Shri Jaswant Singh, Mohali V. ITO, W-6(5), Mohali

ITA 294/CHANDI/2019

AI Insights

The case revolves around an appeal by Shri Jaswant Singh against the order of the Learned Commissioner of Income Tax (Appeals)-2, Chandigarh, which sustained an addition of Rs. 22,41,000/- to the assessee's income for the assessment year 2010-11. The addition was initially made by the Assessing Officer (AO) on the grounds that the deposits in the assessee's bank account were unexplained. The assessee contended that these deposits were proceeds from the sale of agricultural land. The Tribunal examined the evidence, including bank statements and a registered sale deed, and found a direct nexus between the sale transaction and the bank deposits, leading to the conclusion that the deposits were indeed sale proceeds and not liable for tax as income from other sources.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127586 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2019
• Other Referred Cases: Shri Pappu Ram Saran vs ITO, M/s OM Plantation vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: WAY OF REGISTERED SALE
• Keywords: Capital asset; Tangible material
• Section: 147; 148; 144; 2(14)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी #व$म &संह यादव, लेखा सद+य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 294/Chd/ 2019 Assessment Year : 2010-11 Shri Jaswant Singh Village- Soonk, Mohali The ITO Ward-6(5) Mohali PAN NO: DPXPS7199M Appellant Respondent ! " Assessee by : Shri Tej Mohan Singh, Advocate # ! " Revenue by : Smt. Amanpreet Kaur, Sr. DR $ % ! & Date of Hearing : 10/01/2023 '()* ! & Date of Pronouncement : 07/03/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M: This is an appeal filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-2, Chandigarh [in short the ‘Ld. CIT(A)’] passed u/s 250(6) of the Income Tax Act, 1961 (in short ‘the Act’) dated 27/12/2018 for assessment year 2010-11, wherein the Assessee has taken the following grounds of appeal: “1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in sustaining the addition of Rs. 22,41,000/- as against Rs. 39,61,000/- made on account of deposits in bank account treating it to be income from other sources as against sale proceeds of agricultural land stated by assessee which is arbitrary and unjustified. 2. That the explanation and the evidence that the deposits represent sale proceeds of agricultural land has not been appreciated in the correct perspective and as such the addition sustained merits to be deleted. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to the facts of the case and thus untenable.” 2 2. Briefly the facts of the case are that basis information received by the Assessing officer that there were cash deposits amounting to Rs. 31,00,050/- in the assessee’s bank account maintained with Punjab National Bank and given the fact that the assessee has not filed any return of income, proceedings under Section 147 of the Act were initiated and notice under Section 148 of the Act was issued. In response to the notice, the assessee filed his return of income declaring interest income of Rs. 28,165/- and agriculture income of Rs. 1,40,500/-. Further during the course of assessment proceedings, the AO observed that there were five credit entries through cheque deposits in the bank account so maintained by the assessee with PNB wherein amount totalling to Rs. 39,61,000/- have been deposited. Explanation/Information was called for and the Counsel on behalf of the assessee submitted that the amount so deposited represents sale proceeds of agricultural land. As per the AO, the assessee has not furnished any confirmation from the buyer Shri Sahdev Kankarwal and has only furnished a copy of his bank account statement and on perusal thereof, it was observed by the AO that three payments through cheques totaling to Rs. 27,00,000/- have been debited from the buyer’s bank account and credited to the assessee’s bank account. Though the payment to the extent of Rs 27,00,000/- was matching in the two bank accounts, the AO was of still of the opinion that in absence of any confirmation from the buyer, the entire amount of Rs. 39,61,000/- by way of cheque deposits has to be treated as income of the assessee from unknown and unexplained sources and same was accordingly brought to tax in the hands of the assessee. There was however, no addition made in respect of cash deposits of Rs. 31,00,050/- which formed the basis of initiation of impugned proceedings u/s 147 of the Act. As against the returned income of Rs 28,165, the assessed income was accordingly determined at Rs. 39,89,165/-, besides the agriculture income of Rs 1,40,500/- was accepted as returned by the assessee. 