PRAHLAD KUMAR AGRAWAL, RAIPUR, RAIPUR vs. INCOME TAX OFFICER-1(1), RAIPUR (ERSTWHILE INCOME TAX OFFICER-1(3), RAIPUR, RAIPUR

The brief facts in this case are that during the year under consideration, the assessee had entered into an agreement for sale of agricultural land situated at Village : Attari, Tehsil & Dist: Raipur, Chhattisgarh with various persons as per records and raised advance against the above agreements. These advances were deposited in the bank account of the assessee maintained with HDFC bank. That on enquiry from the A.O during the course of assessment proceedings, the assessee in order to establish identity, genuineness and source of investments of the advance received in respect of agreement for sale has submitted before the A.O various agreements of sale and confirmations. Thereafter,

That when the matter reached before the first appellate authority, the affidavits of Shri Deen Dayal Nishad and Shri Shatrughan Nishad were available before the Ld. CIT(Appeals)/NFAC placed by the assessee as additional evidence and that in accordance with Rule 46A(3) of the Income Tax Rules, the Ld. CIT(Appeals) called for a remand report regarding the ground verification of the affidavits filed in respect of Shri Deen Dayal Nishad and Shri Shatrughan Nishad. The Ld. CIT(Appeals)/NFAC after considering the assessment order, remand report and the submissions of the assessee observed and held as follows: “4.4 Ground of Appeal no.1 w.r.t. Addition of Rs. 20,00,000/-: In this ground of appeal the appellant's claims regarding the receipt of advances for the sale of agricultural land, supported by affidavits and agreements have not been sufficiently corroborated by proper documentation. Further, the remand report as reproduced above clearly reveals that the documents furnish by the appellant are not authentic as one gentleman denied having made such documents and the other not appeared before the assessing officer for verification. The inability of the appellant to establish authenticity of the documents filed before the Assessing Officer led to the rejection of the appellant's claim for the amounts of Rs.17,00,000/- and Rs.3,00,000/-, which were included in the disputed addition of Rs.20,00,000/- in the remand report. Therefore, the addition of Rs.20,00,000/- made by the AO in his assessment order is upheld and ground of appeal on this issue is hereby dismissed.”

At the time of hearing, the Ld. Counsel for the assessee reiterated the submissions made before the sub-ordinate authorities and emphasized on the fact that confirmations and sale agreements pertaining to Shri Deen Dayal Nishad and Shri Shatrughan Nishad totalling to Rs.20

Per contra, the Ld. Sr. DR supported the findings of the sub-ordinate authorities.

I have carefully considered the contentions made by the parties and analyzed the facts and circumstances involved in this case a/w. documents on record. This is a case where the agreements of purchase of lands was entered into by the assessee from three persons viz. (i) Shri Ramakant Pandit; (ii) Shri Amit Sashdeva and (iii) Shri Dinesh Sachdeva. Thereafter, the assessee had also entered into agreement to sale of agricultural land as per parties mentioned in the assessment order and in lieu of such agreement these people had advanced money to the assessee and out of the 7 persons, the A.O had accepted the sale confirmations, sale agreements and recorded their statement on oath and also accepted affidavits filed from all the parties except Shri Deen Dayal Nishad and Shri

At the first appellate stage, these affidavits were made available by the assessee before the Ld. CIT(Appeals)/NFAC as additional evidence. Thereafter, a remand report was called for by the Ld. CIT(Appeals)/NFAC from the concerned A.O and as per remand report which is annexed at Page 9 and 10 of the paper book, the A.O regarding Shri Deen Dayal Nishad has not doubted transaction of sale entered into by Shri Deen Dayal Nishad and the assessee. The A.O in the remand proceedings also accepts that it is not Rs.10 lacs but Rs.17 lacs transaction with the assessee by Shri Deen Dayal Nishad. This is evident as the A.O writes that Shri Deen Dayal Nishad is not a man of means to advance Rs.17,00,000/-. However in the entire remand report there is no reasoning given nor A.O conducted specific enquiry regarding financial status of Shri Deen Dayal Nishad which makes the statement of the A.O as hypothetical and mere guess work not sustainable in law. The A.O denies the validity of this transaction of the assessee with Shri Deen Dayal Nishad on the ground that stamp paper records the date of purchase of stamp as mentioned 06.07.2015 and the date of agreement mentioned as 17.08.2012 and therefore, such agreement was not authentic. Further,

The said discrepancies as pointed out in the remand proceedings by the A.O is definitely a typing error which has been committed by stamp vendor since as per treasury which issues stamp paper to the stamp vendor serial numbers are matched and as per serial number of the stamp paper regarding all parties it stamps “L698” and this is also with regard to Shri Deendayal Nishad and therefore, instead of 2012, the year is mistakenly mentioned as 2015.

That also, as practical mode of issuance of stamp paper by vendor, the date of issuance which is stamped at rear side of the stamp paper, stamping machine is used manually and date and year have to be changed manually in that machine, therefore, there is possibility that while changing the date and year before issuance of stamp paper inadvertently mistake was committed and instead of the year 2012, it got mentioned as 2015. That since the Income Tax Act is within the realm of welfare legislation and it is not a penal legislation and also for the fact that the vendor was not crossed checked by the department therefore the benefit of doubt arises in favour of the assessee and the contention of the

The second point of contention in the remand proceedings in respect of Shri Deen Dayal Nishad was that his signature was different in the statement and the affidavit which deferred from the agreement to sale. In this regard, the A.O has not brought what exactly the difference in signature regarding Shri Deen Dayal Nishad. It has been contended and stated at bar by the Ld. Counsel that in one signature, Shri Deen Dayal Nishad writes his name only and on the other signature he had written his name as well as his surname. The department on the other hand has not brought out any evidence to support its contention that the signatures were not of Shri Deen Dayal Nishad or that in one document, signature was made by Shri Deen Dayal Nishad and that the other signature pertains to some other person. No such evidence has been brought on record and in absence of such inquiry, this contention raised by the department is also rejected.

That with regard to Shri Shatrughan Nishad, his affidavit was also filed as additional evidence and it was also sent to the A.O for his comments and therein, he writes that since affidavit filed by Shri Shatrughan Nishad is not corroborated by supporting evidence, therefore, the contention raised in the assessment is correct. However, the A.O in

That in the totality of the facts and circumstances, it is observed that department accepted the factum that the assessee had initially entered into agreement of purchase with three parties i.e. (i) Shri Ramakant Pandit; (ii) Shri Amit Sashdeva and (iii) Shri Dinesh Sachdeva and the department also accepted the fact that subsequently the assessee entered into agreement for sale with regard to 7 persons and in due course, the assessee had received advanced money from them. At the assessment stage, various sale agreements, confirmations of the parties and affidavits were filed by the assessee. Shri Shatrughan Nishad was not present at the assessment and affidavit of Shri Deen Dayal Nishad and Shri Shatrughan Nishad were filed before the Ld. CIT(Appeals)/NFAC as additional evidence. The department has accepted in respect of five parties regarding the cash advanced received by the assessee but in respect of Shri Deen Dayal Nishad and Shri Shatrughan Nishad, the same were

The factum of transaction i.e. land to be sold in respect of 7 parties has been accepted by the department, the agreements have been accepted and confirmations have also been accepted. That on the same parameters and factum of land, the department has not brought any evidence as to why for the two people viz. Shri Deen Dayal Nishad and Shri Shatrughan Nishad, the department holds the amount as non-genuine and treats the same as unexplained cash credit. That neither the A.O nor the Ld. CIT(Appeals)/NFAC has doubted the entire transaction entered into by the assessee with these 7 persons. The Ld. Sr. DR could not establish that why the affidavits of other parties were accepted by the department and why affidavits which were placed as additional evidence i.e. with regard to of Shri Deen Dayal Nishad and Shri Shatrughan Nishad were held as invalid. More so, because it pertains to the same land agreements which for the other parties, the department has already accepted as genuine. The Ld. Sr. DR also could not produce any documentary evidence to justify the stand of the department in rejecting the affidavits filed and thereby

Considering the facts and circumstances in entirety, in my considered view the addition made by the department u/s. 68 of the Act as unexplained cash credit is unfounded, arbitrary, misplaced and bad in law. Resultantly, the A.O is directed to delete the said additions from the hands of the assessee.

As per the above terms, the grounds of appeal raised by the assessee are allowed.

In the result, appeal of the assessee is allowed. Order pronounced in open court on 15th day of May, 2025.