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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG & LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No.95/CTK/2017 Assessment Year : 2013-14
Smt. Sanjukta Prusty,N-4/F-40, IRC Vs. ITO, Ward 3(5), Bhubaneswar. Village, Nayapali, Bhubaneswar. PAN/GIR NoAAPPP 5390 M (Appellant) .. ( Respondent)
Assessee by : Shri Niranjan Panda, AR Revenue by : Shri Subhendu Dutta, DR
Date of Hearing : 26/11/2019 Date of Pronouncement : 16/01/2020
O R D E R Per C.M.Garg,JM This is an appeal filed by the assessee against the order of the CIT(A)-2,
Bhubaneswar dated 28.12.2016 for the assessment year 2013-14.
The assessee has raised the following grounds of appeal:
“1. For that the order of the ld CIT(A) dated 28th Dec'2016 passed in Appeal No. ITA-0386/15-16 U/s.250 confirming the assessment order dated 29.12.2015 passed by the Income Tax Officer, Ward - 3(5) Bhubaneswar U/s. 143(3) is not just and legal on the facts and in the circumstances of the case.
For that the order of learned CIT( Appeal) - 2, Bhubaneswar dated 28th Dec'2016 confirming the addition of Rs. 62,05,000/- ( being the difference of sales receipt of Rs. 1,00,00,000/- of land jointly owned by the appellant & her spouse and amount reflected in the sale deed Rs. 37,95,000/-) to the total income of the appellant basing on the statement of Sri. Sarbeswar Sahu (M.D) of the Bhulaxmi Realcon Private Limited (Purchaser of land) as not to have been paid the said amount to the appellant is against the facts available on record. The appellant was not given the opportunity to cross examine Mr. Sahu which leads to violation of principle of natural justice.
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For that learned CIT (A) is grossly erred in concluding that Rs.62,05,000/-is the unexplained investment of the appellant as per sec-69 without substantiating the nature and source of such income. Thus learned CIT (A) /A.O had not properly discharged there responsibility casted U/S-69 before disputing the claim of the appellant for invoking the said provision & concluding the income as unexplained investment. It is pertinent to mention here that the appellant is a senior lady officer of State Bank of India having no other source of income except salary & interest.
For that without prejudiced to the grounds taken above ld CIT(A) is grossly erred in confirming the addition of Rs.62,50,000/- (being the differential of sales proceeds of land of Rs.1,00,00,000/- received and amount reflected in the sale deed Rs.37,95m,000/- in the hands of the appellant under the pretext that the amount is deposited in Account No.10872443854 in SBI Main Branch, Bhubaneswar which is in the name of appellant. In fact the land sold is jointly held in the name of the appellant & her spouse.”
Facts in brief of the case are that the assessee is an individual, derives
income from salary. She filed the return of income for the year under
consideration declaring income of Rs.7,80,356/-. The assessee also filed revised
return of income declaring total income at Rs.9,51,020/- and paid tax of
Rs.1,23,810/-. The case was selected for scrutiny and during the course of
assessment proceedings, the Assessing Officer, on examination of bank account
maintained by the assessee with State bank of India A/c No.10872443854, noticed
that a sum of Rs.62,05,000/- was deposited in shape of cash on 17.7.2012.
Similarly, a sum of Rs.37,95,000/- was credited in the account on the same day. In
view of above, the Assessing Officer required the assessee to explain the source of
cash deposit and nature of credit made on 17.2.2012. In compliance, the assessee
stated that she had sold a piece of land measuring Ac. 0.300 decimals (plot No.49
& 50 measuring Ac. 0.150 decimals each) at Mouza Patrapada stood in the name
of the assessee and her husband Dr. Uma Shankar Dalal for a consideration of
Rs.1 crore. The payment has been made at Rs.37,95,000/- through RTGC and the
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balance amount of Rs.62,05,000/- is through cash. On going through the sale
deed, the AO noted that the value determined by the Registering Authority is at
Rs.37,95,000/-. Therefore, the AO asked the assessee to explain as to why the
balance deposit of Rs.62,05,000/- should not be treated as sales consideration of
the alleged land. The assessee submitted that although the land has been
registered at the prevailing rate of the Government but the buyer has paid the
total value of land at Rs.1 crore. In support of the claim, the assessee has
furnished handmade receipt signed by both the purchaser and sellers.
In order to examine the statement of the assessee, a sum u/s.131 of the
I.T.Act was issued to the Managing Director, M/s. Bhulaxmi Realcon pvt Ltd., the
buyer of the land. In compliance, the MD appeared and on oath denied of having
payment of any cash to the assessee. He further stated that the consideration was
paid in RTGS. On being cross examination, the assessee submitted that she has
not entered into any other agreement with the buyer and that there is no evidence
with her that the cash received of Rs.62,05,000/- is on account of sale proceeds
of the land. It was in this backdrop that the Assessing Officer opined that there is
no evidence on record to establish and prove that the said amount is nothing but
the sale proceeds which have been invested in acquiring the property and,
accordingly added the same to the total income of the assessee u/s.69 of the Act.
