SHRI HARBANS SINGH ,BATHINDA vs. INCOME TAX OFICER, WARD1(30, BATHINDA

The captioned appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Bathinda dated 16.01.2018 for Assessment Year: 2009-10.

Harbans Singhv. ITO 2. The assessee has raised the following grounds of appeal:

“1. That the Ld. CIT(A)- Bathinda has erred in not deleting the total addition of Rs.65,00,000 made by the AO and confirming addition of Rs.22,48,000 out of the same.

3. That the Ld. CIT(A)- Bathinda has ignored the fact that the appellant and his family was having huge amount of agriculture income from the substantial land holding in their name.

4. That the order is bad in law and on facts

5. That the appellant craves leave to add or amend the ground of appeal before the appeal is heard and disposed off.”

Harbans Singhv. ITO Considering the facts of the case, it was decided to hear the ld. DR and adjudicate the appeal on merits of the case.

“2.0 The reassessment proceedings in this case were initiated by the Assessing Officer on finding that the appellant has deposited cash amounting to Its. 1,70,00,000/- in his bank account during the year under consideration. In the course of assessment proceedings when the explanation was sought about the source of cash then it was explained by the appellant to the AO

Harbans Singhv. ITO that during the year under consideration the appellant had sold agricultural land and for this purpose he executed two sale deeds; one sale deed was executed on 26/09/2008 for Rs. 84,20,000/- and another sale deed was executed on 06/11/2008 for Rs. 75,32.000/-. In order to explain his case further, it was submitted that for these two transactions of sale prior to execution of sale deeds two agreements (Biana) were entered into as under:

• Agreement 1: was enteredon 19/03/2008 and at the time of agreement Rs. 15 lakhswere taken as advance. It was agreed that final sale deed would beexecuted by30/09/2008. Before the execution of the final sale deed another installment was received on 15/05/2008 amounting to Rs. 20 lakhs. The sale deed was executed on 26/09/2008 and the balance amount was received.

• Agreement 2:was enteredon 13/05/2008 and at the time of agreement Rs. 15 lakhsare taken as advance. It was agreed that final sale deed would beexecuted by30/11/2008. Before the execution of the final sale deed another installment was received on 24/05/2008 amounting to Rs. 25 lakhs. The sale deed was executed on 06/11/2008 and the balance amount was received.

It is contended that the benefit of the following amounts received in consequence of the agreements has not been given by the Assessing Officer:

1 19/03/2008 15,00,000 Agreement 1 2 13/05/2008 15,00,000 Agreement 2 3 15/05/2008 15,00,000 Agreement 1 4 24/05/2008 25,00,000 Agreement 2 70,00,000

The aforesaid two agreements of sale eventually culminated into two Registered Sale deeds as under: a. Sale Deed dated 26th September 2008 making transfer of 112K 9M of land for a consideration of Rs. 84,20,000/-. b. Sale Deed dated 06/11/2008 making transfer of 109K 8M of land for a consideration of Rs. 75,32,000/-.

Harbans Singhv. ITO The total of above-mentioned two sale deeds comes to Rs. 1,59,52,000/- but the Assessing Officerdid not provide benefit of the entire consideration on an argument that since no prioragreement to sell has been executed in these cases as has been specifically mentioned in the aforesaid sale deeds, therefore the appellant is not entitled to explain cash deposits of April and May 2008 using these sale transactions. 2.1 It is a matter of record that the following cash was deposited by the appellant in two bank accounts being maintained by him:

A.O. Allowed Addition 1. 15/04/2008 SBOP, Jalal 4,50,000 4,50,000 2 13/05/2008 SBOP, Jalal 24,00,000 24,00,000 3 14/05/2008 SBOP, Jalal 20,00,000 20,00,000 4 24/05/2008 SBOP, Jalal 15,00,000 15,00,000 5 26/09/2008 SBOP, Phul 30,00,000 30,00,000 6 31/10/2008 SBOP, Jalal 1,50,000 1,50,000 7 06/11/2008 SBOP. Phul 75,00,000 75,00,000 1,70,00,000 1,05,00,000 65,00,000

The basic contentious issue in this case is the source of cash deposit as mentioned in the table above appearing at entry number 1,2,3, and 4 which pertain to month of April 2008 and May 2008. The basis on which Assessing Officer has denied the benefit of order was receivedby the appellant is that in the above-mentioned the registered sale deeds dated26/09/2008 and 06/11/2008 it is specifically mentioned that there is no agreement of sale between the parties. 3.0 Opportunity of being heard: It has been specifically pleaded as a ground of appeal by the appellant that no proper opportunity of being heard was given by the Assessing Officer to place on record documents in possession of the appellant. Since, the case was being represented by the appellant himself, therefore in the interest of justice the entire set of documents produced was referred to the Assessing Officer for providing fresh opportunity to the appellant and submit a remand report. In the remand report dated 10/07/2017, it has been reiterated that the sale deed is a specifically mention that there was no prior agreement to sell.

4.0 Argument of the Appellant:As stated above, the case was being represented by the appellant himself, therefore in the course of appellate proceedings he has advanced two arguments which are reproduced here under:

Harbans Singhv. ITO a) The entries in the bank account in respect of deposit of cash are on the matching dates as has been mentioned in the agreements to sale dated 19/03/2008 (agreement 1) and 13/05/2008 (agreement 2).

