Income Tax Appellate Tribunal - Amritsar
Kashmir Singh Malhi, Phagwara vs Assessee on 25 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL,
AMRITSAR BENCH; AMRITSAR
BEFORE SH. A.D. JAIN, JUDICIAL MEMBER
AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No.46(Asr)/2014
Assessment year:2010-11
PAN: AKRPM4174C
Sh. Kashmir Singh Malhi, vs. Income Tax Officer,
Advocate, Civil Courts, Ward-2,
Phillaur. Phillaur.
(Appellant) (Respondent)
Appellant by:S/Sh. Sudhir Sehgal & Piyush Bansal, CA
Respondent by: Sh. S.S. Kanwal, DR
Date of hearing:10/02/2016
Date of pronouncement: 25/02/2016
ORDER
PER A.D. JAIN, JM:
This is the assessee's appeal for the assessment year 2010-11 against the ld. CIT(A)'s action of confirming the addition of Rs.30,40,200/- out of total addition of Rs.40,31,200/- made by the AO under section 69A of the Act.
2. The facts of the case are that the assessee is an individual who earns his livelihood from the profession of a lawyer. The assessee filed his income tax return for the year under consideration on 26.11.2010 declaring therein an income of Rs.4,33,580/-. However, the assessment in this case was completed vide order u/s 143(3) of the Income Tax Act, 2 ITA No.46(Asr)/2014 Assessment Year: 2010-11 1961 on 05.03.2013 at an assessed income of Rs.44,45,480/-. While completing the assessment, the Assessing Officer made an addition of Rs.40,31,200/- to the returned income of the assessee, which, according to the Assessing Officer, represents the unexplained cash deposits into the bank accounts of the assessee maintained by him with various banks.
3. The AO observed as follows:
"In this case return of income was filed on 26.11.2010 declaring income of Rs. 4,33,580/-. The same was processed u/s 143(1) of the Income-tax Act. Later on this case was selected for scrutiny manually with the prior approval of the worthy Addi.Commissioner of Income-tax, Phagwara Range. Phagwara and notice under section 143(2) was issued on 23.09.2011 which was served upon the assessee on 26.09.2011. Subsequently notices u/s 142(0/143(2) of the Income-tax Act alongwith questionnaire were issued on 24/25.05.2012 and sent through post. Now with the change in the holder of the office fresh notice u/s 142(1) and 143(2) of the IT. Act were issued on 06.07.2012. In response to these notices, Sh. Piyush Bansal,C.A. attended the assessment proceedings from time to time. Required informations have been furnished which have been placed on the record. The assessee derived income from profession. During assessment proceeding, the following issues emerged:-
2. During the said year, the assessee deposited cash on various dales at Rs. 11,48,700/- into his saving account 63101504447 with IClCl Bank Ltd., G.T. Road, Phagwara, Rs.
28,60,100/- in Punjab National Bank, Alta Goraya A/c No. 26203 and Rs. 2,90,000/- in Punjab and Sind Bank, Jalandhar A/c No. 8620. The assessee was asked to explain the sources of cash credit entries of the said accounts. In response to this query, the assessee's counsel filed written submission stating that cash deposits in the accounts are from the sale proceeds of his properly No. 964 at Urban Estate, Phagwara and his professional receipts. The plot measuring 8 marlas was allotted by PUDA during the financial year 2007- 08for Rs. 18,13,163/- and spent Rs. 25,03,000/- on its construction. This constructed house was sold for Rs. 45,58,205/- to Mrs. Gurdip Kaur w/o Mr. Resham Singh, Vill.
3 ITA No.46(Asr)/2014Assessment Year: 2010-11 Rurkee, Patti Khera Tehsil Phillaur vide agreement dated 02.05.2009. The assessee filed certified copy of advance agreemen t, copy of allotment letter dated 09.06.2010 issued by the PUDA in favour of Mrs. Gurdeep Kaur, copy of affidavits and copy of Identity bond.
As per certified copy of advance agreement, the assessee would receive the payment in the following installments: -
Advance received:- Rs. 3 lacs From 7.05.2009 to 10.05.2009 Rs. 4.5 lacs From 16.05.2009 to 21.05.2009 Rs. 5 lacs From 06.06.2009 to 04.06.2009 Rs. 13 lacs From 21.07.2009 to 25.07.2009 Rs. 13 lacs From 15.10.2009 to 20.10.2009 Rs. 4 lacs From 10.01.2010 to 16.01.2010 Rs.50,000/- Balance Rs. 2,58,2057- will be paid
by the buyer directly to PUD A on issue of allotment letter in her name. The assesses was asked vide this office letter dated 10.10.2012 to produce the following documents otherwise whole cash credit entries in his bank account will be treated as unexplained income earned during the said year :-
i. A copy of bank account statement of Smt. Gurdip Kaur (purchaser) ii.Original agreement made with the purchaser. Hi. Copy of passport of Smt. Gurdip Kaur. iv. Intimate the source of income of Smt. Gurdip Kaur. v. Detail and sources of each debit and credit entry of the said bank account statement. In response to this letter, the A.R. of the assessee filed written submission on 10.12.2012 in which stated that :-
The assessee could not obtain the copy of individual bank account of the buyer Mrs. Gurdip Kaur. However, there is a joint account of Smt. Gurdip Kaur w/o Kewal Singh with his brother Mr. Piara Singh and nephew Mr. Hah Kris ha n with Capital Local Area Bank Ltd. However, the assessee has requested the relatives of the buyer to get a copy of bank passbook of Mrs. Gurdip Kaur.
ii Original agreement is not available with the assessee as the original is always kept by the buyer and the seller keeps the photocopy.
iii. The assessee has requested the relatives of the buyer to get a copy of passport of Mrs. Gurdip Jffaur from England. To which Mr. Hah Krishan, Nephew of the buyer has assured assessee that they will get the same from Mrs. Gurdip Kaur.4 ITA No.46(Asr)/2014
Assessment Year: 2010-11 iv. The assessee has requested the buyer Mrs. Gurdip Kaur through e- mail to send us the source of payment as -well as an affidavit from her side regarding the purchase ofproperty from us. It has been assured by her son in return mail that his mother is out of station right now and will be back before Chritsmas and then they will send us the requisite documents.
The assessee stated that the documents requested from the buyer will be submitted to your goodself as soon as the same are received by the assessee. The assessee is regularly following up with them for the purpose.
The A.R. of the assessee filed an affidavit of Sh. Hari Krishan (nephew) s/o Sh. Piara Singh resident of Village Rurki Tehsil Phillaur Distt. Jalandhar. Sh. Hari Krishan land is the real sister of his father Sh. Piara Singh and she purchased one house No. 964, Urban Estate, Phagwara from Sh. Kashmir Singh Malhi s/o Sh. Ajit Singh of Urban Estate, Phagwara for Rs.45.58.000/- on the basis of agreement dated 02.05.2009. The payment was made as per the agreement dated 02.05.2009. Some of the payment was made by her and most of the payment was made by him(Hari Krishan) whenever she used to send the money to him as per the terms of the agreement and thereafter he used to pay the same to above said Sh. Kashmir Singh Malhi.
Again, notice u/s 142(1) of the I.Tax Act alongwith letter was issued to the assessee on 22.02.2013 fixing the case for hearing on 27.02.2013 vide which he was asked to produce the all information/documents as already called for vide this office letter dated 10.12.2012 otherwise case would be decided on merits. In response to this letter, the A.R. of the assessee filed written submission alongwith joint account bank statement and copy of one page of the passport of the purchaser and stated that "Mrs. Gurdip Kaur (purchaser) is an NRI residing in England. Her source of income at England will be best known to her and is not known to assessee. There is no question about the financial capacity of an NRI. Further, Mr. Hari Krishan, nephew of the buyer has also confirmed in his affidavit that some payments were made by Mrs. Gurdip Kaur and most of the payments were made by him out of the money sent by Mrs. Gurdip Kaur to him, as per the terms of the agreement ", 1 have gone through the all submissions filed by the assessee and his counsel and noticed the following discrepancies:-
5 ITA No.46(Asr)/2014Assessment Year: 2010-11 The alleged advance agreement was made between Sh. Kashmir Singh Malhi and Mrs. Gurdip Kaur (purchaser ) on
02.05.2009. A perusal of the photocopy of the passport of the purchaser Mrs. Gurdip Kauifas filed by the assessee) shows that she came to India in the month of July 2009. She could no( have put her signature on the said agreement on 02.05.2009 when she was not in India. So it clearly shows that this alleged agreement is fake and prepared by the assessee to justify the sources of cash credit entreis relating to the year under consideration in his bank accounts statement out of his own undisclosed income. Since she was not in India on 02.05.2009. i.e. on the date of agreement, as filed by the assessee. Therefore, no reliance can be placed on the said agreement. Copy of advance agreement made between Sh. Kashmir Singh Malhi and Mrs. Gurdip Kaur ( purchaser ) on 02.05.2009 is part of the assessment order as "Annexure A"
ii. Sh. Hari Krishan s/o Sh. Piara Singh filed an affidavit in which stated on oath that the said house was purchased by his aunt Mrs. Gurdeep Kaur for about Rs5.58,000/- on the basis of agreement dated 02.05.2009. The payments were made as per greement. Some of the payment was made by her and most of the payments were made by him whenever she used to send the money to me as per the terms of the agreement and .thereafter I used to pay the same to above said Kashmir Singh Malhi. On 10.01.2010 the ast payment was paid by him and after that some of the amount was paid to PUD A directly by him as per the terms of the agreement. In the above said affidavit Sh. Hari Krishan has not mentioned any amount and (late of payments made by him so this affidavit is incomplete and not reliable. Moreover, advance agreement is also fake as explained above. Despite given further opportunities, the assessee was not able to lead any evidence in this regard.
iii. Copy of joint bank account statement of Smt. Gurdip Kaur with his brother and nephew) bearing No. 012200002180 with Capital Local Area Bank Limited, Rurkee Tehsil Phillaur was filed by the A.R. of the assessee on 27.02.2013. In this statement, debit and credit entries do not tally with the instalments, claimed to be paid by Mrs. Gurdip Kaur or Sh. Hari Krishan (Nephew of the purchaser) to the assessee. Moreover, no evidence regarding receipt of the said amount by Sh. Hari Krishan from Mrs. Gurdip Kaur has been filed.6 ITA No.46(Asr)/2014
Assessment Year: 2010-11 iv. The assessee has not led any evidence in respect of his claim that any advance, either in cash or through bank account, for sale of property was received in the year under consideration.
After considering the above facts and information filed by the assessee, it is noticed that properly in question was transferred to the purchaser (Gurdip Kaur) by the PUDA on 09,06.2010 relevant to the Asstt Year 2011-12. Mrs. Gurdip Kaur (purchaser) was not in India on the date of advance agreement i.e. 02.05.2009 and the assessee has prepared a fake agreement to explain the sources of cash deposits in his saving bank account statements with the said transaction without any supporting evidence. The submissions filed by the assessee are his after thought only and he is making the efforts to justify the sources of all cash deposits made during the year 2009-10 relevant to the asstt. year 2010-11 in the shelter of this deal but he could not prove that he received the payments on the dates as mentioned in the advance agreement (which itself is not reliable as stated above), what payments received from the purchaser Mrs. Gurdip Kaur and what payments received from Sh. Hari Krishan (Nephew) of the purchaser. Further. Sh. Hari Krishan (Nephew ) could not prove that how much amount was received from Mrs. Gurdip Kaur and how much amount was paid to Sh. Kashmir Singh Malhi. The onus to explain these facts/deposits lies squarely on the assessee.
In view of above discussion, I am satisfied that all cash deposits in these banks are unexplained income of the assessee. However, in the interest of natural justice, cash flow statement, in respect of cash entries in his bank accounts, has been prepared to identify the peak cash balance, during the year, which is reproduced as under:-
ICICI Bank Ltd. Account No. 504447 Date Debit C red it Balance 25.04.2009 - 12,200/- 12200/-
9.5.2009 - 4,22,000/- 4,34,200/-
19.05.2009 - 5,00,000/- 9,34,200/- (A) 29.5.2009 2,50,000/- - 6,84,200/-
1.6.2009 6,00,000/- - 84,200/-
--
7 ITA No.46(Asr)/2014Assessment Year: 2010-11 22.6.2009 20,000/- - 64,200/-
26.6.2009 10,000/- - 54,200/-
29.06.2010 10,000/- - 44,200/-
1.07.2009 10,000/- - 34,200/-
25.07.2009 - 1,70,000/- 2,04,200/-
5.09.2009 25,000/- - 1,79,200/-
17.09.2009 74,000/- - 1,05,200/-
21.09.2009 7,000/- - 98,200/-
26.10.2009 3,500/- - 94,700/-
30.11.2009 - 12,000/- 1,06,700/-
29.12 2009 - 8,000/- 1,14,700/-
25.01.2010 - 12,500/- 1,27,200/-
27.02.2010 - 12,000/- 1,39,200/-
P. N.B Account No. 26203 Date Debit C red it Balance 1.06.2009 - 12,87,000/- 12,87,000/- 22.07.2009 - 10,90,000/- 23.77.000/- 22.08.2009 - 30,000/- 24,07,000/- 20.10.2009 - 50,000/- 24,57,000/- 24.10.2009 - 3,50.000/- 28,07,000/- (B) 26.10.2009 1,00,000/- - 27,07,000/- 19.11.2009 1,10,000/- 25,97,000/-
In the above cash flow statements peak cash balance comes as under:-ICICI Bank Ltd. as on 19.05.2009(A)Rs. 9.34,200/-
P.N.B as on 24.10.2009 (B) Rs.28,07,000/-
Pb. & Sind Bank as on 2.05.2009 (C) Rs.2,90,000/-
Total peak cash balance:- Rs.40,31,200/-
Therefore, the said peak cash balance of Rs. 40,31,200/- is treated as his [explained income and added in his returned income in view of Section 69A of the Income-tax Act. Penalty proceedings u/s 271(1 )(c) of the Act have been initiated separately for furnishing inaccurate particulars of income."
8 ITA No.46(Asr)/2014Assessment Year: 2010-11
4. Vide written submissions filed before the ld. CIT(A), the assessee stated as follows:
"With regard to above mentioned appeal, it is respectfully submitted that the assessee is an advocate by profession, practicing at Civil Courts, Phillaur and Jalandhar. For the AY 2010 - 2011, the assessee has filed his return of income on 26.11.2011 declaring income of Rs.4,33,580/-. The assessee derives income from the profession of Lawyer.
During the relevant year the assessee has sold a house no. 964 at Urban Estate, Phagwara measuring 8 Marias for ? 45,58,205/- to one Mrs. Gurdip Kaur, then resident of village Rurkee, Patti khera, Tehsil Phillaur vide agreement dated 02.05.2009. Copy of the agreement entered into, between both the parties is attached at Page No. 20 of the paper Book. The agreement is duly signed by both the buyer and seller in the presence of two witnesses on a stamped paper. Further it is pertinent to mention here that the copy of the agreement was attested by the Notory Public on 02.05.2009. Despite of the personal signatures of the buyer in the presence of two witness and attestation by the notary on the same date, the learned A O declared that the buyer was not present in India on that date and termed this agreement as fake, which is absolutely against the facts and circumstances of the case.
Both the buyer and seller, in terms of agreement dated 02.05.2009, acted honestly. As per the terms of agreement the assessee (being the seller of properly) received the payment from Mrs. Gurdip Kaur through one Mr. Hari Krishan, who is the nephew of buyer Mrs. Gurdip Kaur, from time to time. Affidavit of Mr. Hari Krishan is attached at Pane No. 45 of the paper Book. The assessee received the payment in cash from the seller and deposited the same in his Bank accounts. Copies of bank statements are attached at Page No. 3 to 11 of the paper Book. Both the parties moved further to get the property transferred in the name of buyer Mrs. Gurdip Kaur. They started the process of transfer. For this purpose, both the assessee and buyer submitted the required affidavits, indemnity bonds and other documents as per the requirement of Punjab Urban Planning and development Authority (PUDA). All the affidavits / indemnity bonds as required by the PUDA were duly executed and got attested before the Executive Magistrate at Phillaur on the dates specified therein. Copies of 9 ITA No.46(Asr)/2014 Assessment Year: 2010-11 all these affidavits and indemnity bonds are attached at Pase No. 24 to 32 of the paper Book.
The Learned AO has erred both in law and facts in ignoring the two affidavits as well as the indemnity bonds submitted by the buyer Mrs. Gurdip Kaur, by personally appearing before the executive magistrate. It may be noted here that on the affidavits of the buyer, her photograph is there and on the indemnity bond submitted by the buyer, photographs of buyer, seller and the attesting witness are there. These photographs were clicked by the duty clerk in the presence of the executive magistrate. The executive magistrate has specifically certified on the back of all these documents that "THE ABOVE PERSON APPEARED AND DEPOSED BEFORE ME". The wording of all these documents clearly state that the said Mrs. Gurdip Kaur is buying the property at 964, Urban Estate, Phagwarci. Despite of these facts, the learned AO ignored these vital documents and doubted the identity as well as genuineness of the transaction. When the executive magistrate is specifically identifying the buyer, what else the seller can do to prove the identity or genuineness of the buyer?
In ITO v Suresh Kalmadi [1988] 32 TTJ(Pune) TM 300 it was held that where identity of creditor is established and entry shown to be not fictitious, the burden shifts on to the department to show as to why the entry still represented the suppressed income of the assessee.
The process of transferred of allotment letter of a property in PUDA takes long time. The whole process is as under:
1. When a property is to be transferred on the basis of allotment letter, the selleter has to appy for No Dues certificate from the PUDA authority, which normally takes about two month from the date of application. In the case of re-allotment, as in the present case, there is always some dues of the PUDA towards allottee. This lingers on the process.
2. After getting the No dues certificate, the seller has to apply in the office of PUDA for No objection certificate regarding the sale of that property and this process also takes about two to three months.
3. If the sale is on the basis of re-allotment letter, the. seller has to deposit the original allotment letter in his favour issued by the PUDA authorities.10 ITA No.46(Asr)/2014
Assessment Year: 2010-11
4. After getting both the above mentioned certificates and submission of re-allotment letter, the process of transfer ofproperty starts.
5. The required affidavits, indemnity bonds and various undertakings as mentioned above are submitted and there-
after as in the present case, the re-allotment letter of the concerned property is issued in favour of the buyer. This whole process of issuance of re-allotment letter in the favour of the re-allottee takes around six months after submission of all the documents regarding transfer mentioned above. That before starting the above said whole process of transfer, both the parties have to enter an agreement to sell, as in the present case, regarding the mode of payment. In the normal parlance, a seller will give the above mentioned procedural documents like affidavit etc, only after receiving the initial money from the buyer. This whole process of re-allotment is beyond the control of the parties to the agreement. It is a process of PUDA office that how much time it takes. This may go from one financial year to the next financial year, as in the present case.
The AO got no authority to challenge the genuineness of the transaction and stating that this transaction belong to next year after ignoring all the vital documents.
The AO has categorically mentioned at Page No. 4 of the impugned order, that the assessee has not discharged the onus to prove the transaction. It is respectfully submitted that the assessee has clearly proved the identity and the genuineness of the buyer as well as the transaction. While coming to this conclusion, the learned AO has wrongly ignored all the documents submitted. He is only asking for the source of the Buyer Mrs. Gurdip Kaur. i. e. he wants the source of source from the assessee.
Reliance is being placed on the case of CIT, Orissa. V/S. Orissa Corporation (P) Ltd. 159ITR 078 (SC), here the Hon 'hie Supreme Court has clearly held that where the assessee had given the names and addresses of the alleged creditors, the onus u/s 68 has been discharged. As per Section 68, the assessee is required to give source of his cash credit and he can-not be asked the source of source. Evidence available on record cannot be ignored and mere suspicion cannot form basis of addition of cash credit as income of assessee. Copy of the order of Hon 'ble Apex court is attached at Page No 51 to 57 of the Paper Book.
11 ITA No.46(Asr)/2014Assessment Year: 2010-11 The order of the learned AO is based on mere conjecture and surmises and is against the law and facts of the case. While making his mind, he ignored the fact that the identity of the buyer has been established. He also ignored that the transaction of sale consideration as well as the transfer of property. He ignored that the properly in question has actually been transferred from the name of the seller, to the name of the buyer. Copy of re-allotment letter issued in the name of buyer Mrs. Gurdip Kaur, who has become the owner of the said property after following the whole process as prescribed by PUD A for transfer.
In thgforay of ignoring all the facts, the AO also ignored the affidavit submitted by Mr. Hah Krishan, nephew of the buyer (Mrs. Gurdip Kaur), regarding the mode of payment of the sale consideration. Copy of the Affidavit from Mr. Hari Krishan is attached at Page No. Vjp of the paper book. Mr. Hari Krishan has clearly mentioned in the affidavit that the property in question at 964, Urban Estate, Phagwara, has been purchased by his Aunty. He has also mentioned that the sale consideration was about Rs. 45,58,000/-, on the basis of agreement dated 02.05.2009. He further mentioned that "THE PAYMENT WAS MADE AS PER THE AGREEMENT. SOME OF THE PAYMENT WAS MADE BY HER AND MOST OF THE PAYMENT WAS MADE BY ME WHENEVER SHE USED TO SEND THE MONEY TO ME AS PER THE TERMS OF AGREEMENT AND THEREAFTER I USED TO PAY THE SAME TO ABOVE SAID KASHMIR SINGH MALHI. ON 10.01.2010, THE LAST PAYMENT WAS PAID BY ME AND AFTER THAT SOME OF THE AMOUNT WAS PAID TO PUDA DIRECTLY BY ME AS PER THE TERMS OF THE AGREEMENT".
The learned AO did not bother to ask any thing from the deponent Mr. Hah Krishan, who has given this statement on oath. The Learned AO totally ignored his involvement in the transaction. During the course of proceedings the Ao has not asked anything about Mr. Hah Krishan but in his order he has mentioned that Mr. Hah Krishan has not mentioned any date or amount in his affidavit. So this affidavit is incomplete and not reliable. But the AO has ignored that Mr. Hah Krishan in the Para 2 of his affidavit clearly mentioned that the payment was made as per the terms of agreement dated 02.05.2009. On these facts the AO can-not held that the agreement dated 02.05.2009 is fake and that the transaction is not genuine. Reliance is placed on the decision of Hon'ble Apex court, in the case of Meiita Parikli & Co. v. Commissioner of Income-Tax, 12 ITA No.46(Asr)/2014 Assessment Year: 2010-11 Bombay 1956 TaxPub(DT) 0171 (SC) :(1956) 030ITR 0181, the Hon'ble Supreme Court j^os observed that:
"It has to be noted, however, that beyond these calculations of figures, no further scrutiny was made by the made by the Income-tax Officer or the appellate Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those enties were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash entries or the statements made by those deponents in their affidavits."
Copy of the order of Hon'ble Apex court is attached at Page No 58 to 63 of the Paper Book.
The AO by ignoring the transaction of sale of property, treated the sum deposited in the bank account of the assessee as unexplained income U/S 69A of the Income Tax Act, 1961. Section 69A is being reproduced as under:
69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."
The preconditions for the applicability of section 69A to any case are as under:
1. There should be some money, bullion, jewellery or other valuable article which is FOUND;13 ITA No.46(Asr)/2014
Assessment Year: 2010-11
2. And such money, bullion, jewellery or other valuable article is not recorded in the books of accounts of the asses see. Here in the present case, there is nothing found by the AO. The wordfound has wide implications. The dictionary meaning of word FOUND HAVING BEING DISCOVERED BY CHANCE OR UNEXPECTEDLY. I PARTICULAR. Here in the present case the learned AO has not found something, the money was already in the bank accounts of the assessee. Further all these bank accounts were duly recorded in the books of accounts of the assessee an .ire also disclosed in the income tax return of the assessee. These facts dearly indicate that Section 69A is not applicable to the case of assessee.
In nut shell, the process of transfer of the properly is as per the procedure of PUD A which was duly adopted and nothing is wrong in that process. The property is duly transferred from the name of the seller to the buyer after receiving the agreed sale consideration, the assessee has duly discharged his onus to prove the identity of the buyer and also the genuineness of the transaction. In view of the above submission, it is prayed that the order of AO making the addition of Rs. 40,31,200/- be set aside and returned income may be accepted."
5. The ld. CIT(A) asked for a remand report from the AO.
6. The AO in his remand report stated as follows:
"Kindly refer to your office letter No. CIT(A)/Jal./1052 dated 06.09.2013 alongwith copy of the submission filed by the assessee on the subject cited above.
2. In this connection, it is submitted that Sh. Kashmir Singh Malhi, Advocate sold his property No. 964 at Urban Estate Phagwara to Smt. Gurdip Kaur w/o Sh. Kewal Singh Vill.Rurkee Patti Khera Tehsil Phillaur. The Jalandhar Development Authority has intimated vide its office letter No.4877 dated 30.09.2013 that Sh. Kashmir Singh Malhi applied for transfer the said properly in the name of Smt. Gurdip Kaur w/o Sh. Kewal Singh on 11.01.2010. This property was transferred in the name of Smt. Gurdip Kaur on 09.06.2010.
3. At present the above said property has been let out to the students of Lovely \ Professional University as PG.14 ITA No.46(Asr)/2014
Assessment Year: 2010-11
4. Summon/letter issued to Sh. Ilari Krishan (nephew of Smt. Gurdip Kaur) s/o Sh. Piara Singh Vjll. Rurki Tehsil Phillaur on 16.09.2013 and 04.10.2013 vide which he was requested to furnish the residential address of Smt. Gurdip Kaur. In response to this letter, Sh. Piyiish Bonsai,C.A. filed reply on 21.10.2013 alongwith copy if passport showing her address at Birmingham and stated that she is non-resident. Since purchaser status is non-resident, information is being forwarded to the Deputy Director of Income-tax (International Taxation ), Chandigarh for further action.
5. The brief facts of the case are :-
During the said year, the assessee deposited cash on various dates at Rs. 11,48,700/-into his saving account 632101504447 with ICICI Bank Ltd., G.T.Road, Phagwara,Rs.28,60,100/- in Punjab National Bank, Atta, Goraya A/C No.26203 and Rs.2,90,000/- in Punjab & Sind Bank, Jalandhar A/C No.8620. The assessee was askedto explain the sources of cash credit entries of the said accounts. In response to thisquery, the assessee's counsel filed written submission stating that sources of cash deposits are from the sale proceeds of his property No. 964 at Urban Estate, Phagwara and his professional receipts alongwith copy of advance agreement made between the assessee and the purchaser Smt. Gurdip Kaitr on 02.05.2009. As per this agreement the assessee would receive the payment in the following instalments:-
Advance received:- Rs. 3 lacs From 7.05.2009 to 10.05.2009 Rs. 4.5 lacs From 16.05.2009 to 21.05.2009 Rs. 5 lacs From 06.06.2009 to 04.06.2009 Rs.13 lacs From 21.07.2009 to 25.07,2009 Rs.13 lacs From 15.10.2009 to 20.10.2009 Rs.4 lacs From 10.01.2010 to 16.01.2010 Rs.50,000/- Balance Rs.2,58,205/- will be paid by
the buyer directly to PUD A on issue of allotment letter in her name. During assessment proceedings, it was noticed that this agreement was duly signed by the assessee and Smt. Gurdip Kaur (purchaser) but photocopy of the passport of Smt.Gurdip Kaur shows that she came to India in the month of July,2009. It is clear that on the date of agreement she was not in India. So this alleged agreement is fake and prepared by the assessee to justify the sources of cash credit entries relating to the year under consideration in his bank accounts statements out of his own undisclosed income. Secondly, the counsel for the assessee filed an affidavit of Sh. Hari Krishan s/o Sh. Piara Singh in which stated that his aunt Smt. Gurdip Kaur purchased property No. 964 at Urban Estate, 15 ITA No.46(Asr)/2014 Assessment Year: 2010-11 Phagwara for Rs. 45,58,000/- and payments were made as per agreement dated 02.05.2009. Some of the payments were made by her and most of the payments were made by him whenever she used to send the money to me and thereafter, I used to pay the same to the seller Sh. Kashmir Singh. It is pertinent to mention that in the above said affidavit neither mentioned the amount paid nor mentioned the date of payments by him.
Thirdly, as per copy of advance agreement dated 02.05.2009, purchaser husband name is Sh. Resham Singh but as per records of Jalandhar Development Authority her husband name is Sh. Kewal Singh.
Thus the assessee failed to furnish the sources of cash credit entires in the bank account statements when onus on the assessee to explain the sources of each cash credit entry into his Saving account.
Keeping in view the above facts, submission filed by the assessee before your goodself is not reliable and may be rejected. Assessment records of the assessee for the asstt. year 2010 -11 in one volume is enclosed herewith."
7. The assessee in his counter comments to the AO's remand report submitted that CIT(A) page 15 para 6.,3 to page 18 para 6.4.
"The submissions of the assessee on the comments of the AO made vide office letter No. ITO/Ward-2/2013 - 14/1067 are as under: -
1. During the relevant year the assessee has sold a house no. 964 at Urban Estate, Phagwara measuring 8 Marias for 45,58,205/- to one Mrs. Gurdip Kaur, then resident of village Rurkee, Patti khera, Tehsil Phillaur vide agreement dated 02.05.2009. Copy of the agreement entered into, between both the parties is attached at Page No. 20 of the paper Book. The agreement is duly signed by both the buyer and seller in the presence of two witnesses on a stamped paper. Further it is pertinent to mention here that the copy of the agreement was attested by the Notary Public on 02.05.2009. Despite of the personal signatures of the buyer in the presence of two witness and attestation by the notary on the same date, the learned AO declared that the buyer was not present in India on that date and termed this agreement as fake, which is absolutely against the facts and circumstances of the case.16 ITA No.46(Asr)/2014
Assessment Year: 2010-11 The learned AO in the para 2 of his letter has clearly mentioned that "The Jalandhar Development Authority has intimated vide its office letter No. 4877 dated 30J)9.2013 that Sh. Kashmir Singh Malhi applied for the transfer the said property in the name of Smt. Gurdip Kaur w/o Sh. Kewal Singh on 11.01.2010. This property was transferred in the name of Smt. Gurdip Kaur on 09.06.2010"
Since the property' has already been transferred, there is no issue of the agreement being fake.
Both the buyer and seller, in terms of agreement dated 02.05.2009, acted honestly. As per the terms of agreement the assessee (being the seller of property) received the payment from Mrs. Gnrdip Kaur through one Mr. Hah Krishan, who is the nephew of buyer Mrs. Gurdip Kaur, from time to time. Affidavit of Mr. Hah Krishan is attached at Pane No, 45 of the paper Book. The assessee received the payment in cash from the seller and deposited the same in his Bank accounts. Copies of bank statements are attached at Page No. 3 to 11 of the paper Book. Both the parties moved further to get the property transferred in the name of buyer Mrs. Gurdip Kaur. They started the process of transfer. For this purpose, both the assessee and buyer submitted the required affidavits, indemnity bonds and other documents as per the requirement of Punjab Urban Planning and development Authority (PUDA). All the affidavits / indemnity bonds as required by the PUD A were duly executed and got attested before the Executive Magistrate at Phillaur on the dates specified therein. Copies of all these affidavits and indemnity bonds are attached at Page No. 24 to 32 of the paper Book.
The Learned AO has erred both in law and facts in Ignoring the two affidavits as well as the indemnity bonds submitted by the buyer Mrs. Gurdip Kaur, by personally appearing before the executive magistrate. It may be noted here that on the affidavits of the buyer, her photograph is there and on the indemnity bond submitted by the buyer, photographs of buyer, seller and the attesting witness are there. These photographs were clicked by the duty clerk in the presence of the executive magistrate. The executive magistrate has specifically certified on the back of all these documents that "THE ABOVE PERSON APPEARED AND DEPOSED BEFORE ME". The wording of all these documents clearly state that the said Mrs. Gurdip Kaur is buying the property at 964, Urban Estate, Phagwara. Despite of these facts, the learned AO ignored these vital documents and doubted the identity as well as genuineness of the transaction. When the executive 17 ITA No.46(Asr)/2014 Assessment Year: 2010-11 magistrate is specifically identifying the buyer, what else the seller can do to prove the identity or genuineness of the buyer?
Furthermore Mr. Hari Krishan, the nephew of the buyer Mrs. Gurdip Kaur, has appeared in person before the Flon'ble CIT (A) and was examined. He categorically stated before the Flon'ble CIT (A) that the impugned he has made the payments to the assessee on various occasions as per the terms of the agreement dated 02.05.2009.
Before submitting his comments vide his office letter dated 22.10.2013, the learned AO also examined Hah Krishan and here again he clearly mentioned that he has made the payments to the assessee on various occasions as per the terms of the agreement dated 02.05.2009.
Jalandhar development authority has clearly mentioned that presently the property is in the name of Mrs. Gurdip Kaur and is accepted by the learned AO. On the one hand, the learned AO is accepting the fact that the property has been sold by the Assessee Mr. Kashmir Singh Malhi to the buyer Mrs. Gurdip Kaur but on the other hand he is reiterating that the agreement is fake.
2. The learned AO has mentioned in his comments that Mr. Hari Krishan has not mentioned in his affidavit about the amount paid or date of payment.
Copy of the Affidavit from Mr. Hari Krishan is attached at Base No 45 of the paper book. Mr. Hari Krishan has clearly mentioned in the affidavit that the properly in question at 964, Urban Estate, Phagwara, has been purchased by his Aunty on the basis of agreement dated 02.05.2009. He has also mentioned that the sale consideration was about Rs. 45,58,000/-, He further mentioned that "TIIE PAYMENT WAS MADE AS PER THE AGREEMENT. SOME OF THE PA YMENT WAS MADE B Y HER AND MOST OF THE PA YMENT WAS MADE BY ME WHENEVER SHE USED TO SEND THE MONEY TO ME AS PER THE TERMS OF AGREEMENT AND THEREAFTER I USED TO PAY THE SAME TO ABOVE SAID KASHMIR SINGH MALHI. ON 10.01.2010, THE LAST PAYMENT WAS PAID BY ME AND AFTER THAT SOME OF THE AMOUNT WAS PAID TO PUD A DIRECTLY BY ME AS PER THE TERMS OF THE AGREEMENT"
18 ITA No.46(Asr)/2014Assessment Year: 2010-11 He has clearly stated that the payment has been made as per the terms of the agreement dated 02.05.2009. He has mentioned the full sale consideration also. He also clearly stated that the last payment was made on 10.01.201:0. Moreover Mr. Hari Krishan has accepted the fact of purchase of transaction and the payment to the assessee both before AO and Hon'bie CIT (A).
3. The name of the husband of Mrs. Gurdip Kaur is Mr. Kewai Singh. Mentioning of the same as Resham Singh in the agreement is an inadvertent mistake. All other documents includingAhe affidavits of Gurdip Kaur, her indemnity bonds before the executive magistrate, affidavit of Hari Krishan and the letter from JDA clearly indicates that the Gurdip kaur is the b uyer of the properly.
All these things clear the fact that the assessee has sold his properly to Mrs. Gurdip kaur. Received the payment and deposited the same in his bank account. The process of transferred of the property is as per the procedure of PUDA which was duly adopted and nothing is wrong in that process. The property is duly transferred from the name of the seller to the b uy er after receiving the agreed sale consideration, the assessee has duly discharged his onus to prove the identity of the buyer and also the genuineness of the transaction.
The AO by ignoring the transaction of sale of property, treated the sum deposited in the bank account of the assessee as unexplained income U/S 69A of the Income Tax Act, 1961.
In view of the above submission, it is prayed that the order of AO making the addition of Rs. 40,31,200/- be set aside and returned income may be accepted.
8. The ld. CIT(A) confirmed the addition to the extent of Rs.30,40,200/- observing as follows:
"6.4 I have considered the observations of the Assessing Officer as made in the assessment order as well as in the remand report. I have also considered the written submissions of the assessee as well as his counter comments. I have further 19 ITA No.46(Asr)/2014 Assessment Year: 2010-11 considered the various judicial pronouncements relied upon by the assessee and the other material brought on record.
6.5. On careful consideration of the assessment order as well as the assessment records, it has been noticed that the Assessing Officer noticed huge cash deposits in various bank accounts of the assessee maintained by him with ICICI Bank, Punjab National Bank & Punjab & Sind Bank. The Assessing Officer during the course of assessment proceedings asked the assessee to prove the source of cash deposits into the bank accounts maintained by him with Punjab & Sind Bank, Punjab National Bank & ICICI Bank. In response thereto, the assessee has submitted before the Assessing Officer that the source of cash deposits in various bank accounts of the assessee is the sale proceeds of the residential house located at Plot No. 964, Urban Estate, Phagwara which has been sold by him to Smt. Gurdeep Kaur a resident of U.K. as well as out of his professional receipts. It has also been submitted that the entire sale proceeds in respect of the sale of residential house located at plot No. 964, Urban Estate, Phagwara were stated to be received in cash from Smt. Gurdeep Kaur. When asked by the Assessing Officer to prove his claim regarding receipt of cash with documentary evidence, the assessee produced a copy of agreement to sell allegedly entered into between the assessee and Smt. Gurdeep Kaur dated 02.05.2009 according to which the assessee agreed to sell H.No.964, Urban Estate, Phagwara to Smt. Gurdeep Kaur of Village Rurki presently residing in U.K. for a consideration of Rs.45,58,205/- and the purchaser has also given an amount of Rs.3,00,000/- to the assessee on 02.05.2009 i.e. at the time of executing the agreement to sell. As per the agreement to sell dated 02.05.2009, the balance sale consideration was agreed to be paid by the purchaser to the assessee as under:-
From 07.05.2009 to 10.05.2009 Rs.4,50,000/- From 16.05.2009 to 21.05.2009 Rs.5,00,000/- From 06.06.2009 to 04.06.2009 Rs.13,00,000/- From 21.07.2009 to 25.07.2009 Rs.13,00,000/- From 15.10.2009 to 20.10.2009 Rs.4,00,000/- From 10.01.2009 to 16.01.2009 Rs. 50,000/- Balance amount agreed to be paid Rs.2,58,205/- when property will be transferred by PUDA in the name of purchaser.
6.6 As the purchaser of the property is stated to be a resident of U. K., the Assessing Officer again asked the assessee to furnish date wise details with regard to cash received from Smt. Gurdeep 20 ITA No.46(Asr)/2014 Assessment Year: 2010-11 Kaur who is stated to be an NRI and a resident of U.K. The Assessing Officer further asked the assessee to file copy of bank account of Smt. Gurdeep Kaur, to produce original agreement to sell to produce copy of passport of Smt. Gurdeep Kaur, details regarding sources of income of Smt. Gurdeep Kaur, details regarding sources "of income of Smt. Gurdeep Kaur. The assessee vide his submissions dated 10.12.2012 assured that the requisite information will be furnished as soon as it is received from the purchaser. At this occasion, the assessee has also filed copy of another affidavit executed by one Shri Hari Krishan of Village Rurkee who is stated to be nephew of Smt. Gurdeep Kaur dated 04.12.2012 vide which Sh. Hari Krishan has deposed as under:-
I, Hari Krishan son of Piara Singh, resident of village Rurki, Tehsil Phillaur, distt. Jalandhar do hereby solemnly affirm and declare on oath as under:
1. That Gurdeep Kaur wife of Kewal Singh residing in England is the real sister of my father Piara Singh. She purchased one house No. 964, Urban Estate, Phagwara, from one Kashmir Singh Malhi son of Ajit Singh of Urban Estate, Phagwara.
2. That the said house was purchased by my aunt Gurdeep Kaur for about Rs. 45,58,000/- (Rs. Forty Five Lacs Fifty Eight Thousands) on the basis of agreement dated 02. 05.2009. The payment was made as per the agreement. Some of the payment was made by her and most of the payment was made by me whenever she used to send the money to me as per the terms of the agreement and thereafter I used to pay the same to above said Kashmir Singh Malhi. On 10.01.2010, the last payment was paid by me and after that some of the amount was paid to PUDA directly by me as per the terms of the agreement. That now the re-allotment letter has been issued by JDA in the name of Gurdeep Kaur.
Sd/-
Sh. Hari Krishan Deponent Verification Verified that the contents of the abovesaid affidavit are true and correct to the best of my knowledge and belief and nothing has been concealed therein.
Verified at Phillaur Dated: 04.12.2012 Sd/-
21 ITA No.46(Asr)/2014Assessment Year: 2010-11 Sh. Hari Krishan Deponent 6.1 From the perusal of contents of the affidavit filed by Shri Hari Krishan, it was noticed by the Assessing Officer that Sh. Hari Krishan in the affidavit has stated that he used to pay the amount in cash to the assessee after receiving it from his aunt Smt. Gurdeep Kaur. It has also been stated by Sh. Hari Krishan that some payments have directly been given by Smt. Gurdeep Kaur to the assessee but most of the cash payments have been passed onto the assessee through him. When asked by the Assessing Officer to tell the details of amounts handed over by him to the assessee on each occasion, Shri Hari Krishan stated that the amounts have been handed over to the assessee as per terms and conditions of the agreement dated 02.05.2009 without giving any details of cash given by him or Smt. Gurdeep Kaur. It has again been submitted by Shri Hari Krishan before the Assessing Officer that the payments were made to the assessee as and when he received the amounts from his aunt. According to the Assessing Officer, Sh. Hari Krishan failed to tell as to how and from whom he received the payments sent to him by Smt. Gurdeep Kaur and what is the mode of sending the cash payments by Smt. Gurdeep Kaur to him. The information desired by the Assessing Officer i.e. copy of bank account of Smt. Gurdeep Kaur, complete copy of her passport and mode of sending money to Sh. Hari Krishan etc. has also not been furnished except copy of only one page of the passport of Smt. Gurdeep Kaur. According to the Assessing Officer it was not established by the assessee that at the time of executing the agreement to sell the purchaser was in India and further from the information provided by the assessee it could only be said that purchaser was in India only in the month of July, 2009. The Assessing, therefore, treated the agreement to sell a fake document and made the addition of Rs.40,31,200/-, representing peak amount of deposits, to the returned income of the assessee.
6.7 On the other hand, the assessee has heavily relied upon the agreement to sell dated 02.05.2009, affidavit filed by Shri Hari Krishan and copies of affidavit and identity bond executed by Smt. Gurdeep Kaur before the Executive Magistrate Phillaur. Apart from this, the assessee also relied on the following judicial pronouncement.
22 ITA No.46(Asr)/2014Assessment Year: 2010-11
(a) Mehta Parilch & Co. Vs CIT, Bombay (1956) 030 ITR 181 (SC).
(b) CIT, Orissa Vs. Orissa Corporation (P) Limited 159 ITR 078 (SC).
(c) ITO Vs. Suresh Kalmadi (1988) 32 TTJ (Pune) TM 300.
It has been vehemently argued by the assessee that he has explained all the cash deposits into his bank account with the help of agreement to sell dated 02.05.2009 supported by affidavit of Shri Hari Krishan dated 04.12.2012.
6.8 After carefully considering the assessment order, remand report, written submissions of the assessee, his counter comments as well as other material brought on record, I am of the opinion that the assessee has totally failed to the sources of cash deposits into his various bank neither during the course of assessment proceedings nor during the course of appellate proceedings could adduce any evidence which will prove that the purchaser of property Smt. Gurdeep Kaur was in India on the date of executing agreement to sell dated 02.05.2009 which is the main bone of contention. The signatures on the agreement to' sell dated 02.05.2009 supposedly of Smt. Gurdeep Kaur do not match with her signatures on affidavit and indemnity bond dated 24.07.2009 executed before the Executive Magistrate Phillaur. Copy of Bank account of Smt. Gurdeep Kaur has also not been produced to prove her creditworthiness. Not only this, Smt. Gurdeep Kaur has never confirmed the contents of affidavit dated 04.12.2012 filed by Sh. Hari Krishan. No doubt that the property has been transferred by PUDA in the name of Smt. Gurdeep Kaur but this fact will itself not prove that the cash deposits have been made out of sale proceeds of the property unless and until it is proved that the agreement to sell is genuine and payments have actually been given by Smt. Gurdip Kaur to the assessee. I fail to understand that as to how a third person (Sh. Hari Krishan) who is not a party either to purchase or to sell can depose that he has made payments to the seller on behalf of Smt. Gurdeep Kaur unless and until his version is confirmed by either Smt. Gurdeep Kaur or by any other documentary evidence. ^TJad^assessee vehemently failed to produce any documentary evidence either in the form of bank account of the purchaser or any other documentary evidence which will prove that Smt. Gurdeep Kaur has actually paid the amounts to the assessee on the respective dates either herself or through any other person. The affidavit filed by Sh. Hari Krishan dated 23 ITA No.46(Asr)/2014 Assessment Year: 2010-11 04.12.2012 has no evidentiary value in the eyes of law as the contents of the affidavit are not confirmed by Smt. Gurdeep Kaur who is the actual beneficiary. It is unbelievable that the payments have been sent by Smt. Gurdeep Kaur from U.K. to Sh. Hari Krishan in cash. The contents of the agreement to sell dated are also unusual as the dates of payments in the agreement have been stated in a fashion just to explain the cash deposits in the various bank accounts. In my opinion, execution of agreement to sell dated 02.05.2012 are also appears to be fake as the signatures of Smt. Gurdeep Kaur on it are entirely different from her signatures on other documents, is just an afterthought.
