DIGVIJAY SINGH,DEHRADIM vs. DCIT,CENTRAL CIRCLE, DEHRADUN
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Income Tax Appellate Tribunal, DEHRADUN CIRCUIT BENCH: DEHRADUN
These two appeals by the assessee are against separate orders
dated 28.01.2019 and 22.10.2018 passed by leaned Commissioner
ITA Nos.2336 & 117/Del/2019 AYs: 2015-16 & 2016-17
of Income Tax (Appeals)-IV [hereinafter referred to as ‘CIT(A)’],
Kanpur, pertaining to assessment years 2015-16 and 2016-17
respectively.
ITA No.2336/Del/2019 AY: 2015-16
The only effective issue to be decided in this appeal is as to
whether the learned CIT(A) was justified in confirming the addition
made by learned Assessing Officer in the sum of Rs.1 crore as
unexplained investments made by the payment in cash to Sh. Jagat
Bhushan Batra in the facts and circumstances of the instant case.
We have heard the rival submissions and perused the
materials available on record. A search and seizure operation was
carried out under section 132 of the Income-tax Act, 1961
(hereinafter referred to as ‘the Act’) in the Doon Valley
Distillers/Breweries group of cases on 18.03.2016. One Shri
Rameshwar Havelia Kuanwala, Dehradun, was belonging to Doon
Valley group, was also searched, wherein certain papers relating to
assessee were found. After recording satisfaction, a notice under
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section 153C of the Act was issued to the assessee on 16.11.2017.
The assessee in response to the said notice filed his return
electronically on 15.12.2017 showing total income of Rs.3,99,590/-
and agricultural income of Rs.3,91,526/-. Since the assessee had
originally filed its return of income on 31.03.2016 declaring total
income of Rs.4,09,592/- (which was higher than the income
disclosed in the 153C return), the learned AO considered the said
income as the income of the assessee and proceeded to make
further addition thereon.
The documents related to the assessee which were found in
the course of search action of Sh. Rameshwar Havelia are as under:
a. Agreement to sale dated 04.12.2014 entered by the assessee
with Sh. Jagat Bhushan Batra for purchase of land consisting
of 6520.33 Sq. meter, which is equivalent to 867 Bighas at the
rate of Rs.50,000/- per bigha, totaling to Rs. 4,33,50,000/-
(hereinafter referred as "A")
b. A partnership deed dated 05.12.2014 executed between the
assessee and Sh. Rameshwar Havelia, having 50% share each.
(hereinafter referred to as 'B')
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ITA Nos.2336 & 117/Del/2019 AYs: 2015-16 & 2016-17
With regard to the document referred in 'A' above, the assessee
agreed to pay Rs. 2 crores to Sh. Jagat Bhushan Batra in the
following manner:
a. Cheque no. 049097 -Rs.50,00,000/-
b. Cheque no.049098 - Rs.50,00,000-
c. Cash - Rs.1,00,00,000-
The aforesaid two cheques were issued from Miyanwal, Kisan
Sewa Sahkari Samiti by the asessee.
With regard to payment of Rs. 1 crore in cash, the assessee
did not have sufficient cash with him and accordingly on
05.12.2014, he entered into a partnership deed with Sh.
Rameshwar Havelia, pursuant to which, Sh. Rameshwar Havelia
made cash payment of Rs.1 crore to Sh. Jagat Bhushan Batra on
behalf of the assessee. Later, the assessee came to know that Sh.
Jagat Bhushan Batra has already sold the land to a third party
and accordingly canceled the agreement of sale dated 04.12.2014.
Pursuant to this cancellation, the assessee confronted Sh. Jagat
Bhushan Batra and sought for refund of the cheque money paid in
the sum of Rs.1 crores (Rs. 50 lakhs + Rs. 50 lakhs). By that time,
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since the cheques were not presented in the Bank by Sh. Jagat
Bhushan Batra, it was returned to the assessee. These facts were
presented before the learned AO by the assessee in the search
proceedings under section 153C of the Act. The learned AO,
however, did not agree to the contentions of the assessee and
proceeded to make two separate additions as unexplained
investments made by the assessee in land as under:
a. Rs. 1 crore representing two cheques payments of Rs. 50 lakhs
each to Sh. Jagat Bhushan Batra.
b. Rs. 1 crore representing cash payment to Sh. Jagat Bhushan
Batra.
The learned CIT(A) deleted the cheque portion of Rs. 1 crore as
it was not presented in the bank for encashment by the seller of the
property, i.e., Jagat Bhushan Batra.
With regard to cash payment of Rs. 1 crore to Sh. Jagat
Bhushan Batra, the learned CIT(A) confirmed the addition in the
hands of the assessee by holding that the assessee could not
specifically explain the source of making payment to Sh. Jagat
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Bhushan Batra in cash. The order of learned CIT(A) was passed on
28.01.2019.
We find that the learned AR had placed on record a copy of the
assessment order framed in the hands of Sh. Rameshwar Havelia
under section 153A(1)(b) read with section 143(3) of the Act, dated
28.12.2018 for assessment year 2015-16 by DCIT, Central, Circle,
Dehradun (who is the same officer assessing the assessee also),
wherein, in para 7 of the said order, the Assessing Officer of Sh.
Rameshwar Havelia had categorically stated that it is Sh.
Rameshwar Havelia, who had made cash payment of Rs. 1 crore to
Sh. Jagat Bhushan Batra. Hence, the receipt of money in cash by
the assessee from Sh. Rameshwar Havelia is proved beyond doubt
by the orders of the Income Tax Department itself. Hence, the
source for making payment to Sh. Jagat Bhushan Batra of Rs. 1
crore in cash stands clearly proved and explained. Hence, in our
considered opinion, there cannot be any unexplained investment
made by the assessee in the sum of Rs. 1 crore in the facts and
circumstances of the instant case.
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ITA Nos.2336 & 117/Del/2019 AYs: 2015-16 & 2016-17
Since the search assessment order of Sh. Rameshwar Havelia
for assessment year 2015-16 could not be placed on record by the
assessee before the learned CIT(A) as it was obtained by him after
passing of order of learned CIT(A), this fact could not be addressed
by the assessee before the learned CIT(A). In any case, these are
only orders of the Income Tax Department, which clearly shows a
divergent stand taken by the very same Assessing Officer for the
very same assessment year for two different assessees on the very
same transaction. Hence, we direct the learned AO to delete the
addition made in the sum of Rs. 1 crore paid in cash to Sh. Jagat
Bhushan Batra.
Since the relief is granted to the assessee on merits, the other
legal grounds raised by the assessee need not be gone into and they
are left open. Accordingly, the grounds raised by the assessee are
allowed.
In the result, the appeal of the assessee is allowed.
ITA No. 117/DDN/2019 AY: 2016-17 11. The only issue to be decided is as to whether the CIT(A) was
justified in confirming the denial of deduction on account of cost of Page 7 of 14
ITA Nos.2336 & 117/Del/2019 AYs: 2015-16 & 2016-17
acquisition and expenses incurred in connection with transfer of
property while computing short term capital gains in the facts and
circumstances of the instant case.
We have heard the rival submissions and perused the
materials on record. The assessee filed his return of income for
assessment year 2016-17 on 31.03.2017 declaring total income of
Rs. 23,38,840/-. The assessee offered capital gains in respect of
transfer of immovable property in the return of income after
reducing the cost of acquisition, including stamp duty and
registration charges and various expenses incurred in connection
with transfer, from sale consideration. The AO did not dispute the
sale consideration reported by the assessee.
We find that the learned AO denied the deduction on account
of registration charges paid in the sum of Rs.34,730/- to Stamp
Authority at the time of purchase of property. This, in our
considered opinion, is not correct in view of the fact that the
assessee had produced the purchase deed of immovable property
before the learned AO and this sum of Rs.34,730/- is duly reflected
thereon as paid by him for the purpose of registering the property in
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his name. It is not the case of the revenue that the source for
making the said payment is not explained by the assessee. Hence,
this sum of Rs. 34,730/- becomes part of cost of acquisition of the
assessee eligible for deduction while computing capital gains.
The assessee had incurred mutation fees of Rs.1,200/-, which
in our considered opinion, is the part of cost of acquisition incurred
in connection with transfer of property. Accordingly, the same is
eligible for deduction while computing capital gains.
The assessee has paid legal counsel fees for drafting of
registered deeds amounting to Rs.5,100/-, which is a direct
expenditure incurred in connection with transfer of property.
Accordingly, the same is eligible for deduction while computing the
capital gains.
The assessee has incurred a sum of Rs.599/- for performing
Puja of the land. This has got nothing to do with the property and
cannot be construed as an expenses incurred in connection with
the transfer of the property. Hence, it is not eligible for deduction
while computing capital gains.
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The assessee has paid a sum of Rs.1,001/- to Sh. Pradip
Joshi (Pandit) for performing puja on the said land. This has got
nothing to do with the property and cannot be construed as
expenses incurred in connection with transfer of the property.
Accordingly, it is not eligible for deduction while computing capital
gains.
The assessee has paid a sum of Rs.1,77,590/- to a civil
contractor, Sh. Sandip Kumar from whom the work of demarcation
and construction of partition for three plots sold was carried out. In
this regard, we find that the assessee had purchased land
consisting of 508.55 sq. meters and had demarcated the land into
three plots and finally sold these plots to three different persons as
under:
Date of Name of Buyer Area Amount Sale 31.12.2015 Smt. Mamta Pathak 111.52 5,78,000/- 15.12.2015 Smt. Vinita Gosain 276.57 14,32,000/- 15.01.2016 Smt. Kalawati 120.46 10,60,500/- Pandey Total 508.55 30,70,500/-
For the purpose of aforesaid partition of land into different
plots, the assessee has engaged the services of civil contractor, Sh.
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Sandip Kumar. We find that the assessee has also placed evidence
on record in the form of letter of confirmation dated 21.05.2018
from Sh. Sandeep Kumar, civil contractor confirming the fact of
rendering the demarcation and partition services to the assessee at
the final cost of Rs.1,77,590/- and also confirming the fact that the
entire payments were received by him on different dates from time
to time in cash. He further confirmed that he was also paid
commission of Rs.40,200/- for sale of two plots in three
installments by the assessee. The said confirmation also include the
copy of Income Tax Returns together with computation of income of
Sh. Sandeep Kumar evidencing the fact of disclosing the amounts
received from assessee as income of Sh. Sandip Kumar. These
documents are enclosed in pages 22 to 24 of the paper-book.
Accordingly, we hold that a sum of Rs.1,77,590/- paid by the
assessee to Sh. Sandeep Kumar towards demarcation of land would
be construed as cost of improvement eligible for deduction while
computing capital gains. Further, the commission payment in the
sum of Rs.40,200/- to Sh. Sandeep Kumar for sale of two plots is to
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be construed as expenses incurred in connection with transfer and
eligible for deduction while computing capital gains.
With regard to payment of Rs.21,200/- as commission to Smt.
Rajni Aswal for sale of third plot, we find that the assessee has
placed on record the confirmation from Rajni Aswal together with
her income tax return and computation of total income evidencing
the fact of offering the commission income in her hands. These
documents are enclosed in pages 25 to 27 of the paper-book. We
hold that this commission payment of Rs.21,200/- is to be
construed as expenses incurred in connection with transfer of land
and accordingly eligible for deduction while computing capital
gains.
In view of the aforesaid discussions, out of the total
disallowance made by the learned AO in the sum of Rs.2,81,620/-
while computing capital gains, Rs.1,600/- (Rs.599 + Rs.1,001)
should be disallowed and remaining amounts should be allowed as
deduction while computing capital gains.
Since, substantial relief has been granted to the assessee on
merits, various other issues raised by the assessee on legal grounds
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ITA Nos.2336 & 117/Del/2019 AYs: 2015-16 & 2016-17
need not be gone into and they are left open. Accordingly, the
grounds raised by the assessee are partly allowed.
In the result, appeal of the assessee for assessment year
2016-17 is partly allowed.
To sum up, appeal for assessment year 2015-16 is allowed
and appeal for assessment year 2016-17 is partly allowed.
Order pronounced in Open Court on 28th June, 2023
Sd/- Sd/- (SAKTIJIT DEY) (M. BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 28/06/2023 RK/Sr.PS Copy forwarded to: • Appellant • Respondent • CIT • CIT(Appeals) • DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (Dehradun Circuit Bench, Dehradun)
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