NABIN KUMAR GUPTA,BANDAMUNDA vs. ASSISSTANT COMMISSIONER OF INCOME TAX, CIRCLE ROURKELA, ROURKELA

Before us, the assessee is represented by Shri Abhijeet Agarwal, Advocate and the department is represented by Shri Sanjay Kumar, ld CIT DR.

In ground Nos. 1 & 2, the assessee has aggrieved by the addition of Rs. 1,60,00,000/- upheld by ld CIT(A) out of total addition of Rs.12,80,000/- made by the assessing officer by holding that assessee has sold certain pieces of land during the year under appeal and such transaction was not disclosed in the return of the income filed by the assessee.

Before us, ld AR submitted that the assessee is one of the partner in M/s. Aaravindam Lifespace LLP and the firm had purchased certain piece of land in terms of the sale deed executed on 10.03.2017, wherein the assessee has represented himself for and on behalf of the firm M/s. Aaravindam Lifespace LLP as a partner. In the said sale deed, the PAN number of the assessee was stated being the signatory on behalf of the purchasing firm. The registration authorities have wrongly submitted the details in SFT wherein this transaction was shown as being carried out by the assessee in his individual capacity and as against the total value of the transaction at Rs. 1,60,00,000/-, the transaction was incorrectly reported in SFT at Rs.12,80,00,000/-. It is further submitted by ld AR that 3 the lower authorities have wrongly treated this transaction of purchase of the land by the partnership firm M/s. Aaravindam Lifespace LLP as a sale transaction entered into by the assessee and confirmed the addition of 1.60 crore in the hands of the assessee as capital gain. Ld AR submitted that from the perusal of the sale deed placed in the paper book at pages 3 to 20, it could be evident that it is a transaction of purchase of land by the partnership firm M/s. Aaravindam Lifespace LLP and therefore, this transaction cannot be treated as the sale of land. Further since it is the land purchased by the partnership firm, the assessee cannot be asked to explain the sources of the investment made in acquisition of such pieces of lands. He submitted that though before the ld AO assessee could not file any details however, during the appellate proceeding before ld CIT(A), all the details were submitted along with the documentary evidences and a remand report was sought by the ld CIT(A), wherein after considering these facts, the correct nature of the transaction was stated by the AO in the remand report dated 26.12.2023. The ld CIT(A) after considering the remand report has wrongly confirmed the addition to the extent of 1.60 crores as sale consideration without appreciating that it was not a sale consideration received by the assessee but it is the purchase price paid by the partnership firm M/s. Aaravindam Lifespace LLP. Therefore, no addition is required to be made in the hands of the assessee on this transaction. He, thus, prayed for the deletion of addition so made and confirmed by the ld. CIT(A).

At the outset, from the perusal of the sale deed placed before us in the paper book, it is seen that the sale deed was executed by the assessee in the capacity of a partner of M/s. Aaravindam Lifespace LLP where the firm has purchased certain pieces of land for a total sum of Rs. 1,60,00,000/- from M/s. Utkal Steel Ltd. Therefore, it is not a transaction of sale of property by the assessee but it is a transaction of purchase of certain piece of land by the partnership firm, wherein the assessee is one of the partner. Also, the fact that in SFT report wrong figure were reported by the respective authorities is an admitted fact and the AO in the remand report has also accepted these facts. The relevant observations of the AO in the remand report dated 26.12.2023 are as under :- 1. Issue on addition in the assessment order u/s.144 dated 23.12.2019 for the A.Y.2017-18 on sale of agricultural land of Rs.12,80,00,000/-: On perusal of sale deed and Buyer details received from the O/o IGR Board of Revenue, Odisha, Cuttack, it is seen that for registration purposes, the consideration for the transfer of the Land, as mentioned in schedule Land is Rs. 1,60,00,0007- (Rupees one Crore Sixty Lakh). The details of schedule land and registration details is as under:

Since the subject transaction is admittedly of purchase of land by the partnership firm wherein the assessee is one of the partners, therefore, no addition could be made by treating this transaction as sale of land in the hands of the assessee as has been done by the lower 6 authority. Therefore, the addition made as capital gain in the hands of the assessee is directed to be deleted.

It is further observed by us that even otherwise this transaction of purchase of property was actually pertained to the partnership firm M/s. Aaravindam Lifspace LLP, therefore the assessee cannot be asked for the source of investments in his individual capacity therefore, on this score also no addition could be made in the hands of the assessee for any investment alleged as unexplained.

With regard to request of ld. CIT-DR for sending back the issue to the file of AO, we find that this will create multiplicity of proceedings as the issue in very clear from the perusal of facts, thus is decided by us.

In view of the above facts, we direct to delete the addition of Rs.1,60,00,000/- as confirmed by the ld. CIT(A) in the hands of the assessee. As a result, ground No.2 of appeal is allowed.

Ground No. 3 taken by the assessee stood withdrawn by the ld AR during the course of hearing by making following remarks in appeal memo:- This has been allowed by the AO vide order dated 9/7/24. Hence withdrawn (Abhijeet Agarwal) 03/09/2024 12. Since this ground of appeal is withdrawn, therefore, the same is hereby dismissed as withdrawn.

The ld CIT(A) has confirmed the addition as made by AO by observing that the assessee has not established the sources of the said cash deposit.

Before us, the ld AR of the assessee reiterated the submissions made before the lower authorities and stated that assessee was dealing in the FMCG goods and deposits are on account of the sales made on cash basis. He, therefore, requested for the deletion of the addition so made by the AO.

On the other hand, ld CIT-DR submitted that during the demonetization period assessee has made a total cash deposit of Rs.61,01,400/-. In response to the notice u/s.133(6) of the Act the respective banks have informed that out of this total cash of Rs.61,01,400/- deposited by the assessee during the demonetization period, Rs.4,77,800/- was deposited in Rs.100/- and Rs.50/- denomination notes and the balance amount was deposited in demonetized currency. The AO after considering the average deposits has been fair enough in allowing the necessary deduction and made addition of Rs.6,42,955/- only and he prayed for the confirmation of such addition.

We have considered the rival submissions. From the records and perusal of the orders of the lower authorities we are unable to find out as 8 to how much of the amount and on which date, the assessee has deposited SBN in bank during the period of demonetization nor any effort was made by the AO to verify these facts. Further the assessee has also failed to file the details about the closing cash balance as on 8.11.2016 which could have been deposited in the bank during the demonetization period in SBN. Therefore, we are of the considered view that this issue needs further examination where the assessee is directed to file the copy of the cash book and another relevant evidences before the AO to establish that the cash deposited during demonetization period was available with him as on 8.11.2016. In case it is found that assessee has accepted SBN after 8.11.2016 no credit for such cash received should be allowed to the assessee.

In view of our above directions, this issue is restored file of the AO for making verifications and make the addition, if any, with regard to the source of the cash deposited in SBN during demonetization period. As a result, this ground of appeal