BHANWARLAL LAXMINARAYAN GOUR vs. ASSISTANT COMMISSIONER OF INCOME TAX

This appeal is filed by the assessee challenging the   judgment   of   the   Income   Tax   Appellate   Tribunal dated 01.06.2017. Following questions are presented for our consideration: “(i) Whether   in  the   facts   and  circumstances of   the   case,   the   Income   Tax   Appellate Tribunal was right in law in confirming the addition   of   Rs.1,10,00,000/­   made   under section 69 of the Act in respect of alleged unexplained   investment   in   the   property   in question on account of difference in purchase consideration   as   per   the   banakhat   and   the final Conveyance Deed found during the course of search despite the fact that no iota of evidence   as   to   payment   of   any   unaccounted purchase consideration was found during the extensive search operation ? (ii) Whether   in  the   facts   and  circumstances of   the   case,   the   Income   Tax   Appellate Tribunal was right in law in heavily relying on   the   banakhat   despite   the   fact   that   the deal as per such banakhat was called off and thereafter, fresh arrangement was made as per which, the purchase consideration was reduced from Rs.4.25 crore to Rs.2.05 crore and the conveyance   deeds   as   well   as   affidavit   of seller

Briefly   stated,   facts   are   that   the   assessee's premises were searched on 11.02.2010, during which, certain   incriminating   documents   were   found   and impounded.     These   documents   principally   were   the banakhat dated 03.03.2006, under which, the assessee and other co­purchasers (representing 50% share each) had   agreed   to   purchase   land   with   hotel,   building, furniture   and   fixtures,   situated   in   the   city   of Baroda, for the total sale consideration of Rs.4.25 crores.   The second document was a sale deed dated 26.05.2006,   under   which,   the   assessee   and   the   co­ purchasers   purchased   the   very   same   property   for   a reduced   sale   consideration   of   Rs.1,14,50,000/­. Third   document   was   an   affidavit   also   dated 26.05.2006, in which, the reason for reduction in the total sale consideration were sought to be explained. As   per   the   affidavit,   the   property   owners   were allowed   to   sell   certain   furniture   and   fixtures   as which fetched Rs.90 lakhs by way of sale price.  The affidavit also recorded that the property in question was under attachment of the lending bank.  The owners have directly paid inclusive of the payments made by the purchasers a total sum of Rs.2.05 crores to the bank for lifting the attachment.

The   Assessing   Officer  was   of  the   opinion   that the reduction in the reflected sale price as compared to the banakhat price was not properly explained.  He confronted the assessee with such drastic reduction in such a short span of time.   The assessee mainly raised following contentions: I. The land bearing block No.210/B was eventually not purchased though shown in the banakhat since it was a new tenure land. II. The sale of furniture and fixtures fetched Rs.90 lakhs to the land owners. III. After agreeing to purchase the entire property for Rs.4.25 crores, it was realized that the building which was supposed to be a hotel was not a modern building.   The furniture and fixtures were old and unused for long, virtually worthless for restarting the hotel.

The Assessing Officer was however unmoved.   He took   into   account   the   final   sale   consideration reflected   in   the   sale   deed,   added   a   sum   of   Rs.90 lakhs directly received by the sellers through sale of furniture and fixtures and came to the conclusion that the reduction of Rs.2.20 crores from the agreed sale price was not explained.   In the process, he also took note of the fact that the same property was valued   by   the   Government   Approved   Valuer   as   on 02.08.2000   at   Rs.3.13   crores   (rounded   off).     This included  the   land   cost   of   Rs.1.17   crores   (rounded off).     As   against   this,   the   assessee   wanted   to project the land cost in May, 2006, at Rs.80 lakhs which was not believable.   He accordingly added 50% of Rs.2.20 crores by way of assessee's unaccounted investment.

Commissioner of Income Tax (Appeals)  also in a detailed   consideration,   confirmed   the   view   of   the Assessing   Officer   and   rejected   the   appeal   of   the assessee.  In further appeal, the Tribunal confirmed the   view   of   the   Revenue   officers,   upon   which,   the present appeal has been filed.

Having heard learned counsel for the assessee, we do not find any question of law arising for the following reasons: I. As   noted,   the   notarized   banakhat   executed   on 03.03.2006 had disclosed a total sale consideration of Rs.4.25 crores for the entire property.  The last date for completing the sale by making full payment was 31.05.2006. On 26.05.2006 itself, the final sale deed   was   executed.     In   such   sale   deed,   there   was drastic reduction in the reflected sale consideration from a total of Rs.4.25 crores shown in the agreement to   sale,   the   sale   deed   only   evidenced   payment   of Rs.1,14,15,000/­. Only component  principally missing was the furniture and fixtures which the owners were themselves   allowed   to   sale   which   fetched   a  sum   of Rs.90   lakhs.     There   still   remained   a   shortfall   of Rs.2.20   crores   which   had   to   be   explained   by   the assessee.  His only explanation was, after executing the agreement to sale, the property was revalued and assessee realized that the building was not suitable for running a hotel and furniture was too old. II. Though no break­up of valuation of the property was given in the agreement to sale, in the affidavit dated 26.05.2006, such break­up was given.   Pre and post   agreement   to   sale   in   which   the   valuation   of building and furniture was drastically reduced, the Assessing   Officer   and   higher   authorities   correctly noted that the valuation of Rs.80 lakhs for the land defies   logic   where   merely   6   years   earlier   the Government Approved Valuer valued the land at Rs.1.17 crores.     The   explanation   of   the   assessee   that   a portion of the land did not form part of final sale deed   is   not   sufficient   to   explain   such   dramatic downward revision.  Nothing was brought on record to suggest that such land which is omitted from final sale   deed,   represented   significant   portion   of   the total land area.  It is not as if the fact that such omitted land was new tenure land, was not noticed by the purchasers. In the banakhat itself, there is a reference   to   this   parcel   of   land.     The   assessee's oral assertion that the valuation report of the year 2000   was   not   accurate   and   that   the   valuation   was inflated only in order to obtain higher loan from the bank, cannot be accepted for the mere asking.  There was   no   material   in   support   of   such   assertion. Secondly, this would also cast serious aspersions on the Government Approved Valuer.   Once agreement to sale was executed for price of Rs.4.25 crores, it is difficult to comprehend why the sellers would agree to   execute   the   sale   deed   at   half   the   agreed consideration.  No material was brought on record to show   the   reason   for   the   sellers   to   act   in   such fashion, against their own interests.

All and all, the disputes are purely factual in nature.   No question of law arises.   Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH