The Dy. Commissioner of Income-tax, Jammu V. Ch. Rakesh Kumar, Jammu

ITA 502/ASR/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1453 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V K SINGH
• Keywords: Income from undisclosed sources; Document seized; Additional evidence; Commercial expediency; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (CAMP : JAMMU) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.502(ASR)/2013 ASSESSMENT YEAR:2007-08 PAN: DEPUTY COMMR. OF INCOME TAX, VS. CH. RAKESH KUMAR, CENTRAL CIRCLE, JAMMU. 55, VILLAGE RAIPUR, SATWARI, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.K.V.K. SINGH, DR RESPONDENT BY:SH. JOGINDER SINGH, CA DATE OF HEARING: 01/12/2015 DATE OF PRONOUNCEMENT: 10/12/2015 ORDER PER A.D. JAIN, JM THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08, TAKING THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN RESTRICTING THE ADDITION OF RS.16,72,800/- TO RS.6, 00,000/- BEING 10% SHARE OF THE ASSESSEE BY TAKING THE UNDIS CLOSED PAYMENT ON ACCOUNT OF PURCHASE OF LAND AT RS.60,00, 000/- INSTEAD OF RS.1,67,28,000/-. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN ACCEPTING THE ARGUMENT OF THE ASSESSEE THAT A LESSER AMOUNT W AS PAID AS CONSIDERATION OF LAND BECAUSE THE AREA OF LAND T URNED OUT TO BE LESS THAN 37 KANALS THEREBY IGNORING THE FAC T THAT THE ASSESSEE HAS FAILED TO PROVIDE ANY EVIDENCE THAT A NY MEASUREMENT OF AREA OF LAND WAS GOT DONE BEFORE THE REGISTRATION OF LAND. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE FACTS THAT THE DEAL FOR PURCHASE O F LAND WAS EXECUTED PURSUANT TO AN AGREEMENT TO SELL WHICH WAS SEIZED DURING SEARCH OPERATION WHEREIN THE ENTIRE SALE ITA NO.502(ASR)/2013 2 CONSIDERATION WAS SHOWN AT RS.5.40 CRORES FOR 37 KA NALS OF LAND. 4. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE FACTS THAT THE REGISTRATION OF LAN D HAS BEEN DONE IN RESPECT OF 36.14 KANALS OF LAND MEANING THE REBY THAT THE ASSESSEE HAD NOT GOT THE NISHANDEHI AND MEASURE MENT OF LAND DONE BY THE REVENUE AUTHORITIES BEFORE OR A T THE TIME OF REGISTRATION. THEREFORE, THE CLAIM OF THE ASSESS EE OF RENEGOTIATION OF DEAL CANNOT BE TRUE. 5. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S BY IGNORING THE PRINCIPLE PREPONDERANCE OF PROBABILITY THAT IN THE ABSENCE OF ANY MEASUREMENT OF LAND BEFORE THE REGI STRATION, THE ENTIRE AMOUNT OF CONSIDERATION WOULD HAVE BEEN PAID WHICH HAD BEEN AGREED UPON AS PER AGREEMENT TO SELL . 2. THE FACTS OF THE CASE AS AVAILABLE ON THE RECORD ARE THAT A SEARCH WAS CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSE E. A NUMBER OF DOCUMENTS AS PER ANNEXURE A-4 HAD BEEN SEIZED FROM M/S. KISAN FLOUR MILLS, IN WHICH THE ASSESSEE IS A PARTNER. PAGES 1 TO 11 OF THE SEIZED DOCUMENTS CONTAINED DETAILS OF TRANSACTION OF PURC HASE OF LAND MEASURING 37 KANALS. THE TRANSACTION OF PURCHASE WA S EVIDENCED BY AN AGREEMENT TO SELL AS PER WHICH THE TOTAL TRANSACTIO N CONSIDERATION WAS PEGGED AT RS.5.40 CRORES FOR 38 KANALS WITH A QUALI FYING CONDITION THAT THE CONSIDERATION WOULD GET ADJUSTED DEPENDING UPON THE ACTUAL MEASUREMENT OF THE LAND AT THE TIME OF REGISTRATION . THE AO MADE AN ADDITION OF RS.16,72,800/- IN THE HANDS OF THE ASSE SSEE, BEING 10% OF THE PRICE OF THE LAND, AMOUNTING TO RS.60,00,000/-. 