SHRI RAJIV KUMAR KHANNA , ABOHAR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-II, BATHINDA

ITA 256/ASR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3529 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: WAY OF ENDORSEMENT
• Keywords: Business income; Opportunity of cross examination; Deemed to accrue or arise in india; Reassessment proceedings
• Section: 131; 68; 69; 54B; 69A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 256/Asr/2018 Assessment Year: 2011-12 Mr. Rajiv Kumar Khanna C/o M/s Tirath Ram Bandari Nath, Mandi No.1, Abohar [PAN: AEHPK 8153M] Vs. Dy. Commissioner of Income Tax, Circle-II, Bathinda (Appellant) (Respondent) Appellant by : Sh. Anil Puri, Adv. Respondent by: Sh. Manpreet Singh Duggal, Sr. DR Date of Hearing: 22.06.2022 Date of Pronouncement: 25.08.2022 ORDER Per Dr. M. L. Meena, A.M.: The appeal has been filed by the assessee against the impugned order dated 26.02.2018 passed by the Ld. Commissioner of Income Tax (Appeals), Bathinda in respect of the Assessment Year 2011-12. 2. The assessee has raised the following grounds of appeal: ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 2 “1. That the Learned Commissioner of Income Tax (Appeals), Bathinda, erred both in law as well as in respect of the fact of the case and while passing his order dated 26.02.2018, in Appeal No.l57-IT/16-17 thereby partly allowing the Appeal. 2. He further erred in confirming the addition of Rs.34,33,500 as long term capital gain on sale of land by wrongly holding that the Appellant is not eligible for deduction under section 54B of the Income Tax Act, 1961. 3. That the Ld. CIT(Appeals) was further unjustified while confirming the addition of Rs.95.17,875 (1,40,17,875 - 45,00,000), made by the Assessing Officer, as income from other sources under section 69A of the Income Tax Act, 1961, based on assumptions and presumptions without any material evidence on record. 4. That the Ld. CIT (Appeals) failed to appreciate that the provision of section 69A were not applicable in the case of the Appellant as no where the Appellant was found to be the owner of any such amount. 5. That the Ld. CIT(Appeals) was further wrong in upholding the addition of Rs. 37,494 on account of alleged rented building to UCO Bank, failing to appreciate that the said income belonged to bigger HUF namely Badri Nath Khanna (HUF) up to 20.03.2014. 6. The Ld. CIT (Appeals) was unjustified in rejecting the submissions of the Appellant and wrongly refused to consider the additional evidence filed during the Appellate proceedings in contravention to Rule 46(1) of the Income Tax Rules, 1962. 7. That the Ld C.I.T.(Appeal) was absolutely misled while confirming the addition of Rs. 10,00,000, relying upon the statement of Mr. Rohtash Kumar recorded, through the commission appointed under section 131(1 )(d) of the Income Tax Act, 1961, at the back of the Appellant without the opportunity of cross examination and ignoring the affidavits filed during assessment as well as appellate proceedings. 8. That all the comments passed by the CIT(Appeals), while partly allowing the appeal, confirming the above additions, are based on assumptions, presumptions, surmises & conjectures only, and are also contrary to the provisions of law and facts of the case. ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 3 9. That the Appellant reserves its right to add, amend, alter or withdraw any grounds of appeal before the same is finally heard.” 3. Briefly the facts as per record are that the appellant is an individual, filed his Return on 09.04.2012, declaring an income of Rs.62,305 comprising of property income, business income from partnership concern M/s Tirath Ram Badri Nat Khanna, Abohar, Income from other sources and agricultural with a footnote relating to the sale of agricultural land for Rs.45,00,000 and advance paid Rs.45,00,000 for purchase of agricultural land (APB, Pg.No.1-2). The AO initiated reassessment proceedings as per reasons recorded dated 30.12.2015 (APB, Pg.No.143-144), as follows: “For non-inclusion of Long Term Capital Gain on sale of land for Rs.45,00,000 on 16.08.2010 and failed to explain the source of Rs.1,40,17,875 offered by him to the seller for purchase of land on 30.08.2010.” 4. The Assessing Officer completed the reassessment proceedings vide order dated 28.11.2016, passed under section 143(3)/147, at an Income of Rs.1,97,95,920 (1,63,62,420 + 34,33,500) and Rs.63,000 as agricultural income, after making various additions, as detailed below: - Long Term Capital Gain Rs. 34,33,500 Deemed Income u/s 69A Rs.1,53,14,125 Property Income Tulip I.T. Services Ltd. Rs. 10,800 Property Income UCO Bank Rs. 37,494 U/s 68 Amount deposited with M/s Tirath Ram BadriNath on 27.08.2010 Rs. 10,00,000 Rs.1,97,95,920 ============ Agricultural Income Rs. 63,000 ============ ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 4 5. In the appeal, the Commissioner of Income Tax (Appeals), Bathinda, partly allowing relief of Rs.58,07,050 in the first appeal and confirmed the balance addition of Rs. 1,39,88,870 (1,97,95,920 – 58,07,050) made by the Assessing Officer, passed under section 143(3)/147 in the reassessment proceedings, as under: - Income Relief Remaining Assessed Allowed Additions Long Term Capital Gain Rs. 34,33,500 - 34,33,500 Deemed Income u/s 69A Rs.1,53,14,125 57,96,250 95,17,875 Property Income Tulip I.T. Rs.10,800 10,800 - Services Ltd. Property Income UCO Bank Rs.37,494 - 37,494 U/s 68 Amount deposited with M/s Tirath Ram BadriNath on Rs. 10,00,000 - 10,00,000 Agricultural Income Rs. 63,000 ============ 6. Ground no.1, is general in nature and hence doesn’t require adjudication. 7. Ground no. 2 is not pressed by the assessee by way of endorsement in the appeal memo that not pressed. Accordingly, the ground no. 2 of the appellant assessee stands dismissed as not pressed. 8. The ground nos. 3 and 4 are interlinked to each other wherein the appellant assessee has challenged the addition of Rs.95,17,875/- made on account of income from other sources u/s 69A of Income Tax Act, 1961 based on assumption and presumption. 8.1 Briefly the facts, as per record are that the AO has made an addition to the extent of Rs.1,53,14,125/- on the ground that the assessee was ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 5 pursuing litigation with Smt. Balwant Kaur in a civil court in pursuant to an agreement dated 11.03/2010 between the appellant and this lady, wherein an agricultural land was agreed to be sold for which the appellant attended the office of Sub Registrar with the balance amount of consideration of Rs. 1,40,17,875/- on 30/08/2010. The Assessing Officer being not satisfied with the source of this amount for above-mentioned transaction as explained by the appellant that he had merely put an attendance with the office of sub registrar, but there was no such amount available with him on that date and his presence was only a mere formal presence. The assessee submitted before AO that in case he was in possession of the aforesaid amount, he would have deposited the same with the office of Sub Registrar to make the claim of specific performance. The AO did not accept the contention with the reasoning that the appellant has not only mounted civil proceedings but also lodged FIR stating that he was ready with the aforesaid amount and in the course of assessment proceedings he cannot backtrack from the statement made before judicial and police authorities. Accordingly, the Assessing Officer made addition of Rs. Rs. 1,40,17,875/- plus7% as above for stamp duty, presuming that had the deal been registered, the total addition would be Rs. 1,53,14,125/-. 8.2 Being aggrieved with the assessment order, the appellant assessee has filed appeal before the CIT appeal, wherein he has been granted part relief vide para 4.2, of the impugned order as under: “4.2 I have given careful consideration to the contentions of the appellant and find that the same is not acceptable for the reason that any statement made before Sub Registrar has a binding effect for the reason that under The Registration Act 1908 he acts as an authority. The acceptance of possession of the balance ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 6 amount under the contract/agreement amounting to Rs.1,40,17,875/- is an acceptance of possession of that money by the appellant. It clearly shows that when the appellant presented himself to the sub registrar he might have either filed an affidavit or sworn in statement in support of his contention that the agreed amount is in his possession. The Assessing Officer is justified in asking the explanation from the appellant about the source of the aforesaid money. In the assessment proceedings, the appellant is not allowed to take a position that he merely presented himself in formal capacity but never possessed the amount as was stated to the sub registrar. However, I do not agree with the Assessing Officer in respect of 7% stamp duty because that statement does not form the part of proceedings under the authority of sub registrar while marking the attendance of the parties to the contract. It is also pleaded by the appellant that by virtue of sale of land through registered sale deed dated 16th August 2010 an amount of Rs. 45 lakhs were available, a benefit of the same may be given as cash available because amount generated on 16/08/2010 by virtue of sale of Alamgarh land can reasonably be presumed to be available on 30/08/2010 for the transaction of purchase. The benefit of this amount is extended to the appellant as plausible explanation for explaining source of cash as mentioned above. The addition of 7% stamp duty amount is delete and of the balance addition of Rs. 1,40,17,875/- made by the Assessing Officer addition amounting to Rs.95,17,875 (1,40,17,875- 45,00.000) is sustained. The ground of appeal is partly allowed.” 8.3 The Ld. Authorized Representative (In short “The AR”) submitted that the Assessing Officer (The AO” in short) made an addition of Rs.1,53,14,125, based on presumption, alleging that the Assessee was present in the office of Sub-Registrar on 30.08.2010 to get the registration deed executed in his name with the amount of Rs.1,40,17,875 plus registration expenses towards stamp duty of 7% payable Rs.12,96,250, for ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 7 which no sources has been explained under section 69A of the Income Tax Act, 1961 against provisions of law. 8.4 The Ld. AR argued that the AO has wrongly invoked the provision of section 69A, as the same being not applicable to the case of the appellant as no Money, Buillion, Jewellery or Other Valuable Article were found in the possession of the Appellant, neither he was found to be the owner, nor the value of article, Money, Buillion, Jewellery or Other Valuable Article recorded in any of his books of account. In this connection, he has drawn our attention to Section 69A of the Act, which is reproduced hereunder: - Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 8.5 Counsel has filed a brief synopsis in support of its contention which reads as under: 1. The provisions of section 69A can be invoked in case of :- a) Assessee is found to be the owner of any MONEY, BUILLION, JEWELLERY OR OTHER VALUABLE ARTICLE b) Value of any MONEY, BUILLION, JEWELLERY OR OTHER VALUABLE ARTICLE is recorded in the books of account maintained by the Assessee c) No explanation is offered about the nature and source of acquisition of money, bullion, jewellery or other valuable article and or d) Explanation offered is not found satisfactory by the Assessing Officer. ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 8 2. Further, there was no occasion for the appellant to carry cash Rs.1,40,17,875 to the office of Sub-Registrar, especially when he having categorically learnt about the cheating and fraud committed by Mrs. Balwant Kaur, by selling 12 Kanals of land, having prime location and value, to Smt. Chhinder Kaur on 07.05.2010 for Rs,1,00,77,200. Copy of sale deed on Page No.23-29. 3. The appellant filed the Suit for Recovery of Rs.80,00,000, in the Court of Add. Civil Judge (Sr. Division), Abohar on 04.11.2010, after affixing court fee of Rs.1,84,500, against Smt. Balwant Kaur and Raovarinder Singh. Copy of Plaint on Page No.42 -49. 4. In reply to Suit for Recovery, at Page No.50-60, the defendant Mrs. Balwant Kaur in para 4 on Page No. 51 admitted :- “That the plaintiff is estopped by his own and conduct to file the present suit. The plaintiff after agreement dated 11.03.2010 himself cannot honour the term and conditions of the agreement. The plaintiff cannot arrange remaining consideration amount, even plaintiff still not in hand the remaining consideration amount. The defendant several time requested the plaintiff to perform his part of contract by paying the remaining consideration amount, even in reply to notice the dated 30.08.2010 plaintiff was again requested to pay the balance consideration amount within 7 days from the receipt of the reply. The plaintiff himself did not turn up on 30.08.2010 along with balance consideration amount to perform his part of contract, then defendants left no other alternative to got mark their presence with the Notary M.P.SinghTinna, Advocate on 30.08.2010. It is certain principle of law plaintiff cannot take advantage of his own wrong, so his suit is liable to be dismissed. 5. This fact is further corroborated by the observations of Sh.Amit Malhan PCS, Addl.Civil Judge (Sr.Division), Abohar in his judgment dated 02.11.2015, in last twelve lines on Page No.94 , after seeing the AKS SAJRA of the relevant part of land sold by Mrs.Balwant Kaur, holding, “ That above said piece of land was situated more close to the main road and by seeing all these facts, the plaintiff agreed to purchase the entire property but now the defendant No.1, has sold, more valuable part i.e. portion which was abutting the main road, to some other persons and by ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 9 doing so, the entire value of the land is diminished and since the sale deed has already been executed by the defendant No.1 in favour of said Chhinder Kaur and Sukhwinder Kaur, now plaintiff does not want to purchase the remaining part. It is clear cheating on the part of the defendant No1 by selling this piece of land to third person i.e. Chhinder Kaur and Sukhwinder Kaur since it was a more valuable piece of land and was adjoining to the road and now if the plaintiff refused to get the sale deed of balance land, he is justified in doing so.” On Page No. 95-96 “ This clause never allows the defendant No.1 to take the benefit of her own wrong by voluntarily executing the sale deed of more valuable piece of suit property to some other and then asked the plaintiff to get the sale deed of balance land executed from her. Certainly by compelling the plaintiff to get the sale deed of balance suit property is an un-necessary harassment to him and that too only on account of willful disobedience to the terms and conditions of the agreement to sell in question by the defendant No.1 The other important aspect of this case is reflected from the jamabadi of the suit property i.e. Exh.P10 for the year 2008-09 that there is a rider imposed by the Hon’ble Punjab and Haryana High Court vide order dated 19.02.2010 upon the suit land and the other land of defendant No.1 and other whereby it was directed by the Hon’ble Punjab and Haryana High Court not to alienate any portion of land except with the permission of the court where the civil suit is pending. The above said rapat has been entered on account of a civil suit filed by Gurlal Singh during his life time against the other including the present defendant No.1 who was defendant No.81 in that civil suit. In the above said civil suit, the parties have gone to the Hon’ble Punjab & Haryana High Court and the Hon’ble Punjab and Haryana High Court while passing order dated 19.02.2010 Exh.P13 clearly made direction to the parties including the present defendant No.1 not to alienate the property by any mode except by informing the Court and writing the same fact in the deed of alienation. Copy of P&HJudgment dated 19.02.2010 on Page No.3 -16. 6. The above findings of the Addil.Civil Judge (Sr. Division), Abohar, were approved by the Sh.Lachman Singh Add.District Judge, Fazilka in the appeal filed by Mrs.Balwant Kaur and Raovarinder Singh, decided on 17.08.2016 holding:- ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 10 “15 As a sequel of my above discussion, there is no merit in the present appeal as there are no grounds to interfere in the impugned judgment and decree dated 02.11.2015 passed by the leaned Trial Court and as such the same are upheld. Resultantly, the present appeal being bereft of merits is hereby dismissed with costs” Copy of Judgment on Page No.101 – 120 7. The addition of Rs.95,17,875 upheld by the CIT(A) is based on assumption and presumption without any cogent material on record to establish and prove that any cash was found in his custody or the appellant carried Rs.1,40,17,875 in cash to the office of Sub-Registrar, Abohar on 30.08.2010. in view of the same there was no justification in upholding the addition of Rs.95,17,875 by invoking provisions of section 69A. 8. In support reliance is placed on the judgment of Punjab & Haryana High Court in the case of CIT vs. RAVI KUMAR(2007) 294 ITR 0078, wherein it was held as under:- ‘Income from undisclosed sources—Addition under s. 69A— Addition on the basis of loose slips found during search—Before provisions of s. 69A could be applied, the assessee should be found to be the owner of money, bullion or jewellery found in this possession and the same should not be found recorded in the books of account—Assessee found to be in possession of loose slips and not of any valuable articles or things—Tribunal was justified is not applying s. 69A— Kantilal Chandulal& Co. vs. CIT (1982) 29 CTR (Cal) 39 : (1982) 136 ITR 889 (Cal) relied on” 9. On going through the above facts of the case, explanation, submissions, provisions of Section 69A, case laws relied upon, your honor will appreciate and agree that neither the appellant was found to be owner of any money, Bullion or Jewellery etc., nor there was any value of such assets recorded in the accounts books of the Assessee and the explanation offered relating to the alleged amount of Rs.1,40,17,875 supported by the statement of Mrs. Balwant Kaur as well as the judgments of Addl. Civil Judge (Sr. Division) and Addl. Civil Judge , referred to above, proves that no such amount was carried by the appellant to the office of Sub Registrar on 30.08.2010, the addition of Rs.95,17,875 upheld by the CIT(A) was unjustified and be kind enough in deleting the same. ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 11 8.6 Per contra, the defendant, Additional CIT (DR) supported the impugned order. He contended that assessee has failed to explain the source of amount of Rs.1,40,17,845/- and Rs.1,29,6,251/- was being available with the assessee as per the agreement and FIR lodged by assessee against the seller of the land. 8.7 We have heard the rival contentions, perused the material on record, and carefully gone through the impugned order and the case laws cited before us. Admittedly, the authorities below have alleged on the basis of mere statement made before the sub- registrar regarding possession of balance amount of Rs. 1,40,17,875/- with appellant assessee, presuming that he might have either filed an affidavit or sworn in statement in support of his possession. 8.8 The learned CIT appeal observed that the AO has called for the explanation of the appellant about the source of the aforesaid money. However, neither the AO nor the CIT(A) has established the source of the amount alleged to be available with the appellant assessee as above. An allegation based on presumption without appreciating the facts of the case that the appellant was merely presented himself but never possessed the aforesaid amount as was alleged by the CIT(A) without establishing the source of availability of the amount by way of bringing corroborative documentary evidences on record cannot be approved. Again, the observation of the Ld. CIT(A) that he did not agree with the AO in respect of 7% stamp duty because that statement did not form the part of proceedings under the authority of sub registrar while marking the attendance of the parties to the agreement is self-contradictory and that ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 12 further the CIT(A) has allowed a benefit of Rs. 45 lakhs available cash, the amount generated on 16/08/2010 by virtue of sale of Alamgarh land can reasonably be presumed to be available on 30/08/2010 from the transaction of sale of another land. 8.9 The Ld. AR further argued that the AO has wrongly invoked the provision of section 69A, in the case of the appellant, as there was no Money, Buillion, Jewellery or Other Valuable Article were found in the possession of the Appellant, and neither he was found to be the owner, nor any unaccounted value of article, Money, Buillion, Jewellery or Other Valuable Article recorded in any of its books of account. 8.10 It is evident from the above that the appellant was not found in possession of the disputed cash of Rs.1,40,17,875 either in the office or outside the office of Sub-Registrar, and when he has learnt about the cheating and fraud committed by Mrs. Balwant Kaur, by selling 12 Kanals of land, of prime location fetching the significant value, being sold to Smt. Chhinder Kaur on 07.05.2010 for Rs,1,00,77,200 (APB, Pgs. No.23-29), he filed a Suit for Recovery of Rs.80,00,000, for the default in terms of agreement, in the Court of Add.Civil Judge (Sr.Division), Abohar on 04.11.2010, against Smt. Balwant Kaur and Raovarinder Singh (APB Pgs.42 -49). 8.11 In the case of “CIT vs. RAVI KUMAR’, (Supra), the Jurisdictional Punjab & Haryana High Court observed that addition on the basis of loose slips found during search is not justified. The provisions of section 69A could be applied, where the assessee has been found to be the owner of ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 13 money, bullion or jewellery or the same found in his possession or found recorded in the books of account. Since, the Assessee was found in possession of loose slips and not of any valuable articles or things, the Tribunal was justified is not applying s. 69A of the Act. 8.12 In the case at hand, it abundantly clear that the appellant was neither found to be owner of any money, Bullion or Jewellery etc., nor there was any value of such assets recorded in the books of account of the Assessee and further the explanation offered relating to the alleged amount of Rs.1,40,17,875, supported by the statement of Mrs. Balwant Kaur as well as the judgments of Addl. Civil Judge (Sr. Division) and Addl. Civil Judge , referred as above, proves that no such amount was carried by the appellant to the office of Sub Registrar on 30.08.2010. Accordingly, the addition of Rs.95,17,875 confirmed by the CIT(A) based on assumption and presumption u/s 69A of the act, without support of any cogent material evidence on record to establish that any disputed cash was found in the custody of the appellant and therefore, in our view, the addition of Rs. 95,17,875/- confirmed by the CIT(A) is unjustified, unwarranted and illegal. The same is deleted. Thus ground nos. 3 and 4 are allowed. 9. In Ground No. 5, the Ld. CIT(Appeals) challenged upholding the addition of Rs. 37,494 on account of alleged rented building to UCO Bank, failing to appreciate that the said income belonged to bigger HUF namely Badri Nath Khanna (HUF) up to 20.03.2014. 9.1 The AO has assessed Rs.37,494 as property income in the hands of appellant, alleging that the same as being his share in the building let out to ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 14 UCO Bank, as per lease agreement dated 16.03.2001, not declared in the Return of Income. The Ld. CIT(A) has confirmed the addition of Rs.37,494, as property income in the hands of appellant. 9.2 The Ld. AR argued that the CIT(A) was not justified in confirming the property income ignoring/overlooking the official record of the department, the Return of Income in the case of Sh. Badri Nath HUF, in particular, establishing the ownership of Mr. Badri Nath Khanna HUF in the year 2001-02, thereby wrongly upholding the addition of Rs.37,494, as property income in the hands of appellant. He further argued that the AO was factually incorrect in holding in alleging that, “The assessee explained that the income was omitted due to an oversight.” The counsel for the appellant argued that rental income actually belonged to bigger HUF in the name of Shri Badri Nath Khanna HUF and the said property income was duly declared in the Return of Income filed on 14.12.2001 of the said HUF for the Assessment Year 2001-02 vide receipt No.13937 (APB, Pgs.166-167) alongwith petition dated 16.10.2017 (APB, Pg.165), filed with the CIT(Appeals) under Rule 46A of the Income Tax Rules 1962 with the prayer to accept the said evidence which is in fact part of departmental record. 9.3 The Ld. AR further clarified, that after the Assessment Year 2001-02, the total income of Badri Nath HUF being below taxable limits, no Income Tax Return was filed. However, it was also explained vide letter dated 15.02.2018, (APB, Pg.169), stating that after the demise of Sh. Badri Nath Khanna, the property let out to UCO Bank was transferred in the names of Sh. Rajiv Khanna and Smt. Chand Rani his mother, while Badri Nath ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 15 Khanna HUF still remained undivided. Since, the said HUF got dissolved on 20.03.2014, on the death of Smt. Chand Rani and thereafter, from assessment year 2015-16, the property income from UCO Bank was shown in the hands of the appellant. 9.4 In view of the above, we hold that the Ld. CIT(Appeal) was not justified in confirming the addition of Rs.37,494, as property income in the hands of appellant. Accordingly, the addition of Rs.37,494 is deleted. 10. In ground no. 7, the assessee has challenged the confirmation of the addition of Rs. 10,00,000, relying upon the statement of Mr. Rohtash Kumar recorded, through the commission appointed under section 131(1)(d) of the Income Tax Act, 1961, at the back of the Appellant without granting the opportunity of cross examination and ignoring the affidavits filed during the assessment as well as appellate proceedings. 10.1 The appellant received an advance of Rs.10,00,000/- against sale of 7 Kanal 13 Marlas agricultural land in village Alamgarh from Mr.Rohtash Kumar on 24.08.2010. The said amount remained unutilized till 27.08.2010, and the same was deposited in the capital account of the appellant in the books of M/s Tirath Ram Badri Nath, Abohar in which he is a partner. The said amount remained unutilized till the same was received back on 31.08.2010 and returned to Rohtash Kumar, as the deal for sale of land was cancelled. However, the AO has made addition based on the statement of Rohtash Kumar on 16.11.2016 on the transactions under section 131 (1)(d) of the I.T. Act, appointing a commission to ITO Abohar (APB, Pgs.155-159). ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 16 10.2 In appeal, the CIT(A) was swayed by observations of the Assessing Officer, and confirmed the addition of Rs.10,00,000 vide paras 7.2 by observing as under: “7.2 I have carefully considered the contention of the appellant and find the same to be an acceptable because the Assessing Officer confronted the statement of Sh. Rohtash Kumar to the appellant in the course of assessment proceedings on 21 st November 2016 as under:- Present S.M.C.Khungar, advocate furnished a written reply that is placed on file. The assessee submitted that Sh. Rohtash Kumar cannot come to Bathinda to attend the proceedings. The assessee was confronted with the statement recorded u/s 131 of the Act on 16.11.2016 in which he stated that during the financial year 2010-11, he had advanced sum of Rs.10 lakhs to Sh. Rajiv Khanna on 02.03.2011 and that no other advance was given in any year. The assessee stated he has no comments on the statement of Sh. Rohtash Kumar. The Assessing Officer discharged onus by recording the statement of the person where there is a clear denial of having made any advance, thereof any subsequent affidavit which is self-serving statement cannot take precedence over the statement recorded before the Assessing Officer which acts as a civil court while recording the statement of witness summoned u/s 131 of Income Tax Act. The appellant has failed to substantiate the ground of appeal therefore the same is dismissed.” 10.3 The Ld. AR argued that the amount disputed remained unutilized right from 24.08.2010 till 31.08.2010, and the same was returned to Rohtash Kumar and there was no need or necessity for crediting or receiving any non-genuine amount as the said deal again entered on 02.03.2011 by receiving Rs.10,00,000. These facts are supported by affidavits dated 22.10.2016 and 21.11.2016 filed with the Assessing Officer with letter dated 21.11.2016 (APB, Pgs.160-162). In the said statement Mr. ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 17 Rohtash Kumar, although it is admitted all the payments made by him relating to the agreement for sale of land entered on 02.03.2011, being accepted as genuine by the AO. That the commission appointed has made one general query in the last question on Page No.158 of the statement as follows:- Q. Please have you given any amount except the above said payment to Mr. Rajiv Khanna? Ans. I have not given any payment to Sh. Rajiv Khanna except the payment of Rs.23,78,000 in any year. 10.3.1 Thus, the AO has misquoted the above facts on page 7 & 8 of the Assessment order :- “(ii) In order to verify the genuineness of the transactions, a commission u/s 131(1)(d) of the Act was issued to ITO, Abohar, who recorded the statement of Sh. Rohtash Kumar. Sh. Rohtash Kumar admitted that he advanced an amount of Rs.10 Lakh to the assessee on 02.03.2011 but regarding claim of the assessee regarding having received an advance of Rs.10 lakh on 24.08.2010 from Sh. Rohtash Kumar, he stated that he had not advanced any amount to the assessee in any year except the amount advanced in pursuance to sale agreement dated 02.03.2011” 10.3.2 While in the statement recorded on 16.11.2016, there was no reference to the transactions dated 24.08.2010 and 31.08.2010, and therefore above observations of the Assessing Officer relating to the said transaction are contrary to the same. Further, the AR argued that the AO wrongly stated that, “The statement of Sh. Rohtash Kumar was confronted to the Assessee, vide order sheet entry dated 21.11.2016, to which, the assessee replied that he had nothing to say on the statement of Sh. Rohtash Kumar.”Specially, when the appellant with his letter ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 18 dated 21.11.2016, (APB, Pg.160), enclosing therewith affidavit dated 22.10.2016 filed during the assessment proceeding for assessment year 2012-13, copy at page No.161 and another affidavit dated 21.11.2016, copy at Page No.162, confirming having given an advance of Rs.10,00,000 on 24.08.2010 for purchase of 7 Kanal 13 Marlas agricultural land from Mr. Rajiv Khanna vide oral agreement, but this agreement was cancelled and the money of Rs.10,00,000 was got back on 31.08.2010. 10.3.3 The Ld. DR stands by the impugned order on the issue. 10.3.4 Having heard the rival contentions and on perusal of records, it has been observed that the addition of Rs.10,00,000, was made by invoking provisions of section 68 of Income Tax Act, 1961, merely relying on the statement of Mr. Rohitash Kumar as above, being recorded at the back of the appellant without being granted any opportunity of cross examination, in rebuttal. 10.3.5 It is evident from above that the facts having been admitted by Mr. Rohtash Kumar in his affidavit dated 21.11.2016, (APB, Pg.162), the authorities below were unjustified in Assessing the amount of Rs.10,00,000 as deemed income of the Assessee by invoking section 68 of Income Tax Act, 1961, and further, the section 68 of the act is not applicable in the case of the appellant, as he was not maintaining any books of accounts and there being no entry of such amount either in books of accounts or bank statement. As such deeming the income by invoking section 68 is absolutely contrary to the provision of law. The Section 68 is reproduced here under:- ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 19 Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10. 10.3.6 The AR contended that the appellant neither used the sum of Rs.10,00,000 from its date of receipt i.e. 24.08.2010 till the same was returned on 31.08.2010, nor credited in any of his books of accounts, as the appellant was not maintaining any personal books of accounts, provisions of section 68 could not be invoked, thereby, the AO was wrong in making an addition of Rs,10,00,000. 10.3.7 In the judgment of Hon’ble Punjab & Haryana High Court in the case of Smt. Shanta Devi Vs. CIT (1988) 171 ITR 0532 : it was held as under:- ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 20 Cash credits—Addition—Books of assessee within meaning of s. 68—Books have to be the books of assessee himself and not of any other assessee— Addition in respect of cash credit entry found in the books of account of partnership firm in which the assessee was a partner, cannot be made in the assessee's hands Held : Perusal of s. 68 would show that in relation to the expression "books" the emphasis is on the word "assessee". In other words, such books have to be the books of the assessee himself and not of any other assessee. In the present case, admittedly the assessee maintained no books of account. The cash credit entry of which the sum in question form part, was found in the books of account of the partnership firm, which in its own right, is an assessee. In the above view of the matter, the books of the accounts of the partnership firm herein cannot be considered that of the individual assessee herein and, therefore, s. 68 would not be attracted to the present case— LaxmiNarain Gupta vs. CIT (1980) 124 ITR 94 (Pat) : relied on. 10.3.8 In another judgment of Madhya Pardesh High Court in the case of CIT vs. SHIV SHAKTI TIMBERS (1998) 229 ITR 0505, wherein it was held as under:- Income—Cash credit—Sec. 68 viz a viz s. 69—Credit entry in the books of firm in the name of the partner—It is s. 68 that applies and not s. 69—While s. 68 applies where a sum is found credited in the books, s. 69 applies to unexplained investments which are not recorded in the books of account Held : A close reading of both these sections makes it clear that in s. 68, there should be a credit entry in the books of accounts, whereas in s. 69, there may not be an entry in the books of accounts. This is a fundamental difference between the two provisions. In case of s. 69 only where investment has been made but has not been satisfactorily explained, the income should be treated to be the income of the assessee, whereas in case of s. 68, there should be a book entry and if that book entry is not satisfactorily explained, then it should be treated as income of the assessee. In the present case, the ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 21 ITO found that all the entries with regard to investment of Rs. 45,000 were not satisfactorily explained, but the CIT(A) found that the explanation to the extent of Rs. 28,000 was satisfactory and he has only made an addition of Rs. 17,000 to the income of the assessee-firm. But strangely enough, the Tribunal, without going into the matter, has gone to the extent of invoking s. 69 and held that all the income should be assessed in the hands of the partners. The view taken by the Tribunal does not appear to be well-founded. As a matter of fact, s. 69 has no application to the facts of the present case. The present case is governed by s. 68, because s. 68 talks about entries in the books of account.— Banshidhar Agrawal vs. CIT (1983) 36 CTR (MP) 94 : (1984) 148 ITR 523 (MP) : TC 42R.1071 followed; NanakchandraLaxmandas vs. CIT (1982) 28 CTR (All) 280 : (1983) 140 ITR 151 (All) : TC 42R.1048, CIT vs. AnupamUdyog (1983) 35 CTR (Pat) 12 : (1983) 142 ITR 133 (Pat) : TC 42R.1049, Smt. Shanta Devi vs. CIT (1988) 68 CTR (P&H) 52 : (1988) 171 ITR 532 (P&H) : TC 42R.1125 and CIT vs. KishorilalSantoshilal (1995) 129 CTR (Raj) 450 : (1995) 216 ITR 9 (Raj) : TC 42R.1217 relied on 11. We understand that the CIT(A) has been misconstruing the provisions of Indian Evidence Act, relating to notarized affidavit given on oath, in holding, that “The statement of the person where there is a clear denial of having made any advance, thereof any subsequent affidavit which is self-serving statement cannot take precedence over the statement recorded before the Assessing Officer which acts as a civil court while recording the statement of witness summoned u/s 131 of Income Tax Act.” It is pertinent to mention that addition based on the statement of the person where there was a clear denial of having made any advance was recorded at the back of the assessee without allowing opportunity to cross- examination in rebuttal is held void in violation of principles of natural justice and against the mandate without being substantiated with corroborative cogent documentary evidences. In the instant case, even the ITA No. 256/Asr/2018 Rajiv Kumar Khanna v. DCIT 22 statement of Mr. Rohtash Kumar was recorded on 16.11.2016, at the back of the Assessee, denying the opportunity to cross examine the witness cannot be used against him, being against the principles of natural justice as held by their Lordships of Supreme Court in the case of “Andaman Timber Industries Vs. Commissioner of Central Excise”, 281 CTR (SC) 241. Further, all the case laws relied upon by department in support are distinguishable on peculiar facts of the case. 12. In the above view, we hold that the Ld. CIT(A) was not justified in confirming the addition of Rs. 10,00,000/- ignoring the affidavit and rebuttal in violation of principles of natural justice. As such, the addition of Rs. 10,00,000/- is deleted. 13. In the backdrop of the aforesaid discussion, the appeal of the assessee is allowed in the terms indicated as above. Order pronounced in the open court on 25.08.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order