On appeal, the ld CIT(A) referring various judicial pronouncements on this
issue, confirmed the action of the Assessing Officer.
Hence, the assessee is in appeal before the Tribunal.
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At the time of hearing, ld counsel for the assessee reiterated the written
submissions dated 22.8.2019 in support of the grounds of appeal of the assessee,
which reads as follows:
“1.That the appellant is a lady assessee under the files of ITO, Ward-3(5), Bhubaneswar bearing the PAN:AAPPP5393M regularly filing her I.T.Retum showing income from sources namely Salary (senior officer of SBI) etc. During the impugned year the appellant had e-filed returns finally revised on 12th Nov'2014 vide acknowledgement No. 40717924012114 showing her net taxable income at Rs. 9,51,020/- and had paid a tax of Rs. 1,23,810/-. The copy of the acknowledgement along with the hard copy of the return are enclosed in the paper book-1 submitted on 08.01.2018 & marked as Annexure- C (Page- 31 to 50) for your honour's kind perusal.
2.That the file was selected for scrutiny & during the assessment proceedings CA. Narayan Choudhury (AR) appeared and produced different documents and papers in support of the return claimed by the appellant. Learned AO without appreciating the documents, papers and clarification produced by the appellant passed an order U/s. 143(3) dated 29th Dec 2015 determined the income at Rs. 71,61,433/-'as against Rs. 9,51,000/- claimed by the appellant on the following grounds:
SI Particulars Amount(Rs) Grounds of disallowance No 1 Unexplained 62,05,000/- Addition of Rs. 62,05,000/-( being investment the difference of sales proceeds of U/s.69ofthel.T Act land of Rs. 1,00,00,000/- actually 1961. received and amount reflected in the sale deed Rs. 37,95,000/-) to the total income of the appellant. 2 Interest on SB A/c 5,418/- Being interest on SB Account not taken into account by appellant. Total 62,10,418/-
The copy of the assessment order is enclosed in the paper book-1 submitted on 08.01.2018 & marked as Annexure- B (Page- 14 to 30) for your honour's kind perusal.
That being aggrieved by the order of learned A.0 passed U/s-143(3) dated 29th Dec 2015 the appellant preferred an appeal before CIT(A)-2 Bhubaneswar vide Appeal No.0386/2015-16. Learned CIT(A) passed an order without appreciating the papers & documents submitted by the appellant confirming the order of learned AO on the following grounds:
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SI No. Particulars Amount(Rs) Grounds of disallowance 1 Unexplained 62,05,000/- 1. Learned CIT (A) has rejected the investment appellant's claim basing on the statement U/s.69ofthel.T of Sri. Sarbeswar Sahu (M.D) of the Act 1961. Bhulaxmi Realcon Private Limited (Purchaser of land) who has categorically stated before the AO that he has not given any cash to the appellant. 2. Learned CIT (A) has also not taken into account the money receipt issued by the appellant basing on the explanation of the payer that the money receipt is not genuine & is not in company's own printed money receipt.
Learned CIT (A) ignored the facts brought to his notice by the appellant with respect to the date of cash deposit in bank, date of RTGS, date of Money receipt, date of registration of land being all are on the same date. 4. Learned CIT (A) has also ignored the audio of the oral confession with respect to the payment of Rs. 62,05,000/- in cash produced before him. 2 Taxing as 1. Learned CIT (A) by citing the unexplained following judicial pronouncements investment. rejected the contention of the appellant with respect to "Unexplained credit in bank can not be taxed as unexplained investment U/S-69" A) Manoj Agarwal Vs. DCIT, New Delhi.(2008) 113 ITD 377 (Delhi BencfV'A") (Special Bench). B) Smt Ranu Agarwal Vs. ITO, 3(3). (2012) 22 Taxman.com 94 (Agra)Third Member). The copy of the assessment order is enclosed in the paper book-1 submitted on 08.01.2018 & marked as Annexure- A (Page- 1 to 13) for your honour's kind perusal.
That being aggrieved by the order of learned CIT(A) this appeal is preferred before the honourable bench for redressal. The factual & legal issues involved in this appeal are as under:
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SALE OF IMMOVABLE PROPERTIES FOR RS.1,00,00,000/- 5.1 That the appellant along with her spouse were jointly owing two plots as detailed below which were sold to Bhulaxmi Realcon Private Limited (purchaser) on 17.07.2012. SI. Property details Ownership Sales consideration No 1 Plot No.49,Khata- Jointly owned by Dr. Composite sales 703/434, Umasankar Dalai & consideration of for both Patrapada, Area- Smt. Sanjukta the plots Rs. 0.150 decimals, Prusty. 1,00,00,000/- Kisam- Gharabari
2 Plot No. Jointly owned by Dr. Composite sales 50,Khata-703/434, Umasankar Dalai & consideration of for both Patrapada, Area- Smt. Sanjukta the plots Rs. 0.150 decimals Prusty. 1,00,00,000/- Kisam- Gharabari
As a token of evidence the copies of the sales deed is enclosed in the paper book-1 submitted on 08.01.2018 & marked as Annexure- D (Page-51 to 75) for your honour's kind perusal.
5.2 That the actual sales consideration for both the plots is Rs. 1 Crore being received in the form of bank transfer (RTGS) Rs. 37,95,000/- on 17.07.2012 & Rs. 62,05,000/- by cash against money receipt on the same day 17.07.2012 being directly deposited by the purchaser in the joint bank account of Appellant & her spouse maintained in SBI. Both the deposits were duly evidenced in the bank statement of the said account. The copies of the bank statement evidencing both the receipts are enclosed in the paper book-1 submitted on 08.01.2018 & marked as Annexure-F (Page-80 to 82) for your honour's kind perusal.
5.3 That the cash of Rs. 62,05,000/- received from the purchaser was duly acknowledged by money receipt of the appellant & her spouse (payees). The copies of the money receipt and an affidavit declaring about the said facts are enclosed in the paper book-1 submitted on 08.01.2018 & marked as Annexure-E (Page- 76 to 79) for your honour's kind perusal.
That the appellant and her spouse had deposited the consideration of Rs.1,00,00,000/- 6y opening capital gain deposit account bearing the No.32433001335 in State Bank of India, Bhubaneswar Main branch. Subsequently both of them have withdrawn money from the said account & invested in properties with due intimation to the jurisdictional Income Tax Authority & bank. Both the appellant & her spouse after getting instruction from the IT. Department vide letter dated 22.10.2013 from the IT. Department after closer of the Capital Gain Account Scheme filed the revised returns incorporating the computation of capital gain in their
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respective returns. For better appreciation of the facts the copy of the said letter along with other relevant communication are enclosed in paper book- 2 submitted on 26.09.2018 and marked as Annexure-7 (Page- 56 to 60) for your honour's kind perusal.
That since the properties sold were jointly owned by the appellant and her spouse, the total consideration of Rs. 1,00,00,000/- was equally divided between both of them and accordingly Umasankar Dalai (Co-owner and spouse of the appellant) had filed his return on 11.01.2015 vide Acknowledgement No.462636520110115 showing Rs. 50,00,000/- as his part of sales consideration and accordingly computed Capital Gain after taking exemption U/s. 54F of the IT.Act'1961. As a token of evidence the hard copies of the said return along with the Acknowledgement are enclosed in the paper book-1 submitted on 08.01.2018 &marked as Annexure-C (page-41 to 50) for your honour's kind perusal.
That the above said return filed by Mr.Dalal was duly assessed by the department vide Communication Reference No.CPC/1314/V2/1431893143 Refund Sequence No. 7331856058 and assessment order dated 13th March'2015. The copies of the said assessment order are enclosed in paper book-2 submitted on 26.09.2018 and marked as Annexure-6 (page-47 to 56) for your honour's kind perusal.
5.7 That accordingly the appellant Mrs. Sanjukta Prusty (the other co- owner) had also filed Her return vide Acknowledgement, No. 40717924012114 dated 12th Nov'2014 showing Rs. 50,00,000/- as her part of sales consideration and computed Capital Gain after taking exemption U/s.54F of the I.T.Act 1961. The copy of the acknowledgement along with the hard copy of the return are enclosed in the paper book-1 submitted on 08.01.2018 and marked as Annexure-C (page-31 to 40) for you honour's kind perusal.
5.8 That under the above said facts and circumstances of the case, on the one hand IT department had assessed accepting the return filed by Mr. Dalai (co-owner of the appellant) & disputing the return filed by the appellant is not correct in the eyes of law. Even otherwise adding Rs. 62,05,000/- (difference between the actual consideration of Rs 100,00,000/- & value of Rs. 37,95,000/- mentioned in the sale deed) is not backed by any valid & cogent reason.
5.9 That the moot point in the impugned assessment is treating Rs. 62,05,000/-( difference between the actual consideration of Rs 100,00,000/- & value of Rs. 37,95,000/- mentioned in the sale deed) being cash received from the purchaser on sale of the plots as unexplained investment U/s.69 of the I.T.Act 1961 in the hands of the appellant. Learned A.O as well as CIT (A) had not taken to account the facts that the actual consideration of the land was Rs. 1 crore, out of which Rs. 62,05,000/- paid in cash on 17.07.2012 by depositing in the bank account
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of the appellant and Rs.37,95,000/- paid by RTGS on 17.07.2012 which was duly evidenced in the bank statement & the plots were also registered on the same day i.e. 17.07.2012.
5.10 That Learned AO had stated in the last para of Page.8 of his order dated 25.12.2015 ( page-21 of the Paper Book) that " there is no evidence with her to prove that the alleged cash to the tune of Rs.62,05,000/- is nothing but the sales proceeds of the (and in question. Since there is no evidence on record to established and prove that the said amount is nothing but the sale proceeds which have been invested in acquiring the properties, as discussed in the foregoing paragraphs, have no other alternative but to treat the same as unexplained investment and as such added to the total income U/s.69 of the I.T.Act1961."
5.11 That the above said observation was based only on the statement recorded of Sri. Sarbeswar Sahu (M.D) of the Bhulaxmi Realcon Private Limited (Purchaser of land) & as per his statement,
(A) The consideration of the lands is Rs. 37,95,000/-only which was paid through RTGS to the joint account of the appellant & her spouse. They had not paid any cash of Rs.62,05,000/- to the appellant. (B) The money receipt is not genuine, (C) The company is having its own printed MR which is usually issued while paying to the parties.
5.12 That it is pertinent to mention here that Sri. Sarbeswar Sahu (M.D) of the Bhulaxmi Realcon Private Limited (Purchaser of land) himself confessed about the payment of Rs. 1 crore to the appellant our telephone The recorded version of the same was produced before learned CIT (A) during the appeal proceedings. Thus the statement recorded by learned AO and the confession over the telephone are totally contradictory. Learned CIT (A) has not taken cognizance of the said contradiction in the form of oral evidence.
5.13 That as a general commercial practice the money receipt was issued by the recipient (in the present case the appellant) & not by the payer. Even otherwise if the said payment was made by Sri. Sarbeswar Sahu (M.D) of the Bhulaxmi Realcon Private Limited (Purchaser of land) out of his unaccounted money the company can never issue money receipt for the said payment.
5.14 That both the plots sold were valuable land situated in the heart of the Bhubaneswar city. Before taxing Rs.62,05,000/- invoking the provisions of Sec-69, both the assessing & appellate authorities have also not bothered to take into consideration the market value of the properties sold which is much more than the value of Rs.37,95,000/- adopted by the registering authority stamp valuation purpose.
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5.15 That for better appreciation of the facts it is to be stated that after purchasing the land from the Appellant the purchaser company ( Bhulaxmi Realcon Private Limited ) had applied to State Bank of India , HLST Zonal office, Bhubaneswar for approval of the project for building flats over the said land and accordingly submitted Valuation report of Er. Omprakash Das, (M.I.E , Civil) FIV, Registered valuer, Govt. Of India ( Cat-1), Plot No-51, Dumuduma-A, Po- Khandagiri, Bhubaneswar. The relevant portion of the valuation report is tabled below for your honour's kind perusal.
SI Particulars Apartment Project Apartment Project "Utpal-2" No. "Utpal" 1 Name of the Bank State Bank of India , HLST State Bank of India, HLST Zonal office, Zonal office, Bhubaneswar Bhubaneswar 2 Schedule of Land Plot No. 50,Khata- Plot No.49,Khata-703/434, 703/434, Patrapada, Patrapada, Area-0.150 Area-0.150 dcml/6,534 dcml/6,534 Sqft decimals Sqft decimals Kisam- Kisam-Gharabari Gharabari 3 Plan approval BDA Letter BMC Letter No.1704/CSC dt by N0.33889/BP dt 29.02.2016. Appropriate 22.08.2013. authority. Date of sale of Land 17.07.2012 17.07.2012 4 Date of valuation 21.10.2013 03.08.2016 5 Date of submission 21.11.2013 03.08.2016 of the proposal to the bank. 6 Present market Rs.98,01,000/- (valued @ Rs. 1,11,07,800/-(valued value of the land as Rs. 1,500/- per Sqft for @ Rs. 1,700/-per Sqft for per the Valuation 6,534 Sqft.) 6,534 Sqft.) of the Registered valuer. 7 Present distress sale Rs.93,11,000/- (Being Rs.99,97,020/-/- (Being value of the land as 95% of the market 90% of the market value of per the Valuation of value of Rs. 1,11,07,800 /-) the Rs.98,01,000/-) Registered valuer. The copies of the valuation reports of both the lands are enclosed paper book-2 submitted on 26.09.2018 & marked as Annexure-1& 2 (page-9 to page-15) respectively for your honour's kind perusal.
5.16 That analysis of the facts stated in the above referred valuation report the following facts are coming for consideration:
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SI Particulars Apartment Project Apartment Project No. "Utpal" "Utpal-2" 1 Schedule of Land Plot No. 50,Khata- Plot No.49,Khata- 703/434, Patrapada, 703/434, Patrapada, Area-0.150 dcml/6,534 Area-0.150 dcml/6,534 Sqft decimals Kisam- Sqft decimals Kisam- Gharabari Gharabari 2 Date of sale of 17.07.2012 17.07.2012 Land 3 Value adopted in Rs. 18,97,500/- (coming to Rs. 18,97,500/-(coming to sale deed Rs.290/-per sq.ft Rs.290/- per sq.ft
4 Date of valuation for 21.10.2013 03.08.2016 State Bank of India. 5 Value adopted in Rs.98,01,000/- (valued Rs. 1,11,07,800/- the valuation date @ Rs. 1,500/- per Sqft (valued @ Rs.1,700/-per for 6,534 Sqft.) Sqft for 6,534 Sqft.) 6 Increase of land 517% 586% value in % 5.17 That analysis of the above facts revels that the value adopted by the purchaser in the sale deed dated 17.07.2012 at the time of purchase of land from the appellant was Rs.290/- per Sqft, as against the market value of Rs. 1,500/- per Sqft adopted by the Registered Valuer on 21.10.2013 i.e. the valuation date. Undoubtedly the purchaser had purposefully reduced the value in the registered sale deed to save the stamp & registration cost which was borne by him. Even otherwise in no stretch of imagination there can be an increase of the value of the land to the extent of 517% within a span of nearly one year(period between the date of sale & date of valuation).
5.18 That it is pertinent to mention here that the series of events with respect to the sale of land are as under. SI. Facts Date No 1 Receipt of cash of Rs. 62,05,000/- duly deposited in Bank 17.07.2012 evidenced by bank statement 2 Issue of money receipt evidencing the said payment. 17.07.2012
3 Receipt by RTGS of Rs. 37,95,000/- duly evidenced in the 17.07.2012 bank statement. 4 Registration of the land duly evidenced by sale deed. 17.07.2012
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All the relevant documents in support of the above mentioned facts were produced before learned AO as well as CIT (A). The same are also enclosed in both the paper books submitted before this honourable bench.
5.19 That the series of events as spelt out above are emphatically clear that the actual sales consideration was Rs. 100,00,000/- which has been duly reflected in the bank account as against Rs.37,95,000/- as spelt out in the sale deed. Accordingly taxing the differential amount of Rs. 62,05,000/- as unexplained investment U/s.69 of the I.T.Act'1961 has no leg to stand.
INVOKING PROVISIONS OF SECTION. 69
6.1 That for better appreciation, the provisions of Sec-69 are enumerated below "Where in the financial year immediately preceding the assessment year the assessee had made investment which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him, is not in the opinion of the Assessing Officer, satisfactory, the value of the investment may be deemed to be the income of the assessee of such financial year."
Section-69 is intended to refer to a case where the assessee had made an investment which does not form part of his declared income for the relevant year and he is unable to offer any explanation about the nature and source of such investment or the explanation offered by him is not satisfactory.
6.2 That when the bill was introduced in the parliament the word "shall" had been used but during the course of consideration of the bill and on the recommendation of the select committee, the said word was substituted by the word "May". This clearly indicates the intention of the parliament in enacting Sec-69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such sources of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. In other words Sec-69 does confer discretion of treating the unexplained sources of investment as income of the assessee, only after considering all the surrounding facts, circumstances & circumstantial evidences of a particular case.
6.3 That for invoking the provisions of Sec-69 of the I.T.Act'1961 responsibility is casted upon the A.O to correctly identify the otherwise source of income from which the investments are made. In the appellant's case she is a senior lady officer working in State Bank of India and is not having any other sources other than Salary, Interest which are duly reflected in the return of income regularly filed. During the impugned year,
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the appellant and her spouse had disclosed the total consideration of Rs. 100,00,0007-received from sale of the above referred land in their respective returns. Learned A.O had also not identified any otherwise source where from the appellant can earned unaccounted income.
6.4 That it is pertinent to mention here that analysis of the bank account of the appellant for the impugned year, it is revealed that there were not much of transactions except the deposit of Rs 37,95,000/- & Rs.60,05,000/- on 17.07.2012 i.e. the date of the sale of the properties. Thus there is absolutely no question that the appellant is having unaccounted money which had been deposited in the bank. Thus learned A.O as well as CIT (A) are grossly erred in assessing the income U/s.69 ignoring all the facts and circumstances of the case.
6.5 That it is pertinent to mention here that this Honourable ITAT Cuttack Bench in an exactly identical case of Basudev Panigrahi Vs. ITO, Ward-3(1), Bhubaneswar, Appeal No.lTA No. 138/CTK/2017 has accepted the actual receipt of Rs.54,00,000/- as the consideration as against Rs. 19,85,000/-mentioned in the registered sale deed as the sales consideration. The copy of the said order is enclosed in paper book-2 submitted on 26.09.2018 & marked as Annexure-3 (page-25 to page- 34) for your honour's kind perusal.
6.6 That the other relevant judicial pronouncements in the following cases are worth mentioning:
SI Case Pronouncement No. 1 ITO Vs. In the said case it was concluded that, in the absence Abraham. Varghese of anything on record to suggest that the assessee Charuvil, Honourable was in a position to generate unaccounted income of ITAT, Cochin "SMC" Rs.39 lakhs, the explanation of the assessee that the Bench, (2017) 186 impugned cash deposited in his bank account was the TTJ (Coch) 528. entire sale consideration of the agricultural land including the on-money which was not shown in the sale deed on the insistence of the buyers is acceptable and, therefore, the said on-money could not be treated as unaccounted money and brought to tax under Sec-68 as "income from other source".
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2 CIT Vs. In the said case honourable Supreme Court had held Smt. P.K.Noorjahan that:" A discretion has been conferred on the ITO (1999) U/s.69 to treat the source of investment as the income 155(CTR)SC509 of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case and the ITO is not obliged to treat such sources of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory"
The copies of the above pronouncements are enclosed paper book-2 submitted on 26.09.2018 & marked as Annexure-4&5 respectively (page-35 to page-46) for your honour's kind perusal.”
Replying to above, ld DR drew our attention towards assessment and
CIT(A)’s order and submitted that the AO was right in making the addition and ld
CIT(A) was justified in confirming the same. Ld D.R. drew our attention towards
top para 1 page 3 of the assessment order and submitted that on examination of
the bank account of the assessee maintained with SBI A/c. No.10872443854,
noticed that a sum of Rs.62,05,000/- has been deposited in cash on 17.7.2012 and
a sum of Rs.37,95,000/- has been credited in the same account on the same date.
Ld DR further explained that when the assessee was asked to explain the source of
cash deposit, the assessee stated that she and her husband Dr Uma Shankar Dalal
jointly sold a piece of land measuring Ac 0.300 (L\Plot No.49 & 50 measuring
Ac.0.150 dcm each) at Mouza patrapada, Bhubaneswar stood in her name and her
husband Dr. Uma Shankar Dalal for a consideration of Rs.1 crore. She also
explained that the payment has been made of Rs.37,95,000/- through RTGS and
balance amount of Rs.62,05,000/- in cash. Ld D.R. strenuously contended that on
examination of the registered sale deed executed on 17.2.2012, furnished by the
assessee, it was noticed that the value of consideration of the sold property was
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determined by the registering authority at Rs.37,95,000/- and stamp duty was paid
accordingly thereon. Ld D.R. submitted that when the assessee show caused as to
why the deposit of cash to the tune of Rs.62,05,000/- shall not be treated as sales
consideration of alleged land, then the assessee replied that the land has been
registered at the prevailing rate of the government but the buyer has paid Rs.1
crore and the assessee has submitted hand made receipt signed by her and her
husband in support of the claim. Ld D.R. submitted that the assessee could not
substantiate that the amount of cash deposit was given by the purchaser of the
land with proper documents and evidences. He submitted that in the statement
recorded by the AO u/s.131 of the Act, the purchaser of the land denied of giving
the money to the assessee. Therefore, the said sum of Rs.62,05,000/- remains
unexplained. He, accordingly, submitted that since the assessee could not
establish with proper evidence that said money is the sale proceeds of the land,
therefore, the AO was right in treating the same as unexplained investment.
We have heard the rival submissions, perused the written submissions filed
by the assessee as well as the orders of the lower authorities. We find that the
assessee and her husband Dr Uma Shankar Dalal had sold land Ac.0.300 decimals
to Shri Sarbeswar Sahu, MD, M/s. Bhulaxmi Realcon pvt Ltd. for a consideration of
Rs.1 crore. Out of total amount of consideration, an amount of Rs.37,95,000/-
was transferred to the bank account of the assessee through RTGS and
Rs.62,05,000/- was paid in cash by the purchaser, as claimed by the assessee,
which was deposited in bank on 17.2.2012 i.e. on which date sale deed was
executed. It is also evident that on 17.2.2012, the cash of Rs.62,05,000/- was
deposited alongwith the RTGS amount i.e. on the same date. However, when
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confronted to the purchaser Shri Sarbeswar Sahu u/s.131 of the Act, he denied of
giving the cash to the assessee and claimed that he has paid Rs.37,95,000/-
through RTGS as per valuation of registering authority. The contention of the
assessee is that Rs.62,05,000/- is the sale consideration which was given by the
purchaser in cash. In view of above, the Assessing Officer was opined that the
assessee could not furnish any positive evidence to substantiate that a sum of
Rs.62,05,000/- in cash was actually given by the purchaser and, accordingly,
added the same to the income of the assessee u/s.69 of the Act.
