Yadwinder Kumar Sharma, Zirakpur V. ACIT, Patiala

ITA 1055/CHANDI/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6186 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKARSHAN SINGH
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Gift; Income from undisclosed sources; Search and seizure; Document seized; Additional evidence; Cost of acquisition; Documents seized
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1131 & 1132/CHD/2012 ASSESSMENT YEAR : 2004-05 & 2005-06 THE A.C.I.T., VS SH.YADWINDER KUMAR SHARMA, CENTRAL CIRCLE, LOHGARH, PATIALA. WARD 6, ZIRAKPUR. PAN : AOAPS4926B & ITA NO.1053 & 1054/CHD/2012 ASSESSMENT YEAR : 2004-05 & 2005-06 SHRI YADWINDER KUMAR SHARMA, VS THE A.C.I.T. , LOHGARH, CENTRAL CIRCLE, WARD 6, PATIALA. ZIRAKPUR. PAN : AOAPS4926B & ITA NO.1055/CHD/2012 ASSESSMENT YEAR : 2006-07 SHRI YADWINDER KUMAR SHARMA, VS THE A.C.I.T. , LOHGARH, CENTRAL CIRCLE, WARD 6, PATIALA. ZIRAKPUR. PAN : AOAPS4926B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY : SHRI AKARSHAN SINGH DATE OF HEARING : 16.06.2014 DATE OF PRONOUNCEMENT : 11.07.2014 O R D E R PER SUSHMA CHOWLA, JM OUT OF THESE BUNCH OF FIVE APPEALS, TWO ARE CROSS A PPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST SEPARATE OR DERS OF 2 COMMISSIONER OF INCOME TAX (APPEALS) BOTH DATED 21. 08.2012 RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06 AGAINST ORD ER PASSED UNDER SECTION 143(3)/153A OF THE ACT. FURTHER, THE ASSES SEE IS IN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS) RELATING TO ASSESSMENT YEAR 2006-07 DATED 21.08.2012 AGAINST OR DER PASSED UNDER SECTION 143(3)/153A OF THE ACT 2. ALL THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA 1053/CHD/2012 :: A.Y. 2004-05 ::ASSESSEE'S APPEAL 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEA L BUT DURING THE COURSE OF HEARING, THE LD. AR FOR THE ASSESSEE POIN TED OUT THAT ONLY GROUND OF APPEAL NO. 2 IS PRESSED WHICH READS AS UN DER : THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING INDEX COST OF ACQUISITION IN RE SPECT OF SALE OF 1/3 RD SHARE OF PLOT MEASURING 3419 PER SQ.YDS. AT VILLAGE LOHGARH AT RS. 1,98,317/- INSTEAD OF RS. 3, 15,473/- TAKEN BY THE APPELLANT AS PER PARA 11 OF HIS ORDER, THEREBY CONFIRMING THE ADDITION OF RS. 1,17,156/- OUT OF AD DITION OF RS. 7,92,854/- MADE BY THE ASSESSING OFFICER. 4. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED VIDE GROUND NO. 2 IS COVERED BY THE ORDER OF THE TRIBUNA L IN THE CASE OF BROTHER OF THE ASSESSEE SHRI PARMINDER KUMAR SHARMA VS ACIT IN ITA NOS. 952, 953 & 954/CHD/2012 RELATING TO ASSESSMENT YEARS 2004-05 TO 2006-07 ORDER DATED 23.08.2013. 5. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING T HE YEAR UNDER CONSIDERATION, SEARCH & SEIZURE OPERATIONS WERE CON DUCTED AT THE 3 RESIDENTIAL PREMISES OF THE ASSESSEE ON 16.10.2007 WHERE THE ASSESSEE RESIDED ALONGWITH HIS THREE BROTHERS, SHRI N.K.SHAR MA, SHRI PARMINDER SHARMA, SHRI DHARMINDER SHARMA AND HIS PARENTS. TH E ASSESSEE DURING THE YEAR HAD SHOWN LONG TERM CAPITAL GAINS ON SALE OF PLOT MEASURING 3419 SQ.YDS. AT VILLAGE LOHGARH 1/3 RD SHARE TO M/S N.K.SHARMA ENTERPRISES LTD. THE ASSESSEE HAD COMPUTED THE INC OME FROM LONG TERM CAPITAL GAINS BY ADOPTING THE COST OF ACQUISIT ION AS ON 09.06.1996. SIMILAR COMPUTATION OF INCOME FROM LON G TERM CAPITAL GAINS WAS MADE IN THE HANDS OF THE OTHER BROTHERS A LSO. THE ASSESSING OFFICER, HOWEVER SHOW CAUSED THE ASSESSEE AS TO WHY THE INDEXED COST OF ACQUISITION SHOULD NOT BE ADOPTED AS ON THE DATE OF ACQUISITION OF THE ASSET BY THE ASSESSEE. THE ASSESSEE HAD ACQUIR ED THE SAID PLOT/LAND FROM HIS GRANDMOTHER THROUGH GIFT ON 25.03.2003 AND THE ASSESSING OFFICER RECOMPUTED THE INDEXED COST OF ACQUISITION ON THE BASIS OF COST INFLATION INDEX RELATING TO FINANCIAL YEAR 2002-03 I.E. THE YEAR OF THE GIFT AND NOT ON THE BASIS OF THE ORIGINAL DATE OF A CQUISITION OR THE PROPERTY BY THE GRANDMOTHER OF THE ASSESSEE. 7. WE FIND SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN THE CASE OF ASSESSEE'S BROTHER SHRI PARMINDER KUMAR SHARMA VS ACIT (SUPRA) AND ALSO IN THE CASE OF THE OTHER BROTHER SHRI VISHVANA TH SHARMA VS ACIT IN ITA NO. 956/CHD/2012. THE TRIBUNAL VIDE ORDER D ATED 23.08.2013 HELD AS UNDER : 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE SPECIAL BENCH IN CASE O F CIT V. MANJULA J. SHAH, 68 DTR 269 (BOM) WHEREIN IT WAS HELD THAT INDEXATION HAS TO BE APPLIED FROM THE DATE WHEN TH E PREVIOUS OWNER ACQUIRED THE ASSET. THIS POSITION HAS BEEN CONFIRMED BY HON'BIE BOMBAY HIGH COURT IN CASE OF CIT V. MANJULA J. SHAH. 204 TAXMAN 691, HEAD NOTE OF THIS DECISION READS AS UNDER: 'CAPITAL GAINS - COST OF ACQUISITION - RELEVANT YEA R FOR INDEXATION VIS-A-VIS PROPERTY ACQUIRED UNDER GIFT- PROPERTY PURCHASED BY ASSESSEE'S DAUGHTER ON 29 TH JAN., 1993, GIFTED TO ASSESSEE ON 30 TH JUNE, 2003 - AS THE PREVIOUS OWNER HELD THE 4 CAPITAL ASSET FROM 29'' JAN., 1993, AS PER EXPLN. 1 (I)(B) TO S. 2(42A) THE ASSESSEE IS DEEMED TO HAVE HELD THE CAPI TAL ASSET AS LONG-TERM 'CAPITAL ASSET FROM 29 TH JAN., 1993 -THEREFORE, IN DETERMINING THE INDEXED COST OF ACQUISITION UNDE R S. 48, THE ASSESSEE MUST BE TREATED TO HAVE HELD THE ASSET FRO M 29 TH JAN, 1993 AND ACCORDINGLY THE COST INFLATION INDEX FOR 1 992-93 WOULD BE APPLICABLE IN DETERMINING THE INDEXED COST OF ACQUISITION- CONTENTION OF REVENUE THAT AS THE ASSE SSEE HELD THE ASSET W.E.F 1 SL FEB., 2003, THE FIRST YEAR OF HOLDING THE ,ASSET WOULD BE FINANCIAL YEAR 2002-03 AND ACCORDIN GLY, THE COST INFLATION INDEX FOR 2002-03 WOULD BE APPLICABL E IS DEVOID OF MERIT, BECAUSE IN THAT CASE, THE ASSESSEE WOULD NOT BE LIABLE FOR LONG-TERM CAPITAL GAINS TAX BY APPLYING THE DEEMED FICTION CONTAINED IN EXPLN. 1(I)(B) TO S. 2(42A) AN D S.49(1)(II)-IN CONSTRUING THE WORDS 'ASSET WAS HELD BY THE ASSESSEE' IN CL.(III) OF S. 48, ONE HAS TO SEE THE OBJECT WITH WHICH THE SAID-WORDS ARE USED IN THE STATUTE- IN TH E ABSENCE OF ANY INDICATION IN CL.(III) OF THE EXPLANATION TO S.48 THAT THE WORDS 'ASSET WAS HELD BY THE ASSESSEE' HAVE TO BE C ONSTRUED DIFFERENTLY, THE SAID WORDS SHOULD BE CONSTRUED IN ACCORDANCE WITH THE OBJECT OF THE STATUTE, THAT IS, IN THE MAN NER SET OUT IN EXPLN. 1(I)(B) TO S. 2(42A)-,LF THE MEANING GIVEN I N S.2(42A) IS NOT ADOPTED IN CONSTRUING THE WORDS USED IN S.48, T HEN THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIR ED UNDER A GIFT WILL BE OUTSIDE THE PURVIEW OF THE CAPITAL GAI NS TAX AND THE PROVISION OF S.55(1)(B)(2)(II) WILL BECOME UNWO RKABLE,' A SIMILAR VIEW WAS TAKEN BY THE HON'BLE DELHI HIGH COURT IN CASE OF ARUN SHUNGLOO TRUST, 68 DTR 279 (DEL). HEAD NOTE OF THIS DECISION READS AS UNDER:. 'CAPITAL GAINS- COST OF ACQUISITION - RE LEVANT YEAR FOR INDEXATION OF COST VIS-A-VIS PROPERTY ACQ UIRED UNDER GIFT, TRUST, ETC.- THERE IS NO REASON TO HOLD THAT CL.(III) OF THE EXPLANATION BELOW S,48 INTENTS TO R EDUCE OR RESTRICT THE 'INDEXED COST OF ACQUISITION' TO THE P ERIOD DURING WHICH THE ASSESSES HAS HELD THE PROPERTY AND NOT THE PERIOD DURING WHICH THE PROPERTY WAS HELD BY TH E PREVIOUS OWNER- 'HELD BY THE ASSESSES' USED IN EXPL N. (HI) TO S.48 HAS TO BE UNDERSTOOD IN THE CONTEXT AN D HARMONIOUSLY WITH OTHER SECTIONS- COST OF ACQUISITION STIPULATED IN S.49 MEANS THE COST FOR W HICH THE PREVIOUS OWNER HAD ACQUIRED THE PROPERTY - TER M 'HELD BY THE ASSESSEE' SHOULD BE INTERPRETED TO IN CLUDE THE PERIOD DURING WHICH THE PROPERTY IN TRUST O N 5 TH JAN., 1996, WHICH PROPERTY WAS ACQUIRED BY T HE PREVIOUS OWNER SOMETIME BEFORE 1 ST APRIL, 1981, ON SALE OF PROPERTY BY THE ASSESSEE IN ASS(.YR.2001-G2 , IT WAS ENTITLED TO THE BENEFIT OF INDEXED COST OF ACQU ISITION FROM 1 ST APRIL, 1981, AND NOT FOR THE PERIOD ON OR AFTER 5 LH JAN., 1996. HELD AS PER S.49, THE COST OF ACQUISITION IN THE HANDS O F AN ASSESSEE IS TREATED AS THE COST OF ACQUISITION BY THE PREVIOUS OWNER. SIMILAR BENEFIT / ADVANTAGE IS GIVEN IN RESPECT OF COST OF IMPROVEMENT. SEES. 48 AND 49 HAVE TO BE READ HARMONIOUSLY TO GIV E FULL EFFECT TO THE LEGISLATIVE INTENT. ON READING OF CL. (IV) OF EXPLANATION TO S.48, IT IS APPARENT THAT THE TERM COST OF IMPROVE MENT' WOULD INCLUDE THE COST OF IMPROVEMENT(S) MADE BY THE PREV IOUS OWNER. THE BENEFIT OF INDEXED COST OF IMPROVEMENT WOULD BE AVAILABLE EVEN IF THE CAPITAL /ASSET IS ACQUIRED BY THE ASSES SEE UNDER ANY GIFT, WILL OR SUCCESSION, TRUST ETC. AND IMPROVEMEN T WAS MADE BY THE V PREVIOUS OWNER. IF THE CONTENTION OF THE REVE NUE IS ACCEPTED, 5 THEN BENEFIT OF INDEXED COST OF ACQUISITION WILL NO T BE AVAILABLE TO AN ASSESSEE IN A CASE COVERED BY S.49 FROM THE DATE ON WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER BUT ONLY FROM THE DATE THE CAPITAL ASSET WAS TRANSFER TO THE ASSESSEE. THIS WI LL LEAD TO A DISCONNECT AND CONTRADICTION BETWEEN 'INDEXED COST OF ACQUISITION' AND 'INDEXED COST OF IMPROVEMENT' IN T HE CASE OF CAPITAL ASSETS WHERE S.49 APPLIES. THIS CANNOT BE T HE INTENTION BEHIND THE ENACTMENT OF S.49 AND EXPLANATION TO S.4 8. THERE IS, NO REASON OR GROUND WHY THE LEGISLATIVE WOULD WANT TO DENY OR DEPRIVE AN ASSESSEE BENEFIT / ADVANTAGE OF THE PREV IOUS HOLDING FOR COMPUTING 'INDEXED COST OF ACQUISITION' WHILE ALLOW ING THE SAID BENEFIT FOR COMPUTING' INDEXED COST OF IMPROVEMENT. (PARAS 10,13 & 14) THE CONSTRUCTION PLACED BY THE REVENUE WILL LEAD TO INCONSISTENCY AND INCONGRUITIES, 'WHEN ONE REFERS T O S.49 AND CL. (IV) OF EXPLN. (1) TO S. 48. THIS WILL RESULT IN A BSURDITIES BECAUSE THE HOLDING OF PREDECESSOR HAS TO BE ACCOUNTED FOR THE PURPOSE OF COMPUTING THE COST OF ACQUISITION,, COST OF IMPR OVEMENT END INDEXED COST OF IMPROVEMENT BUT AS PER THE REVENUE NOT FOR THE PURPOSE OF INDEXED COST OF ACQUISITION. EVEN FOR TH E PURPOSE OF DECIDING WHETHER THE TRANSACTION IS A SHORT-TERM CA PITAL GAIN OR LONG-TERM CAPITAL GAIN, THE HOLDING BY THE PREDECES SOR IS TO BE TAKEN INTO CONSIDERATION. BENEFIT OF INDEXED COST O F INFLATION IS GIVEN TO ENSURE THAT THE TAXPAYER PAYS CAPITAL GAIN TAX ON THE 'REAL' OR ACTUAL 'GAIN' AND NOT ON THE INCREASE I N THE CAPITAL VALUE OF THE PROPERTY DUE TO INFLATION. THI S IS THE OBJECT OR PURPOSE IN ALLOWING BENEFIT OF INDEXED COST OF IMPR OVEMENT, EVEN IF THE IMPROVEMENT WAS BY THE PREVIOUS OWNER IN CA SES COVERED BY S.49. ACCORDINGLY THERE IS NO JUSTIFICATION OR REASON TO NOT ALLOW THE BENEFIT OF INDEXATION TO THE COST OF ACQU ISITION IN CASES COVERED BY S.49. THIS IS NOT THE LEGISLATIVE INTENT BEHIND CL.(III) OF EXPLANATION TO S.48. THERE IS NO REASON AND JUST IFICATION TO HOLD THAT CL.(III) OF THE EXPLANATION BELOW S.48 IN TENTS TO REDUCE OR RESTRICT THE 'INDEXED COST OF ACQUISITION ' TO T HE PERIOD DURING WHICH THE ASSESSEE HAS HELD THE PROPERTY AND NOT TH E PERIOD DURING WHICH THE PROPERTY WAS HELD BY THE PREVIOU S OWNER. THE INTERPRETATION RELIED BY THE ASSESSED IS REASON ABLE AND IN CONSONANCE WITH THE OBJECT AND PURPOSE BEHIND SS. 4 8 AND 49. THE EXPRESSION 'HELD BY THE ASSESSEE' USED IN EXPLN . (III) TO S. 48 HAS TO BE UNDERSTOOD IN THE CONTEXT AND HARMONIO USLY WITH OTHER SECTIONS. THE COST OF ACQUISITION STIP ULATED IN S.49 MEANS THE COST FOR WHICH THE PREVIOUS OWNER HAD ACQ UIRED THE PROPERTY. THE TERM 'HELD BY THE ASSES SEE' SHOULD BE INTERPRETED TO INCLUDE THE PERIOD DURING WHICH THE PROPERTY WAS HELD BY THE PREVIOUS OWNER, - CIT VS. MANJULA J, SH AH (2012) 68 DTK .(BOM,) 269 - CONCURRED WITH.' FOLLOWING THE ABOVE DECISION WE ARE OF THE OPINION THAT IN CASE CAPITAL ASSET HAS BEEN RECEIVED BY THE ASSESSEE BY WAY OF GIFT OR INHERITANCE THEN COST OF INFLATION INDEX HAS TO BE APPLIED FROM THE DATE WHEN SUCH ASSET WAS ACQUIRED BY THE PREVIO US OWNER. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD.CIT( A) AND DIRECT THE ASSESSING OFFICER TO APPLY INFLATION INDEX AS P ER OUR OBSERVATIONS. 6 8. THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENTI CAL TO THE ISSUE BEFORE THE TRIBUNAL IN THE CASE OF THE OTHER CO-OWN ERS I.E. THE BROTHER OF THE ASSESSEE AND FOLLOWING THE SAME PARITY OF RE ASONING, WE DIRECT THE ASSESSING OFFICER TO ADOPT THE COST INFLATION I NDEX FROM THE DATE WHEN SUCH ASSET WAS ACQUIRED BY THE PREVIOUS OWNER AND NOT FROM THE DATE ON WHICH THE ASSESSEE ACQUIRED THE ASSET. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME FROM LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE FOLLOWING OUR ORDER IN SH RI PARMINDER KUMAR SHARMA VS ACIT (SUPRA). THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE IS ALLOWED. 9. THE GROUND NOS. 1, 3 AND 5 BEING NOT PRESSED ARE DISMISSED AND THE GROUND NO. 4 BEING GENERAL IS ALSO DISMISSED. ITA 1054/CHD/2012 :: A.Y. 2005-06 :: ASSESSEE'S APPEAL 10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL : 1. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 6,521/- (OUT OF ADDITION OF RS. 13,171/-) MADE BY THE ASSES SING OFFICER INN RESPECT OF SALE OF PLOT MEASURING 70 SQ.YARDS IN VILLAGE LOHGARH BY TAKING INDEX COST OF ACQUISITION AT RS. 1879/-M INSTEAD OF RS. 8400/- TAKEN BY THE A SSESSEE AS PER PARA-8 OF HIS ORDER. 2. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 6,521/- (OUT OF ADDITION OF RS. 13,1717-) MADE BY THE ASSES SING OFFICER IN RESPECT OF SALE OF PLOT MEASURING 70 SQ.YARDS IN VILLAGE LOHGARH BY TAKING INDEX COST OF ACQUISITION AT RS. 1879/- INSTEAD OF RS. 8400/- TAKEN BY THE AS SESSEE AS PER PARA-11 OF HIS ORDER. 3. THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 22,192/-( OUT OF ADDITION OF RS. 43,953/-) MADE BY THE ASSESS ING OFFICER BY TAKING COST OF ACQUISITION OF PLOT MEASURING 1168 SQ. YARDS AT VILLAGE LOHGARH (IN WHICH ASSESSEE HAS L/5 TH SHARE) AT RS. 31,355/-, INSTEAD OF RS. 1,40,1607- TAKEN BY THE ASSESSEE FOR THE PURPOSE OF WORKING OUT CAPITAL GAI N AS PER PARA 18 OF THE ORDER. 4. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMIN G THE ADDITION OF RS.L6,969/-( OUT OF RS. 2,31,081/-)- MADE BY THE ASSESSING OFFIC ER BY TAKING COST OF ACQUISITION OF PLOT MEASURING 1433/- SQ. YARDS (HAVING L/3 RD SHARE) AT VILLAGE LOHGARH AT RS.86,172/-, INSTEAD OF RS.1,37,078/- TAKEN BY THE ASSESSEE AS PER PARA 23 OF THE ORDER. 7 5. THAT THE AFORESAID ADDITION AS MADE BY THE AS SESSING OFFICER HAS BEEN CONFIRMED THE LEARNED CIT(A) AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSION MADE BY US HAS NOT BEEN CONSID ERED PROPERLY. 6. NOTWITHSTANDING ABOVE SAID GROUNDS OF APPEAL, IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THAT NO ADDITION CAN BE MADE AS NO INCRIMINATING NATURE OF DOCUMENTS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION IN VIEW OF THE SPEC IAL BENCH JUDGMENT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMITED & OTHERS AS R EPORTED IN 147 TTJ 513. 11. THE ISSUE VIDE GROUND NOS. 1 TO 4 IS IN RESPECT OF THE COST INFLATION INDEX TO BE ADOPTED IN RELATION TO VARIOU S PLOTS OF LAND SOLD BY THE ASSESSEE. IT WAS ADMITTED BY THE AUTHORIZED REPRESENTATIVE THAT THE ISSUES RAISED VIDE GROUND OF APPEAL NOS. 1 TO 4 WAS IDENTICAL TO THE ISSUE RAISED VIDE GROUND OF APPEAL NO. 2 IN ITA NO. 1053/CHD/2012. SINCE THE FACTS AND ISSUE RAISED VIDE GROUND OF APP EAL NOS.1 TO 4 IN ITA NO. 1054/CHD/2012 ARE IDENTICAL TO THE ISSUE RA ISED VIDE GROUND NO. 2 IN ITA NO. 1053/CHD/2012, OUR DECISION IN ITA NO. 1053/CHD/2012 SHALL APPLY MUTATIS-MUTANDIS TO GROUN D OF APPEAL NOS. 1 TO 4 RAISED BY THE ASSESSEE IN ITA NO. 1054/CHD/2 012 ALSO. THE ASSESSING OFFICER SHALL RECOMPUTE THE INCOME FROM L ONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE BY ADOPTING THE COST INFLATION INDEX OF THE YEAR FROM WHICH THE PREVIOUS OWNER HAD ACQUI RED THE SAID ASSET AND NOT FROM THE YEAR IN WHICH THE ASSESSEE RECEIVE D THE SAID ASSET THROUGH GIFT. GROUND OF APPEAL NOS. 1 TO 4 RAISED BY THE ASSESSEE ARE ALLOWED. 12. THE GROUND OF APPEAL NO. 5 RAISED BY THE ASSESS EE IS GENERAL IN NATURE AND GROUND OF APPEAL NO. 6 RAISED BY THE ASS ESSEE WAS NOT PRESSED. HENCE, BOTH THESE GROUNDS OF APPEAL ARE D ISMISSED. 8 ITA 1055/CHD/2012 :: A.Y. 2006-07 :: ASSESSEE'S APPEAL 13. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPE AL BUT HAS NOT PRESSED GROUND NOS. 2 TO 4 AND HAS ONLY PRESSED GRO UND NO. 1 WHICH READS AS UNDER : THAT THE WORTHY CIT(APPEALS) HAS ERRED IN CONFIRMI NG THE ADDITION OF RS. 3,40,173/- MADE BY THE ASSESSING OFFICER BY TAKING COST OF ACQUISITION OF PLOT MEASURING 725 SQ.YDS. AT VILLAGE LOHGARH AT RS . 20,152/- AGAINST COST OF ACQUISITION BY THE ASSESSEE AT RS. 3,60,325/- TA KEN BY THE ASSESSEE AS PER FINDING OF THE CIT(A) IN PARA 7 OF THE ORDER. 14. THE LD. AR FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE ISSUE RAISED VIDE GROUND NO. 1 IN THE PRESENT APPEAL WAS IDENTICAL TO THE GROUND NO. 2 RAISED IN ITA NO. 1053/CHD/2012. IN V IEW THEREOF, OUR DECISION IN ITA NO. 1053/CHD/2012 SHALL APPLY MUTAT IS-MUTANDIS TO GROUND NO. 1 RAISED BY THE ASSESSEE IN ITA NO. 1055 /CHD/2012. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCO ME FROM LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE IN LINE WITH OUR DIRECTIONS. GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE IS TH US, ALLOWED. 15. THE GROUND OF APPEAL NOS. 2 TO 4 BEING NOT PRES SED ARE DISMISSED AS NOT PRESSED. ITA 1131/CHD/2012 :: A.Y. 2004-05 :: REVENUES APPEAL 15. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL : 1. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.36,000/- ON ACCOUNT OF LOW HOU SEHOLD WITHDRAWALS KEEPING IN VIEW THE SPECIFIC FINDING S IN THE ASSESSMENT ORDER. 2. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 7,92,854/-, AND RS.6,197/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN AS PER SPECIFIC FINDINGS GIVEN BY THE A.O. IN THE ASSESSMENT ORDER IN WHICH HE HAD APPLIE D AVERAGE RATE OF LAND AT RS. 1495/- PER SQ. YD. WHILE CALCUL ATING THE LONG TERM CAPITAL GAIN CONSIDERING THE FACT THAT THE ASS ESSEE AND HIS FAMILY MEMBERS HAD SOLD THE PLOTS IN SAME LOCALITY AT DIFFERENT RATES DURING THE SAME PERIOD. 3. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING 9 THE ADDITION OF RS. L0,50,000/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF UNEXPLAINED LONG TERM CAPITAL GAIN BY THE AO IN THE ASSESSMENT ORDER IN WHICH HE HAD APPLIED RATE RS. 1000/- PER SQ. YD. CONSIDERING THE FACT THAT THE ASSESSEE HAD HIMSELF SOLD ANOTHER PROPERTY IN THE SAME LOCALITY AT DIFFE RENT RATE DURING THE SAME PERIOD. 4. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITIONS OF RS. 3,10,000/- OUT OF TOTAL AD DITION OF RS. 3,44,260/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF UNEXPLAINED CREDIT ENTRIES IN THE BANK ACCOUNT AS P ER SPECIFIC FINDINGS GIVEN BY THE AO IN THE ASSESSMENT ORDER TH AT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO EXPLAIN T HE SOURCE OF THESE CREDIT ENTRIES. 5. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITIONS BY ADMITTING THE ADDITIONAL EVIDE NCE AT THE APPELLATE STAGE AS PER FOLLOWING REASONS: I) THE ASSESSING OFFICER OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE AT APPELLATE STAGE UNDER SECTION 46A OF T HE INCOME TAX RULES. II) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DE LETED THE ADDITION WITHOUT ALLOWING THE ASSESSING OFFICER TO EXAMINE THE CORRECTNESS AND GENUINENESS OF THE ADDITIONAL EVIDE NCE ADMITTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 16. THE ISSUE IN GROUND NO. 1 RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS. 36,000/- MADE ON ACCOUN T OF LOW HOUSEHOLD WITHDRAWALS. 17. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD SHOWN HOUSEHOLD WITHDRAWALS @ RS. 12,000/- PER MONT H WHEREAS THE ASSESSING OFFICER HAD ESTIMATED THE HOUSEHOLD EXPEN SES @ RS. 15000/- PER MONTH RESULTING IN ADDITION OF RS. 36,000/-. 18. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE P ARA 4 AT PAGE 4 OF THE APPELLATE ORDER HAD UPHELD THE ADDITION OF RS. 36,000/- BUT IN THE FINAL ANALYSIS, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS INADVERTENTLY HELD THAT THE ADDITION IS DELETED. W E FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE REVENUE IN THE P RESENT APPEAL WHERE THE COMMISSIONER OF INCOME TAX (APPEALS) HAS UPHELD THE ADDITION OF RS. 36,000/-. HOWEVER, WE MODIFY THE DIRECTIONS OF THE COMMISSIONER 10 OF INCOME TAX (APPEALS) THAT THE ADDITION IS DELETED TO ADDITION IS UPHELD. THE GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE IS THUS, DISMISSED. 19. THE ISSUES RAISED VIDE GROUND NOS. 2 & 3 ARE SI MILAR AND CONSEQUENTLY, WE PROCEED TO DECIDE THE SAME TOGETHE R. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD VARIOU S PLOTS OF LAND TO HIS FAMILY CONCERN M/S N.K.SHARMA ENTERPRISES LTD. THE BROTHERS OF THE ASSESSEE HAD ALSO SOLD CERTAIN PIECES OF LAND I N THE SAME AREA TO M/S N.K. SHARMA ENTERPRISES LTD. HOWEVER, THERE WA S DIFFERENCE IN THE RATE OF LAND ON WHICH PLOT OF LAND HAS BEEN SOL D BY ASSESSEE I.E. ON RATES LOWER THAN THE RATE ON WHICH THE PROPERTY WAS SOLD BY THE BROTHER OF THE ASSESSEE. THE ASSESSING OFFICER, IN VIEW TH EREOF RECOMPUTED THE INCOME FROM LONG TERM CAPITAL GAINS BY ADOPTING THE RATES OF LAND AT WHICH THE BROTHER OF THE ASSESSEE HAD SOLD SIMIL ARLY PLACED PLOTS OF LAND RESULTING IN ADDITION OF RS.7,92,854/-, RS. 61 97/- AND RS. 10,50,000/-. 20. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE P ARA 8 AT PAGE 5 DELETED THE SAID ADDITION AGAINST WHICH THE REVEN UE IS IN APPEAL. 21. THE LD. DR FOR THE REVENUE POINTED OUT THAT BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAD ADMITTED THAT THE CIRCLE RATE WAS HIGHER THAN THE RATE AT WHICH T HE PROPERTY HAD BEEN SOLD BY THE ASSESSEE TO ITS FAMILY CONCERN. THE CO MMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION VIDE PARA 10 WITHOUT TAKING CONSIDERATION OF THE ADMISSION OF THE ASSESSEE ITSE LF. 22. THE LD. AR FOR THE ASSESSEE IN REPLY POINTED OU T THAT ADDITION, IF ANY COULD BE MADE ONLY UNDER SECTION 50C OF THE ACT AS SECTION 55(2) OF THE ACT HAS BEEN DELETED FROM THE STATUTE. THE LD. AR FOR THE 11 ASSESSEE, HOWEVER FAIRLY ADMITTED THAT THE CIRCLE R ATE WAS HIGHER THAN THE RATE AT WHICH THE PROPERTY WAS SOLD BY THE ASSE SSEE IN SOME CASES AND IN SOME CASES, THE CIRCLE RATE WAS LOWER THAN T HE RATE AT WHICH PROPERTY HAS BEEN SOLD. 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF LONG TERM CAPITAL GAINS ON SALE OF DIFFERENT PLOTS OF LAND BY THE ASSESSEE TO ITS FAMILY CONCERN M/S N.K.SHARMA ENTERPRISES. THE BRO THER OF THE ASSESSEE HAD ALSO SOLD SIMILARLY PLACED PLOTS OF LA ND TO THE SAME CONCERN BUT THE RATES AT WHICH PROPERTY HAS BEEN SO LD BY THE ASSESSEE AND BY HIS BROTHER ARE AT VARIANCE. THE ASSESSING OFFICER, IN VIEW THEREOF RECOMPUTED THE INCOME FROM LONG TERM CAPITA L GAINS IN THE HANDS OF THE ASSESSEE BY ADOPTING THE RATES AT WHIC H BROTHER OF THE ASSESSEE HAD SOLD THE SAID PLOTS OF LAND. WE FIND N O MERIT IN THE SAID STAND OF THE ASSESSING OFFICER AS PROVISIONS OF SEC TION 55(2) OF THE ACT HAVE BEEN DELETED FROM THE STATUTE. HOWEVER, T HE CASE OF THE ASSESSEE IS COVERED UNDER THE PROVISIONS OF SECTION 50C OF THE ACT WHICH, THOUGH HAD NOT BEEN INVOKED BY THE ASSESSING OFFICER BUT THE ASSESSEE BEFORE COMMISSIONER OF INCOME TAX (APPEALS ) HAD ADMITTED THAT THE CIRCLE RATES IN CASE OF CERTAIN PLOTS OF L AND WERE HIGHER THAN THE RATES AT WHICH ASSESSEE HAD SOLD THE SAID PIECE OF LAND. 24. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE P ARA 8 & 9 AT PAGES 5 TO 10 HAS REPRODUCED THE SUBMISSIONS OF THE ASSESSEE. AT PAGE 9, THE ASSESSEE HAS ADMITTED THAT THE ADDITION IN T HE HANDS SHOULD BE LIMITED TO RS. 417,600/- AND THE BALANCE SHOULD BE DELETED. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVER VIDE PARA 10 HAD DELETED THE ENTIRE ADDITION WITHOUT TAKING INTO CON SIDERATION THE ADMISSION OF THE ASSESSEE. IN THE ENTIRETY OF THE ABOVESAID FACTS AND 12 CIRCUMSTANCES AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), WE HOLD T HAT APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT, THE INCOME FR OM LONG TERM CAPITAL GAINS HAS TO BE RECOMPUTED IN THE HANDS OF THE ASSESSEE BY ADOPTING THE CIRCLE RATES FOR COMPUTING THE SALE CO NSIDERATION OF THE SAID PLOTS OF LAND. HOWEVER, AS THE NECESSARY DETA ILS ARE NOT AVAILABLE ON RECORD, WE REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR LIMITED PURPOSE OF VERIFYING CIRCLE RATES AND AFTER APPLYING THE SAME, RECOMPUTE THE INCOME FROM LONG TERM CAPITAL GAINS I N THE HANDS OF THE ASSESSEE. REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE. IN CASE THE CIRCLE RATES ARE LOWER THAN T HE SALE RATE SHOWN BY THE ASSESSEE, THEN INCOME FROM LONG TERM CAPITAL GA INS HAS TO BE COMPUTED ON THE SALE PRICE SHOWN BY THE ASSESSEE. THE GROUND OF APPEAL NOS. 2 AND 3 RAISED BY THE REVENUE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 25. THE NEXT ISSUE RAISED BY THE REVENUE IS VIDE GR OUND NOS.4 & 5 IN RESPECT OF DELETION OF ADDITION MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF BANK ENTRIES. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CREDIT ENTRIES IN THE BANK AC COUNT. THE ASSESSEE FAILED TO FURNISH ANY REPLY BEFORE THE ASSESSING OF FICER AND HENCE, FOUR ENTRIES TOTALING RS. 344,260/- WERE TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE IN ADDITION. 26. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSEE FURNISHED THE EXPLANATION IN RESPECT OF FOUR ENTRIE S AND SAME ARE INCORPORATED AT PAGE 24 OF THE APPELLATE ORDER. TH E SAID SUBMISSIONS WERE CONFRONTED TO THE ASSESSING OFFICER FOR HIS CO MMENTS AND AS THE ASSESSEE HAD FAILED TO FURNISH ANY PROOF REGARDING THE IDENTITY, CREDIT 13 WORTHINESS AND THE OCCASION FOR PROVIDING LOANS EAR LIER, THE THEORY OF RETURN OF LOAN WAS NOT ACCEPTED AND EVEN THE SOURCE OF CASH ENTRIES OUT OF CASH FLOW WAS NOT ACCEPTED BY THE ASSESSING OFFI CER. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) PLACED RELIANC E ON THE CASH FLOW STATEMENT FURNISHED BEFORE THE ASSESSING OFFIC ER AND DELETED THE ADDITION. REVENUE IS IN APPEAL AGAINST THE SAME. 27. BOTH THE AUTHORIZED REPRESENTATIVES PUT FORWARD THEIR CONTENTIONS. 28. WE HAVE HEARD THE RIVAL CONTENTIONS AND ON THE PERUSAL OF RECORD WE FIND THAT THE ASSESSEE WAS CONFRONTED TO EXPLAIN SOURCE OF THE FOLLOWING CREDIT ENTRIES IN THE BANK ACCOUNT : DATE AMOUNT 23.2.2004 RS. 24,760/- 05.03.2004 RS. 1,00,000/ 26.03.2004 RS.1,60,800/- 31.3.2004 RS. 60,000/- 29. THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE FOUR ENTRIES BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS AS UNDER : '1) RS.24,760 IS A DEPOSIT OF CASH TO OPEN AN ACCOUNT. 2) RS. 1,00,000 HAS BEEN RECEIVED FROM MR. AVTAR SINGH , BEING IN THE NATURE OF PART REPAYMENT' OF LOANS, ADVANCED T O HIM BY THE ASSESSEE. COPY OF ACCOUNT IS ENCLOSED HEREWITH. 3) RS. 1,60,800 HAS BEEN RECEIVED FROM MR. BALDEV SING H, BEING IN THE NATURE OF REPAYMENT OF LOANS, ADVANCED TO HIM B Y THE ASSESSEE. COPY OF ACCOUNT IS ENCLOSED HEREWITH. 4) THE ASSESSEE SOLD A LAND MEASURING 271 SQUARE YARDS IN VILLAGE LOHGARH TO MRS. KEWAL LATA. THIS SALE HAS PROPERLY BEEN ACCOUNTED IN THE BOOKS OF THE ASSESSEE AND TAX ALSO PAID ON T HE CAPITAL GAINS ARISING OUT OF SUCH TRANSFER. THE LAND WAS SOLD FOR RS.3,25,500. HOWEVER THE REGISTRATION OF THE SAME WAS DONE ON 01 .04.2004, BUT THE ASSESSEE RECEIVED AN ADVANCE OF RS. 50,000 OUT OF THE TOTAL SUM OF RS. 3,25,500 ON 26.03.2004. COPY OF ACCOUNT OF MRS. KEWAL LATA IN THE BOOKS OF THE ASSESSEE AND THE REGIS TRATION DEED ARE ENCLOSED TO JUSTIFY THE STATEMENT MADE.' 14 30. THE COMMISSIONER OF INCOME TAX (APPEAL S) VIDE PARA 22 HELD AS UNDER : 22. THE APPELLANT HAS EXPLAINED AN AMOUNT OF RS. 1, 60,800/- CREDITED IN BANK ACCOUNT AS RETURN OF LOAN FROM SHR I BALDEV SINGH. IT HAS BEEN SUBMITTED THAT THE AMOUNT WAS OU TSTANDING FROM SHRI BALDEV SINGH SINCE 1/4/2001 AND HAD BEEN REFLECTED ACCORDINGLY IN THE BALANCE SHEET FOR A.Y. 2002-03 O NWARDS. THE EVIDENCE TO SUPPORT THE CLAIM HAD ALSO BEEN FILED I N THE FORM OF BALANCE SHEET WHEREIN THE SAID RECEIVABLE STANDS RE CORDED FOR A.Y. 2002-03 ONWARDS. THE ASSESSEE WAS DIRECTED TO FILE THE BANK ACCOUNT STATEMENT OF SHRI BALDEV SINGH TO THAT THE IMPUGNED AMOUNT HAD BEEN ACTUALLY RECEIVED FROM HIM ALSO HIS IDENTIFICATION PARTICULARS. THE PERUSAL OF COPY OF THE BANK UNT SHOWS THAT THE CHEQUE NO. 098303 OF HDFC BANK HAS B EEN BY SH. BALDEV SINGH TO THE APPELLANT ON 23/2/2004 AND THE STANDS RECORDED IN THE BANK ACCOUNT OF THE APPELLANT AS DU RING APPELLATE PROCEEDINGS. SINCE IT IS CLEAR THAT THE A MOUNT IN QUESTION HAS BEEN RETURNED TO THE APPELLANT BY MR. BALDEV SINGH AND THE SAME AMOUNT WAS OUTSTANDING FROM HIM AS PER THE BALANCE SHEETS, THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. FURTHER SIMILAR ARE THE FACTS IN RESPECT OF AMOUNT RECEIVED BY CHEQUE FROM SH. AVTAR SINGH TO THE TUNE OF RS.1,00,000/- VIDE CHEQUE NO. 536435 DATED 23/2/2004 AND THE ASSESSING OFFICER IN THE REMAND REPORT HAS NOT BROUGHT ON RECORD ANY CONTRADICTORY FACTS ESPECIALLY IN VIE W OF DETAILED SUBMISSIONS OF THE APPELLANT. THE AMOUNT IN QUESTIO N IS RETURN OF LOAN ADVANCED BY THE ASSESSEE WHICH STANDS RECORDED IN HIS BALANCE SHEET. THEREFORE, THE ADDITION MADE IN THIS REGARD IS DIRECTED TO BE DELETED. THE CREDIT ENTRY OF RS. 50, 000/- HAD BEEN EXPLAINED BY THE ASSESSEE BEING ON ACCOUNT OF ADVAN CE RECEIVED FROM SMT. KEWAL LATA TO WHOM LAND MEASURING 271 SQ. YARD HAD BEEN SOLD BY THE ASSESSEE. THE DETAILS OF AMOUNTS R ECEIVED AS ADVANCED STAND RECORDED IN THE REGISTRATION DEED SU BMITTED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS. THE ASSE SSING OFFICER IN HIS REMAND REPORT HAS ALSO AGREED THAT CREDIT EN TRY OF RS. 50,000/- WAS SUPPORTED BY DOCUMENTS PRESENTED BY TH E ASSESSEE. AS SUCH ADDITION OF RS. 50,000/- ON THIS ACCOUNT IS DIRECTED TO BE DELETED 31. PERUSAL OF THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) REFLECT HIM TO HAVE NOTED THE EXPLANATION OF THE CREDIT ENTRIES OF RS. 160,800/-, RS. 1,00,000/- AND RS. 50 ,000/-. HOWEVER, THE CREDIT ENTRIES IN THE BANK ACCOUNT OF THE ASSES SEE ARE ON ACCOUNT 15 OF DEPOSIT OF CASH OF RS. 24,760/-, CHEQUE OF RS.1, 00,000/-, CHEQUE OF RS. 160,800/- AND CASH OF RS. 60,000/-. INCASE THE EXPLANATION OF THE ASSESSEE IS ACCEPTED WITH REGARD TO RS. 1,00,000/- RS. 160,800/- AND RS.50,000/- THE BALANCE AMOUNT FOR WHICH NO EXPLANA TION HAS BEEN FURNISHED BY THE ASSESSEE IS RS. 24,760/- AND RS. 1 0,000/- OUT OF RS. 60,000/- AGAINST WHICH THE ASSESSEE HAS GIVEN EXPLA NATION WITH REGARD TO RS. 50,000/- ONLY. WE ARE IN CONFORMITY WITH THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO THE BALANCE ENTRIES. HOWEVER, WE UPHOLD THE ADDITION OF RS. 24, 260/- DEPOSITED IN CASH AND RS. 10,000/- OUT OF TOTAL DEPOSIT OF RS. 6 0,000/- AND DIRECT THE ASSESSING OFFICER ACCORDINGLY. 32. THE REVENUE IS AGGRIEVED BY THE ORDER OF COMMIS SIONER OF INCOME TAX (APPEALS) IN ADMITTING THE ADDITIONAL EV IDENCE. HOWEVER, SINCE THE COMMISSIONER OF INCOME TAX (APPE ALS) HAD CONFRONTED THE SAID EVIDENCE AND THE ASSESSING OFFI CER AND THE REMAND REPORT IN THE CASE WAS RECEIVED, WE FIND NO MERIT IN THE STAND OF THE REVENUE. THE GROUND OF APPEAL NO. 4 RAISED BY THE REVENUE IS PARTLY ALLOWED AND GROUND NO.5 RAISED BY THE REVENU E IS DISMISSED. ITA 1132/CHD/2012 :: A.Y. 2004-05 :: REVENUES APPEAL 33. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL : 1. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.48,000/- ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS KEEPING IN VIEW THE SPECIFIC FINDINGS IN THE ASSESSMENT ORDER. 2. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS. 13,171/-, RS. 13,171/-, RS.2,19,061 /-, 43,953/- AND RS. 2,31,081/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAI N AS PER SPECIFIC FINDINGS GIVEN BY THE A.O. IN THE ASSESSMENT ORDER IN WHICH HE HAD APPLIED RATE OF LAND @ RS. 1495/- PER SQ. YD. WHILE CALCULATING THE LONG TERM CAPITAL GAIN CONSIDERING THE FACT THAT THE ASSESSEE AND HIS BROT HER HAD SOLD THE PLOTS IN SAME LOCALITY AT DIFFERENT RATES DURING THE SAME PERIOD. 16 3. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 24,00,000/- , RS.2,20,750/- AND RS. 3,69,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT THOUGH THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENT NO. 10 & 1 1 OF ANNEXURE A-2 AND BY ADMITTING ADDITIONAL EVIDENCE AT THE APPELLATE STAG E AS PER FOLLOWING REASONS: I. THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENC E DURING THE ASSESSMENT PROCEEDINGS AS SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER, II. THE AO OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE AT APPELLATE STAGE U/S 46A OF THE INCOME TAX RULES. III) THE LD. CIT(A) HAS DELETED THE ADD ITION WITHOUT ALLOWING THE AO TO EXAMINE THE CORRECTNESS AND GENUINENESS OF THE ADDITIONAL EVIDENCE A DMITTED BY THE LD. CIT(A). 34. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESS EE IS IDENTICAL TO THE GROUND OF APPEAL NO.1 RAISED IN ITA NO. 1131/CH D/2012 AND FOLLOWING OUR DECISION IN ITA 1131/CHD/2012, WE REV ERSE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND CONFIRM TH E ADDITION OF RS. 48,000/-. THE GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE IS THUS, ALLOWED. 35. THE ISSUE RAISED VIDE GROUND OF APPEAL NO. 2 IS IDENTICAL TO THE GROUND OF APPEAL NOS. 2 & 3 RAISED BY THE REVENUE I N ITA NO. 1131/CHD/2012 AND OUR DECISION IN ITA 1131/CHD/2012 SHALL APPLY MUTATIS-MUTANDIS TO THE GROUND OF APPEAL NO. 2 RAIS ED BY THE REVENUE IN ITA 1132/CHD/2012. THE GROUND OF APPEAL NO. 2 R AISED BY THE REVENUE IS THUS, ALLOWED FOR STATISTICAL PURPOSES. 36. THE GROUND OF APPEAL NO. 3 RAISED BY THE REVENU E IS AGAINST DELETION OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. 37. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS NO. 10 & 11 OF ANNEXURE A -2 WERE SEIZED FROM THE RESIDENCE OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT AS PER THE SAID AGREEMENT, THE ASSESSEE SHRI YADWIN DER SHARMA ENTERED INTO AN AGREEMENT FOR PURCHASE OF LAND MEAS URING 26 BIGHAS 3 17 BISWA @ 45 LACS PER KILA AT VILLAGE MAUJA GAJJIPUR WITH SHRI HARISH CHANDER R/O HOUSE NO. 524 SECTOR 7 PANCHKULA AND OT HERS AND SHRI YADWINDER SHARMA PAID RS. 72 LACS ON 11.01.2005 IN CASH AND THE SAID FACTS WAS ALSO ADMITTED BY HIS BROTHER SHRI N.K.SHA RMA IN HIS STATEMENT RECORDED ON OATH DURING THE COURSE OF SEA RCH. THE ASSESSEE WAS SHOW CAUSED AS TO WHY RS. 72 LACS SHOULD NOT BE ADDED AS INCOME AS THE INVESTMENT WAS MADE FROM UNDISCLOSED SOURCES . IN REPLY, THE ASSESSEE SUBMITTED THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S SATINDER KUMAR AND OTHERS AS SELLERS ALONGWITH MR. DHARAM SINGH AND MR. SANDEEP KUMAR AS HIS EQUAL (1/3 RD ) PARTNERS IN THE SAID AGREEMENT. AN AMOUNT OF RS. 72 LACS WAS PAID AS AD VANCE FOR THIS DEAL. THE ASSESSEE'S SHARE COMES TO RS. 24 LACS ON LY. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AS NO SOURCES OF INVESTMENT OF RS. 24 LACS WERE FILED AND THE SAME W AS TREATED AS INCOME FROM UNDISCLOSED SOURCES. 38. ANOTHER DOCUMENT REFLECTED PURCHASE OF LAND WOR TH RS. 220,750/- ON 11.11.2004. THE ASSESSEE FAILED TO FI LE ANY REPLY IN RESPECT OF THE SAME NOR ANY EXPLANATION WAS GIVEN R EGARDING THE SOURCES OF INVESTMENT AND THE SUM OF RS. 220,750/- WAS ADDED AS INCOME OF THE ASSESSEE. ANOTHER LAND PURCHASED BY T HE ASSESSEE FOR RS. 359,000/- AND AS THE ASSESSEE FAILED TO FURNISH ANY INFORMATION IN THIS REGARD ALSO, THE SAME WAS ADDED AS UNDISCLOSED INCO ME OF THE ASSESSEE. 39. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSEE FURNISHED A REPLY STATING THAT THOUGH THE ASSESSEE HAD PURCHASED PROPERTY JOINTLY WITH TWO PERSONS AND SUM OF RS. 72 LACS WAS PAID BUT THE AGREEMENT IS SILENT ABOUT THE SHARE OF ALL THE THREE PERSONS AND THE SHARE OF THE ASSESSEE IN ADVANCE WAS ONLY RS. 16,50 ,000/- AS THE 18 PROPERTY HAS BEEN REGISTERED FOR THAT CONSIDERATION . THE CLAIM OF THE ASSESSEE WAS THAT THE SHARE OF THE ASSESSEE IN THE PROPERTY WAS 88/728 I.E. 12.088%. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED BY THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER PARA 25 AT PAGES 30-31 OF THE APPELLATE ORDER. THE SAID SUBMISSIONS WERE FORWARDED TO THE ASSESSING OFFICER AND THE REMAND REPORT OF THE ASSE SSING OFFICER IS REPRODUCED UNDER PARA 26 AT PAGES 31-32 OF THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE IS REJOINDER HAS FURNISHED ANOTHER REPLY WHICH IS REPRODUCED UNDER P ARA 27 OF THE APPELLATE ORDER. THE COMMISSIONER OF INCOME TAX (A PPEALS) ADMITTED THE ADDITIONAL EVIDENCE IN THE FORM OF CASH-FLOW ST ATEMENT WHICH ACCORDING TO THE COMMISSIONER OF INCOME TAX (APPEAL S), WAS BASED UPON THE WITHDRAWALS/DEPOSITS MADE BY THE ASSESSEE IN THE BANK ACCOUNTS WHICH IN-TURN HAS BEEN REFLECTED IN THE RE TURN OF INCOME FILED BY THE ASSESSEE. AS PER THE COMMISSIONER OF INCOME TAX (APPEALS), THE EVIDENCE IN THE FORM OF CASH FLOW STATEMENT PRO POSED TO BE FILED NOW HAS NOT BEEN CREATED AFRESH OR IS NOT BASED UPO N ANY NEW DOCUMENTS AND THEREFORE ONLY GIVES AN OPPORTUNITY T O THE ASSESSEE TO EXPLAIN THE IMPUGNED SEIZED DOCUMENTS. THE DENIAL O F ADMISSION OF ADDITIONAL EVIDENCE WOULD MEAN THAT WORKING OUT OF CORRECT TAXABLE INCOME ON THE BASIS OF VARIOUS DOCUMENTS WOULD G ET COMPROMISED. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OB SERVED THAT IT MEANS THAT THE EXPLANATION OF THE ASSESSEE BASED U PON HIS BANK ACCOUNTS IS NECESSARY TO ADJUDICATE THE GROUNDS OF APPEAL. ON THE PERUSAL OF THE CASH-FLOW STATEMENT WHICH REFLECTED THE PAYMENT OF RS. 16,50,000/-, THE COMMISSIONER OF INCOME TAX (APPEAL S) DELETED THE ADDITION OF RS. 24 LACS. SIMILARLY, IN RESPECT OF T HE OTHER INVESTMENT OF RS. 220,750/- AND RS. 3,69,000/-, THE ASSESSEE P LACED RELIANCE ON THE CASH-FLOW STATEMENT WHICH WAS FILED AS ADDITION AL EVIDENCE. THE 19 COMMISSIONER OF INCOME TAX (APPEALS) ADMITTED THE S AME AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. REVENU E IS IN APPEAL AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS). 40. THE LD. DR FOR THE REVENUE POINTED OUT THAT DUR ING THE COURSE OF SEARCH, WHEN THE DOCUMENT WAS FOUND, THE ASSESSING OFFICER CONFRONTED THE SAID DOCUMENT TO THE ASSESSEE AND TH E ASSESSEE ADMITTED TO HAVE GIVEN ADVANCE OF RS. 24 LACS I.E. 1/3 RD SHARE IN THE PROPERTY. HOWEVER, BEFORE THE COMMISSIONER OF INCOME TAX (APP EALS), THE ASSESSEE HAS CHANGED HIS STAND AND SUCH CHANGED STA ND CANNOT BE ACCEPTED. THE NEXT STAND TAKEN BY THE LD. DR FOR T HE REVENUE WAS THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF INVESTMENT TO BE OUT OF CASH FLOW STATEMENT WHICH WAS NOT FILED BEFORE THE ASSES SING OFFICER AND WAS MERE AFTER-THOUGHT AND PREPARED DURING THE APPE LLATE PROCEEDINGS AND CANNOT BE RELIED UPON. SIMILAR WAS THE POSITIO N IN RESPECT OF INVESTMENT OF RS. 220,750/- AND RS. 3,69,000/- WHIC H WAS EXPLAINED TO BE OUT OF THE SAID CASH FLOW STATEMENT. 41. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT DU RING THE COURSE OF SEARCH, NO OTHER EVIDENCE EXCEPT THE AGREEMENT WAS FOUND AND THE SHARES WERE NOT DETERMINED IN THE SAID AGREEMENT TO SELL. 42. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING VIDE GROUND NO. 3 IS TWO FOLD I.E. ON E AGAINST THE DELETION OF THE ADDITION AND SECOND PART OF THE SAI D GROUND OF APPEAL IS AGAINST ADMISSION OF ADDITIONAL EVIDENCE IN VIOLATI ON OF THE PROVISIONS OF RULE 46A OF IT RULES. ADMITTEDLY, THE ADDITIONA L EVIDENCE IN THE FORM OF CASH-FLOW STATEMENT WAS FILED BEFORE THE CO MMISSIONER OF INCOME TAX (APPEALS) WHICH WAS CONFRONTED TO THE AS SESSING OFFICER AND IT CANNOT BE SAID THAT THE PROVISIONS OF RULE 4 6A OF IT RULES HAVE 20 BEEN VIOLATED IN THE CASE. HOWEVER, WE SHALL CONSI DER THE RELIANCE UPON THE SAID CASH-FLOW STATEMENTS IN THE PARAS HER EIN BELOW. 43. DURING THE COURSE OF SEARCH AT THE RESIDENCE OF THE ASSESSEE, DOCUMENT NO. 10 AND 11 OF ANNEXURE A-2 WERE FOUND W HICH IN-TURN WERE AGREEMENT TO SELL ENTERED INTO BY THE ASSESSEE WITH DIFFERENT PARTIES TO PURCHASE DIFFERENT PROPERTIES. FIRST DO CUMENT WAS FOR THE PURCHASE OF 26 BIGHAS 3 BISWA @ 45 LACS PER KILLA O F PLOT OF LAND AT VILLAGE MAUJA GAJJIPUR. THE ASSESSEE ALONGWITH SHR I DHARAM SINGH AND SHRI SANDEEP KUMAR HAD ENTERED INTO THE SAID AG REEMENT AND PAID RS. 72 LACS ON 11.01.2005 IN CASH. THE SAID EVIDEN CE WAS CONFRONTED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS AND THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN THE SOURCE OF I NVESTMENT OF RS. 72 LACS. THE ASSESSEE FILED REPLY DATED 18.12.2009 WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER AT PAGE 11 OF T HE ASSESSMENT ORDER AND THE SAME READS AS UNDER : THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S SA TINDER KUMAR AND OTHERS, AS SELLERS ALONGWITH MR. DHARAM S INGH AND MR. SANDEEP KUMAR AS HIS EQUAL (1/3 RD ) PARTNERS IN THE SAID AGREEMENT. AN AMOUNT OF RS. 72 LACS WAS PAID A S ADVANCE FOR THIS DEAL. THE ASSESSEE'S SHARE COMES TO RS. 24 LACS ONLY. 44. THE STAND OF THE ASSESSEE BEFORE ASSESSING OFFI CER WAS THAT HE HAD 1/3 RD SHARE IN THE SAID PROPERTY AND HIS SHARE AMOUNTED TO RS. 24 LACS. HOWEVER, AS THE ASSESSEE HAD FAILED TO FURNI SH ANY EVIDENCE WITH REGARD TO SOURCE OF THE SAID RS. 24 LACS, THE SAME WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES IN THE HANDS OF THE ASSESSEE. 45. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSEE CHANGED HIS STAND AND CLAIMS THAT THE ASSESSEE HAD 1/3 RD SHARE IN THE SAID PROPERTY BUT HAD ONLY SHARE TO THE EXTENT OF 1 2.088%. THE ASSESSEE VERY CATEGORICALLY ADMITS THAT THE SHARES OF EACH CO-OWNER ARE 21 NOT MENTIONED IN THE SAID AGREEMENT TO SELL. HOWEV ER, RELIANCE IS PLACED UPON THE SALE DEED IN WHICH THE ASSESSEE CLA IMS THAT HE HAD PAID CONSIDERATION WHICH AMOUNTED TO HIS SHARE TO B E 12.088%. THE POINT TO BE NOTED AT THIS JUNCTURE IS THAT THE SALE DEED WAS REGISTERED ON 12.03.2009 AND THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE WAS PASSED ON 28.08.2009. THE ASSESSEE HAD FILED REPLY BEFORE ASSESSING OFFICER ON 18.12.2009 AND IT ADMITTED TO HAVE 1/3 RD SHARE IN THE PROPERTY. THE SAID DOCUMENT WAS ALSO CONFRONTED TO THE ASSESSEE AND HIS BROTHER SHRI N.K.SHARMA DURING THE COURSE OF SE ARCH AND THE STATEMENT OF SHRI N.K.SHARMA WAS RECORDED ON OATH A ND HE ADMITTED THAT HIS BROTHER HAD MADE INVESTMENT IN CASH IN THE SAID PROPERTY. IN VIEW OF THE ABOVESAID EVIDENCES AND THE STATEMENT R ECORDED AND ALSO THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, WE FIND NO MERIT IN THE STAND OF THE ASSESSEE THAT IT OWNS THE SAID PROPERTY ONLY TO THE EXTENT OF 12.088%. WE REJECT THE SAME. 46. THE NEXT ASPECT TO BE ADJUDICATED IN THE PRESEN T APPEAL IS THE SOURCE OF INVESTMENT OF THE SAID RS. 24 LACS INVEST ED BY THE ASSESSEE. DURING THE APPELLATE PROCEEDINGS ASSESSEE HAS FILED ON RECORD CASH- FLOW STATEMENT AND CLAIMS THAT THE SOURCE OF INVEST MENT WAS OUT OF THE SAID CASH-FLOW STATEMENT. NO SUCH CASH-FLOW STATEM ENT WAS FILED DURING THE ASSESSMENT PROCEEDINGS AND THE VERACITY OF THE SAID STATEMENT HAS NOT BEEN ESTABLISHED BY WAY OF EXPLAN ATION WITH EVIDENCE OF THE SOURCE OF CREDIT IN THE SAID CASH-F LOW. MERELY BECAUSE ONE DOCUMENT HAS BEEN PREPARED BY THE ASSESSEE AT A LATER STAGE, WHICH IN TURN HAS NOT STOOD THE TEST OF EVIDENCE BEFORE A SSESSING OFFICER, WE FIND NO MERIT IN THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS) IN PLACING RELIANCE UPON SUCH CASH-FLOW STATEMENT A ND DELETING THE ADDITION IN THE HANDS OF THE ASSESSEE. IN THE ABSE NCE OF ANY CONCRETE 22 EVIDENCE FILED BY THE ASSESSEE TO EXPLAIN THE SOURC E OF CASH INVESTMENT OF RS. 24 LACS, WE REVERSE THE ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS) AND UPHOLD THE ADDITION OF RS. 24 LACS. SIMILARLY, INVESTMENT OF RS.220,750/- AND RS. 3,69,000/- WAS M ADE IN CASH AND THE SOURCE OF THE SAID INVESTMENT IS AGAIN THROUGH THE CASH-FLOW ENTRIES. IN VIEW OF OUR REJECTING THE CASH-FLOW STA TEMENT PREPARED BY THE ASSESSEE, WE FIND NO MERIT IN THE ORDER OF COMM ISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD AND THE SAME IS REVERS ED. ACCORDINGLY WE UPHOLD THE ADDITION OF RS. 24 LACS, RS. 220,750/ - AND RS. 3,69,000/- THE GROUND OF APPEAL NO. 3 RAISED BY THE REVENUE IS THUS ALLOWED. 47. IN THE RESULT ASSESSEE'S APPEAL IN ITA NO. 105 3/CHD/2012, ITA NO. 1054/CHD/2012 AND ITA NO. 1055/CHD/2012 ARE PAR TLY ALLOWED AND REVENUES APPEAL IN ITA NOS. 1131 & 1132/CHD.2012 A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH JULY, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.