SH. AMI LAL YADAV,GURGAON vs. ITO, REWARI

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ITA 1896/DEL/2016Status: DisposedITAT Delhi27 September 2016AY 2007-088 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 32,40,000 was not justified and directed its deletion. The Tribunal found that the property was indeed sold for Rs. 92.03 lac, as evidenced by the agreement to sell and a receipt signed by the buyer, Shri Kanwar Singh, which clearly mentioned a rate of Rs. 19 lac per acre. The assessee's bank statement corroborated the receipt of Rs. 33.50 lac in cash, deposited on the same dates as cheque deposits. The Tribunal noted that the AO failed to enforce the attendance of the buyer, Shri Kanwar Singh, when requested by the assessee, despite it being incumbent upon the AO to verify the assessee's claim. The Tribunal also observed that the AO did not dispute the nature of the asset as agricultural land and did not compute any capital gains, treating the amount as unexplained income. Regarding the Rs. 75,000 claimed as agricultural income, no arguments were advanced by the assessee, and thus this addition was sustained. The appeal was partly allowed.

What were the facts?

The assessee, Ami Lal Yadav, appealed against an order of the CIT(A) for AY 2007-08, which confirmed an addition of Rs. 32,40,000. The AO noted AIR information of the assessee depositing Rs. 33,51,000 cash in his bank account. The assessee claimed this was sale consideration from his wife's agricultural land. The sale agreement showed the wife and her sister selling agricultural land to Shri Kanwar Singh. Information from the Joint Sub-Registrar indicated a sale consideration of Rs. 24,22,000. The assessee's wife received Rs. 1 lac and Rs. 10 lac by cheque, and Rs. 1,11,000 in cash. The assessee contended the actual sale consideration was Rs. 92.03 lac, with the buyer recording a lower amount for registration purposes. The AO added Rs. 32.40 lac (Rs. 33.51 lac - Rs. 1.11 lac).

What were the issues?

1. Whether the addition of Rs. 32,40,000 on account of alleged unexplained cash deposits in the assessee's bank account is justified, turning on the determination of the source of funds from the sale of agricultural land (mixed law and fact, Section 68 of the Income Tax Act, 1961). The assessee argued that the cash deposits represented the actual sale consideration received from the sale of agricultural land, supported by an agreement to sell at Rs. 19 lac per acre, resulting in a total consideration of Rs. 92.03 lac, despite the sale deed reflecting a lower amount. The revenue contended that the addition was justified as the sale consideration recorded in the sale deed did not support the cash deposit amount. 2. Whether the addition of Rs. 75,000 as agricultural income is justified (mixed law and fact). No arguments were advanced by the assessee on this issue.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I: NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Mahavir Singh, Advocate
For Respondent: Shri Rajesh Kumar, Sr. DR
Hearing: 26.09.2016Pronounced: 27.09.2016

per acre. This Agreement to sell also refers to payment of Rs.1 lac to the assessee on 31.8.2006. This Agreement is albeit signed by the sellers and witnesses, but, is admittedly not signed by the buyer, Shri Kanwar Singh.

1.

Page No.1 onwards is a copy of registered Sale deed in which sale consideration has been mentioned at 24.22 lac. This shows that the transaction was settled with a sale rate of Rs.19.00 lac per acre, which gives the total amount of sale consideration at Rs.92.03 lac.

Notwithstanding that, the sale deed was got registered with a lower amount of sale consideration. This fact is further borne out from a perusal of the assessee’s bank account, whose copy is available on page 11 of the paper book. This shows that a sum of Rs.3,50,000/- was deposited in cash on the same day along with the cheque of Rs.1 lac on 4.9.2006, which got encashed for a sum of Rs.99,682/-. Similarly, on 23.11.2006, there is deposit of cheque of Rs.10 lac and on the same date, there is a deposit of total cash of Rs.30 lac, which also includes the declared sale consideration

Rs.1,11000. These two amounts, viz., Rs.3,50,000/- on 4.9.2006 and Rs.30 lac on 23.11.2006 are claimed to be the sums received in cash by the assessee from Shri Kanwar Singh on account of sale of property for a sum of Rs.92.03 lac. The sale consideration of Rs.92.03 lac, admittedly, comes out by applying the rate of Rs.19 lac per acre, which has been mentioned in the receipt dated 31.8.2006 duly signed by the buyer Shri Kanwar Singh. The assessee requested the AO to issue summons to the buyer and examine his claim of having received Rs.33.50 lac in cash. The AO did issue summons. Since none attended on behalf of the purchaser, the AO gave burial to the assessee’s request and did not proceed further to enforce the attendance of Shri Kanwar Singh. When I consider the facts and all the surrounding circumstances, there remains no doubt whatsoever that the property was, in fact, sold for a sum of Rs.92.03 lac, but, the sale deed was executed for a lower amount of Rs.24.22 lac.

The assessee’s bank statement validates his claim of having received a sum of Rs.33.50 lac in cash on account of sale of property, which was deposited in the bank on the respective dates of receipt only alongside the deposit of cheques. This is further substantiated from the fact that the bank

4.9.2006 itself with a deposit of Rs.1,000/- and on the same date cash of Rs.3,50,000/- was deposited along with a cheque of Rs.1 lac. Apart from these two cash deposits totaling Rs.33.50 lac, there is hardly any other entry of cash deposit in the bank account. These facts abundantly evidence that the assessee’s wife, in fact, received Rs.33.50 lac from the sale of her agricultural land in cash which was not declared by the buyer for obvious reasons. When the assessee raised the contention before the AO for examining the buyer, Shri Kanwar Singh, it became incumbent upon the AO to enforce his attendance and satisfy himself as regards the assessee’s contention. Nothing of this sort was done by the AO, who chose an easy way of making addition in the hands of the assessee, an agriculturist.

5.

On a specific query about the declaration of sale consideration on transfer of agricultural land in the computation of income for the purpose of computing the capital gain, the ld. AR submitted that the property sold was an agricultural land which did not result into any capital gain chargeable to tax. It is further noted that the AO has not disputed the nature of capital asset transferred, being an agricultural land. This is 6

manifest from the fact that he did not compute any capital gain from the transfer of this property, but, simply made an addition of Rs.32.40 lac, being the “unexplained income of the assessee from unexplained sources.”

In the given circumstances, I am satisfied that the ld. CIT(A) was not justified in sustaining the addition, which is hereby directed to be deleted.

This ground is allowed.

6.

Though there is another ground against the chargeability of Rs.75,000/- shown by the assessee as an agricultural income, but, no argument was advanced in support of this ground. I, therefore, sustain this addition. This ground fails.

7.

In the result, the appeal is partly allowed.

The order pronounced in the open court on 27.09.2016.

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