2. BY WAY OF GROUND NO.1, THE DEPARTMENT CONTENDS THAT THE LD. CIT(A) HAS ERRED IN TAKING UNDISCLOSED PAYMENT ON A CCOUNT OF PURCHASE OF LAND AT RS.60,00,000/- INSTEAD OF RS.1,67,28,000 /-. AS PER ASSESSMENT ORDER, ACCORDING TO THE AGREEMENT TO SEL L FOUND DURING THE COURSE OF SEARCH, THE TOTAL CONSIDERATION FOR THE T RANSACTION FOR 37 KANALS OF LAND WAS OF RS.5.40 CRORES. THIS AGREEMENT WAS B ETWEEN SH. PYARE LAL SARAF AND SH. CH. NAGAR SINGH. AN AMOUNT OF RS. 2.0 0 CRORES HAD BEEN PAID AS AN ADVANCE. BOTH THE PARTIES HAD AGREED FOR BALANCE PAYMENTS AS AND WHEN THE SALE DEEDS WERE EXECUTED IN THE COURT OF SUB-REGISTRAR. ITA NO.502(ASR)/2013 3 FURTHER, ANY DISPUTE ON ACCOUNT OF TITLE OF LAND OR WITH ARMY ADJOINING THE PROPOSED LAND, WAS TO BE THE RESPONSIBILITY OF THE SELLER AND IF THE LAND MEASURED LESS THAN 37 KANALS, THE AMOUNT WAS T O BE REDUCED PROPORTIONATELY. A RECEIPT WAS ALSO SEIZED. THIS SH OWED A CONSOLIDATED PAYMENT OF RS.3,72,25,000/-. THE RECEIPT WAS AS PER THE NON-JUDICIAL STAMP PAPER AND WERE SIGNED BY THE SELLER AND THE WITNESSES. FURTHER, PAGE NO.2 OF ANNEXURE A-4 CONTAINED A RECEIPT OF RS . 60 LACS IN CASH RECEIVED BY THE SELLER. PAGE-5 SHOWED THE FOLLOWIN G DESCRIPTION OF THE TOTAL TRANSACTIONS: TOTAL COST OF LAND 5,35,62,162/- PAID CASH AND CHEQUES UPTO 07.06.2006 4,98,72,000/ - BALANCE 36,90,162/- 27,00,000/- 9,90,162/- 9 MARLA EXTRA 1,00,000/- 10,90,162/- TOTAL COST OF LAND 5,35,62,162/- REGISTER 8,70,000/- TOTAL EXP. 5,45,32,162/- 3. ON QUERY BY THE AO, THE ASSESSEE CONTENDED THAT HE WAS THE CO- OWNER OF LAND MEASURING 37KANALS PURCHASED FROM SH. PYARE LAL SARAF AND HIS FAMILY MEMBERS. THE SHARES OF THE OWNERS WE RE WERE AS FOLLOWS: I) CH. NAGAR SINGH 40% II) CH. JAGAR SINGH 40% III) CH. RAM PAL 10% IV) CH. RAKESH KUMAR 10% (THE ASSESSEE) THE ASSESSEE CONTENDED THAT THE AGREEMENT TO SELL F OUND DURING THE COURSE OF A SEARCH WAS SIGNED BY ALL THE PARTIES. A S PER THIS AGREEMENT, THE LAND WAS PURCHASED FOR RS.5.40 CRORES AS AGAINS T THE ACTUAL AMOUNT PAID AT RS.3,72,72,000/-; THAT THE SELLER HAD INIT IALLY AGREED TO SELL THE LAND WHICH HAD A VERY BIG FRONT AND THE INTENDED P URCHASERS WERE ITA NO.502(ASR)/2013 4 SHOWN THE AREA ACCORDINGLY, AND IT WAS THEREON, TH AT THEY HAD ENTERED INTO AN AGREEMENT WITH THE FAMILY OF SH. PYARE LAL SARAF. IT WAS SUBMITTED THAT LATER ON, THE FRONT PORTION ADJOININ G THE NATIONAL HIGHWAY WAS REDUCED TO APPROXIMATELY 20 FEET AND THE PURCHA SER FOUND THAT THE FRONT PORTION BELONGED TO SOME OTHER PERSON. SH.PYA RE LAL SARAFT COULD NOT STRIKE A DEAL WITH THE SAID PERSON. ACCORDINGLY , THE PURCHASER HAD NO OPTION BUT TO PURCHASE THE BACK PORTION OF THE PROP ERTY FROM SH. PYARE LAL IN LIEU OF THE FRONT PORTION. THE ASSESSEE SUBM ITTED THAT SINCE THE WHOLE PLAN OF BUILDING THE FLATS ON THIS PORTION OF LAND , AS WELL AS THE COMMERCIAL PURPOSE WAS DEFEATED, THE PURCHASER INSI STED UPON THE REDUCTION OF THE PURCHASE PRICE. THEY EVEN THREATEN ED TO WITHDRAW FROM THE DEAL. HOWEVER, SINCE A SUBSTANTIAL AMOUNT STOOD ALREADY PAID, THE PURCHASER REFUSED TO PAY ANY FURTHER AMOUNT AND GOT THE REGISTRATION DEAL EXECUTED IN THEIR FAVOUR. THERE WAS AN ARMY CA MP ADJOINING THE LAND AND ARMY PEOPLE DID NOT ALLOW THEM TO BUILD TH E BOUNDARY WALL. ACCORDINGLY, THE PURCHASERS WERE FORCED TO BUILD BO UNDARY WALL BY LEAVING SOME PORTION ON THE SIDE, WHICH WAS ALSO RE DUCED THE PURCHASERS UTILITY OF THE LAND. THE ASSESSEE ENCLO SED ALONGWITH THE SAID REPLY TO THE AO, A COPY OF THE CONCERNED MAP AND PH OTOGRAPH IN SUPPORT OF THIS CONTENTION REGARDING THE ARMY CAMP ADJOININ G THE LAND. AN AFFIDAVIT OF SH. PYARE LAL SARAF WAS ALSO FILED. I T WAS CONTENDED THAT AS PER SEIZED MATERIAL, THE TOTAL PAYMENT MADE WAS OF RS.3,72,72,000/- COMPRISING OF CHEQUES AMOUNTING TO RS.98,72,000/- AND CASH OF RS.2,74,00,000/-. THE TOTAL CASH PAID AS PER DOCUM ENT SEIZED, WAS OF RS.3,40,00,000/-, OUT OF THIS RS.66,00,000/- WAS R ETURNED BY SH.PYARE LAL SARAF IN CASH. AS SUCH, THE BALANCE AMOUNT OF NET CASH PAID WAS WORKED OUT TO RS.2,74,00,000/-. SH. PYARE LAL SARAF , THE SELLER, IN HIS STATEMENT, DEPOSED THAT THE DEAL WAS FIXED FOR AN AMOUNT OF RS.3,72,72,000/- OUT OF WHICH, RS.98,72,000/- WAS RECEIVED BY CHEQUES AND THE BALANCE OF RS.2,74,00,000/- WAS RECEIVED IN CASH. THEREFORE, THE ASSESSEE SUBMITTED THAT THE TOTAL CONSIDERATION WAS OF RS.3,72,72,000/- ITA NO.502(ASR)/2013 5 AND NOT OF RS.5,40,00,000/-. IT WAS POINTED OUT THA T AS PER STATEMENT OF SH. PYARE LAL SARAF, THE AMOUNT OF RS.2,74,00,000/ - WAS RECEIVED IN CASH FROM CH. NAGAR SINGH. THE ASSESSEE SUBMITTED T HAT THE AMOUNT HAD DULY BEEN TAKEN INTO CONSIDERATION FOR THE PURPOSE OF SURRENDER AS FOLLOWS: S.NO. NAME PAYMENT BY CASH PAYMENT BY CHEQUE REGISTRATION CHARGES PAID IN CASH 1 CH. NAGAR SINGH 11268800/- 3640000/- 348000/- 2. CH. JAGAR SINGH 10828100/- 4087000/- 350000/- 3. CH. RAM PAL 2647200/- 1080000/- 76300/- 4. CH. RAKESH KUMAR 2662200/- 1065000/- 66200/- TOTAL 27400000/- 9872000/- 840500/- 4. HOWEVER, THE AO MADE AN ADDITION OF RS.16,72,800 /-. IT WAS OBSERVED THAT DULY SIGNED AGREEMENT ALONGWITH WITNE SSES HAD BEEN SEIZED. AS PER THIS AGREEMENT, THE TOTAL DEAL WAS F OR 37 KANAL OF LAND, SITUATED AT NARWAL BYE PASS ROAD, JAMMU, FOR A CONS IDERATION OF RS.5.40 CRORE. THEREFORE, THE ASSESSEE COULD NOT ARGUE THAT THE DEAL WAS NOT FOR RS.5.40 CRORE AND WAS FOR RS.3.72 CRORE. THE AO OB SERVED THAT DULY STAMPED RECEIPTS FOR RS.4,00,00,000/-, I.E., RS.3, 40,00,000/- BY CONSOLIDATED RECEIPTS ON NON-JUDICIAL STAMP PAPERS AND RS.60,00,000/- ON PLAIN PAPER PAID UPTO 31.05.2006 HAVE BEEN FOUN D AND SEIZED , BESIDES THE PAYMENTS BY CHEQUES AMOUNTING TO RS.98, 72,000/-. THE AO REFUSED TO ACCEPT THAT THE ASSESSEE HAD RECEIVED BA CK RS.66,00,000/- FROM SH. PYARE LAL SARAF AT THE TIME OF PAYMENTS BY CHEQUES. IT WAS OBSERVED THAT WHEREAS THE ASSESSEE WAS TRYING TO RE LY ON THE STATEMENT OF SH. PYARE LAL SARAF RECORDED AT THE TIME OF SEARCH, THE FACT REMAINED THAT SH. PYARE LAL SARAF WAS SEARCHED ON 20.04.07, I.E., ONE DAY AFTER THE SEARCH OF CH. NAGAR SINGH, DUE TO WHICH FACT, THE S TATEMENT OF SH. PYARE LAL SARAF WAS A FABRICATED STORY, MADE UP TO SUIT CH. NAGAR SINGH AS ITA NO.502(ASR)/2013 6 WELL AS SH.PYARE LAL SARAF. THE AO FURTHER OBSERVED THAT THE ARGUMENT OF CH. NAGAR SINGH THAT AT THE TIME OF AGREEMENT SH. PYARE LAL SARAF HAD AGREED TO SELL THE BIG FRONT OF THE PLOT AND LATER ON THE FRONT PORTION WAS REDUCED APPROXIMATELY TO 20 FEET. AS SUCH, THE DEAL WAS RENEGOTIATED WAS ALSO A AFTER-THOUGHT AND FABRICATED STORY DID N OT CONTAIN ANY REFERENCE IN THIS REGARD. THE AO ALSO OBSERVED THAT THE ARGUMENT OF CH. NAGAR SINGH THAT DUE TO ARMY CAMP ADJOINING TO THE LAND, THE ARMY PEOPLE DID NOT ALLOW THE PURCHASER OF THE LAND TO B UILD THE BOUNDARY WALL AT ADJOINING ARMY CAMP AND ACCORDINGLY THEY WERE FO RCED TO BUILT THE BOUNDARY WALL BY LEAVING SOME PORTION ON THE SITE. ALSO DID NOT HOLD GOOD. SINCE ALL THESE FACTORS WERE KNOWN TO THE ASS ESSEE BEFORE THE DEAL, AS THE ARMY DID NOT COME SUDDENLY, ON THE ADJOININ G LAND. IT WAS OBSERVED THAT THE ASSESSEE HAD ALSO FAILED TO PRODU CE ANY EVIDENCE WHATSOEVER TO SUPPORT ALL THESE ASSERTIONS. THE AO FURTHER OBSERVED THAT THE DIARY MARKED ANNEXURE A-7 WAS FOUND DURING SEAR CH FROM THE RESIDENCE OF CH. NAGAR SINGH. PAGE-1 OF THE SAID DI ARY CONTAINED THE VALUE OF LAND MEASURING 37 KANAL AT RS.5,45,50,000 /- AND THE PAYMENTS MADE BY CH. NAGAR SINGH, CH. JAGAR SINGH, CH. RAM P AL AND CH. RAKESH KUMAR (THE ASSESSEE). THE AO OBSERVED THAT IN VIEW OF THE SEIZURE OF DULY SIGNED AGREEMENT TO SELL FOR RS.5,40,000/- PAR TICULARLY WHEN THE AGREEMENT HAD BEEN ENACTED, IT DID NOT LIE IN THE M OUTH OF THE ASSESSEE TO STATE THAT THIS LAND WAS NOT PURCHASED BY HIM FO R RS.5,40,000/- BUT WAS PURCHASED FOR RS.3.72 CRORE. THE AO, ACCORDINGL Y, TOOK THE VALUE OF LAND AT RS.5,40,00,000/-. HOWEVER, SINCE THE ASSESS EE HAD CONSIDERED A SUM OF RS.3,72,72,000/- IN HIS FUND FLOW STATEMENT, THE AO MADE AN ADDITION OF RS.1,67,28,000/-, I.E. RS.5,40,00,000/- MINUS RS.3,72,72,000/-, QUA THE ASSESSEE. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION. ACCORDINGLY, THE DEPARTMENT IS IN APPEAL BEFORE THIS BENCH. ITA NO.502(ASR)/2013 7 6. THE LD. DR CONTENDS THAT THE LD. CIT(A) HAS ERRE D IN RESTRICTING THE ADDITION OF RS.16,72,800/- TO RS.6,00,000/-, BEING 10% OF THE ASSESSEE, BY TAKING THE UNDISCLOSED PAYMENT ON ACCOUNT OF PU RCHASE OF LAND AT RS.60,00,000/- INSTEAD OF RS.1,67,28,000/-. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) HAS GONE WRONG IN ACCEPTING THE ASSE SSEES ARGUMENTS THAT A LESSER AMOUNT WAS PAID AS CONSIDERATION, SINCE TH E AREA OF THE LAND TURNED OUT TO BE LESS THAN 37 KANALS, FAILED TO CON SIDER THAT THE ASSESSEE DID NOT PROVIDE EVIDENCE OF ANY MEASUREMENT OF THE AREA OF THE LAND HAVING GOT DONE BEFORE THE REGISTRATION OF LAND. IT HAS BEEN FURTHER CONTENDED THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT THE DEAL FOR PURCHASE OF LAND WAS EXECUTED PURSUANT TO AN AGREE MENT TO SELL, AS PER WHICH, THE ENTIRE SALE CONSIDERATION WAS SHOWN AT R S.5.40 CRORES FOR 37 KANALS OF LAND AND THAT IT WAS THIS DOCUMENT, WHICH WAS SEIZED DURING THE SEARCH. IT HAS FURTHER BEEN CONTENDED THAT THE LD. CIT(A) HAS ERRED IN FAILING TO TAKE INTO CONSIDERATION THE FACTS THAT T HE REGISTRATION OF LAND HAD BEEN DONE IN RESPECT OF 36.14 KANALS OF LAND, P ROVING THAT THE ASSESSEE HAD NOT GOT THE NISHANDEHI AND MEASUREMENT OF LAND GOT DONE BY THE REVENUE AUTHORITIES EITHER BEFORE, OR AT THE TIME OF REGISTRATION. LASTLY, IT HAS BEEN CONTENDED THAT THE LD. CIT(A) FELL IN ERROR IN IGNORING THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY TO T HE EFFECT THAT WHEN NO MEASUREMENT OF LAND HAD BEEN GOT DONE BEFORE THE RE GISTRATION, THE ENTIRE AMOUNT OF THE CONSIDERATION WOULD HAVE BEEN PAID, AS AGREED UPON IN THE AGREEMENT TO SELL. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER, SUBMITTING T HAT THE LD. CIT(A) HAS PASSED A DETAILED AND WELL REASONED ORDER, REQUIRIN G NO INTERFERENCE AT ALL. THE ITAT ORDER DATED 28.4.2014, PASSED IN THE CASE OF CH. NAGAR SINGH AND CH. JAGAR SINGH, IN ITA NO.341, 375, 342 & 376(ASR)/2013 HAS BEEN PLACED ON RECORD AND RELIED ON TO CONTEND THAT IN THE CASES OF THESE TWO CO-OWNERS OF THE ASSESSEE FOR THE VERY SA ME ASSESSMENT YEAR ITA NO.502(ASR)/2013 8 AS INVOLVED HEREIN, THE ITAT, UNDER EXACTLY SIMILA R CIRCUMSTANCES HAS DELETED SIMILAR ADDITIONS MADE IN THE HANDS OF THOS E TWO PERSONS. 8. HAVING HEARD BOTH THE PARTIES IN THE LIGHT OF TH E MATERIAL PLACED ON RECORD, WE FIND THAT AS PER THE AGREEMENT TO SELL, 37 KANALS OF LAND WAS AGREED TO BE SOLD FOR RS.5,40,00,000/-. THE AMOUNT OF RS.2 CRORES WAS PAID AS AN ADVANCE. THE BALANCE PAYMENTS WERE AGREE D TO BE MADE AS AND WHEN THE SALE DEEDS WERE EXECUTED BEFORE THE SU B-REGISTRAR. THE ASSESSEES MAIN PLEA THAT THE FRONT PORTION, ADJOIN ING THE NATIONAL HIGHWAY WAS REDUCED TO 20 FEET. THE PURCHASERS INCL UDING THE ASSESSEE FOUND THAT THIS FRONT PORTION NOT BELONGED TO THE S ELLER, SH.PYARE LAL SARAF BUT TO SOMEBODY ELSE. SH. PYARE LAL SARAF COU LD NOT STRIKE A DEAL WITH OTHER PERSON AND THEY HAD NO OPTION BUT TO PU RCHASE THE BACK PORTION FROM SH.PYARE LAL SARAF IN LIEU OF THE FRON T PORTION. SINCE THE WHOLE PLAN OF BUILDING THE FLATS ON THIS PORTION OF LAND AS WELL AS THE COMMERCIAL PURPOSE WAS DEFEATED, THEY INSISTED FOR THE REDUCTION OF THE PURCHASE