ASHWANI KUMAR vs. COMMISSIONER OF INCOME TAX PATIALA

ITA/326/2016HC Punjab & HaryanaPHHC01110531201623 November 2016Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE JASGURPREET SINGH PURI3 pages
AI SummaryDismissed

What were the facts?

The appeal pertains to assessment year 2009-2010. The assessee, Ashwani Kumar, entered into two agreements for sale of properties for Rs. 70 lacs and Rs. 60 lacs, with earnest money deposits of Rs. 35 lacs and Rs. 30 lacs respectively, totaling Rs. 65 lacs. The assessee claimed this entire earnest money was paid in cash and forfeited as the purchasers failed to proceed with the sale. The Assessing Officer, CIT (Appeals), and the Income Tax Appellate Tribunal (ITAT) did not accept the assessee's explanation. The purchasers could not be traced, one allegedly died prior to the transaction, and the 50% earnest money payment was considered unusual. The assessee could not provide details of when the cash was deposited in his bank account.

What did the High Court hold?

The High Court held that no substantial question of law arises in this case. The Court found that the refusal of the three authorities (Assessing Officer, CIT (Appeals), and ITAT) to accept the assessee's story was not perverse or absurd. The Court noted that the alleged purchasers were not produced, could not be traced, and there were doubts about their residency. The unusually high earnest money (50% of sale consideration) and the inability to account for its deposit in the bank account further weakened the assessee's claim. The lack of correspondence and a plausible reason for purchasers abandoning the agreements also contributed to the disbelief. The Court concluded that the authorities had taken a possible view, which does not warrant interference on the ground of raising a substantial question of law. The appeal was dismissed.

What were the issues?

1. Whether the Tribunal's order is unreasonable for not returning findings on the existence of payees to capital account transactions, as per Section 32 of the Indian Evidence Act, 1872, and Section 2(14) of the Income Tax Act, 1961? The assessee argued that direct evidence regarding the payees was overlooked. 2. Whether advance money from an agreement to sell should be deducted from the 'cost of asset' and/or the whole amount is chargeable to tax as a 'revenue receipt' under Sections 2(14), 45(1) read with Section 51 of the Income Tax Act, 1961? The assessee contended that the advance money should be treated in a specific manner concerning cost of asset and taxability. The Revenue did not record any specific arguments in the judgment.

Which sections of the Income-tax Act were involved?

Section 32,Section 2(14),Section 45(1),Section 51

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-326-2016 (O&M)

Date of decision:- 23.11.2016 Ashwani Kumar ...Appellant Versus Commissioner of Income Tax, Patiala (Punjab) ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE A.B. CHAUDHARI Present:- Mr. Sachin Bhardwaj, Advocate, for the appellant. * * * * S.J. VAZIFDAR, C.J. (ORAL)

This is an appeal against the order of the Income Tax Appellate Tribunal confirming the order of the CIT (Appeals) which in turn upheld the assessment order. The matter pertains to the assessment year 2009-2010. 2. The appellant contends that the following substantial questions of law arise:- “I.

Whether under the fact & circumstances of the case, the Tribunal order is unreasonable while overlooking & neither returning any findings on the ‘fact and direct evidence’ u/s 32 of Indian Evidence Act, 1872 qua the existence of the payee to the capital account transactions u/s 2(14) of the Income Tax Act, 1961? II.

Whether under the fact & circumstances of the case, pursuant to the provisions of Section 2(14), 45(1) r.w. Section 51, the advance money arising out of agreement to sell shall be deduc

The order continues below.

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