Income Tax Appellate Tribunal - Kolkata
Partha Chakraborty , Birbhum vs Acit, Circle - 50(1), Kolkata on 6 September, 2019
आयकर अपील य अधीकरण, यायपीठ - "C" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "C" KOLKATA
Before Shri J.Sudhakar Reddy, Accountant Member and
Shri S.S.Godara, Judicial Member
ITA No.2585Kol/2018
Assessment Years: 2014-15
Partha Chakraborty बनाम ACIT, Circle-50(1)
C/o Subash Agarwal & / Kolkata
Assocaites, Advocates V/s .
Siddha Gibson, 1, Gibson
Lane, Suite 213, 2 n d Floor,
Kolkta-69
[PAN No.ADQPC 5578 E]
अपीलाथ /Appellant .. यथ /Respondent
अपीलाथ क ओर से/By Appellant Shri Subash Agarwal, Advocate
यथ क ओर से/By Respondent Dr. P.K Srihari, CIT-DR
सुनवाई क तार ख/Date of Hearing 21-06-2019
घोषणा क तार ख/Date of Pronouncement 06-09-2019
आदे श /O R D E R
PER S.S.Godara, Judicial Member:-
This assessee's appeal for assessment year 2014-15 arises against the Commissioner of Income Tax (Appeals)-15, Kolkata's order dated 14.09.2017 passed in case No.10340/CIT(A)-15/16-17(1)/Kol, involving proceedings u/s/. 143(3) of the Income Tax Act, 1961; in short 'the Act'.
Heard both the parties. We proceed to adjudicate assessee's main appeal itself ITA No.2585/Kol/2018 with the consent of both the parties. The assessee's stay application No.07/Kol/2019 is not pressed during the course of hearing therefore.
ITA No.2585/Kol/2018 Assessment Year 2014-15Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 2
2. Coming to main appeal ITA No.2585/Kol/2018, Mr. Agarwal is fair enough in not pressing for the assessee's first two substantive grounds challenging correctness of the both the lower authorities' action disallowing donation / subscription as well as entertainment expenses of ₹1,445/- and ₹12,075/-; respectively. These two substantive grounds are dismissed as not pressed.
3. Next comes the assessee's third substantive grievance that the Assessing Officer as well as the CIT(A) have erred in adding his loan amount from M/s Chakra Infrastructure Ltd. (hereinafter referred to as CIL) as unexplained cash credits u/s. 68 of the Act.
4. We advert to relevant facts as per para-6 pages 2 and 3 in assessment order dated 26.12.2016. The Assessing Officer had issued section 133(6) notice to CIL which stood returned back by the Postal Authority "left". He then required the assessee to profile photo id , supportive documents, profit and loss account, balance- sheet and return relating to the relevant previous year creditworthiness and the corresponding bank statement thereof.
5. Case file suggests that CIL's director Shri, Pranab KR. Roy appeared before the Assessing Officer on 19.12.2016 alongwith voter ID card, muster data, director's signatory details and unsigned confirmation of account in assessee's name. He stated that CIL profit and loss account, balance-sheet, ITR and bank statement for financial year 2013-14 was not readily available. The Assessing Officer observes that assessee thereafter filed the other entities ledger copy as on 31.03.2014 with closing balance of ₹6,44,95,068/- after adjusting all credit / debit entries in the relevant previous years. He concluded in this fact that the assessee's failure in getting even the confirmation from the other side invited unexplained cash credits addition u/s68 of the Act.
6. The assessee filed appeal. He placed on record additional submission as well during the lower appellate proceedings. The CIT(A) called for the Assessing Officer's response. The assessee's Assessing Officer submitted his remand report in the lower ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 3 appellate proceedings. The CIT(A) holds that as per the Assessing Officer's action raising various issues in the remand report, it emerged that Shri Roy had not filed his return for assessment year 2014-15. The assessee's sale agreement with the said entity was unregistered firm, the Stock Exchange Board of India, SEBI had barred its director from capital market with further direction to refund investors money. The police had filed a case on 09.07.2014 and the department's inspector had found its address as not correct; sufficiently indicated that the impugned addition had been rightly made during the course of assessment. This leaves the assessee aggrieved.
7. We have given our thoughtful contentions to rival pleadings against and in support of the impugned addition. The assessee's detailed evidence i.e. copy of agreement, sale dated 24.11.2011, ledger account of CIL and its confirmation coming from other side alongwith the Assessing Officer's remand report dated 28.08.2017; stand perused.
8. We notice from the Assessing Officer's remand report that the assessee had stated purpose of the impugned sum to be regarding advance money stipulated in the agreement to sale with CIL involving of six storied building alongwith the land of Chakra Nayantara Hotel including furniture and fixtures for a consideration amount of ₹10 crores payable from time to time by 31.03.2014. He then stated that this deal could not materialize the Assessing Officer's remand report deals with all the issue as under:-
"IV) Ground No.6
1. This ground relates to the addition of Rs.6,4495,068/- made by the Ld. AO.
2. The addition was made regarding loan &advance taken from M/s Chakra Infrastructure Ltd. amount of outstanding loan as on 31.03.2014 was Rs.6,44,96,068/-
3. In this regard, to verify the loan transaction, u/s. 133(6) notice was issued on 9.11.2016 which was returned back by the postal authority with the remark 'that the loan creditor was not found" on the given address at M/s Chakra Infrastructure Ltd., Chakramadhumati, 40D North Purbachal, Haltu, Kalitala Link Road, Kolkat-700078.
4. The assessee was asked to produce the party. As per order sheet noting dated 19.12.2016, Sri Pranab KR. Roy, Director of M/s Chakra Infrastructure Ltd., submitted a photocopy of his ID card and one unsigned confirmation of account.
5. The documents which were called by 133(6) notice were not submitted by him like profit & loss account. Balance-sheet and bank statement of M/s Chakra Infrastructure Ltd.ITA No.2585/Kol/2018 Assessment Year 2014-15
Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 4 This proves that genuineness of transaction is not proved for which onus is on the assessee.
6. He also stated that the company has not filed return of income for AY : 2014-15.
This also proves that genuineness of transaction is not proved for which onus is on the assessee.
7. In this regard during appellate proceeding, the assessee has submitted that he has entered into an agreement for sale with M/s Chakra Infrastructure Ltd. who had admit to purchase a six-storied building alongwith the land of Chakranayantara Hotel including furniture and fixture from the assessee for a consideration amount of Rs.10 crore. It was further decided that CIL would pay such amount to the assessee from time to time by 31.03.2016.However, the said deal did not materialize and the assessee was returning the money received from CIL [Ledger account of CIL is annexed herewith and marked as Annexure-G] Comments of AO
8. After going through the 'agreement for sale' furnished by the assessee with Chakra Infrastructure Learned. On 24th March, 2011, it is seen that document is not registered anywhere, but it notarized document. It cannot be admitted as evidence u/s. 49 of the Registration Act which requires collateral proof, hence cannot be relied upon the assessee and the balance Rs.99,980,000/- shall be paid by the purchaser from time to time not later than 31.03.2014.
9. In this regard, the confirmation filed by assessee is perused where there are the journal entries showing transfer of fund from 1.4.2013 to 7.7.2013 and debit to P. Chakraborty and alliance form 12.04.2013 to 06.01.2014. Thus the entries are as late as 1.4.2013 and not from the date of execution of claimed sale deed as on 24.03.2011. It cannot be established that they belong to source as claimed by assessee from sale of Chakra Narayan hotel.
10. Further, it is submitted by assessee that,
(b) During the course of assessment proceedings, the assessee submitted the said agreement for sale datded 24.03.2011. Further, one of the directors of CIL, Shri Pranab KR. Roy appeared before the AO alongwith a confirmation of accounts. It is humbly submitted that the said confirmation of account inadvertently remained unsigned. However, the fact that the confirmation was not signed on behalf of CIL cannot be deemed to be an adversity since the director of CIL himself appeared before the AO and confirmed the transaction. The said confirmation submitted was nothing but a copy of account between CIL and the assessee and no discrepancy was noticed by the Ld. AO in the said copy of accounts/ confirmation. However, annexed herewith and marked as Annexure 'H'). The said signed confirmation is nothing but a clarificatory evidence and cannot be said to be additional evidence since the corroborative material is already on record. Thus, the Ld. AO should have considered that the assessee produced the director of CIL before him on his request who confirmed the transactions with the assessee. Comments of A.O
11. Mere statement without corroboratory evidences are not valid. The documents which were called by 133(6) notice were not submitted by Director like Profit & Loss Account, Balance-sheet and bank statement of M/s Chakra Infrastructure Ltd. He also stated that the Company has not filed return of income for Assessment Year:
2014-15. This proves that genuineness of transaction is not proved for which onus is on the assessee.
12. Further, it is stated by assessee that-
ITA No.2585/Kol/2018 Assessment Year 2014-15Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 5 © In the relevant year, the assessee received only sum of Rs.8,52,000/- from CIL. However, the AO wrongly added the closing balance of Rs.6,44,95,068/- to the income of the assessee without considering that the said amount also included brought forward balance. The details of the transactions with CIL in the relevant year is given as under. Opening balance Amount received Amount paid Closing balance Rs.6,83,85,969/- Rs.8,52,000/- Rs.47,901/- Rs.6,44,95,068/-
The above facts find corroboration with the confirmation of account signed by the said party [Annexure H]"
Fro the above, it is apparent that the addition made by the Ld. AO was not permissible in law inasmuch as Rs.6,83,85,969/- was appearing as the brought forward balance form the earlier year and during the instant year, the closing balance has, in fact, been reduced to Rs.6,44,95,068/-.
