INCOME TAX OFFICER, WARD-1(3), RAIPUR vs. SHRI REKHCHAND JAIN, RAIPUR

आयकर अपीलीय अिधकरण, रायपुर �यायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR �ी र�वश सूद, �याियक सद�य एवं �ी अ�ण खोड़�पया, लेखा सद�य के सम� । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA No.73/RPR/2020 (Assessment Years: 2015-2016) ITO-1(3), Raipur V Shri Rekhchand Jain, s Prop.: M/s Oswal Radio, M.G. Road, Raipur (C.G.) PAN: ACIPJ2381 B (अपीलाथ� /Appellant) (��यथ� / Respondent) .. Shri Bikram Jain, CA िनधा�रती क� ओर से /Assessee by : राज�व क� ओर से /Revenue by : Shri Piyush Tripathi, Sr. DR सुनवाई क� तार�ख / Date of Hearing : 22/08/2023 घोषणा क� तार�ख/Date of Pronouncement : 18/10/2023 आदेश / O R D E R Per Arun Khodpia, AM :

The revenue has filed this appeal against the order passed by the CIT(A)-I, Raipur, dated 24.02.2020 for the assessment year 2015-2016.

2 ITA No.73/RPR/2020 the land was purchased either before or on the date of transfer of land at Sejbahaar in contravention to section 54 B? 2. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs. 91,80,111/- made on account of deduction claimed u/s 54B of the Act thereby ignoring the fact that the Bikri Ikrarnama between the assessee along with Shrichand Golechha and Smt. Chandu Bai Jain and M/s Satyam Developers was duly notarized which was also accepted by the assessee in reply filed on 26.12.2017, whereas the Sahmati Patra and Kabja Patra dated 10.09.2014 was not notarized and also in view of fact that there is no any mention of Sahmati Patra, Kabja Patra and the Bikri Ikrarnama in the sale deed executed on 30.03.2015 for Rs. 1,94,40,000/-? 3. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of 91,80,111/- on account of deduction claimed u/s 54B of the Act thereby ignoring the fact that in the ‘Sahmati Patra’ and Kabj Patra’ dated 10.09.2014 it is mentioned that the seller has given the possession of the land to the purchaser only for the purpose of executing agricultural work but not otherwise handed over full possession and ownership to the purchaser. As such possession for a limited purpose of agriculture does not come under clause (v) of section 2(47) of the I.T. Act? 4. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of 91,80,111/- on account of deduction claimed u/s 54B of the Act thereby ignoring the fact that the sale deed supplied by the assessee is different from the agreement(Ikrarnama) given by the assessee? 5. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of 91,80,111/- on account of deduction claimed u/s 54B of the Act thereby ignoring the fact that the copy of sale deed sent by the Sub Registrar office is in plain paper instead of stamp paper and without payment details? 6. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the addition of Rs. l,25,21,000/-u/s 68 of the Act regarding investment made by the assessee in purchase of the said land at Dhaneli by stating that if the AO was not convinced about the genuineness of the said documents, he would have inquired into their veracity from the banks to ascertain the truth of the assessee’s claim, thereby ignoring the fact that onus to prove the creditworthiness of the loan creditors, mode of transactions and genuineness of transaction was on the assessee but the assessee failed to discharge his onus even though the CIT(A) himself having concurrent powers of the AO u/s 250(4) of the Act could have made enquiries in this regard as laid down in the judgements of the Hon’ble Supreme Court in the cases of Roshan Di Hatti v. CIT[1977] 107 ITR 938 [SC], Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 [SC] ?” 7. The order of Ld. CIT (A) is erroneous both in law and on facts

3 ITA No.73/RPR/2020

Ground 1 to 5 : CIT(A) is not justified in deleting the addition of Rs. 91,80,111/- on account of deduction claimed u/s 54B. 4. Brief facts of the issue raised by revenue in ground no 1-5 of the appeal are that the assessee is an individual, having income from Salary, Income from House Property and Income from Business from M/s Poswal Radio. Assessee has filed his return of income electronically on 09.12.2015 declaring total income of Rs.4,92,390/-. In due course, the case of the assessee was selected for limited scrutiny through CASS on the following reasons :- i) Large deduction u/s.54B, 54-C, 54-D, 564-G, 54-GA. ii) Mismatch in sales turnover reported in audit report and ITR.

Date Cheque no. State Bank of India Amount 02.09.2014 771035 State Bank of India Rs. 1000000/- 15.09.2014 771036 State Bank of India Rs. 100000/- 15.09.2014 771037 State Bank of India Rs. 370000/- 13.05.2015 771041 State Bank of India Rs. 1000000/- 08.07.2014 389873 State Bank of India Rs. 1000000/- 06.09.2014 413227 State Bank of India Rs. 500000/- 06.09.2014 413228 State Bank of India Rs. 1000000/- 13.09.2014 413229 State Bank of India Rs. 500000/- 20.03.2015 021076 Allahabad Bank Rs. 6000000/- 21.03.2016 21098 Allahabad Bank Rs. 97500/- 15.09.2016 320961 Allahabad Bank Rs. 972500 Total Rs. 19440000/-

4 ITA No.73/RPR/2020

5 ITA No.73/RPR/2020 of investment in purchase of above lands not being after the transfer of land at Sejbahar. Assessee responded to such an observation of the Ld. AO, in para 5 of reply dated 21.09.2017, the same is reproduced below- “In the case of the assessee an agreement for sale of the property located at Kh. No. 481/1 Sejbahar Raipur for consideration of Rs. 1,94,40,000/- was executed between the parties on 10.09.2014 (copy of agreement enclosed) when possession of the land was handed over to the purchaser (M/s. Satyam Developers) as per terms of agreement. The sales consideration was paid as per agreed terms which was utilized for purchase of agricultural land whose details is as under which is already given in pint No. 2 of our submission dated 23.08.2017.” 7. With the aforementioned reply of the assessee dated 21.09.2017, the the assessee has filed the copy of Sahmati Patra and Kabja Patra dated 10.09.2014 between the assessee, co-sellers Shri Shrichand Golechha and M/s Satyam Developers. The said agreement was found to be neither registered nor notarized. In the agreement the Kh. No. 481/1 and area 1.618 hectare is mentioned to be sold @ Rs. 65,00,000/- per Acre and the details of advance payment of Rs. 60,00,000/- is mentioned as under :-

