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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 28.04.2022 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi, [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 09.12.2019 passed by learned ITO, Ward 5(2), Bhopal [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on following grounds:-
That on facts and circumstances of the case the reassessment proceedings instituted u/s 148 is bad and unjust.
Shri Subhash Arora Assessment year 2012-13 2. That reassessment initiated on the basis of reasons recorded as per AIR information regarding cash deposit in Bank of Baroda is bad in law in absence of any concrete information regarding escape of income. Thus the Notice and proceedings instituted is bad and unjust.
3. The Ld. CIT(A) has erred in upholding the addition of Rs. 14,25,000/- as unexplained investment, when the said amount was available with the assessee. On the contrary the amount was utilized for purchase of house which is duly reflected in return and exemption u/s 54F was allowed.
4. The Ld. CIT(A) has erred in upholding the addition of Rs. 14,25,000/- without appreciating the facts that the assessee was having the source of the said deposits not giving the effect of the amount withdrawn and re- deposited in Bank and also not allowed the consideration received of Rs. 14,25,000/-.
5. The Ld. CIT(A) and the ld. AO both of them have erred in law and was not justified in disbelieving the sale proceed of plot of Rs. 14,25,000/- and was not justified in discharging the evidences produced.
6. That the ld. AO misconstrues the facts of family settlement by narrating that the assessee is the joint owner of the property sold whereas the appellant is the sole owner of the said property as per family settlement/ registered Power of Attorney.”
We have heard the learned Representatives of both sides at length and case-records perused.
Brief facts are such that the assessee originally filed return of income of relevant AY 2012-13 on 30.11.2012 declaring a total income of Rs. 1,94,550/-. Subsequently, the AO re-opened assessee’s case through notice dated 28.03.2019 u/s 148 on getting information from Annual Information Return (AIR) that the assessee had deposited cash of Rs. 15,53,000/- in bank a/c during the previous year 2011-12 relevant to AY 2012-13 involved in this appeal. In response to notice, the assessee again filed return on 26.07.2019 repeating the same income of Rs. 1,94,550/-. Thereafter, the AO issued statutory notices u/s 143(2)/142(1) from time to time and scrutinized case of assessee. During proceeding, when the AO asked assessee to explain source of deposit, the assessee submitted a notarized sale-agreement dated 27.12.2011 showing sale of a plot, namely Plot No. 57, Gopal Grah Nirman Society, Bhopal and receipt of consideration of Rs. 14,25,000/- in cash from purchaser. The assessee also filed another notarized agreement showing
Shri Subhash Arora Assessment year 2012-13 investment in purchase of a new property for Rs. 18,25,000/- and claiming that the new investment entitled him to claim exemption u/s 54F; therefore the taxable gain which arose on sale of old plot turned to be Rs. Nil. The AO, however, noted certain fallacies in the explanation of assessee, namely (i) the assessee has not mentioned the capital gain and exemption u/s 54F either in the Return of Income or Computation of total income; (ii) the assessee has not filed copy of registered-deed and submitted only notarized sale- agreement, (iii) even the perusal of sale-agreement showed that the assessee sold joint-plot for Rs. 14,25,000/- and the consideration was distributed among the co-owners, therefore the assessee was to receive only Rs. 14,25,000/3 = Rs. 4,75,000/-. With these observations, the AO rejected assessee’s explanation that the cash was deposited out of sale proceed of plot. Ultimately, while completing assessment, the AO treated entire deposit of Rs. 15,53,000/- in Bank A/c as unexplained money u/s 69A and made addition. Aggrieved, the assessee carried matter in first-appeal and contested.
During first-appeal, the CIT(A) noted submissions of assessee and although granted part-relief of Rs. 1,28,000/- out of the addition of Rs. 15,53,000/- but upheld addition of Rs. 14,25,000/- for which the assessee claimed to have made deposits from sale-proceed of plot. The operative portion of the order of CIT(A) is extracted below for an immediate reference:
“4.4 The appellant in his submission has stated that he has sold a residential plot no. 57 measuring about 1500 sq.ft. at Gopal Grah Nirman Sahkari Society Mydt., Bhopal on 27.12.2011 of Rs. 14,25,000/- by cash through registered Power of Attorney, the said plot was acquired by the mother of appellant (Swarn Dabar) on 19.11.1991 of Rs. 20,000/- including development charges and stamp duty etc. The appellant has submitted that he had cash received from the purchaser and deposited in his saving bank account with Bank of Baroda. The remaining amount of Rs. 1,28,000/- cash deposited in his saving bank account from small saving of Business activities. The appellant has stated that he had filed all documentary evidences like Sale agreement, Power of Attorney and Sahmati Patra wherein it is clearly mentioned the plot was received from his mother Smt. Swarn Dabar and he was single owner of the said plot.
