INCOME TAX OFFICER, BEHROR vs. SHRI VIRENDER YADAV, ALWAR

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ITA 1340/JPR/2018Status: DisposedITAT Jaipur12 December 2019AY 2012-136 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) relied on the purchaser's admission during remand proceedings. However, the revenue argued this was a device to cover undisclosed income, as the purchaser's income was exempt under Section 10(26AAA). The Tribunal noted the AO had given numerous opportunities to the assessee, who remained absent.

What were the facts?

The assessee purchased immovable properties for Rs. 2,69,82,340/- without filing a return. The assessee claimed the source of investment was the sale of land for Rs. 2,88,05,845/- through an unregistered agreement, with the entire consideration received in cash. The Assessing Officer (AO) doubted this explanation due to lack of documentary evidence and the unusual cash transaction.

What were the issues?

Whether the CIT(A) erred in deleting the addition based on the purchaser's admission without appreciating the facts, especially regarding the cash transaction and lack of registered sale deed. The issue also involves whether the transaction was a genuine sale or a device to conceal income.

Which sections of the Income-tax Act were involved?

Section 10(26AAA),Section 133(6),Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCH ‘B’, JAIPUR

Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1340/JP/2018

This appeal by the revenue is directed against the order dated 13.09.2018 of ld. CIT (Appeals), Alwar for the assessment year 2012-13. The revenue has raised the solitary ground as under :-

“ On the facts and circumstances of the case and in law ld.CIT (A) erred in restricting the addition of Rs. 2,91,52,880/- to Rs. 2,92,880/- made by the AO on account of unexplained investment from undisclosed sources, without appreciating the material facts of the case.”

2.

None has appeared on behalf of the assessee respondent despite the notice sent through the AO was duly served on the assessee as per the acknowledgement and report of the AO. We further note that since beginning the assessee has not been appearing despite the notices issued, therefore, in the facts and circumstances when the notice was duly served upon the assessee as per the acknowledgement of the assessee and nobody has appeared on behalf of the assessee, we proposed to hear and dispose off the appeal of the revenue ex parte.

3.

We have heard the ld. D/R and carefully perused the orders of the authorities below. The assessee is an Individual and has not filed any return of income for the year under consideration. The AO has issued a notice under section 148 of the IT Act on 29th December, 2014 on the basis of the information of purchase of immovable properties for a consideration of Rs. 2,69,82,340/-. During the assessment proceedings, the assessee explained the source of investment as sale of land measuring 4.81 hectares i.e. 19.20 bigha to one Shri T. Lachunagapa resident of Gangtok (Sikkim) @ Rs. 15 lacs per bigha for a total consideration of Rs. 2,88,05,845/-. The assessee has claimed that the said land was sold through a sale agreement dated 07.05.2011 against the consideration received in cash. The AO has not accepted the said explanation of the assessee on the ground that the assessee has not produced any documentary evidence which can be verified. The assessee has produced only an agreement which is not registered and further the entire sale consideration was claimed to have been received in cash. Thus the AO doubted that a person who belongs to Gangtok (Sikkim) cannot bring or carry such a huge amount of Rs. 2,88,60,000/- in cash. The AO further noted that even after the expiry of about 6 (six) years from the date of alleged sale agreement, no sale deed has been executed or registered. The AO accordingly made the addition of Rs. 2,91,52,880/- on account of unexplained investment in purchase of immovable properties. On appeal, the ld. CIT (A) has called for a remand report from the AO.

In the remand proceedings, the alleged purchaser Shri T. Lachunagapa, a Sikkimese, has admitted the transaction of purchase of land from the assessee. Based on the said admission of the purchaser, the ld. CIT (A) has deleted the addition. The ld. D/R has contended that it is only a device to cover up the undisclosed income by the assessee by planting a purchaser whose income is exempt under section 10(26AAA) of the IT Act. Thus the ld. D/R has submitted that since the income in the hands of Sikkimese is exempt under section 10(26AAA), therefore, the assessee has claimed that he has received the consideration from the alleged purchaser. The ld. D/R has further contended that the assessee has claimed to have sold the land through an unregistered agreement which is not possible when the purchaser belongs to Sikkim and will pay such a huge consideration without having a proper title document, despite the expiry of such a long time there is no sale deed regarding the said transaction, therefore, the alleged agreement to sell is nothing but an after-thought make belief document. She has relied upon the order of the AO.

4.

Having considered the submissions of the ld. D/R and going through the orders of the authorities below, we find that during the assessment proceedings, the AO granted as many as 20 opportunities to the assessee. The details of the notices issued by the AO given at page 3 of the assessment order as under :-

The AO issued notice under section 133(6) to the Sub Registrar, Neemrana and on receiving the details of the documents from concerned Sub Registrar, the AO found that the assessee had made investment of Rs. 2,69,82,340/-. All these enquiries were conducted by the AO due to the reason that the assessee did not cooperate and file the details regarding the investment made in the immovable properties.

Only when the AO issued the show cause notice to frame the assessment under section 144 of the IT Act and also issued summon under section 131, the assessee furnished a copy of the alleged agreement dated 07.05.2011 and claimed that the sources of investment is sale proceeds of land for a consideration of Rs. 2,88,60,000/- to one Shri T. Lachunagapa resident of Gangtok (Sikkim). It is pertinent to note that it is beyond preponderance of human probability that a person from Gangtok (Sikkim) would purchase a land in Rajasthan against a consideration of Rs. 2,88,60,000/- without having a proper title deed in his favour. The alleged agreement to sell is not a document which can be verified independently and can be considered as a conclusive evidence for transaction of purchase and sale of the immovable properties. Even otherwise, the immovable properties cannot be transferred under such an unregistered document being agreement to sell. The details of assessee’s share in the alleged ancestral land are also not available on record. It is also not clear from the record whether the assessee was having the share in the ancestral property to the extent of 19.20 bigha. Further, not executing the sale deed and registration with the authorities even after the expiry of such a long time creates a genuine doubt about the transaction. Therefore, the genuineness of the claim has not been established with verifiable documentary evidence. It is also a relevant fact that the alleged purchaser of the land being a Sikkimese, is exempt from Income tax as per section 10(26AAA) of the IT Act.

Therefore, the possibility of using the name of such a person as a device to evade the tax cannot be ruled out. Accordingly, in the facts and circumstances of the case, we set aside this matter to the record of the AO for conducting a proper enquiry particularly on the point of the assessee’s share in the alleged ancestral property and whether the said property is available in the exclusive right of the assessee for transfer. The status of the land regarding the possession and the real ownership is also required to be verified. Needless to say that the assessee be given a proper opportunity of hearing before passing the fresh assessment order.

5.

In the result, appeal of the revenue is allowed for statistical purpose.

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