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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: HON’BLE SHRI C.N. PRASAD, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2009-10 contest the order of Ld. Commissioner of Income- Tax (Appeals)-25, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No.CIT(A)-25/IT/14/13-14 dated 02/11/2015 on following effective Grounds of appeal: - 1. On the facts and the circumstances of the case, and in law Ld.CIT(A) erred in allowing u/s. 54F only on the basis of the letter furnished by the civil contractor without verifying the genuineness of the contractor and the physical existence of the building. Further Ld.CIT(A) admitted evidence on this issue in violation of Rule 46A without providing opportunity to A.O.
2. On the facts and circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.1,13,40,000/- on a/c of unaccounted cash credit without appreciating the fact that the assessee has failed to provide any documents and explanation to prove the same as burden of proof lies on the assessee.
2.1 Brief facts leading to the same are that the assessee being resident individual was assessed for impugned AY u/s 143(3) r.w.s. 148 on 06/03/2013 wherein the income was determined at Rs.226.68 Lacs after certain additions/disallowances. The assessee had not filed any return of income for the impugned AY. During search action u/s. 132 in the case of Mr. Madan Kolambekar group and survey action u/s. 133A on Jai Corp Group, various incriminating documents/evidences were recovered with corroborating evidences that development charges was paid to assessee against CIDCO file No.1916, Sector 59, Plot No.5, Area 1800 (Dronagiri). It transpired that the said plot was transferred by the assessee to Madan Associate / M/s. Iconic Realtors Ltd. [Jai Corp group entity] vide tripartite agreement dated 21/05/2008. Upon perusal of material, the assessee was stated to have received unaccounted cash of Rs.113.40 Lacs from Jai Corp Group entities/Madan Kolambekar on 24/04/2008 in respect of above plot deal at Dronagiri. 2.2 Accordingly, the case was re-opened by issuance of notice u/s. 148 on 28/08/2012, in response to which the assessee submitted that the assessee was 73 years old and his income was below taxable limit and therefore, no return was filed for impugned AY. Notices u/s 142(1) & 143(2) were issued to the assessee in due course calling for requisite information / details.
2.3 The assessee submitted hard copy of return disclosing interest income of Rs.1.75 Lacs. Upon perusal of information, it transpired that the assessee’s mother Srimati Anandibai Narayan Kathe died on 03/01/1996 leaving behind assessee and others as legal heirs. She was holding land being described as 12.5% Goathan at Nagaon and by virtue of government acquisition of land, she was allotted plot admeasuring 2000 Sq. Meter at Dronagiri. During the course of assessment proceedings, the assessee filed sale agreement towards the sale of plot admeasuring 2050 Sq. meter at Dronagiri wherein the plot was stated to be sold for a consideration of 109.67 Lacs. As per the sale agreement, the legal heirs were only four persons including assessee. The assessee also produced irrevocable power of attorney executed during December, 2006 which stated that there were four legal heirs of Srimati Anandibai Narayan Kathe. This was in contrast to distribution agreements dated April 2008 & January, 2009 wherein it was mentioned that there were eleven beneficiaries which contradicted the sale agreement that there were only 4 beneficiaries. Accordingly, the assessee was directed to furnish the details of all the beneficiaries. 2.4 The assessee vide submissions dated 21/10/2012, explained that there were 8 main persons i.e. the assessee and his 6 brothers and 1 sister and only the assessee was alive. However, it was noted that as per distribution agreement, the sale proceeds were to be divided into 8 parts- 7 parts would go to each of the son of the deceased whereas one part was to go to 4 daughters of the deceased. In the aforesaid background, rejecting assessee’s submissions, the entire sale consideration of Rs.109.67 Lacs was brought to tax in the hand of the assessee as unexpanded cash credit u/s 68.