3 3. Against the said findings and the order of the AO, the assessee filed an appeal before the Ld. CIT(A). During the course of appellate proceedings, the assessee submitted that he has executed a sale deed in respect of sale of his agricultural land situated at Village- Muaja Khanpur Rajputan, Naraingarh with Shri Sahdev Kankarwal and has received payment of Rs. 39,61,000/- all through cheques in respect of said land sold by him. In support, the assessee has submitted copy of the bank account statement, maintained with PNB, of the buyer Shri Sahdev Kankarwal which reflected the payment of Rs. 27,00,000/- through three cheques of Rs. 9,00,000/- each. Further regarding the other two credit entries amounting to Rs. 12,61,000/-, the assessee submitted copy of the another bank account statement maintained by buyer with Oriental Bank of Commerce reflecting debits from the said bank account alongwith a certificate from the assessee’s own bank confirming that two cheques amounting to Rs. 12,61,000/- have been credited in the assessee’s bank account. It was further submitted by the assessee that the agricultural land sold by him is in the Revenue Estate of Village Mauja, Khanpur in Tehsil Naraingarh, District Ambala and it is under Gram Panchayat and not in any area within the territorial jurisdiction of Municipality, Cantonment Board etc. and village Khanpur Rajputan is situated at a distance of about 12 kms from Naraingarh which falls beyond the specified area. It was accordingly submitted that the agricultural land so sold by him doesn’t form part of capital asset as defined in Section 2(14) of the Act and the whole of the consideration so received is duly explained by way of sale of agriculture land not liable to tax. 4. The ld CIT(A), accepting the assessee’s submissions, has returned a finding that “on perusal of the submissions alongwith documentary evidences, it is evident that the deposits in the assessee’s bank account amounting to Rs. 39,61,000/- were out of sale proceeds of agricultural land sold by him”. However, given that the sale deed of the agriculture land was executed for a 4 lower consideration of Rs. 17,20,000/-, the excess amount of Rs 22,41,000/- over and above the consideration as per registered sale deed shall partake the character of “income from other sources” and the contention of the assessee that the same equally qualifies and partake the character of income arising out of sale of agriculture land was not accepted. The explanation of the assessee was thus partly accepted to the extent of Rs. 17,20,000/- and the remaining amount of Rs 22,41,000/- was treated as “income from other sources” and sustained by the ld CIT(A). Against the sustenance of addition of Rs. 22,41,000/-, the assessee has come in appeal before us. 5. During the course of hearing, the Ld. AR reiterated the submissions made before the lower authorities and it was submitted that the explanation and the evidences so produced by the assessee clearly demonstrate that the whole of the credits in his two bank accounts relates to the consideration arising out of sale of the agricultural land and which has not been properly appreciated in the correct perspective. It was submitted that thought the assessee could not submit the confirmation from the buyer, at the same time, buyer’s details were available on record and AO failed to issue summons to him. At the same time, the assessee was able to obtain copies of bank account statements of the buyer which were duly produced before the AO as well as ld CIT(A). It was submitted that on perusal of these two bank account statements of buyer, it is amply clear and goes on to prove that the consideration for sale of agricultural land has flown from the two bank accounts of the buyer directly into the bank account of the assessee. It was accordingly submitted that the necessary linkage has been duly established by the assessee by way of registered sale deed as well as copy of the bank statements of the buyer and the action taken by the AO is not warranted and the addition so sustained by the ld. CIT(A) be directed to be deleted. 5 6. Per contra, the Ld. DR relied on the order of the AO as well as the Ld. CIT(A) and it was submitted that the Ld. CIT(A) has already allowed relief to the assessee to the extent of consideration as stated in the registered sale deed and the assessee does not deserve any further relief and the appeal so filed by the assessee deserve to be dismissed. 7. We have heard the rival contentions and purused the material available on record. The limited issue under consideration relates to the nature and source of credit of Rs 39,61,000/- in the assessee’s bank account and the reasonability of the explanation so submitted by the assessee. The factum that these credits are through cheque deposits and not cash deposits in the assessee’s bank account on 22/02/2010 are not in dispute. The assessee has explained that these cheque payments were received from Mr Sahdev Kankarwal being the sale proceeds of agriculture land and in support, copy of registered sale deed dated 19/02/2010 along with copy of bank statement of two bank accounts maintained by the buyer, Mr Sahdev Kankarwal have been placed on record. On perusal of these bank account statements, it is noticed that particulars of the cheque