Date Amount Source Bank date Amount 19/03/2008 15,00,000 Agreement 1 19/03/2008 12,00.000 15/04/2008 4,50,000 13/05/2008 15,00,000 Agreement 2 13/05/2008 24,00,000 14/05/2008 15,00,000 Agreement 1 14/05/2008 20,00,000 24/05/2008 25,00,000 Agreement 2 24/05/2008 15,00,000

5. I have considered the contention of the appellant and find that the same are partly acceptable for the reason that it is not denied that the total cash deposit in the bank accounts was Rs. 1,70,00,000/- during the year under consideration and the registered amount of the sale deeds was Rs. 1,59,52,000/-. The broad difference in these two figures comes to Rs. 10,48,000/- but the AO denied this benefit for a simple reason that there was no agreement to sell which is specifically mentioned in the registered sale deeds dated 26/09/2008 and 06/11/2008. However, a perusal of the sale deeds shows that it also contains a recital that the sale amount/sale consideration has already been paid. This could also mean that some of the amount might have been paid as early as in the months of March to May 2008. There is no specific mention in these registered sale deeds that the amount has been paid on that date only. The parties might have been exchanging sale consideration prior to the date ct execution of the sale deeds and its possibility cannot be ruled out. This becomes more reliable and trustworthy for the reason that the appellant has provided photocopies of alleged agreement to sell and has been able to correspond the cash deposits mentioned in these agreements with the deposits in the bank account maintained by the appellant. Even if these agreements to sell are not believed as convincing documents these are sufficient to indicate that there were exchange of cash between the parties prior to the execution of a registered sale deed. Under the circumstances, the appellant is entitled to benefit of the cash amount mentioned in the registered sale deeds. However, before taking an approach that cash has been received by the appellant in the prior months, it would be imperative to also include the cash deposit of March 2008 in the bank account to the extent of Rs. 12,00,000/- and added into the total deposits made during the year under consideration Rs. 1.70,00,000/- which comes to Rs.

Harbans Singhv. ITO 1,82,00,000/-. The appellant has explained the source of cash amounting to Rs. 1,59,52,000/- which he has received commencing from March 2008 till 06/11/2008 when the last sale deed was executed. By subtracting this amount from the cash deposit the gap comes to Rs. 22,48,000/- which has still not been explained considering the fact thatphotocopies of agreement to sell are unreliable. The addition made by the Assessing Officer to the extent of Rs. 65 lahhs is reduced to Rs. 22,48,000/- and the appellant gets relief of Rs. 42,52,000/-. The ground of appeal is partly allowed.”

7. Heard the learned DR, perused the material on record with the impugned order. From record it is evident that the appellant assessee has been merely filing adjournment applications without mentioning bonafide reasons in perpetuity as above, that defeats the basic purpose of the principle of opportunity under the law. The appellant assessee applications for adjournment are found without merits and bona fide reasons for seeking the adjournment which compelled us to the presume that appellant is not interested in prosecuting the appeal any more. Merely contending in the grounds that appellants family was having huge amount of agriculture income from the substantial land holding in their name without substantiating the agricultural income with corroborative documentary evidence would be of no help to the appellant in explaining the disputed cash deposit.

Harbans Singhv. ITO 8. Admittedly, the appellant has deposited the total cash amounting to Rs. 1,70,00,000/- during the year under consideration as against the registered amount of the sale deeds of Rs. 1,59,52,000/-. Thus, the difference in these two figures comes to Rs. 10,48,000/- but the AO denied this benefit for a simple reason that there was no agreement to sell which was specifically mentioned in the registered sale deeds dated 26/09/2008 and 06/11/2008. The CIT(A) has stated that a perusal of the sale deeds shows that it contains a recital that the sale amount/sale consideration has already been paid. This could also mean that some of the amount might have been paid as early as in the months of March to May 2008. There is no specific mention in these registered sale deeds that the amount has been paid on that date only. The parties might have been exchanging sale consideration prior to the date of execution of the sale deeds and its possibility cannot be ruled out. This becomes more reliable and trustworthy because the appellant has provided photocopies of alleged agreement to sell and has been able to correspond the cash deposits mentioned in these agreements with the deposits in the bank account maintained by the appellant. Even if these agreements to sell are not believed as convincing documents, these were sufficient to indicate that there were exchange of Harbans Singhv. ITO cash between the parties prior to the execution of a registered sale deed.

Under the circumstances, the appellant is entitled to benefit of the cash amount mentioned in the registered sale deeds. However, before taking an approach that cash has been received by the appellant in the prior months, it would be imperative to also include the cash deposit of March 2008 in the bank account to the extent of Rs. 12,00,000/- and when added into the total deposits made during the year under consideration Rs. 1.70,00,000/- which comes to Rs. 1,82,00,000/-. The appellant has explained the source of cash amounting to Rs. 1,59,52,000/- as discussed in the impugned order which he has received commencing from March 2008 till 06/11/2008 when the last sale deed was executed. Meaning thereby that after subtracting this amount from the cash deposit the difference comes to Rs. 22,48,000/- (1,82,00,000 -1,59,52,000)which has still not been explained since photocopies of agreement to sell are unreliable. In view of that matter, we find no infirmity or perversity in the impugned order to the facts on record in restricting the addition to Rs. 22,48,000/-.

Harbans Singhv. ITO 10. In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 30.08.2023