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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO & SHRI D.S. SUNDER SINGH
आदेश /O R D E R Per V.DURGA RAO, Judicial Member:
This appeal is filed by the Revenue and cross objection by the assessee against the order of the Commissioner of Income Tax (Appeals), [CIT(A)], Vijayawada dated 29.08.2016 for the assessment year 2012-13.
Facts of the case, in brief, are that the assessee is a retired employee filed his return of income by admitting total income of Rs.3,74,520/-. The return filed by the assessee was initially processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). Subsequently, the case was selected for scrutiny and after following due procedure, the assessment was completed u/s 143(3) of the Act. During the course of assessment proceedings, the Assessing Officer (AO) has noted that on verification of bank accounts of the assessee, it is noticed that huge cash deposits have been made in his Indian Overseas Bank Account. When the assessee was asked to explain the source of these cash deposits, he submitted that he sold his urban agricultural land of 2.02 acres for a consideration of Rs.1 crore, situated at Gudivada received from his father on partition through Will, deposited the sale proceeds of the land to the
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tune of Rs.99,00,000/- in cash into his bank account with Indian Overseas Bank, Ring Road Branch, Vijayawada in SB A/c No.106701000016627. The AO has asked the assessee to file the sale deed. The assesse on 09.03.2015 filed an unregistered sale agreement in respect of the above sale transaction. On verification of the sale agreement copy dated 23.08.2011, it is noticed that the sale agreement dated 23.08.2011 for Rs.1 crore was not registered and moreover it does not contain the addresses of the buyers, but only names of the buyers were mentioned and as such the identity of the persons purchased the property, genuineness of the transaction is not verifiable. The AO has asked the assessee to furnish the addresses of the buyers, encumbrance certificate for sale transaction, their income tax particulars and also to explain why the sale agreement was not registered when the consideration is very high, which is Rs.1 crore. The assessee neither produced the buyers nor furnished the addresses and no details have been filed before the AO. Therefore, the AO has treated the entire amount of Rs.99,00,000/- deposited in the assessee’s bank account as unexplained deposits and the assessee was asked to furnish the addresses and produce the buyers before him. The assessee neither furnished the addresses, produced any evidence nor filed any document except the
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unregistered agreement dated 23.08.2011. In view of the above, the AO has treated the entire deposit of Rs.99,00,000/- as unexplained cash deposit in the bank account u/s 68, accordingly the income is assessed to tax under the head ‘income from other sources’ and the same is added to the total income of the assessee.
Before the Ld.CIT(A), the assessee has submitted that the subject land has been sold by the assessee by executing General Power of Attorney (GPA). The land was sold to one Mr.Atluri Ram Babu for a consideration of Rs.1,00,50,000/- vide GPA dated 24.08.2011 which is registered before Jt.Sub Registrar, Gudivada with document bearing No.BK-4 of 73/2011. The Ld.CIT(A) by considering the above explanation given by the assessee has deleted the addition made by the AO by observing as under :
“Hence, I fail to persuade myself to agree with contention of A.O. that the deposit of one crore has not been explained with documentary proof and the document filed by appellant is not verifiable and not having any corroborative evidence like the identity of the buyers etc. In my view, contemporaneous evidence in the form of GPA agreement and sale agreement and corresponding deposits in bank coupled with subsequent encumbrance certificate clearly established the genuineness of the transactions. Hence, addition of Rs.99,00,000/- is not in order. I direct the Assessing Officer to delete the same.”
On being aggrieved, the Revenue carried the matter before the Tribunal. The Ld.DR has pointed out that the Ld.CIT(A) deleted the
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addition made by the AO based on the GPA filed by the assessee dated 24.08.2011. The Ld.CIT(A) without calling for the remand report simply considered the same, deleted the addition and it is a clear violation of Rule 46A of Income Tax Rules, 1962 and submitted that the issue may be remitted back to the AO for the consideration of GPA. It is further submitted that in the GPA, it is not mentioned that the assessee has received the sale consideration but the market value of the property is mentioned. Therefore, the Ld.CIT(A) wrongly presumed that the assessee has received consideration by executing GPA.
On the other hand, the Ld.Counsel for the assessee has submitted that the assessee has executed the sale agreement unregistered on 23.08.2011 and received Rs.1 crore and the same is deposited in the assessee’s bank account, therefore, the AO ought not to have doubted the genuineness of the transaction. It is further submitted that when the assessee sold the property through unregistered sale agreement, received the money, there is no obligation on the part of the assessee to produce the buyers and to prove the credit worthiness of them. Therefore, the AO is not correct in calling the assessee to produce the buyers and also prove their credit worthiness. The Ld.Counsel for the assessee further submitted that the
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assessee has submitted that subsequent to the sale agreement, the assessee executed the GPA and the land was sold to one Mr.Atluri Rambabu and the same is registered on 24.08.2011 before Jt.Sub Registrar, Gudivada. Therefore, the AO ought not have doubted the genuineness of the transaction and strongly supported the order passed by the Ld.CIT(A).
We have heard both the sides, perused the records and gone through the orders of the authorities below. The case of the assessee is that he has sold the property though unregistered sale agreement dated 23.08.2011 to 4 persons namely Valluruvalli Rajasekhara Prasad, Atluri Ram Babu, Sankabathula Naga Venu Kumar, Varuvula Bala Krishna Murthy and received a consideration of Rs.1 crore on the same day and the same amount is deposited in his bank account with Indian Overseas Bank, Ring Road Branch, Vijayawada in SB A/c No.106701000016627. The AO has doubted the transaction on the ground that the details of the buyers were not available in the unregistered sale agreement and also he received entire sale consideration without executing the sale deed. Therefore, the AO has asked the assessee to furnish the details of the buyers and also produce the buyers before him. The assessee neither filed the details of the buyers before the AO nor produced the buyers. From the sale agreement it is clear
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that the complete details of the buyers are not given. Therefore, the doubt expressed by the AO is genuine. When the AO has asked the assessee to furnish the details and complete addresses of the buyers, the assessee has not responded and no details were furnished. Under those facts and circumstances of the case, the AO has disbelieved the unregistered sale agreement and also consideration received and accordingly treated the entire amount received as unexplained cash deposits in the bank account by invoking section 68 and the same is added to the total income of the assessee. Before the Ld.CIT(A), the assessee has filed the GPA dated 24.08.2011 and submitted that he has received an amount of Rs.1,00,50,000/- as a sale consideration from Mr.A.Ram Babu and the same is registered before Jt.Sub Registrar, Gudivada. The Ld.CIT(A) by considering the GPA directed the AO to delete the addition made by him. It is a fact that the assessee has not filed GPA before the AO. He has only filed unregistered sale deed dated 23.08.2011. The Ld.CIT(A) before taking into consideration of the GPA dated 24.08.2011, ought to have called for the remand report from the AO. Not only that in the GPA filed by the assessee, he has not referred unregistered sale agreement dated 23.08.2011. Therefore, it cannot be construed that the GPA executed by the assessee is
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in pursuance to the unregistered sale agreement. As per GPA, the market value of the property of Rs.1,00,50,000/- only was mentioned. Nowhere, it is mentioned that the sale consideration has been received by the assessee from Mr.Atluri Ram Babu of Rs.1,00,50,000/-. Therefore, the Ld.CIT(A) is not correct in deleting the addition made by the AO based on GPA. Therefore, under these facts and circumstances of the case, we are of the opinion that the Ld.CIT(A) ought to have referred the GPA to the AO and called for remand report and decide the matter. The Ld.CIT(A) simply considered GPA and deleted the addition made by the AO. It is a clear violation of Rule 46A of IT Rules, 1962. Therefore, we set aside the order passed by the Ld.CIT(A) and remit the matter back to the AO to decide the entire issue deno in accordance with law after giving reasonable opportunity to the assessee.
In view of the above, appeal filed by the revenue is allowed for statistical purpose.
So far as the cross objection is concerned, the Ld.Counsel for the assessee has not pressed the issue and the same is dismissed.
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In the result, appeal filed by the Revenue is allowed for statistical purpose and the cross objection filed by the assessee is dismissed.
The above order was pronounced in the open court on 18th July, 2018.
Sd/- Sd/- (धड.एस. सुन्दर ससह) (िी.दुगाा राि) (D.S. SUNDER SINGH) (V. DURGA RAO) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 18.07.2018 L.Rama, SPS आदेश कीप्रधिधल धपअग्रेधर्ि/Copy of the order forwarded to:- 1. निर्ााररती/ The Assessee- Sri V.Venkata Subba Rao, F-4, Sri Balaji Nilayam 8-178, KGG Prasad Road, Kanuru, Penamaluru Mandal, Krishna Dist.- 520007 2. राजस्व/ The Revenue – The I.T.O., Ward-2(4), Central Revenues Building, M.G.Road, Vijayawada – 520 002 3. The Pr.Commissioner of Income Tax, Vijayawada 4. The Commissioner of Income Tax (Appeals), Vijayawada 5. धिभागीयप्रधिधिधि, आयकरअपीलीयअधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6.गाडाफ़ाईल / Guard file आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, VISAKHAPATNAM