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Facts
The assessee, a non-filer, was involved in the purchase of agricultural land. Information from a survey u/s 133A led the AO to believe that the total payment for the land was Rs. 1,19,00,000, significantly higher than the Rs. 40,00,000 shown in the sale deed. The assessee's share was Rs. 59,60,000, and it was found that Rs. 59,50,000 remained unexplained.
Held
The Tribunal held that while the AO's initial findings pointed to a larger unexplained investment, the assessee's alternate submission, supported by a chart, indicated that only Rs. 7,00,000 related to the impugned assessment year. Considering the assessee's 50% share, the addition was restricted to Rs. 3,50,000.
Key Issues
Whether the addition made by the AO on account of unexplained investment in land purchase is justified, and if so, to what extent for the assessment year 2012-13.
Sections Cited
133A, 143(3), 147, 148, 142(1), 139, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA & SHRI ANIKESH BANERJEE
The instant appeal of the assessee filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld. CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in shot, ‘the Act) for the Assessment Year 2012- 13, date of order 24/11/2023. The impugned order emanated from the order of the Learned Income-tax Officer, Ward-1(1), Udaipur (for brevity, the “Ld. AO”), passed under section 143(3)/147 of the Act, date of order 07/12/2019.
/Jodh /2045 Chinmay Jain 2. The brief facts of the case are that the assessee is a non-filer of the income- tax return. The Ld. AO on perusal of information found that during the course of survey u/s 133A of the IT. Act, 1961 in the case of M/s. Subhlaxmi Buildcon Pvt. Ltd. and M/s. Everest Ashiana Business Pvt. Ltd. Udaipur, books/documents were impounded. As per sale deed, the assessee alongwith Sh. Anil Chhajer has purchased agricultural land situated at Village Bhuwana. Tehsil Girwa, Udaipur for a consideration of Rs. 40,00,000 on 23.8.2011 from Sh. Tolaram, Sh. Varde and Sh. Pura Dangi. Whereas as per page 31 of Annexure A/7, payment to Sh. Pooranal was made aggregating to Rs. 15,00,000. As per page 32 of Annexure A/7, payment to Sh. Varda was made aggregating to Rs. 15,00,000; and as per pages 34 to 35 of Annexure A/7, payment to Sh. Tolaram was made aggregating to Rs. 89,00,000. As such from perusal of these pages i.e. 31,32, 34 and 35 of Annexure A/7, total payment towards payment of property was made by the purchasers aggregating to Rs. 1,19,00,000 instead of Rs. 40,00,000 shown in purchase deed. The assessee's share comes at Rs. 59,60,000 (50% of Rs. 1,19.00,000). No return of income has been filed by the assessee. Therefore, investment made by the assessee for purchase of land amounting to Rs. 59,50,000 remains unexplained. Thus, it is evident that an income of Rs. 59,50,500 had escaped assessment. A notice u/s 148 of the Act was issued in this case on 28.03.2019 after obtaining the necessary approval which was duly served upon assessee. But no return was filed by the assessee in response to notice as 148 of the Act. Further, a notice us 142(1) of the Act was issued on 07.10.2019 and duly served on the assessee. The assesse was required to file his return on or before 14.10.2019 but no return was filed. The assessee filed ITR in response to notice u/s 148 on 08.11.2019 declaring total income Nil. Finally, after deducting the investment of the assessee amount to /Jodh /2045 Chinmay Jain Rs.20,00,000/- the balance amount to Rs.39,50,000/- (Rs.59,50,000/- - Rs.20,00,000/-) was confirmed. Aggrieved assessee filed an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) confirmed the addition made by the Ld.AO. Further aggrieved, the assessee is in appeal before us.
3. The Ld.AR argued and submitted a paper book containing pages 1 to 55 which is kept on record. The Ld.AR stated that the Ld.AO has wrongly assumed the purchase of property and payments made by the assesse to the parties. Considering this, the Ld.AR stated that during the appeal proceedings, the assessee submitted the following submissions which is reproduced as below:-
“1. That during assessment year 2012-13, appellant was enjoying income amounting to Rs. 22910/- from Interest on MIS and Interest on Saving Bank Account. Therefore, he was not required to file his Return of Income u/s139 of the Income Tax Act, 1961. (Refer Page No. 1-19).
That AO. received some information from other ITO regarding purchase of land admeasuring 0.4100 Hectare situated at Araji No. 497-502. Village Bhuwana, Tehsil Girwa, District- Udaipur (Rajasthan) from Shri Tola Ram, Shri Pura, & Shri Verda Dangi in co-ownership with Shri Anil Chhajer amounting to Rs.4000000/-, And accordingly. appellant's share of purchase consideration was amounting to Rs.2000000/- (Rs. Twenty Lakh only), which was paid by him as under: - S.No. Cheque Number & date Amount (Rs.) Refer page No. 1 120534/07.02.2011 1000000 2 120532 /07.02.2011 50000 20-21 3 120531/16.02.2011 500000 Total 2000000
3. Third ITO (that means ITO other than AO) conducted survey on (1) M/s Subh Laxmi Buildcon Pvt. Ltd. and (2) M/s. Everest Ashiana Business Pvt. Ltd., and some loose papers were found in relation to the alleged cash transaction between above Companies and Shri Tola Ram, Shri Pura & Shri Verda Dangi.
5. That when your goodself will peruse above loose papers, then you will observe that neither name of appellant nor the name of Shri Anil Chhajer was mentioned thereon. Also, the above loose papers are not in own handwriting of the appellant and the co-purchaser- Shri Anil Chhajer. Therefore, so far as appellant is concerned, above loose papers are not related to him. Hence, in view of the assessee's angle, above loose papers are dumb loose papers, and the AO should have not given any cognizance, and accordingly addition amounting to Rs.3950000/- was not to be made on the basis of above loose papers.
6. That appellant duly explained the source of purchase of land amounting to Rs. 20 Lakh. In order to explain the source of purchase of land, appellant filed following documents, and after considering the documents, no addition of Rs. 20 Lakh was made by the AO while making Assessment Order dated 07.12.2019.
(a) Statement of Saving Bank A/c No. 668010100014348 with Bank of India, Delhigate Branch, Udaipur. (Refer Page No. 21).
(b) Confirmation of Smt. Kamala Bai Jain. (Refer Page No. 26-27). (c) Confirmation of Shri Gajendra Chandaliya. (Refer Page No.28-29). (d) Confirmation of Smt. Rekha Jain. (Refer Page No.30-31). (e) Confirmation of Smt. Kiran Jain. (Refer Page No.32-33).
(f) Registered Purchase Deed of impugned purchase of land. (Refer Page No.34-45).
That we are further to submit that promoter of above Companies- Shri Aakash Jain, is well known personality dealing in Real Properties Investors as well in dealing of land in Udaipur, Hotelier and a manufacturer of Surgical Cotton & Bandage and Surgical Elastic Strips 7.1 That had the AO put some efforts, then he could able to know that Shri Aakash Jain is a leading dealer of Land and Immovable properties in Udaipur, and whatever cash transactions were appearing on the loose papers relating to Shri Tola Ram, Shri Pura and Shri Verda Dangi, it might have possible that relating to any other transactions/negotiation between Promoter and Tola Ram, Pura, Verda Dangi i.e. other than that of the appellant. As such, instead of issue of Notice
That at the time of issue of the Notice dated 28.03.2019 u/s148 of the Income Tax Act, 1961, above loose papers were not in possession with the AO. As such, Notice u/s 148 was issued without framing of basis of escapement of income.
In view of the above facts of the case, assessment made is bad in Law and liable to be quashed in view of following circumstances:
A. Cross Examination AO should have cross examined the payers for alleged cash payment amounting to Rs 39.50 Lacs.
Whether Appellant had made the alleged payment to the seller of land Shri Tola Ram, Shri Pura and Shri Verda Dangi.
2. Whether the alleged payment was made by the appellant to the promoters of the company and the sellers have received above cash payment from promoters of the company on behalf of appellant against purchase of impugned land.
That AO also failed to supply statement of promoters along with loose papers stating that the alleged payment was received by them from the appellant in order to give the same to sellers against purchase of impugned land, and also failed to provide the statement of sellers stating that they have received payment from company's promoter for the sale of impugned land.
So far as we know. AO was not having loose papers along with statement of parties at the time of issuance of Notice u/s 148 and also as well as at the time of passing of Assessment Order (as when we made request to AO to supply us copy of the loose papers, then the AO asked the concerned ITO to provide him the loose papers)
5. When the E-assessment is done, whatever the queries were asked by the AO, the same were replied to. Therefore, before fastening tax liability on the appellant, specific show cause notice was to be issued to the appellant.
Therefore, Assessment Order passed without cross examination and without perusal of Statement of Parties during the course of survey proceeding u's 133A of the Income Tax Act, 1961 is bad in law in view of the following case laws:-
(1) Bhatia Diamond P. Ltd. Vs. ITO, Ward-4(4), (ITAT), New Delhi "6. Keeping in view of the facts and circumstances of the present case and respectfully following the order of the Tribunal, SMC Delhi Bench, Delhi in the case of Smt. Jyoti Gupta Vs. ITO (Supra) and in view of the law settled by Hon'ble Supreme Court of India in the case of Andaman Timber Vs. CIT (Supra), on identical facts and circumstances, the addition in dispute is deleted and the appeal of the assessee is allowed."
In the alternate ground, the Ld. AR submitted a chart demonstrating that, in relation to the impugned transaction, a sum of Rs.7,00,000/- in cash pertained to the relevant assessment year, which was jointly attributable to the assessee and the co-owner. Accordingly, it was contended that only the assessee’s share, i.e., Rs.3,50,000/-, could be added to his total income for the year under consideration. The relevant chart is reproduced below: – Assessment Amount of Amount as per Total amount Cash as per Total amount year during cheque in purchase deed paid through impounded paid as per which payments impounded cheque document impounded were made as material document per impounded material 2011-12 4800000 3000000 7800000 3400000 8200000 2012-13 3000000 1000000 4000000 7000000 3700000 Total 7800000 4000000 11800000 41000000 11900000
4. The Ld.DR argued and relied on the orders of the revenue authorities.
We have heard the rival submissions and perused the material available on record. The transactions undertaken by the assessee pertain to AYs 2011-12 and 2012-13. It is noted that the assessee, along with the co-owner, made a payment of Rs.40,00,000/- through banking channels. The balance transactions were completed in AY 2011-12. On examination of the chart submitted, we find that only /Jodh /2045 Chinmay Jain a sum of Rs.7,00,000/- relates to the impugned assessment year. Considering the 50% share attributable to the assessee, only Rs.3,50,000/- can be brought to tax in his hands. The assessee has accepted this position vide letter dated 21/10/2024 filed before the Bench. Accordingly, we accept the alternate submission of the assessee to the extent of 50% of the on-money payment relatable to the impugned year. While we are conscious of the observations made by the Ld. AO in the impugned assessment order, in the facts and circumstances, only the portion relating to the impugned assessment year is liable to be added to the assessee’s total income. We, therefore, set aside the impugned appellate order and restrict the addition to Rs.3,50,000/- for the year under consideration. The appeal of the assessee is thus partly allowed on merits. The legal grounds raised
are treated as academic in nature.
6. In the result, the appeal of the assessee bearing