Shri Subhash Arora Assessment year 2012-13 4.5 An analysis of the facts reveal that the appellant deposited cash of Rs. 15,53,000/- in his bank account. Before the undersigned, the appellant submitted that a plot of his mother Swarn Dabar was sold for Rs. 14,25,000/- . In the agreement (only notarized/un-registered) dated 27.12.2011 which was submitted. It is seen that Smt. Swarn Dabar, Jagdish Arora and the appellant Subhas Arora are chi9ldren of one Shri Sundardas Arora and Smt. Rampyari Arora. Therefore, Swarn Dabar is sister not mother of the appellant. This is factually incorrect. Again, the appellant has submitted a Sahmati Patra dated 06.02.2010, wherein the Swarn Dabar and Jagdish Arora have relinquished their rights in favour of Subhash Arora. This is again not registered. 4.5.1 In the assessment the AO has mentioned that “the assessee has also submitted another purchase agreement dt. 10.11.2011 of a residential house property amounting to Rs. 18,25,000/- and stated to pay Rs. 14,51,000/- for the same on different dates and claimed exemption u/s 54F but, no mention of the same was found to be in ITR or computation of income.” As the above was not found in the ITR, however, the action of the appellant in submitting the same before the AO, is beyond normal reasonings. 4.5.2 Taking into account all the facts of the instant case, the appellant’s explanation with regard to Rs. 14,25,000/- is not accepted. Addition to the extent of Rs. 14,25,000/- is confirmed. With regard to the balance addition of Rs. 1,28,000/-, the explanation of the appellant is accepted and the same is allowed. Appeal on ground no.1 is partly allowed.”
Still aggrieved by order of first-appeal, the assessee has come in next appeal before us.
Before us, the assessee has raised several grounds, as re-produced above, challenging the legality of the proceedings done by AO as well as merits of the addition made by AO. But, during hearing, Ld. AR for assessee made submissions only on the merits of the addition and did not utter any voice on legality of proceedings. Therefore, our adjudication in subsequent discussion is confined to what is pleaded before us and the legality aspect is not being adjudicated treating the same as non-pleaded/non-pressed.
Ld. AR for assessee assailed orders of both of the lower-authorities and submitted that the addition of Rs. 14,25,000/- has been wrongly made/upheld in present case. Ld. AR submitted that assessee sold plot
Shri Subhash Arora Assessment year 2012-13 through sale-agreement dated 27/12/2011 and received cash-consideration of Rs. 14,25,000/- in cash for which sale-deed was subsequently executed on 24.12.2012. The entire consideration of Rs. 14,25,000/- belonged to assessee individually and the AO has made a wrong observation that the assessee was a co-owner having 1/3rd share only. Following facts are submitted in this regard with the support of documents placed in Paper- Book:
(a) The plot was originally acquired and owned by Smt. Rampyari Arora (assessee’s mother) on 19.11.1991.
(b) After death of Smt. Rampyari Arora on 21.05.1992, three successors became joint-owners of plot, namely (i) Subhash Arora (assessee), (ii) Smt. Swarn Davar (assessee’s sister), and (ii) Shri Jagdish Lal Arora (assessee’s brother). However, Smt. Swarn Davar and Shri Jagdish Lal Arora, vide Consent-document dated 06.02.2010 executed on stamp- paper of Rs. 100/- duty notarized, relinquished their right in plot in favour of assessee, honouring a strong wish of their deceased mother Smt. Rampyari Arora (Consent-document was filed to AO as well CIT(A) and also filed before us at Paper-Book-I, Page 23-24). Ld. AR relied upon the decision of Hon’ble Supreme Court in Same Kale Vs. Dy. Director of Consolidation AIR 1976 SC 807 to claim that a family arrangement which was registerable but not registered, can be used for a collateral purpose.
(c) Thereafter, the assessee filed an application dated 02.06.2011 to Tehsildar, M.P. Nagar, Bhopal alongwith (i) Consent-document, (ii) Death-certificate of mother, (iii) Registered-deed of plot, and (iv) an affidavit dated 31.03.2011 solemnized by assessee, for transfer of impugned plot in assessee’s name. Acting upon assessee’s application, the office of Tehsildar issued letter No. 672/Th/11 dated 17.06.2011 to Sub-Registrar, Co-operative Societies, Bhopal for giving his recommendation/comments for transfer of plot in assessee’s name.
Shri Subhash Arora Assessment year 2012-13 These documents are filed at Page No. 34 to 36 of Paper-Book-I for the first time before ITAT.
(d) The assessee has shown full sale proceed of Rs. 14,25,000/- in his individual return. Ld. AR drew our attention to show this from Copy of ‘Acknowledgement of Return’ filed by assessee in response to notice u/s 148 and copy of ‘Computation of Total Income’ prepared for filing such return. These documents are filed at Page No. 37-39 of Paper-Book-I for the first time before ITAT.
Then, Ld. AR also drew our attention to an affidavit of assessee’s income-tax consultant Shri Radheyshyam Chauhan who conducted proceedings in first-appeal before CIT(A), filed at Page No. 40 of Paper-Book- I. In Para No. 7 and 8 of the affidavit, it has been averred by assessee’s consultant that due to human error, he mentioned name of assessee’s mother as “Swaran davar” in place of “Rampyari Arora” before CIT(A). Ld. AR submitted that the CIT(A)’s adverse finding on this aspect is dissolved by affidavit of consultant.
Lastly, Ld. AR drew our attention to a Statement filed at Page No. 1-8 of Paper-Book-II (which was also filed to lower-authorities as per certificate given in Paper-Book), giving extract of the entries of cash-deposits made in Bank A/c on various dates. This Statement is scanned and re-produced below for an immediate reference. In last column titled “Remarks”, the assessee has mentioned the sources of deposits. There are 12 entries (marked by us as 1 to 12 on the basis of explanation given by Ld. AR during hearing) where the assessee claims to have made deposits from sale proceeds of plot:
Shri Subhash Arora Assessment year 2012-13
Shri Subhash Arora Assessment year 2012-13
Shri Subhash Arora Assessment year 2012-13 10. With these submissions, Ld. AR strongly claimed that the assessee has genuinely sold plot and received consideration of Rs. 14,25,000/- individually and the same was deposited in Bank A/c from time to time. Therefore, the authorities are wrong in disbelieving assessee’s explanation and making/upholding addition. Ld. AR prayed to delete addition.
Per contra, Ld. DR for revenue firstly submitted that the AO has doubted sale of plot itself with the observation that sale-deed was not before him, the assessee filed only notarized agreement. Then, Ld. DR requested us to carefully examine the copies of sale-agreement dated 27.12.2011 and registered sale-deed dated 24.12.2012 filed by assessee (Paper-Book-I at Page No. 25-33). Carrying us through these documents, Ld. DR submitted that these documents are executed by all three owners i.e. assessee, his brother and his sister, and not by assessee alone or individually. Then, there is no reference of Consent-document either in sale-agreement or sale-deed. Then, it is categorically mentioned on Page No. 2 of the sale-agreement that the consideration of Rs. 14,25,000/- received in cash had been divided/distributed amongst co-owners which is also an observation made by AO. Therefore, Ld. DR contended, even if sale-agreement and sale-deed are taken into account, the assessee’s claim that he was individual owner of the sold plot is not credible and rightly rejected by lower-authorities.
We have considered rival submissions of both sides and perused the orders of lower authorities as also the documents filed in Paper-Book-I and Paper-Book-II to which our attention has been drawn. After a careful consideration, we find that the assessee has filed certain newer evidences to assail/dislodge the findings of AO. These documents are:
(i) Application dated 02.06.2011 filed to Tehsildar, M.P. Nagar, Bhopal for transfer of impugned plot in assessee’s name and Copy of the letter No. 672/Th/11 dated 17.06.2011 issued by Office of Tehsildar to Sub- Registrar, Co-operative Societies, Bhopal for giving his comments/
Shri Subhash Arora Assessment year 2012-13 recommendation for transfer of plot in assessee’s name, filed at Page No. 34 to 36 of Paper-Book-I.
(ii) Copy of ‘Acknowledgement of Return’ filed in response to notice u/s 148 and copy of ‘Computation of Total Income’, to show that full amount of sale consideration of Rs. 14,25,000/-, resultant capital gain and exemption was disclosed by assessee individually in his return at Page No. 37-39 of Paper-Book-I. It is noteworthy that the assessee has still not filed full copy of “Income-tax Return” to conclusively establish that the full amount of sale consideration, capital gain and exemption were disclosed by him.
Furthermore, from perusal of Statement, re-produced in foregoing paragraph No. 9 of this order, it is manifest that the assessee is claiming to have made piecemeal deposits in Bank A/c in 12 entries on different dates from receipt of cash-consideration from buyer. Some deposits entries are of Rs. 49,500/- also. But, on Page No. 2 of the sale-agreement (Page 26 of Paper-Book-I), although the factum of payment of consideration in cash is acknowledged by purchaser but the dates are not mentioned; it is only stated in regional language that the consideration was paid/received “bala bala”. Therefore, unless the AO carries out a complete verification from purchaser qua the full picture of payments made to assessee, it is difficult for us to conclude that the deposits made in bank a/c on so many dates were really out of amounts received from purchaser.
Therefore, the AO is required to examine the newer evidences placed by assessee and also make a verification, as noted by us in foregoing Para No. 13-14. Hence, we are of the considered view that this matter should go back to the file of AO who would do the necessary exercise and come to conclusion afresh. Needless to mention that the AO shall confine his exercise qua the deposit of Rs. 14,25,000/- only and shall not disturb the relief of Rs. 1,28,000/- already given by CIT(A). Furthermore, while doing so,
Shri Subhash Arora Assessment year 2012-13 the AO shall give adequate opportunities to assessee also and shall not be influenced by previous orders. Ordered accordingly.
Resultantly, this appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 26.10.2023.