6.9 In these facts and in the circumstances of the case, I am of the opinion that the assessee has absolutely failed to explain the cash deposits in his bank accounts with any authentic documentary evidence. The agreement to sell on which the assessee heavily relied upon appears to be fake in view of the discussion in preceding paragraphs. The assessee has also not produced any documentary evidence to prove the credit worthiness of Smt. Gurdeep Kaur. No evidence has been brought on record to prove that at the time of executing the burden heavily lies on the assessee to prove the sources of cash deposit in his various bank accounts supported by any authentic documentary evidence and in my considered opinion the burden which squarely lies on him has not been discharged. In view of these facts, I hold that the Assessing Officer is justified in treating the cash deposits in various bank accounts of the assessee as unexplained. The judicial pronouncements relied upon by the assessee have entirely different facts than that of the facts of the case of the assessee. The facts of the cases relied upon are distinguishable. However, I am of the opinion that the Assessing Officer has not worked out the peak amount of deposits correctly. While working out the peak, the Assessing Officer should have taken into account all the three bank accounts of the assessee together as the withdrawals made from one account can be deposited in other and vice versa. The peak amount of deposit is, therefore, worked out as under:-
Withdrawal( Date Particulars R Deposit(Rs.) Ba!ance(Rs.) s.) 24 ITA No.46(Asr)/2014 Assessment Year: 2010-11 25.04.09 ICICI Bank A/c -
No.504447 12,200 12,200 02.05.09 Punjab & Sind Bank - 2,90,000 3,02,200 A/c No. SB-2/8620 09.05.09 ICICI Bank A/c - 4,22,000 7,24,200 No.504447 19.05.09 -do- - 5,00,000 12,24,200 22.05.09 Punjab & Sind Bank 50,000 - 11,74,200 A/c No. SB-2/8620 29.05.09 ICICI Bank A/c 2,50,000 - 9,24,200 No.504447 01.06.09 -do- - 3,24,200 6,00,000
-
01.06.09 PNB A/c No.26203 12,87,000 16,11,200
02.06.09 to Punjab & Sind Bank - 29,000 16,40,200
A/c
Page 24
0-,. 06.09 No. SB-2/8620
-
18.06.09 Punjab & Sind Bank 1,00,000 15,40,200
A/c No. SB-2/8620
22.06.09 ICICI Bank A/c - 15,20,200
No.504447
20,000
24.06.09 Punjab & Sind Bank 24,000 - 14,96,200
A/c No. SB-2/8620
26.06.09 to ICICI Bank A/c 30,000 - 14,66,200
01.07.09 No.504447
05.06.09 No.SB-2/8620
25 ITA No.46(Asr)/2014
Assessment Year: 2010-11
18.06.09 Punjab & Sind Bank 10,000 - 15,40,200
A/c No. SB-2/8620
22.07.09 PNB A/c No.26203 - 10,90,000 25,46,200
25.07.09 ICICI Bank A/c - 1,70,000 27,16,200
No.504447
22.08.09 PNB A/c No.26203 - 30,000 27,46,200
05.09.09 to ICICI Bank A/c 1,06,000 - 26,40,200
21.09.09 No.504447
20.10.09 to PNB A/c No.26203 - 4,00,000 30,40,200
24.10.09
26.10.09 -do- - 29,40,200
1,00,000
26.10.09 ICICI Bank A/c 3,500 - 29,36,700
No.504447
19.11.09 PNB A/c No.26203 - 28,26,700
1,10,000
-
30.11.09 to ICICI Bank A/c 20,000 28,46,700
29.12.09 No.504447
-
11.01.10 PNB A/c No.26203 53,100 28,99,800
25.01.10
to ICCI Bank A/c -
27.02.10 No.504447 24,500 29,24,300
In view of the above stated facts, the addition made by the Assessing Officer is reduced from Rs.40,31,200/- to Rs.30,40,200/-. The assessee will thus get an relief Rs.9,91,000/-. In the result, grounds of appeal No.2 to 7 taken by the assessee are partly allowed."
9. Before us, the assessee has challenged the aforesaid action of the ld. CIT(A). The ld. counsel for the assessee has addressed arguments.
26 ITA No.46(Asr)/2014Assessment Year: 2010-11 A brief synopsis has also been filed. It has been submitted that the assessee owned house No.964, Urban Estate, Phagwara, for which, the plot was allotted to him and later on, he carried out the construction, which has been accepted by the department as per evidence at page 37 to 38 of the paper book. Further, the residential house was sold, for which, there was approval and issuance of fresh allotment letter in favour of Smt. Gurdeep Kaur, the purchaser, as per evidence at PB 21 to
24. The affidavit of Smt. Gurdeep Kaur is placed at PB 27 & 28. The purchaser has furnished indemnity bond and affidavit duly attested before the Executive Magistrate on 24.07.2009, when Smt. Gurdeep Kaur personally appeared before the Executive Magistrate and the property stands transferred to Smt. Gurdeep Kaur later on, which has not been denied or doubted by the department. As regards the fact that Smt. Gurdeep Kaur was in India on the date of executing the agreement on 02.05.2009 is again irrelevant, since the fact that the property was transferred and sold to Smt. Gurdeep Kaur has not been doubted by the AO and the ld. CIT(A) and Smt. Gurdeep Kaur is not related to the assessee and against the sale of property, the payment had been received by the assessee and, which has been received, as per the affidavit of her nephew, Sh. Hari Krishan, placed at PB 45 and that he was representing on behalf of Smt. Gurdeep Kaur, is further proved from his joint bank account in India with Smt. Gurdeep Kaur, copy of which is placed at PB 49 to 50. In the affidavit, Sh. Hari Krishan has emphatically stated 27 ITA No.46(Asr)/2014 Assessment Year: 2010-11 about the agreement dated 02.05.2009 and the last payment to PUDA directly on 10.01.2010 and the cash payment has been reconciled with the dates given in the agreement and with the deposits in the bank account of the assessee. Even the Assessing Officer verified the fact from JDA Authorities during remand proceedings that the property stands transferred in the name of Smt. Gurdeep Kaur.
9.1 It ss further stated that the assessee was not required to prove whether Smt. Gurdeep Kaur was in India as on the date of execution of agreement on 02.05.2009, but it was a fact that the amount had been received by the assessee on the sale of the property. If the property had been sold, the payment must have been received and the AO had not been able to identify any other source of the assessee, since his professional receipts had been accepted and no adverse view had been taken by the AO and the ld. CIT(A). The authorities below are doubting on presumption that the signatures of Smt. Gurdeep Kaur on the agreement did not match with those on the documents furnished by her while appearing before the Executive Magistrate, Phillaur. Sh. Hari Krishan the nephew of Smt. Gurdeep Kaur had confirmed about that agreement and in order to further substantiate the fact, it was stated that proceedings against Smt. Gurdeep Kaur regarding the sale of property had been initiated by Assistant Director of Income Tax (International Taxation) by way of a letter dated 31.01.2014, to which, Smt. Gurdeep Kaur, vide letter dated 22.02.2014, replied and confirmed 28 ITA No.46(Asr)/2014 Assessment Year: 2010-11 the agreement, dated 02.05.2009 and also the copy of the passport had been enclosed by her to the said Officer. It was accordingly submitted that the said evidence goes to prove the case of the assessee directly and, therefore, by way of separate application, dated 24.11.2014, the assessee has made a request for admission of such additional evidence.
9.2. It was further submitted that it was not a case of cash credit where the creditworthiness is required to be proved at all, since the assessee is concerned about the good realizable value of his property and the assessee was not required to keep track of the purchaser, once the deal was over. Smt. Gurdeep Kaur had confirmed the agreement to sell dated 02.05.2009, which was genuine and by virtue of that only, the property had been transferred by PUDA, which had been accepted by the department and once the property had been transferred, the agreement had been confirmed and the payment had been received as per the terms of the agreement and for which, the payment had been deposited in the bank account of the assessee, nothing more was required to be proved.
One cannot execute the agreement to sell the property without consideration, particularly when Smt. Gurdeep Kaur was not a relative of the assessee. Sh. Hari Krishan is her nephew, which has confirmed by the joint bank account of Sh. Hari Krishan with Smt. Gurdeep Kaur and further, Sh. Hari Krishan had the power of attorney for some other properties also, therefore, he had confirmed the same by presenting 29 ITA No.46(Asr)/2014 Assessment Year: 2010-11 himself before the AO. Now, since Smt. Gurdeep Kaur has confirmed the transaction, nothing remains to be proved.
9.3. In the letter, Smt. Gurdeep Kaur had confirmed to the department during her proceedings that the cash payments were made as per terms of the agreement, dated 02.05.2009 to the tune of Rs.43 lacs and the balance payment of Rs.2,58,205/- had been made directly to PUDA and, thus, nothing remains to be proved. The assessee is not required to prove the source of cash given by Smt. Gurdeep Kaur, as this is not the requirement of law. From the affidavit furnished now and earlier also, it has been confirmed that Smt. Gurdeep Kaur is now the owner of the property, which has been transferred by the assessee and that fact has been doubted by the AO/CIT(A) and, thus, the contents of the affidavit have also been confirmed by Smt. Gurdeep Kaur.
9.4. It was submitted that from the above submissions, it was proved that the finding of the ld. CIT(A) in para 6.9 about the credit worthiness, signatures regarding confirmation of sale were not required earlier, but still that has been confirmed by way of evidence now being furnished, the onus upon the assessee stands discharged and reliance is being placed on the judgment as reported in the case of CIT vs. Daulat Ram Rawatmull as reported in 87 ITR 349 and now, lays upon the department to prove it otherwise. But the department having accepted the transfer of the property and the fact that Smt. Gurdeep Kaur is not a relative of the assessee and the assessee was not required to prove the source from 30 ITA No.46(Asr)/2014 Assessment Year: 2010-11 where the NRI has given money, the sustaining of the addition of Rs.30,40,200/- is against the facts and circumstances of the case and, therefore, that deserves to be deleted. It was further prayed that the order of the ld. CIT(A) is not sustainable at all since the ld. CIT(A) has ignored the documentary evidences filed by the assessee.
10. On the other hand, the Ld. DR relied on the AO's order. It was contended that cash of about Rs.40,31,000/- was found deposited. The onus was on the assessee to prove the source thereof. It was contended that as per section 69A of the Act, where any money is found to be in the ownership of the assessee and such money is not recorded in the books of account, if any, maintained by the assessee for any source of income and the assessee offers no explanation about the nature and source of acquisition of the money, or the explanation offered by him is not, in the opinion of the AO, satisfactory, the money may be deemed to be the income of the assessee. It was contended that in the present case, the said onus of the assessee has not been discharged. It was submitted that as on 02.05.2009, the alleged date of the agreement between the assessee and Smt. Gurdeep Kaur, she was not in India and that therefore, the AO has correctly held the agreement to be a fabricated one, particularly when the observation of the AO that the signatures of Smt. Gurdeep Kaur on the agreement are entirely different from her signatures on the other documents, does not stand disproved.
31 ITA No.46(Asr)/2014Assessment Year: 2010-11
11. We have heard the rival contentions and have perused the material available on record. The ld. CIT(A) confirmed the action to the extent of Rs.30,40,200/- by holding that the assessee had failed to explain the cash deposits in his bank account. For arriving at this conclusion, the first observation of the ld. CIT(A) is that the assessee could not, either in the assessment proceedings, or in the first appellate proceedings, prove that the purchaser of the property, Smt. Gurdeep Kaur was in India on 02.05.2009, i.e., the alleged date of execution of the agreement to sell. In this regard, firstly, as rightly contended on behalf of the assessee, the construction over the plot allotted to the assessee has not been disputed by the department. Apropos the construction of the house, the approval was granted, which also has not been questioned. Then, Smt. Gurdeep Kaur filed an affidavit APB 27-28), therein, she has categorically stated, inter-alia, that "I have agreed to purchase/get transferred plot at commercial site number 964 situated in sector/phase-1 at Urban Estate, Phagwara from its owner Sh. Kashmir Singh Malhi son of Ajit Singh, r/o 948 Urban Estate, Phagwara thrugh his GPA/SPA Sh.______ (if applicable)."
12. This affidavit stands attested by the Executive Magistrate, Phillaur. Smt. Gurdeep Kaur also appeared before the Executive Magistrate. The house was duly transferred in the name of Smt. Gurdeep Kaur. These facts have also not been disputed and the ld. CIT(A) has merely disregarded the said affidavit of Smt. Gurdeep Kaur.
32 ITA No.46(Asr)/2014Assessment Year: 2010-11
13. Sh. Hari Krishan, nephew of Smt. Gurdeep Kaur, who used to receive the money from Smt. Gurdeep Kaur and hand it over to the assessee, filed his affidavit at APB-45, deposed that he had been representing Smt. Gurdeep Kaur. His Bank account , which was an account (APB 49-50) held jointly by him alongwith Smt. Gurdeep Kaur, also supports this contention.
14. In his aforesaid affidavit, Sh. Hari Krishan has made the following deposition (APB45):
"1. That Gurdeep Kaur wife of Kewal Singh residing in England is the real sister of my father Piara Singh. She purchased one house no. 964, Urban Estate, Phagwara, from one Kashmir Singh Malhi son of Ajit Singh of Urban Estate, Phagwara.
2. That the said house was purchased by my aunt Gurdeep Kaur for about Rs.45,58,000/- (Rs. Forty Five lacs Fifty Eight Thousands) on the basis of agreement dated 02.05.2009. The payment was made as per the agreement. Some of the payment was made by her and most of the payment was made by me whenever she used to send the money to me as per the terms of the agreement and thereafter I used to pay the same to above said Kashmir Singh Malhi. On 10.01.2010, the last payment was paid by me and after that some of the amount was paid to PUDA directly by me as per the terms of the agreement.
3. That now the re-allotment of letter has been issued by JDA in the name of Gurdeep Kaur."
15. This affidavit has also not been proved to be false. The factum of payment for the house by Gurdeep Kaur to the assessee stands substantiated thereby.
33 ITA No.46(Asr)/2014Assessment Year: 2010-11
16. Furthermore, during the remand proceedings, it was verified by the AO from the JDA Authority that the house stood transferred in the name of Gurdeep Kaur.
17. Then, the Taxing Authorities have also not brought on record anything to show that there was any other source of income of the assessee. The professional receipts were accepted. The documents regarding the sale of the house did not stand disproved. The agreement in question has not been shown as not having been acted upon.
18. Further, in the remand report, the AO stated as follows:
"2. In this connection, it is submitted that Sh. Kashmir Singh Malhi, Advocate sold his property No. 964 at Urban Estate Phagwara to Smt. Gurdip Kaur w/o Sh. Kewal Singh Vill.Rurkee Patti Khera Tehsil Phillaur. The Jalandhar Development Authority has intimated vide its office letter No.4877 dated 30.09.2013 that Sh. Kashmir Singh Malhi applied for transfer the said properly in the name of Smt. Gurdip Kaur w/o Sh. Kewal Singh on 11.01.2010. This property was transferred in the name of Smt. Gurdip Kaur on 09.06.2010."
19. Then, in her Income-tax proceedings before the Assistant Director of Income Tax (International Taxation), Chandigarh, which proceedings were in respect of the same amount of Rs.45,58,205/-, Gurdeep Kaur confirmed vide letter dated 22.02.2014, that the payment had been made to the assessee in cash on various dates, as per the terms of the agreement dated 02.05.2009. The relevant contents of this letter are as follows:
"1. The House No.964 situated at urban estate, Phagwara was purchased by me from Mr. Kashmir Singh Malhi, Advocate, 34 ITA No.46(Asr)/2014 Assessment Year: 2010-11 Civil Courts, Phillaur for Rs.45,58,205/- vide our agreement dated 02.05.2009.
2. The payment to Mr. Kashmir Singh Malhi were made in cash on the various dates as per the terms of agreement dated 02.05.2009. As per the terms of our agreement, out of this sum of Rs.45,58,205/-, a sum of Rs.43,00,000/- was paid to Mr. Kashmir Singh Malhi on various dates and balance of Rs.2,58,205/- was paid by me directly to PUDA."
20. The aforesaid letter has been sought to be produced as additional evidence. The order of the ld. CIT(A) is dated 16.12.2013, whereas the aforesaid letter is of 22.02.2014. Therefore, it being not in existence as on the date of the passing of the impugned order, obviously, it could not have been produced by the assessee before the ld. CIT(A), much less during the assessment proceedings. This letter, as the above contents thereof show, is directly related and is very relevant, to the dispute at hand and, therefore, it is necessary for the adjudication thereof. As such, the same is taken as evidence. This letter, it is seen, was in response to the requisition of information u/s 133(6) of the Act, as desired by the DIT (International Taxation), Chandigarh.
21. The ld. CIT(A) has next observed that the alleged signatures of Smt. Gurmeet Kaur on the agreement to sell dated 2.5.2009 did not match with her signatures on the affidavit and indemnity bond dated 24.07.2009 executed before the Executive Magistrate. In this regard, firstly, the ld. CIT(A) is not a hand-writing expert. In case he doubted the signatures of Smt. Gurmeet Kaur on the agreement to sell, the proper course available for him was to refer the same to a qualified hand-
writing expert, to ascertain the actual position. This, however, was not 35 ITA No.46(Asr)/2014 Assessment Year: 2010-11 done. However, as discussed, Sh. Hari Krishan, nephew of Smt. Gurmeet Kaur confirmed that the agreement had duly been executed. Also, in the income tax proceedings of Smt. Gurmeet Kaur before DIT (International Taxation), by way of her aforesaid letter/reply dated 22.02.2014, Smt. Gurmeet Kaur herself confirmed the agreement. Therefore, this observation of the ld. CIT(A) is also not sustainable.
22. The ld. CIT(A) further observed that the bank account of Smt. Gurmeet Kaur had not been produced and so, her creditworthiness did not stand proved; and that Smt. Gurmeet Kaur had not confirmed the contents of the affidavit of Sh. Hari Krishan. In this regard, as rightly contended on behalf of the assessee, it is in a case of cash credit where creditworthiness requires to be proved, which is not the position herein.
The assessee sold the house to Smt. Gurmeet Kaur and received the payment for the same. It is this transaction, which is in question in the present case. Moreover, to reiterate, Smt. Gurmeet Kaur has admitted having purchased the house and having made the payment therefor.
