Income Tax Appellate Tribunal - Delhi
Ram Saroop Saini (Huf) vs Assistant Commissioner on 27 April, 2007
ORDER
1. We find it convenient to dispose of this bunch of ten cross-appeals by the assessees and the revenue pertaining to respective assessment years as shown in the caption of the order, by this consolidated order.
2. The assessees before us are three HUFs, the Kartas whereof are brothers. The assessments have been framed by treating the sale of land declared by the assessees as adventure in the nature of trade and not as sale of capital asset declared by the assessee. The quantum of income assessed is also in dispute.
3. The background, facts and the dispute leading to the present controversy are identical in respect of all the appeals of three assessees herein. We therefore, consider it appropriate to take up for consideration the controversy in relation to I.T.A. No. 1409/Delhi/05 pertaining to Ram Saroop Saini, HUF. The return of income was filed declaring income of Rs. 2,36,790 plus agricultural income of Rs. 55,400 for the assessment year 2001-02. The assessing officer noticed that the assessee HUF along with other two assessees had got approved their common agricultural land situated near Swami Uma Bharti Public School, Rewari into a Town Planning Scheme No. 9 (in short TPS) by paying development charges to the Municipal Committee, Rewari. After converting the agricultural land into non-agricultural land, the assessee started selling plots in smaller denomination starting from the assessment year 1994-95 onwards. In the return of income filed for the assessment year starting from 1994-95, the assessee has declared income from the sale of land as income assessable under the head 'Capital gain'. Similarly, in the instant case also, the assessee declared its income from sale of land under the head 'Capital gain'. The assessing officer, however, has treated the transactions as adventure in the nature of trade. The Commissioner (Appeals) has since upheld the stand of the assessing officer and hence the present appeal before us.
4. Before us, the first and foremost grievance of the assessee is that the income-tax authorities have erred in holding that the impugned sale of land was in the nature of trade and not a transaction assessable under the head 'Capital gain'. Needless to point out, if the activity of sale of land undertaken by the assessee is held to be adventure in the nature of trade, the income therefrom is assessable under the head 'Income from business', whereas if it is held as a sale of a capital asset simpliciter, the income therefrom is assessable under the head 'Income from capital gain'.
5. The learned counsel for the assessee has drawn our attention to the paper book filed on behalf of the assessee wherein is placed the copies of returns of income for various assessment years starting from assessment years 1994-95 to 2001-02 to demonstrate that in the past in the case of this assessee, the income has been treated as falling under the head 'Capital gains'. The learned counsel for the assessee submitted that the assessee inherited the impugned agricultural lands in the year 1980 and has been declaring agricultural income therefrom regularly. The learned counsel also submitted that a portion of the agricultural lands owned by the assessee was acquired by HUDA and the gain therefrom has been accepted by the department as assessable under the head 'Capital gain'. The learned counsel pointed out that that in the instant cases, sale was of lands which were falling within the extended Municipal limits of Rewari. Therefore, in order to maximize the sale realization, the assessee deemed it fit to pay the development charges to the Municipal Committee and thereafter sell the plots of land in small pieces. He emphasized that there was no attributes of adventure in the nature of trade associated with the impugned sale transactions. The learned counsel relied upon various decisions viz. CIT v. Premji Gopalji , Income Tax Officer v. Smt. Premlata Manohar (1999) 69 ITD 248 (Del), M.V. Chandrashekhar v. Dy. CIT (2004) 91 ITD 543 (Bang.), Smt. N. Kaasivisalam v. Assistant Commissioner (2005) 93 TTJ (Chen) 537, B. Narsimha Reddy v. Income Tax Officer (1993) 47 ITD 398 (Hyd.) in support of his submissions.
6. The learned counsel for the assessee also submitted that the assessee did not have any business of real estate either prior to or subsequent to the impugned sale transactions. The learned counsel has also pointed out that in the case of one of the co-owners, the assessing officer with respect to similar sale transactions has accepted the income declared under the head 'Capital gain' in an assessment proceeding finalized under Section 143(3) of the Act. In this regard our attention was invited to the assessment order dated 22-3-2002 at pages 49 and 50 of the paper book in the case of Madan Lal Saini (HUF) for the assessment year 1999-2000. The revenue in the present year was, therefore, not justified in deviating from its earlier stand on the principle of consistency. In support, reliance was placed on various decisions viz. CIT v. Neo Poly Pack (P) Ltd. , and CIT v. Dalmia Promoters Developers (P) Ltd. .
7. The learned departmental Representative on the other hand, has supported the orders of the lower authorities. The learned departmental Representative pointed out that the activity of selling land in small pieces was carried out over an extended period of time and, therefore, the same has been rightly held to be a transaction possessing attributes of an adventure in the nature of trade. Reliance was placed on the reasoning articulated by the lower authorities in their respective orders in support of the case of the revenue.
8. We have carefully considered the issue in question with respect to the orders of the lower authorities, facts and circumstances of the case and rival contentions. The crux of the issue is as to whether the assessee could be said to be carrying on business of dealing in land. The factual contours relating to the controversy can be briefly understood as follows. The assessee by way of inheritance acquired certain agricultural lands in the year 1980. A portion of such agricultural lands was converted into nonagricultural lands by payment of development charges to the local Municipal Committee, Rewari. The land was thereafter sold by cutting it into smaller pieces of plots. The said activity has resulted in surplus in the hands of the assessee. The assessee contends that the surplus is assessable as a capital gain since it results from the sale of a capital asset. The revenue, on the other hand, contends that the surplus is assessable as business income for the transactions have all the elements of an adventure in the nature of trade. The moot question is whether the stand of the revenue deserves to be upheld or not.
9. Before we dwell on the main controversy, it would be appropriate to understand the nature of question involved before us. The question involved is a mixed question of law and facts. In the instant case, admittedly, prior to getting the agricultural land converted into non-agricultural land by payment of development charges and selling it thereafter in small pieces of plots, the assessee has been deriving income C from agriculture, rent, interest from bank etc. To emphasize it is noteworthy that the assessee was neither carrying on any trade nor was involved in any real estate business. The assessee only derived agricultural income from the lands in question. In fact we also notice that in the case of one of the co-owners, namely, Madan Lal Saini, HUF, the Karta was an employee with Haryana Agriculture University besides deriving agricultural income. The aforesaid facts are not in dispute. Therefore, under such circumstances, if the transaction in question has to be understood to be in the nature of trade, necessarily the onus is on the revenue to demonstrate the same. This is for the reason that the transactions in question are not in the ordinary line of activity undertaken by the assessee in the past. The onus was, therefore, on the revenue to prove that the transaction was an adventure in the nature of trade. For this proposition, we rely upon the judgment of the Hon'ble Supreme Court in the case of Saroj Kumar Mazumdar v. CIT .
10. Apart from the aforesaid, we may also briefly touch upon the meaning of the expression "in the nature of trade" appearing in the definition of business in Section 2(13) of the Act. The Hon'ble Supreme Court in the case of G. Venkataswami Naidu & Co. v. CIT and Sree Meenakshi Mills Ltd. v. CIT , held that the aforesaid expression postulates the existence of certain elements in the nature of adventure which, in law, imbibes it with the character of trade or business. It was the presence or absence of such element in the particular transaction in question that would decide as to whether the transaction is in the nature of trade or not. A reading of the decisions of the Hon'ble Supreme Court in the cases of G. Venkataswami Naidu & Co. v. CIT and Sree Meenakshi Mills Ltd. v. CIT and Saroj Kumar Mazumdar v. CIT , clearly brings out that what is of relevance is to cull out the dominant intention of the assessee in the transaction undertaken which resulted in the surplus sought to be taxed. We find it appropriate to extract a portion of the head note from the judgment of Hon'ble Apex court in the case of G. Venkataswami Naidu & Co. (supra) as under:
If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realization of investments consisting of purchase and resale, though profitable, are clearly outside the domain of adventure in the nature of trade. In deciding the character of such transactions several factors are relevant, such as, e.g., either the purchaser was a trader and the purchase of the commodity and its resale were allied to his usual trade or business or incidental to it; the nature and quantity of the commodity purchased and resold; any act subsequent to the purchase to improve the quality of the commodity purchased and thereby make it more readily resaleable; any act prior to the purchase showing a design or purpose; the incidents associated with the assessee purchase and resale; the similarity of the transaction to operations usually associated with trade or business; the repetition of the transaction; the element of pride of possession. A person may purchase a piece of art, hold it for some time and if a profitable offer is received sell it. During the time that the purchaser had its possession be may be able to claim pride of possession and aesthetic satisfaction; and if such a claim is upheld that would be a factor against the transaction being in the nature of trade. The presence of all these relevant factors may help the court to draw an inference that a transaction is in the nature of trade; but it is not a matter of merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction.
In cases where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it, the presence of such an intention is a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. The presumption may be rebutted.
11. Before we proceed to analyze the import of the transactions in question, we may gainfully refer to the judgment of the Hon'ble Gujarat High Court in the case of CIT v. Premji Gopalji . In the said case, the assessee owned agricultural land which was inherited from his ancestors. In 1957-58, it was converted into non-agricultural land, divided into small plots and such plots were sold as and when purchaser was available. The revenue noticed that in the assessment year 1969-70, the assessee had profits on sale of land, as in the past. The revenue treated the gain as income from business as against its stand of accepting the gain as capital gain in the past. The revenue contended so on the ground that the assessee, having sold the two plots originally in 1961, repurchased them in 1964 and ultimately again sold the plots in the previous year relevant to the assessment year 1969-70. The Hon'ble High Court held that the amount of gain was to be treated as capital gain and not as business profits. The features which were noted with approval by the Hon'ble High Court were, namely, (i) that the land was ancestral agricultural land of the assessee, (it) that the repurchase of the plot only showed that the assessee was not a dealer in the past and was only disposing of its capital asset, and (iii) that the land was repurchased merely because it was adjacent to the land in which the existing plot of the assessee was standing. For all these reasons and the circumstances of the case, the court held that the revenue did not discharge the burden of establishing that repurchase and the sale of two plots was adventure in the nature of trade in the assessment year 1969-70.
12. Now with the aforesaid discussion we may come back to the facts of the instant case. In the instant case, we find that the only factor which has been relied upon by the revenue to demonstrate that the transaction in question was adventure in the nature of trade is the factum of the assessee converting the lands into non-agricultural land and selling the same by dividing into small plots. The moot question is whether the aforesaid is enough to hold that the revenue has discharged its onus required under the circumstances having regards to the judgment of Hon'ble Supreme Court in the case of Saroj Kumar Mazumdar v. CIT . The answer, to our mind, is clearly in the negative. Admittedly, it is not the case of the revenue that the assessee is a dealer in lands or that the assessee was carrying on any business in the past or even subsequently. The fact that the assessee got the land converted into non-agricultural land before selling it may raise a presumption in favour of the revenue but the same is neither determinative or conclusive to answer the controversy in question. This is for the reason that it is the totality of the circumstances which have to be borne in mind to determine the character of the transaction. In this case, undisputedly, the assessee acquired the land by way of inheritance in 1980 and not even by way of purchase. Thereafter, the assessee continued to hold the land as agricultural land and deriving income therefrom as such. Notably, there was no intention manifested in assessee to acquire and hold the land so as to realize profits or for an adventure in the nature of trade. It is not uncommon to find that due to rapid growth of urban areas, more and more rural agricultural lands are being converted into cities. The holder of such agricultural lands ostensibly does not have a control over the process of urbanization. The only intention of the holder of such agricultural land under the circumstance is to maximize his realization from sale of such land. All along the holder of such lands looks upon the gain only as a capital accretion. The intention at the time of acquiring the land (i.e., inheritance) and holding it thereafter is not to deal in real estate. In any case, the subsequent sale cannot represent adventure in the nature of trade. The factor that the assessee converted his agricultural land into non-agricultural land and thereafter sold it, also demonstrate the desire to maximize his realization from the disposal of capital asset. The intention has to be gauged from the manner of acquisition of an asset. In the instant case, clearly, it cannot be said that when the assessee inherited the land in 1980, it had intention to undertake adventure in the nature of trade by becoming a dealer in lands. Similarly, at the time of getting the lands converted into non-agricultural lands also the only intention of the assessee to maximize his realization from disposal of a capital asset. To reiterate, the character of land firstly is ancestral and secondly there is no material to hold that prior to such sale transaction undertaken the assessee had undertaken any such dealing in sale and purchase of land. Therefore, there is nothing to infer that the assessee ever acquired the land to deal in the same as a businessman.
13. In view of the above discussion, in our view, the revenue has not discharged its onus to categorically prove that the dominant intention of the assessee was to embark on adventure in the nature of trade when the assessee sold the lands in question and earned surplus. We conclude by noticing that in view of the discussion above and the judicial pronouncements mentioned (supra), the impugned transactions have to be accepted as resulting in gain assessable under the head 'Capital gain'.
14. Before parting, we may also refer to the contradictory approach of the revenue on this issue. In the case of one of the co-owners, namely, Madan Lal Saini, HUF, the assessing authority while framing assessment under Section 143(3) on 22-3-2002 for the assessment year 1999-2000 has accepted the sale transactions of similar nature as assessable under the head 'Capital gain'. Similarly, gain resulting from acquisition of a portion of the lands in question by HUDA has also been assessed under the head 'Capital gain'. The present impugned assessment order has been passed on 27-2-2004 and the assessing authority is the same who passed the order under Section 143(3) on 22-3-2002 in the case of Madan Lal Saini, HUF. Therefore, it is evident that on the date of passing of the impugned order, the revenue had already come to the conclusion that on identical facts the transactions in question had resulted in a gain assessable under the head 'Capital gain'. Needless to mention, rule of consistency requires that when the revenue has accepted a particular view, that view should be adhered to subsequently also unless there is a fair and reasonable cause for departure. The judgment of Hon'ble Apex court in the case of Radhasoamy Satsang v. CIT , clearly supports the aforesaid proposition. No new facts have emerged which would justify a departure in this regard. We, therefore, find no justification to uphold the order of the Commissioner (Appeals) on this count as well. Resultantly, the assessee succeeds.
15. Since the facts and circumstances and the issue involved in the cases of the other HUFs are identical to the facts of Ram Saroop Saini, HUF (I.T.A. No. 1409/Delhi/2005), our decision in the case of said Ram Saroop Saini shall apply mutatis mutandis in their cases as well. Accordingly, the assessees therein also succeed on this issue.
16. Now we take up for consideration the appeals of the revenue pertaining to respective assessment year as shown in the caption of this order. The solitary common issue which is raised by the revenue in its appeal isaction of the CIT(Appeals) in deleting the additions made by the assessing officer on account of under statement of sale price. The assessing officer after conducting certain verification exercise in the assessment year 2001-02 concluded that the assessee had sold the plots and executed sale deeds showing lesser amount of sale consideration than the actual sale consideration receipt. The difference has been assessed as income of the assessee from undisclosed sources. The additions have since been deleted by the CIT(Appeals) and therefore the revenue is in appeal before us.
17. Since the background facts and dispute leading to the aforesaid controversy is identical in the case of the three assessees, we, therefore consider it appropriate to take up for consideration the controversy by adverting to the fact position in relation to ITA No. 1347/Delhi/2005 in the case of Ram Saroop Saini, HUF pertaining to assessment year 2001-02. In this case the assessing officer has adopted the sale rate of the plots sold by assessee at Rs. 1,750 as against the sale rates declared in the sale deeds executed between the assessee seller and the purchasers. The assessing officer did so on the strength of the statements recorded under Section 132(1) of two persons namely Smt. Sudershan Kumari on 26-2-2004 in the case of one of the co-owners {i.e., Suraj Bhan Saini, HUF - assessment year 2001-02) and also of one Shri R.D. Kataria, a property dealer. The registered sale deed revealed the sale consideration @ Rs. 1,000 per sq. yd. The assessing officer has adopted Rs. 1,750 per sq. yd. as representing fair market rate. The total addition made on this count is of Rs. 18,49,250. On the basis of their Statements the assessing officer held that there has been under statement of sale consideration of plots sold by the assessee in the assessment year 2000-01, i.e., year under consideration.
18. In appeal before the CIT(Appeals), the assessee challenged the veracity of the information and material collected by assessing officer. The CIT (Appeals), after considering the submissions of the assessee on points of law and facts has since deleted the addition.
19. Before us the learned departmental Representative has emphasized that there was information with the assessing officer that the assessee had executed agreements with purchasers of plot at a sale consideration much higher than that declared in the sale deeds which were ultimately executed. The learned departmental Representative pointed out that the assessee did not furnish agreements to sell with all the purchasers. The learned departmental Representative pointed out that out of the 13 sale transactions carried out by the assessee for the assessment year 2001-02 the sale rate recorded is uniform i.e., Rs. 1,100 per sq. yd. In five cases, the assessing officer had copies of agreements to sell which showed higher sale rate. On the basis of such agreements, the assessing officer was right in concluding that in all the cases of sales the assessee would have transacted for sale of land at a consideration more than the consideration stated in the final sale deeds executed ultimately. In this context the CIT (Appeals) was unjustified in deleting the addition in relation to eight sale transactions ignoring the existence of 'agreements to sell' in five cases. Even in relation to those five cases the evidence has been disregarded for the reason that the purchasers in their statements made before the assessing officer had disowned such agreements, which is unjustified. In sum and substance the learned departmental Representative has assailed the order of the CIT (Appeals) by placing reliance on the reasoning given by the assessing officer in his assessment order.
20. On the other hand, the learned counsel for the assessee has defended the order of the CIT(Appeals) by placing reliance on the same. According to the learned counsel the entire evidence available with the Assessing Officer has been correctly appreciated by the CIT(Appeals) and that such Evidence was not enough to justify the impugned addition. The learned counsel pointed out that the assessing officer did not allow any opportunity to the assessee to cross examine Shri R.D. Kataria, the property agent. The assessing officer was, therefore, not justified in relying upon the statement of property agent to infer that the assessee has received sale consideration over and above the amounts stated in the sale deeds ultimately executed. The learned counsel for the assessee also submitted at Bar that insofar as the assessments of the purchasers are concerned, the revenue has not taken any action so as to bring to tax the consideration that has allegedly changed hands. On the aforesaid basis, it is therefore prayed that the decision of the CIT(Appeals) be affirmed.
21. On this aspect we have carefully considered the rival submissions. In this case the ostensible dispute relates to the veracity of the sale consideration recorded in the sale deeds executed by the assessee towards the sale of plots. The assessee, it emerges from the order of the lower authorities, had sold plots to 13 different people and had accordingly executed 13 sale deeds in the year under consideration. The sale consideration in each of the transactions has been recorded on the basis of the sale rate of Rs. 1,100 per sq. yd. The assessing officer, on the other hand, has contended that the assessee had sold the plots in actuality on the basis of sale rate of Rs. 1,750 per sq. yd. The entire basis of the addition is the statement of the property agent Shri R.D. Kataria and also the copies of agreement to sell available with the assessing officer in 5 out of 13 cases. According to the assessing officer in such 5 cases the consideration agreed between the assessee and the purchaser was more than the amount recorded in the sale deed ultimately executed.
22. On the aforesaid basis firstly the CIT(Appeals) has recorded a categorical finding that insofar as the 8 transactions are concerned for which the alleged copies of agreement to sale showing contrary sale consideration, was not available with the assessing officer, it was safe to deduce that there was no material except surmises with the assessing officer to come to a conclusion that the sale consideration stated in the sale deeds ultimately executed was understated. This finding of the CIT(Appeals) has not been negated by the revenue before us on the basis of any cogent material or evidence. The learned departmental Representative has not pointed out the existence of any material which would enable us to take a view contrary to that of the CIT(Appeals). The only basis with the assessing officer to make an addition with respect to the 8 cases is the alleged statement of the property agent Shri R.D. Kataria in relation to the modus operandi of sale undertaken by the assessee and the copies of agreements to sale with respect to the balance of the five transactions. Factually speaking the aforesaid evidence cannot be used to imply that the assessee understated the sale consideration in respect of 8 transactions in question. Thus the inference of the CIT (Appeals) that in respect of such 8 transactions there is no evidence with the assessing officer to negate the stand of the assessee is liable to be uphelearned we hold so.
23. Now we may consider the remaining five transactions in relation to which the assessing officer had in his possession copies of the alleged' agreement to sell' which showed higher sale rate than the sale rate recorded in the sale deeds ultimately executed.
24. To appreciate the factual contours in each of the five cases, we deemit proper to re-produce below the pleas of the assessee relating to the aforesaid as noted by the CIT (Appeals) in his order :
3.2 In the cases (viz. at Sr. Nos. 7, 10, 11, 12 & 13, ibid), where original/photocopies of 'Agreement to sell' were in the possession of the assessing officer (wherefrom he came to the conclusion that though the rates as per 'Agreement to sell' were Rs. 1,750, Rs. 1,880, Rs. 1,880, Rs. 1,750, Rs. 1,750 per square yard respectively, the sale deeds were executed at Rs. 1,100. The copies of such agreements to sell were obtained from the assessing officer in the form of remand report and were confronted to the appellant's counsel. In reply (Sr. Nos. 7, 10, 11, 12 & 13, ibid), the appellant's version has been obtained and reproduces as under :
Sr. No. 7 : Sham Sunder Manoj Kumar : The assessing officer has claimed that he is in possession of original agreement marked A-1 as per page 7 of the paper book of assessing officer Sir, this is not the valid document as first page i.e. page No. 7 where amount is shown is not signed by any person i.e. seller or purchaser. Further, in statement which was recorded in Camera by the assessing officer, he clearly refused that these are not my signature nor any agreement was executed. The said facts are quite clear as per his statement at page 24 at bottom of our paper book earlier filed.
Sr. No. 10 : Yash Pal : This is only the photocopy. No first page i.e. page No. 14 assessing officer paper book is not signed. Further, photocopy in the absence of the original document is no valid not relevant in the eye of law. Secondly, Sir, in his statement as per page Nos. 10 and 11 of our earlier paper book, he had clearly stated that no any agreement was executed nor he owned the signature on alleged agreement.
Sr. No. 11 : Ashok Kumar : This is not the valid and original documents no court fee stamps are affixed nor the first page i.e. page No. 21of assessing officer's paper book is signed by the executants. Further, Shri Ashok Kumar during recording of statement clearly refused regarding execution of agreement and the appended signature on agreement which is quite evidence as per copy of agreement at pages 12 to 14 of our paper book.
Sr. No. 12 : Shri Subhas Chand : No copy of agreement is available on record (paper book of assessing officer). Further as per version of the assessing officer that he is in possession of photocopy which is not relevant nor a valid document in law when original is not available. Sir, during the course of statement Shri Subhash Chand clearly stated that noany agreement was even executed nor I ever signed which is quite evidence as per pages 21-22 of ours paper books.
Sr. No. 13 : Nand Lal : The alleged agreement is of 160 sq. yd. is ever executed hence not valid in law. As per Shri Nand Lal's statement dated 19-2-2004 at pages 15 to 17 of ours paper book he clearly stated that the agreement shown to me does not relate to "me" nor "I" signed the same. Further he stated that no purchase of 160 sq. yds. is ever held by 'me' as per alleged agreement.
On the basis of the aforesaid the CIT(Appeals) has further examined each of the transaction and records; his finding in para 3.5 of his order and the relevant portion is extracted hereinafter :
The appellant's version in respect of Sr. Nos. 7, 10, 11, 12 & 13 reproduced above, is seen and discussed as under:
Sr. No. 7 : Sham Sunder : The appellant's objection that first page of agreement is nor signed by any of the parties to the transaction, wherein the alleged rate is quoted, is quite valid. The agreement deed is not affixed by any court Fee stamp, and written on a simple paper. When the first page of agreement where the rate is quoted, is not signed by the parties, if makes the agreement meaningless and hence invalid. Such a document is not capable of being enforced. In his statement before the assessing officer, he refused having executed any agreement to purchase with the appellant and denied that signature on such agreement to sell was his.
Sr. No. 10 : Yash Pal : Similarly, in respect of photocopy of agreement at Sr. No. 10, the document is on a simple paper and suffers from the same disqualification on its first page, where the alleged amount (rate) is written, viz, without a signature of any of the parties. This also loses the validity and hence is unenforceable. In statement before the assessing officer, he refused having entered into any agreement to purchase and disowned his signature on the alleged agreement to sell (1st page of which is unsigned).
Sr. No. 11 : Shri Ashok Kumar : In respect of transaction at Sr. No. 11, besides the original document having not been affixed by court Fee Stamp, it is not signed by any of the parties. Hence it has no validity and is not enforceable.
Sr. No. 12 : Shri Subhash Chand : In respect of transaction at Sr. No. 12, only the photo copy was produced by the assessing officer and there was no original. However, in this regard, Shri Subhash Chand was examined by the assessing officer, when he denied having executed any agreement to purchase. Hence, it would be difficult to accept its authenticity while applying its contents against the appellant. Sr. No. 13 : Shri Nand Lal : In respect of transaction at Sr. No. 13, photo copy of alleged agreement to sell is on a simple paper and the first page thereof, where rate is quoted, is unsigned. The agreement to sell is in respect of 160 sq. yards and whereas he purchased only 80 sq. yards only.
25. On the above basis it emerges that the CIT (Appeals) has not accepted as credible the material and evidence available with the assessing officer. The findings of the CIT (Appeals) regarding the un-reliability of the material available with the assessing officer has not been negated by the department before us on the basis of any cogent material. The pleas of the learned departmental Representative were based on the admission of a purchaser namely Shri Inder Arora (in the case of the other co-owner M/s. Suraj Bhan Saini - HUF) wherein the said person admits to the signatures found in the 'agreement to sell'. The learned departmental Representative also pointed out that in the statement of one of the purchasers namely Smt. Sudershan Kumari recorded on 26-2-2004 (in the case of Suraj Bhan Saini - HUF). She has admitted that the signature on the agreement to sale was hers. Similarly the learned Dr. referred to the statement of Shri R.D. Kataria, property agent in support of the case of the revenue.
26. In this connection, we are of the opinion that insofar as the understatement of sale consideration by assessee is concerned, the same cannot be clinchingly inferred from the material and evidence on record. We have perused the documents in question and also notice the defects noted by the CIT (Appeals), namely (i) ultimate purchasers have not signed on the first page of the documents; (ii) that the documents have not been affixed with the requisite court fee stamp; (Hi) the assessing officer did not possess the originals; and (iv) neither the assessing officer reported as to how the copies of 'agreements to sell' came to his possession; all these factors have been considered by the CIT (Appeals) to hold that the evidence was not reliable. We are inclined to affirm the conclusion of the CIT (Appeals) on this aspects. Firstly it is a well-settled trite law that a mere photo copy of a document cannot be said to be reliable unless the originals of the documents are brought on record. For this proposition reliance can be placed on the case of Ms. Arati Bhargava v. Kavi Kumar Bhargava, 1999 (3) Civil court Cases 377 (Delhi), Ramesh Verma v. Smt. Lajesh Saxena 1998 (2) Civil court Cases 67 (MP) and Sachindra Kumar Ghos v. Prativa Devi 1983(1) Rent Control Reporter 215 (Cal.). Moreover such documents have not been owned up by the respective purchasers and the assessee and therefore the CIT (Appeals) rightly held the same to be unreliable.
Now insofar as the reliance placed by the revenue on the statement of Shri A R.D. Kataria, a property agent, we find that the said statement has been collected at the back of the assessee. Other feature that has been noted by the CIT (Appeals) is the lack of opportunity to the assessee for cross-examining the said witness and for that reason the said evidence deserves to be ignored following the ratio of the decision of the Hon'ble Apex court in the case of Kishinchand Chellaram v. CIT'. Even in the statement of one Shri Inder Arora and Smt. Sudershan Kumari (statement recorded in the case of Suraj Bhan Saini, HUF - co-owner), the respective purchasers have denied paying consideration over and above the consideration stated in the sale deeds. In the face of such denials, we find that no further enquiries have been initiated by the revenue but the same have been merely disbelieved. Therefore, the aforesaid evidence also cannot clinch the issue in favour of the revenue.
27. In the result, on the basis of the aforesaid, the appeal of the revenue in ITA 1357/Delhi/2005 is liable to be dismissed and the order of the CIT (Appeals) is affirmed.
28. Insofar as the appeals in the cases of other two HUFs pertaining to the assessment year 2001-02 are concerned, the circumstances and material with the revenue in making the additions stands on identical footing.Additions have been made for similar reasons. The CIT (Appeals) hasfollowed similar reasoning as taken in the case of Ram Saroop Saini, HUF (ITA 1347/Delhi/05) in deleting the additions made by the assessing officer. Before us also it was a common ground between the parties that the issue involved is identical to that in ITA 1347/Delhi/05 which has been considered by us in the earlier paragraphs. Therefore, following the reasoning in ITA 1347/Delhi/05, the appeals of the revenue for assessment year 2001-02 in the case of other assessees vide ITA No. 1346/Delhi/ 05, ITA 1413/Delhi/05 and ITA 1343/Delhi/05 are also dismissed.
29. Now we are remaining with the appeals of the revenue pertaining to the assessment year 1996-97. In all these appeals, similar addition has been made on the plea that the assessee has under-stated the sale consideration recorded in the sale deeds executed. The additions made have been deleted by the CIT (Appeals) on the plea that there was no evidence relating to the assessment year 1996-97 to infer under statement of sale consideration. In order to appreciate the manner in which the CIT(Appeals) has decided the issue, we may refer to the following discussion made by him in the case of ITA 1344/Delhi/05 pertaining to assessment year 1996-97 by way of paras 3 to 5 of his order :
3. The assessing officer attended the appellate proceedings and was asked to let me have the evidence, which was being relied upon in support of the fact that the rate as per agreement to sell was higher. The assessing officer could not furnish any evidence relating to accounting year (assessment year) in appeal whereupon one could conclude that the rates as per sale deed were lower than the rates mentioned in the 'Agreement to sell' if any. The assessing officer submitted that there were agreements to sell in view of its mention in the sale deed and a few were in the possession of the assessing officer.
4. The reliance by the assessing officer of an instance/instances of understatement of sale consideration in assessment year 2001-02 in the assessment year 1996-97, would not help the assessing officer in proving the case in question on the ground of generality. The addition made of Rs. 3,89,900 is hereby deleted in view of the decision of Supreme Count in K.P. Varghese in and decision of Kerala High Court in the case of CIT v. Shri K.C. Agnes reported in 262 ITR 354 Kerala High Court held in the above said case as under: 'When a document shows a fixed price, there will be a presumption that that is the correct price agreed upon by the parties.'
5. In the end the appeal for the assessment year 1996-97 is allowed on the point of quantum.
30. The aforesaid factual finding of the CIT (Appeals) is to the effect that there was no evidence with the assessing officer relatable to the assessment year 1996-97 to infer under-statement of sale consideration. Such findings remained un-assailed even before us. The learned departmental Representative could not negate the same and quite fairly conceded the factual matrix brought out by the CIT (Appeals). The assessing officer, in our view, was unjustified in making a presumption on the basis of evidence with him for assessment year 2001-02 to hold that the assessee had under-stated the sale consideration for the sales undertaken in the assessment year 1996-97 also. The order of the CIT (Appeals) on this aspect deserves to be uphelearned Accordingly the appeal of the revenue in ITA 1344/Delhi/05 is dismissed. The facts and issues are similar in the appeals of the revenue in ITA 1412/Delhi/05 and ITA 1345/Delhi/05. As a result the appeals of the revenue in ITA No. 1345/Delhi/05 and ITA 1412/Delhi/05 pertaining to assessment year 1996-97 are hereby dismissed.
31. In conclusion whereas the appeals of the assessee are allowed, those of the revenue are dismissed.