2.5 The assessee, vide submissions dated 23/02/2013, staked claim of deduction u/s 54F against aforesaid gains, by submitting bills towards construction of residential house. However, in the absence of any purchase documents & other details, the claim was rejected. 2.6 The assessee has suffered another addition of unexplained cash credit u/s 68 for Rs.113.40 Lacs which spring from the fact that incriminating material found during search / survey proceedings as enumerated in para 2.1 established that the assessee received unaccounted cash of Rs.113.40 from the aforesaid entities against sale of above plot. 3.1 Before Ld. first appellate authority, the assessee assailed the addition by submitting that the addition has been made for Rs.109.67 Lacs even though the assessee had received only Rs.16.42 Lacs as his share. The copies of allotment letter, sale agreement, distribution agreements, power of attorney etc. were filed in support of the submissions. Upon perusal of Power of Attorney, Ld. first appellate authority concurred with the stand that there were several legal heirs having their legal claims over the plot and the assessee was not the sole owner of the plot. Further, as per Power of Attorney, 4 persons were acting on behalf of the other legal heirs and therefore, there was no contradiction between the sale agreement and the distribution agreement. The distribution agreements correctly listed 11 beneficiaries i.e. 7 brothers and 4 sisters. The sale proceeds were to be divided into 8 parts – 7 parts for each of the brother and 1 part for the benefit of 4 sisters. The perusal of assessee’s bank statement established that the amount mentioned against each beneficiary in the distribution agreement was debited in the passbook of the bank account opened by the assessee in joint names for the purpose of distribution among the legal heirs / beneficiaries. Keeping in view the entirety of documentary evidences, Ld. CIT(A) concluded that the assessee received only an amount of Rs.16.42 Lacs out of sale proceeds and the balance belonged to other beneficiaries /legal heirs. Resultantly, the balance addition of Rs.93.25 Lacs was deleted. 3.2 The deduction u/s 54F was allowed by observing as under: - 8.1. The appellant in his submission has stated that he has paid an amount of Rs.19,53,000/- to build a residential house at Uran. The A.O denied the claim stating that the appellant had not submitted the details of the construction of the house for the claim to be allowed u/s.54F. The appellant in his submission has provided the details as annexure to the letter dated 07.10.2015. He has furnished a letter from Pioneer Enterprises, Civil Contractors who has certified that the appellant has given an amount of Rs.11,53,000/- towards construction of a residential house at Kathe Ali, Nagaon, Taluka Uran. The appellant has furnished additional details to show that an amount of Rs. 19,50,000/- has been paid for the construction of the house. In view of the above, and since the appellant fulfills the condition, the claim U/S.54F is allowed. This ground of appeal is therefore allowed. 3.3 The addition of Rs.113.40 Lacs was deleted, after considering the remand report, by observing as under: - 9.3. I have carefully considered the submissions of the appellant, the assessment order as well as the report under the remand proceedings. Apart from the information received from the JCIT(OSD) Central Circle -39, Mumbai no other information or evidence is with the A.O to come to the conclusion that the appellant has received the cash. The A.O has not done any investigation or verification to ascertain whether the appellant has received the amount. There is no doubt that there was an entry in the books of parties to whom the property at Dronagiri has been sold where it is indicated that an amount of Rs.1,13,40,000/- has been paid to the appellant. On receipt of this information the A.O should have gone ahead to ascertain by on the spot verification or some other means to find out whether the appellant or any of the other beneficiaries had made any investment of the money which the appellant is stated to have received from the purchaser of the property. Normally a statement on oath could have been recorded of the entity or person who is said to have made the payment and the appellant could have been given an opportunity to cross examine the party. But no such verification or enquiry has been done and the only basis for the addition as indicated by the appellant is the entry found in the books of a third party. This entry by itself cannot form a basis of the addition and the onus to prove that the appellant has received the money is on the A.O. In view of the above I hold that the addition of Rs.1,13,40,000/- made u/s.68 cannot be sustained and therefore it is deleted. This ground of appeal is allowed.”
Aggrieved, the revenue is in further appeal before us contesting grant of deduction u/s 54F and deletion of addition of Rs.113.40 Lacs u/s 68.
The Ld. DR supported the stand taken by Ld. AO and submitted that the assessee failed to discharge the onus that it did not receive unaccounted cash from the concerned parties. Per Contra, Ld. Authorized Representative for Assessee [AR], submitted that the additions could not be sustained merely on the basis of third-party statements without bringing on record any corroborative evidences. 5.1 We have carefully heard the rival submissions and perused relevant material on record including documents placed in the paper- book. The undisputed fact that emerges are that the stated plot of land was acquired by the assessee by way of inheritance from his mother. The documents on record has established that assessee was not the sole owner of the land under question and it was entitled for share to the extent of Rs.16.42 Lacs only which has rightly been brought to tax in his hand. 5.2 So far as the addition u/s 68 for Rs.113.40 Lacs is concerned, it emerges that except for third party documents / evidences, there is nothing on record which corroborates the fact that any such unaccounted money flowed to the assessee in cash. The assessee denied having received any such money and therefore, the onus had shifted on revenue to dislodge the assessee’s claim. As rightly noted by Ld. CIT(A), no further investigation /inquiry has been conducted by Ld.AO to contradict the assessee’s claim. The opportunity to cross-examine the persons has never been provided to the assessee and the assessee was directed to prove the negative i.e. that he did not receive any unaccounted money. Therefore, we do not find any infirmity in the impugned order on this issue. Ground No. 2 stand dismissed. 5.3 So far as deduction u/s 54F is concerned, we find that the assessee supplied construction bills as well as certificate of civil contractor to suggest that the money was spent for construction of the residential building. The assessee in support of the claim had filed copy of construction bills, statement showing mode of payment to contractor, correspondence with Sarpanch of Grampanchayat, Naygaon, Uran, NOC from other legal heirs to build a house, 7/12 extract, property tax receipt etc. The said documents were filed during remand proceedings also to Ld. AO vide submissions dated 23/05/2015 and therefore, there was no violation of Rule 46A as urged by the revenue in grounds of appeal
. The perusal of these documents clearly established the assessee’s claim u/s 54F. Therefore, no infirmity could be found in the impugned order, in this regard. Ground No.1 stands dismissed.
6. The appeal stands dismissed. Order pronounced in the open court on 06th June, 2019. Sd/- Sd/- (C.N. Prasad) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 06/06/2019 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2.