23. It has also been observed by the ld. CIT(A) that even if the property was transferred to PUDA in the name of Smt. Gurmeet Kaur, this fact by itself does not prove that the cash deposits had been made out of the sale proceeds of the property, without proving that the agreement to sell was genuine and that the payments had actually been made; and that the deposition of Sh. Hari Krishan was not at all credit-worthy, as he was but a third person to the transaction of sale of house by the assessee to 36 ITA No.46(Asr)/2014 Assessment Year: 2010-11 Smt. Gurmeet Kaur and Smt. Gurmeet Kaur had not confirmed the version of Sh. Hari Krishan that he, i.e., Sh. Hari Krishan had made payments to the assessee/seller on behalf of Smt. Gurmeet Kaur purchaser; and that no other documentary evidence had also been brought in this regard. Here, as seen, Smt. Gurmeet Kaur has, in no uncertain terms, admitted of the transaction of purchase of house from the assessee in the proceedings before the DIT (International Taxation), Chandigarh, thereby affirming the agreement. The agreement, even otherwise, does not stand proved to be a sham document. It remains undisputed that Smt. Gurmeet Kaur was residing in the U.K. at the relevant time. It remains undisputed that Sh. Hari Krishan is her nephew. It remains undisputed that Sh. Hari Krishan was handling the matter regarding payment of the purchase price of the house and was making payment to the assessee on behalf of Smt. Gurmeet Kaur. PUDA has transferred the house in the name of Smt. Gurmeet Kaur, which fact has earned the ld. CIT(A)'s acceptance. This transfer by PUDA unilaterally ratified the agreement dated 24.07.2009, i.e., the agreement in question. Seeing the entire picture , nothing adverse can be inferred from the transaction, which itself does not stand disproved. Now, obviously, the transfer of the house in favour of Smt. Gurmeet Kaur also affirmed the factum of the payment having been made by Smt. Gurmeet Kaur and received by the assessee, as per the terms of the agreement.
Smt. Gurmeet Kaur has not been shown to be a relative of the assessee 37 ITA No.46(Asr)/2014 Assessment Year: 2010-11 and there is no assumption going that the agreement was executed sans consideration. The factum of Sh. Hari Krishan being the nephew of Smt. Gurmeet Kaur also stands confirmed by the admission of Smt. Gurdeep Kaur in this regard and the fact that Sh. Hari Krishan and Smt. Gurmeet Kaur were holding a joint bank account. Smt. Gurmeet Kaur had executed a power of attorney in favour of Sh. Hari Krishan regarding her some other properties also, which fact, as putforward by Sh. Hari Krishan before the AO, was never denied by Smt. Gurmeet Kaur, which confirms the transaction before the DIT (International Taxation). In this case, again, there is no force in the observation of the ld. CIT(A).
24. The next objection of the ld. CIT(A) is that the assessee has failed to produce any documentary evidence, either in the form of bank account of the purchaser, or any other documentary evidence, which would go to prove that Smt. Gurmeet Kaur had actually made the payment to the assessee on the respective dates, either herself, or through any other person. In this regard, first of all, the agreement to sell dated 2.5.2009 makes pointed mention specific of dates on which the payments were to be made. At this juncture, it would not be out of place to reproduce herein the english translation of the said agreement to sell, a copy whereof has been filed before us:
"AGREEMENT TO SELL Kashmir Singh Malhi son of Ajit Singh, resident of 548 Urban Estate, Phagwara- of the first part.
Gurdeep Kaur wife of Resham Singh, resident of England now at Rurki, Tehsil Phillaur- of the Second part.38 ITA No.46(Asr)/2014
Assessment Year: 2010-11 The property bearing Plot No. 964 in which building/kothi is constructed has been allotted to the first part by PUDA and some remaining amount out of the installments is payable to PUDA. Now the first party has agreed to sell the abovesaid Kothi/building for an amount of Rs.4558205/- to the second party. Today First party has received an amount of Rs.300000/-(Rs. Three Lacs) in cash from the second party as earnest money and the rest of the amount was agreed to be paid by the second party as under:
1) Rs. 450000/- between 07.05.2009 to 10.05.2009,
2) Rs.500000/- between 16.05.2009 to 21.05.2009,
3) Rs.1300000/- between 06.06.2009 to 04.06.09,
4) Rs.1300000/- between 21.07.2009 to 23.07.2009,
5) Rs.400000/- between 15.10.2009 to 20.10.2009
6) Rs.50000/- between 10.01.2010 to 16.01.2010 and the balance consideration would be paid by the second party after the allotment letter from the office of PUDA for transfer in favour of party no.2 and the party no.2 would pay the remaining amount to the office of PUDA personally. If the second party failed to pay the amount as per the terms and conditions stated above then the amount paid by second party would stand forfeited and the agreement 'would be treated as cancelled. If the first party failed to comply with the terms and conditions and in that case the second party would be entitled to get the specific performance done from the Civil Court, hence this agreement dated 02.05.2009 is executed as evidence."
25. In her letter before the DIT (International Taxation), Chandigarh, Smt. Gurmeet Kaur has confirmed having made cash payment to the tune of Rs.43 lakhs, as per the terms of the agreement dated 2.5.2009 and that the balance payment of Rs.2,58,205/- had been made directly to PUDA. Accordingly, this observation of the ld. CIT(A) also does not hold water.
26. The ld. CIT(A) has also remarked that the affidavit dated 4.12.2012, filed by Sh. Hari Krishan, had no evidentiary value, as contents thereof were not confirmed by Smt. Gurmeet Kaur, the actual 39 ITA No.46(Asr)/2014 Assessment Year: 2010-11 beneficiary and it was unbelievable that the payments had been sent by Smt. Gurmeet Kaur from the U.K. to Sh. Hari Kishan in cash. This observation of the ld. CIT(A) also gets nullified by the conduct of Smt. Gurmeet Kaur in unequivocally confirming the transaction, whereby she admitted of having made all the payments to the assessee and to PUDA.
PUDA, as noted, duly transferred the house in favour of Smt. Gurmeet Kaur, indicating that there was no issue with regard to payment to PUDA at the hands of Smt. Gurmeet Kaur. That being so, the very question of Sh. Hari Krishan being a conduit so far as regards the payments made by Smt. Gurmeet Kaur to the assessee becomes otiose and redundant, particularly in the face of the categorical admission of the transaction by Smt. Gurmeet Kaur and nothing contrary established having come on record.
27. The ld. CIT(A) also takes objection to the mention of specific dates of payments in the agreement and has observed that this was unusual and the dates were stated in a passion to explain cash deposits in the various bank accounts. Here also, it is a case of net picking, in as much as, firstly, there is nothing unusual about the mention of various dates and payments in the agreement. It is just that the parties to the agreement were particular in this regard and they did not want to leave anything to chance. It was, therefore, that a schedule of payments by way of specific dates, was reduced into writing and made a part of the agreement to sell. This, in fact, rather goes in favour of the assessee and 40 ITA No.46(Asr)/2014 Assessment Year: 2010-11 not at all against him. To reiterate, the agreement has not been proved to be a forged or fabricated or shamdocument. Smt. Gurmeet Kaur has confirmed having made payments to the tune of Rs.43 lakhs to the assessee. The balance payment of Rs.2,58,205/- was stated to have been paid directly to PUDA. The assessee handed over the possession of the house. PUDA has transferred the house in favour of Smt. Gurmeet Kaur. This observation of the ld. CIT(A), therefore, also does not merit acceptance. It is just that the ld. CIT(A) has read the facts to be leading to a particular course, i.e., that the dates of payments were incorporated in the agreement just to explain cash deposits in various bank accounts.
28. The last observation of the ld. CIT(A) is that the agreement to sell, which appears to be fake, since the signatures of Smt. Gurmeet Kaur on it were entirely different from her signatures on other documents is just an afterthought. The issue of veracity of the signatures of Smt. Gurmeet Kaur on the agreement to sell stands addressed by us in the foregoing portion of this order. Moreover, she has herself accepted the agreement to be a valid agreement. Thus, on this count, the agreement cannot be said to be a fake document, in the absence of any other evidence having been brought on record to prove it to be fake. As such, this agreement cannot at all be termed to be an after-thought.
29. So, looked at from any angle, the transaction of sale of house by the assessee to Smt. Gurmeet Kaur remains unhinged and stands well established. The grievance of the assessee in this regard is justified. The 41 ITA No.46(Asr)/2014 Assessment Year: 2010-11 order of the ld. CIT(A) is not sustainable in the eye of law, as discussed, being a result of mere surmises and conjectures, without any evidence brought on record against the assessee. The same is, hence, reversed.
The addition of Rs.30,40,200/- is, as such, deleted.
30. In the result, the appeal is allowed.
Order pronounced in the open court on 25/02/2016
Sd/- Sd/-
(T.S. KAPOOR) (A.D. JAIN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 25/02/2016
/skr/
Copy of order forwarded to:
1. The Assessee: Sh. Kashmir Singh Malhi, Phillaur
2. The ITO, Ward-2, Phagwara
3. The CIT(A), JLR
4. The CIT, JLR
5. The Sr. DR, ITAT, ASR.
True copy By order (Assistant Registrar) Income Tax Appellate Tribunal Amritsar Bench: Amritsar.