SRI BASUDEV PANIGRAHI,BHUBANESWAR vs. ITO, WARD-3(1), BHUBANESWAR

This is an appeal filed by the assessee against the order of CIT(A)-

2, Bhubaneswar, dated 9.1.2017 for the assessment year 2010-2011.

was not justified in confirming the order of the Assessing Officer making

addition of Rs.34,14,400/-.

the assesse claimed to have made investment of Rs.79,05,000/- in the

construction of a house on Plot No.321(P), G.A.Plot No.222,

Chandrasekharpur, Bhubaneswar. Out of this, an amount of

2 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 Rs.54,00,000/- was said to be sale proceeds of land and building at Vani

Vihar, Bhubaneswar. The Assessing Officer examined the registered sale

deed dated 22.2.2010 for the Vanivihar Plot between the assessee and

Braja Kishore Jena, the purchaser. He noted that in this agreement, the

purchaser has given Rs.19,85,000/- to the assessee (Rs.10,00,000/- in

cheque and Rs.9,85,600/- in cash) and not Rs.54,00,000/-. The

Assessing Officer asked the assessee the reasons for the discrepancy.

The assessee explained that even though the sale deed mentioned an

amount of Rs.19,85,600/-, actually he has received Rs.54,00,000/- from

Braj Kishore Jena. The assessee submitted that an amount of

Rs.34,14,400/- has been received by him in cash from Braja Kishore

Jena. In support of the same, the assessee submitted an agreement for

sale dated 24.12.2009 between the assessee and Braja Kishore Jena in

which an amount of Rs.54,00,000/- has been mentioned.

issued summons u/s.131 of the Act to Braja Kishore Jena, the purchaser

of Vani vihar property. The Assessing Officer further observed that it was

specifically asked to Braja Kishore Jena regarding purchase of above said

property. In reply to specifically asked to Sri Braja klshore Jena regarding

the purchase of the above said property. In reply to questions No.3 & 4

dtd. 15.1.2013 that he has paid Rs. 19,85,600/- for the purchase of land,

the Assessing Officer observed that Shri Braja Kishore jena was required

to explain by showing the copy of notarized agreement made on

3 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 24.12.2009 submitted by the assessee , wherein the assessee claimed to

have received Rs.54,00,000/- vide the above referred agreement for the

sale of said property. In reply to Question No. 6, whether he had signed

the agreement dtd. 24.12.2009, Shri Braja Kishore Jena replied that the

same was done under compulsion as Shri Panigrahi had warned him of

selling the land to some other people if he doesn't adhere to his demand

of signing the agreement. Sri Braja Kishore Jena denied to have made

payment of Rs.34,14,400/- to the assessee.

vide show cause letter dated 6.2.2015, wherein, the assessee was asked

for clarification regarding the statement recorded of Sri Braja Kishore

jena, copy of the statement recorded u/s.131 was forwarded to the

assessee. The assessee was asked to furnish the explanation with

documentary evidence as Shri Jena has specifically denied to have made

cash payment of Rs.34,14,400/- to the assessee. The Assessing Officer

further observed that it was specifically asked to the assessee that

purchaser of the property Shri Braja Kishore Jena has stated in the above

referred statement recorded on 15.1.2013 that Shri Jena had paid only

Rs.19,85,600/- for the purchase of the said property at Plot No.28, Vani

Vihar, Bhubaneswar and not Rs.54,00,000/- as claimed by the assessee.

The assessee was asked to submit details regarding the investment of the

remaining amount of Rs.34,14,400/-.

4 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 6. In reply to above cause notice, the assessee submitted that

Rs.34,10,000/- was paid upfront before the sale deed was registered and

the purchaser might have used the non-tax paid income to acquire the

aforesaid asset. The assessee being the honest citizen and tax payer

offers the entire receipts both cash and cheque as consideration received

from the sale of the property. It was further stated that as regard to the

agreement price of Rs.54,00,000/- and sale deed price of Rs.19,85,600/-,

there was an agreement made by the assessee with Sri Braja Kishore

Jena for sale of property over Plot No.28, Laxmi Vihar, unit-13,

Bhubaneswar for a consideration of Rs.54 lakhs on 24.12.2009. The

agreement has been notoraised in presence of witnesses making it valid

and binding on both the parties. It was further submitted that before

notarized, witnesses were present during registration, wherein, it was

mentioned that said land was sold at Rs.19,85,600/-.

before the Assessing Officer. Ld CIT(A) after considering the submission

of the assessee held that cash of Rs. 34,14,400/- has been received by

him from Sri Braja Kishore Jena on sale of Vanivihar property and that

there is an agreement of sale to prove this. However, Sri Braja Kishore

Jena has out rightly denied the payment of cash of Rs. 34,14,400/-. Sri

Braja Kishore Jena, is witness of the assessee, to prove his claim receipt

of cash of Rs. 34,14,400/-. The witness, Sri Braja Kishore Jena, has

denied to have paid this cash. Therefore, it was incumbent on the

5 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 assessee to come up with alternative evidence. Before the Assessing

Officer, the assessee stated that witnesses were present when the sale

was made with the purchaser and cash of Rs. 34,14,400/- was paid. The

assessee could have produced the witnesses before the Assessing Officer

to support his claim that the cash of Rs. 34,14,400/- was indeed given by

Sri Braja Kishore Jena to him. This has not been done by the assessee.

The onus to prove that the cash of Rs. 34,14,400/- has been received

from Sri Braja Kishore Jena is on the assessee and the assessee has not

discharged this onus. The CIT(A) further observed that in the appeal

proceedings, the assessee has further stated that sale deeds are prepared

on a benchmark price for the payment of stamp duty and that payment of

'on money' over and above reported in sale deeds is a reality. The

assessee has relied upon the decision of Hon’ble Allahabad High Court in

the case of CIT vs Intezar Ali (All) and decision of Hon’ble Kerala High

Court in the case of CIT vs P.M. Abu Bakr (2014) 45 Taxman.com

172(Kerala), wherein, it was observed that these cases are general in

nature, mentioning that there may be 'on money' in real estate

transactions. In the case of the assessee, the purchaser has denied

having paid cash of Rs. 34,14,400'-. The assessee has not been able to

put forward any further evidence in this regard. He observed that the

agreement dated 24.12.2009 itself is not sacrosanct. When the purchaser

stated that he was forced to sign on the agreement and he has not paid

Rs.34,14,400/-, the assessee was required to bring additional evidence

before the Assessing Officer. This was not done by the assessee. This

6 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 view is supported by the decision in the case of Chand Prakash Vij vs CIT,

315 ITR 251 (P&H). hence, he confirmed the action of the Assessing

Officer.

authorities. Ld A.R. also produced before me a copy of valuation report

dated 22.6.2011 which was made by Er. A.K.Samantray, in respect of Plot

No.47/628 situated at Laxmivihar, PS: Sahid Nagar, Bhubaneswar, Dist:

Khurda belonging to Shri Sadhu Charan Biswal, wherein, the registered

valuer has opined the value of the land was Rs.1600/- per sq.ft. He

claimed that the above valuation was also accepted by Punjab National

Bank, Chandrasekharpur Branch, Bhubaneswar. He claimed that the said

plot of land was situated in the same locality. The plot of land sold by the

assesse was measuring Ac. 0.080 dcms equivalent to 3478 sq.ft and the

value of the same as per the said valuation report comes to

Rs.55,64,800/-.

authorities and materials available on record. In the instant case, the

undisputed facts are that the assessee constructed a house property at

Plot No.321, (P) G.A.Plot No.222, Chandrasekharpur, Bhubaneswar and

made investment of Rs.79,05,000/-. On being required to explain the

7 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 source of investment, the assessee stated that it had sold a land and

building at Vanivihar, Bhubaneswar and received Rs.54 lakhs. The

Assessing Officer from the registered sale deed dated 22.2.2010 between

the assessee and the purchaser Shri Braja Kishore Jena observed that the

sale consideration mentioned in the said deed is Rs.19,85,600/-

comprised of Rs.10 lakhs in cheque and Rs.9,85,600/- in cash. When

required to explain, the assessee submitted that the said plot of land was

actually sold to Shri Braja Kishore jena for a consideration of Rs.54 lakhs

. In support of this, the assessee submitted that he had entered into a

sale agreement dated 24.12.2009 with Shri Braja Kishore Jena, wherein,

the amount of sale consideration was stated to Rs.54 lakhs. It was

pointed out that the said agreement to sale was signed by Shri Braja

Kishroe Jena and the same was notorised and was also signed by the

witnesses. The Assessing Officer recorded the statement of Shri Braja

Kishore Jena u/s.131 of the Act on 15.1.2013, wherein he denied of

having paid Rs.34,14,400/- in cash to the assessee. On further

questioned by the Assessing Officer as to why he signed the agreement,

which shows sale consideration of Rs.54 lakhs, the explanation of Shri

Jena was that he was forced to sign this agreement as the assessee

threatened to sell the said property to some other persons. In the

circumstances, the Assessing officer disbelieved the explanation of the

assessee and made an addition of Rs.34,14,400/- under the head

unexplained investment in house property.

8 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 12. I find that in the instant case, it is not in dispute that the assessee

has sold its plot of land being Plot No.321(P), G.A.Plot No.222, situated at

Chandrasekharpur, Bhubaneswar to Shri Braja Kishore Jena vide

registered deed of sale dated 22.2.2010. The only dispute is regarding

amount of consideration which was received by the assessee against the

above sale. According to the assessee, the sale consideration was Rs.54

lakhs and his contention was supported by a Notorised agreement of sale

dated 24.12.2009 whereas as per the revenue, the consideration was

Rs.19,85,600/-, which was supported by registered sale deed. The

assessee explained the reason of difference in the amount of

consideration mentioned in the agreement of sale and sale deed as the

total agreed consideration as per agreement of sale was received by him

before execution of sale deed and the purchaser insisted of mentioning of

lesser amount of consideration in the sale deed to avoid payment of the

stamp duty which was to be paid by the purchaser. The assessee also

produced before me a copy of valuation report dated 22.6.2011 which

was made by Er. A.K.Samantray, in respect of Plot No.47/628 situated at

Laxmivihar, PS: Sahid Nagar, Bhubaneswar, Dist: Khurda belonging to

Shri Sadhu Charan Biswal, wherein, the registered valuer has opined the

value of the land was Rs.1600/- per sq.ft. He claimed that the above

valuation was also accepted by Punjab National Bank, Chandrasekharpur

Branch, Bhubaneswar. He claimed that the said plot of land was situated

in the same locality. The plot of land sold by the assesse was measuring

9 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 Ac. 0.080 dcms equivalent to 3478 sq.ft and the value of the same as per

the said valuation report comes to Rs.55,64,800/-.

13.` On the other hand, the Assessing Officer recorded a statement of

purchaser of the plot of land namely Shri Braja Kishore Jena who stated in

his deposition that he actually paid Rs.19,85,000/-. He explained that he

signed this agreement of sale on 24.12.2009 for Rs.54 lakhs as because if

he would not sign that agreement, then the assessee could have sold the

land to some other persons.

Kishore Jena as sacrosanct without any verification. I find that Sri Braja

Kishore Jena has categorically admitted of signing the agreement to sale

on 24.12.2009, wherein consideration was stated Rs.54 lakhs. I find no

reason why a person who agreed to purchase a plot of land at

Rs.19,85,600/- will sign an agreement at a prior date, wherein, more

amount is shown as the amount of consideration. The reason given by

the purchaser is not at all convincing when I take into consideration the

valuation report on 22.6.2011 mentioned above. In the above

circumstances, I find force in the submission of the assessee that the plot

of land was actually sold at the price stipulated in the notorised

agreement of sale. I, therefore, set aside the orders of lower authorities

and delete the addition of Rs.34,14,400/- and allow the ground of appeal

of the assessee.

10 ITA No. 138/CT K/ 2017 Asse ssment Year :20 10- 201 1 15. In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 9 /08/2017. Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 9 /08/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant : Sri Basudev Panigrahi, Plot No.211/H, Sector-A, Zone-B, Mancheswar Industrial Estate, Rasulgarh, Bhubaneswar. 2. The Respondent. ITO Ward 3(1), Bhubaneswar 3. The CIT(A) -2, Bhubaneswar 4. Pr.CIT-2, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack