INCOME TAX OFFICER, BEHROR vs. SHRI MAHINDER YADAV, ALWAR

PER BENCH : These two appeals are filed by the assessee and revenue aggrieved from the order of the Commissioner of Income Tax

2. That the CIT Appeal, Alwar in his order dated 13.09.2018 enhanced the total amount of investment from 35653212.00 to 36245212.00 of the assessee by his own assumption. The total investment proved by the AO in his remand report is 35653212.00. Therefore the enhancement of Rs. 5.92 lakh is illegal and baseless. And based on his own assumption.

3. That the CIT Appeal erred in making addition of Rs. 18.92 lakh, where the ld. AO was satisfied with the submission of the assessee.

4. That the CIT Appeal has overruled the findings of the AO without giving any specific reasons. The assessee craves to add/alter any ground of appeal at the hearing of the appeal.”

2.1 On 22.09.2021 assessee has filed a payer to revise ground no. 3 and a prayer to raise additional ground. The said additional ground and revised ground is extracted herein below as the same admitted in the interest of justice:

Modified ground no.3 3. That the CIT(A) erred in making addition of Rs. 19.92 laksh where the ld. AO was satisfied with the submission of the assessee.

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the addition to the tune of Rs. 34,73,212/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may be granted by deleting the said addition.

3. In the revenue has taken following ground in this appeal;

“1. On the facts and circumstances of the case and in law Ld. CIT(A) erred in restricting the addition of Rs. 3,62,45,212/- to Rs. 53,65,212/- made by the AO on account of unexplained investment from undisclosed sources, without appreciating the material facts of the case.”

4. The fact as culled out from the records is that in this case notice dated 29.12.2014 u/s 148 of the I.T.Act, 1961 was issued and served upon the assessee on 03.01.2015 after recording reasons u/s 147 of the Act. The assessee has not filed return of income within stipulated time in compliance of notice u/s 148.

Thereafter notice dated 20.02.2015 u/s 142(1) along with query letter was issue to the assessee fixing the date of hearing on 02.03.2015. It is observed from the records that the assessee remained non-compliant in the assessment proceedings. The ld. AO in his order at page 3 given a table mentioning the notices issued and / or opportunities provided and the compliance made by the assessee. The same is reproduced here in below:

5. It has been thus observed by the ld. AO that the assessee was provided number of opportunities to file reply in relation of various queries raised but he has only furnished part details/documents. The ld. AO based on the information provided by the assessee and details obtained from the office of the sub- registrar observed that the assessee has purchased following immovable properties during the year under consideration:

5.1 On perusal of the above table, it has been observed that assessee has paid a sum of Rs. 2,97,31,820/- for purchase of immovable property to the sellers in cash for purchase of immovable properties. The AO has further observed that the assessee has also incurred the other expenses in the form of registration expense, stamp duty, deed writing, commission/brokerage, photography expenses and other expenses which is tabulated in the assessment order and the same is extracted here in below: the assessee has invested a sum of Rs. 2,97,31,820/- in purchase of immovable properties during the year under consideration and also incurred expenses to the tune of Rs. 19,94,260/- in registration and other expenses. Thus, he has stated that the assessee has invested a sum of Rs. 3,17,26,080/- in purchase of immovable properties. The ld. AO further observed that in spite of various opportunity granted to the assessee. Therefore, based on the above facts the ld. AO given a final show cause notice to the assessee asking him to show cause as to why a sum of Rs. 3,17,26,080/- should not be treated as undisclosed sources income and added to the income of the assessee. The assessee has not filed any reply to the said show cause notice.

5.3 Meanwhile SR Bansur has also furnished copy of sale deed executed by the assessee for the year under consideration.

Therefore, on 22.06.2015 again a show cause notice was issued to the assessee. The relevant extract is as under:

"...In compliance of enquiry letter issued u/s 133(6) of the I.T. Act, 1961, Sub- Registrar Bansur has furnished copy of sale deeds executed by you during the year under consideration. On perusal of the sale deed, it is noticed that you have paid a sum of Rs. 10,00,000/- for purchase of immovable property situated at Vill. Hamirpur, Bansur and also paid registration charges/stamp duty of Rs. 65660/-. You are hereby required to show cause by this amount

7 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO should not be treated as your undisclosed income and added to your income..." No details/documents have been furnished by the assessee in compliance of above cause notice. Copy of two sale deeds registered by the assessee before the SR Fundawar has also been furnished by the SR- Mundawar vide his office letter no. 186 dated 12-06-2015 received in this office on 23-06-2015. However, AR of the assessee vide his written submission dated 08-12- 2015 has stated that:- “…..with due respect it is submitted that the assessee has purchased agriculture land as follows Date place cost registration charges total total 16-06-2011 Neemrana 9687300 188590 101175890 08-12-2011 Neemrana 9448180 472800 9920980 08.07.2011 Neemrana 9930340 458720 10389060 26.07.2011 Neemrana 1078000 65000 1143000 24.07.2011 Partapur chak no. 1 1250080 83510 699150 33661670 The assessee has purchased this land from the proceeds received on agreement of his ancestral land situated at Village Sanoli Tehsil Mundawar, Dist-Alwar, Rajasthan. The assessee has sold total of 4.48 hact, ie, about 22 bigha land @ 15.00 lakh/- bigha to Sh. T. Lachunagapa R/o Yamuna House, Gangtok, Sikkim. Sir, the assessee has received all the payment in cash from the party and handed over the possession and promised him that the documents can be register whenever he want. The invested all the proceed/amount in the purchase of agriculture land stated above….”

5.4 In the light of the peculiar facts of the case and continuation non compliance on the part of the assessee the ld. AO sought direction u/s 144A of the Income Tax Act from the office of the Addl. CIT, Range -2, Alwar vide AO letter dated 08.01.2016. The relevant direction is extracted here in below ; “…… I have perused the assessment records of the above assessee and find that there is no complication regarding the issue involved in this case. Neither any nor direction has been sought. Therefore, you are directed to complete the assessment as per rules. If the assessee does not co-operate the assessment proceedings, you can complete the assessment on merits exparts u/s 144 of the I.T. Act ….” relevant observation of the AO is reiterated here in below for the sake of brevity of the facts:

Summon u/s 131 of the IT Act, 1961 was issued on 13-01-2016 and assessee was required to attend this office personally on 21-01-2016. The summon remained uncomplied with. The assessee has furnished a copy of so called sale agreement executed between him and Sh. T. Lachunagapa R/o Gangtok (Sikkim) for sale of his agricultural land situated at Vill. Sanoli, Tehsil Mundawar, Distt. Alwar (Rajasthan) An enquiry letter dated 13.01.2016 u/s 133(6) of the IT Act, 1961 was issued to Sh. T. Lachunagapa R/o Gangtok (Sikkim) calling for certain details/documents in support of land purchased by him from the assessee on agreement basis. No reply was received from Sh. T. Lachunagapa R/o Gangtok (Sikkim) till 14-03-2016 hence another enquiry letter dated 14-03-2016 was issued to him through registered post to furnish certain details/documents within three days but till date no reply has been received from him. On 04-03-2016, the AR of the assessee has furnished copy of affidavit of Sh. Thukchuk Lachungpa S/o Lt. Sh. Tencho Lachungpa R/o Gangtok Sikkim in which he has stated that he has purchased the land from the assessee situated at Vill. Sanoli admeasuring 4.48 hectares but have not registered the sale deeds. He has further stated that he has visited the place once in Feb 2011 and again in April 2011 and in May 2011 during my visit to New Delhi by his personal vehicle. He further stated that I have given some amount at the time of my first visit and balance he has collected by visiting delhi from me and balance in may 2011 at Gangtok along with his brother Virender Yadav. He has further stated that all the payments have been made in cash by him to the selling party. He further stated that papers relating to agreement to sales are purchased by the seller himself and got notarized by them and after completion of payment I received the original and copy of that give to them. Contents of the affidavit have been examined carefully and it is observed that the purchaser has only stated that he has made some payments in his first visit during Feb. 2011, April 2011 and some in May 2011 is completely contradictory to the contents of the sale agreement. Exact amount paid on each time has been not stated by the purchaser. No or non registration of sale deed has been given by the so called purchaser.

When being facility is available all over the country then why payments were made in cash has been justified by him. Vide this office letter dated 14-03-2016 the assessee was asked as under: In order to finalize the pending assessment proceedings for the A.Y. 2012-13, in addition to earlier details/documents/clarification, you are hereby required to furnish the following details/documents/clarifications: 1. Furnish all pending details/documents along with supporting evidences.

9 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO 2. Produce original copy of sale agreement entered into by you for sale of your agricultural land situated at Vill. Sanoli (Mundawar) during the year under consideration.

4. Whether the sale deed for the land under consideration has been registered with the registration authority, if not, furnish the justification for non registration.

5. Produce the notary public who has notarized the sale agreement along with copy of his register.

10 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO Total payment made as under Total purchases 32334740 Less:: Received from T. Lachungpa 26888000 Received from brother 4000000 Self amount = 1446740 Reply of the assessee has been considered but the same is not found tenable documentary evidences in support of his contention have been furnished by him copy of alleged sale agreement. As stated above, the assessee was provided ample opportunities during the assessment proceedings to explain the source of investment made in purchase of immovable properties but the assessee has failed to prove source of investment made in purchase of immovable properties. However, the assessee has furnished a copy of alleged sale agreement executed by him with Sh. T. Lachunagapa R/o Gangtok (Sikkim) for sale of his agricultural land situated at Vill." as no except Sanoli. The contention of the assessee regarding sale of his agricultural land through a sale agreement is being hereby rejected on the following grounds:

1. The assessee has failed to prove the genuineness of sale agreement as he has neither produced the person with whom he has executed a sale agreement for sale of his agriculture land nor has produced the notary public who has notarized the sale agreement.

2. There is a clear contradiction in sale agreement and in affidavit of Sh. Lachungpa R/o Gangtok (Sikkim). As per affidavit of Sh. Lachungpa he has stated that he has made some payments in his first visit during Feb. 2011, April 2011 and some in May 2011 is completely contradictory to the contents of the sale agreement. Exact amount paid on each time has been not stated by the purchaser. As per sale agreement dated 10-04-2011 it is stated that entire sale consideration has been received in cash from the purchaser as earnest money (sai). Relevant extract of sale agreement is being reproduced hereunder: “...मैने उपरो�त आराजीयात को मुब�लक- 15,00,000/- �पये श�देन प��ह लाख �पये ��त प�क� बीघा के �हसाब से सौदा तय �कया गया है। बहक �ेता को �व�य करके �ेता से इस सौदे के म�य बतौर साई के मु0 2,68,80,000/- �पये श�देन दो करोड़ अडसठ लाख अ�सी हजार �पये �ा�त कर �लये है। उपरो�त आराजीयात का बयनामा मै �व�ेता िजस �दनांक को �ेता चाहेगा उस �दन �ेता के ह कमे या �ेता �वारा बनाये �कसी �दगर �यि�त के हक म� करवा दूंगा तथा �ेता से बयनाम� क� कोई रकम �ा�त नह� क�ंगा”

3. No sale deed has been registered with the registration authorities till date as stated by the purchaser without specifying any reasons for non registration of sale deed when entire payments was made at the time of executing sale agreement which shows that the transaction is not genuine and is a sham transaction.

11 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO 4. As stated in the sale agreement, the assessee has sold 4.48 hectares Le Bigha land to Sh. T. Lachunagapa 15.00 lacs per bigha i.e. for a consideration of Rs. 2,68,29,560 4.48 hectares means 17.89 Bigha and 17.89 1500000 2,68,29,560/-) and received a sum of Rs. 2,68,80,000/- as earnest money. It is ridiculous that a persons who buy a land for a sale consideration of Rs. 2,68,29,560/- and paid a sum of Rs. 2,68,80,000/- as carnest money and even after paying more than sale consideration did not get registered the sale deed in his name or in the name of other person.

5. How a person paid the entire sale consideration in cash to the seller at the time of executing sale agreement and did not get registered the sale deed with the registration authorities even after 05 years and 10 months from date of sale agreement is also not believable.

6. No original sale agreement has been produced by the assessee.

9. Neither the assessee not the purchaser has proved the source of extending such a huge amount in cash to the assessee for purchase of his agricultural land situated at village- Sanoli, Mundawar.

1 Neemrana 16.06.2011 96,87,300 488590 Approximately Rs. 175000/- 10350890 2 Neemrana 08.12.2011 94,48,180 472800 Approximately Rs. 175000/ 10095980 3 Neemrana 08.07.2011 99,30,340 581040 Approximately Rs. 175000/ 10686380 4 Batkhani 12.01.2012 6,66,000 39150 Approximately Rs. 10000/ 715150 05.10.2011 5 Hamirpur 10,00,000 65660/- Approximately Rs. 15000/ 1080660 07.10.2011 6 Sanoli 192822/- 10200/- Approximately Rs. 3000/ 206022 01.07.2011 7 Sanoli 558900 35640 Approximately Rs. 9000/ 603540 26.07.2011 8 Neemrana 1078000 65000 Approximately Rs. 15000/ 1158000 24.07.2011 9 Partpur 1250080 83510 Approximately Rs. 15000/ 1348590 Chak No. 2 Total Investment 36245212

The above chart shows that the assessee has made investment in immovable properties to the tune of Rs. 3,62,45,212/- but source of the same

13 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO has been remained unexplained as discussed in forgoing paragraphs of this assessment order. The assessee has failed to prove the source of investment in purchase of immovable property to the tune of Rs. 3,62,45,212/- hence the sum of Rs. 3,62,45,212/- is being hereby treated as income from undisclosed sources invested in purchase of immovable property and added to the total income of the assessee and taxed in his hands accordingly.

6. Aggrieved from the said order of the assessing officer, assessee has preferred an appeal before the Commissioner of Income Tax, Appeals-22, Alwar.

6.1 In the appellate proceeding the assessee has taken 7 grounds of appeal related to the addition of Rs, 3,62,45,212/- made by the AO on account of investment in purchase of immovable property from undisclosed sources.

6.2 Before the ld. CIT(A) assessee filed a detailed submissions along with the additional evidence under rule 46A of the Income Tax Rules, 1962. The ld. CIT(A) stated that after going through the reasons for not filling the details before the AO it has been considered necessary to take it on record to adjudicate on the issues raised in the appeal. The additional evidences were thus, forwarded to the AO for examination and his comments.

09.04.2018 in the remand proceedings, the relevant part is reproduced here in below :

“Verification of the funds received by the assessee of Rs. 26880000/- from shri T. Lachunagapa:- the assessee in his submission during the course of proceedings stated that he has received all the amount in cash from T.Lachungapa. The was asked to produce Sh.T. Lachungapa on dated 24.02.2016 , statement of the buyer is recorded, the buyer stated that he has purchases the land from the assessee and paid all the money in cash on different dates and executed the agreement with him. He further stated that he has taken over the possession of the land and sale deed is yet not executed. He produce his balance sheet for verification in which he has shown this land. He further stated that he is native of Sikkim for which no tax liability on him and given his PAN. He submitted all about his income in the state which place on record and copy of the statement is attached with this. The statement of brother of the assessee Sh. KD yadav was also recorded and placed on file copy of that is also enclosed. The statements of the assessee was also recorded and matched with the statement of the buyer Sh T. Lachunagapa. After recorded the statement the following amount has been verified :- Total investment by the Assessee including Registration charges in property Rs 35653212.00 Amount received from T. Lachunagapa Rs 26880000.00 Amount received from KD yadav Rs. 4000000.00 Balance Rs. 4773212.00 Amount invested by assessee from sale of his other Land and savings = 1400000.00 Unvarifeed amount = 3473212.00 The Jt. CIT while endorsing the remand report has written as under; Kindly refer to the subject cited as above 2. Kindly find enclosed herewith letter No 04.04.2018 received from the ITO, Ward Behror, Alwar on the subject cited above 3.The AO, vide this letter has submitted that the assessee was given ample opportunities to prove the source of investment made by him in purchase of 15 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO Immovable property at Neemrana and others. Despite this, the assessee did not respond and was not able to prove the transactions. The AO has also submitted that amount which remains unverified during the proceedings in respect of the purchase of immovable property to Rs. 34,73,212/-.

4. In view of the above facts and as submitted by the AO, the above amount as derived by the AO deserves to be confirmed as mentioned in AO’s letter. This is submitted herewith for your kind perusal and consideration. Therefore after due verification the A.O has concluded that the source of investment made by the appellant in purchase of property to the extent of Rs.3,22,80,000/- has been verified that includes Rs. 2,68,80,000/- receipt as sale consideration from Sh. T Lachungpa and Rs. 40,00,000/- receipt from Sh. K. D. Yadav and Rs. 14,00,000/- out of past savings. In this regard, I have taken into consideration the remand report stating that Sh. K. D. Yadav was summoned during remand proceedings and his statement was recorded where he has admitted to have advanced Rs. 40,00,000/- to the appellant. Furthermore the A.O. has accepted the claim of the assessee with regard to investment of Rs. 14,00,000/- out of his past savings/crop sales etc. However, I am not convinced about the source of investment of Rs. 14 Lakhs as no concrete evidence has been filed to substantiate this claim of the appellant. Therefore in my considered view, on the basis of enquiries made by the A.O during remand proceedings and evidences on record following amount of investment stand verified; 1. Rs. 2,68,80,000/- received from Sh. T Lachungpa on account of sale consideration of land as verified by the A.O in remand report.

2. Rs. 40 lakhs received from Sh. K. D. Yadav as verified by the A.O in remand report. However another question arises about the sale of the land vide agreement to sell. Since the possession of the land was transferred to Sh. T. Lachungpa after getting the sale consideration therefore as per the transfer of property Act, the transfer has already taken place. Therefore, has any capital gain arisen out of this transfer? In this regard, the appellant has filed the proof of the said land being agricultural as per the letter from Patwari vide his letter dated 31/08/2018 mentioning that the land is situated 25 km from the municipal limit. As such the land is not capital asset as per the provisions of section 2(14)(iii) of the Act.”

6.4 The ld. CIT(A) based on the evidences and facts along with the remand report submitted by the AO the investment to the extent of Rs. 3,08,80,000/- considered as explained and deleted the sustained and thus the appeal of the assessee was partly allowed.

7. As the assessee did not get the relief completely the assessee has carried the appeal before us and even the revenue also aggrieved from the order of the CIT(A) carried the the appeal before us on the only one ground granting the relief by CIT(A) based on the report of the AO.

8. First of all we take up the appeal of the revenue in where in the revenue has taken only one ground which is related to the deletion of the addition by the ld. CIT(A) based on the basis of the remand report for an amount of Rs. 3,08,80,000/-.

8.1 The ld. DR has filed a detail submission and in respect of the appeal filed by the Revenue and the appeal of the assessee to the relevant submission of the ld. DR is extracted herein below.

“2. The brief facts of the case are that the assessee had purchased some lands in Neemrana and surrounding area and the AO required the assessee to explain the source of purchase of such lands. The total cost of 9 pieces of land was Rs. 3,62,45,212 which included estimated expenses of Rs. 5,92,000 on account of misc. expenses discussed by the AO in the assessment order u/s 17 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO 143(3)/147 dated 26.03.2016. The explanation of the assesse regarding source during the course of the assessing proceedings was: Total Purchases: Rs. 3,23,34,740 Sources: (i) Sale receipts from Sh Lachungpa on account of sale of land: 2,68,88,000 (ii) Loan from brother : 40,00,000 (iii) Savings : 14,46,740 Thus, the major source of purchase was purported sale of agricultural land to a resident of Sikkim, Sh Lachungpa. The AO required to produce Sh Lachungpa, so that his statement could be recorded, but the assesse failed to do so. The assesse was also not able to satisfy the AO that why a person of Sikkim will purchase the land in a village in Rajasthan and why the agreement has not been registered by him even after so many years of so-called purchase of land. The entire payment was made in cash and the AO wondered how a person will come far away from Sikkim to purchase the land with huge amount of cash. The AO was also not satisfied with the explanation of the assessee marding other sources and added Rs 3.62.45.212 to his total income 2. Aggrieved with the order of the AO, the assessee filed appeal before the CITA). The CIT(A) during the course of the appellate proceedings, forwarded the submission of the assessee to the AO for remand report. The AO submitted in his remand report that amount of RS 2.68.000 received form Lachungpa, loan of Rs 40,00,000 for hither K.D Yadav is verified and savings of Rs. 14,00,000 is also verified. The AO took total con at Rs 3.56.53.212 in the remand proceedings and did not offer any comment on cost of misc expenses amounting to Rs. 5,92,000 taken in the assessment order. Thus, as per AO in the remand proceedings, total verified amount was Rs. 3,22,80,000 and balance amount of Rs. 34.73.212 was unverifiable and was required to be confirmed.

