Shri Anand Pandey, Rewa V. Principal Commissioner of Income Tax-2, Jabalpur

ITA 1/JAB/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2463 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 06-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAYA MAHESHWARI
• Assessee Lawyers: NEERAJ AGRAWAL
• Keywords: Assessment record; Reassessment proceedings
• Section: 147; 263; 143(3)

Judgement Text

1 | P a g e IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR (through web-based video conferencing platform) BEFORE SHRI SANJAY ARORA, HON‟BLE ACCOUNTANT MEMBER & SHRI MANOMOHAN DAS, HON'BLE JUDICIAL MEMBER I.T.A. No. 01/JAB/2020 (Asst. Year : 2010-11) Appellant by : Shri Neeraj Agrawal, FCA Respondent by : Smt. Maya Maheshwari, CIT-DR Date of hearing : 04/05/2022 Date of pronouncement : 12/05/2022 O R D E R Per Sanjay Arora, AM This is an Appeal by the Assessee agitating the Order under section 263 of the Income Tax Act, 1961 („the Act‟, hereinafter) dated 14/11/2019 in respect of the assessee‟s assessment u/s. 147 r/w s. 143(3) of the Act dated 11/09/2017 for the Assessment Year (AY) 2010-11. 2.1 The brief facts of the case are that the assessee, along with one Shri Rakesh Singh, purchased a property, valued at Rs. 31.50 lacs (as per AIR information), on 10/08/2009, i.e., during the relevant year, for a stated consideration of Rs. 11 lacs. The assessee returning an income for the year at Rs. 1.73 lacs only, he was subjected to reassessment proceedings, culminating in an assessment at the Anand Pandey, Near Dainik Jagran Press, Urrahat, Rewa (M.P.) [PAN: BCWPP 5117 N] Vs. Principal CIT-2, Jabalpur. (Appellant) (Respondent) ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 2 | P a g e returned income. No enquiry was made by the Assessing Officer (AO) in the reassessment proceedings in respect of the substantial difference between the fair market value and the stated purchase consideration (as per sale deed), to examine the source of investment in which the reassessment proceedings had been initiated. The assessee‟s (an Advocate by profession) version of being only a name lender, who had therefore not made any investment toward the said purchase, was accepted by the AO – who limited his inquiry to the investment by the assessee as the joint owner, on the strength of the following documents: (a) sale deed dated 10/08/2009, which mentions both the cheques, i.e., for Rs. 5 lacs (dated 10/08/2009) and Rs. 6 lacs (dated 12/08/2009), as received from Shri Rakesh Singh (PB pgs. 96-98); (b) Power of Attorney (POA) dated 01/10/2009 executed by the assessee in favour of Shri Rakesh Singh (RS) authorising him to sell the property (PB pgs. 13-16); (c) agreement dated 10/07/2011, whereby the assessee received consideration of Rs. 10,000/- from RS in lieu of lending his name in the purchase transaction; and (d) the confirmation by the seller, Smt. Sudha Singh, by way of an affidavit dated 11/09/2017, to have received the outstanding consideration (as on 10/08/2009), i.e., Rs. 6 lacs, in cash from RS in instalments as the cheque dated 12/08/2009 (for Rs. 6 lacs) could not be presented in bank as it was not presentable (PB pgs. 11- 12). 2.2 The Pr. CIT, on an examination of the assessment record, found the enquiry by the AO as deficient for failure to examine the following issues, which he regarded vital: (para 5 of the impugned order) “(i) Who had paid Rs.6,00,000/- in cash to the seller/s of the property? (ii) In whose possession the property is at present? (iii) Whether the assessee has disowned the ownership over the property and the name of the assessee has been removed from the records maintained, by the State Revenue Authority. If not, how can it be relied upon that a person (who is by profession an advocate) will allow to use his name for such a big deal and that too for a small fee of Rs.10,000/- . (iv) Whether late Shri Rakesh Singh's heirs have admitted the facts narrated by the assessee. ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 3 | P a g e (v) The A.O. has also not examined the sellers of the property who could have told the reality of cash payment of Rs.6,00,000/-. (vi) Who had paid the stamp duty of Rs.3,11,100/-.” He, accordingly, remitted the matter back to the AO for verification on the grounds stated, holding as under:- “07. I have gone through the entire assessment records, assessment order and written submission of the assessee. Accepting the self-serving documents like affidavit, etc. by the A.O. does not amount to proper inquiry. The points mentioned hereinabove in para 5 have not been examined by the A.O. at all. No prudent person can believe that an advocate by profession will lend his name for making transaction in immovable property for a fee of Rs.10,000/- when the contents of the registered deed are false (regarding the payment of Rs.6,00,000/-, ostensibly made by cheque but actually paid in cash), and the .assessee is one of the purchasers, the A.O. should have conducted the inquiry as suggested in para 5 of above.” Aggrieved, the assessee is in appeal before us. 3.1 Before us, it was explained by Shri Agrawal, the ld. counsel for the assessee, that there was sufficient evidence on the assessment record to establish the assessee‟s claims before the AO, since accepted by him. There could be no reason to doubt the assessee‟s status as a name lender once the seller had vouched on oath to have received the balance consideration of Rs. 6 lacs in cash, even if in instalments, from Sh. Rakesh Singh (RS). Once it is established that he (RS) is the sole owner of the property, there was no need for the AO to enquire either about the possession (of the property) or the payment of stamp duty (at Rs. 3.11 lacs), both of which would only be by him as the sole owner. The ld. CIT-DR would, on the other hand, submit that it is inconceivable that an Advocate, among all persons, should have agreed to lend his name as the owner of an immovable property. It is incredulous to believe that he did for a sum of Rs. 10,000, which may be his fee for legal support/assistance. Further, the POA dated 01/10/2009 was valid only for a period of one year, for which she would take us through para 5 thereof (PB pg.5). ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 4 | P a g e Further, at page 2, para 4 of the sale deed (PB pg. 96), the seller, Smt. Sudha Singh, confirms having received the entire payment, i.e., Rs. 11 lacs, at one go. 3.2 Shri Agrawal would, in rejoinder, state that RS, the owner, intended to sell the land after plotting, and which was in fact done soon after purchase, and that explains the POA term of one year as well as clarifies on the possession of the plot. A POA beyond one year would attract stamp duty at a higher rate. The mention of „entire consideration at one go‟ in the sale deed is a typing mistake, i.e., when juxtaposed with the statement of consideration in the earlier part of the sale deed, which bears a clear mention of two cheques dated 10/8/2009 & 12/8/2009 for Rs. 5 lacs and Rs. 6 lacs respectively. He expressed his ignorance on the Bench asking him about the education profile of RS. 4. We have heard the parties, and perused the material on record. 4.1 The first thing that strikes one on a mere browse of the facts of the case is as to why would one, much less a practising lawyer, who is well aware of the intricacies of law, as well as the practical problems one could face on not stating the truth in the registered documents, which have evidentiary value in law, agree to be a name lender of an immovable property (IP)? And to state that he did it for a sum of Rs. 10,000 by entering into an agreement in that behalf two years hence? This is as farcical as it could get. No reasonable person could be expected to be agree thereto, and it is in this context that we asked Sh. Agrawal about the education profile of RS. Rather, if the entire consideration was indeed paid-up and, in any case, to be paid by RS, the transaction becomes even more intriguing and inexplicable. There is no explanation at any stage, including before us, for this, and which we regard as incongruent and, rather, anomalous. What purpose, one may ask, does the same, i.e., name lending, serve? Could a transaction, much less the one at hand, being in respect of acquisition of IP, be entered into without any reason or purpose? The assessment order abysmally fails on the ground of lack of enquiry which, inasmuch as it reflects non-application of mind, is one of the ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 5 | P a g e infirmities that renders an order as erroneous and prejudicial to the interest of the Revenue and, thus, liable for revision u/s. 263, even as explained by the Apex Court in Malabar Industries Co. Ltd. v. CIT [2000] 243 ITR 83 (SC); the other three being: wrong assumption of facts; incorrect application of law; and omission to observe the principles of natural justice. The case law in the matter is legion, with a series of decisions by the Apex Court, both before and after Malabar Industries Co. Ltd. (supra). The same has been (by Finance Act, 2015, w.e.f. 01/6/2015) incorporated as one of the ingredients leading to the invocation of sec. 263, in the provision itself. One can understand where an explanation stands rendered, found acceptable by the AO, though not by the revisional authority, but as noted hereinbefore, the assessee‟s case is sans any explanation and the assessment order without any basis. Couple this with the admitted fact that the promised consideration of Rs. 6 lacs on 12/08/2009, i.e., the basis on which the sale deed was executed, failed, ought to have put the AO on further enquiry. The acceptance of the assessee‟s version under the circumstances makes the non- application of mind total. There is, to continue further, no enquiry about the creditworthiness; the returned income, etc. of RS, the stated and sole owner of the property. Why, he having initiated the assessment proceedings to enquire into the source of investment as well as about the huge difference between the fair market value and the stated consideration, the AO did not even venture on this, extremely relevant, aspect of the matter. 4.2 We may at this stage, and only for the sake of completeness of our order, also consider the different aspects of the matter, i.e., as argued before us. It is said that RS intending to sell the property soon after its‟ purchase, the assessee issued a POA for one year, with that over that period attracting stamp duty. Why, to begin with, did the assessee lend his name in the first place? Further, the POA only authorizes RS to sell the property, but does not relinquish the assessee‟s right over the sale proceeds thereof. What value, then, the same? It is then said that the seller confirmed the receipt of Rs. 6 lacs in cash from RS, who gave her the cheque in ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 6 | P a g e the first place, so that there was nothing to doubt the same. Apart from the fact that the same is contradicted by the sale deed itself wherein the seller confirms receipt of the entire sale consideration at the time of the sale deed itself, the argument does not stand the test of scrutiny. How, one may ask, would the seller know about the source of money, i.e., the assessee or RS, if it is RS who pays her cash; the cash being paid to her being in any case only by or for or on behalf of the purchasers? That is, she cannot, even assuming payment of cash to her by RS, know the actual source thereof, and neither, to be fair to her, is of any concern to her. It is the RS, or his accounts, that are relevant in the matter. She, in any case, has confirmed receipt at the time of the sale deed itself. Her affidavit is to that extent of no moment. Rather, any normal person, on the cheque becoming unable to be presented, which itself lacks conviction and does not ring true, seek another for the same amount, and immediately on it becoming known that the cheque-in-hand cannot – for which no clear reason has been stated, be presented, i.e., 12/8/2009 or earlier. Why would a seller, having executed the sale deed on the basis of the entire receipt by 12/8/2009, forego the same, and assume the risk of default of payment? The story of the cheque becoming unable to be presented and, therefore, payment made in cash in instalments – implying he did not have money to pay her upfront, is again too fantastic to be believed, and for the AO to have believed it upfront, facile. All that was necessary for him to verify the assessee‟s claim was to seek the bank account of RS; the balance wherein on 12/8/2009, i.e., the date of the cheque, would convey if he indeed intended to pay the balance amount through cheque or even had the resources to do so. Why, it may also throw light on how the sum of Rs. 5 lacs, paid through his bank account, came to be deposited therein, as indeed the source of payment of stamp duty at rs. 3.11 lacs. The investment of the sale proceeds by the seller, if forthcoming, could also help enable establish the truth of the matter. 4.3 Before parting with this order, we may, if only for the sake of completeness of our order, advert to one of the arguments raised by Sh. Agrawal, stating that ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 7 | P a g e there may be no dearth of inquires that could be raised in the matter, so that, going by such a consideration, every order adverse to the Revenue could possibly be regarded as erroneous insofar as it is prejudicial to the interest of the Revenue, liable for revision u/s. 263. True, an explanation could provoke another, and so on. Application of mind contemplates proper enquiry, which, by definition, would be one as warranted in the facts and circumstances of the case, so as to arrive at a reasonable satisfaction with regard thereto. The whole purpose of inquiry, it may be appreciated, is to ascertain the truth of the matter. Any inconsistency or incoherence in the explanation or the evidence adduced should therefore prompt further inquiry, which thus becomes prima facie warranted. The language employed by the statute (i.e., w.e.f. 01/6/2015) in this regard, i.e., „an order passed without making further inquiries or verification which should have been made.‟ is apposite. It is the inquiry/verification by the AO that is relevant for the purpose, and not the explanation/s, if any, furnished before the appellate authority, much less that de hors the record. We do not consider it necessary to dilate further in the matter; the case law in the matter, rendered in different fact settings, being legion. The argument advanced is completely inapplicable in the facts of the instant case, which we have found to be of one of lack of inquiry on the most fundamental aspects of the transaction under examination and, thus, observed an absence of any basis to the AO‟s findings, and inasmuch as they confirm absence of any interest of the assessee in the property, consider the lack of further inquiry as de hors common-sense and logic. Each of the issues raised by the revisionary authority is pertinent, and unaddressed. 5. In view of the foregoing, we see no reason for any interference, and decline to. We decide accordingly. ITA No. 01/JAB/2020 (A.Y. 2010-11) Anand Pandey v. Pr. CIT 8 | P a g e 6. In the result, the assessee‟s appeal is dismissed. Order pronounced in open Court on May 12, 2022 Sd/- Sd/- (Manomohan Das) (Sanjay Arora) Judicial Member Accountant Member Dated: 12/05/2022 vr/- Copy to: 1. The Appellant:Anand Pandey, Near Dainik Jagran Press, Gandhi Nagar, Urrahat, Rewa (M.P.) 2. The Respondent: Principal CIT-2, Jabalpur 3. The CI T-D.R., I TAT, Jablapur 4. Guard File By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Jabalpur