DHANPATI WIFE OF SH. GAJE SINGH DEFENCE COLONY, GALI NO.3 DISTRICT KATHAL,HARYANA V. THE INCOME TAX OFFICER WARD-1, KAITHAL, HARYANA

ITA 866/CHANDI/2024

AI Insights

The case involves an appeal by Dhanno Urf Dhanpati against the order of the CIT(A)/NFAC, Delhi, which pertained to the Assessment Year 2011-12. The primary contention was the non-service of notice under section 148 of the Income Tax Act, which the assessee argued rendered the proceedings void ab-initio. Additionally, the assessee contested the additions made by the Assessing Officer regarding unexplained cash deposits and investments in property. The Tribunal examined the authenticity of an agreement related to the sale of land, which was central to the assessee's defense, and found that the cash deposits were indeed from the sale proceeds, thus allowing the appeal and deleting the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714596 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2011-2012
• Other Referred Cases: Sh. Jagir Singh of Chandigarh Bench of the ITAT in ITA No.331/Chd/2019, Amritsar Bench of the ITAT in the case of Smt. Tej Kaur in ITA No.6/Asr/2020, Pappu Ram Saran Vs ITO in ITA No. 1302/JP/2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Unexplained investment
• Section: 147; 148; 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 866/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2011-12 Dhanpati Wife of Shri Gaje Singh Defence Colon, Gali No. 3, District Kaithal, Haryana बनाम The ITO Ward-1 Kaithal, Haryana ˕ायी लेखा सं./PAN NO: BESPD8422E अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजˢ की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 01/07/2025 उदघोषणा की तारीख/Date of Pronouncement : 5/08/2025 आदेश/Order PER KRINWANT SAHAY, AM: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 17/06/2024 pertaining to Assessment Year 2011-12. 2. In the present appeal Assessee has raised the following grounds: \"1. a). That the Ld. CIT(A), NFAC, Delhi has erred in dismissing the grounds of appeal with regard to service of notice u/s 148 and which is against the facts and circumstances of the case. b). That the notice u/s 148 had never been served upon the assessee concerned as it has been returned to the Assessing Officer concerned and, thus, the contention of the LD. CIT(A) about the service of notice is not correct. c). That since the notice u/s 148 is a jurisdictional notice having not been served, the proceedings as initiated by the Assessing Officer are void ab-initio. d). That the approval as granted by the Ld.CIT u/s 151 is only mechanical without any application of mind by the concerned PCIT/JCIT/Addl.CIT. 2. Notwithstanding the above said grounds of appeal, the Ld. CIT(A) has erred in not giving any finding on merits of the addition as made by the Assessing Officer. Printed from counselvise.com 2 3. That the assessee having filed the submissions on the ground with regard to non-service of notice u/s 148 and, thus, she was under a bonafides belief that the submissions on merits are to be uploaded only after the decision on the reopening of the case u/s 148 by the worthy CIT(A). 4. That the assessee was prevented by sufficient and reasonable case in not submitting the submissions on merits in view of the above bonafides belief and even otherwise, the CIT(A) was supposed to adjudicate the ground on merit as well. 5. That the appellant craves leave to add or amend any of the grounds of appeal before the appeal is finally heard or disposed off.\" 3. The facts as borne out from the Assessment order and from the order of CIT(A) are that the assessee is not having any PAN Number. AIR information was received by the Assessing Officer that the assessee has deposited a cash of Rs. 50 lacs in her saving bank account maintained with State Bank of India, during financial year 2010-11. Thereafter, the proceedings u/s 147 were initiated and notice u/s 148 was issued to the assessee on 28.03.2018. In response to which, the assessee filed the return of income on 26.11.2018, declaring an income of Rs. 6880/-. It was also stated by the assessee that she is widow of Late Sh. Gaje Singh, who died on 26.10.2015. This intimation has already been given during the course of assessment proceedings for Asstt. Year 2010-11 in the case of brother of assessee, Sh. Ram Pal and the death certificate was also filed and that the order u/s 143(3) was passed in the case of brother of assessee. 4. Regarding the source of Rs. 50 lacs, which was deposited in the bank account, it was stated by the Ld. Counsel that her late husband, Sh. Gaje Singh and her brother, Sh. Ram Pal owned certain land. Both of them agreed to sell, measuring 23 kanals in Village Kultaran @ Rs. 81 lacs per acre vide agreement, dated 12.01.2010 and an amount of Rs. 60 lacs was received as earnest money. Finally, the sale deed was registered on 17.05.2010 for Rs. 32,33,500/- but as per that agreement, the value of the land worked out to Rs. 3.73 Crores and the share of her late husband was Rs. 1.23 crore. Out of that, an amount of Rs. 50 lacs was deposited by her husband in the joint account of self & her husband and later on, the said amount was withdrawn Printed from counselvise.com 3 for reinvestment for purchase of agricultural land. For which, the evidence was filed. It was also stated that Sh. Bharat Bhushan, with whom the agreement, dated 12.01.2010 was made for the sale of land had accepted the fact during the course of assessment proceedings in the case of Sh. Ram Pal. The assessment of the same was framed for Asstt. Year 2010-11, wherein, his statement was recorded. A copy of the agreement, dated 12.01.2010 had been placed in the Paper Book. In that agreement, a sum of Rs. 60 lacs was received and out of which, Rs. 55 lacs was received by cash and Rs. 5 lacs was paid by way of cheque. Out of Rs. 55 lacs, in the bank account of Sh. Ram Pal, the cash of Rs. 39 lakh was deposited and it has been accepted by the ITO, Ward-1, Kaithal vide order, dated 28.12.2017. As per copy submitted to Assessing Officer and the same has been placed in Paper Book- II. It was further pleaded that though, the registered sale deed in respect of the same land was executed for an amount of Rs. 32,33,500/- on 17.05.2010 but it is the same land, for which, the agreement was entered into on 12.01.2010. 5. It was also pleaded that no notice u/s 148 was served upon the assessee and all such facts have been mentioned at page 4 of the order of Assessing Officer. The Assessing Officer did not consider the agreement, dated 12.01.2010 but only considered the registered value of land at Rs. 32,33,500/- on 17.05.2010, in which, the assessee's share worked out to Rs.10,41,370/-. The Assessing Officer gave a benefit of the said amount out of Rs. 50 lacs deposited in the bank account and made an addition of Rs. 39,58,630/-. Further, it was brought to our notice that the assessee had made an investment in the purchase of immoveable property for Rs. 64,28,250/-. The source of which, was explained out of the amount of Rs. 50 lacs withdrawn from the bank account on 01.05.2010 and, accordingly, the Assessing Officer made an addition of Rs. 14,28,250/- as unexplained investment in the purchase of property. Printed from counselvise.com 4 6. Against the order of the Ld. AO the assessee went in appeal before the Ld. CIT(A). 7. Before the CIT(A), the same facts were reiterated and also, it was stated that notice u/s 148, dated 28.03.2018 was not served. The assessee placed a letter from the Sub-Divisional Inspector Post Office that the notice as issued by the Assessing Officer, dated 28,.03.2018 by way of Speed Post was received back on 02.04.2018 and, accordingly, it was stated that if the notice u/s 148 have not been served, then the proceedings u/s 148 are void ab-initio and relied upon the certain case laws. 8. Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 9. On merits, it was vehemently argued by the Ld. Counsel of the assessee that the land, which was registered on 17.05.2010 was the same piece of land, for which, there was an agreement between Sh. Gaje Singh and the brother of assessee, dated 12.01.2010 with Sh. Bharat Bhushan on 12.01.2010. The same land was purchased by M/s. A.B. Marketting, in which, Sh. Bharat Bhushan have been active partner and, thus, on the basis of agreement, dated 12.01.2010, the land was agreed to be sold at Rs. 81 lacs per Acre, for which, the consideration comes to Rs. 3,74,11,875/- and out of that, the share of assessee was Rs. 1.23 crore. The same had been utilized as under:- S. No. Particulars Amount (In Rs.) (i) Total amount received by Sh. Gaje Singh 1.23 Crores (ii) Less: Amount deposited in bank account on 18.05.2010 i.e. on the next day of registration. 50,00,000/- Amount invested in purchase of property 64,28,250/- Source of above: Amount withdrawn from bank account 50,00,000/- Printed from counselvise.com 5 (iii) Less: Balance amount invested out of cash in hand in the purchase of agricultural land as above 14,28,250/- 10. It was also pleaded that authenticity of the agreement, dated 12.01.2010 have been accepted by the department in the case of Sh. Ram Pal, brother of assessee, where there was a deposit of cash of Rs. 39 lacs in his bank account, for which, Sh. Ram Pal had relied upon the same agreement, dated 12.01.2010 and the assessment was framed in the hands of Sh. Ram Pal and no adverse view had been drawn. Further to that, it was pointed out that the ITO, Ward-1, Kaithal, who had framed the assessment of Sh. Ram Pal, had passed the information regarding the said agreement to ITO, Ward-II, Kaithal about the land purchased by A.B. Marketing for taking an appropriate action in the hands of said concern and copy of the same is placed at page 37 of the Paper Book-II. 11. The Ld. Counsel relied upon the case of Sh. Jagir Singh of Chandigarh Bench of the ITAT in ITA No.331/Chd/2019, reported in 106 ITR (Trib.) 233 and of Amritsar Bench of the ITAT in the case of Smt. Tej Kaur in ITA No.6/Asr/2020 for the preposition that where the cash was deposited in the bank account, for which source was explained by the sale of immoveable property. There is a direct nexus of the deposit of cash viz-a-viz sale of land. The assessee has no other source of income, then, it can safely be held that the amount deposited in the bank account is out of the amount received from the sale of said land. 12. The Ld. DR stated that the notice u/s 148 was sent by speed post and, thus, it should be presumed to have been served. Further on merits, it was argued that the Assessing Officer has rightly given the benefit of Rs. 10,41,370/- of the share of assessee and has made the addition of Rs. 