Income Tax Appellate Tribunal - Jaipur
Smt. Jamna Devi, Jaipur vs Ito, Jaipur on 7 June, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No.754, 755 & 756/JP/2015
fu/kZkj.k o"kZ@Assessment Year : 2006-07, 2007-08 & 2008-09
Smt. Jamna Devi, cuke ITO Ward-7(2),
Jaipur Vs. Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BXNPD0140H
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No.757, 758 & 759/JP/2015
fu/kZkj.k o"kZ@Assessment Year : 2006-07, 2007-08 & 2008-09
Smt. Narangi Devi, cuke ITO Ward-7(2),
Jaipur Vs. Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ANUPN9207H
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Rajeev Sogani (CA)
jktLo dh vksj ls@ Revenue by : Smt. Seema Meena (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 13/04/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 07/06/2018
vkns'k@ ORDER
PER BENCH:
These are appeals filed by the respective assessees against the consolidated orders of the ld CIT(A)-03, Jaipur dated 31.08.2015 for A.Y 2006-07, A.Y 2007-08 and A.Y 2008-09 respectively. All these appeals were heard together and are being disposed off by this consolidated order.ITA No. 754/JP/2015 2
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
2. In ITA No. 754/JP/2015 for A.Y 2006-07, the assessee, Smt. Jamna Devi has taken following grounds of the appeal:
"1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in reopening the assessment u/s 147 of Income Tax Act, 1961. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings being illegal and without any basis.
2. In the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs.5,00,000/-towards alleged unexplained deposits in the bank account of the assessee. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 5,00,000/-.
3. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs. 85,65,220/-for the alleged reason of source of these payments being not verifiable and remained unexplained although having decided that the entire transaction of alleged purchase of land do not pertain to the A.Y. 2006-07 and pertain to the A.Y. 2007-08."
3. In ground no. 1, the assessee has challenged the reopening of the assessment u/s 147 of Income-tax Act, 1961. Briefly the facts of the case are that originally no return of income was filed by the assessee. The AO has issued a notice u/s 148 on 20/03/2013 after recording reasons for belief that sources of investment to the tune of Rs 81,36,000 remain unexplained and thus escapement assessment and seeking necessary permission under section 151 of the Act. On receipt of notice u/s 148, return of income was filed showing NIL income. The objection against notice u/s 148 filed by the AR of the assessee were disposed off by the Assessing officer through an order dated 13/02/2014.
3ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
4. During the course of hearing, ld. AR submitted that, since the proceedings u/s 147 are punitive in nature, the AO is duty bound to carry out formation of his belief with due diligence and not in a casual and mechanical manner. It was submitted that in the present case, from the perusal of reasons recorded, it is evident that AO as per copes of sale deed, formed a belief that income has escaped assessment. It is submitted that the AO recorded the reasons in most arbitrary manner because the sale took place in AY 2007-08 and in AY 2006-07 and it was submitted that this fact of date of transaction has been accepted by the Ld. CIT(A), where she also taken into account the date of stamp paper, date of execution of document, date of registry of document. It was submitted that the only reasonable inference which can be drawn is that the AO has recorded the reasons in most casual and carefree manner without applying his mind. In support, reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Supreme Polypropolene (P.) Ltd. [2013] 35 taxmann.com 215 (Delhi) and decision of Hon'ble Allahabad High Court in the case of CIT & Anr. vs. Dr. Ajay Prakash (2014) 89 CCH 085 (All HC). It was further submitted that the reasons recorded for reopening for AY 2007-08 are word to word replica with the reasons recorded for A.Y. 2006-07. In this regard, our attention was drawn towards the fact that the assessment order for the year under appeal was passed on 24/02/2014 and reasons for AY 2007-08 were recorded on 31.03.2014. Thus, it is established beyond doubt that the reasons for AY 2007-08 were recorded only after passing the assessment order of A.Y. 2006-07. In view of above, it was submitted that the only reasonable inference which can be drawn is that even the AO was convinced that the transaction took place in AY 2007-08 and thereafter the Ld. CIT(A) confirmed this fact in her order dated 31.08.2015. It was submitted that even before the finding of the Ld. CIT(A), the AO was 4 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur satisfied that transaction took place in AY 2007-08 and therefore reopening is without jurisdiction. It was further submitted that other precondition for reopening u/s 147 is contained in section 151 which states that no notice u/s 148 can be issued unless a superior authority is satisfied that the reasons recorded are correct. It was submitted that the Ld. JCIT has not seen the underlying document on the basis of which reasons are recorded and if he would have seen the sale deed, he would never have granted the sanction for reopening the case of AY 2006-07 as it is very evident that sale took placed in AY 2007-08. In support, reliance was placed on the decision of Hon'ble Supreme Court in the case of Chhugamal Rajpal vs. S.P. Chaliha [1971] 79 ITR 603, and Hon'ble Bombay High Court in the case of Smt. Kalpana Shantilal Haria vs. ACIT. It was submitted that the notice u/s 148 of the Act can be issued to the assessee and in the present case, the appellant does not fall in the definition of the term "assessee" as defined in section 2(7) of the Act. It was submitted that the Ld. CIT(A) in a very casual manner held the error committed by the AO as inadvertent error which could be cured by the provision of section 292B of the Act. It was submitted that Ld. CIT(A) has failed to appreciate importance of the requirement of recording of reasons by the legislature without which action u/s 147 lacks jurisdiction. It was submitted that resort to section 292B cannot be made to validate an action which has been rendered illegal.
5. The ld DR is heard who has relied on the findings and order of the lower authorities.
6. In order to appreciate the rival contentions, it would be relevant to refer to the reasons recorded before the issuance of notice u/s 148 which are reproduced as under:-
5ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur "As per information available (copies of sale deed) with this office, the assessee has purchased the following properties during the year under consideration:-
Date of Purchased Amount of Details Location of
transaction from Purchase land & Cost
of acq.
11/01/2006 Shri Jagdish ½ share of Khasra No. Village -
S/o Chanda Rs. 774 & 782- Goner,
Lal 21,44,000/- 0.67
Tehsil -
i.e. Rs. hectares
Sanganer,
10,72,000/-
Jaipur
11/01/2006 Shri Jagdish ½ share of Khasra No. Village -
S/o Chanda Rs. 85,11 & 739- Goner,
Lal 78,24,000/- 1.63
Tehsil-
i.e. Rs. hectares
Sanganer,
39,12,000/-
Jaipur
11/01/2006 Shri Jagdish ½ share of Khasra No. Village -
S/o Chanda Rs. 142, 143, Goner,
Lal 63,04,000/- 144, 147 &
Tehsil-
i.e. Rs. 148-1.97
Sanganer,
31,52,000/- hectares -
village Goner Jaipur
The assessee is not filing her return of income. Moreover, the sources of investment made of Rs. 81,36,000/- (10,72,000 + 39,12,000 + 31,52,000) 6 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur remains unexplained. Thus, I have reasons to believe that income to the tune of Rs. 81,36,000/- has escaped assessment."
7. We have recently dealt with the reopening of assessment in hands of the seller i.e, Shri Jagdish Narayan Sharma (ITA No. 751/JP/2015 & others) in respect of the same transactions wherein we have held that the subject transaction pertains to A.Y 2007-08 and not A.Y 2006-07 and the reopening of the assessment for A.Y 2006-07 on the said ground was held to be invalid. Our relevant findings contained in case of Jagdish Narayan Sharma (ITA No. 751/JP/2015) dated 25.05.2018 shall apply with equal force in the instance and the same is reproduced as under: "8. Firstly, we note that reasons recorded before issuance of notice are two-fold. Firstly, the sale of the land situated at village Ginor in respect of which capital gains has been stated to be chargeable to tax and which has escaped taxation. Secondly, the unexplained deposits found in assessee's bank account maintained with PNB which have also escaped taxation. Regarding the first ground, on perusal of the sale deed executed by the assessee with Jamna Devi and Narangi Devi, it is observed that the date on which the sale deed has been executed has been stated as 11.01.2006, the date of purchase of the stamp paper has been mentioned as 11.01.2007 and the date on which the sale deed was presented for registration with the stamp authorities and finally registered has been stated as 12.01.2007. Identical fact pattern exist in respect of other sale deeds so executed by the assessee with Jamna Devi and Narangi Devi. There could be two possible scenarios that we can visualise in this regard. Firstly, where there was an agreement to sell dated 11.01.2006 which was subsequently converted into a sale deed on 11.01.2007 and while doing so, the original text along with the date of execution of agreement to sell has been blindly copied. However, it is not the case of the Revenue and 7 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur even there is nothing on record to suggest that there was an agreement to sell which was executed on 11.01.2006, therefore, this scenario doesn't exist. The other scenario which seems to exist in the present case is that the stamp paper was purchased on 11.01.2007, thereafter, while typing the contents of the sale deed, there is a clerical/typographical mistake which has happened whereby date of execution of the sale deed has been wrongly typed as 11.01.2006 instead of 11.01.2007. No doubt, there is a mistake on part of the assessee while executing the sale deed, the question is should the Assessing officer before assuming jurisdiction under section 148 should have examined the sale deed properly in order to at least determine whether the sale transaction which has escaped taxation fall in A.Y 2006-07 or A.Y 2007-08. The Courts have held from time to time that sufficiency of material is not relevant for determining assumption of jurisdiction under section 147 so long as there is nexus between the material and the formation of belief. The formation of belief has to be based on prima facie reading and appreciation of the material available on record which in this case is the registered sale deeds which have been executed by the assessee. On a prima facie reading of such sale deeds, it is apparent that the sale deeds have been executed and registered with the stamp authorities on 12.01.2007 and therefore, any escapement of capital gains on such sale transaction shall fall in financial year 2006-07 relevant to Assessment Year 2007-08 and not Assessment Year 2006-07. We are, therefore, of the view that as far as the first ground for reopening the assessment proceedings is concerned, there is lack of nexus between the material and the formation of prima facie belief that the income has escaped taxation for the impunged assessment year. The decision of the Hon'ble Allahabad High Court in case of Dr Ajay Prakash (supra) where it was held that where the entries are dated 29.08.1998, reopening of 8 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur assessment proceedings for AY 1998-99 are clearly invalid, supports the case of the assessee."
8. In light of above, the assumption of jurisdiction under section 147 by the Assessing officer for the impunged assessment year is held to be invalid. In the result, ground no. 1 taken by the assessee is allowed.
9. In Ground no. 2, the assessee has challenged the action of the Ld. CIT(A) in confirming the addition of Rs. 5 lacs on account of unexplained deposits in the saving bank account maintained with Punjab National bank. As we have quashed the assumption of jurisdiction under section 147, we don't think it would be relevant to examine the merits of the additions so made by the AO. Hence, the ground is dismissed as infructious.
10. In ground no. 3, the assessee has challenged the addition towards unexplained sources of investment amounting to Rs. 85,65,220/-. During the course of hearing, the Ld. AR submitted that the said ground is not pressed as the additions were ultimately deleted and were confirmed in A.Y 2007-08. The ground is thus dismissed as not pressed.
11. In the result, the appeal of the assessee is allowed in light of above directions.
ITA 755/JP/2015
12. Now, we take up appeal of the assessee in ITA No. 755/JP/2015 pertaining to A.Y. 2007-08 wherein the grounds of appeal are as under:
"1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred confirming the action of ld. AO of reopening the assessment u/s 147 of Income Tax Act, 1961. The action of 9 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings, being illegal and without any basis.
2. In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of ld. AO of completing the assessment ex-parte under section 144 of the I.T. Act, 1961. The action of the Id. CIT(A) is illegal, unjustified and arbitrary. Relief may please be granted by quashing the entire assessment order, being illegal and violative of the principles of natural justice.
3. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of Id. AO in making addition of Rs.57,000/- towards alleged unexplained deposits in the bank account of the assessee. The action of Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 57,000/-.
4. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of ld. AO in making addition of Rs. 85,42,800/- for the alleged reason of source of these payments for purchase of land being not verifiable and remained unexplained. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 85,42,800/- as there was no exchange of money."
13. In the first ground of appeal, the assessee has challenged the reopening of the assessment and assumption of jurisdiction by the AO 10 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur under section 147 of the Act. It is a case where no return of income has been filed by the assessee. Pursuant to issuance of notice u/s 148, the return of income has been filed disclosing income of Rs 15,820. The reasons were recorded before issuance of notice u/s 148 and after seeking approval of the CIT(OSD), Range -7 Jaipur u/s 151 of the Act.
14. During the course of hearing, it was submitted by the ld AR that from the perusal of the reasons recorded, it can be seen that the reasons are recorded in most arbitrary manner as the date of transaction stated in reasons as 11.01.2006 which does not fall in the year under consideration. Accordingly, it was submitted that the reasons have been recorded without application of mind by the Assessing Officer. It was further submitted that notice issued is invalid as it does not comply with the requirement of Section 151. It was submitted that superior authority has not mentioned any reasons for coming to the conclusion that it is a fit case for reopening. The superior authority has in a mechanical manner accorded permission by just writing "yes" and has affixed his signature thereunder. Nowhere, the superior authority has recorded a satisfaction not even in brief. It was accordingly submitted that the important safeguards provided u/s 147 and 151 were lightly treated by the Ld. AO as well as Ld. CIT(A) and thus the sanction granted is not proper and valid within the meaning of section 151 of the IT Act, 1961 and therefore, the proceedings for reopening of the assessment is bad in law. It was further submitted that the Ld. CIT(A) in a very casual manner held that the error committed by the Ld. AO is inadvertent error which could be cured by the provisions of section 292B of the Act.
15. We now refer to the findings of the Ld. CIT(A) which has been relied upon by the ld DR and which are reproduced as under:
11ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur "2.3 I have carefully considered the findings of the AO as also submission made by Ld. A/R of the appellant. However, I find that the arguments advanced by the Ld. A/R fail to support the case of assessee and the judicial precedents cited by him do not apply to the facts of the present case. Accordingly, I do not concur with him for the reasons set out in detail in the ensuring paragraphs.
2.4 I find that the Assessing Officer was in possession of specific and concise information regarding purchase of lands by assessee, sources of which were never disclosed by her to the department. Therefore, the Assessing Officer was in possession of sufficient reasons forming basis of satisfaction of escapement of income from tax, thereby enabling and requiring the AO to reopen the assessment in the case of assessee u/s 147 of the Income Tax Act, 1961. The Ld. A/R has also not disputed the fact that the income pertaining to these transactions had actually escaped. However, he has challenged the validity of reassessment u/s 147 merely on the ground that the date of sale was wrongly mentioned on all the three sale deeds as "11.01.2006", whereas, he claims, the actual date is "11.01.2007". Having mentioned so, the Ld. A/R contends that, in terms of the reasons recorded, the sale transactions do not pertain to the year under consideration and therefore, the AO's satisfaction of escapement of income is baseless. Accordingly, it was prayed that, the entire reassessment proceedings be quashed.
2.5. Here, it may be mentioned that the date of sale on the sale deeds was mentioned as "11.06.2006" which however, has been claimed by the.
Ld. A/R as 'wrongly mentioned', and the correct date was "11.01.2007". Now, the issue as to whether the actual date was former or the latter is a matter of dispute on which, the assessee was supposed to make submissions before AO on factual aspects and therefore, this cannot be 12 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur made a ground to challenge the validity of initiation of reassessment proceedings u/s 147. It is a matter of fact that, the AO was in possession of the abovementioned three sale deeds which depicted purchase transactions entered into by assessee reflecting huge investments on part of the assessee, sources of which were never disclosed to department, thus establishing the fact of escapement of income. And, as mentioned on the sale deed, the AO considered the date of sale as "11.01.2006" and in doing so, he committed no error in as much as he has only picked that date which was mentioned on the sale deed. But, merely because the assessee disputes and claims subsequently that the date mentioned on the sale deed is not correct, it cannot be held that, the AO at that stage was wrong in satisfying himself as to the fact of escapement of income. Further, even if it is presumed that, the Ld. AO had wrongly considered the date as "11.01.2006" instead of "11.01.2007", the same is merely a mistake curable u/s 292B of the Income Tax Act, 1961 since otherwise, the reassessment proceedings in substance and effect are in conformity with the intent and purpose of the Income Tax Act, 1961. Thus, this curable mistake by virtue of section 292B does not vitiate the entire reassessment proceedings.
Further, it is a matter of fact that, the sale transactions actually took place in the financial year relevant to the Assessment Year under appeal, therefore, merely because in the reasons for reopening assessment, a curable mistake has occurred, the entire reassessment proceedings cannot be held invalid."
16. In order to appreciate the rival contentions, we refer to the reasons recorded by the AO before the issuance of notice u/s 148 which are reproduced as under:-
13ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur "As per information available (copies of sale deed) with this office, the assessee has purchased the following properties during the year under consideration:-
Date of Purchased Amount of Details Location of
transaction from Purchase land & Cost
of acq.
11/01/2006 Shri Jagdish ½ share of Khasra No. Village -
S/o Chanda Rs. 774 & 782- Goner,
Lal 21,44,000/- 0.67
Tehsil -
i.e. Rs. hectares
Sanganer,
10,72,000/-
Jaipur
11/01/2006 Shri Jagdish ½ share of Khasra No. Village -
S/o Chanda Rs. 85,11 & 739- Goner,
Lal 78,24,000/- 1.63
Tehsil-
i.e. Rs. hectares
Sanganer,
39,12,000/-
Jaipur
11/01/2006 Shri Jagdish ½ share of Khasra No. Village -
S/o Chanda Rs. 142, 143, Goner,
Lal 63,04,000/- 144, 147 &
Tehsil-
i.e. Rs. 148-1.97
Sanganer,
31,52,000/- hectares -
village Goner Jaipur
The assessee is not filing her return of income. Thus, the sources of investment made in purchase of properties as reflected above of Rs. 81,36,000/- (10,72,000 + 39,12,000 + 31,52,000) remains unexplained.14
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur Thus, I have reasons to believe that income to the tune of Rs. 81,36,000/- has escaped assessment."
17. In assessee's appeal for A.Y 2006-07 (ITA No. 754/JP/2015), we find that identical transactions and material in form of sale deeds were the basis for reopening the assessment and we have held therein that the subject transactions pertains to A.Y 2007-08 and not A.Y 2006-07 and the reopening of the assessment for A.Y 2006-07 on the said ground was held to be invalid. In the instant case, where the AO has reopened the assessment for A.Y 2007-08 in respect of the same transactions which has escaped assessment, we donot see any infirmity in the said action of the AO in assuming jurisdiction under section 147 of the Act. There is clearly a live link and nexus between the material in form of sale deeds and formation of a belief that income has escaped assessment.
18. Further, we find that the notice has been issued u/s 148 after obtaining approval of the appropriate authority u/s 151 who has clearly applied his mind before issuance of sanction. The sale deeds clearly demonstrate that the transactions pertained to A.Y 2007-08 which shows that the appropriate authority has not just gone by the reasons where the date of transaction has been wrongly stated as 11.1.2006 but has actually analysed the underlying material which forms the basis for reasons which have been recorded by the AO for reopening the assessment. There is no particular form or manner which has been prescribed for recording satisfaction and issue of sanction under section 151 of the Act. Once the appropriate authority has gone through the material and the request seeking approval from the Assessing officer and thereafter, he records his satisfaction and approves the same, it would be in sufficient compliance with the requirements of section 151 of the Act.
15ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
19. Here, it is important to note that similar contentions regarding arbitrary sanction u/s 151 have been raised by the ld AR in context of A.Y 2006-07. The fact of the matter is that there are sale transactions evidenced by the registered sale deeds which clearly demonstrate the date of execution and registration with the appropriate authority. As per the sale deeds, the transactions pertain to A.Y 2007-08. In that factual context, the ld AR cannot plead that the appropriate authority has neither applied his mind in A.Y 2006-07 when the sanction was initially granted nor subsequently in A.Y 2007-08 while according the sanction under section 151 of the Act. It is not a case of protective assessment in A.Y 2006-07 and substantive addition in A.Y 2007-08 in respect of same transactions and issuance of notice and sanction u/s 151 at the same point in time. The reasons for A.Y 2006-07 were recorded on 15.03.2013 and thereafter, the assessment was completed on 24.02.2014. Thereafter, reasons for A.Y 2007-08 were recorded on 31.03.2014 and sanction of the appropriate authority was received. In light of the same, we are unable to accede to the contentions of the ld AR regarding arbitrary and mechanical sanction given by the appropriate authority u/s 151 of the Act.
20. Further, we have gone through the contention regarding issuance of notice under section 148 to an assessee and not to any person and the fact that in the instant case, the appellant is not an assessee. If we look at the definition of "assessee" as defined in section 2(7), it talks about a person by whom any tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income. In our view, the appellant clearly falls in the definition of an assessee as so defined and the contention so raised is clearly devoid of any merits and is hereby rejected.
16ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
21. In the result, the ground of appeal is hereby dismissed and the assumption of jurisdiction by the AO u/s 147 of the Act is held to be valid.
22. In Ground no. 2, the assessee has challenged the assessment completed ex-parte u/s 144 of the Act. During the course of hearing, the Ld. AR submitted that the assessee does not wish to press the said ground of appeal. Hence, ground no. 2 is dismissed as not pressed.
23. In ground no. 3, the assessee has challenged the sustenance of addition of Rs. 57,000/- on account of unexplained deposits in the bank account maintained with Punjab National Bank, Gonar Branch. During the course of assessment proceedings, the AO observed that Rs. 72,822/- were found deposits in the said bank account and necessary explanation were sought from the assessee. The assessee submitted that Rs. 15,822/- on account of interest has been duly offered in the return of income. Further, regarding Rs. 50,000/- the assessee submitted that the amount was deposited by her father-in-law Shri Jagdish Narain Sharma, however, no documentary evidence/confirmation to this effect was filed. Accordingly, the AO treated Rs. 57,000/- as unexplained deposits and brought the same to tax.
24. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the said addition and her finding are at reproduced as under:
"4.3 I have carefully considered that the findings of the AO as also submission of the appellant and find that the contentions of the assessee are not acceptable. AO obtained information u/s 133(6) that there were cash deposits in the bank account of assessee on various dates to the tune of Rs. 57,700/-. On being confronted, the 17 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur assessee explained before AO that, these amounts were deposited by her father-in- law in her accounts and belonged to him. It was further contended that, though the account was in the name of assessee but pertained to Sh. Jagdish, assessee's father-in-law. Similar submission has been made before me as well. Clearly, the submission of assessee does not explain the cash deposits in her bank account. Further, the account is in the name of assessee only, therefore, the cash deposits in the said account shall be deemed to be belonging to assessee only and there is no reason to believe assessee's version that the deposits did not belong to her.
The appellant has further tried to explain these bank deposits by submitting a common cash flow summary prepared from the entries appearing in her own bank account and also by incorporating the entries appearing in the bank account of assessee with Shri Jagdish and Smt. Narangi Devi, the other group persons. However all these persons have an independent existence and are assessable separately and have carried on separate land transactions etc. because of which the appellant cannot be allowed to take benefit of the availability of the cash in the hands of some other person. Therefore the contention of the appellant that the immediate source of the cash deposits is out of common cash flow chart cannot be accepted. Therefore this amount of deposit in cash in the bank account of the assessee remained unexplained and the addition of Rs. 57,700/- is hereby upheld."
25. We have heard the rival contentions and purused the material available on record. We donot find any infirmity in the order of the ld CIT(A) and the same is hereby confirmed. The ground of appeal is thus dismissed.
18ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
26. In ground no. 4, the assessee has challenged the sustenance of addition towards unexplained investment in purchase of land amounting to Rs. 85,42,800/-.
27. Briefly the facts of the case are that the assessee alongwith Smt. Narang Devi has purchased following pieces of land from Shri Jagdish Narain Sharma wherein the assessee was having half share:
(a) Land Khasra No. 142, 143, 144 147 & 148 total 1.97 hectare situated at village Goner, Tehsil Sanganer, District Jaipur purchased at Rs.66,19,200/-(63,04,000+Stamp & Reg. Charges Rs.3,15,200).
(b) Land Khasra No. 85, 1113 & 739 total 1.63 hectare situated at village Goner, Tehsil Sanganer, District Jaipur purchased at Rs.82,115,200/- (78,24,000/-Stamp & Reg. Charges Rs.3,19,200/).
(c) Land Khasra No. 774 & 782 total 0.67 hectare situated at village Goner, Tehsil Sanganer, District Jaipur purchased at Rs.22,51,200/-
(21,14,000/- + Stamp & Reg. Charges Rs.1,07,200/-).
The total sale consideration as per the registered sale deeds was for Rs. 1,70,85,600/- and registration charges on account of stamp duty etc. were also incurred for Rs. 8,13,600/-. The total investment of the assessee on account of purchase of land (being half share) including stamp duty expense was arrived at Rs. 85,42,800/, The AO required the assessee to explain the source of such investment and the assessee submitted before the AO that no physical transaction of the sale consideration was made because the lands were transferred in the name of assessee and Smt. Narangi Devi by their father-in-law, Sh. Jagdish Narain Sharma during the year 2006-07. However, the AO was not convinced with such submission and observed that as per the sale deeds, the amounts have been paid to the seller party. Accordingly the AO held 19 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur that the assessee has made undisclosed investment of Rs. 85,42,800/- in the purchase of such land. Accordingly such amount was added to the total income under the head "income from other sources."
28. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the said addition and her finding are at para 5.7 which are reproduced as under:-
"5.7 I have gone through the facts of the case, observations of the AO and have considered the submissions made by the ld. A/R of the assessee. Regarding the additional evidences submitted by the appellant, it is seen that these evidences are not of the nature that the same could not be filed before the AO during the course of assessment proceedings more particularly when ample opportunity was provided to the assessee. Further the appellant has failed to demonstrate as to what are the circumstances under which these details could not be filed before the AO as enumerated in Rule 46A. The procedure as provided in the rule regarding the submission of additional evidences should be resorted to in the case of real and actual hardship and it should not be followed in casual manner. Assessee has failed to give any reasonable cause regarding non-submission of the same and from the perusal of the order sheet entry as provided by the AO in the remand report, it is evident that assessee was absent on the given date of hearing and after few days appeared with the papers as per sweet will. Under these circumstances if the prayer of the appellant for the admission of additional evidence is admitted, it will amount to mockery of justice and the procedure provided therefore. The assessee cannot be allowed to exploit the facility provided in the law to his / her own convenience. With the above discussions the additional evidences as submitted by the appellant are not admitted.20
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur On merits, A/R of the appellant has reiterated the same arguments as were advanced in AY 2006-07 which are decided against the assessee after making elaborate discussion while disposing off the appeal of the appellant for AY 2006-07 (supra). The issue under reference is in respect to the investment in the acquisition of land sources of which were held as unexplained by the AO. Since the AO has made additions of such unexplained investment in both the assessment year, i.e. AY 2006-07 and AY 2007-08 though the land under question were acquired in the previous year relevant to AY 2007-08 and while deciding the appeal of the appellant for AY 2006-07 though all the contentions raised with regard to the source of investments and nature of transactions were rejected, however, the addition was directed to be deleted for the sole reason that the transaction in previous year relevant to A.Y. 2007-08. in the year under appeal, since the transaction of purchase of lands has taken place and as stated above, the appellant before me put forth the same arguments as were taken in A.Y. 2006.-07 with regard to the source of investment in acquisition of lands and, the nature of transactions contended as made to avoid family disputes etc. which had already been decided against the assessee thus, by following the decision taken in A.Y. 2006-07, the addition of Rs. 85,65,220/- as made on account of unexplained investment u/s 69 is hereby upheld. Accordingly, this ground is dismissed."
29. During the course of hearing, the Ld. AR reiterated the submissions made before the ld CIT(A). It was submitted that before the CIT (A), it was conclusively established that the owner of the land Shri Jagdish Narayan Sharma was facing serious family disputes. Claims and counterclaims from different relatives were made over the land inherited 21 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur by Jagdish Narayan Sharma. Complete documentary evidences to substantiate these facts were placed before the ld. CIT (A). None of these factual aspects are disputed by ld. CIT (A).
It was submitted that Shri Jagdish Narayan Sharma, in this background, in order to safeguard his land, on wrong legal advice, executed a sale deed in favour of his daughter-in-laws. The reason leading to execution of sale deed has not at all been countered by the ld. CIT (A).
It was further submitted that the Ld. CIT (A) disregarded the submissions mainly for the solitary reason of a sale deed having been executed amongst the parties leading to presumption that sale has taken place. She has further herself admitted the fact that the sale deed is not conclusive evidence and the said presumption is rebuttable by the assessee through effective evidence. In this regard it is submitted that during the appellate proceedings affidavits of the purchasers were submitted [PB 410-415] in which the purchasers have confirmed to the fact that there was no transfer of funds and the sale deed represents a sham document executed only to protect the interest of the family. Ld. CIT(A) has erred in holding that assessee has failed to produce evidence for rebuttal of presumptions because all the possible evidences were placed on record. Ld. CIT(A) have not specified that how assessee has failed to discharge his obligation. Vague observation made by ld. CIT(A) is baseless.
It was further submitted that ld. CIT (A) had all the powers u/s 131 to summon to these deponents to find out the veracity of these affidavits. Ld. CIT (A) for the reasons best known to her did not exercise her statutory powers and yet disbelieved the affidavits. Any affidavit unless controverted, has to be accepted. Reliance is placed on Hon'ble Supreme 22 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur Court judgment in the case of Mehta Parikh & Co vs CIT [1956] 30 ITR 181 (SC), wherein it was held as under:
"..The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross- examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits..."
It was further submitted that the ld. CIT(A) further erred in holding that ld. AO is supposed to look into the substance only when the assessee has shown that the apparent is not real. It is submitted that the provisions of the Income Tax Act are to be applied on the basis of substance and not the form assigned to the transaction or the way transaction is structured. The contention is further supported by the introduction of ICDS in the IT Act, 1961. Even if contention of ld. CIT(A) is considered then also ld. AO should have looked into the substance as the assessee by way of plethora of evidences already proved that apparent is not real.
It was further submitted that the ld. CIT (A) has further erred in considering that since the sale deed is witnessed, it shall be presumed that witness has attested the contents of the instruments also. As submitted above the sale deed in the present case is a sham document. Ld. CIT (A) has further erred in observing that the Sub-Registrar has endorsed in the sale deed that consideration has been passed on in his presence. It is submitted that as evident from the sale deed PB 389 which is also 23 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur reproduced by ld. CIT (A) at page 27 of her order. The endorsement by Sub- Registrar is highly mechanical from which no conclusion can be drawn as the Sub- Registrar has not strike off the irrelevant portions. It is not clear whether the consideration has flown and passed before him. Therefore, the contention of ld. CIT (A) is devoid of merits.
It was further submitted that admittedly sale deed can be persuasive evidence but for sure cannot be conclusive evidence. Any persuasive evidence has to be weighed with reference to other allied/circumstantial evidences and thereafter in totally a conclusion can be drawn. In the present case, the following specific evidences before the lower authorities were enough to prove that apparent was not real and it can be concluded that sale deed is a sham document :
a) Affidavits,
b) Documentary evidences of multiple disputes,
c) No evidence of source of income of the buyers It was further submitted that from the perusal of the bank statement of the assessee, Narangi Devi and Jamna Devi, a reasonable inference which can be drawn is that Jamna Devi and Narangi Devi were not in a capacity to purchase a land worth Rs. 1,67,20,000. There is no evidence of payment or receipt of such huge sum. If the alleged transaction would have taken place then it must have left some traces of it. However, in absence of the movement of cash the allegation of ld. AO and ld. CIT(A) is devoid of merits. Further, it is not the case of ld. Lower authorities that these people had other bank accounts in which the transaction took place.
It was further submitted that the lower authorities have further failed to appreciate the fact that if money was received by the assessee then where it went. Such huge money could not be kept at home. Further, even ld.
24ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur Lower authorities failed to establish that the money so received was consumed. In the above background, ld. Lower authorities have grossly erred in considering the sale deed as a valid and conclusive evidence.
It was further submitted that the ld. CIT(A) has failed to appreciate the background of the parties. The family (buyers and seller) had a rural and illiterate background having no knowledge of such legal issues nor having any experience of such matters. They did not have access to proper legal consultation. All this resulted into their ending up with a wrong choice of documentation. To a literate person like the ld. CIT(A), this may appear hypothetical but the ground realties in India are otherwise which need no proof.
It was further submitted that the ld. CIT(A) has rejected the pleadings before her on the grounds that no prudent person will act in that manner. It is submitted that the parties were definitely not prudent. Ld. CIT(A) has not appreciated that no prudent person will invest in buying such a disputed property which otherwise is going to be inherited by her family. Therefore, the basic reason for rejecting the submission by CIT(A) does not hold good.
It was further submitted that the ld. CIT(A) observed that the earlier contention of assessee that assessee does not have any financial resources stands contradicted in as much as, she has paid stamp duty as high as Rs. 4,29,220 on the sale deeds whereas, she could have executed a gift deed which entails minimal liability of stamp duty as compared to the sale deed. Ld. CIT(A) has erred in establishing financial capacity of the assessee to pay Rs. 85,65,220 by observing that she has paid Rs. 4,29,220. The 25 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur presumption on the face is not acceptable as the assessee has only paid 5% of the alleged purchase amount.
It was further submitted that the ld. CIT(A) has erred in observing that burden to establish the source and availability or non-availability for that matter of funds has to be established by the assessee and not the AO. This is the primary and initial burden which necessarily lies upon the assessee only which she has failed to discharge. Plethoras of evidences have already been submitted to establish non availability of funds and therefore the assessee has duly discharged the primary and initial burden.
30. Reliance was placed on the following judicial pronouncements:
• Hira Lal Ram Dayal v. Commissioner of Income Tax [1979] 2 Taxman 579 (Punj. & Har.) • Hira Lal Ram Dayal vs ITO [1983] 16TTJ 300 (CHD.) • Mrs. K. Atma Ram vs. Income Tax Officer [1987] 27 TTJ (Chd) 99. • Smt. Chinimilli Venkata vs. ITO in I.T.A. No. 1923/HYD/2014 A.Y. 2010-11 order dated 02.09.2016.
31. We have heard the rival contentions and purused the material available on record. The additions have been made by the Assessing officer in the hands of the assessee stating that the assessee has purchased certain immoveable property in form of certain identified hectares of land for an amount of Rs 85,42,800 and the assessee having failed to offer any explanation regarding source of such investments, the additions in form of unexplained investment have been made in her hands. The basis of such a finding by the Assessing officer is the three registered sale deeds which have been executed by the assessee (jointly with Smt Narangi Devi) with their father-in-law Shri Jagdish Narayan Sharma.
26ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur During the appellate proceedings, it was submitted that due to various family disputes, in order to safeguard the title in the inherited land, Shri Jagdish Narayan Sharma, camouflaged the title by getting the land registered in name of assessee and Smt Narangi Devi without any consideration. In support of the said contentions, affidavits of the assessee and Smt Narangi Devi were submitted as additional evidence during the appellate proceedings before the ld CIT(A). It was contended that said affidavits substantiate the fact that there was no transfer of funds and the sale deed represent a sham document executed only to protect the interest of the family.
32. We find that the subject matter of transfer is certain specific hectares of land situated at Village Goner, Tehsil Sanganer, District Jaipur. It is a settled law and which has been confirmed by the Courts time and again that any transfer of immoveable property in form of ownership rights over such land can happen only through a written document in form of a conveyance deed and such a conveyance deed has to be duly registered with the Stamp authorities after paying appropriate stamp duty. In the instant case, three separate conveyance deeds have been executed in favour of the assessee (jointly with Smt Narangi Devi) by Shri Jagdish Narayan Sharma and the same are duly registered with the Stamp authorities. Having registered the conveyance deed, where the parties so decide subsequently to cancel or rescind the same, it is again a settled position that they have to again execute a written agreement cancelling or rescinding the earlier sale deed and the said agreement cancelling or rescinding the earlier sale deed has again to be registered with the stamp authorities. Similarly, where the parties so decide subsequently to amend/vary/modify the terms of the sale deed so executed, they have to again execute a written agreement amending/varying/modifying the earlier 27 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur sale deed and the said agreement has again to be registered with the stamp authorities. In the instant case, there is no agreement which has been executed and registered modifying the initial sale deeds and therefore, the said sale deeds continue to remain valid and stand as on day and reflect the mutual understanding of the parties duly taken on record and recorded in official records by the stamp duty authorities. The subsequent affidavits which are merely signed unilaterally by the assessee and Smt Narangi Devi, and not even by the transferor, Shri Jagdish Narayan Sharma can in no circumstances take precedence over the registered sale deeds. Further, regarding the circumstances relating to family disputes which have lead to execution of the sale deeds, there is no finding recorded by the lower authorities. Even if we believe the existence of such a dispute as so claimed by the assessee, how would that nullifies the existence and the contents of the sale deeds which have been executed and registered with the stamp duty authorities. Once a sale deed has been executed which evidence the handing over of the possession of the land and passing of the consideration, the circumstances which has led to execution of the sale deed are of no consequence. It is only in a scenario where pursuant to total or partial partition of HUF or under a gift or a will or a family settlement, certain transfer has happened which the law has envisaged under section 47 as not regarded as transfer for the purposes of computing the capital gains. It is not the case of the assessee that as part of the family settlement, the father-in-law has transferred the land to her alongwith Smt Narangi Devi. Further, we find that the assessee after having acquired the subject land has subsequently sold a part of such land to a third party, namely Smt Prem Devi vide registered sale deed dated 27.07.2007 and capital gains arising therefrom has been brought to tax in the hands of the assessee by the Assessing officer in AY 2008-09. In appeal for A.Y 2008-09 in ITA No. 756/JP/15, 28 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur though the assessee has challenged the said addition, however, no contentions have been raised stating that where the capital gains are determined finally, the same should be brought to tax in hands of father- in-law and not the assessee as the original transfer in her name was a sham transaction. It is therefore a case where the assessee has acquired the subject land through a duly executed sale deeds and thereafter, has acted upon the said sale deed by way of subsequent sale of a part of the land initially acquired. It is therefore a case of valid acquisition of land through registered sale deeds.
