JYOTSNA VIKAMSINH,MUMBAI vs. INCOME TAX OFFICER 21(1)(5), MUMBAI

This appeal filed by the assessee is against the order of CIT(A)-33, Mumbai dated 13/06/2017 for A.Y.2013-14 in the matter of order passed u/s.143(3) of the IT Act.

The grounds raised by the assessee are as under:- “1) The CIT (A) has erred in confirm in law and facts by making addition of Rs.60,00,000/- to the total income of our Appellant by invoking provisions of section 69A of the Income Tax Act. 2) The CIT(A) has erred in law and on facts by making additions of Rs.60,00,000/- under the head business income. 3) The Commissioner of Income Tax (Appeal) failed to appreciate that the Cheque of Rs.60,00,000/- as referred in the conveyance deed was not deposited in your Appellant's Bank Account.

Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual and had filed her return of income for A.Y. 2013-14 on 27th July, 2013 declaring total income at Rs.14,78,250/-. During the course of scrutiny assessment, the AO found that assessee has deposited a sum of Rs.60,00,000/- in cash in her bank account, accordingly, AO asked the source of the deposit. It was explained before the AO that during A.Y. 2011-12 the assessee along with other two co-owners, namely, Mr. Pratapsinh Shoorji Vallabhdas and Mr. Dilipsinh Shoorji Vallabhdas were jointly and equally holding the plot of land bearing CTS No. 27 (Part), Survey No. 96 admeasuring 457 Sqr. Mtrs. of village Hariyali, Taluka Kurla. The said plot of land was sold by three co-owners to M/s. Kanchi Koncept Builders & Developers Pvt. Ltd. 'the Purchaser') for a total consideration of Rs.1,80,00,000/-. The said land was conveyed through the Deed of Conveyance dated 3rd November, 2010 entered into between the said three co-owners and the Purchaser. Accordingly, the assessee was entitled to receive Rs. 60,00,000/- (l/3rd of Rs. 1,80,00,000/-) as consideration for parting with her share in the said land. The purchaser had issued the cheque for Rs.60,00,000/- in the name of the assessee dated 7th December, 2010 drawn on Bank of India, Ghatkopar East branch having cheque number '000132'. However, the purchaser requested all the three co-owners that the cheques issued should not be deposited till they were further intimated in this regard. Later, only Mr. Dilipsinh Shoorji Vallabhdas was instructed to deposit the cheque but the assessee and Mr. Pratapsinh Shoorji Vallabhdas were never instructed to deposit the cheques. Accordingly, the assessee did not deposit the cheque received from the purchaser. Later, in the A.Y. 2013- 14 the purchaser paid the Rs. 60.00,000/- to the assessee in cash in tranches and the same were deposited by the assessee in her bank account no. '910010004391093’ with Axis Bank between 17th July, 2012 and 4th September, 2012, the details of which are as follows: Sr. Date Amount of cash deposited in the No. Account (in Rs.) 1. 1707 2012 5.00,000/- 2. 25072012 5.00,000/- 3. 26 07 2012 5,00,000/- 4. 27/072012 5,00,000/- 5. 28/07 2012 5,00,000/- 6. 30 07 2012 5,00,000/- 7. 31 07 2012 5,00,000/- 8. 02 08 2012 7,50,000/-

04 08 2012 2,00,000/- 10. 13 08 2012 5,00,000/- 11. 14/08/2012 5,00,000/- 12. 24/08/2012 3,00,000/- 13. 31/08/2012 1,50,000/- 14. 04/09/2012 1,00,000/- Total 60,00,000/- 3.1. It was also explained that capital gain so earned on the sale of plot was already offered by assessee in A.Y.2011-12 and scrutiny assessment was framed wherein AO has accepted the declared capital gain and taxed thereon. 3.2. However, the AO did not agreed with the assessee’s contention and added Rs.60,00,000/- in her income by observing that assessee has not explained the source of receipt from the buyer who has purchased the plot in the A.Y.2011-12 from the assessee. 4. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us. 5. It was argued by ld. AR that in the A.Y. 2011-12 the assessee had sold the land to the Purchaser and had received the consideration of Rs. 60,00,000/- by a cheque. However the same was never deposited in the bank account by the assessee under the specific instructions from the Purchaser. Therefore the said amount of Rs. 60.00,0007- was, in fact, not received by the assessee in the A.Y. 2011-12. The said amount remained to be recovered from the Purchaser since the A.Y. 2011-12 till the time the same was received in A.Y. 2013-14. Our attention was also invited to the audited Balance Sheet on the Asset side under the head 'Loans and Advances' for the A.Ys.2011-12 and 2012-13 indicating the amount receivable from M/s. Kanchi Koncept Builders Pvt. Ltd, thereby establishing this fact that the said amount of Rs. 60,00,000/- was not recovered by the assessee from the Purchaser in the A.Ys. 2011-12 and 2012-13. 5.1. It was further argued that even though the assessee had not received the consideration from the Purchaser in the A.Y. 2011-12, the capital gains earned on the said transaction of Rs. 52,09,409/- (1/3rd share of the assessee in the total capital gains of Rs. 1,56,28,228/-) was offered to taxation and was forming part of the computation of total income of the assessee for the A.Y. 2011-12. The computation of the capital gains was scrutinized and accepted by the A.O. in the assessment order dated 13th March, 2014 for A.Y. 2011-12 in case of the assessee and Mr. Pratapsinh Shoorji Vallabhdas dated 26th February, 2014. Since the tax liability on the said capital gains was already paid by the assessee in the A.Y. 2011-12, no further liability remained to be paid on the said transaction and the amount of Rs. 60,00,000/- received in cash by the assessee in tranches during the A.Y. 2013-14 could not be brought to tax once again as the same would tantamount to double taxation of the said transaction. 5.2. Our attention was also invited to the assessee's bank statements of Axis Bank for the period commencing from 1st April, 2010 to 31st March, 2013 which also clearly show that the assessee did not deposit the cheque of Rs. 60,00,000/- at all and the said consideration was received in tranches by the assessee during A.Y.2013-14. All these facts were brought to the notice of the A.O. in the assessment proceedings vide letter dated 20th January 2016 and 16th February, 2016. 5.3. It was further contended by ld. AR that the assessee vide letter dated 8th February, 2016 had furnished before the A.O. the details of the Purchaser such as extract of Company Master Data from the Registrar of Company website showing registered office of the Purchaser, list of directors and the details of PAN of the company and also that of the Directors. The A.O. issued the notice u/s. 133(6) of the Act to the Purchaser which could not be served. Thereafter the assessee provided new address of the Purchaser to the A.O. and the new notice was issued by the A.O. and the same remained unserved. However, it is submitted that after providing the new address to the A.O., only single attempt was made to serve the said notice on the Purchaser and no further efforts were carried out to serve the said notice once again whereby the A.O. could have confirmed the facts from the Purchaser. It is, therefore, submitted that the solitary attempt made by the A.O. to gather the facts in case were grossly insufficient and the conclusions drawn therefore are erroneous and as such, the issuance of the notice u/s. 133(6) of the act is not an empty formality and the same should not have been completed by the A.O. in a perfunctory manner.

On the other hand, ld. DR contended that assessee could not substantiate the fact of receipt of cash in the year under consideration even though AO had issued notice u/s.133(6) to the purchaser, but the same could not be served on the purchaser. Accordingly, the AO was justified in adding the said deposit of cash in assessee’s bank account as unexplained.

We have considered rival contentions and carefully gone through the orders of the authorities below. From the record, we found that assessee had sold the land jointly owned by her with Mr. Pratapsinh Shoorji Vallabhdas and Mr. Dilipsinh Shoorji Vallabhdas. Thus, the assessee was having 1/3rd share therein. The plot was sold for Rs.1.80 Crores through conveyance deed on 03/11/2010. According to the conveyance deed, assessee was entitled to receive Rs.60,00,000/- (equivalent to her 1/3rd right in the land) which was paid through cheque by the purchaser M/s. Kanchi Koncept Builders & Developers Pvt. Ltd. Subsequent to the execution of the conveyance deed, the buyer asked the assessee not to deposit the cheque till he gives the clearance. However, thereafter, the buyer has paid Rs.60,00,000/- in the F.Y.2012- 13 on different dates as stated above. The said amount was deposited by the assessee in her bank account. It is also a matter of record that profit earned on the sale proceeds of Rs.60,00,000/- out of the sale of land was already offered as capital given in the A.Y.2011-12 which was under scrutiny by the Assessing Officer and assessment order was passed on 30/03/2014 for the A.Y.2011-12. The AO had dealt with the issue of capital gains on sale of this land at para 13 and after giving deduction on account of indexed cost of acquisition brought capital gain of Rs.52,09,409/- to tax net. It is also a matter of record that tax liability on the said capital gains was also paid by the assessee in the A.Y.2011-12, no further liability remain to be paid on the said transactions. It is also not a case of AO that cheques received in the A.Y.2011-012 was credited by assessee in her bank account. On the contrary, the audited balance sheet clearly indicates that the amount of Rs.60,00,000/- given by cheque which was not cleared was shown in the audited balance sheet under the head ‘loans and advances’ in the A.Y.2011-12 and 2012-13. This clearly establishes the fact that the said amount of Rs.60,00,000/- was not recovered by the assessee from the purchaser in the A.Y.2011-12 and 2012-13. Since the assessee has correctly disclosed and offer to tax capital gains on the said transactions in the A.Y.2011-12, the same