Amount Cheque no. Bank Name Rs. 2000000/- 320960 Bank name not & date not given Rs. 1000000/- 413227 Bank name not & date not given Rs. 1000000/- 771035 Bank name not & date not given Rs. 1000000/- 389873 Bank name not & date not given Rs. 1000000/- 389872 Bank name not & date not given Total Rs.6000000/- Bank name not & date not given

6 ITA No.73/RPR/2020 06.09.2014. In response to the summons issued to M/s Satyam Developers, a written reply a/w copies of sale deed for Rs. 1,94,40,000/-. Rs. 1,81,02,500/- and Rs. 1,22,85,000/- and an agreement of sale between the assessee, co-seller Shri Shrichand Golechha and M/s. Satyam Developers were filed. This agreement was notes as duly notarized. The agreement is for the sale and purchase of 3.331-hectare land at Sejbahar at Kh. No. 481/1, 2.343 hectare and Kh. No. 482/16, 0.445 hectare and Kh. No.482/16, 0.223 hectare for Rs. 65,00,000/- per acre in which advance of Rs. 1,00,00,000/- was mentioned as given by cheque, in this agreement the cheque no, date, amount and name of the banks are mentioned. This is different from the registered sale deed supplied by the assessee. This is also different from the agreement (Ikramama) given by the assessee. More important is to note that Sub-Registrar Raipur has sent copy of sale deed in plain paper without stamp paper and without payment details. As the copy of agreement dated 10.09.2014 filed with reply dated is not notarized or registered and some cheques are not tallied with the payment details mentioned in the deed, therefore, the AO held that the agreement dated 10.09.2014 is bogus, fabricated for the purpose of showing the payments and handing over the possession on the land at Sejbahar sold to M/s Satyam Developers on the dated of agreement. Further the AO found from the copy of agreement submitted by M/s Satyam Developers with its reply filed on 12.12.2017 that there is no mention of handing over possession on the land before the date of full payments. On the contrary it is mentioned that if the purchaser do not pay the sales consideration within the scheduled

7 ITA No.73/RPR/2020 period then the deal will be cancelled. When these facts were confronted to the assessee vide query letter dated 12.12.2017 and asked to explain vide reply dated 22.12.2017 filed in this office on 26.12.2017 the assessee has given a written explanation, the same is reproduced below- The assessee along with Shri Shrichand Golechha and Smt. Chandubai Jain executed a sale agreement [Vikray Ikramamawith Satyam Developers for sale of 3.331 hectare of agricultural land which was also notarized. The list of total land is enclosed herewith as Annexure ‘k’. But later on the purchaser asked for possession of 1.618 hec. Of agricultural land belonging to the assessee and Shri Shrichand Golechha for which Sahmati Patra and Kabja Patra dated 10.09.2014 was executed for area of 1.618 hec. So that this part of land can be used by purchaser. The assessee has handed over the land to the purchaser on 10.09.2014 when as agreement was exacted and following payments where received through bank before the date of agreement which payments are also mentioned in the relevant registry copy of bank statement enclosed to evident the credit entries. Date Cheque No. Amount 02.09.2014 771035/- Rs. 1000000/- 09.09.2014 389873 Rs. 1000000/- Deduction u/s 54 is already discussed in our submission dated 21.09.2014. The reply and plea of the assessee were not found acceptable by the Ld AO for the following reasons- a) The Bikri Ikramama between the assessee along with Shrichand Golechha and Smt. Chandu bai jain and M/s Satyam Developers was duty notarized which is also accepted by the assessee in reply filed on 26.12.2017. b) The Sahmati Patra and Kabja Patra dated 10.09.2014 was not notarized. c) There is no any mention Sahmati Patra and Kabja Patra and also the Bikri Ikramama in the sale deed executed on 30.03.2015 for Rs. 19440000/- d) In the Sale/purchase deed dated 30.03.2015 there is also no mention that the kabja on the land was handed over to the purchase on 10.09.2014. In the contrary it has been mentioned in page ‘5’ of the deed that the sellers are in need of money for household/business/ and other works and seller has handed over possession and ownership of the said land after receiving the full amount of appropriate sale consideration of the land and made the seller as the owner of the land.

8 ITA No.73/RPR/2020 e) In the ‘Sahamti Patra’ and ‘Kabja Patra’ dated 10.09.2014 it is mentioned that the seller has given the possession of the land to the purchaser only for the purpose of executing agricultural work but not otherwise handed over full possession and ownership to the purchaser. As such possession for a limited purpose of agriculture does not come under clause (v) of section 2(47) of the LT. Act. f) The sale agreement duly notarized do not allow the handing over possession until full payments received on the land to seller. Also the Sahamti Patra and Kabja also do not show the handing over of full-fledged possession. The possession given is only for agricultural work. g) Any intellected persons will never land over the possession and ownership of his property without receiving full amount of sales consideration. The intellected person will also not keep the execution of purchase deed of property purchase after making full payments. h) The sale deed supplied by the assessee is also different from the agreement (Ikramama) given by the assesse. More important is to note that SubRegistrar, Raipur has sent copy sale deed in plain paper without stamp paper and without payment details. 9. For the aforesaid reasons narrated by Ld AO, the Sahamati Patra and Kabja dated10.09.2014 has been held as useless and vain document. According to the Ld. AO, by such ostentatiously fabricated document the assessee has tried to shift the date of transfer of the land sold from date of execution of sale deed i.e. 30.03.2015 to the date of Sahamati Patra and Kabja Patra dated 10.09.2014 by taking the shelter of an illegal document. It was also noted by the AO that by such means the assessee has also tried to prove that the agricultural lands purchased at village Dhaneli have purchased after the date of transfer. The AO, refused to accept the reply and plea of the assessee, thus, have not accepted the date of transfer of the land at Sejbahar as 10.09.2014. He inferred that the date of transfer is actually the 30.03.2015 the date of execution of the sale deed. Thus, the AO held that all the agricultural lands have been purchased on or before 30.03.2015, the deduction u/s 54B would have been allowable only when

9 ITA No.73/RPR/2020 the assessee would have purchased the agricultural land after 30.03.2015, consequently, the claimed u/s 54-B was disallowed. The cost of the acquisition of land sold at Sejbahar is taken at Rs. 2,73,635/- as furnished by the assessee in his reply and indexed cost is worked out to Rs. 5,39,889/- (F.Y. 2006-07 Rs. 273635/519 x 1024 = 5,39,889). finally, the AO calculated the taxable long term capital gain at Rs.91,80,111/-. 10. Aggrieved with the above order of the AO, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) deleted the addition made by the AO by observing as under :- 2.3 I have gone through the submission of the appellant and also perused the assessment order. As per the AO the land from Shri Gurdeep Singh was purchased on 30/03/2015 whereas the land at Sejbahar was sold on 31/03/2015, therefore the claim u/s 54B is not allowable since date of purchase is later than date of sale. This finding is not correct. Because the AO has himself mentioned in para 3.2 that the land at Sejbahar was sold on 30/03/2015. Therefore, the date 31/03/2015 mentioned at para 3.4 is not correct. Further the money on sale of Sejbahar land was received by the assessee on various dates from 02/09/2014 to 15/09/2016. The AO did not accept claim of the assessee that as per the agreement for sale the land was handed over to the buyer a per the agreement darted 10/09/2014 and the consideration was received as per agreed terms which was utilized for purchase of new land. The AO has cited certain irregularities such as the agreement being not notarized and there are difference in the payment details in respect of ale of land. During the appeal the Ld AR has contended that even if it is presumed as per AO that the land was not handed over to buyer however since the assessee has taken loan which were invested in the new land and since the loan was repaid subsequently out of sale consideration received later therefore the deduction u/s 54B is allowable. Similar issue has been dealt in the assessee’s favour by Mumbai Tribunal in the case of Inshar Shigh Chawada Vs DCIT 130 TTJ 108. Facts are that the assessee sold flat giving rise to the capital gain. The assessee has purchased new residential house by partly taking bank account loan and partly from own funds. He repaid the bank loan partly out of the sale proceeds of original flat. Relying on the decision of Bombay High court in the case of CIT Vs Dr. P.S. Pasricha in ITA No. 1825/209 dated 07/10/2009 the Tribunal has held that the Department’s appeal is without any substance and the assessee is entitled to claim of deduction u/s 54B. In another case of Yatin Prkash Telang Vs ITO in ITA No. 1136/Mum/2018 171 ITD 705 the

10 ITA No.73/RPR/2020 Mumbai tribunal has held similar view. In view of the above facts the amount is decided in assessee’s favour and the addition made by the AO is hereby deleted. 10.1. Now, the revenue is in appeal before the Tribunal against the deletion of the addition by the ld. CIT(A).

11 ITA No.73/RPR/2020 Patra and the Bikri Ikrarnama were not referred in the sale deed executed on 30/03/2015. Another argument of the department was that the Sahmati Patra/ Kabja Patra which was the basis for claiming the deduction u/s 54B was not having any discussion that the seller had given the full possession or the ownership right of land to the purchaser, rather the possession of the land was conditional one i.e. only for the purpose of performing of agricultural work. It is the contention of revenue that possession for limited purpose of agriculture does not come under clause (v) of Section 2(47) of the I.T. Act. Accordingly, it was the prayer of the department that the decision of Ld.CIT (A) was erroneous, not justified and is subject to reversal.

Brief Facts:  The appeal preferred by the department is against the order of CIT(A), where in the A.O. had made disallowance of deduction claimed u/s 54B of Rs. 91,80,111/- and addition u/s 68 of Rs. 1,25,21,000/- on account of unsecured loan received, which was deleted by CIT (Appeal). 1. First addition/Disallowance: - Disallowance of deduction claimed u/s 54B Observation of the AO for disallowance of deduction claimed u/s 54B: The observation of the A.O. is at para 3.6 & 3.7 at page 8 and 10 of the Assessment Order Observation of CIT(A):

Observation of CIT(A) is at para 4.3 at page-9 & 10 of CIT(A) order.

12 ITA No.73/RPR/2020 Submission:  Please refer written submission made before CIT(Appeal) para 2.1 to 2.6 page no 2-9 of PB (Paper Book).  The case of the assessee was assessed u/s 143(3) of the Income Tax Act, 1961.  During the year the assessee jointly with one more person has sold an agricultural land for a consideration of Rs. 1.94 crore wherein the share of assessee is 97 lacs. The long-term capital gain comes out from the sale of said land is Rs. 91.08 lacs. The assessee has purchased agricultural land of Rs. 1.24 crore and has claimed deduction u/s 54B of the Income Tax Act, 1961 of Rs. 91.08 lacs

 That the Ld. AO has disallowed the claim made u/s 54B of the Income Tax Act, 1961 by stating that since the agricultural land has purchased prior to the date of sale of agricultural land, therefore the assessee is not eligible for deduction u/s 54B of the Income Tax Act, 1961.

 That the above contention of the A.O. is not correct. That prior to the registry of the land, the assessee has executed one sahamati /kabja patra on 10.09.2014 [refer page no 16-18 of paper book (PB)], where in possession was handed over to the buyer. The assessee has received advance amount for sale of said land and is evident from the registered deed and sahamati/kabja patra. (refer page no 41-49 of PB for registered deed )The said advance amount along with some other amount is utilized for purchase of agricultural land for claiming deduction u/s 54B (refer page no 38 of PB ).

 ➢ That in view of spirit of CBDT Circular issued dated 10.05.1983 for claiming deduction u/s 54E (refer page no 40 of PB ) and in view of various case laws, it is to submit that if the advance amount is utilized for purchase of another land even through the registry has taken place subsequently, the assessee is eligible for deduction u/s 54B.That in the present case, the assessee has utilized the advance amount for purchase of land and is eligible for deduction u/s 54B of the Income Tax Act, 1961.

 The assessee relies on the following case laws:

13 ITA No.73/RPR/2020  Pankaj Kumar Agrawal VS. ITO [54 CCH 544] (ITAT Raipur Bench) (Refer page no 108-109 of PB) (Covered Case)

 Inderjeet Singh Mann vs. ACIT [ITA No. 1136/CHD/2014] (ITAT Pune Bench)(Refer page no 93-105 of PB)

 Ramesh Jakhadi vs. ITO [41 ITD 368] (ITAT Chandigarh Bench) (Refer page no. 106-107 of PB)

 CIT vs. Subhash Vinayak Supnekar [(2016) 97 CCH 0250] (High Court of Bombay) (Refer page no 91-92 of PB)

 In view of above facts and circumstances the addition made by the AO has correctly been deleted by CIT(A).

of deduction u/s 54B of the I.T. Act having dates of agreement, sale deed

pertaining to purchase and sale of the land to be considered while deciding

the admissibility of the deduction claimed, the chart furnished is culled out

as under:

1st addition:- deduction claimed u/s 54B of the Income Tax Act, 1961 Agreement detail / Sale detail Date of Particulars Land detail Agreement Page no of PB Agreement rate per acre 10.09.2014 Sahamati Kabja Patra Kh. No-481/1, 1.618 16-17 6500000/- Hectare (4 acre) per acre After Sale Agreement Kh. No: - 481/1 (2.343 Hectare), 6500000/-per 19-20 10.09.2014 Kh. No-482/8 (.445 Hectare), acre Kh. No-no: - 482/17 (.320 Hectare) and 482/16 (.223 Hectare) = 3.331 Hectare

30.03.2015 Registered Sale Deed Kh. No-481/1, 1.215 Hectare. 6500000/-per 42-43 (3.0023 acre) acre

14 ITA No.73/RPR/2020

Payment received detail by the assessee Date of Registry:- 30.03.2015 Cheque No Amount Relevant Bank Whether Whether Date as per registered deed (Refer page (Refer page no statement page showing in showing in (Refer page no 43 no 43 of PB) 43 of PB) No. in PB Sahamati sale of PB) Kabja Patra agreement

(Refer page (Refer page no. no. 17 of PB) 20 of PB) 08.07.2014 389873 10,00,000/- 23 YES YES 02.09.2014 771035 10,00,000/- Back of page 22 YES YES 15.09.2014 771037 3,70,000/- 43 NA YES 15.09.2014 320961 9,72,500/- 30 NA YES Total 33,42,500/- 20.03.2015 021077 60,00,000/- 36 NA NA

New Agricultural Land Purchased detail (Refer page no 38 of PB) Detail of Land Date of Purchase Total Investment 50% share (Assess's Share) Land at Dhaneli 25.11.2014 27,43,870 13,71,935 Kh. No- 3/1, 3/9 25.11.2014 62,64,736 31,32,368 Land at Dhaneli. Kh. No-3/2

Land at Dhanei, Kh. 09.12.2014 84,90,318 42,45,159 No.2/5/2,355/2/2,5/, 5/26 30.03.2015 74,50,850 37,25,425 Land at Dhaneli. Kh. No- 3/7,3/8 Total 2,49,49,774 1,24,74,887

that the agriculture land was purchased prior to the date of sale of

agricultural land and prior to the registry of the land, as per Sahmati/ Kabja

Patra dated 10/09/2014 the possession was duly handed over to the buyer,

this fact was substantiated by the Ld. A.R. by showing us copy of the

Sahmati/ Kabja patra wherein at page 2 it is mention that the possession of

land it is handed over to the buyer on today for the purpose of agriculture

15 ITA No.73/RPR/2020 work which has been accepted by the buyer. It is further stated by the Ld. AR that in terms of the said Sahmati/ Kabja patra the assessee has received advance amount for sale of the said land which is evident from registered deed wherein the said advance amount along with some other amount is utilized for the purpose of purchasing the agricultural land. Therefore, the assessee has rightly claimed the deduction u/s 54B. Ld. AR further drew our attention to CBDT’s Circular dated 10/05/1983 referring to clarification pertaining to section 54E of the Act, which is extended to the reliefs claimed u/s 54B also. According to the said circular CBDT has clarified that “the Board have decided that if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption u/s 54E. The board has further clarified that same consideration would apply for relief u/s 54B also. Copy of the CBDT’s Circular is extracted as under: SECTION 54E l EXEM PTION OF LONG-TERM CAPITAL GAINS WHEN CONSIDERATION IS INVESTED IN SPECIFIED ASSETS 436. Assessee investing earnest money in specified assets before date of transfer - Whether amount so invested qualifies for exemption 1. Section 54E provides for exemption of long-term capital gains if the net consideration is invested by the assessee in specified assets within a period of six months after the date of such transfer. A technical interpretation of section 54E could mean that the exemption from tax on capital gains would not be available if part of the consideration is invested prior to the date of execution of the sale deed as the investment cannot be regarded as having been made within a period of six months after the date of transfer. 2. On consideration of the matter in consultation with the Ministry of Law, it is felt that the foregoing interpretation would go against the purpose and spirit of the section. As the section contemplates investment of the net consideration in specified assets for a minimum period and as earnest money or advance is a part of the sale consideration, the Board have decided that if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption under section 54E.

16 ITA No.73/RPR/2020 Circular : No. 359 [F. No. 207/8/82-IT(A-II)], dated 10-5-1983.

JUDICIAL ANALYSIS EXPLAINED IN - In Ramesh Narhari Jakhadi v. ITO [1992] 41 ITD 368 (Pune-Trib.) it was observed that inasmuch as the above circular has been issued by the Board keeping in view the purpose and spirit of section 54E, same consideration would apply for relief under section 54B also, because if an agriculturist is dispossessed of his agricultural land and obtains possession of another agricultural land for the purpose of being used for agricultural purposes, the same benefit available under the Board’s circular should be extended to the assessee governed by section 54B also. In this connection, it is also necessary to consider the question whether the investment should be made in new agricultural land necessarily within a period of two years after the date of transfer or not. Applying the spirit of the circular of the Board, it could be said that the investment made prior to the date of transfer would also be eligible and should be considered as investment made out of sale proceeds. The limit of two years’ period after transfer is an outer limit, while the investments made earlier to the date of transfer out of the earnest money or advances should be considered to fall within two years’ time limit period and which would be the inner limit, so to say.

REFERRED TO IN - The above circular was referred to in B.K. Chadha v. ITO [1987] 27 TTJ (Del. - Trib.) 485, with the following observations :

". . . . The Circular No. 359 issued by the CBDT on 10-5-1983 also does not help the assessee’s case. That circular of CBDT applies to a situation where a part of net consideration received on sale of property is invested in a specified asset prior to the date of the execution of the sale deed. It has been stated by the Board that even when the investment in specified assets is made on a date prior to the date of the execution of the sale deed the exemption under section 54E should not be denied on the ground that the investment is not made within a period of six months after the date of transfer. That situation does not obtain in the present case. . . ." (p. 489)

EXPLAINED IN - Dy. CIT v. Tollygunj Club [1995] 52 ITD 166 (Cal.) with the following observation :

"The CBDT’s Circular No. 240, dated 17-5-1978 advisedly and significantly did not stipulate that sub-section (3) would be applicable from the assessment year 1978-79, which was normally done in such circulars explaining the newly introduced statutory provisions. It only stated that the provision would take effect from 1-4-1978 which meant that the benefit thereof would be available to all assessees who received additional compensation after that date. Even as a matter of construction, sub-section (3) of section 54E has to be construed only as procedural and having retrospective application, having regard to the object for which it was introduced. Therefore, the additional compensation having been invested entirely in specified assets in accordance with section 54E(3), the capital gains, even if considered assessable, were exempt from income-tax"

deduction claimed u/s 54B has placed his reliance in favor of the assessee

on the following judgments:

17 ITA No.73/RPR/2020  Pankaj Kumar Agrawal VS. ITO [54 CCH 544] (ITAT Raipur Bench) (Covered Case), wherein coordinate bench of the tribunal in ITA no. 30/RPR/2014, order dated 15/01/2019 has held that “for the purpose of section 54B, period of investment has to be counted from the date of sale agreement itself and not from date of registration.”

 Inderjeet Singh Mann vs. ACIT [ITA No. 1136/CHD/2014] (ITAT Chandigarh Bench), in this judgment ITAT’s Chandigarh Bench, wherein CBDT’s Circular No. 359 dated 10/05/1983 was discussed and also various judgments by coordinate bench of the ITAT Amritsar, Pune, Chennai were discussed also judgment by the Hon’ble Bombay High Court in the case of Subhas Vinayak Supnekar (supra) was referred to and has observed that:

“14. We have considered the rival submissions. The assessee has filed copy of the sale deed dated 19.2.2009 in the paper book in which it is specifically mentioned that assessee received various advances from the purchasers on different dates in the year 2007 before execution of sale deed. According to the chart prepared by the Ld. Counsel for the assessee, upto November 2007, the assessee has received advance money of Rs. 4,63,35,060/-. It would, therefore, prove that purchaser has paid substantial amount to the assessee as advance money as against total sale consideration of Rs. 5.64 crores. No purchaser would make such a huge advance without taking the possession of the land. The contention of the assessee, is therefore, correct that assessee has handed over the possession of land to the purchaser sometime in April 2008 otherwise the purchaser would not make the huge advances to the assessee. It is also proved that when substantial amount was received against the sale of land, it is available to the assessee for making investment in purchases of land. The assessee claimed that he has made investment of Rs. 51,80,000f- in the purchase of another land vide purchased deed dated 9.6.2008. Therefore, authorities below cannot deny deduction claimed u/s 54B of the I.T. Act. Since the assessee has invested the advance money in purchase of land before the date of transfer of the land, the amount invested will qualify for exemption u/s 54B of the I.T. Act. The evidence and material on record clearly prove that payment for purchase of land was made out of advance received by the assessee against sale of land, in the year under consideration. The claim of the assessee for deduction u/s 54B is thus supported by the Board Circular No. 359 (supra)and the decisions relied upon by the assessee. The authorities below were, therefore, not justified in denying the deduction claimed u/s 54B of

18 ITA No.73/RPR/2020 the Act for a sum of Rs. 51,80,000/-. In view of the above discussion and in the light of the Board's Circular and the decisions cited above, we direct the Assessing officer to grant deduction claimed u/s 54B of the I.T. Act in a sum of Rs. 51,80,000/-. Since the Assessing officer computed the capital gain of Rs. 55,59,3631-, therefore, the Assessing officer is directed to re-compute the capital gains by giving deduction to the assessee of Rs. 51,80,000/-. This ground of the appeal of the assessee is allowed.”

 Ramesh Narhari Jakhadi vs. ITO [41 ITD 368] (ITAT Pune Bench) wherein, it was held that investment made prior to the date of transfer out of earnest money or advance amount received would also be eligible as investment out of sale proceeds for purpose of exemption u/s 54B.

