Loading judgment…
No AI summary yet for this case.
Before: Shri H.S. Sidhu & Shri L.P. Sahu
per cash flow statement submitted, the assessee had paid Rs. 6,00,000/- in cash on 20.10.2008 and Rs.3,00,000/- by way of six cheques bearing Nos.
650541 to 650546 all dated 20.12.2008 drawn on State Bank of Patiala,
ITA No. 3033/Del./2013 7 Kondli, New Delhi. The Assessing Officer noticed that as per agreement to sale executed on 20.12.2008, wherein all payments, i.e., Rs. 6,00,000/- in cash and Rs. 3 lacs by cheques were shown to have been made on 20.12.2008.
Therefore, there being no link between the alleged cash payment of Rs.600000/- on 20.10.08 as per in cash flow statement and the cash payment of Rs.6,00,000/- shown to have been made on 20.12.2008 as per agreement, the Assessing Officer was of the opinion that the nature and source of the cash payments of Rs.600000/- stood unexplained and added the same to the total income of assessee. The ld. CIT(A) deleted this addition.
The ld. DR submitted that Rs.6,00,000/- were shown by the assessee to have been paid in cash on 20.10.2008 towards purchase of agricultural land at Nazafgarh as per cash flow statement, whereas as per agreement for purchase, the date of payment has been shown as on 20.12.2008. The assessee was unable to explain the nature and source of investment on different dates.
Therefore, the Assessing Officer was justified to make addition of it as an unexplained investment. The ld. CIT(A) wrongly deleted this addition without considering the findings of the Assessing Officer.
The learned AR, on the other hand, relied on the order of the ld. CIT(A).
ITA No. 3033/Del./2013 8
After hearing both the parties and perusing the material on record, we find that there is sharp contradiction in the dates of payment shown as per cash flow statement and as per purchase/sale deed. On perusal of the bank statement, it is observed that the assessee had withdrawn cash of Rs.13 lacs on 29.07.2008, Rs.15 lacs on 30.07.2008 and Rs.20 lacs on 13.10.2008. Out of these withdrawals, the assessee has shown to have made payment of Rs.20 lacs to Sh. Azad Singh as alleged refund of advance as per cancellation agreement, noted above. On perusal of agreement for purchase of agricultural land from six persons at Nazafgarh, the assessee has shown to have made payment of Rs.1 lacs each on 20.12.2008. Firstly, as noted above, the cash flow statement given by the assessee is not supported by any books of account.
Secondly, the contention of the assessee that payment of Rs.6 lacs was made in cash out of withdrawals from bank account, is not acceptable because it is not credible to hold that much of cash from the date of its withdrawals to the date of its payment, which is shown as 20.12.2008 in the agreement, particularly when the assessee was maintaining the bank account. We, therefore find that the ld. CIT(A) was not justified in deleting this addition without considering the attending facts and circumstances of the case. It is also not clear whether the alleged payment was made on the date as ITA No. 3033/Del./2013 9 mentioned in cash flow statement or as mentioned in agreement. Accordingly, ground No. 2 of the Revenue deserves to be allowed.
The facts relating to third issue are that in the assessment proceedings, the Assessing Officer observed that the assessee had made investment in purchase of plot at Rohini for Rs.38,50,000/- on 06.06.2008. The details of various payments made are as under :
S.No. Mode of payment & Amount Source Date (a) P.O. No-0073010 14,48,200 Out of saving bank account no. 55013164569 with State Bank of Patiala, Kondli Branch 08.04.08 Out of saving bank account no. 55013164569 with (b) P.O. No-007433 1,29,450 State Bank of Patiala, Kondli Branch 07.05.08 (c) Cheuque 650538 64,354 Out of saving bank account no. 55013164569 with State Bank of Patiala, Kondli Branch 16.05.08 22,07,996 (Out of cash in hand of Rs. 24,89,248/- as on 5-6-08 (d) Cash on 06.06.08 as per cash flow statement. Total 38,50,000 The agreement to sale and purchase deed is placed at PB-22 to 34. The stamp duty has been paid of Rs.2,31,000/-. The observations of the Assessing Officer are under :
The assessee has tried to give a colorable device by treating the advance which appears to be sham transaction. Keeping the above facts just as to explain the same as investment in purchase of property on 06.06.08 i.e. plot at Rohini (Plot Bearing No. 39, Block, C, Pocket , A-l, area measuring 209 Sq mtrs Sector 32. The receipt in respect of purchase of plot at Rohini indicate as under:-
The perusal of the above facts reveals that pay order amounting to Rs. 14,48,200 + Rs. 1,29,450 = Rs. 15,77,650/- has been made to DDA. This appears either same dues were due to the assessee which has been paid by assessee on behalf of the seller. No source of investment has been explained inspite of the fact that the assessee was again and ITA No. 3033/Del./2013 10 again asked to furnish the bank statements with narration and sources of investment. As per receipt filed, it shows that a sum of Rs. 64,354/- has been paid vide cheque No. 650538 issued by S.B.P in favour of Collector of Stamps, Vikas Sadan. The agreement to sell made and executed shows the cost of consideration at Rs. 38,50,000/-and paid Rs. l,15,500/- as stamp duty and Rs. 1,15,500/- as corporation tax. Thus the total payment of Rs. 2,31,000/- on stamp papers were made by the assessee. The receipt shows only 64,354/- by cheque. The remaining expenditure on stamp duty i.e. Rs. 2,31,000 (-) 64,354/- = Rs. 1,66,646/-remained unexplained expenditure. The same is added to the income of the assessee. As the assessee has furnished inaccurate particulars of his income the penalty proceedings u/s 271(1)(c) initiated separately . Besides, the facts discussed above, the investment in purchase of plot at Rohini also remained unexplained in view of the facts stated above, hence the investment in the purchase of plot remained unexplained and the investments is Rs. 38,50,000/- made in the property is added to the income of the assessee as unexplained investment. Since the assessee has concealed the particulars of his income, penalty proceedings u/s 271(1) © is initiated separately. Addition : Rs. 38,50,000/- The ld. CIT(A) deleted this addition, observing as under :-
I have considered the appellant's submissions, the observations of the AO in the assessment order and the facts of the case. As far as the payment of Rs. 14,48,200/-, Rs. 1,29,450/- and Rs.64,354/- is concerned, it is seen that the same has been paid through cheques from the saving bank account of the appellant with State Bank of Patiala, Kondli where all these payments are duly reflected. All the credit entries in this account have duly been discussed and appropriate inference has been drawn as discussed under Ground no. 2, With regard to the remaining payment of Rs. 22,07,996/-paid in cash on 0570672008 it is seen the same has already been discussed above under Ground no. 2 while considering the cash availability as on 27.07.2008 and appropriate addition has already been made on account of unexplained cash investment in this payment. Therefore no adverse inference was required to be drawn with respect to investment of Rs. 38,50,000/- in the purchase of the residential plot at Rohini. The addition of Rs. 38,50,000/- made on this account is therefore, deleted.
The ld. DR relied on the order of the Assessing Officer and submitted that the assessee has tried to explain the cash availability with him from the cash flow statement. It was submitted that the assessee has made payment in cash on 06.06.2008 and has shown to have received cash of Rs.20 lacs from ITA No. 3033/Del./2013 11 Azad Singh on 15.05.2008. This receipt was doubted by the Assessing Officer for credible reasons. Therefore, there was no sufficient cash available with him and the Assessing Officer was justified to make addition.
The ld. AR, on the other hand, relied on the order of the ld. CIT(A).
We have heard the submissions of both the parties and have gone through the record. We find that the assessee had made payment to the vendor by cheques which have been duly debited in his bank passbook as noted above. Further the assessee has made payment on 06.06.2008 of Rs.22.07.996/- in cash. The availability of funds to make this cash payment is based on the cash flow statement, which, as already noted, is not based on any books of account maintained by the assessee. Secondly, the receipt of Rs.20 lacs from Shri Azad Singh on 15.05.2008 has not been established by the assessee to be the genuine receipt and we have already restored that issue to the Assessing Officer while deciding ground No. 1 of the Revenue’s appeal.
Therefore, unless the receipt of Rs.20 lacs as shown in the cash flow statement, stands verified at the stage of Assessing Officer, the explanation of the assessee regarding availability of cash for making payment of Rs.22,07,996/- cannot be accepted. In view of this, we deem it appropriate to ITA No. 3033/Del./2013 12 restore this issue also to the file of Assessing Officer for deciding the same afresh after making proper enquiry on the genuineness of receipt of Rs.20 lacs from Azad Singh. In case the amount of Rs.20 lacs is found actually received by the assessee, the contention of assessee with respect to this issue shall stand accepted. Otherwise, the Assessing Officer shall act as per law. Accordingly, this ground of appeal is also allowed for statistical purposes.
Regarding the last issue, the facts are that the assessee claimed exemption on receipt of Rs.26,90,230/- u/s. 10(37) of the Act on the premise that the assessee had received Rs.26,90,230/- as part of compensation of agricultural land at Kondli measuring 6 bighas 10 Bishwas in which the share of assessee was to the tune of one bigha ten Biswa. The said property was already in possession of DDA as they had taken its possession at the time of enhancement of award No. 4/7980 on dated 22.05.79 when the award was announced for the land area measuring 3 bighas 10 bishwa, but the physical possession of total land area measuring 9 bighas 18 Bishwa of Khasra No. 670/414/2 was taken over by the Government Authority. The Assessing Officer applying the provisions of section 10(37) observed as under :
“Where the compulsory acquisition has taken place before 01.04.2004, but the compensation is received after 31.03.2004, it shall be exempt. But if part of original compensation in the above case has already been received before 01.04.2004 then exemption shall not be available even though balance original compensation is ITA No. 3033/Del./2013 13 received after 31.03.2004. However, enhanced compensation on or after 01.04.2004 against agricultural land, compulsory acquired before 01.04.2004 shall be exempt.
As the condition laid down u/s. 10(37) of the Income tax Act, 1961 are not fulfilled by the assessee in no case can claim exemption of the compensation received by him, because of facts that : a) He was not owner of the agricultural land; b) No agricultural produces were made by the individual preceding two years before the Acquisition of land. c) The land was acquired after 01.04.2004.”
The Assessing Officer, accordingly, disallowed Rs.26,90,230/- treating it as unexplained income from business. The ld. CIT(A) treated this amount as long-term capital gains taxable in the hands of assessee.
We have heard the submissions of both the parties and perused the entire material available on record and we find no infirmity in the order of the ld. CIT(A). The findings of the ld. CIT(A) are reproduced as under :
I have carefully considered the appellant's submissions, the observations of the AO in the assessment order and the facts of the case. As far as the appellant's contention that he had purchased the land under consideration in the year 2001 is concerned, it is seen that there is no documentary evidence on record in support of the same. Therefore, date of acquisition by the appellant would the date on which he acquired the assignment rights in the property i.e. 23/09/2004 on which date he entered into an agreement with the owners of the land. The total consideration paid by the appellant along with the other three persons who had bought the assignment rights of the property is Rs. 19,10,000/- plus stamp duty of Rs. 95,500/- i.e. Rs. 20,05,500/-. This amount was the cost of the total land measuring 6 bigsa 7 biswas. The appellant's share out of this land being 1 biga 10 biswas, the cost to the appellant for buying the assignment rights works out to Rs. 4,73,740/- (i.e Rs, 20,05,550 x 30 / 127). For this cost of acquisition of land, the appellant received a total compensation amounting to Rs. 39,57,400/-, Rs. 12,67,170/- in FY relevant to Y 08-09 and Rs. 26,90,230/- FY relevant to the current AY. As the assignment rights were obtained by the appellant on 23/09/04, the asset was held by the appellant for less than 36 months as on 10.08.2007 when the amount of compensation was received in the AY 08-09. Therefore, in AY 2008-09 the amount of compensation less the cost of acquisition
ITA No. 3033/Del./2013 14 would be the Short Term Capital Gain assessable to tax in that Assessment Year. The whole of the amount of Rs.26,90,230/- received on 07.10.2008 will be taxable as Long Term Capital Gain during the current assessment year as cost of acquisition has already been allowed to the appellant in AY 2008-09. The Assessing Officer is directed accordingly.”
In view of the above findings of the ld. CIT(A), we do not find any infirmity in the decision reached by him on this issue. Accordingly, this ground of the Revenue deserves to be dismissed.
In the result, the appeal of the Revenue is partly allowed for statistical purposes.
Order pronounced in the open court on 26th February, 2018.