3. The ld. CIT(A) in his order dated 13.09.2018 accepted the verification of Rs. 3,08,80,000 on account of sale of land to Lachungpa and loan from brother, but he did not accept the verification of Rs. 14,00,000 out of savings of the assessee, as he failed to fumish any evidence during the course of the remand proceedings to substantiate his claim.

4. The ld. AR during the course of the proceedings has submitted that when the AO in the remand proceedings had accepted the past savings of Rs. 14,00,000 then the ld. CITIA) could not disregard such admission and ought to have accepted the remand report on this issue also. The argument is legally untenable because of the following reasons-

18 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO (1) As per the provisions of section 251(1a) of the Act, in case of an order of assessment, the CIT(A) may confirm, reduce, enhance or annul the assessment Thus, the CIT(A) is required to confirm or reduce the additions disallowances made in the assessment order, he is not required to confirm or reduce the finding of the AO in remand report pursuant to his directions u/s 250(4) of the Act (ii) The remand report is furnished in pursuance of the directions of the CIT(A) s 250(4) of the Act to enable him to dispose of an appeal in a satisfactory manner. By no stretch of imagination, this report can be binding on CIT(A) and divest him from the powers vested in him by the Act by virtue of section 251(1) of the Act. It is inconceivable to think that a report of lower authority, to whom the higher authority directed to furnish such report, will be binding on such higher authority when judicial conscience of such higher authority prevents him to accept such report (iii) Remand report, which is sort of an administrative report, cannot substitute the order of assessment. What is appealable as per the provisions of the Act, is order of assessment and not remand report (iv) The CIT(A) has co-terminus power with that of the AO. So, he can make any inquiry to dispose of the appeal himself, or he can direct the AD to do such inquiry Section 250(4) only talks about directions by the CIT(A) to make inquiry and report the result of the same to the CIT(A). The work of the AO stops here. Section 250(4) does not lay down that the CIT(A) shall pass the order on the basis of the findings of the AO. The reason is not far away to seek. The Act cannot bound a judicial authority to accept the finding of some other authority, otherwise it will severely undermine the independence and judicial conscience of such authority. Even a higher authority cannot direct the lower authority to decide a particular case in a particular manner. If the view that every finding of the AO in remand proceedings should be accepted by the CIT(A) is accepted, then it will be akin to delegating the function of the higher judicial forum to a lower judicial forum.

(v) The objective of the remand report is to get the inquiry conducted. What should be the conclusion of such inquiry, is to be decided by the CIT(A) and not the Assessing Officer. (vi) When the view of the AO in the remand proceedings is not in conformity with the view of the AO, who passed the assessment order and the CFTCA) finds that view of the latter is acceptable, then argument that the Department was also of the view that the addition is not sustainable, will no longer hold true. In this scenario, there are two views of the Department and the CIT(A) has preferred the finding of the AO in the assessment order rather than the finding of the AO in the remand report for the simple reason that the AO has not given any reason for such finding.

19 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO 5. On merits also, the assessee had shown its past savings at Rs. 14,00,000 without any evidence. The AO has accepted the submission without even an iota of evidence during the remand proceedings. Hence, the ld. CIT(A) has not accepted the so-called verification by the AO. It is to be noted that during the course of the appellate proceedings, the savings of the self was shown by the assessee at Rs. 14,00,000 while during the course of the appellate proceedings he increased this figure to around Rs. 48,00,000. The assessee is taking the figures as per his whims and fancies just to balance out the total cost which shows that figures are not actual. The saving of the assessee is a certain fact which is within his knowledge, how this figure can change during different proceedings.

6. In view of the above facts, the additions of Rs. 53,65,21 confirmed by the ld.CIT(A) may kindly be sustained. Departmental Appeal The ld. CIT(A) has allowed the relief of Rs. 3,08,80,000 on the basis of the remand report of the AO. It is seen that the said remand report is perverse, as it did not take into account the crucial facts in case of source of fund received from Sh Lachungpa. The AO in the remand proceedings had only recorded the statement of Sh Lachungpa and relied upon his balance sheet. However, the following crucial facts were missed by the AO-

1. 1. Why the sale-purchase transaction of such a hefty amount was not registered till the date of recording of statement.

2. When the similar properties were sold in the same village at much lower price at same time, what was specific and extra-ordinary to the property purchased by Sh Lachungpa.

3. Sh. Lachungpa is not an agriculturist. Otherwise also, what was the rationale of purchase of property by a Sikkimese in Rajasthan, particularly when neither he nor his any family member is residing in Rajasthan.

4. The entire sale transaction has been shown to have been done in cash. What was the rationale of doing such a huge transaction in cash, particularly when the impugned land is agricultural land and transaction per se is outside the scope of income-tax.

