M/S. WORLDWIDE FOURTUNE HOMES ,KATHUA vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, JAMMU

ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income-tax (Appeals)-5, Ludhiana, (in brevity ‘the CIT (A)’) order passed u/s 250 (6) of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2018-19. The impugned order was emanated from the order of the ld. ACIT, Central Circle, Jammu, (in brevity the ld. AO) order passed u/s 143(3) of the Act.

“1. That the Ld. CIT, (A)-5, Ludhiana passed order Under section 250(6) of the Income tax Act, 1961 merely on assumptions, without appreciating the factual, legal and statutory position of the Law and facts of the case.

2. (a) That on the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the addition by invoking the provisions of section 69A of the Act whereas the Ld.AO has made the addition on account of capital gain

(b) That on the facts and circumstances of the case, the Ld. CIT(A) has confirmed the addition without appreciating the facts that the transactions of sale of land does not pertain to the assessee firm as the sale deed took place between the Dr. Dushant Kumar and Shri Kirti Bhushan. The assessee firm has facilitated the said transaction as a real estate commission agent.

3. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal.”

“Therefore, in view of above provisions the onus is on the assessee to explain the contents of the documents found from his premises. The explanation of the assessee that these are some rough dated jottings and this does not mean that these are cash or genuine transactions, cannot be taken as true and correct unless otherwise proved by the assessee which he has failed to do.Inthis regard it is seen that the document is properly showing amount of transaction, first name of person from whom received, purpose of transaction. , This statement of affairs recorded on the said document clearly shows financial transaction carried out by the assessee aggregating to Rs 13,00,000/-.[Rs.10,00,000/+Rs 3.00 000/] It was for the assessee to explain the nature of financial transactions recorded on the said document as every financial transaction would be in the personal knowledge of the assessee which he is avoiding to disclose. Since the assessee has not given any details of transaction despite the narration on the impounded document shows ‘sale of shop’, therefore, the undersigned is unable to determine the cost of acquisition of the shop and the Rs. 10,00,000/ is adopted as the full value of consideration. Accordingly the income on account of capital gains is worked out as under-

Full value of consideration = Rs. 10,00,000/ Cost of acquisition = Nil Capital gains income = Rs. 10,00,000/

In response the counsels of the assessee have failed to furnish any reply/explanation in this regard and accordingly it was explained to them that provisions of section 45 read with 292C of the Act are attracted in this case and accordingly an addition of Rs. 10,00,000/ is made to the income of the assessee under the head capital gains u/s 45 of the Act for the above said assessment year. Further the assessee has under reported its income in consequence to misreporting thereof, therefore, necessary penalty proceedings u/s 270A/274 are initiated separately in this case for the assessment year under reference.”

5.1 In the appeal order page 14 the relevant paragraph is reproduced as below:

“The provisions of Section 292C make it very clear that the impounded document belongs to the assessee and the contents of the document are true. Subsequent denial of a transaction which is clearly made out from the impounded document cannot be taken as ground for providing any relief to the assessee.

The Hon'ble Supreme Court in the case of CIT vs. Smt. P. K. Noorjahan reported at [1999] 237 ITR 570 has held that if, the assessee's explanation regarding the source of investment is not found to be satisfactory, the AO has the discretion to treat such investment as assessee's income.

Further, the Hon'ble High Court of Madras in the case of Thiru S. Shyam Kumar vs. ACIT reported at [2018] 99 taxmann.com 39 has held as under:

“Unexplained investment (On-money payment) - A search was conducted in business premises of assessee wherein certain loose slips were recovered, which showed several entries pertaining to cash and cheque transactions in respect of purchase of a property - Assessee accepted in his statement that slip represented on-money payment made for purchase of property in question - Later on, assessee retracted from his statement and claimed that loose slips were only dumb slips - Tribunal however, rejected claim of assessee and confirmed addition - Whether since nothings in loose slips were clear, retraction made by assessee after period of two years was rightly rejected as an afterthought - Held, yes - Whether thus, impugned order could not be interfered - Held, yes”

From the above judgments, it is clear that once there is adequate documentary proof available showing the payment of on-money, the assessee cannot be allowed to go scot free with respect to alleged unaccounted cash transactions.

The Hon'ble High Court of Punjab & Haryana in the case of Vikrant Dutt Chaudhary vs. CIT, Panchkula reported at [2017] 88 taxmann.com 727 (Punjab & Haryana) has held as under:

“Photostat copies of documents, in absence of their original constitute material in hands of Assessing Officer if they are relevant for purpose of assessment and if they are not successfully rebutted by assessee”

In view of the above facts and stated legal position, the addition made iy the AO is treated as deemed income u/s 69A on account of unaccounted transactions mentioned in the impounded document and penalty is also initiated u/s 270A for under reporting of income.”

5.2. In both the orders the nature of the calculation of tax and nature of addition is different. The assessing authority has considered the amount Rs. 10 lakh as capital gain but not cost of acquisition during time of assessment proceeding in the reason lack of documents. The ld. CIT(A) had converted the income assessed U/s 45 to section 69A. The appellate authority can change the view of assessing authority. The ld. CIT (A) can decide the appeal by passing a written order, after hearing the appellant, by which the orders of the ld. AO can be confirmed, modified or annulled, which may have the effect of reduction, deletion or enhancement of the quantum of demand raised by the ld. AO. The grievance of the assessee is that without giving a reasonable opportunity to the assessee the ld. CIT(A) had converted the income U/s 45 to the deemed income u/s 69A for unaccounted transaction. The ld. AR submitted a sale deed which is duly executed on 29.11.2017 in favour of Sh. Dushyant Kumar made by Sh.

Kirti before the bench. We accept this document and have taken in the record with approval of the ld. DR. The assessee has narrated a different fact in Appeal Ground No. 2(b). But in appeal proceeding the assessee was unable to substantiate the fact. We find that the ld. CIT(A) had made the observation without giving a reasonable opportunity to the assessee. We are, therefore, of the opinion that interest of justice would be sub served if the impugned order is set aside and the matters are remitted back to the ld. CIT(A) for consideration thereof afresh. We are not expressing any views on the merits of the case so as to limit the appellate procedure before the ld. CIT(A). Needless to say, the assessee should get a reasonable opportunity of hearing for setting aside proceedings.