 CIT vs. Subhash Vinayak Supnekar [(2016) 97 CCH 0250] (High Court of Bombay), in this case Hon’ble Mumbai High Court has drawn the analogy referring to section 54EC of the Act, regarding the advance under an agreement to sale of a capital asset, based on which Ld. AR of the assessee has submitted that the amount invested will qualify for exemption u/s 54B of the I.T. Act.

19 ITA No.73/RPR/2020 revenue are not in accordance to the facts and merits of the case, that the claim of the assessee u/s 54B is not permissible for the reason that the agricultural land has purchased prior to the date of sale of agricultural land which is a mandatory condition for deduction according to the provisions of Section 54B, on the other hand since the advance payment for sale of impugned land were received and the possession of the land was handed over to the buyer before the purchase of the another agricultural land which is proved from the evidences, should be construed as advance received in specified assets before the date of transfer of asset therefore the same is qualified for exemption u/s 54B, in the present case since the purchase of the new capital asset in the form of agricultural land was made out of the advances received from the sale of agricultural land therefore all such amounts incurred for the purchase of land are eligible for exemption u/s 54B. To demonstrate that the advances received on account of sale of agricultural land, possession of the same was already given to the buyer as mentioned in Sahmati / Kabja Patra on 10/09/2014, a statement showing such transactions is furnished at page no. 39 of the assessee’s paper book the same is extracted as under:

20 ITA No.73/RPR/2020

21 ITA No.73/RPR/2020 details of advance received for sale of land and cost of investment incurred towards purchase of land, it is evident that all the payments towards investment in new agricultural land were made after receipt of the advances on sale of land, therefore, in terms of the clarification by CBDT in its Circular No. 359 [F. No. 207/8/82-IT(A-II)], dated 10-5-1983, respectfully following the various judicial pronouncements referred to (supra), also on perusal of the findings by the Ld. CIT(A) wherein, it is observed that the money on sale of Sejbahaar land was received by the assessee on various dates from 02/09/2014 to 15/09/2016, assessee has also taken loan which is invested in new land and since loan was repaid afterwards out of the sale consideration received therefore deduction u/s 54B cannot be denied. Reliance was placed on order of ITAT Mumbai in the case of Inshar Singh Chawada Vs. DCIT 130, and decision of Hon’ble Bombay High Court in the case of CIT Vs. Dr. P. S. Pasricha in ITA No. 1825/2009 dated 07/10/2009. Ld. AO’s contention that the Sahmati / Kabja Patra was not notarized can be treated as an irregularity but cannot term the document as false or vain, so as to deny the deduction u/s 54B, dehors any supporting material to prove that the said document was a bogus document, while the assessee’s contentions are supported with the fact that advances were received through banking channel duly recorded in the Sahmati / Kabja Patra as well as in the registered sale deed, therefore, we are convinced with the submission of the assessee. Accordingly, as per settled position of law, we are of the considered opinion that assessee has appropriately claimed the deduction u/s 54B and Ld. CIT(A)’s decision and deleting the addition made

22 ITA No.73/RPR/2020 by Ld. AO is found to be a rational conclusion. Resultantly, ground No. 1 to 5 of the revenue are dismissed.

Ground No. 6: Regarding deleting the addition of Rs. 1, 25,21,000/- u/s 68 of the Act.

23 ITA No.73/RPR/2020 Cheque Nos. are not mentioned. Assessee also have not furnished the copy of computation of income, capital account, balance sheet and bank statements of the creditors. With such observations Ld. AO stated that the creditworthiness of the loan creditors, mode of transactions and genuineness of the transaction have not proved by the assessee, thus, the onus to prove all such credentials which was on the assessee, but was failed to discharge the same. Finally, the amount introduced in the balance sheet in the form of unsecured loan was treated as unexplained credit u/s 68 and added to the income of the assessee.

3.1 Grounds 3 and 4 have been taken against addition of unsecured loans. Relevant facts as per the assessment order are as under: ... The assessee has filed copy of cash book for A.Y. 2014-15 and 2015- 16. On going through the balance sheet of A.Y. 2015-16 it is found that the assessee has shown unsecured loans of Rs. 12521000/- in the name of following persons. Ankit Jain Rs. 1366000/- Anubhuti Jain Rs. 2200000/- Archana Goswami Rs. 500000/- Chandubai Jain Rs. 805000/- Hemlata Ojha Rs. 500000/- Kamlesh Ojha Rs. 500000/- Mokshita Chandrakar Rs. 250000/- Priti Bajaj Rs. 800000/- Sanjay Kumar Dhale Rs. 900000/- Shailesh Ojha Rs. 500000/- Suresh Kumar Ojha Rs. 500000/- Suresh Ojha HUF Rs. 850000/- Vasudeo Bajaj Rs. 600000/- Vasudevo Bajaj HUF Rs. 850000/-

24 ITA No.73/RPR/2020 Yogendra Dewangan Rs. 900000/- Yogendra Goswami Rs. 500000/- Total Rs. 1252100

All above unsecured loans are new and shown in A.Y. 2015-16. The assessee has filed the confirmation of a/c of the loan creditors and copy of acknowledgement of their income of return. Vide this office letter dated 14.09.2017 the assessee was asked to file the copy of personal capital a/c and balance sheet for A.Y. 2013-14, 2014-1 and 2015-16. The assessee has now filed the copy of balance sheet with the reply filed on 26.12.2017. On going through the confirmations, the date of credit and amount is shown mentioning “bank” “Ch. No.” But in the copy of a/c of the loan creditors. Name of the banks and cheque numbers are not mentioned. The assessee has filed only the copy of Income tax verification form only but not filed the copy of computation of income capital account. Balance sheet and bank statement of the creditors. As per the copy of a/c filed all the loans have been shown as received during the A.Y. 2015-16. As such the creditworthiness of the loan creditors, mode of the transactions and genuineness of the transactions have not proved by the assessee. Onus to prove the creditworthiness of the creditors., mode of transactions and genuineness of transaction was on the assessee, but the assessee failed to discharge his onus. Therefore, the amount of Rs. 12521000/- introduced in the balance sheet in the form of unsecured loans from above persons., is treated as unexplained credit u/s 68 of the Income Tax Act, 1961 and added to the total income of the assessee. Reliance is also placed on the decision of Commissioner of Income Tax Vs. Sofia finance Ltd. Dated 27.08.1993 [DELHC] and Commissioner of Income Tax Vs. Nova Promoters Finalease Pvt. Ltd. Dated 15.02.2012 [DEL HC]. Penalty proceedings u/s 27(l)(c) are imitated for furnishing inaccurate particulars of income.

3.3 Facts being as above, the AO has treated unsecured loan received by the assessee as assessee’s income u/s 68. The AO has noted that the assessee has filed confirmation of account of loan creditors and copy of acknowledgement of their income of return. The assessee was asked to file copy of personal capital account and balance sheet and the assessee has filed a balance sheet on 26/12/2017. In the confirmations cheque numbers have not been mentioned. The assessee has filed only the copy of Income Tax verification form but not filed the copy of computation of income, capital account, balance sheet and bank statement of creditors. As per the AO creditworthiness of creditors is not established. He has relied on the decision in the case of CIT Vs Sofia Finance Ltd and CIT Vs Nova Promoters Finlease Pvt Ltd. During the appeal proceedings the assessee has furnished copy of letter dated 12/12/2017 wherein the AO has asked confirmation of all loans of Rs. 54,70,896/-. This query is at SI. No. 9 of the said letter. The assessee has not only furnished the same but as noted by the AO has also furnished acknowledgment of filing of return and balance sheet. When the creditors have confirmed having provided loan, whether or not cheque number are written against the transactions it will not affect the acceptability of the document. Instead of simply treating

25 ITA No.73/RPR/2020 the outstanding amount as assessee’s income if the assessee had any doubt the AO should enquire from assessee and was also empowered to make enquiries from the creditors. By making addition without allowing any opportunity to the assessee to explain the addition cannot be sustained, In a case ( Russian Technology Centre Pvt. Ltd 300 CTR 501) Delhi High Court has held that” ... the preceding enumeration of the circumstances of the case show that the assessee had furnished all the relevant data before the AO and the CIT(A) which however were not inquired into by the AO. Instead of obdurately adhered to his first impression and/or initial understanding that the entire transaction was neither creditworthy nor genuine. ... The assessee discharged its burden of proof in terms of the settled dicta in Divine Leasing (supra). It was only logical to expect that if the AO was not convinced about the genuineness of the said documents, he would have inquired into their veracity from the bank(s) to ascertain the truth of the assessee’s claims. Having not done so, he was not justified in disregarding the assessee’s contentions that the infusion of monies into its accounts was legitimate. “ In case of Orient Trading Company Ld vs CIT 49 ITR 723 honorable Bombay HC held that once assessee has discharged its onus by furnishing documents to identify third party it was not for the assessee to establish the creditworthiness of third party. The jurisdictional Chhattisgarh High Court in the case of Pawan Kumar Agrawal vs ITO has on similar facts held that the first appellate authority was fully justified in taking the view that it was open to the department to take recourse of section 131 or section 133(6) of the Act if they were to further proceed. That not having done so, the FAA was within its jurisdiction to conclude on facts and law, in favor of assessee. Following these decisions, and considering above facts, I held that the AO has made addition without making any inquiry to disprove the documents provided by the assessee. The addition is therefore deleted.

26 ITA No.73/RPR/2020 assessee actually evade to discharge. As such the finding by the Ld. CIT(A) is contrary to the settled principles of law.

 During the year the assessee has received unsecured loan of Rs. 1,25,21,000/-. To prove the identity and creditworthiness and genuineness of the transaction, the assessee had furnished ITR, Confirmation of account of lender and bank statement of the assessee. However, the A.O. made the addition by stating that the assessee has not submitted the computation of income, capital account, balance sheet and bank statement of the lender, therefore the failed to prove the creditworthiness of the creditor, mode of transaction and genuineness of the transaction.

 The assessee has duly discharged his primary onus by submitting ITR, Confirmation of account of the lender. (refer page no 59-90 of PB for ITR and Confirmation of account). Further, the assessee has submitted copy of his own bank statement evidencing the loan is received through banking channel (refer page no 50-58 of PB). The A.O. has not enquired the documents furnished by the assessee. Further the A.O. has not taken the recourse of section 131/133(6) of the Income Tax Act before making addition in the present case of the assessee. The A.O. had all the documents and can call the documents directly from the lender to verify the transaction by issuing notice u/s 131/133(6) however the same was not done. The entire addition have been made based on surmises and presumption without making any independent enquiry or making enquiry of the document submitted by the

27 ITA No.73/RPR/2020

assessee. Therefore, it is a settled law that no addition can be made on surmises and presumption.

 The assessee relies on the following case laws: Pawan Kumar Agrawal vs. Income Tax Officer, Ward 2(2), Bilaspur, Tax case No. 24 of 2011, High Court of Chhattisgarh (Refer page no 130-132 of PB)

Commissioner Of Income Tax Vs. Mark Hospitals (P) Ltd. (2014) 91 CCH 0008 Chen HC (Refer page no 110-111 of PB)

CIT & Anr vs. Russian Technology Centre Pvt. Ltd & Anr. [ 300 CTR 5011 Delhi High Court (Refer page no 114-115 of PB)

Red Pro Motors Pvt. Ltd. Vs. Income Tax Officer, (2020) 60 CCH 0450 Del Trib (Refer page no 118-120 of PB)

In view of above facts and circumstances the addition made by the AO has correctly been deleted by CIT(A). It is prayed accordingly.

received by the assessee during the AY 2015-16 were repaid to the

respective loan creditors, therefore, there should not be any doubt with

respect to genuineness of the said loans. Copy of the chart furnished before

us is extracted as under:

Unsecured loan receipt and repayment Status (Rekh Chand Jain)-A.Y. 2015-16 Loan Received Detail Loan Repayment Detail Name of the Amount Page no of Page no in Amount Cheque Date of Page no of Lender received PB-I for ITR PB-I for Repaid No. repayment bank (Refer page (Refer page and relevant statement Confirmation bank enclosed no-50 of PB-I no-50 of PB-I for detail of for detail of of Account entries in herewith lender lender assesse's bank account 9 13,66,000 59-60 55 15,000 704276 29.07.15 10,50,000 707401 29.08.15 1 1,50,000 707162 13.10.15 1 7,00,000 707408 19.10.15 1 Ankit Jain 7 1 7 Anubhuti 22,00,000 61-62 55 4,00,000 704273 07.07.15 7 Jain Archana 5,00,000 63-64 53 5,00,000 366022 10.08.15 9 goswami Chandubai 8,05,000 65-66 56 10,00,000 707175 24.11.15 20 jain

28 ITA No.73/RPR/2020

Hemlata 5,00,000 67-68 52 5,00,000 707167 19.10.15 17 ojha

Kamlesh 5,00,000 69-70 52 5,00,000 707420 17.09.15 14 ojha

Mokshita 2,50,000 71-72 57 chandrakar 10 8,00,000 72-73 52 and 54 5,00,000 366027 25.08.15 03.09.15 12 3,00,000 707407 Priti bajaj

Sanjay Kumar 9,00,000 74-75 55 and 56 9,00,000 366025 20.08.15 10 Dhale

Sailesh Ojha 5,00,000 76-77 52 5,00,000 707168 19.10.15 18 Suresh 5,00,000 78-79 52 5,00,000 707410 16.09.15 13 kumar ojha

Suresh ojha 8,50,000 80-81 54 8,50,000 707419 17.09.15 14 HUF

6,00,000 82-83 52 and 55 Vasudeo 5,00,000 366028 25.08.15 11 Bajaj 1,00,000 707414 12.10.15 17 Vasudeo 8,50,000 84-85 54 8,50,000 707405 03.09.15 12 bajaj huf

Yogendra 9,00,000 86-87 53 and 54 9,00,000 707413 12.10.15 17 dewanfgan

Yogendra 5,00,000 88-89 52 5,00,000 366021 10.08.15 9 goswami

1,25,21,000 Total

available on record and considered the case laws by the parties.

Admittedly, the assessee has submitted confirmations and

Acknowledgements of ITR’s of the loan providers, the identity of such loan

providers was also not doubted by the Ld. AO. Ld. AO has confined his

observations up to certain irregularities or Missing information like name of

bank and cheque No. etc. The recourse available with the AO u/s 131 or

section 133(6) to enquire with the loan creditors was not exercised. Ld.

CIT(A) has rightly observed that if the AO was not convinced about the

genuineness of the documents furnished, he would have enquired their

veracity from the banks in order to ascertain the truth of the assessee’s

claim but without doing so, disregarding the assessee’s contention

29 ITA No.73/RPR/2020 summarily that the infusion of money’s into its accounts was legitimate, was not justified. Ld. CIT(A) placed his reliance on the judgment by Hon’ble Bombay High Court on the case of Orient Trading Company Ltd. Vs. CIT 49 ITR 723, wherein it was held that once the assessee has discharged his onus by furnishing the documents to identify third party it was not for the assessee established the creditworthiness of the third party. In the case of Pawan Kumar Agarwal Vs. ITA Hon’ble Jurisdictional High Court of Chhattisgarh has held that the first appellate authority was fully justified in taking the view that it was open to the department to take recourse of section 131 or section 133(6) of the Act, if they were to further proceed. That not having done so, the FAA was within its jurisdiction to conclude on facts and law, in favour of assessee. In the present case, the assessee has further substantiated by submitting the information pertaining to repayment of all the loans in the following AY 2016-17 along with copies of bank statement of the assessee showing all such repayments, such facts shows that the doubt of Ld. AO with respect to genuineness of the transaction was excessive, without proper independent enquiries, based on surmises/presumptions, thus, the assessee cannot be penalised for the same. Under such facts and circumstances, in absence of any contrary decision or material brought on the surface by the department against the contentions of the assessee, respectfully following the principle of law laid down under the various judgments referred to supra, there was no infirmity found in the order of Ld. CIT(A) which needs to be corrected. However certain facts pertaining to repayment of the loans are new facts which were

30 ITA No.73/RPR/2020 not there before the revenue authorities, thus, the same are subject to verification from the corroborative evidence, thus the same needs examination by the Ld AO. Consequently, ground No. 6 of the revenue though have no forceful merits, restored back to the files of Ld AO for the limited purpose of verification of the correctness and veracity of facts pertaining to repayment of loans submitted by the assessee. Needless to say, proper opportunity of being heard shall be provided to the assessee. Consequently, ground no 6 of the revenue is partly allowed for statistical purposes.

Order pronounced in the court on 18/10/2023. Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) �याियक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER रायपुर/Raipur; �दनांक Dated 18/10/2023 Prakash Kumar Mishra, Sr.P.S(on tour) / Vaibhav आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant- 2. ��यथ� / The Respondent- 3. आयकर आयु�(अपील) / The CIT(A), आयकर आयु� / CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, 5. Raipur 6. गाड� फाईल / Guard file. स�या��त �ित // True Copy // आदेशानुसार/ BY ORDER,

(Assistant Registrar) आयकर अपीलीय अिधकरण, रायपुर/ ITAT, Raipur

31 ITA No.73/RPR/2020

32 ITA No.73/RPR/2020

Date Initial 1. Draft dictated on 19.04.23 Sr.PS 2. Draft placed before author 19.04.23 Sr.PS 3. Draft proposed & placed before the second JM/AM member 4. Draft discussed/approved by Second JM/AM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the Sr.PS 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.