33. Further, we have gone various other contentions so advanced by the ld AR in context of findings of the ld CIT(A) regarding the contents of the sale deeds and onus regarding source of investment, however, we are unable to accede to the said contentions and the following findings of the ld CIT(A) are hereby confirmed:
"7. In the present case, the assessee had purchased certain lands as mentioned in the table above. These lands were purchased by assessee jointly with Smt. Narangi Devi for total consideration of Rs. 1,62,72,000/- and the assessee has paid half share of such sale consideration of Rs. 81,36,000/-. The assessee also paid half share of stamp duty amounting to Rs. 4,29,220/-. In this manner the assessee has paid a total amount of Rs. 85,65,220/- as purchase consideration. However, since the source of such a huge investment was not explained before the AO, therefore the same was treated as unexplained income of assessee.
7.1 Before me, the ld. A/R has made very elaborate submissions which runs into several paragraphs embarking upon legal as well as factual aspects of the case and has maintained that, no actual sale has 29 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur taken place. The submissions of ld. A/R are being dealt with parawise in the subsequent paras.
7.2 First contention of assessee is that, there has been no actual transfer of property to assessee by Sh. Jagdish for the reason that they are related to each other being daughter/father-in-law respective and further, it was submitted that, the sale deed is nothing but merely a document to shield the family interest in the land from other relatives disputing the inheritance. This contention of assessee not acceptable in as much as merely because the purchaser and seller are relatives, it does not lay ground for any presumption that, they cannot enter into commercial transaction such as sale / purchase of land, or that any transfer of property between them shall take without consideration only. There is no such embargo and when there are duly executed, witnessed and registered sale deeds on record, a primary, obvious and natural presumption arises that, a sale has taken place of the property mentioned in the sale deed. Mere mention of the fact that the parties to the sale deed are relatives, the said presumption in respect of the transaction recorded on the sale deed is not even remotely rebutted. Until and unless such presumption is rebutted by assessee through effective evidence it shall be presumed and continued to be presumed so, that the sale transaction recorded on the sale deed is true and genuine. In this regard, a reference is necessary to section 80 of the Indian Evidence Act, 1872 which provides for a presumption in favour of the document submitted on record off the court. The section reads as under:-
Sec 80. Presumption as to documents produced as recorded of evidence-30
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur Whenever any document is produced before any Court, purporting to be a record or-memorandum of the evidence, or of any part of the evidence, given by a witness in a judicial proceeding or before any officer authorized by law to take such evidence, or to be a statement or confession by any prisoner or accused person, taken in accordance with law, and purporting to be signed by any Judge or Magistrate; or by any such officer as aforesaid, the Court shall presume that the document is genuine; that any statements as to the circumstances under which it was taken, purporting to be made by the person signing it, are true, and that such evidence, statement or confession was duly taken.
This section leaves no room for doubt that, the contents of a document shall necessarily be presumed as true and genuine. However, the presumption is rebuttable, but only by way of effective evidence. In the present case, the assessee has failed to produce such an evidence. Before proceeding to the next contention of ld. A/R, it may be mentioned that, though the laws of evidence do not strictly apply to the income tax assessment proceedings. Nevertheless, the principles underlying the provisions of Indian Evidence Act, 1872 can always be referred to wherever required and applied in a less rigorous / strict manner as compared to the Judicial proceedings before a Court of Law.
7.3 Next contention of assessee is that, the Assessing Officer has preferred 'form' over 'substance' and has further submitted that, the AO was under obligation to lift the veil and ascertain the correct nature of the transaction. This contention of Ld. A/R is rather hypothetical and is clearly not maintainable. AO is supposed to look into substance of the matter only when the assessee has shown that the apparent is not real, the burden of proving which lies strictly upon assessee. Unless, this burden is 31 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur discharged, the apparent in normal course is treated as real. The presumption available to the contents of the sale deed has not been discharged by the assessee by leading effective evidence. Therefore, the contention of assessee for considering 'substance' over 'form' gets devoid of any merit and deserves to be rejected.
7.4 AO has observed that, the witnesses signing the sale deed were witnesses to the transaction and to the passing on of sale consideration in the presence of the sub registrar. In this regard, the Ld. A/R submits that, the role of witnesses is merely to attest the execution of the instrument and not the contents of the instrument. While putting forth such a proposition, the Ld. A/P. has relied upon section 3 of the Transfer of Property Act, 1882. I have considered the argument of the Ld. A/R wad gone through the provisions of section 3 of T.P. Act, 1882, on perusal of which I have found that, section 3 nowhere contemplates such a stipulation as has been submitted by Ld. A/R. The portion of section 3 on which reliance has been placed and reproduced in the written submission filed before me merely provides the definition of "attested" and does not make any provision regarding role of witnesses to the instrument. Therefore, in the absence of any such stipulation, it has to be presumed that, the witnesses have attested the document itself which by necessary implication includes the contents of the instrument as well. AO was right in making such assumption of law and thus, the contention of assessee holds no merit, liable to be rejected.
The copy of registered sale deed duly evidencing these fact is as under:-
AO has observed that, the sale consideration has actually passed on from assessee to the seller in front of / in the presence of the sub- registrar. As against this, the Ld. A/R has referred to section 34 & 58 of the Indian Registration Act, 1908 and has contended that, there was no 32 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur endorsement of consideration having passed on in the presence of the registering authority. I have considered the contention of the Ld. AIR and perused the provisions of section 31 & 58 of the Indian Registration Act, 1908, on perusal of which, I find that the even if the provisions of said sections are applied, it does not support the case of assessee. The Ld. A/R contends that, there is no endorsement of consideration having passed on in the presence of the registering authority, however from a perusal of the sale deed, it is noted that, there is mention of the admission by the parties that the entire sale consideration has been paid and received in cash.. Therefore, sections
34 & 58 of the Indian Registration Act, 1908 do not help the case of assessee. The sub Registrar also endorsed this transaction which is evident from the copy of registered sale deed which is as under:-
Reliance has been placed on the judgment of Hon'ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. (2012) 340 ITR 1 (SC). On a perusal of the relevant portion of the dictum of the judgment, it is seen that, the reproduced observations of the Hon'ble Apex Court only accentuate the importance, need and sanctity of registration of a document of transfer of immovable property. Clearly, this is not relevant to the issue in the present case hence, the judicial precedent cited by the Ld. A/R is found not applicable to the facts of the case. Further, the Ld. AIR himself has failed to mention as to in what manner the judgment is applicable to the facts of the present case.
Reliance has also been placed on the judgment off Hon'ble Jharkhand High Court in the case of Shakuntala Devi vs. State of Jharkhand and Ors. A copy of the judgment is submitted and placed at paper book pages 468 to 472. I have perused the relevant portion of the dictum of the judgment and find that, this judgment too is of no help to the case 33 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur of assessee. The crux of the judgment is that, the registering authority does not have any power to conduct investigation / inquiry into the title of the vendor before registering it and, the registering authority has only to see whether the document is duly stamped to the valuation given in the documents. However, the Hon'ble Court has nowhere commented upon the presumption regarding admissibility in evidence of a registered document and the presumption annexed thereto u/s 80 of the Indian Evidence Act, 1872. As held by the Hon'ble Court, the registering authority has no power to conduct inquiry into the title of the vendor. However, it must be mentioned that title of the vendor is not an issue in the present case. Nevertheless, if this judgment has been relied upon by the Ld. A/R in support of the contention that the registering authority has not conducted an enquiry in the matter and that, the contents of the sale deeds were not reliable, then it may, be mentioned that, the judgment does not support such a contention in any manner.