Comments of AO-
As discussed above, confirmation filed by assessee is perused. The amount shown by M/s Chakra Infrastructure Ltd. does not show capacity to advance such huge loans which had not even filed any return for the said assessment year.
Further, balance sheet of the assessee also does not show the name of M/s Chakra Infrastructure Ltd. but the assessee during assessment proceeding had stated that "Unsecured loan from friends & relatives, sundry creditors from capital goods. Advance & deposits" are noting but loan form M/s Chakra Infrastructure Ltd. Thereby, the identity of loan creditor is not established through books of account. The amount is found in books of account credited and assessee could not prove nature and source. Therefore, the issue may be decided on merit of the case after considering the above fact.
13. Further, it is submitted by assessee that "It is humbly submitted that the opening balance of Rs.6,83,85,969/- was reflected in various proprietorship business of the assessee in the AY :2013-14. The breakup of the amounts as reflected in the books a on 31.03.2013 is given herein under-
(i) Chakra Narayan Hotel as on 31.03.2013
a. Unsecured loan from friends 3269503.60
& relatives
b. Unsecured loan from others 32722020.89
c. Sundry creditors from capital 4525750 40517273.89
goods
(ii) P. Ckhakraborti &Alliances as on 31.03.2013
a. Unsecured loan from friends 6626940.00
& relatives
b. Unsecured loan from others 13065754,84 19692694.84
(iii) Baba Lokenath Rural Godown as on 31.03.2013
a. Unsecured loan from friends 4826000.00
& relatives
b. Advance & deposits 3350000.00 8176000.00
68385968.73
It is clarified here that in the earlier years, pursuant to the above mentioned agreement for sale dated 24.11.2011, the assessee was receiving the payments from CIL in his different proprietary concern M/.s Chakra Narayantara Hotel and the closing balance of Rs.6,44,95,068/- was reflected in the balance-sheet as on 31.03.2014 of the said concern (Annexure-A)."
14. The perusal of submission as verified from balance sheet, the whole transaction is found to be accommodated entries shown under the head 'loan from, others" and "loan from, friends and relatives" and balance Rs.6,44,95,068/- is shown as outstanding. No ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 6 transaction directly from Chakra Infrastructure Ltd is appearing in the books of account. Further the identity of the loan creditors is not established on this fact and as return of income was not file by Chakra Infrastructure Ltd., genuineness of the transaction is not established. Further, profit & loss account, balance-sheet and bank statement were not filed by M/s Chakra Infrastructure Ltd., therefore, creditworthiness is not established. Therefore, the balance appearing in balance sheet of the assessee of Rs.6,44,95,068/- remains unexplained.
15. The above discrepancies in account of assessee was categorically mentioned as it leads to some circumstantial evidences in case of assessee.
In this regard, circumstantial evidences are of crucial importance collected from Public Domain which are of crucial importance.
The news in the Economic Times of India dated 21.4.2016 is very relevant that SEBI barred the Firm and its Directors from the Capital market for four years of M/s Chakra Infrastructure Ltd who had garnered funds illegally.
It is reproduced based on google search as under for ready reference as under.
"SEBI ASKS CHAKRA INFRASTRUCTURE TO REFUND INVESTORS'MONEY".
NEW DELHI: Markets regulator Sebi has ordered Chakra Infrastructure and its directors to refund investors' money which it had raised illegally b issuing securities. Besides, the Securities and Exchange Board of India (SEBI) has barred the firm and its directors from the capital markets for four years.
Chakra Infrastructure garned funds illegally through issuance of Non-Convertible Redeemable Debentures (NCDs) As per Sebi, the company had raised Rs.10.24 crore by issuing NCDs to 72 investors during 2012-13. While Chakra Infrastructure said it mopped up Rs.10 crore, there was an additional amount of over Rs.24 lakh about which complaints were received. Since the shares were issued by the firm to more than 50 people, it qualified as a public issue that requires compulsory listing on a recognized stock exchange. It was also required to rile a prospectus, among other things, which it failed to do. In an order date April 20, the regulator has directed the company and its directors to refund the money along with an interest of 15 per cent per annum. The firm and its directors haves been restrained and prohibited from buying, selling or otherwise dealing in the securities markets for four years and the ban will continue till the completion of refunds to investors.
In case, the firm fails to comply with the order in three months, Sebi would make a reference to state government or local police to register a case against them for fraud, cheating and misappropriation of public funds.
Besides, the Ministry of Corporate Affairs would initiate the process of winding up of the company.
The directions would come into force with immediate effect.
2. Further, SEBI has passed order no.WPM/PS/09/ERO/APR/2016 dated 22.04.2016 restraining the Chakra Infrastructure Ltd along with its Directors from accessing the security market and a further prohibited from buying selling or dealing in securities. In the said order name of assessee also appeared as a director.
3. Further, Dy. Commissioner of Police(II), Detective Department, 18, Lal Bazar Street, Kolkata forwarded its Memo No.22/SIT/DD dated 29.05.2017 stating that the case was filed against the assessee with Ref No.Garfa PS.DD/SIT, Case No.227 dated 09.07.2014 u/s. 120B/420/406/409 IPC and had started the investigation.
Comments
1. The amount estimated by SEBI in its order and the amount shown as sale of Chakranarayan hotel is same of Rs.10 crores.
ITA No.2585/Kol/2018 Assessment Year 2014-15Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 7
2. Circumstantial evidence proves that the agreement filed by assessee is nothing but created document to accommodate illegal fund and might be tainted money.
3. It is further strengthened on the basis of Report of Inspector, who was deputed and in his report dated 25.8.2017, he stated that In case of Shri Jitendra Prasad Singh, DA-33,Sagarika Apartment, 1set Floor, New Town, Kolkata, Inspector - Shri Ganesh Chandra Chakladar's report is as follow- 'First I try to find out the existence the address i.e. of "M/.s Chakara Infrastructure Ltd. of 40B/B, North Purbachal, P.O.Haltu, Kali Tala Link Road, [P.No.28, Purbachal Main Road, Kolkata-78". Everybody of the area failed to inform about such name and address. But a grocer, named Bapi Barick, informed that M/s Chakra Infrastructure Ltd has been abolished a few years back and it was established in a room under a apartment, named 'Madumati". But the given address is not correct. As per his instruction I have traced out the existence of M/s Chakra Infrastructure Ltd. on going there, I notice that there is no office under name and style M/s Chakra Infrastructure Ltd. but I observe several notices affixed above the gate [enclosed photocopy]. One of them is shown as Chakra Infrastructure Ltd. I also notice that the collapsible gate is sealed. Wife of care taker, Smt. Anima Halder told me that local police sealed the gate. I observed that the building was painted and named "Madumati". Premise No.653, Kali Tala Link Road, Postal Address; 28 Purbachal Road, Kolkata-700078.
4. Inspector had submitted the spot report alongwith photograph confirming the action taken by police.
5. Therefore, you are kindly requested to take above evidences also into consideration while deciding the case, which shows that identity and genuineness of transaction is not proved of M/s Chakra Infrastructure Ltd."
9. Learned CIT-DR vehemently supports the lower authorities' action and all more particularly the Assessing Officer's above extracted remand report holding his agreement to sale with CIL to be not a genuine one being an unregistered document. He pin-points glaring aspect of the issue as per SEBI's direction criminal proceedings pending against the said entity (supra).
10. We find no reason to concurring with either Revenue's foregoing arguments or both the lower authorities' action treating the assessee's advance / loan amount(s) to ₹6.44 crores in case of CIL. We wish to make it clear first of all that the department is fair enough in not disputing the assessee's explanation to have owned / possessed a six storied residence / commercial B comprising of fifty rooms units and that ten of said units stood sold leaving behind forty of them with kitchens, store and other specified emanated of flow rooms reception rooms bath rooms. There is further no issue regarding assessee's cost of construction met out from loans availed from PSU bank. This above stated agreement stated on 24.04.2011 in paper book pages 46 to 57 ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 8 reveals that CIL had agreed to purchase thirty out of assessee's forty remaining units for ₹10 crores including all movable assets and emanated attached bathrooms. It had paid ₹20,000/- as advance and balance figure(s) of ₹99,980,000/- had to be transferred not later than 31.03.2014. the assessee and his vendee further agreed that the later would be entitled to use the above said thirty rooms units upon paid of 25% of the consideration money. We re-emphasis that department has not doubted assessee's ownership as well as possession all these foregoing assets.
11. We now deal with the registration aspect of the above stated agreement. The Revenue's case as per the lower authorities finding is that the impugned agreement does not deserve to be accepted as genuine since an un-registered document. We find that the very issue had come up before this tribunal's co-ordinate benches in Smt. Sapnaben Depakbhai Patel vs. ITO Ward-10(1) Ahmedabad in ITA No.2414/Ahd/2013 decided on 13.01.2016. Learned co-ordinate bench considered the interplay between sec. 24D of the Income Tax Act vis-à-vis the sec. 17(2)(1A) and Sec. 49 of the Registration Act as well as sec. 53A of the Transfer of Property Act as under:-
"23. The first reason assigned by the ld.First Appellate Authority for ignoring the agreement dated 4.4.2008 and 2.3.2009 for holding them invalid and non-genuine is that for harbouring any "transfer" within the meaning of clause (v) of section 2(47), there must be a transaction under which the possession of immovable property is allowed to be taken or allowed to be retained. There is no dispute with regard to the above finding of the ld.CIT(A). We also concur with regard to the observation of the ld.First Appellate Authority that Section 53A of the Transfer of Property Act (TPA), 1982 is not source by which the title to the immovable property can be acquired, but it only served as a shield to defend one's lawful possession obtained in pursuance to a contract. According to the ld.First Appellate Authority, sections 17 and 49 of the Indian Registration Act have been amended by Act No.2001 whereby it has been laid down that the registration of sale agreement/contract for the purpose of section 53A is mandatory. The ld.DR while putting reliance upon the order of the ld.CIT(A) also brought to our notice copy of the Govt. of Gujarat Extraordinary Gazette Notification published on Saturday, February, 2002 whereby amendment of the Indian Registration Act in section 17 of the Registration Act has been published. The ld.CIT(A), while construing the impact of sections 17 and 49 of Indian Registration Act along with section 53A of TPA within the meaning of section 2(47) of the Income Tax Act has concluded that the "transfer" within the section 2(47) of the Income Tax Act can only be completed, if in part performance of the contract, possession has been handed over as per section 53A of the TPA. Once the agreement was not registered then it will lose its evidentiary value within the meaning of Section 53A of the TPA. In other words, the rights flowing from an agreement can only be recognized if it was duly registered. If the agreement was not registered, then the rights would not accrue to the parties to the agreement. If no rights would accrue, then it will be construed that the possession was not delivered by the assessee vide agreement dated 4.4.2008 and 2.3.2009, meaning thereby, no transfer has taken place. The ld.First Appellate Authority further put ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 9 reliance upon the judgment of the Hon'ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana, 14 taxmann.com 103.
24. On due consideration of the above reasoning, we are of the view that as far as the judgment of the Hon'ble Supreme Court in the case of Suraj Lamp & Industries (supra) is concerned, it is altogether in different context. There is no dispute with regard to the proposition that transfer of an immovable property having value of more than Rs.100/- can only be completed by way of registered sale deed, as contemplated in section 17 of the Registration Act. This judgment deals with the concept of power of attorney, lease, licence etc. Definition of expression "transfer" provided in section 2(47) is more wider than in the general law. As observed earlier, while dealing with the issue no.(ii), the expression "transfer"
employed in section 2(47) includes (a) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the TPA, and (b) any transaction entered into in any manner which has the effect of transferring, or enabling the enjoyment of, any immovable property. In these two eventualities, profits on account of capital gains would be taxable in the year in which such transactions are entered into, even if a transfer of immovable property is not effective or completed under the general law. In the present case, there is a fine distinction which remained un-noticed at the end of the ld. CIT(A). According to the assessee, the rights which have been alienated by her by virtue of agreement dated 4.4.2008 are the rights of capital nature. These rights have been alienated in favour of SDS. The ld.CIT(A) has referred to sections 17 and 49 of the Indian Registration Act, but, failed to notice the proviso appended to section 49 which has been incorporated by way of amendment subsequently. Thus, it is pertinent to take note of section 49 along with proviso which reads as under:
"49. Effect of non-registration of documents required to be registered.--No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall--
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered :
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877), or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882 (4 of 1882) or as evidence of any collateral transaction not required to be effected by registered instrument."
25. Section 53A of the T.P. Act provide a shield to defend the possession taken by virtue of the agreement. The vendee can claim protection of the possession even against the owner i.e. vendor, during the period sale deed was not registered. The person who has acquired the possession on execution of agreement as referred to in section 53A may not be able to protect his possession on account of non-registration of the agreement, but for all other collateral purposes, i.e. for tendering the agreement into evidence for suit for specific performance, etc. it is to be treated as valid agreement. A controversy in this aspect had arisen whether such non-registered agreement can be entertained in evidence or not in a suit for specific performance. A reference was made before the Division Bench of Punjab & Haryana High Court in regular Second appeal No.4946 of 2011 in the case of Ram Kishan Vs. Bijeder Mann. The Hon'ble High Court has resolved the controversy and held that such unregistered agreement can be produced as evidence in suit for specific performance. It can be made basis of suit for specific performance. The finding recorded by the Hon'ble Punjab & Haryana High Court in this case reported in (2013) 1 PLR 195 as under:
ITA No.2585/Kol/2018 Assessment Year 2014-15Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 10 "11. A conjoint appraisal of sections 53A of the Transfer of Property Act, 1882, sections 17(1A) and 49 of the Indian Registration Act, 1908, particularly the proviso to section 49 of the Indian Registration Act, in our considered opinion, leaves no ambiguity that, though, a contract accompanied by delivery of possession or executed in favour of a person in possession, is compulsorily registrable under section 17(1A) of the Registration Act, 1908, but the failure to register such a contract would only deprive the person in possession of any benefit conferred by section 53A of the 1882 Act. The proviso to section 49 of the Indian Registration Act clearly postulates that non-registration of such a contract would not prohibit the filing of a suit for specific performance based upon such an agreement or the leading of such an unregistered agreement into evidence.
12. A suit for specific performance based upon an unregistered agreement to sell accompanied by delivery of possession or executed in favour of a person who is already in possession, cannot, therefore, be said to be barred by section 17(1A) of the Registration Act, 1908.
13. Section 17(1A) merely declares that such an unregistered contract shall not be pressed into service for the purpose of section 53A of the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the proviso to section 49 of the Indian Registration Act, 1908, put paid to any argument to the contrary.
14. We, therefore, hold that :
(a) a suit for specific performance, based upon an unregistered contract/agreement to sell that contains a clause recording part performance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/agreement;
(b) the proviso to section 49 of the Registration Act, legitimises such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract."
26. Thus, if the assessee refused to honour her agreement dated 4.4.2008, SDS has a right to get this agreement enforced by way of suit for specific performance and the assessee could be persuaded to execute the sale deed in favour of SDS by virtue of this agreement. The validity of this agreement under general law viz. Specific Relief Act as well as Indian Registration Act has not been effected. This aspect has not been appreciated by the ld.CIT(A) while holding that since the agreements are unregistered, therefore, they are non-genuine."
We observe in the light of foregoing detailed discussion that the learned lower authorities have erred in not accepting genuineness of the assessee's owned registered agreement to sale. We wish to make it clear that the assessee has further proved all uncollateral circumstances n his favour since the above stated unregistered agreement followed the vendees multiple payments of transfers made former name as well as his ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 11 proprietory concern M/s Chakra Nayantara Hotel, M/s Nayantara Appliances and M/s B.N. as on 31.03.2013 (supra). The relevant ledger account to this effect from 01.04.2013 indicates all these payments instances. The assessee's opening balance as on 01.04.2013 including these payments indication that a figure of ₹6,83,85,969/-.
12. The Revenue's stand that all these are accommodation entries in the name of assessee's three concern, does not inspire concurrence therefore since the lower authorities have themselves included payments made in respect of assessee as well as his proprietary concern name. We reiterat that impugned addition sum of ₹6,44,95,068/- is the net balance of CIL. We accordingly observe that the Revenue's action of making the impugned addition of the very sum in assessee's hand on one hand and holding the same as accommodation entries on the other is not acceptable.
13. Coming to equally important aspect that the assessee's opening balance figure(s) as on 01.04.2018 read an amount of ₹6,83,85,969/- followed by further amount received of ₹8,52,00/- and amount paid ₹47,42,901/- only, this tribunals co- ordinate bench's in ITO Ward-1(4) Kolkata vs. M/s Sankhuwala Commercial Pvt. Ltd. in ITA No.1973/Kol/2016 decided on 27.07.2018 has taken into consideration the catena of case law to hold that sec. 68 addition of unexplained cash credits comes into play only qua the relevant transactions or credit instances in the specified accounting period as follows:-
"8. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the claim of having received the amount in question towards share capital and share premium during the earlier F.Y. 1999-2000 relevant to A.Y. 2000-01 and not during the year under consideration was not accepted by the A.O. during the course of assessment proceedings in the absence of documentary evidence filed by the assessee to support and substantiate the same. During the course of appellate proceedings before the Ld. CIT(A), the assessee company however filed such documentary evidence as additional evidence to support and substantiate its claim that the amount in question on account of share capital and share premium having been received in the earlier year and not in the year under consideration, the addition made by the A.O. by treating the same as unexplained cash credit during the year under consideration was not sustainable. The said documentary evidence filed by the assessee was forwarded by the Ld. CIT(A) to the A.O. along with the submission made by the assessee for his verification and comments. As per the direction of the Ld. CIT(A), the A.O. verified the documentary evidence filed by the assessee and found the same to in order. He also verified the claim of the assessee ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 12 company from the share subscriber companies and found that the entire share capital along with share premium amounting to Rs. 54.35 crores was actually received by the assessee company during the F.Y. 1999-2000 relevant to A.Y. 2000-01. Keeping in view this categorical finding given by the Assessing Officer in his remand report after verifying the claim of the assessee company from the relevant documentary evidence as well as from the share subscriber companies, the Ld. CIT(A) held that the amount in question towards share capital and share premium having been received by the assessee company in the earlier year, the same could not be treated as unexplained cash credit for the year under consideration. To arrive at this conclusion, the Ld. CIT(A) relied on the following judicial pronouncements:
"i. In CIT v. Usha Stud Agricultural Farms Ltd. 301 ITR 384 (Delhi) it was held in para (6) of the order:
'(6) Here, the CIT(A) has deleted the addition of Rs. 15 lacs mainly on the ground that this credit balance of Rs. 15 lacs is being reflected in the accounts of the assessee over the past four to five years or so and hence this was not a fresh credit entry of the previous year under consideration and these credit entries were already made and accounted for in the A.Y.s 1995-96 and 1997-98 which were introduced in the form of advance against breeding stallions owned by the assessee and thus these credit entries did not relate to the year under consideration for being considered under section 68 of the Act. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessee, does not pertain to the year under consideration, under these circumstances, the A.O. was not justified in making the impugned addition under section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A).' ii. In CIT v. Parameshwr Bohra 301 ITR 404 (Rajasthan) it was held in para (5) of the order:
'(5) On the merit of the additions made in the income of the assessee, there is a clear finding, and about which there is no dispute, that the amount added in the income of the assessee as unexplained investment or cash credit in the A.Y. 1993-94 was the same amount which was credited in the books of account of the assessee for previous year ending on 31st March, 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in the business and this amount was shown as a closing capital as on 31st March, 1992 and on 1st April, 1992 it was an opening balance. Considering this aspect, the Tribunal has come to the conclusion that what was already credited in the books of account ending on 31st March, 1992 for financial year 1991-92 relevant to A.Y. 1992-93 cannot be an unexplained cash credit or investment in the books of account maintained for the financial year 1992-93, the accounting period of which ends on 31st March, 1993 so as to warrant its consideration as unexplained investment or cash credit for its relevant A.Y. 1993-94.ITA No.2585/Kol/2018 Assessment Year 2014-15
Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 13 It does not require any elaborate argument that a carried forward amount of the previous year does not become an investment or cash credit generated during the relevant year 1993-94."
9. As held by the Hon'ble Delhi High Court in the case of Usha Stud Agricultural Farms Ltd. (supra) as well as by the Hon'ble Rajasthan High Court in the case of Parmeshwar Bohra (supra), the amount received by the assessee in the earlier year and not in the year under consideration and duly credited in the books of account of the assessee for such earlier year cannot be added under section 68 as unexplained cash credit for the year under consideration. In our opinion, the ratio of the said two judicial pronouncements is squarely applicable to the facts of the present case and the Ld. CIT(A) was fully justified in deleting the addition made by the A.O. under section 68 during the year under consideration by treating the amount in question towards share capital and share premium which was received by the assessee company in the earlier year and not in the year under consideration. At the time of hearing before us, the learned DR has not disputed this factual position or even the applicability of the ratio of the said two judicial pronouncements relied upon by the Ld. CIT(A) while deleting the addition made by the A.O. under section 68.
10. It is also observed that the similar issue involving identical facts and circumstances has been decided by the coordinate bench of this Tribunal vide its order dated 05.07.2018 passed in ITA No. 1972/K/2016 wherein the order of the Ld. CIT(A) deleting the addition made by the A.O. under section 68 by treating the share capital and share premium amount received in the earlier year as unexplained cash credit in the subsequent year was upheld by the Tribunal for the following reasons given in paragraph no 4 & 5 of its order:
"4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee is an income tax assessee under PAN AABCJ9581H of the Tax Ward 1(4), Kolkata. The A.O. has passed the assessment order dated 21.03.2014 u/s 147/143(3)/263/144 of the Act. The A.O. has made the addition u/s 68 of the Act, therefore, we would like to reproduce section 68 of the Act which reads as under:
'Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and sources thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year.'
5. On perusal of the aforesaid provision of law shows that an addition u/s 68 of the Act for making addition u/s 68 as unexplained cash credit the following condition has to be satisfied:
a. sum must be found credited in the books of the assessee for any previous year;ITA No.2585/Kol/2018 Assessment Year 2014-15
Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 14 b. on being not satisfactorily explained, sum so credited may be treated as income of that previous year.
Therefore, for the purpose of section 68 of the Act the year in which the sum is credited in the books of the assessee is very relevant. The main contention of the assessee was that the impugned addition amount/sum was credited in the books of the assessee for financial year/previous year 1999-2000 relevant A.Y. 2000-01. We note that the amount added in the income of the assessee as unexplained cash credit in the A.Y. 2005-06 was the same amount which was credited in the books of account of the assessee in the previous year ending on 31.03.2000. It is not the case of the revenue that this amount of credit entered in the books of account of the assessee during the year ending on 31.03.2005. The assessee's case is that this is the closing capital as on 31.03.2000 and on 01.04.2000 it was an opening balance. Therefore, the Ld. CIT(A) concluded that what was already credited in the books of account ending on 31.03.2000 for A.Y. 1999-2000 relevant to A.Y. 2000-01 cannot be an unexplained cash credit in the books of account maintained for the F.Y. 2004-05 relevant to A.Y. 2005-06 so as to warrant this consideration as unexplained cash credit for relevant A.Y. 2005-06."
11. Respectfully following the decision of the coordinate bench of this Tribunal in the case of Geoletic Supply Pvt. Ltd. (supra) as well as that of Hon'ble Delhi High Court in the case of Usha Stud Agricultural Farms Ltd. (supra) and Hon'ble Rajasthan High Court in the case Parmeshwar Bohra (supra), we uphold the impugned order of the Ld. CIT(A) deleting the addition made by the A.O. under section 68 by treating the amount of share capital and share premium received during the earlier year as unexplained cash credits for the year under consideration."
14. Coming to the Revenue's vehement arguments that CIL has been facing both the SEBI and criminal proceedings (supra), we observe that same has no bar on the issue before us as all these are subsequent developments than the relevant accounting period and more so when we are adjudicating identity, genuineness and creditworthiness of the assessee's advance payments received from the said entity. We further are of the view that the mere fact of the said entity not having filed its return does not prove not fatal to the assessee's explanation proving identity, genuineness and creditworthiness of the advance receipts. We therefore direct the Assessing Officer to delete the impugned addition of ₹6,44,95,068/-.
15. Next comes assessee's fourth substantive ground seeking to delete alleged bogus loan addition of ₹71,57,971/- in case of M/s Disha Productions and Media Pvt.
ITA No.2585/Kol/2018 Assessment Year 2014-15Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 15 Ltd. This paper book page 88 contains RNI licence agreement dated 23.10.2013 with M/s Darpan Publication Ltd, accounting confirmation of ledger / books of account and M/s Disha Production and Media Pvt. Ltd. ITR acknowledgment and final account; respectively. All these sufficiently indicates that the assessee; holder of RNI licence on behalf of M/s Disha Productions & Media Pvt. Ltd as an individual, had received the impugned sum from M/s Darpan Publication. One of the said entity director (supra) also appeared and confirmed the assessee's case before the Assessing Officer to this effect. We conclude in this fact that the lower authorities have erred in treating the impugned sum in assessee's hands as unexplained cash credits. The same is directed to be deleted.
16. Next comes correctness of sec. 40A(3) disallowance of ₹9,60,669/- on cash payments made to Shri J.P. Singh as on 20.08, 9.11.2011 and 28.12.2013 involving varying sums. The Assessing Officer's remand report itself is very very clear that none of the assessee's cash payments has exceeded the threshold limit of ₹20,000/- during the course of a day so as to trigger the impugned disallowance. We therefore delete the same for this precise reason alone.
17. Lastly comes the assessee's sixth substantive grievance challenging correctness of the disallowance of business expenditure of ₹50,50,700/- treated as bogus during the course of assessment as well as in lower appellate proceedings. Learned CIT-DR invites our attention to this Assessing Officer's remand report going against the assessee. We find that the assessee has duly filed his detailed evidence of bills and confirmation of the payees payments made through banking channel and its profit and loss account page 19 indicating the construction in brokers credited of ₹1.59 crores corresponding to the impugned expenditure. Learned counsel submits that the assessee has shown gross profit @ 35% on the impugned cost of disallowance which has gone up to 67% giving rise to an absurd result in case both the lower authorities' action is upheld. The fact also remains that the assessee himself has not been able to prove one to one matching of impugned material purchases and the respective payee's books. We therefore deem hold in this peculiar factual backdrop that a lump sum addition of ITA No.2585/Kol/2018 Assessment Year 2014-15 Partha Chakraborty Vs ACIT,Cir-50(1) Kol. Page 16 ₹7 lac out of ₹50,50,700/- would meet the ends of justice with a rider that the same shall not be taken as a precedent any other case or assessment year; as the case may be. Necessary computation to follow.
18. This assessee's appeal is partly allowed in above terms.
Order pronounced in open court on 06/09/2019
Sd/- Sd/-
(लेखा सद&य) ( या(यक सद&य)
(J.Sudhakar Reddy) (S.S.Godara)
Accountant Member Judicial Member
*Dkp-Sr.PS
)दनांकः- 06/09/2019 कोलकाता / Kolkata
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ /Appellant-Partha Chakraborty C/o Subash Agarwal & Associates, Advocates Siddha Gibson, 1, Gibson Lane, Suite 213 2nd Floor, Kolkta-69
2. यथ /Respondent-ACIT Circle-50(1), Kolkata
3. संबं,धत आयकर आयु-त / Concerned CIT
4. आयकर आय-
ु त- अपील / CIT (A)
5. .वभागीय (त(न,ध, आयकर अपील य अ,धकरण कोलकाता/DR, ITAT, Kolkata
6. गाड2 फाइल / Guard file.
By order/आदे श से, /True Copy/ सहायक पंजीकार आयकर अपील य अ,धकरण, कोलकाता ।