5. What was the need of carrying such a huge amount of cash from Sikkim to Rajasthan.

6. What is the sanctity of the Balance-sheet of Sh. Lachungpa, when as a resident of Sikkim, his income is exempt u/s 10(26AAA), and therefore, tinkering in Balance-sheet is not noticed anywhere.

7. The AO in the remand proceedings did not carry out any physical inquiry to see that impugned land is in whose possession. As the Id. CIT(A) has relied upon a remand report which was not prepared with due diligence, therefore, the Hon'ble Tribunal is requested to 20 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO exercise its wide powers u/s 254 of the Act and restore back this matter to the file of the AO to pass an order after conducting the proper inquiries.”

8.2 As regards the appeal filed by the revenue the ld. AR of the assessee submitted his written submission where in he has contended as under :

“GROUND 1 OF DEPARTMENT’S APPEAL: RESTRICTING OF ADDITION OF RS. 3,62,45,212 TO RS. 53,65,212

2. Revenue cannot be said to be aggrieved from the order of ld. CIT(A) wherein the relief provided by ld. CIT(A) was based on the Remand Report of ld. AO 3. Reliance is placed on the following decisions: a. SRMB Dairy Farming (P) Ltd -Civil Appeal No. 19651 of 2017 (SC) [CLC 35-45] “….The National Litigation Policy is as follows: The Vision/Mission 1. The National Litigation Policy is based on the recognition that the Government and its various agencies are the pre-dominant litigants in courts and Tribunals in the country. Its aim is to transform the Government into an efficient and responsible litigant. This policy is also based on the recognition that it is the responsibility of the Government to protect the rights of citizens, to respect fundamental rights and those in charge of the conduct of the Government litigation should never forget this basic principle. “Efficient litigant” means - Focusing on the core issues involved in the litigation and addressing them squarely. - Managing and conducting litigation in a cohesive, co-ordinated and time-bound manner. - Ensuring that good cases are won and bad cases are not needlessly persevered with.

21 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO - A litigant who is represented by competent and sensitive legal persons: competent in their skills and sensitive to the facts that the Government is not, an ordinary litigant and that a litigation does not have to be won at any cost. …. “(G) Appeals in revenue matters will not be filed: (a) if the stakes are not high and are less than that amount to be fixed by the Revenue authorities: (b) if the matter is covered by a series of judgments of the Tribunal or of the High Court which have held the field and which have not been challenged in the Supreme Court: (c) where the assessee has acted in accordance with long standing industry practice: (d) merely because of change of opinion on the part of the jurisdictional officers...” [CLC 37-38] b. Jivatlal Purtapshi vs CIT [1967] 65 ITR 261 (Bom) [CLC 1-2] It has been held that what is voluntarily accepted cannot give rise to a grievance which can be taken in further appeal. Because of settlement between assessee and department, addition was deleted, however, the department filed appeal before ITAT complaining about deletion of said additions. Department’s appeal was dismissed as it was not treated to be aggrieved. c. Banta Singh Kartar Singh vs CIT [1980] 125 IT 238 (P&H) [CLC 3- 5] Decision of Jivatlal Purtapshi (supra) was followed. d. CIT vs Cochin Malabar Estates & Industries Ltd [1989] 180 ITR 152 (Kerala) [CLC 6-7] & e. Ramanlal Lamdar vs CIT [1977] 108 ITR 73 (Madras) [CLC 8-9]

In both the above cases (d and e) the assessee’s appeal was dismissed on account of being incompetent as the assessee was not considered to be “person aggrieved”. The appeal was filed on the same issue for which the assessee agreed before AO and filed no objection. Therefore, the assessee was not said to be aggrieved by the order of AO. f. B. Jayalakshmi vs ACIT [2018] 407 ITR 212 (Madras) [CLC 10- 19] Headnote: Where Commissioner (Appeals) on basis of remand report of Assessing Officer, allowed claim of assessee, revenue was not entitled to maintain an appeal before Tribunal against said order of Commissioner (Appeals).

22 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO With the above mentioned observations of the Hon’ble Madras High Court set aside the matter to Hon’ble ITAT. In the set aside case ACIT vs B Jayalakshmi – ITA No. 1512 to 1514/CHNY/2003 [CLC 20-34], Hon’ble ITAT after taking note of the observations of Hon’ble Madras High Court held that where a remand report in favour of the assessee is there, revenue could not be considered as an aggrieved party. Hon’ble ITAT also placed reliance on the decision of Hon’ble Supreme Court in the case of SRMB Dairy Farming (P) Ltd (supra).

8.3 The ld. AR of the assessee in addition to the written submitted that in respect of the source of the investment made by the assessee the ld. AO examined all the aspect of the source of the investment and after verifying the records produced and the statement recorded of the person involved in the proceeding it has been submitted by the AO that the investment source duly explained by the assessee in the remand proceddings. The AO himself accepted the contention of the assessee in the remand proceeding and no that situation revenue may not have any upon by the ld. AR of the assessee the department appeal is not maintainable. The ld. AR of the assessee further submitted the copy of the order of the ITAT in the case of Shri Virendra Yadav brother of the assessee where in the amount involved was the same and the coordinate bench of the ITAT has set a side the issue for verification before the AO for source from where even the assessee has received the source for the investment which were considered as our of unexplained sources. The relevant portion of the ITAT’s decision is as under :

The AO issued notice under section 133(6) to the Sub Registrar, Neemrana and on receiving the details of the documents from concerned Sub Registrar, the AO found that the assessee had made investment of Rs. 2,69,82,340/-. All these enquiries were conducted by the AO due to the reason that the assessee did not cooperate and file the details regarding the investment made in the immovable properties. Only when the AO issued the show cause notice to frame the assessment under section 144 of the IT Act and also issued summon under section 131, the assessee furnished a copy of the alleged agreement dated 07.05.2011 and claimed that the sources of investment is sale proceeds of land for a consideration of Rs. 2,88,60,000/- to one Shri T. Lachunagapa resident of Gangtok (Sikkim). It is pertinent to note that it is beyond preponderance of human probability that a person from Gangtok (Sikkim) would purchase a land in Rajasthan against a consideration of Rs. 2,88,60,000/- without having a proper title deed in his favour. The alleged agreement to sell is not a document which can be verified independently and can be considered as a conclusive evidence for transaction of purchase and sale of the immovable properties. Even otherwise, the immovable properties cannot be transferred under such an unregistered document being agreement to sell. The details of assessee’s share in the alleged ancestral land are also not available on record. It is also not clear from the record whether the assessee was having the share in the ancestral property to the extent of 19.20 bigha. Further, not executing the sale 24 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO deed and registration with the authorities even after the expiry of such a long time creates a genuine doubt about the transaction. Therefore, the genuineness of the claim has not been established with verifiable documentary evidence. It is also a relevant fact that the alleged purchaser of the land being a Sikkimese, is exempt from Income tax as per section 10(26AAA) of the IT Act. Therefore, the possibility of using the name of such a person as a device to evade the tax cannot be ruled out. Accordingly, in the facts and circumstances of the case, we set aside this matter to the record of the AO for conducting a proper enquiry particularly on the point of the assessee’s share in the alleged ancestral property and whether the said property is available in the exclusive right of the assessee for transfer. The status of the land regarding the possession and the real ownership is also required to be verified. Needless to say that the assessee be given a proper opportunity of hearing before passing the fresh assessment order.

8.4 Consequent to the said order of the ITAT the assessing officer has accepted the contentions of the assessee and the relevant observation of the assessing officer in the case of his brother is as under:

Therefore, notice u/s 142(1) of the I.T. Act, 1961 was issued and served upon legal heir Smt. Kamla Devi W/o Late Sh. Virender Yadav on 16.02.2021 to provide details/information in respect of alleged agricultural land Simultaneously, information were also called for from the Tehsildar, Mundawar vide this office letter dated 19.02.2021 in respect of the alleged land and from the alleged purchaser Sh. T. Lachungapa R/o Gangtok (Sikkim) vide letter dated 08.07.2021 in respect of sale deed executed in respect of alleged property and possession & real ownership of the said land khasra as on today In response, the assessee, the Tehsildar and Sh. T. Lachungapa furnished reply alongwith requisite details and documents which were examined and placed on records. After examination of details and documents furnished during the course of assessment proceedings, no adverse inference has been drawn. Considering the above facts, the total income of the assessee is assessed at Rs 4,09,560/- as determined vide order u/s 250 passed on 17.10.2018 giving effect to the appellate order of Id. CIT(A), Alwar in appeal no. 84/2016-17 dated 13.09.2018. vehemently argued that the appeal of the revenue is not maintainable.

8.6 Per contra, the ld. DR in addition to the submission made submitted that the assessee has not cooperated to the department in the proceedings in spite the various opportunities were granted.

He has purchased all the properties in cash. The source of the property is agreement to sale of the property in cash and that too it from the proceeds of sale of land of ancestral property to a person having residence at Sikkim and out of saving which is disputed based on the set of facts. The ld. AR further submitted that the assessee has received substantial amount in cash from Shri T.

Lachungapa and that too without any registered document in his favour and a sum of Rs. 40 lac from his brother without any support. All these transaction cannot be considered as genuine and therefore, the relief granted by the ld. CIT(A) is required to be reversed and the addition made by the AO is required to be confirmed. written and oral arguments placed on record along with the decision cited by both the parties. It is not disputed by the revenue that the remand report given by the ld. AO is erroneous and without carrying out any independent inquiry. Thus, the revenue has accepted that the fact about the source of the investment made by the assessee is genuine and explained and based on that report the ld. CIT(A) has allowed the appeal partly then on that deleted addition revenue should not have any grievance. The Reliance for this purpose is placed on record on the detailed findings given by the decision of the coordinate A Bench of Chennai ITAT wherein the bench has held as under:-

“In our opinion, it is clear from the remand report and the underlying enquiry report that the claim of the assessee with regard to agricultural income was accepted by the Learned Assessing Officer and therefore the claim rightly allowed by the Commissioner of Income Tax(Appeals). Apart from this, in our opinion, there is much strength in the argument of the learned AR that on issues where a remand report is in favour of the assesse, Revenue could not be considered as an aggrieved party. Hon’ble Apex Court in its judgement in the case of SRMB Dairy Farming (P) Ltd.(supra) has highlighted the need to scrupulously follow the National Litigation Policy. It would be appropriate to reproduce a part of such policy here: “3. The purpose underlying this policy is also to reduce the Government litigation in courts so that the valuable court time would be spent in resolving other pending cases so as to achieve the goal in the principles incorporated in the National mission for judicial reforms which includes identifying bottlenecks which the Government and its agencies may be concerned with and also removing unnecessary Government cases. Prioritization in litigation has to be achieved with particular emphasis on welfare legislation, social reform, weaker

27 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO sections and senior citizens and other categories requiring assistance must be given utmost priority. In respect of filing of appeals in revenue matters it is stated as under: (G) Appeals in revenue matters will not be filed: (a) if the stakes are not high and are less than that amount to be fixed by the Revenue authorities: (b) if the matter is covered by a series of judgements of the Tribunal or of the High Court which have held the field and which have not been challenged in the Supreme Court: (c) where the assessee has acted in accordance with long standing industry practice: (d) merely because of change of opinion on the part of the jurisdictional officers.” In these circumstances, we do not find any merit in these appeals filed by the Revenue, insofar as it relates to the issue relating to agricultural income claimed by the assessee for the impugned assessment years.”

8.8 Being consistent with the said findings of the decision of the coordinate bench A of Chennai ITAT and the Bombay high court in the case of Jivatlal Purtapshi Vs. CIT 65 ITR 261 we hold that when the addition were deleted by the ld. CIT(A) based on remand report which is based on agreement on facts cannot give rise to any grievances on the same very facts and the revenue cannot agitate the same very issue in appeal. Thus, the appeal of the revenue in thus dismissed.

ADDITIONAL GROUND OF ASSESSEE’S APPEAL- ADDITION OF RS. 34,73,212 9.1 In respect of this additional ground the ld. AR of the assessee has submitted following submission:

The investment of Rs. 34,73,212 is fully explained. The assessee is an agriculturist and has sold a number of lands and, therefore, had accumulated such amount for making investment. In view of above addition of Rs. 34,73,212 deserves to be deleted.”

9.2 We found that while taking this ground the approach of the ld. AR of the assessee is causal and has submitted only three line reply and has knowing or unknowing remained silent as to why and how the said claim is required to be deleted considering the same as past savings. For this contention he has not given any justification of this contention and merely on a statement that the same was past saving. At the same time, he has also not submitted that there is an error in the findings of the lower authorities in holding that the amount invested by the assessee remain unverified to the extent of Rs. 34,73,212/- and thus, this general submission will not help the assessee to get relief and the in the assessment proceedings and the assessee remain totally non cooperative in the proceeding before the lower authorities. In terms of these observations, we do not find any merits and thus the additional ground raised by the assessee is dismissed.

10. The ground number two and three (revised) raised by the assessee is that enhancement done by the CIT(A) ignoring the remand report of the AO where in the AO has not repeated the estimated addition at Rs. 5,92,000/- and Rs. 14,00,000/- sustained by the CIT(A) is illegal and baseless deserves to be deleted. The ld. AR of the assessee submitted that the ld. AO has not commented upon the estimate of income and issue related 14,00,000/- as past savings and thus it is the valid reason for the assessee to believe that the ld. AO choose to remain silent on the issue and has not controverted the submission of the assessee and therefore, the ld. CIT(A) confirming these two additions is bad in law as well as on facts and thus the said additions are required to be deleted. Against these grounds the ld. AR of the assessee submitted their written submission and filed a paper book. The relevant written submission is reiterated here in below:

30 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO GROUND 1 to 4 OF ASSESSEE’S APPEAL: FINDINGS OF AO NOT CONSIDERED AND ADDITION OF RS. 19,92,000 (MODIFIED) SUSTAINED 1. Remand Proceedings are not just mere proceedings for collection of data but are the proceedings wherein data is collected, analyzed and then conclusions are drawn by ld. AO.

2. Therefore, when in remand proceedings past saving of Rs. 14,00,000 were found to be justified, ld. CIT(A) should have assigned a proper reason for not considering the same to be justified. Ld. CIT(A) in a very summary manner rejected the claim of the assessee.

3. Further, addition of Rs. 5,92,000 made by ld. AO in assessment proceedings was an estimated ad-hoc addition without any basis as evident from AO page 14. During remand proceedings, ld. AO, after proper verification, found that such expenses were not incurred and, therefore, the said amount was not included in the amount of investment made during the year. Ld. CIT(A) without assigning proper reason confirmed the addition. In view of above addition of Rs. 19,92,000 deserves to be deleted.

32 & 1339/JP/2018 Shri Mahinder Yadav vs. ITO At the same time estimation of the other expenses at Rs. 5,92,000/- has not scientific basis of estimation. Considering the overall facts and circumstances we deem it fit to reduce the 50 % as other expenses estimated at higher side incurred by the assessee not recorded or explained properly and at the same time 50 % of the amount at Rs. 7 lakh can be considered as past savings. Thus, out of the total addition of Rs. 19,92,000/- the assessee get relief for Rs. 9,96,000/- and thus ground no. 2 and 3 are partly allowed.

In the result, appeal of the assessee is partly allowed and appeal of the revenue is dismissed.

Order pronounced in the open Court on 31/08/2022.

Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 31/08/2022 *Ganesh Kr. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Mahinder Yadav, Alwar 2. izR;FkhZ@ The Respondent- Income Tax Officer, Behror 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत.