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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI N.K. BILLAIYA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, Shri Kewal Lakhera (hereinafter referred to as the ‘assessee’) by filing the present appeal sought to set aside the impugned order dated 18.11.2016 passed by the Commissioner of Income - tax (Appeals), Muzaffarnagar qua the assessment year 2010-11 on the grounds inter alia that :- “1. That the Ld. CIT(A), Muzaffarnagar erred in law, on facts and in surrounding circumstances in sustaining monstrous
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additions in an arbitrary, illogical, whimsical and mechanical manner, having no sanctity in law. 2. That in order to sustain the huge addition of Rs. 4650000 towards alleged short term capital gain, the Ld. CIT(A), erred in law, on facts and surrounding circumstances in failing to appreciate that the appellant, being merely a power of attorney holder, having no legal title or ownerships rights in the residential plot, in question, is not liable to be assessed to capital gain tax, as per settled law of binding nature of Hon'ble High Court of judicature Madras dated 03-11-2014 having unequivocal applicability on facts and surrounding circumstances of the present case. 3. That the Ld. CIT(A), further erred in law, on facts and in surrounding circumstances in inferring illogically that the appellant had purchased the property from Smt. Rajvati, which in the absence of any documentary evidence, is clearly hypothetical and fictional in nature.
That in doing so, the Ld. CIT(A), also erred in law, on facts and in surrounding circumstances, in failing to appreciate that the documentary evidence in the shape of duly registered power attorney coupled with recital in the sale deed itself and affidavit of Smt. Rajwati is completely sound, strong and creditable and beyond impeachment in the eyes of law. 5. That the Ld. CIT(A), also erred in law, on facts and in surrounding circumstances, in making uncalled for fishing inquiry into the process of payment of consideration to Smt. Rajwati by the appellant, thereby ignoring the vital aspect that acceptance of receipt of consideration is itself clearly and unambiguously reflected in the affidavit of Smt. Rajwati, having been executed long after the sale of the property in question. 6. That in doing so, the Ld. CIT(A), erred in law, on facts and in surrounding circumstances in failing to appreciate that non disclosure of amount and date of payment by cash/cheque, is quite immaterial, particularly when Smt. Rajwati, had never raised any dispute on this issue.
That order to wipe out the impact of landmark judgment of jurisdictional ITAT, New Delhi in the case of Mayawati, the Ld. CIT(A), erred in law, on facts, and in surrounding circumstances, in converting section 68 of I.T. Act into section 69A of I.T. Act, in an abrupt and arbitrary manner and that too, without affording opportunity of being heard to the appellant, resulting in breach of principle of natural justice being audi alteram partum.
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That without prejudice to above the Ld. Ld. CIT(A), in a zeal to sustain addition further erred in failing to appreciate that section 69A of I.T. Act is itself not directly applicable to the facts and surrounding circumstances of the case and consequences of the case and consequently the impugned addition of Rs.494250 towards unexplained cash deposit in bank account, eventually and completely stands deleted automatically either u/s 69A or section 68 of I.T. Act, as the case may be. 9. That so far investment in the purchase of property is concerned, Ld. CIT(A), also erred in law, on facts and in surrounding circumstances in failing to appreciate that the actual investment of Rs.3332500 having been explained fully during the course of appellate proceedings, also completely wipes out the impugned addition of Rs. 1482500 for all intents and purposes. CONCLUSION: That the impugned appellate order under appeal, being based on misplaced, misconceived, out of context, whimsical findings and without shred of any evidentiary backing, is liable to be quashed in the interest of equity and natural justice it is prayed accordingly.”
Briefly stated the facts necessary for adjudication of the issue at
hand are : Assessing Officer noticed that the assessee has sold property
bearing No.2/432, Niti Khand, Indirapuram, Ghaziabad for a sale
consideration of Rs.18,00,000/- vide sale deed dated 25.09.2009 as
against the stamp duty value of the sale deed at Rs.64,50,000/-.
Assessing Officer (AO) for the purpose of computation of capital gain
adopted circle rate under section 50C of the Income-tax Act, 1961 (for
short ‘the Act’), declined the exemption u/s 54F and thereby made an
addition of Rs.46,50,000/-. AO also made addition of Rs.12,44,250/-
and Rs.15,33,500/- on account of unexplained cash deposit and
unexplained investment in purchase of property respectively.
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Assessee carried the matter by way of an appeal before the ld.
CIT (A) who has confirmed the additions by dismissing the appeal.
Feeling aggrieved, the assessee has come up before the Tribunal by way
of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties
to the appeal, gone through the documents relied upon and orders passed
by the revenue authorities below in the light of the facts and
circumstances of the case.
So far as addition made by the AO to the tune of Rs.46,50,000/-
on account of sale of property and confirmed by the ld. CIT (A) is
concerned, before the ld. CIT (A) , the assessee has brought on record
new facts that since he was not the owner of the property rather he has
executed the sale deed in question as Attorney of Smt. Rajwati, original
owner, there is no question of computing the capital gain in the hands of
assessee and brought on record additional evidence before the ld. CIT
(A) which was allowed u/s 46A of the Act.
Ld. AR for the assessee by relying upon the decision of Hon’ble
Madras High Court in case the case of CIT vs. C. Sugumaran (2015) 281 CTR 115 contended that when assessee was not owner of the
property in question rather he was mere Attorney of Smt. Rajwati, there
is no question of computing the capital gains in the hands of the
assessee.
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However, bare perusal of the impugned order passed by the ld. CIT (A) particularly para 11 goes to prove that, “the ld. CIT (A) has thrashed the issue at length and called upon the assessee to bring on
record the facts if any consideration has ever been passed between
assessee and Smt. Rajwati before or after the execution of power of
attorney dated 18.09.2008 and to furnish the facts as to the exact sale
consideration given by the assessee to Smt. Rajwati after execution of
the sale deed and exact sale consideration received by the assessee and
also to file computation of income as filed with the return of income
along with acknowledgement of return.”
Instead of filing the aforesaid information, assessee continued to
harp on the judgment delivered by Hon’ble High Court of Madras,
which has also been relied upon before the Bench.
We are of the considered view that no doubt, the assessee has
executed the sale deed dated 25.09.2009 being attorney on the basis of
power of attorney dated 18.09.2008 one behalf of Smt. Rajwati, owner
of the property in question, but the assessee for the reasons best known
to him chosen to keep silent to explain the facts if the sale consideration
received by him being attorney has ever been transferred to Smt.
Rajwati nor he has produced computation of income along with return
of income filed by him qua the relevant assessment year as called for by
the ld. CIT (A).
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In these circumstances, we are of the considered view that merely
on the basis of legal position that the assessee being attorney cannot be
treated as owner of the property in dispute for computing capital gains
because assessee has not brought on record the true and correct facts
rather intentionally suppressed the material facts from the AO/CIT (A)
as well as from the Bench. During the course of arguments, the Bench
has put a specific query to the ld. AR for the assessee that :
“whether assessee being the attorney has transferred the sale consideration to Smt. Rajwati, original owner of the property, if so, whether in cash or through banking channel.”
But the ld. AR for the assessee stated that this query can be answered by
the assessee only. In these circumstances, we are of the considered view
that unless assessee does not explain if he has transferred the sale
consideration to Smt. Rajwati, original owner and has not produced
computation of his income along with return of income qua the relevant
assessment year, the power of attorney dated 18.09.2008 is a mere
“sham document” prepared to evade the tax and he is not entitled for benefit of judgment of Hon’ble Madras High Court in CIT vs. C.
Sugumaran (supra).
Ld. CIT (A) in this case was also required to call for a remand
report from AO if Smt. Rajwati received the sale consideration qua the
property in question and capital gains has been computed in her hands
because Smt. Rajwati has also filed affidavit before the ld. CIT (A)
stating in para 6 thereof that she endorsed the sale deed dated
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25.09.2009 as she has received cash sale consideration. In order to
decide the issue :
“as to whether by virtue of power of attorney dated 18.09.2008 assessee has executed the sale deed merely as an attorney on behalf of Smt. Rajwati and has transferred the sale consideration to her or the power of attorney is a sham document just to evade the tax”,
the issue is required to be remanded back to the AO to decide afresh.
Consequently, this issue is remanded back to the AO to decide afresh
after providing adequate opportunity of being heard to the assessee.
So far as question of confirming the addition by ld. CIT (A) to
the tune of Rs.12,44,250/- and Rs.15,33,500/- on account of unexplained
cash deposit and on account of unexplained investment in purchase of
property is concerned, the ld. CIT (A) has thrashed the issue in question
by returning following findings :-
“13. The facts of the case, submissions made by the appellant, remand report of the AO and rejoinder of the appellant have been considered. The appellant has purchased a property at 4/130 HIG, Gyan Khand, Indirapuram, Ghaziabad during the year under reference for Rs.33,32,5001-. The appellant did not furnish source of the investment in the said property before the AO. Therefore, the AO has made addition on this account of unexplained investment. During the appellate proceedings, it has been explained by the AR that the appellant has taken a bank loan of Rs.18,43,000/- from P.N.B. Housing Finance Ltd. The remaining amount has been explained by making payments from his bank account with PNB, Indirapuram vide cheques Nos.251593 and 251588 dated 16.09.2009 and 29.07.2009 of Rs.5 lac each respectively, cheque of Rs.l.5 lac dated 28.09.2009 and Rs.7,000/- in cash. On perusal of the submission and bank' account with PNB, Ghaziabd (Account No.40S2000100000763) of the appellant it is noted that two cheques for Rs.2 lac each have been deposited on 14.09.2009, cash of Rs.5 lac has been deposited on 28.07.2009 and cash of Rs.2.5 lac has been deposited on 26.09.2009 before issuing cheques for the purchase of the property as above. However, the appellant has not submitted any explanation/documentary evidence to explain the source of cash deposited or details of cheques
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received of Rs.4 lac to substantiate the explanation given above for the investment made. The appellant has been given reasonable opportunity during appellate proceedings. However, the source of investment in the above property for Rs.14,82,500/- (excluding amount of Rs.18,43,000/-) has remained unexplained. Therefore, it is held that the AO was justified to make addition to the extent of Rs.14,82,000/- on account of unexplained investment in the property and the same is hereby confirmed u/s 69 of the Act. The AO has made addition of Rs.12,44,250/- on account of unexplained cash deposits in the bank account of the appellant u/s 68 of the Act due to non-submission of any explanation during assessment proceedings. During appellate proceedings, the appellant has filed only a copy of bank statement with PNB but has not explained the source of the same with supporting evidences. In the circumstances the source of cash deposit of Rs.l lac (03.06.2009) and Rs.3,94,250/- (29.01.2010) has remained unexplained. The remaining additions of Rs.5 lac and Rs.2.5 lac as made by the AO have been already considered while making addition for unexplained investment in the house in the preceding para. ……….. It has been provided' u/s 69A of the Act that where the appellant is found in ownership of any amount and the explanation offered by the appellant regarding the nature and the source of the acquisition of the same is not found satisfactory then such amount will be deemed income of the appellant for that financial year. In this case the appellant is found to be the owner of the deposits made on different dates in his bank account and explanation offered by him for the nature and source of the acquisition of the same has been found to be unsatisfactory. The appellant has not denied the ownership of such amounts found credited in his bank account in the year under consideration. Therefore, the addition made by the AO under a wrong provision of the Act cannot absolve the appellant from being taxed under the correct provisions of the Act. Therefore, the addition of Rs.14,82,500/- on account of unexplained investment in property is assessed u/s 69 of the Act which is hereby confirmed. The addition made at Rs.4,94,250/- on account of unexplained cash deposit is assessed u/s 69A of the Act which is hereby confirmed. Ground of appeal No.3 is dismissed.”
Ld. CIT (A) has given ample opportunity to the assessee during
appellate proceedings to file explanation/documentary evidence to
explain the source of cash deposit as well as unexplained investment in
purchase of property to explain the cash deposits as well as unexplained
investment in purchase of property. Ld. AR for the assessee drew our
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attention towards cash flow statement and bank statement issued by Punjab National Bank, available at pages 114 & 116 of the paper book respectively, which have already been duly considered by the ld. CIT (A) and has not brought on record any new facts/documents to explain the cash deposit as well as deposit of Rs.4,00,000/- by cheques. 14. So, in these circumstances, we are of the considered view that the addition of Rs.14,82,500/- on account of unexplained investment in property has been rightly considered by the ld. CIT (A). Ld. CIT (A) out of addition of Rs.12,44,250/- on account of unexplained cash, thus rightly confirmed the addition of Rs.1,00,000/- deposited on 03.06.2009 and Rs.3,94,250/- deposited on 29.01.2010. It is also rightly held by ld. CIT (A) that the addition of Rs.5,00,000/- and Rs.2,50,000/- made by the AO has already been considered in the addition made on account of unexplained investment in the property. So, we find no illegality or perversity in the findings returned by the ld. CIT (A) on this issue, hence this issue is determined against the assessee. 13. Resultantly, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in open court on this 4th day of October, 2019.
Sd/- sd/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 4th day of October, 2019 TS
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