PR. COMMISSIONER OF INCOME TAX-2, CHANDIGARH vs. SH. RANDHIR SOOD

ITA/356/2018HC Punjab & HaryanaPHHC01119217201820 March 2020Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN6 pages
AI SummaryRemanded

What were the facts?

The Principal Commissioner of Income Tax-2, Chandigarh (Revenue) appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated January 1, 2018, concerning Assessment Year 2009-10. The ITAT had upheld the deletion of an addition of Rs. 4,46,75,000/- made by the Assessing Officer (AO) concerning advance money received by the assessee, Randhir Sood. The assessee was authorized by M/s Hash Builders Pvt. Ltd. to procure land for a TATA Housing Development Company project. The assessee received advance payments, including the disputed amount. The AO assessed the total income at Rs. 6,62,72,169/-. The Commissioner of Income Tax (Appeals) partly allowed the appeal, deleting the addition. The ITAT upheld this deletion, leading to the present appeal.

What did the High Court hold?

The High Court held that the deletion of the addition of Rs. 4,46,75,000/- could not be sustained. The Court noted that the assessee had withheld information and avoided scrutiny by not producing the agreement of authorization during assessment or appellate proceedings. While the agreement has now been produced before the High Court, the Court found that the appellate authorities had not considered crucial aspects. Specifically, the AO had established that a significant portion of the advance was used for purposes other than procuring land for the TATA project, such as investment in M/s Gulmohar Landcon Pvt. Ltd. and an unsecured loan to Sh. Sudhir Chadha. The assessee also failed to provide documentary evidence for an investment with Sh. Darshan Singh, who denied receiving it. The Court found that the assessee's claim of no surplus generation from the advance was unsubstantiated, and the aspect of sale deeds being executed as GPA of land owners was ignored. Therefore, the matter was remitted back to the AO to decide the issue afresh after providing an opportunity to the assessee, clarifying that the High Court's observations were not an expression on the merits of the issue.

What were the issues?

1. Whether the ITAT was right in upholding the deletion of the addition of Rs. 4,46,75,000/- made by the AO for advance money received, or determining income earned in the transaction with M/s Hash Builders Pvt. Ltd., particularly when the assessee failed to produce an agreement/contract to ascertain the genuineness of the transaction or evidence that no surplus was generated from advances made to potential sellers? (Question of law and fact, concerning Section 2(24) and Section 56(2)(ix) of the Income Tax Act, 1961). 2. Whether the ITAT's upholding of the deletion of the addition of Rs. 4,46,75,000/- was perverse, given that Rs. 3,91,75,000/- was not utilized for advances to potential sellers, and no sale deeds were executed as per the AO's findings? (Question of law and fact). Assessee's contentions: Advance received is not income. Section 56(2)(ix) was amended in 2014 and is not applicable to the assessment year in question. The agreement of authorization dated March 9, 2007, was placed on record. Revenue's contentions: The assessee did not produce the agreement with M/s Hash Builders Pvt. Ltd. authorizing the purchase of land. The advance received was not utilized for advances to proposed sellers but elsewhere. The appellate authorities failed to appreciate these aspects.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(24),Section 56(2)(ix),Section 131

AI-generated summary — verify with the full judgment below

[1] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH **** Date of Decision: 20/3/2020 The Pr. Commissioner of Income Tax-2, Chandigarh Appellant Versus Randhir Sood Respondent CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the Revenue.

Ms. Radhika Suri, Senior Advocate with Mr. Manpreet Singh Kanda, Advocate for the respondent. **** AVNEESH JHINGAN, J. [1] This appeal is filed under Section 260-A of the Income Tax Act, 1961 [for brevity 'the Act'] against the order dated 01.01.2018 passed by the Income Tax Appellate Tribunal, Chandigarh. The assessment year involved is 2009-10. Following substantial questions of law are claimed:- (i)

Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in upholding the order of the Ld. CIT(A), deleting the addition of Rs.4,46,75,000/- made by the assessing officer for advance money received or determining income earned PANKAJ BAWEJA 2020.03.20 12:16 I attest to the accuracy and integrity of this document High Ciourt, Chandigarh [2] in this transaction with M/s

The order continues below.

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