Before we proceed to consider and adjudicate the grievance of the
assessee, first of all, we observe that undisputedly the assessee and her husband
Dr Uma Shankar Dalal were jointly owning Plot No. 49 & 50, Khata No.703/343,
Patrapada, Bhubaneswar having area of Ac. 0.150 dcm/6534 sq.ft each totaling Ac.
0.300 dcms/14068 ft. it is also not in dispute that the sale deed was executed by
the assessee and her husband Dr Uma Shankar Dalal on 17.7.2012 in favour of the
purchaser M/s. Bhulaxmi Realcon Pvt Ltd., and on the same date amount of
Rs.37,95,000/- was transferred from the account of the purchaser to the joint
account of the assessee and her husband Dr Uma Shankar Dalal. It is also not in
dispute that on the very same date i.e. on 17.7.2012, amount of cash of
Rs.62,05,000/- was also deposited to the said joint bank account of the assessee
and her husband Dr Uma Shankar Dalal. From the copy of the registered sale
deed, we clearly observe that the sale consideration of Rs.37,95,000/- has been
shown therein and stamp duty has been paid on this amount as per rates
prescribed by the Government of Odisha.
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The main controversy in this case revolves around the explanation of the
assessee, which has not been accepted by the AO and ld CIT(A) that the amount
of Rs.62,50,000/- which was deposited to the joint bank account of the assessee
and her husband Dr Uma Shankar Dalal in cash as part and partial of sale
consideration received against sale of two plots. To fortify this contention, ld
counsel has placed vehement reliance on the valuation report submitted as
Annexure-1 and 2 at pages 9 to 15 of APB-2 filed on 26.9.2018. From the perusal
of the valuation report dated 21.10.2013 pertaining to Plot No.50, it was submitted
by the purchaser builder that State Bank of India shows valuation adopted by the
valuer at Rs.98,01,000/- with an increase of 517% and another report dated
3.8.2016 pertaining to Plot No.49 also reveals that this report has been prepared
at the instance of the purchaser for submission to State Bank of India and the
valuer has adopted the value at Rs.1,11,07,800/- with an increase of value of
586%. It is also not in dispute that the assessee is a Bank Officer and her
husband is a practicing doctor and it cannot be expected from them to understand
the actual procedure to be adopted by them at the time of sale of immovable
property to comply with the requirements of provisions of Income tax Act.
However, in this case, when the AO called the builder for statement u/s.131 of the
Act, he denied having paid Rs.62,05,000/- in cash as part sale consideration
against purchase of said two plots but the valuation report prepared by him for
submission before bank authorities for procurement of loan support the fact that
the sale consideration written in the registered sale deed on the date of execution
of sale deed was under influence of stamp valuation/circle rate prescribed by the
Government and, therefore, the sale consideration was written in the sale deed as
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Rs.37,95,000/-. We cannot ignore the fact that RTGS amount of Rs.37,95,000/-
was transferred by the purchaser to the assessee and her husband Dr Uma
Shankar Dalal on the date of execution of registered sale deed and on same very
day cash amount of Rs.62,05,000/- was deposited in the joint account of the
assessee and her husband. Therefore, the assessee was under bonafide belief
that the entire sale consideration towards sale of the two plots of Rs.1 crore was
paid partly by RTGS and partly in cash. In these circumstances, we are also
compelled to accept the contention of ld counsel for the assessee that when the
purchaser denied of giving Rs.62,05,000/- in cash to the assessee as part of sale
consideration of said two plots, then the AO could have allowed the assessee to
cross examine the purchaser, which has not been done by the AO as to whether
he has paid Rs.62,05,000/- in cash over and above the RTGS amount of
Rs.35,97,000/- and also no enquiry/action has been undertaken by the AO against
the builder on this issue.
From perusal of the assessment order last para at page 8, it is ample clear
that the AO has treated the impugned amount as unexplained investment u/s.69 of
the Act. Whereas the provisions of section 69 of the Act intended to be applied to
a case where the assessee had made an investment which does not form part of
his declared income in the relevant year and he is unable to offer any explanation
about the nature and source of such investment or the explanation offered by him
is not satisfactory. In the present case, as we have noted earlier, the assessee has
not made any investment which attracts provisions of section 69 of the Act. Per
contra, in the return of income for the assessment year 2013-14 (Paper book page
31 to 50) filed by the assessee and her husband Dr. Uma Shankar Dalal, we clearly
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observe that the assessee and her husband has shown sale consideration of Rs.50
lakhs each totaling to Rs.1 crore and they have also claimed deduction/exemption
u/s.54F of the Act. We may also point out that said two plots were owned by the
assessee jointly with her husband and they jointly executed the sale deed in favour
of the purchaser on 17.7.2012 but ignoring this glaring fact, the AO has made
addition of entire amount of Rs.62,05,000/- in the hands of the assessee, which is
also a very perverse and incorrect conclusion of the AO.
The assessee has submitted a money receipt dated 17.7.2012 issued in
favour of the purchaser Shri S.Sahu, MD, M/s. Bhulaxmi Realcon Pvt Ltd., but this
document has been rejected by the AO by observing that it is a handmade receipt
signed by the assessee and her husband but no verification has been made from
the purchaser in this regard by the AO.
In the case of ITO vs. Abraham Varghese Charuvil 186 TTJ (Coch) 528,
ITAT Cochin Bench has concluded that in the absence of anything on record to
suggest that the assessee was in a position to generate unaccounted income of
Rs.39 lakhs, the explanation of the assessee that the impugned cash deposit in his
bank account was the entire sale consideration of the agricultural land including
the on-money which was not shown in the sale deed on the insistence of the
buyers is acceptable and, therefore, the said on-money could not be treated as
unaccounted money and brought to tax under section 68 as ‘income from other
sources’.
Ld counsel for the assessee relied on the decision of Hon’ble Supreme
Court in the case of CIT vs Smt. P.K.Noorjahan (1999) 155 CTR 509 (SC), wherein,
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it was held that a discretion has been conferred on the ITO u/s. 69 of the Act to
treat the source of investment as the income of the assessee if the explanation
offered by the assessee is not found satisfactory and the said discretion has to be
exercised keeping in view the entire facts and circumstances of the particular case
and the ITO is not obliged to treat such sources of investment as income in every
case where the explanation offered by the assessee is found to be not satisfactory.
In the present case, the AO has not brought any positive evidence or other
allegation on record to suggest or establish that the explanation of the assessee
that the impugned cash of Rs.62,05,000/- deposited in the joint account of the
assessee and her husband was the entire sale consideration of plots sold by them,
including the on-money, discernible from the registered sale deed, the amount of
sale consideration of Rs.37,95,000/- has been shown on the insistence of the
buyer is not acceptable. The AO has also not brought any adverse material or
positive evidence on record to establish that either the assessee or her husband or
they jointly were in a position to generate cash amount of Rs.62,05,000/- from
other undisclosed sources and they deposited the same as showing part of sale
consideration received against sale of said two plots and in absence of such
material or evidence the findings arrived by the AO and confirmed by the ld CIT(A)
cannot be held as sustainable keeping in view entire facts and circumstances of the
case as well as order of ITAT Cochin Bench in the case of Abraham Varghese
Charuvil(supra).
In view of foregoing discussion and respectfully following the propositions
rendered in the case of Abraham Varghese Charuvil (supra), we hold that the AO
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was not correct in treating the cash deposit of Rs.62,05,000/- as unexplained
investment of the assessee and taxing the same under section 69 of the Act.
In the present case, there is no positive or adverse evidence against the
assessee and her husband to suggest or establish that the assessee being a bank
officer and her husband being a medical practitioner, respectively were in
possession to generate unaccounted income of Rs.62,05,000/- which was
deposited in a day and thus, when the factum of deposit of Rs.1,00,00,000/- partly
through RTGS sent by the builder and partly through cash alongwith execution of
sale deed on same date is considered and valuation report of one Plot No.50 dated
21.10.2013, which has been prepared by the valuer on the insistence of the builder
which shows that only after one year and three months, the price has been valued
at Rs.98,01,000/- for one m plot and thus, price of said two plots comes to rs.2
crores are kept together, then the explanation of the assessee that the impugned
cash deposit in their bank account on execution of sale deed and Rs.37,95,000/-
through RTGS and Rs.62,05,000/- was deposited in cash at the insistence of the
buyer on same date i.e. 17.7.2012 has to be accepted as part and partial sale
consideration against sale of said two plots.
From the copies of return of income for the assessment year 2013-14 filed
by the assessee and her husband, it is discernible that the assessee has claimed
deduction u/s.54F of the Act against the capital gain accrued to her on sale of plots
but this claim of the assessee has been negated by the AO. Therefore, the AO is
directed to consider the same by taking into consideration that the assessee and
her husband have received sale consideration of Rs.50 lakhs each totaling to
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Rs.1,00,00,000/- against sale of two plots and shown in their income tax returns.
Hence, the claim of deduction/exemption u/s.54F of the Act has to be considered
and allowed as per the provisions of the Act. The AO is directed to pass necessary
appeal effect order accordingly.
In the result, appeal of the assessee is allowed.
Order pronounced on 16 /01/2020.
Sd/- sd/- (Laxmi Prasad Sahu) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 16/01/2020 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Smt. Sanjukta Prusty.
The Respondent. ITO, Ward 3(5), Bhubaneswar 3. The CIT(A)-2, Bhubaneswar 4. Pr.CIT-2 , Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//
By order
Sr.Pvt.secretary ITAT, Cuttack
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