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by the AO. He accordingly, held that the order of the AO was erroneous and prejudicial to the interest of the Revenue. He, therefore, set aside the assessment order in question with the direction to the AO to pass a fresh assessment order.
The relevant para of the order of the Ld. Pr.CIT, for the sake of reference, is reproduced hereunder:
“The reply filed by the assesse has been examined but not acceptable because as per agreement to sell dated 14.02.2011 by which the assessee has claimed that during the year under consideration, he had received Rs.19 Lakh from Sh. Sunil Khasa on 14.02.2011 for sale of his 20% share in plot No.
Noida the final date of "conclusion of deal was fixed for 31.03.2011, but as per reply dated 17.03.2021 of the assessee, he has submitted a copy of letter No. 874 dated 01.04.02015 of Naveen Okhla Audhyogik Vikas Pradhikaran. Noida vide which the above said house was transferred to the name of the assessee on 01.04.2015 only. Thus it is clear that the assessee was not the owner of the above said property at the time of agreement to sell. The above facts do not prove the genuineness of cash deposits Rs.19,02,000/-. Moreover, in the agreement to sell, the property was mentioned as a plot but it was actually a duplex residential house. This fact has also not been examined.
A.Y. 2011-12 Page 6 of 10
I have carefully examined the entire facts of the case from the assessment record and the reply submitted by the assessee. Perusal of assessment record shows that the replies filed during the assessment proceedings were just placed on record and the A.O. has failed to make any independent enquiries to verify that cash deposits were received from Sh. Sunil Khasa by executing agreement to sell dated 14.02.2011 of his 20% share in plot No. 213, Noida. Moreover as per reply dated 17.03.2021, the assessee has submitted a copy of letter No. 874 dated 01.04.02015 of Naveen Qkhla Audhyogik Vikas Pradhikaran, Noida vide which the above said house was transferred to the name of the assessee on 01.04.2015 only. Thus it is clear that the assessee was not the owner of the above said property at the time of agreement to sell. The above facts clearly show that the assessee could not prove the genuineness of cash deposits Rs.19,02,000/-. Moreover, in the agreement to sell, the property was mentioned as a plot but it was actually a duplex residential house. There was a clear lack of inquiry on the part of the AO. In view of the facts discussed above it is clear that the assessment order is erroneous and prejudicial to the interest of revenue. The A.O. should conduct detailed enquiries on the above issues. Inquiries should be conducted to examine the ownership of property. The agreement to sale should also be examined. Documentary evidences regarding purchase and sale of property should also be called for and examined. The fact that it was a plot or house which was sold should be examined. The source of cash deposit should be examined supported by documentary evidences and in case it is not explained necessary action should be taken as per law. ……” 6. Being aggrieved by the above order of the Ld. Pr.CIT the assessee has come in appeal before us. We have heard the rival contentions and have gone through the records. A perusal of the above reproduced relevant para of the order of the Ld. Pr.CIT reveals that the Ld. Pr.CIT had proceeded on the wrong footing that the assessee had deposited the amount of Rs.19 lacs in the account and further that the A.Y. 2011-12 Page 7 of 10 assessee had entered into an agreement to sell for 20% share in the house with Shri Sunil Khasa, whereas, the case of the assessee from the very beginning has been that the amount of Rs.19 lacs was not deposited by her in the joint bank account, rather the amount in question was deposited by the other/second account holder i.e. her husband, namely Shri Surender Singh Taxak.
In our view, once the assessee had come with a clear stand that the account in question was a joint account and the amount was deposited by the other account holder and that other account holder, namely Shri Surender Singh Taxak had admitted before the AO in clear term that in fact, he had deposited the amount in question and not the assessee and further the source in his hand was also mentioned, then under the circumstances, the addition, if any, could have been made in the case of Shri Surender Singh Taxak, if he would have failed to prove the genuineness of the transaction. In our view, when the assessee had explained that the account was a joint account and the amount was deposited by the second account holder, then in our view, the AO should have dropped the proceeding against the assessee and issued notice to the second account holder, i.e. the husband of the assessee. A.Y. 2011-12 Page 8 of 10 However, the AO continued with the proceedings, wherein the assessee duly explained the source of cash deposited even by the second account holder. The AO to further verify the genuineness of the transaction, recorded the statement of Shri Sunil Khasa, the proposed purchaser, who categorically admitted that he had paid the amount of Rs.19 lacs to the second account holder. However, the Ld. Pr.CIT proceeded with the revision order on the premises that the amount was deposited by the assessee and that she had allegedly executed the agreement to sell and further that she was not the owner of the house on the date of the execution of the agreement to sell.
Whatever may be the shortcomings/discrepancies relating to the agreement to sell 20% portion of the house, that could have been taken into consideration in the assessment proceedings in the case of the second account holder i.e. the husband of the assessee. Once the assessee had explained that she has not deposited any amount in the joint account and further the second account holder had in clear term admitted that the amount was deposited by him, the assessee, in our view, was absolved of her liability to further explain about the transaction. However, the Ld. Pr.CIT proceeded on wrong footing that the aforesaid A.Y. 2011-12 Page 9 of 10 explanation relating to the agreement to sell 20% share in the house pertain to the assessee. Even it was explained that the father of the husband of the assessee was paralytic and was not in good health and, therefore, the agreement to sell was executed by the husband of the assessee i.e. the second account holder. The compulsion for execution of agreement to sell was also explained as installment was due of Rs.17.25 lacs towards the Noida Authority/Developer and that the husband of the assessee was in dire need of money for which he obtained Rs.19 lacs from his friend Shri Sunil Khasa and in lieu of that, he executed agreement to sell of 20% share of the house. The father-in-law of the assessee expired after some time and thereafter the house in fact, was transferred in the name of the husband of the assessee on 01.04.2015.
The above facts show that the AO had duly made appropriate inquiries and even recorded the statement of Shri Sunil Khasa, who admitted that he had given Rs.19 lacs to the husband of the assessee. In view of the above discussion, it is held that the Ld. Pr.CIT wrongly exercised his revision jurisdiction u/s 263 of the Act. The impugned order passed by the Ld. Pr.CIT u/s 263 of the Act being bad A.Y. 2011-12 Page 10 of 10 in law, is not sustainable and the same is accordingly, quashed.
In the result, the appeal of the assessee stands allowed.
Order pronounced on 07.12.2021.