Shri Ramesh Kumar , Bangalore V. Income TAx Officer Ward-7(2)(1), Bangalore

ITA 1228/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7700 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VENKATESH
• Assessee Lawyers: H R SURESH
• Keywords: Capital asset; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1228 / BANG/201 8 ASSESSMENT YEAR : 20 14 - 15 SHRI RAMESH KUMAR, 60, 31 ST B CROSS, BCC LAYOUT, 4 TH T BLOCK, JAYANAGAR, BANGALORE 560 041. PAN: AEZPR9515G VS. THE INCOME TAX OFFICER, WARD 7 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.R. SURESH, CA RESPONDENT BY : SHRI S. VENKATESH, JCIT (DR) DATE OF HEARING : 0 5 .0 7 .2018 DATE OF PRONOUNCEMENT : 13 .0 7 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A) 7, BANGALORE DATED 06.02.2018 FOR ASSE SSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEEARE AS UNDER. 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-7, BANG ALORE, HAS ERRED IN SUSTAINING THE ORDER OF THE ASSESSING AUTH ORITY TO THE EXTENT OF RS.25,00,000/- BEING THE ADDITION UNDER THE HEAD IN COME FROM OTHER SOURCES. 2. THE AO HAS ERRED IN SUBJECTING THE ADVANCE OF RS . 10,00,000/- RECEIVED BY THE APPELLANT FROM ONE MR. C. S PRASAD S/O OF C N SHIVANNA FOR SALE OF VACANT SITE NO. 848/857/18 SIT UATED AT I BLOCK, WARD 3, ADIANJANEYA SWAMY TEMPLE, CHIKKANAYAKANAHAL LI TUMKUR DISTRICT UNDER AGREEMENT TO SELL DT. 31.08.2013 FOR A TOTAL SALE CONSIDERATION OF RS. 16,20,000/- AS INCOME FROM OTH ER SOURCES. 3. THE AO HAS ERRED IN SUBJECTING THE ADVANCE OF RS . 15,00,000/- RECEIVED BY THE APPELLANT FROM ONE MR. H N SATHYANA RAYANA S/O LATE NANJAPPA FOR SALE OF 3 ACRES AND 35 GUNTAS OF AGRIC ULTURAL LAND IN SURVEY NO. 107 SITUATED AT HOSAHALLI VILLAGE, KASAB A HOBLI, CHIKKANAYAKANAHALLI TALUK, TUMKUR DIST. DISTRICT UN DER AGREEMENT TO ITA NO. 1228/BANG/2018 PAGE 2 OF 4 SELL DT. 31.01.2014 FOR A TOTAL SALE CONSIDERATION OF RS. 25,00,000/- AS INCOME FROM OTHER SOURCES. 4. THE ASSESSING AUTHORITY IS INCORRECT IN STATING THAT SUCH AGREEMENTS ARE EXECUTED ON STAMP PAPER OF RS. 100/- ONLY AS AG AINST THE ACTUAL STAMP VALUE OF RS. 200/-EXECUTED AS PER THE KARNATA KA STAMP ACT. 5. THE ASSESSING AUTHORITY HAS MISLED HIMSELF TO CO NCLUDE THE SALE TRANSACTION ARE NOT GENUINE SINCE THE SALE AGREEMEN T WAS NOT REGISTERED. THE ASSESSING AUTHORITY OUGHT TO HAVE U NDERSTOOD THAT IT NOT MANDATORY TO REGISTER THE AGREEMENT FOR SALE OF PROPERTY EITHER UNDER THE KARNATAKA STAMP ACT OR UNDER INDIAN REGIS TRATION ACT. 6. THE ASSESSING AUTHORITY AND THE APPELLATE AUTHOR ITY OUGHT TO HAVE CONSIDERED THE EXPLANATION OF THE APPELLANT REASONS FOR NOT COMPLETING THE SALE TRANSACTION BY THE PURCHASERS D ULY PAYING THE BALANCE AMOUNT AND OBTAINING THE SALE DEED FROM THE APPELLANT. 