39,58,630/- and the addition of Rs. 14,28,250/- has rightly been made. because the assessee could not explain the source of investment. Printed from counselvise.com 6 13. We have gone through the assessment order, the order of CIT (A) and the arguments of the Ld. Counsel as well as Senior DR and Paper Books filed by the Ld. Counsel. The facts are not disputed in, as much as, the source of Rs. 50 lacs as deposited in the joint bank account of the assessee and her husband. It is stated to have been received on account of sale of land vide registration deed, dated 17.05.2010, though, the registration of immoveable property is for Rs. 32,33,500/-, but it has been claimed that the said land has been sold @ Rs. 81 lacs per acre, for which, agreement have been placed before the lower authorities and before us. It was with one Sh. Bharat Bhushan and the same land has been sold on 17.05.2010 to 'A.B. Marketing', in which, Sh. Bharat Bhushan was an active partner. It is on record that such agreement has been accepted by the department in the case of Sh. Ram Pal, brother of assessee, wherein, there was a deposit of Rs. 39 lacs and for which source was explained out of the advance received as per agreement, dated 12.01.2010. Further to that, the said agreement was forwarded by the ITO, Ward-1, Kaithal, who framed the assessment of Sh. Ram Pal to the ITO, Ward-II, Kaithal vide letter, dated 22.11.2018 for necessary action in the case of A.B.Marketing, Kaithal. The letter is being reproduced as under:- \"To Dated: 22.11.2018 The Income Tax Officer, Ward-2, Kaithal Sir Sub: Passing of information in the case of M/s A.B. Marketing Co. Kaithal regarding - ***** Please find enclosed the copy of reply submitted in the case of Dhanno Urf Dhanpati w/o Sh. Gaje Singh in which he had given an agreement for sale of property @ Rs.81 lacs per acre. This property was purchased by M/s A.B. Marketing Co, Kaithal from Sh. Gaje Singh. This information is being passed for taking action in the case of M/s A.B. Marketing Co. Kaithal. Encl:- As above. Yours Faithfully (S.C. Kumar) Printed from counselvise.com 7 Income tax Officer Ward-1, Kaithal Copy to the Addl. Commissioner of Income Tax, Kurukshetra Range Kurukshetra for information.\" 14. Thus, the authenticity of the said agreement has been accepted by the department from the evidences as placed before us and it is also on record that the assessee does not have any other source of income. There is direct nexus between the date of sale of land, which is 17.05.2010 and the cash deposited in the joint bank account of assessee and her husband on 18.05.2010. Thus, it can very well be inferred that the source of cash deposits were on account of sale of land to A.B. Marketing. Reliance placed by the assessee on the judgment of Sh. Jagir Singh of Chandigarh Bench of the ITAT is very much relevant to the facts of the case, in which, the reliance has been placed on the judgement of Co-ordinate 'Jaipur Bench' in the case of 'Pappu Ram Saran Vs ITO in ITA No. 1302/JP/2018, dated 03.09.2020\", wherein, under similar facts and circumstances, the deposit of cash in the bank account was accepted out of the sale of immoveable property. Though the registered amount was less than the actual amount received. The same is a routine practice to save the stamp duty. Similarly, reliance was placed on the judgement of Smt. Tej Kaur as cited supra, wherein by relying upon the judgment of 'Jaipur Bench' and 'Chandigarh Bench' under similar facts and circumstances, the addition as made by the department on the basis of bank deposit, was accepted out of the sale of immoveable property though the registered amount was less. 15. In the present case, the facts are clear as there is agreement on record its authenticity has been accepted by the department in the case of Sh. Ram Pal and also the ITO, Ward-1, Kaithal has passed the information of Rs. 81 lacs per acre to the ITO, Ward-II, Kaithal holding jurisdiction in the case of A.B. Marketing. Further, regarding the investment in purchase of agricultural land, which has partly been accepted and addition of Rs. 14,28,250/- have been made. The source of the same is explained as per chart reproduced above. Printed from counselvise.com 8 Thus, Rs. 50 lacs having been withdrawn from the bank account and balance amount of Rs. 14,28,250/ having been sourced from the sale of land as cited above is proved. Thus, the additions of Rs. 39 lacs and Rs. 14,28,250/- have no justification. Thus, both these additions are deleted. 16. Though, the assessee has challenged the reopening of the case u/s 148 but since the appropriate relief have already been granted on merit, the ground of appeal with regard to 148 has become academic. Thus, the same is not adjudicated. 17. In the result, appeal of the Assessee, on merit, is allowed. Order pronounced in the open Court on 25/ 08/2025. Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG/ RKK आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com 9 1. Draft dictated 04/08/2025 Sr.PS 2. Draft first placed before author 3. Approved draft comes to Sr.PS/PS 4 Final draft placed before author 5. Order signed and pronounced on 6 File sent to the Bench Clerk Sr.PS 7. Date on which file goes to the AR 8. Date on which file goes to the Head Clerk. 9. Date of dispatch of Order Printed from counselvise.com "