deposits in the assessee’s bank account namely cheque numbers and date of credit exactly tallies with the cheque numbers and date of debit in the buyer’s bank accounts. Therefore, the factum that these credits in the assessee’s bank account are through the debits in the buyers bank account are clearly established and lends credence to assessee’s explanation that there was direct nexus between receipt of sale consideration and deposits thereof in his bank account within few days of registration of sale deed. We find that a similar matter came up for consideration before the Coordinate Jaipur Benches in case of Shri Pappu Ram Saran vs ITO (in ITA No. 1303/JP/2018 dated 03/09/2020) wherein it was held that where the cash was deposited on the very next day of entering into the sale deed, a direct nexus has been prima facie established between source of cash deposit and sale 6 transaction and in absence of any contrary material brought on record, the explanation of the assessee regarding source of deposit cannot be disputed and the relevant findings read as under: “6. We have considered the rival submissions as well as relevant material on record. The AO has made addition on account of cash deposit of Rs. 27,50,000/- in the bank account of the assessee on 09.04.2009. Since the assessee has not appeared before the AO nor made compliance to the various notices issued by the Assessing Officer, therefore, the assessment was completed ex-parte U/s 144 r.w.s. 147 of the Act. Before the ld. CIT(A) the assessee produced sale deed as well as bank account and also detailed submissions in respect of the source of cash deposit made in the bank account. The ld. C(IT(A) called for remand report wherein the AO has pointed out that the sale deed dated 08.04.2009 shows the sale consideration of Rs. 6,45,000/-. The ld. CIT(A) has consequently allowed the claim of the assessee only to the extent of Rs. 6,45,000/- as stated in the sale deed. The Bench has raised a query about the discrepancy in the name mentioned in the sale deed and the name of the assessee appearing in other records. The ld. AR has pointed out that the assessee Shri Pappu Ram is also known as @ Prabhu Ram. Thus, in the sale deed of the name of the assessee appearing as Shri Prabhu Ram. After verification of the record we are satisfied that the name appearing in the sale deed alias name of the assessee. The AO has also not disputed the fact that the assessee is one of the joint owners of the land which was sold vide sale deed 08.04.2009. We further note that the cash of Rs. 27,50,000/- was deposited in the bank account of the assessee with Oriental Bank of Commerce, Kishangarh on 09.04.2009. The date of cash deposit is subsequent to the date of sale deed dated 08.04.2009 which prima facie shows that the source of cash deposit has a direct nexus with the sale transaction of the land sold by the assessee jointly with other coowners vide sale deed dated 08.04.2009. Though the sale deed shows the sale consideration of Rs. 6,45,000/- which is also the Stamp Duty Valuation however, once the assessee has brought on record the relevant facts as well as nexus between transaction of sale and deposit in bank account then only inference can be drawn from these facts and circumstances of the case is that the source of deposit of Rs. 27,50,000/- is the sale consideration of the land. The Assessing Officer has not brought anything contrary on the record during the remand proceedings such as examination of the purchaser. Therefore, in the absence of any contrary material the explanation of the assessee regarding source of cash deposit in the bank account cannot be disputed. This Tribunal in case of M/s OM Plantation vs. ITO (supra) has considered an identical issue in para 6 as under:- 7 “6. We have considered the rival submissions as well as the relevant material on record. The assessee purchased the land situated at Bhankrota, Jaipur vide two sale deeds both dated 11/8/2005 for a total consideration mentioned in the sale deeds at Rs. 1,76,34,000/-. However, the Assessing Officer received the report of the DDIT(Inv) alongwith the details of the cash deposits in the bank accounts of the sellers and their relatives and further an agreement to sell dated 11/5/2005 wherein the consideration @ Rs. 28,25,000/- per bigha was agreed upon between the parties and part consideration was stated to have been paid at the time of agreement in cash as well as in cheque. The Assessing Officer has computed the total purchase consideration by adopting the rate of Rs. 28,25,000/- per bigha as stated in the agreement to sell dated 11/5/2005. Though the said agreement is not signed by both the parties and it was signed only by the seller, however, we find that the details given in the agreement regarding the agricultural lands, its khasaras numbers as well as the part consideration of Rs. 15,50,000/- through a cheque No. 582863/- dated 10/6/2005 is not in dispute. The deails of the said cheque also find place in the registered sale deed dated 11/8/2005. Thus, the contents of the agreement to the extent of part payment of consideration has been established by the sale deed dated 11/8/2005. Therefore, even if the said agreement is not enforceable in law due to the non-bearing of the signature of the assessee and further due to non-registration, the contents of the said agreement which has been proved and corroborated by the sale deed go to establish the existence of the agreement between the parties. Further the details of the cash deposited in the bank account of the sellers and their relatives has been reproduced by the Assessing Officer in the assessment proceedings at page No. 4 and 5 of the assessment order as under: The dates of deposit of cash as well as cheques in the bank accounts of the sellers, their sons, grandsons and wife are clearly matching to the dates of agreement to sell and sale deed i.e. 11/5/2005 and 11/8/2005. All the deposits of cash in the bank accounts of these persons were made on the very next day of execution of agreement and sale deed respectively. In absence of any other source of income of the sellers, the only inference which can be drawn from the details of the bank accounts and particularly the deposits made on the particular dates which is just one day after the execution of the agreement to sell and sale deeds that the cash deposits in the bank accounts of the sellers and their relatives is only from the sale consideration received against the sale of agricultural lands in question. There is no other transaction either on those dates or in around those dates of deposits in the bank accounts other than the present transaction of 8 sale of lands by the sellers. Further the Assessing Officer has reproduced the statements of the branch manager wherein the amounts were deposited as well as the relatives of the sellers who have confirmed the receipt of cash and deposit of the same in the bank account. Thus, we find that the assessment framed by the Assessing Officer is not solely based on the statements recorded by the Investigation Wing but there was tangible material in the shape of the bank accounts statements, agreement to sell and sale deeds which are of course not in dispute. The only dispute raised by the assessee is regarding the photo copy of the agreement and its evidentiary value, however, it is not the issue of legal enforceability of the said agreement and the claim under the agreement but the contents of the agreement which are to the extent corroborated by the independent evidence being sale deeds and further the bank statements of the sellers cannot be denied on the technical ground of admissibility. Therefore, once the payment of cash is reflected from all these documents as well as statements of the parties then the technical objection raised by the assessee will not help the case of the assessee.” In view of the facts and circumstances of the case when the deposit of cash in the bank account is contemporaneous to the transaction of sale of land then in the absence of any contrary material the source explained by the assessee cannot be rejected. Hence, the addition sustained by the Ld. CIT(A) is deleted.” 8. In the instant case, we find that there were cheque deposits of Rs 39,61,000/- on 22/02/2010 within few days of execution of sale deed on 19/02/2010 and therefore a clear nexus has been established between source of such deposits and sale transaction of agriculture land owned by the assessee. The same is corroborated from the bank statements of the buyer where the particulars of cheque deposits in the assessee’s bank account exactly tallies and only inference which can be drawn is that the deposits are towards receipts of sale consideration of agriculture land. We are conscious of the fact that though the sale deed shows lower sale consideration which is also the stamp duty valuation however, once the assessee has brought on record the relevant facts and documentation as well as nexus between transaction of sale and deposit in bank account has been established then in absence of any contrary evidence brought on record, only inference which can be drawn from 9 these facts and circumstances of the case is that the nature and source of deposit of Rs. 39,61,000/- is nothing but represent the full value of consideration from sale of agriculture land so sold by the assessee and thus stand explained. 9. The factum of agriculture land not being a capital asset has not been disputed by the Revenue in the instant case and thus, the full value of the consideration of Rs 39,61,000/- is not liable for tax and addition of Rs. 22,41,000/- so sustained by the ld CIT(A) which represent a part of consideration is hereby directed to be deleted and the matter is decided in favour of the assessee. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 07/03/2023. Sd/- Sd/- आकाश द प जैन #व$म &संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद+य/ ACCOUNTANT MEMBER AG Date: 07/03/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar