GURMEET SINGH CHOUHAN,RAJPURA vs. ITO, RAJPURA

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 23.09.2016 of the Commissioner of Income Tax (A), Meerut (camp office Patiala) [hereinafter referred to as ‘CIT(A)’].

account of the assessee. The assessee explained before the Assessing officer that the said amount was received by the assessee as ‘earnest money’ for sale of land in lieu of agreement to sell dated 21.12.2009 entered between the assessee and Shri Jaspal Singh. The total

ITA No. 1369/Chd/2016- Gurmeet Singh Chouhan, Rajpura 2

consideration was settled at Rs. 12 lacs out of which Rs. 9,60,000/-

was received by the assessee as advance / earnest money, which was

deposited in the bank account. The assessee, as per the Assessing

officer, relied upon the copy of the agreement to sell dated

21.12.2009. However, the assessee could not produce the said Shri

Jaspal Singh, intended purchaser as he being an NRI, settled at Italy,

hence, was not present in India at that time. The Assessing officer

therefore, held that assessee could not prove the genuineness of the

payments and he, therefore, treated the deposit of Rs. 9,60,000/- into

the bank account of the assessee as undisclosed income of the

assessee.

submissions that the amount in question was received as earnest

money from Shri Jaspal Singh who was an NRI settled at Italy. The

assessee also produced the affidavit executed by Shri Jaspal Singh,

wherein, he affirmed that he had paid the amount of Rs. 9,60,000/- as

earnest money to the assessee vide agreement dated 21.12.2009. He

further affirmed that the said agreement to sell dated 21.12.2009

could not be matured due to his financial needs and further plan to go

Italy again. That the assessee had returned the above advance of Rs.

9,60,000/- to him on 4.2.2010 in cash and that as on the date he

had no balance towards him. He further affirmed in the affidavit that

the assessee had made a request to him in the month of December

2013 to make himself available for appearance before the Income Tax

officer but at that point of time he was not in India. It has been also

deposed in the affidavit that presently i.e on the execution of

ITA No. 1369/Chd/2016- Gurmeet Singh Chouhan, Rajpura 3

affidavit on 20.2.2015, he was present in India and would go back to

Italy in the next one or two months and he was ready to appear and

state these facts before the Income tax authorities during his stay in

India. The Ld. CIT(A) called upon the remand report upon this

additional evidence submitted by the assessee during the appellate

proceedings. In the remand report, the Assessing officer reiterated

the contents of the affidavit and recommended to the CIT(A) that the

matter may be decided on merits. However, neither the Assessing

officer during the remand proceedings nor the Ld. CIT(A) during the

appellate proceedings called upon Shri Jaspal Singh to verify the

transaction or to ask him to furnish the evidence regarding the

source of the advance of Rs. 9,60,000/- paid to the assessee. The Ld.

CIT(A) confirmed the addition made by the Assessing officer

holding that the assessee had failed to prove the genuineness of the

transactions and the creditworthiness of the payer.

prove the genuineness of the transaction and the creditworthiness of

the payer, however, once the assessee had furnished the affidavit of

the payer, wherein, the payer had not only confirmed the transaction

but also offered to appear / present himself before the income tax

authorities, then it was up to the Income-tax authorities either the

Assessing officer or the CIT(A) to record his statement or ask him to

furnish the evidence of his creditworthiness.

In view of the above, we do not find any justification the part

of the CIT(A) to confirm the addition. Therefore, the order of the

ITA No. 1369/Chd/2016- Gurmeet Singh Chouhan, Rajpura 4

CIT(A) is hereby set aside and the addition of Rs. 9,60,000/- made by the CIT(A), is ordered to be deleted. In the result, appeal of the assessee stands allowed. Order pronounced in the Open Court on 13.07.2018

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 13.07.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR