Income Tax Appellate Tribunal - Amritsar
Sh. Jaswinder Singh, Bathinda vs The Income Tax Officer,, Bathinda on 21 February, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR.
BEFORE SH. RAVISH SOOD, JUDICIAL MEMBER
AND DR. M. L. MEENA, ACCOUNTANT MEMBER
I.T.A. No. 115/(Asr)/2016
Assessment Year: 2011-12
Sh. Jaswinder Singh, Vs. Income Tax Officer,
#161, Royal Enclave Ward II(1), Bathinda
Bathinda
PAN: AENPS5926C
(Appellant) (Respondent)
Appellant by : Sh. P. N. Arora, Advocate
Respondent by: Sh. Rahul Dhawan, CIT-DR
Date of Hearing: 17.12.2021
Date of Pronouncement: 21.02.2022
ORDER
PER RAVISH SOOD, JM
The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax, Bathinda under Sec. 263 of the Income-tax Act, 161 ("Act", for short), dated 26.11.2015, which in turn arises from the order passed by the Assessing Officer u/s. 143(3) of the Act, dated 09.10.2013 for Assessment Year 2011-12. 2 ITA No. 115/Asr/2016
2. The assessee has assailed the impugned order on the following grounds of appeal before us.
"1. That the learned CIT has erred in assuming the jurisdiction under section 263 of the Income Tax Act and thereby setting aside the order to the file of the AO to frame the assessment de novo.
2. That setting aside the order of the Assessing Officer, the learned C1T has failed to consider the facts that the assessment was framed by the AO after due application of mind and verification of source of cash deposits of Rs. 31,50,000/- on different dates in the bank account maintained with SBOP, Pilibanga, Rajasthan to his satisfaction in accordance with law, therefore, the finding of the learned C1T that the assessment has been framed without making adequate enquiries is against law.
3. That the learned CIT has erred in holding that the order passed by the AO is erroneous on account of making inadequate enquiry and lack of verification at the time of making assessment in respect of cash deposit of Rs. 31,50,000/- in the bank account with State Bank of Patiala, Pilibanga by holding that the assessment has been framed without making inquires and, if made, the same are inadequate as not made in a specific manner without appreciating that as per explanation filed and material placed on record during the proceedings under section 263 of the Income Tax Act, the assessment has been framed by the Assessing Officer after making inquires as required under law and to his satisfaction.
4. That the appellant craves to add or amend the grounds of appeal."
3. Original assessment in the case of the assessee was framed by the AO vide his order passed u/s 143(3) of the Act, dated 09.10.2013, wherein the income of the assessee was determined at Rs. 2,62,320/-. 3 ITA No. 115/Asr/2016
4. Observing, that the case of the assessee was selected for scrutiny assessment under CASS for verifying the source of cash deposits of Rs.31.50 lacs in the assessee's bank A/c, the Pr. CIT, being of the view that the AO while framing the assessment had failed to properly verify the source of the cash deposits in question, thus, issued a 'Show cause' notice ("SCN", for short), dated 19/26.08.2015 to the assessee and called upon him to explain as to why the assessment framed by the AO vide his order passed u/s 143(3) of the Act, dated 09.10.2013 may not be revised by him u/s 263 of the Act. For the sake of clarity the relevant extract of the 'SCN', dated 19/26.08.2015 is culled out as under :
"The case was selected for scrutiny through CASS to examine the source of cash deposits made by the assessee in savings bank accounts. As per copy of bank account maintained with SBOP, Pilibanga (Raj.), the assessee had made cash deposits of Rs.31,50,000/- (Rs.6.50 lacs on 22.06.2010 and Rs. 25 lacs on 30.12.2010). During the course of assessment proceedings, the assessee was asked to explain the source of cash deposits. The assessee stated that the cash deposits were out of sale of proceeds of agricultural land. During the course of assessment proceedings, the assessee, in support of his cash credits, filed a copy of agreement (ikrarnama) dated 22.06.2007 entered by him (alongwith his three brothers) with S/Sh. Makhan Singh & Rajvir Singh of District Hanumangarh (Rajasthan). As per the said agreement, the total consideration of the land to be sold was Rs. 1.21 crores and the assessee and his brothers received advance payment of Rs. 20 lacs. Thereafter, the land was sold for Rs. 11.71 lacs only as per two separate registration deeds dated 30.12.2010. As per these two registration deeds, the assessee's share comes to Rs.2.92 lacs, whereas the assessee has sought to explain the entire consideration as source for cash deposits. The agreement/ikrarnama has not been examined by the AO despite this being material evidence in support of assertion made by the assessee.4 ITA No. 115/Asr/2016
Further the credits in the bank accounts of three brothers of the assessee were required to be investigated during the course of-assessment proceedings which the AO has failed to do so. Thus no effective inquiry has been made by the AO to examine the source of cash deposits amounting to Rs.31,50,000/- and other such entries in the account of the assessee. The absence of enquiry in circumstances that required inquiry has resulted in assessment being based on insufficient materials making the assessment order erroneous and prejudicial to the interests of the Revenue."
In reply, it was submitted by the assessee that the AO in the course of the assessment proceedings had duly verified the source of the cash deposits of Rs.31.50 lacs in the assessee's bank account with State Bank of Patiala, Pilibanga (Raj.). Elaborating on his aforesaid contention, it was submitted by the assessee, that during the course of the assessment proceedings, on be queried as regards the cash deposits in his bank account, it was submitted by him that the same was sourced out of the sale proceeds of agricultural land that was jointly owned by him along with his three brothers, and was sold by them vide an 'agreement to sell', dated 22.06.2010 to S/sh. Makhan Singh and Rajvir Singh, Ss/o. Shri. Mehr Singh, Rr/o Masruwala Distt. Hanumangarh (Raj.) for a consideration of Rs.1.21 crores, out of which a sum of Rs. 20 lacs was received as advance at the time of executing the agreement, while for the balance sale consideration was to be received at the time of the registration of the sale deeds. It was further stated by him that the aforesaid land was thereafter 5 ITA No. 115/Asr/2016 transferred vide registered sale deed, dated 30.12.2010. It was, thus, the claim of the assessee that the cash deposit of Rs.31.50 lacs in his bank A/c that was made in two tranches, i.e Rs.6.5 lac deposited on 22.06.2010, and Rs. 25 lac deposited on 31.12.2010, as verified by the A.O in the course of the assessment proceedings, was sourced out of, viz. (i) advance of Rs.20 lacs that was received at the time of executing the 'agreement to sell', dated 22.06.2010; and (ii) out of the balance sale consideration received at the time of registration of the sale deeds. However, the Pr. CIT, observed, that the consideration that had exchanged hands between the parties, i.e, as per the registered sale deeds was Rs. 11.71 lacs (Rs. 4.5 lac (+) Rs. 7.21 lac) as against Rs. 1.21 crore mentioned in agreement. It was further observed by the Pr. CIT, that as per the registered sale deeds, the share of the assessee in the sale consideration, i.e, on sale of the aforesaid land that was jointly owned by him a/w his three brothers worked out at Rs. 2.92 lac. Further, the Pr. CIT was of the view that the assessee's share in the amount of advance of Rs. 20 lac (supra) worked out at Rs. 5 lac. Backed by the aforesaid facts, the Pr. CIT held a conviction that if the consideration recorded in the sale deed, dated 30.12.2010 amounting to Rs. 11.71 lac was taken as exclusive to the 6 ITA No. 115/Asr/2016 assessee, even then, only an amount of Rs. 16.71 [Rs. 5 lac (+) Rs. 11.71 lac] would be available with the assessee, as against the cash deposits of Rs. 31.50 lac (supra) in his bank account. In the backdrop of the aforesaid facts, the Pr. CIT was of the view that the assessee had failed to explain the source of the cash deposited in his bank A/c. Apart from that, the Pr. CIT was of the view that the assessee had sought to evade stamp duty by understating the sale value in the registered sale deeds, as against that mentioned in the 'agreement to sale'. Also, the Pr. CIT was of the view that as the transfer of the immovable property as per the mandate of law contemplated in section 54 of Transfer of the Transfer of Property Act, 1882, could only be effected vide a registered instrument, therefore, the claim of the assessee of having received a consideration of Rs. 1.21 crores on the sale of the land in question vide an "agreement to sell", dated 22.06.2010 had no evidentiary value. Also, the Pr. CIT was not inspired by the claim of the assessee that the "agreement to sell" in question was registered with a Notary Public. It was observed by the Pr. CIT that as a Notary Public had no power to register any document, therefore, the enquiries that were made by the AO with him as regards the 'agreement' that was claimed to be registered with him were of no relevance. Backed 7 ITA No. 115/Asr/2016 by his aforesaid deliberations, the Pr. CIT holding a conviction that the AO had failed to carry out any effective enquiries as regards the source of the cash deposit of Rs. 31.50 lacs in the assessee's Saving Bank account with State Bank of Patiala, Plilibanga (Raj.), therein held the order passed by him u/s 143(3) of the Act, dated 09.10.2013 as erroneous in so far it was prejudicial to the interest of the revenue within the meaning of section 263 of the Act. Accordingly, the Pr. CIT set-aside the assessment order with a direction to the AO to decide the matter afresh after giving an adequate opportunity of being heard to the assessee and examining all the relevant evidence.
4. Aggrieved, the assessee has assailed the order passed by the Pr. CIT u/s 263 of the Act, dated 26.11.2013 in appeal before us.
5. We have heard the Ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR in order to support his respective contentions. Admittedly, the case of the assessee was selected for scrutiny assessment under CASS for verifying the cash deposits of Rs.31.50 lacs (supra) that were made by him during the year under 8 ITA No. 115/Asr/2016 consideration in his Saving Bank account with SBOP, Pilibanga (Raj.). As is discernible from the records, we find that the AO had vide his Notice u/s 142(1), dated 10.07.2013, specifically vide Query no.2 called upon the assessee to, inter alia, explain the source of the cash deposits in his bank A/c. In fact, a perusal of the order passed by AO u/s 143(3), dated 09.10.2013, reveals, that he had vide an 'Office note' categorically stated that the assessee during the year under consideration has deposited a sum of Rs.6.50 lacs on 22.06.2010 and Rs.25 lacs on 31.12.2010 in his Saving bank A/c with State Bank of Patiala, Branch: Pilibanga (Raj.). Also, it is further stated by him that a copy of the assessee's bank A/c with State Bank of Patiala, Branch: Pilibanga (Raj.) was obtained and duly verified by him in the course of the assessment proceedings. Referring to the source of the aforesaid cash deposit of Rs. 31.50 lac (supra), it is stated by the AO, that the same as claimed by the assessee was made out of the sale consideration of the agricultural land that was jointly owned by him a/w his three brothers at Pilibanga (Raj.), which was sold by them to S/sh. Makhan Singh and Rajvir Singh Ss/o Sh. Mehar Singh, Rr/o Masruwala (presently 22, STG Dhani, Pilibanga), Distt. Hanumangarh (Raj.), vide an 'agreement', dated 22.06.2010 for a sale consideration of Rs. 1.21 crores, out of which a 9 ITA No. 115/Asr/2016 sum of Rs.20 lac was received as advance at the time of executing the agreement, while for the balance was to be given at the time of registration of the sale deed, i.e, by 10.01.2011. It is further stated by him that the registered deeds were however executed on 23.12.2010. For the sake of clarity, the 'Office Note' of the AO forming part of the assessment order is reproduced as under (Page 68-69 of 'APB') :
"Office Note :
1. The case was selected for scrutiny under the CASS as the assessee made cash deposits of Rs.31,50,000/- into his saving bank account with the SBOP, Pilibanga (Raj.). The copy of the said bank account was obtained and verified. It has been noticed that a sum of Rs.6.50 lac has been deposited on 22.06.2010 and Rs.25 lac has been deposited on 31.12.2010. On being required to explain the source of such cash deposit, the assessee contended that he had been owning agri. land with his three brothers at Pilibanga (Raj.) and they entered into an agreement on 22.06.2010 to sell such land to S/Shri Makhan Singh and Rajbir Singh, sons of Shri Mehar Singh, R/o Masruwala (presently 22, STG Dhani, Pilibanga), Distt. Hanumangarh (Raj) on 22.06.2010 for Rs.1.21 Crore vide registered agreement dated 22.06.2010 according to which a sum of Rs.20 lac was given as advance, the balance was to be given at the time of registration by
10.01.2011. However, the registry was got executed on 23.12.2010 as per the copies of registration deed in respect of assessee's share of land furnished by the assessee. Regarding arising of capital gains in respect of the transfer, the assessee contended that the land is situated outside the Municipal Limit, as has also been clearly mentioned in the Sale Deed by the Registrar. However, the assessee has also furnished a copy of the certificate of the Patwari, certifying that the land is not an urban land. In view of the copies of agreement and sale deeds, the source of cash deposits stand explained satisfactorily.
However, Inspector to pass on information regarding purchase of the land by the above mentioned two brothers i.e. S/Shri Makhan Singh and Rajbir Singh, sons of Shri Mehar Singh, R/ o Masruwala to the Income Tax Officer, Hanumangarh and also endorse a copy of the information to the JCIT, Ganga Nagar in respect of investment of Rs.1.21 crore by these two brothers for necessary action at their end. A photo-copy of the agreement should also be sent alongwith this information. From perusal of the registration deeds of tire 10 ITA No. 115/Asr/2016 assessee's share of land, it appears that the registration deeds in respect of the sale of land by the assessee and his other three brothers have been got executed at lesser rate than the agreement. Information in this respect should also be passed on to the Sub Registrar, Pilibanga (Raj.) alongwith a copy of information thereof to the DM, Hanumangarh for further necessary action in respect of evasion of stamp duty, if any."
6. On a perusal of the aforesaid 'Office Note', we find, that the AO taking cognizance of the fact that the assessee along with his three brothers had vide an 'agreement', dated 22.06.2010 sold the agricultural land that was jointly owned by them for a consideration of Rs. 1.21 crore (supra) to S/shri Makhan Singh and Rajbir Singh, Ss/o. of Shri Mehar Singh, Rr/o Masruwala. Backed by the aforesaid fact, the A.O had directed his inspector to pass on the information regarding purchase of the land by the above mentioned two brothers to the ITO, Hanumangarh, and had also endorsed a copy of the same to the JCIT, Ganga Nagar for necessary action at their end. Also, the AO taking cognizance of the fact that the registered sale deed of the agricultural land in question was executed for a consideration of Rs.11.70 lacs on 31.12.2010, while for the respective parties had executed the 'agreement to sell' on 22.06.2010 for a consideration of Rs.1.21 croes, had also directed for sharing of the said information with the Sub- Registrar, Pilibanga, (Raj.) a/w a copy of same to 11 ITA No. 115/Asr/2016 the District Magistrate, Hanumangarh for further necessary action in respect of evasion of stamp duty, if any.
7. In the backdrop of the aforesaid facts, we are of the considered view, that it can safely be concluded that the AO while framing the assessment had called for the requisite information and verified the source of the cash deposited by the assessee in his Saving Bank account with State Bank of Patiala, Branch: Pilibanga (Raj.). In our considered view, the AO after necessary deliberations had accepted the assessee's explanation as regards the source of the cash deposit of Rs. 31.50 lacs (supra) in his bank account, i.e., out of the sale consideration of Rs. 1.21 crore (supra) that was received on sale of the agricultural land that was jointly owned by him a/w his three brothers. In so far the view taken by the Pr. CIT, that as an amount of only Rs.16.71 lacs (supra) was only available with the assessee, as against the cash deposit of Rs.31.50 lacs (supra), we are afraid is a view arrived at by him by discarding the claim of the assessee of having sold the agricultural land in question vide the 'agreement to sell', dated 22.06.2010 for a consideration of Rs.1.21 crores. We are of the considered view, that as observed by the Pr. CIT, and rightly so, the transfer of an immovable property as per Section 54 of the Transfer of Property Act can only be 12 ITA No. 115/Asr/2016 executed vide a registered deed. Also, we concur with him that registration of 'agreement to sell' with a Notary Public can by no means substitute a document registered with the Registrar/Sub-Registrar who are appointed by the State Government. At the same time, we cannot remain oblivious of the fact, that an 'agreement to sell' duly notarized would carry evidentiary value, at least qua the sale consideration that had exchanged hands between the parties, i.e, the purchaser and seller. In the backdrop of our aforesaid deliberations, we are of the considered view, that no infirmity can be related to the reliance placed by the AO on the 'agreement to sell', qua the sale consideration for which the agricultural land in question was sold by the assessee a/w his three brothers. In fact, the observation of the Pr. CIT, that the assessee on his own admission had sought to evade stamp duty by understating the amount of sale consideration of the land sold by him, therein, in fact reveals the fact that the assessee a/w his brothers had sold the land in question vide the 'agreement to sell', dated 22.06.2010 had not been discarded by him. Be that as it may, we are of the considered view, that as the AO in the course of the assessment proceedings had duly called for and verified the source of the cash deposit of Rs. 31.50 lac (supra) in the assessee's Saving Bank A/c with State Bank of Patiala, 13 ITA No. 115/Asr/2016 Pilibanga (Raj.), therefore, merely for the reason that the Pr. CIT was of the view that the AO had failed to carry out any effective enquiry as regards the source of the said amount, would by no means justify the triggering of his revisional jurisdiction u/s 263 of the Act. We are further of the view, that the factum of verification as regard the source of the cash deposit can safely be gathered beyond any doubt from the 'Office Note' (supra) of the AO, wherein acting upon the contents of the 'agreement to sell', dated 22.06.2010, he had not only shared the information with the ITO/Jt. CIT who were exercising jurisdiction over the purchasers of the land, viz. S/shri Makhan Singh and Rajbir Singh, but had also passed over the said information to the Sub-Registrar, Pilibanga (Raj.) and the District Magistrate, Hanumangarh for necessary action in respect of evasion of stamp duty, if any, on the ground, that the registered sale deeds as regards the transaction of sale of land in question were executed at a value far below the actual consideration that had exchanged hands as per the 'agreement to sell', dated 22.06.2010. In our considered view, as the AO after necessary deliberations had taken a possible and a plausible view, therefore, the Pr. CIT was clearly divested from exercising his revisional jurisdiction u/s 263 of the Act. Our aforesaid view, that where an AO after 14 ITA No. 115/Asr/2016 making proper and detailed inquiry had on the basis of a possible view accepted the assessee's claim, then, the CIT in the garb of his revisional jurisdiction u/s 263 of the Act cannot direct the AO to carry out a fuller enquiry, is supported by the judgment of the Hon'ble High Court of Bombay in the case of CIT, Central-III v. Nirav Modi [2017] 390 ITR 292 (Bombay). In the aforesaid case, the AO after making a proper and detailed inquiry had formed a view that the amount received by the assessee as a gift from his relative was a genuine transaction. However, the CIT set-aside the order passed by the AO, with a direction to inquire into the capacity of the donors and therein decide about the genuineness of the gift transaction afresh. On appeal, it was, inter alia, observed by the Hon'ble High Court, that where there are two possible views and the AO had taken one of the possible views, then no occasion to exercise powers of revision can arise. It was observed by the Hon'ble High Court that the CIT could not have exercised his revisional jurisdiction for directing a fuller inquiry to find out if the view taken was erroneous, specifically when the view was arrived at by the AO after an inquiry. We find that the aforesaid judgment of the Hon'ble High Court had thereafter being upheld by the Hon'ble Supreme Court in the case of CIT v. Nirav Modi [2017] 77 15 ITA No. 115/Asr/2016 taxmann.com, 244 Taxman 194 (SC) and the SLP filed by the Revenue was dismissed.
7. We, thus, in terms of our aforesaid deliberations are unable to persuade ourselves to find favor with the order passed by the Pr. CIT, Bathinda u/s 263 of the Act, dated 26.11.2015, and thus set-aside the same and restore the order passed by the AO u/s 143(3) of the Act, dated 09.10.2013. The Grounds of appeal nos. 1 to 3 filed by the assessee are allowed in terms of our aforesaid reasons.
8. The Ground of appeal no. 4 being general is dismissed as not pressed.
9. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
Order pronounced under rule 34(4) of the Income-Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.
Sd/- Sd/-
(Dr. M.L. Meena) (Ravish Sood)
Accountant Member Judicial Member
Date: 21.02.2022
*GP/Sr./PS*
16 ITA No. 115/Asr/2016
Copy of the order forwarded to:
(1) The Appellant:
(2) The Respondent:
(3) The CIT(Appeals)
(4) The CIT concerned
(5) The Sr. DR, I.T.A.T
True Copy
By Order