Ashwani Kumar V. Commissioner of Income Tax, Patiala (Punjab)

ITA/326/2016

AI Insights

The case involves Ashwani Kumar, the appellant, who appealed against the order of the Income Tax Appellate Tribunal, which confirmed the order of the CIT (Appeals) upholding the assessment order for the year 2009-2010. The dispute centered on two agreements for the sale of properties, where the appellant claimed to have received earnest money in cash. The authorities disbelieved the appellant's story due to various inconsistencies, such as the non-tracing of the purchasers and the unusual amount of earnest money received. The court examined whether these findings raised substantial questions of law under the Income Tax Act, 1961, and the Indian Evidence Act, 1872.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 807627 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 23-11-2016
• Assessment Year: misc
• Laws Referred To: Indian Evidence Act, 1872, Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: SACHIN BHARDWAJ
• Keywords: Assessment Order; Assessment Year 2009-2010; Earnest money; Forfeiture; Income Tax; Capital Account Transactions
• Section: 32; 2(14); 5; 45(1); 51

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-326-2016 (O&M) Date of decision:- 23.11.2016 Ashwani Kumar ...Appellant Versus Commissioner of Income Tax, Patiala (Punjab) ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE A.B. CHAUDHARI Present:- Mr. Sachin Bhardwaj, Advocate, for the appellant. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Income Tax Appellate Tribunal confirming the order of the CIT (Appeals) which in turn upheld the assessment order. The matter pertains to the assessment year 2009-2010. 2. The appellant contends that the following substantial questions of law arise:- “I. Whether under the fact & circumstances of the case, the Tribunal order is unreasonable while overlooking & neither returning any findings on the ‘fact and direct evidence’ u/s 32 of Indian Evidence Act, 1872 qua the existence of the payee to the capital account transactions u/s 2(14) of the Income Tax Act, 1961? II. Whether under the fact & circumstances of the case, pursuant to the provisions of Section 2(14), 45(1) r.w. Section 51, the advance money arising out of agreement to sell shall be deducted from the ‘cost of asset’ and (or) the whole amount is Amodh Sharma 2016.11.28 16:30 I attest to the accuracy and authenticity of this document chandigarh ITA-326-2016 (O&M) 2 ‘chargeable’ to tax u/s 5 as ‘revenue receipt’?” 3. In our view, a substantial question of law does not arise in this case. The appellant/assessee alleges having entered into two agreements dated 19.06.2008 and 27.06.2008 for the sale of his properties to two different purchasers. The total sale consideration in respect of the agreements was Rs. 70 lacs and Rs. 60 lacs. The agreements state that the earnest money deposited in respect thereof was Rs. 35 lacs and Rs. 30 lacs respectively. According to the appellant, the entire earnest money amounting to Rs. 65 lacs was paid in cash. He further contends that as the purchasers did not present themselves for registration, he forfeited the EMD. The Assessing Officer, CIT (Appeals) and the Tribunal disbelieved the story. 4. The alleged purchasers were not produced by the appellant. The Assessing Officer issued summons at the appellant’s request. The purchasers could not be traced. There is a doubt as to whether they were residents of the village in which the land is situated. One of the alleged purchasers had died three years earlier. Moreover, it is unusual that 50% of the consideration was paid as earnest money. The appellant is unable to mention the date on which the amount was deposited in his bank account. It was presumably in the same financial year, namely, 2008-2009 relevant to the assessment year in question, namely, 2009-2010. A purchaser having paid 50% of the consideration is not likely to abandon the agreement almost immediately. There is nothing on evidence to indicate why they would do so. There was no correspondence between the assessee and the purchasers. Amodh Sharma 2016.11.28 16:30 I attest to the accuracy and authenticity of this document chandigarh ITA-326-2016 (O&M) 3 In these circumstances, the refusal of three authorities under the Act to accept the appellant’s case cannot be said to be perverse or absurd. The least that must be said is that they have taken a possible view. The same, therefore, does not raise a substantial question of law. 5. The appeal is accordingly dismissed. (S.J. VAZIFDAR) CHIEF JUSTICE (A.B. CHAUDHARI) JUDGE 23.11.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.11.28 16:30 I attest to the accuracy and authenticity of this document chandigarh "