old family debts, Rs.4 .80 lakhs for construction of house in Pullkasi Village and the balance was advanced to parties for keeping Rs.2 lakhs and Rs.3 lakhs in the house for family expenses and educational expenses of his daughter, respectively. It was also noted that the revised return was filed by the seller wherein he had shown approximately Rs.2.5 lakhs being available with him in cash. Even after giving the retraction and admitting that he had sold the property for a sale consideration of Rs.4.10 lakhs, the seller filed his I.T. Return on 28.01.2000 wherein he did not admit the cash on money consideration for the sale transaction. Subsequently he revised the I.T. Return wherein he admitted the sale consideration and showing Rs.4.80 lakhs out of the above as utilised for construction of residential house property and consequently claiming exemption under Section 54, the seller filed the computation of income paying Rs.1,83,576/- as tax, which was quite evident from the conflicting statements given by the seller and the conflicting I.T. Returns filed by him that his action of admitting sale consideration and paying tax was nothing but an obvious effort to save from further harassment from the Revenue and escape from the exigibility of tax on undisclosed income of the cash consideration under Section 158 BD of the Act, which in magnitude would far exceed the tax paid by him. The burden of proving actual consideration in such transaction was that of Revenue. The Tribunal had given factual finding and held as follows: "We 34 Lokesh Gadia ITA No.854/Ind/2017 find that it is the uniform view of the Courts and also held by the Apex Court as reported in 131 ITR 397 the burden of proving actual consideration in such transaction is that of revenue. Considering the entire gamut of the case, we find that revenue has failed to discharge its duties and as held by the Id. CIT(A) instead made up a case on surmices and conjectures which cannot be allowed. Under the circumstances, we do not find any infirmity in the order of the Id. CIT(A) and we uphold the appellate order in this regard."
We also found that the Assessing Officer did not conduct any independent enquiry relating to the value of the property purchased. He merely relied on the statement given by the seller. If he would have taken independent enquiry by referring the matter with the Valuation Officer, the controversy could have been avoided. Failing to refer the matter was a fatal one.
4. In view of the foregoing conclusions, we find no error in the order of the Income Tax Appellate Tribunal and requires no interference. Hence no substantial questions of law arise for consideration of this Court. Accordingly, the above tax case is dismissed. No costs."
23. In the above judgment of Hon'ble Madras High Court has clearly held that the burden of proving actual consideration in these transaction was on the revenue and as the revenue has failed to discharge its duties, such additions are made merely on surmises and conjectures. This judgment of Hon'ble High Court of Madras has also been affirmed by the Hon'ble Supreme Court of India in Civil Appeal No.4262 of 2007 294 ITR 0049.
35 Lokesh Gadia ITA No.854/Ind/2017
24. Now summarising the facts of the instant appeal and in light of above judgments we find that on one hand revenue authorities have relied only on the statement of sellers of land which was brought on record due to deposit of cash in their bank accounts. The source of deposit of alleged cash ofRs.1,75,00,000/- in the joint bank account of sellers may be either from their own undisclosed sources of income of two sellers or "on money" receipt from sale of land. On the other hand there is long list of documentary evidences corroborating the transactions of sale of land for Rs.95,00,000/- which are duly signed by the sellers namely Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala on multiple occasions. These documents includes agreement to sale dated 24.12.2009 executed between the purchasing company and the sellers for sale of said land, agreeing for sale consideration of Rs.95,00,000/-, copies of the application dated 24.12.2009 made by the sellers before the Collector, Dhar, Affidavit dated 13.1.10 duly signed in by the sellers placed before the SDM Collector, Dhar, copies of public notices dated 1.1.2010 issued by the SDM(Revenue) for the purpose of sale of subject land, copies of the note sheets evidencing the proceedings carried out before the office of the District Collector regarding sale 36 Lokesh Gadia ITA No.854/Ind/2017 of land, copies of orders dated 18.3.2010 passed by District Collector, Dhar authorising the seller of land to make the sale to M/s. Natural Gadia Real Estate Pvt. Ltd, copies of relevant extracts of bank statement of the company reflecting the payment of sale consideration to the sellers and copies of registration sale deed dated 25.03.2010 executed by all the parties in respect of subject land. All these above stated documents including affidavits signed under oath have established one fact again and again that two persons namely Mr. Rajendra Prasad Jhala and Mr. Vishnu Prasad Jhala who owned agricultural land measuring 10 Bighas sold it for sale consideration of Rs.95,00,000/- to M/s. Natural Gadia Real Estate Pvt. Ltd through its Director Mr. Lokesh Gadia i.e. the assessee.
25. Certainly due to number of evidences filed by the assessee enumerating the fact that the transaction of sale of land was entered for a sale consideration of Rs.95,00,000/- are much more in weightage in comparison to single piece of evidence in the form of statement given by the sellers. Situation may have been different if the department had undertaken the valuation of land in question to 37 Lokesh Gadia ITA No.854/Ind/2017 prove that market price of the land was around Rs. 2.70 crores.
26. The credibility of the documentary evidences corroborating the fact that sale consideration is only Rs.95,00,000/-and not Rs.2,70,00,000/- is far more than the statement given by the sellers and the Ld. Departmental Representative failed to controvert the submissions as well as documentary evidences placed before us by the Ld. Counsel for the assessee. It is a settled law that documentary evidence has precedence over oral evidence. In the case of Roop Kumar V/s Mohan Thedeni 2003 6 SCC 595 Hon'ble Supreme Court observed that "It is likewise a general and most inflexible rule that wherever written instruments are appointed, either by the requirement of law, or by the contract of the parties, to be the repositories and memorials of truth, any other evidence is excluded from being used either as a substitute for such instruments, or to contradict or alter them. This is a matter both of principle and policy. It is of principle because such instruments are in their own nature and origin, entitled to a much higher degree of credit than parol evidence. It is of policy because it would be attended with great mischief if those instruments, upon which men's rights depended, 38 Lokesh Gadia ITA No.854/Ind/2017 were liable to be impeached by loose collateral evidence. (See Starkie on Evidence p. 648" (Emphasis applied). We therefore on the basis of the facts and documentary evidences placed before us are inclined to hold that the sale consideration for sale of land in question was only Rs.95,00,000/- and revenue authorities failed to bring any credible material on record to prove that the sale consideration was Rs. 2,70,00,000/- and not Rs.95,00,000/-.
27. Even otherwise the addition of Rs.1,75,00,000/- made by the Ld. A.O u/s 69B of the Act will not stand for under the provisions of Section 69B of the Act, firstly because the alleged land is not purchased by the assessee but is purchased in the name of another assessee namely Natural Gadia Real Estate Pvt. Ltd and secondly the assessee who is earning income from salary, house property and income from other sources is not maintaining any books of accounts and for making any addition u/s 69B of the Act there should be specific finding by Ld. A.O that the investment made by the assessee exceeds the amount recorded in the books of accounts maintained by the assessee for any source of income and the assessee offers no explanation about such excess amount or the 39 Lokesh Gadia ITA No.854/Ind/2017 explanation offered by the assessee is not, in the opinion of the A.O, satisfactory.
28. In the instant case the assessee is not maintaining any books of accounts nor the land in question is purchased by him. Even otherwise the amount of investment in land shown by Natural Gadia Real Estate Pvt. Ltd is duly supported by various documentary evidences referred above and payment made through account payee cheque duly mentioned in the registered sale deeds.
29. We, therefore in the given facts and circumstances of the case are of the considered view that both the lower authorities erred in confirming the addition of Rs.1,75,00,000/- by wrongly invoking provisions of Section 69B of the Act, as the alleged transaction of sale of land by two sellers to the buyer M/s. Natural Gadia Real Estate Pvt. Ltd was entered into at a consideration of Rs.95,00,000/- only and no corroborative evidence is placed on record by the revenue authorities as well as Ld. Departmental Representative which could prove that "on money" of Rs.1,75,00,000/- was paid over and above the stated sale 40 Lokesh Gadia ITA No.854/Ind/2017 consideration in the registered sale deed. We, therefore set aside the finding of Ld. CIT(A) and delete the addition of Rs.1,75,00,000/- made in the hands of the assessee by Ld. A.O u/s 69B of the Act and allow Ground No. 2(a) & 2(b) of the assessee.
30. Ground No.3 is general in nature which needs no adjudication.
31. In the result appeal of the assessee is partly allowed.
The order pronounced in the open Court on 30.05.2019.
Sd/- Sd/-
( KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 30th May, 2019
/Dev
Copy to: The Appellant/Respondent/CIT concerned/CIT(A)
concerned/ DR, ITAT, Indore/Guard file.
By order
Assistant Registrar, ITAT, Indore
41