ANBHAO PARKASH S/O DARSHAN LAL, VILLAGE VEERE WALA KALAN, FARIDKOT,FARIDKOT vs. INCOME TAX OFFICER, WARD-3(4), FARIDKOT, JURISDICTIONAL ASSESSING OFFICER, ITO WARD 1, FARIDKAOT, FARIDKOT

Brief facts emerging from the record are that the assessee is an agriculturist whose main source of income is earnings from agricultural activity. On information received by the AO regarding cash deposited in bank account (OBC) by the assessee amounting to Rs.16,75,000/- and earning of commission income (as reflected in Form 26AS ) and in absence of any return of income on record, proceedings were initiated by issue of notices u/s 148 dated 29/03/2019.Thereafter , return submitted on 12/11/2019 , was followed by notice issued u/s 143(2) and in absence of any proper explanation to notices issued u/s 142(1), thereby , failing to satisfactorily explain the source of cash deposit, the assessment was completed on a total income of Rs.16,85,430/- (including an addition of Rs.16,75,000/- u/s 69 of the Act, being the amount of cash, deposited in bank by the assessee).

In course of first appeal proceedings, the assessee has filed submissions with evidences explaining the source of cash deposit in details and remand report was obtained from the AO, and in response to the same the assessee has filed a rejoinder to the remand, but the ld. CIT(A) after consideration of all documentary evidences has dismissed the appeal and has sustained the addition of Rs.16,75,000/- u/s 69 of the Act . the memorandum of appeal.

The first three grounds of appeal ( Grounds 1 to 3 ) relates to the reopening of the case u/s 148, where the assessee has raised objections regarding independent application of mind of the AO for the purpose of reopening .

In course of hearing, the assessee has filed a summary regarding date-wise deposit of cash in the bank which is reproduced as under:

The agreement to sell was executed on official stamp paper of Rs.500/-,and the same has been duly drafted, dictated and stamped by an advocate S. Balhar Singh Gill, Faridkot. The agreement was executed & signed in the presence of two independent witness namely S. Baldev Singh S/o Sh. Gurdial Singh & Sh. Ram Krishan S/o S. Gurpreet Singh both being resident of veerewalakalan. Both the witness had provided the duly notarized affidavit to witness that the same agreement was made in their presence and the copy of both affidavits are forming part of paper book at page 62-67.

As per Section 17 of Registration Act, 1908 the registration of agreement to prove the transaction genuine, is not mandatory. (Copy of the same is enclosed at page 68-71 of Paper Book.)

In this regard, it is hereby submitted that Ld. CIT-(A) has not considered the source as explained by the assessee only on account that the agreement to sell executed by the assessee is an unregistered agreement.

Reliance is being placed on the judgment of Hon’ble Chandigarh “SMC”, Chandigarh Bench in the case of Narinder Kumar Vs. The Income Tax officer dated wherein in Para 5 of the order, it is for tendering as an evidence in a civil suit filed for specific performance of the contract and the Ld. CIT(A) followed an erroneous approach for just ignoring the agreement to sell.(The copy of the order is enclosed in paperbook at page 72-77).

Further reliance is also placed on the judgement of Kolkata Bench of ITAT in the case of Gautam Jhunjhunwala in wherein, the Hon’ble Bench has held as under:

In the result, the appeal of assessee is allowed”.

Hence, it is hereby submitted that although the said agreement is an unregistered but a valid document as in the above judgment, the Hon’ble Bench has allowed the exemption u/s 54 of the Act on the basis of only an agreement to sell. In the case of the assessee also, Rs. 10,00,000/- received on account of agreement to sell is the source of cash deposit by the assessee in the bank account and no adverse opinion in this regard is called for. submitted the affidavits of both the witnesses duly attested by Notary Public. Copy of same is enclosed at page 62-67 of Paper Book. It is clearly mentioned in the affidavits that “the said agreement to sell was written in my presence and I am the witness to this agreement. At the time of writing the said agreement, Gurdarshan Mall & Anbhao Parkash had collected Rs.10 lakh in cash & the remaining amount was to be collected at the time of registration.”

It is also submitted that if the assessee once submitted an affidavit and the contents of the affidavit have not been disproved by cross examination from the deponent then it would not be opened to the revenue authorities to disagree the facts mentioned in the affidavit.

Reliance is being placed on the decision laid down by the Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181(copy enclosed at page 78- 84 of paper book), none of the authorities considered it necessary to cross-examine the deponent with reference to the statement made in the affidavit, and, hence, under these circumstances it was not open to the revenue to challenge the correctness of the statement made by the deponent in the affidavit. In other words, consequently, the assessee was entitled to assume that the authorities were satisfied with the affidavit as sufficient proof on this point.

During the year under consideration the assessee has cultivated approx. 12 Acres of land jointly with his father. From the total of 12 acre of the land approx.

As the Assessee’ fathers name is mentioned on the J-Forms this obstructs the appellant to claim that appellant has earned agricultural income on the basis of those J-Forms. i. During the appellate proceedings, the assessee submitted J-Forms as evidence of agricultural income, J-Forms were in the name of the appellant's father which was questioned by the CIT(A), Assessment Year: 2012-13 But as the assessee lives in a joint family and it is a common practice in joint families that the major operations are being conducted in senior member’s name. ii. Even though the J-Forms are in the name of the appellant's father, the appellant has signed them. Therefore, the contention of the Ld. CIT(A.)—merely stating that the J-Forms were in the name of the assessee’sfatherisunjustified and contrary to the law, as the appellant has the authority to sign the J-Forms.

The documents submitted by the appellant, including the J-form, Jamabandi etc. serve as valid evidence of the transactions. The rejection of these documents solely on the ground that they are in the name of the assessee's father is unjustified, as both the assessee and his father jointly manage the agricultural activities. Therefore, the addition of ₹6,75,000/- should be deleted.

Moreover it is also submitted that, the assessee provided necessary details and thus, the onus shifted on the revenue to bring contrary material, but the learned CIT- A merely doubting the agreement to sell and agricultural income without pointing out any specific defect in the documents submitted by the assessee.

Reliance in this regard is also placed on the following judgments, wherein it has been held that when the source of the impugned addition made u/s 69 of the Act has been proved, it depicts that the assessee has discharged his onus and accordingly, addition made u/s 69 of the Act deserves to be deleted:

ITO vs. Daya Chand Jain Vaidya (1975) 98 ITR 280 Allahabad High Court “When a particular explanation furnished by the assessee and evidence in support thereof is adduced, the onus shifts on the Assessing Officer to falsify the said material or bring new material on record. Mere rejection of good explanation does not convert good proof into no proof”.

In light of the above submissions, it is hereby submitted that in the case of the assessee, the source of the investment has duly been explained with the help of relevant and corroborating documents proving the identity, creditworthiness and genuineness of the transaction wherein. Hence, it is hereby requested that the explanation of the assessee regarding the cash deposit of Rs. 16,75,000/- should be kindly accepted and assessment order passed by the Ld. AO may kindly be quashed and the additions made by the Ld. AO kindly be deleted.

He has also not controverted the argument of the assessee that in case of doubt regarding the contents of the sworn affidavit, examination of witness was required to have been done, as laid down by the Hon’ble Apex court in the case of Metha Parikh & Co (supra), and in absence of any such examination, in this case, neither by the AO nor the CIT(A), to rebut the contents of the affidavit , the sworn declaration contained therein cannot be disbelieved. He however, prays for upholding of the appeal order.

We have heard the rival submissions and considered the materials on record and we find that there is no compulsion of registration of an agreement for sale of agricultural land, however, registration under Act 1908, is compulsory in case of transfer, lease or mortgage of immovable property. As such the legal validity of the agreement of sale cannot be doubted, more so, considering the fact that the affidavit presence, has not been challenged by the AO or the CIT(A) and no examination of witness has been done and as such the averments or affirmation in the sworn affidavit cannot be disputed at this stage. As such we accept the explanation of the assessee that cash of Rs. Ten lakhs, has been deposited in bank out of such advance received, which is a reasonably acceptable explanation in absence of any materials to the contrary.

Regarding the issue of compulsory registration of lease deed raised by the ld DR, it is our opinion, that an unregistered lease deed may not be admissible as evidence in court to prove the terms of the lease or to claim any rights based on those terms, but it is still relevant to establish the existence of a landlord – tenant relationship.

In the instant case lease deeds, covering the agricultural lands from where the agricultural income is arising to the assessee (lands being leased in his favour), gives a right to the assessee to cultivate the same and the said right is in between the owner and the assessee (which is not disputed by any of the parties ) and for the purpose of the revenue the genuineness of actual RECEIPT of agricultural sale proceeds , evidenced by form – J has never been doubted , which means funds were available as per Form – J, with the assessee (and his father ) for making deposit in availability of funds are accepted out of sales of agricultural produce ( with the assessee and his father ) both belonging to the same agricultural family, earning their livelihood from cultivation from the same plot of land owned by the father and leased plot of land taken on lease by the son (with no other source of income other than agriculture), the cash deposit of Rs. 6,75,000/- in bank is accepted as explained.

Since we have allowed the appeal on merits of the case, the legal grounds contained in ground 1 to 3 of Form 36, are not taken up for adjudication.

In the result, the appeal filed by the assessee is allowed.