7.5 Next contention of assessee is that, the assessee has no source of income so as to make an investment as huge as Rs. 85,65,220/-. It is further contended that, section 69 places a very heavy burden on the ld. AO when any unexplained investment is alleged. Emphasis has been laid by Ld. A/R on the word "may" which is contended to mean that even if the ld. AO is not satisfied about the explanations offered by the assessee, he need not necessarily in all the cases mandatorily treat that alleged investment as income. Having considered the contentions raised by Ld. A/R, I find that the same is not acceptable. There is no doubt, the AO is expected to carry out necessary inquiries before satisfying himself about unexplained investments, however, that burden of AO is secondary and comes into picture only when the assessee has discharged his initial burden which is primary. As has 34 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur already been observed above, the assessee has failed to discharge her initial onus of rebutting the contents of the sale deeds, therefore, this contention of assessee fails on this ground. And that being so, the judicial precedent relied upon i.e. in the case of PK Noorjahan 103 TAXMAN 382 (SC), does not apply to the facts of the present case.
7.6 In the next contention of assessee, resort has been taken to the factor of 'human probability' by arguing that, taking the same into consideration, no prudent man would assume that there can be sale of property within family when the property is enjoyed by all family members. Here, I would mention that, no law or even the factor of human probability places any embargo on any commercial transaction sought to be executed between family members. Moreover, viewing the matter through the concept of human probability, it can be said without a speck of doubt that no prudent man would transfer the property to family members through a sale deed (which is essentially a document recording sale transaction) and not, a gift deed. According to the human probability, a prudent person purporting to transfer his / her property to his family members shall, execute the same through a gift deed only for the reiiisons that, it is a transfer without consideration and secondly, the stamp duty payable on the gift deed is very less as compared to that payable on a sale deed. Here, the earlier contention of assessee that assessee does-not-haw any financial resources stands corittadictedin as much as, she has paid stamp duty as high as Rs„ 4,29,220/- on the sale deeds whereas, she could have executed a gift deed which entails minimal liability of stamp duty as compared to the sale deed. Therefore, the contentions of assessee are self contradictory and therefore, unacceptable and hereby, rejected.35
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur Reliance has been placed on the judgment of Hon'ble Supreme Court in case of Sumati Dayal[1995] 80 TAXMAN 89 (SC) and; CIT v. Durga Prasad More [1971] 82 ITR 540, at pp. 545, 547 (SC) in support of the contention of 'human probability'. However, as already observed above, the factor of 'human probability' runs counter to the case of assessee, therefore, the above judgments would not help the case of assessee.
7.7 It has further been contended that, the AO has not placed on record any evidence to suggest availability of funds with the buyer. It may be mentioned here, that the burden to establish the source and availability or non-availability for that matter of funds has to be established by the assessee and not the AO. This is the primary and initial burden which necessarily lies upon the assessee only which she has failed to discharge."
In the result, the ground no. 3 of the assessee's appeal is dismissed.
34. In the result, the appeal of the assessee is dismissed.
ITA No. 756/JP/201535. Now, we take up appeal of the assessee in ITA No. 756/JP/2015 pertaining to A.Y. 2008-09 wherein the grounds of appeal are as under:
1. "In the facts and circumstances of the case and in law, the ld.
CIT(A) has erred in confirming the action of ld. AO of reopening the assessment u/s 147 of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings, being illegal and without any basis.
36ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of ld. AO in making addition of Rs. 5,30,000/- towards alleged unexplained deposits in the bank account of the assessee. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 5,30,000/-.
3. (a) In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of ld. AO in calculating the Short Term Capital Loss at Rs. 64,986/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said working of short Term Capital Loss as there was no transaction of sale by the assessee as the land did not belong to her and otherwise also the land was the agricultural land, which is not a capital asset as per section 2(14) of the Income Tax Act, 1961.
(b) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of ld. AO of applying the provisions of section 50C of the Income Tax Act, 1961 and adopting the sale consideration at Rs. 24,48,000/- against the declared sale consideration of Rs. 11,50,000/-. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the sale consideration at Rs. 11,50,000/- as evidenced in the alleged sale deed."
36. In ground No. 1, the assessee has challenged the reopening of the assessment u/s 147 of the Act. The ld. AR has contended that from the perusal of the reasons recorded on 15.03.2013, it is evident that the AO has considered the land to be situated within 8 kms. However, he has not based his findings on any evidence. It was submitted that the AO only on the basis of surmises considered the land to be situated within 8 kms and 37 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur even the report of the Tehsildar was received on 19.02.2014 and it was accordingly submitted that AO has not recorded the reasons in the manner provided in law.
37. We have gone through the reasons so recorded by the AO before issuance of the notice u/s 148 of the Act and we find that the AO based on the copy of the sale deed wherein the assessee has sold her half share of the land 0.15 hectares situated at Khasra No. 85 at Village Goner Tehsildar Sanganer has been sold to Prem Devi wife of Hari Mohan Gupta on 27.06.2007. The AO has further stated in the reasons that the land sold was situated at village Goner which is situated within 8 kms of the municipal limits. Further, the Registrar has valued the transaction at Rs. 24,48,000/- and accordingly an amount of Rs. 6,49,000/- has escaped assessment in terms of provisions of section 50C of the Act. We therefore, find that there is a live link between the formation of the prima facie belief that income has escaped assessment and the material in possession of the Assessing Officer in the form of a registered sale deed which has not been disputed by the Assessee. Whether the land is situated within 8 kms of municipal limit or not is a matter of further investigation which can be carried out once the reassessment proceedings have been initiated. In light of the same, the contention so raised by the ld. AR cannot be accepted.
38. It has been further contended by the ld. AR that while carrying out file inspection, there is no copy of the approval which have been obtained u/s 151 before reopening the assessment and it was submitted that if the bench deem fit, it may call the records to ascertain the facts. During the course of hearing, the assessment records were called for and it was noted that the approval u/s 151 is available on the assessment records. Hence the contention so advanced by the assessee has been duly addressed. However, the same does not support the case of the assessee.
38ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
39. Another contention which has been raised by the ld. AR is that the assessee does not fall within definition of the term "assessee" as defined in section 2(7) of the Act. We have already examined the said contention in the context of assessee's appeal in ITA No. 754/JP/2015 and the finding contained therein shall equally apply herein and we do not therefore accept the contention so raised by the assessee. In light of the above, we do not find any illegality in assumption of jurisdiction by the AO u/s 147 of the Act. In the result, ground taken by the assessee is hereby dismissed.
40. In ground No. 2, the assessee has challenged the confirmation of addition of Rs. 5,30,000/- on account of unexplained deposits in the assessee's bank account considering that the assessee has failed to furnish the necessary explanation in respect of source of such deposits. In this regard, ld. AR has reiterated the submissions as made before the ld. CIT(A) and we find that the said contentions have been duly considered by the ld. CIT(A). We have gone through the findings of the ld. CIT(A) and we do not see any infirmity therein and we hereby confirm the said findings which are contained in Para 2.3 of ld CIT(A)'s order which is reproduced as under:-
"2.3 I have carefully considered that the findings of the AO as also submission of the appellant and find that the contentions of the assessee are not acceptable. AO obtained information u/s 133(6) that, there were cash deposits in the bank account of assess on various dates to the tune of Rs. 5,30,000/-. On being confronted, the assessee explained before AO that, these amounts were deposited by her father-in-law in her accounts and belonged to him. It was further contended that, though the account was in the name of assessee but pertained to Sh. Jagdish, assessee's father-in-law. Similar submission has been made before me as well. Clearly, the submission of assessee does not explain the cash deposits in 39 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur her bank account. Further, the account is in the name of assessee only, therefore, the cash deposits in the said account shall be deemed to be belonging to assessee only and there is no reason to believe assessee's version that the deposits did not belong to her.
The appellant has further tried to explain these bank deposits by submitting a common cash flow summary prepared from the entries appearing in her own bank account and also by incorporating the entries appearing in the bank account of assessee with Shri Jagdish and Smt. Narangi Devi, the other group persons. However all these persons have an independent existence and are assessable separately and have carried on separate land transactions etc. because of which the appellant cannot be allowed to take benefit of the availability of the cash in hands of some other person. Therefore, the contention of the appellant that the immediate source of the cash deposits is out of common cash flow chart can not be accepted. Therefore the amount of deposit in cash in the bank account of the assessee remained unexplained and the addition of Rs. 5,30,000/- is hereby upheld. Thus, this ground of appeal is dismissed."
41. In ground No. 3, the assessee has challenged the treatment of land sold as capital asset and calculating short term capital loss of Rs. 64,986/- and further the assessee has challenged the adoption of sale consideration of Rs. 24,48,000/- by invoking the provisions of section 50C as against actual sale consideration of Rs. 11,50,000/- received by the assessee. It was contended by the ld. AR that the certificate of Tehsildar which has formed the basis of AO's findings in his remand report and which has been considered by the ld. CIT(A) in holding the land in question is a capital asset, the said enquiry was conducted by the Tehsildar at back of the assessee and no opportunity of cross-examination was given to the assessee. It has been further contended that the ld. CIT(A) has erred in 40 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur holding that the assessee has not requested the AO for making reference to the Valuation Officer. It was submitted that the assessee before the ld. CIT(A) claimed that the AO should have refer the case to Valuation Officer and therefore, a specific request was made and it was submitted that the ld. AO while discharging his duties is bound to refer the matter the Valuation Officer when the assessee has disputed the value adopted by the stamp authorities.
42. The relevant findings of the ld. CIT(A) are contained at page 66 to 67 of her order which are reproduced as under:-
"From the perusal of remand report dt. 7.8.2015 and report of the Tehsildar, which are forming part of this order, it is clear that this land is a capital asset, being situated within 8 kms from the end of the municipal limits of Jaipur Nagar Nigam. Further the appellant has not brought to any evidence to prove that the agricultural land is situated beyond 8 kms even as on the date of CBDT notification mentioned by him. Though the appellant filed the certificate of Gram Panchayat however, the Tehsildar report as given above is final as he is the final land revenue authority to assess the nature of the land. In view of the above discussion, the findings of the AO appears to be very reasoned one and in the absence of anything contrary to such findings/facts the action of the AO in taxing the long term capital gains from the sale of such land by holding the land as capital asset is confirmed.
With regard to the adoption of the value taken by sub registrar as sale value by application of sec. 50C, the appellant contended that the AO should have referred the matter for valuation however, from the perusal of the material available on record it is found that during the course of assessment proceedings the assessee neither objected to the value determined by sub-registrar nor had requested the AO for making 41 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur reference to the valuation officer. Under these circumstances AO has correctly applied provisions of section 50C(2) as it is mandatory under the circumstances."
43. We have gone through the findings of the ld CIT(A) and don't see any infirmity in the said findings. We also find that similar contentions have been raised by the assessee in its appeal in ITA No. 754/JP/15 where after examining the said contentions in detail, we have not accepted the same. Our findings contained therein shall apply with equal force in the impugned assessment year. In the result, ground No. 3 of the assessee is hereby dismissed.
44. In the result, the appeal of the assessee is dismissed.
ITA No. 757/JP/201545. In this appeal (ITA No. 757/JP/2015) for A.Y 2006-07, the assessee, Smt Narangi Devi has taken the following ground of appeal:
"1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in reopening the assessment u/s 147 of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings being, illegal and without any basis.
2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs. 85,65,220/- for the alleged reason of source of these payments being not verifiable and remained unexplained although having decided that the entire transaction of alleged purchase of land do not pertain to the AY 2006-07 and pertain to the AY 2007-
08."42
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
46. During the course of hearing, the ld AR submitted that the assessee doesn't wish to press the subject appeal and the grounds taken therein. In the result, the appeal is dismissed as not pressed.
ITA No. 758/JP/201547. In this appeal (ITA No. 758/JP/2015) for A.Y 2007-08, the assessee, Smt Narangi Devi, has taken the following grounds of appeal:-
"1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred confirming the action of ld. AO in reopening the assessment u/s 147 of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings being, illegal and without any basis.
2. In the facts and circumstances of the case and in law, the ld.CIT(A) has erred in confirming the action of ld. AO in completing the assessment ex-parte under section 144 of the I.T. Act, 1961. The action of the ld. CIT(A) is illegal, unjustified and arbitrary. Relief may please be granted by quashing the entire assessment order, being illegal and violative of the principles of natural justice.
3. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the action of ld. AO in making addition of Rs. 85,65,220/- for the alleged reason of source of these payments for purchase of land being not verifiable and remained unexplained. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 85,65,220/- as there was no exchange of money."43
ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
48. In ground no. 1, the assessee has challenged the action of the ld. CIT(A) in confirming the action of ld. AO in reopening the assessment u/s 147 of Income Tax Act, 1961. Undisputedly, the facts and circumstances of case are exactly identical as in case of Jamna Devi in ITA No. 755/JP/15 for A.Y 2007-08 and similar contentions have been advanced by the ld AR and the ld DR. Our findings and directions contained in ITA No. 755/JP/15 shall apply mutatis mutandis to this ground of appeal. Hence, the assumption of jurisdiction under 147 by the AO is upheld and ground of appeal is dismissed.
49. Ground no. 2 regarding completion of the assessment proceedings u/s 144 was not challenged during the course of hearing. Hence, the same is dismissed as not pressed.
50. In ground no. 3, the assessee has challenged the addition towards unexplained investment in purchase of land amounting to Rs 85,65,220. Undisputedly, the facts and circumstances of case are exactly identical as in case of Jamna Devi in ITA No. 755/JP/15 for A.Y 2007-08 and similar contentions have been advanced by the ld AR and the ld DR. Our findings and directions contained in ITA No. 755/JP/15 shall apply mutatis mutandis to this ground of appeal. Hence, the addition made by the AO is upheld and ground of appeal is dismissed.
51. In the result, the appeal of the assessee is dismissed.
ITA No. 759/JP/201552. In this appeal (ITA No. 759/JP/2015) for A.Y 2008-09, the assessee, Smt Narangi Devi has taken the following ground of appeal:-
"1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in reopening the assessment u/s 147 of Income Tax Act, 1961. The action of the 44 ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceeding, being illegal and without any basis.
2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs. 5,00,000/- out of total addition of Rs. 9,80,000 made by ld. AO towards alleged unexplained deposits in the bank account of the assessee. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 5,00,000/-.
3. (a) In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in calculating the Short Term Capital Loss at Rs. 64,986/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said working of Short Term Capital Loss as as there was no transaction of sale by the assessee as the land did not belong to her and otherwise also the land was the agricultural land, which is not a capital asset as per section 2(14) of the Income Tax Act, 1961.
(b) In the facts and circumstances of the case and in law, the ld.
CIT(A) has erred in confirming the action of the ld. AO in applying the provisions of section 50C of the Income Tax Act, 1961 and adopting the sale consideration at Rs. 24,48,000/- against the declared sale consideration of Rs. 11,50,000/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the sale consideration at Rs. 11,50,000/- as evidenced by the alleged sale deed."
45ITA No. 754 - 759/JP/2015 Smt. Jamna Devi & Smt. Narangi Devi, Jaipur vs. ITO, Ward-7(2), Jaipur
53. Undisputedly, the facts and circumstances of case are exactly identical as in case of Jamna Devi in ITA No. 756/JP/15 for A.Y 2008-09 and similar contentions have been advanced by the ld AR and the ld DR. Our findings and directions contained in ITA No. 756/JP/15 shall apply mutatis mutandis to this appeal. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 07/06/2018.
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(Vijay Pal Rao) (Vikram Singh Yadav)
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Jaipur
Dated:- 07/06/2018
*Ganesh Kr
vkns'k dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Smt. Jamna Devi, Jaipur & Smt. Narangi Devi, Jaipur
2. izR;FkhZ@The Respondent- ITO Ward-7(2), Jaipur
3. vk;dj vk;qDr@CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@Guard File (ITA No. 754-759/JP/2015) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.