7. THE APPELLATE AUTHORITY IS INCORRECT IN SUSTAINI NG THE ADDITION OF RS.25,00,000/-MERELY FOR THE REASON THAT THE SALE D EED IS NOT EXECUTED BY THE APPELLANT IN FAVOR OF PURCHASERS WITHOUT CON SIDERING THE VALID EXPLANATION OFFERED BY THE APPELLANT. 8. THE APPELLATE AUTHORITY IS INCORRECT IN STATING THAT THE APPELLANT HAS NOT BROUGHT ANYTHING ON RECORD TO COUNTER THE DOUBT RAISED BY THE ASSESSING OFFICER ON THE BASIS OF WHICH THE ADDITIO N HAS BEEN MADE. 9. THE APPELLATE AUTHORITY OUGHT TO HAVE CONSIDERED THE DOCUMENTARY EVIDENCES FURNISHED BY THE APPELLANT BEFORE THE ASS ESSING AUTHORITY WITH REGARD TO ADVANCES RECEIVED FOR SALE OF PROPER TY AND OUGHT TO HAVE CONCLUDED THAT THE ASSESSING OFFICER DOUBTING SUCH TRANSACTION HAD NO BASIS AND THEREFORE CONFIRM SUCH ADDITION IT SELF IS INCORRECT. 10. THE APPELLATE AUTHORITY HIMSELF WAS UNDER SURMI SE THAT THE OWNERSHIP OF THE LAND DOES NOT EXPLAIN THE TRANSACT ION ENTERED INTO BY THE APPELLANT FOR SALE OF PROPERTY AND HAS FURTHER MISLED HIMSELF THAT THE AGREEMENT HAS BEEN ENTERED INTO ON STAMP VALUE OF RS.100/- AS AGAINST ACTUAL STAMP VALUE OF RS.200/-. 11. THE APPELLATE AUTHORITY HAS ERRED IN CONCLUDING THE ORDER STATING THAT THE APPELLANT FAILED TO OFFER AN EXPLANATION O F THE SOURCE FOR THE RECEIPT OF RS. 25,00,000/-WHICH IS SUPPORTED BY VAL ID AGREEMENT FOR SALE OF IMMOVABLE PROPERTY. 12. THE APPELLATE AUTHORITY HAS ERRED IN SUSTAINING THE ADDITION OF RS.25,00,000/-RELYING ON THE DECISION OF HONORABLE COURTS WHICH IS SQUARELY NOT APPLICABLE TO THE APPELLANT CASE AND T HE APPELLATE AUTHORITY OUGHT TO HAVE APPRECIATED THAT THE APPELL ANT HAD FURNISHED THE EXPLANATION WITH DOCUMENTARY EVIDENCES OF THE S OURCE OF SUCH RECEIPT. ITA NO. 1228/BANG/2018 PAGE 3 OF 4 13. THE APPELLATE AUTHORITY IS INCORRECT IN HOLDING THAT THE APPELLANT SOURCE FOR THE AMOUNT REMAINS UNEXPLAINED AND UN-VE RIFIED TO THE SATISFACTION OF ASSESSING OFFICER. 14. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT ADDITIONS MADE BY THE ASSG. AUTHORITY AND SUSTAINED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)-7, BE DELETED AND THE APPEAL BE ALLOWED. THE APPELLANT PRAYS FOR LEAVE, TO ADD, DELETE OR AM END THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE LD. AR OF ASSESSEE SUBMITTED A COPY OF SALE AGREEMENT OF SITE AS PER WHICH THE ASSESSEE HAS RECEIVED AN ADVANCE OF RS. 1 0 LAKHS FROM SHRI C.C. PRASAD AND ALSO A COPY OF SALE AGREEMENT OF GARDEN LAND AS PER WHICH THE ASSESSEE HAS RECEIVED AN ADVANCE OF RS. 15 LAKHS FR OM SHRI H.N. SATHYANARAYANA. HE SUBMITTED THAT THE ADDITION WAS MADE BY THE AO BY ALLEGING THAT THE SAID AGREEMENTS FOR SALE ARE NOT REGISTERED AND SUBSEQUENTLY ALSO, SALE DEED OF THE ABOVE PROPERTIES WERE NOT EX ECUTED; THE RECEIPT OF ADVANCE IS NOT ACCEPTABLE. HE PLACED RELIANCE ON J UDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRAVANCORE RUBBER & T EA CO. LTD. VS. CIT AS REPORTED IN [2000] 109 TAXMAN 250 (SC) AND ALSO THE JUDGEMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. DE LHI APARTMENTS (P.) LTD. AS REPORTED IN [2013] 32 TAXMANN.COM 381 (DELHI). HE ALSO SUBMITTED THAT THE JUDGEMENTS RELIED UPON BY CIT(A) BEING THE JUDGEMEN T OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. KORLAY T RADING CO. LTD. AS REPORTED IN [1998] 232 ITR 820 (CAL.) AND THE JUDGEMENT OF H ONBLE APEX COURT RENDERED IN THE CASE OF KALE KHAN MOHAMMED HANIF VS. CIT AS REPORTED IN [1963] 50 ITR 1 (SC) AND ROSHAN DI HATTI VS. CIT AS REPORTED IN [1977] 107 ITR 938 (SC) ARE NOT APPLICABLE BECAUSE IN THE PRESENT CASE, THE ADVANCES ARE RECEIVED ON ACCOUNT OF SALE OF CAPITAL ASSET WHICH FORM THE CAP ITAL RECEIPT AND CANNOT BE CONSIDERED AS REVENUE INCOME. THE LD. DR OF REVENU E SUPPORTED THE ORDER OF CIT(A) AND IN PARTICULAR MY ATTENTION WAS DRAWN TO PARA NO. 6.1 OF THE ORDER OF CIT(A) AND IT WAS POINTED OUT THAT IT IS NOTED BY C IT(A) IN THIS PARA THAT MERE EXISTENCE OF ASSET IN THE RECORDS OF THE ASSESSEE D OES NOT PROVE RECEIPT OF ADVANCE MONEY BY THE ASSESSEE. ITA NO. 1228/BANG/2018 PAGE 4 OF 4 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARD ING THE ADDITION MADE BY THE AO U/S. 68, APART FROM SUBMITTING THE AGREEMENT FOR SALE, THE ASSESSEE SHOULD HAVE BROUGHT ON RECORD THE CONFIRMATIONS OF BOTH TH E PERSONS FROM WHOM IT IS CLAIMED THAT THE ADVANCES ARE RECEIVED BY THE ASSES SEE ALONG WITH HE EVIDENCE REGARDING THEIR CREDIT WORTHINESS BECAUSE THIS IS SETTLED POSITION OF LAW BY NOW THAT IN RESPECT OF CASH CREDIT, THE ASSESSEE HAS TO ESTABLISH THE IDENTITY OF CREDITOR, CREDIT WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. I FIND THAT THE ASSESSEE HAS NEITHER BROUGHT ON RECORD THE CONFIRMATION OF THE CREDITORS NOR THE ASSESSEE HAS BROUGHT ON RECORD THE EVIDENCE FOR CREDIT WORTHINESS OF THE CREDITORS. H ENCE I FEEL IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF CIT (A) FOR FRESH DE CISION WITH THE DIRECTION THAT ASSESSEE SHOULD BRING ON RECORD THE CONFIRMATION OF THE CREDITORS ALONG WITH THE EVIDENCE OF THEIR CREDIT WORTHINESS AND AFTER CONSI DERING THE SAME, THE LD. CIT (A) SHOULD DECIDE THE ISSUE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. I ORDER ACCORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DA TE MENTIONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 13 TH JULY, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.