PRICE. THEY EVEN THREATENED TO WITHDRAW FR OM THE DEAL BUT SINCE SUBSTANTIAL AMOUNT HAD ALREADY BEEN PAID, THE Y REFUSED TO PAY ANY FURTHER AMOUNT AND GOT REGISTRATION DEED IN THEIR F AVOUR. IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT, SH. PYARE LAL SARAF HAD STATED THAT AS PER DEAL AN AMOUNT OF RS.3.72 CRORE WAS FIX ED AND RECEIVED, OUT OF WHICH RS.98.72 LACS WAS RECEIVED THROUGH CHEQUES AND BALANCE AMOUNT OF RS.2.74 CRORE WAS RECEIVED IN CASH FROM C H. NAGAR SINGH. IT WAS ALSO CLARIFIED THAT INITIALLY RS.60 LACS WAS P AID, THEN RS.1.40 CRORE WAS PAID AND AGAIN RS.1.40 CRORE WAS PAID, FURTHER CHEQUES OF RS.32.25 LAKHS WERE PAID BY CH. NAGAR SINGH. LATER ON RS.66 LACS WAS PAID BY CHEQUES, AGAINST WHICH, HE RETURNED RS.66 LACS APP ROXIMATELY. WE HAVE ALSO GONE THROUGH THE DETAILED FINDINGS GIVEN BY TH E LD. CIT(A) AND THE SAME ARE REPRODUCED HEREUNDER: 11. I HAVE CONSIDERED THE BASIS OF ADDITION MADE B Y THE AO IN THE ASSTT. ORDER, THE ARGUMENTS OF THE AR ON THE ISSUE AND ADDITIONAL EVIDENCE FILED DURING THE APPELLATE PROCEEDINGS AS WELL AS AOS ITA NO.502(ASR)/2013 9 COMMENTS ON THE SAME. THE ADDITIONAL EVIDENCE IS CL EARLY IN THE NATURE OF FINAL MEASUREMENT CARRIED OUT BY THE REVE NUE AUTHORITIES TO DETERMINE THE ACTUAL LAND TRANSFERRED FROM THE S ELLER TO THE BUYER AND, THEREFORE, CANNOT BE SAID TO BE IN THE NATURE OF AN AFTER-THOUGHT OR SELF SERVING EVIDENCE. IT IS A DOCUMENT WHICH WA S NOT AVAILABLE TO THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS , AS THE REVENUE AUTHORITIES COULD NOT CARRY OUT THE SAID MEASUREMEN T AND THE APPELLANT, BECAUSE OF HIS SPECIFIC PROBLEMS, COULD NOT PURSUE IT AS WELL. THE CONSIDERATION OF THIS EVIDENCE AT THE APP ELLATE STAGE IS ESSENTIAL TO GET TO THE ROOT OF THE MATTER AND TO D ISPOSE OF THE GROUNDS OF APPEAL IN THIS REGARD. THE HONBLE P & H HIGH COURT IN THE CASE OF CIT PATIALA VS. CHITOSHO MOTORS IN I.T. A. NO.741 OF 2010 VIDE ORDER DATED 05.01.2011 HAS CLEARLY HELD THAT THE DEPARTMENT IS NOT EXPECTED TO TAKE TECHNICAL PLEA OF ADDITIONAL E VIDENCE WHEN SUCH EVIDENCE MAY ADVANCE THE INTEREST OF JUSTICE. THERE FORE, ADDITIONAL EVIDENCE SOUGHT TO BE FILED IS ALLOWED. 12. THE IMPORTANT QUESTION HERE IS THAT WHETHER THE BUYERS AT THE TIME OF EXECUTION OF REGISTRATION DEED HAD PASSED T HE ENTIRE SALE CONSIDERATION OF RS.5,40,00,000/- OR NOT. THE DOCUM ENTS PERTAINING TO THE PURCHASE TRANSACTION AND THE CONSEQUENT PAYM ENTS MADE EITHER IN CHEQUES OR IN CASH HAD BEEN SEIZED DURIN G THE CORUSE OF SEARCH OPERATION. THE CLAIM OF THE APPELLANT THAT T HE SALE CONSIDERATION WILL GET REDUCED IN ACCORDANCE WITH T HE ACTUAL LAND TRANSFERRED IS LOGICALLY ACCEPTABLE AS THE SAME HA S BEEN RECORDED IN THE AGREEMENT TO SELL AND DULY CONFIRMED BY THE SELLER DURING THE COURSE OF HIS STATEMENT MADE U/S 132(4). HOWEVER, I T IS ALSO IMPORTANT TO KEEP IN MIND THE DOCUMENTARY EVIDENCE EVIDENCING THE PAYMENTS IN CASH BY THE BUYERS TO THE SELLERS. THE DOCUMENT AT SL.NO. 5 & 6 OF ANNEXURE A-4 CLEARLY RECORD THE EVI DENCE OF TRANSFER OF SALE CONSIDERATION TO THE TUNE OF RS.4.98 CRORES BUT THERE IS NO EVIDENCE OF THE TRANSFER OF THE REST OF THE SALE C ONSIDERATION WHICH HAS BEEN ASSUMED BY THE AO ON THE BASIS OF AGREEMEN T TO SELL. SINCE THE ENTIRE TRANSACTION HAS BEEN DOCUMENTED AN D RECOVERED DURING THE COURSE OF SEARCH OPERATION, THE ADDITION S TO BE MADE IN THIS REGARD HAVE TO BE ON THE BASIS OF SUCH DOCUMEN TS AND ANY EXTRAPOLATION WOULD NOT BE LOGICAL. THE FOLLOWING H AS BEEN CLEARLY RECORDED ON PAGE NO.5: DATE PARTICULARS AMOUNT 19/05 TOTAL CASH PAID 2,00,00,000 31/05 TOTAL CASH PAID 1,40,00,000 3,40,00,000 CHEQUE 98,72,000 4,38,72,000 07/06/06 CASH PAID 60,00,000 4,98,72,000 ITA NO.502(ASR)/2013 10 THE PERUSAL OF THE ABOVE STATEMENT REVEALS THAT AN AMOUNT OF RS.60,00,000/- HAD BEEN PAID IN CASH ON 07.06.2006 FOR WHICH SEPARATE RECEIPTS HAS ALSO BEEN FILED. THIS AMOUNT AND THE SOURCE THEREOF HAS NOT BEEN EXPLAINED BY THE BUYERS ON THE GROUND THAT NO SUCH PAYMENT WAS MADE AS THE SALE CONSIDERATION HAD BEEN REDUCED IN ACCORDANCE WITH THE ACTUAL LAND TRANSFER RED. HOWEVER, THE BUYERS HAVE NOT BEEN ABLE TO EXPLAIN AS TO FRO M WHAT SOURCE PAYMENTS OF RS.60,00,000/- ON 07.06.2006 HAD BEEN M ADE AS THE DOCUMENTS SEIZED DURING THE SEARCH HAS TO BE READ I N ITS ENTIRETY AND NOT IN PARTS. IF THE REST OF THE RECORDINGS ON THE IMPUGNED PAPER HAVE BEEN ACCEPTED BY THE APPELLANT, SOME PART OF I T CANNOT BE TREATED TO BE OF NO RELEVANCE AND IMAGINARY. THEREF ORE, IT BECOMES CLEAR THAT THE BUYERS HAD PAID RS.60,00,000/- IN CA SH WHICH LATER ON HAD BEEN RETURNED BY THE SELLERS BECAUSE OF THE ACTUAL MEASUREMENT BEING LESS THAN 37 KANALS. THIS MEANS T HAT THE BUYERS HAD UNACCOUNTED INCOME OF RS.60,00,000/- DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ADDITION MADE BY THE AO TO THE TUNE OF RS.60,00,000/- BEING TOTAL CONSIDERATION RECEIVE D AND NOT ACCOUNTED FOR IS CONFIRMED. THE SHARE OF THE APPELL ANT WOULD BE RS.6,00,000/-. IT IS SEEN THAT THE AO AT THE TIME O F MAKING ADDITION HAS TREATED THE PAYMENT OF SALE CONSIDERAT ION BY CHEQUES TO THE TUNE OF RS.98,72,000/- ALSO AN UNACCOUNTED W HICH IS CONTRARY TO THE EVIDENCE FOUND DURING THE COURSE O F SEARCH AS THE AMOUNT OF RS.66,00,000/- WAS RETURNED AS STATED BY THE PURCHASER/SELLER DURING THE STATEMENT RECORD U/S 13 2(4) AT THE TIME OF SEARCH OPERATION. FURTHER, THE AMOUNT OF RS .98,72,000/- PAID BY THE ASSESSEE TO THE SELLERS IS AS PER THE F OLLOWING DETAILS:- REGARDING THE PAYMENTS OF RS.98,72,000/- AS SHOWN IN THE SEIZED DOCUMENTS, IT IS TO SUBMIT THAT THE SAID PAY MENTS WERE MADE BY CHEQUES TO THE FAMILY OF TREHANS AGAI NST THE LAND PURCHASED UNDER CONSIDERATION. THE BANK ACCOU NT FROM WHICH THESE PAYMENTS WERE MADE AND PURCHASE OF THE SAID LAND WERE DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE AND HIS BROTHER. THE DETAI LS OF BANK ACCOUNT AND LAND PURCHASED ACCOUNT WERE FURNISHED B EFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HOWEVER, HE IGNORED THE FACTS AND MADE THE ADDITION IN RESPECT OF UNDISCLOSED INVESTMENT FOR THE PURCHASE OF LAND ON HIS ASSUMPTIONS. THE DETAILS OF SUCH PAYMENTS A S ALSO MENTIONED IN THE LOOSE SHEET SEIZED DURING THE COU RSE OF SEARCH IS REPRODUCED AS UNDER: MEASUREMENT OF LAND DETAILS OF CHEQUES PAYMENTS SHOWN IN THE ITA NO.502(ASR)/2013 11 SEIZED RECORD. 1 CH.NAGAR SINGH 2.3 5,80,000 3.7 9,00,000 4.0 10,80,000 4.0 10,80,000 TOTAL 13.10 36,40,000 2. CH.JAGAR SINGH 3.16 10,00,000 4.00 10,80,000 3.18 10,50,000 2.19 7,95,000 0.12 1,62,000 15.05 40,87,000 3. CH.RAM PAUL 10,80,000 4. CH.RAKESH KUMAR 3.19 10,65,000 OUT OF THE TOTAL PAYMENTS OF RS.98,72,000/- MADE TH ROUGH THE BANKING CHANNEL, THE DETAILS OF PAYMENTS MADE BY TH E ASSESSEE C. NAGAR SINGH ARE AS UNDER: DATE BANK A/C CHEQUE NO. PARTY AMOUNT (RS.) 07.06.2006 UCO BANK 17847 751053 NIRBHAY TREHAN S/O PYARE LAL SARAF 10,80,000 07.06.2006 UCO BANK 17847 751052 BANI TREHAN W/O NIRBHAY TREHAN JAMMU 9,00,000 08.06.2006 UCO BANK 17847 751054 SEEMA MAGAINE D/O ASHOK VARUN R/O POONCH 5,80,000 12.06.2006 UCO BANK 17847 751055 RAJESH TREHAN S/O PYARE LAL TREHAN 10,80,000 THE ASSESSEE HAS DULY DISCLOSED THE ABOVE PAYMENTS IN HIS BOOKS OF ACCOUNT THROUGH HIS SAVING BANK ACCOUNT MAINTAI NED WITH THE UCO BANK, RAGHUNATH BAZAR, JAMMU. ITA NO.502(ASR)/2013 12 THEREFORE, OUT OF THE TOTAL ADDITION, AN AMOUNT OF RS.60,00,000/- COULD BE SAID TO BE UNACCOUNTED AND THE SHARE OF TH E APPELLANT IN THE SAME AMOUNTS TO RS.6,00,000/-. THE REST OF THE ADDITION IS DIRECTED TO BE DELETED. 9. IT IS EVIDENT THAT THE FOLLOWING EFFECTIVE FINDI NGS OF THE LD. CIT(A) REMAIN FIRM AND THE DEPARTMENT HAS NOT BEEN ABLE TO SUCCESSFULLY ASSAIL THEM: A) THE AGREEMENT TO SELL CONTAINED A RECITAL TO THE EFFECT THAT THE SALE CONSIDERATION WOULD GET REDUCED IN PROPORT ION TO THE LAND ACTUALLY TRANSFERRED. B) THIS RECITAL RUNS AS FOLLOWS: ANY DISPUTE WHICH MAY ARISE ON ACCOUNT OF TITLE O F LAND OR WITH THE ARM ADJOINING THE PROPOSED LAND SHALL BE T HE RESPONSIBILITY OF THE PARTY OF THE IST PART SH. PYA RE LAL SARAF AND IF THE AREA OF THE LAND AT SITE MEASURES LESS T HAN 37 KANALS, AMOUNT SHALL BE REDUCED PROPORTIONATELY. C) IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT, THE SELLER, SH. PYARE LAL SARAF ALSO CONFIRMED THIS POSITION. D) IT WAS PAYMENT OF ONLY RS.4.98 CRORE, OUT OF THE PROPOSED TOTAL SALE CONSIDERATION OF RS.5.40 CRORE, WHICH WA S EVIDENCED BY THE SEIZED DOCUMENT. E) THERE IS NO MATERIAL ON RECORD TO SHOW THE PAYME NT OF ANY AMOUNT OVER AND ABOVE/OTHER THAN THE SUM OF RS.4.98 CRORE, AND THE AO, MERELY ON THE BASIS OF THE AGREEMENT TO SELL, WHICH, IN THE FACTS OF THE CASE, COULD NOT BE IMPLE MENTED IN TOTO, WRONGLY ASSUMED THAT THE ENTIRE PROPOSED SAL E CONSIDERATION OF RS.5.40 CRORES MUST HAVE PASSED HA NDS. 10. FURTHER, THE LD. CIT(A) ALSO TOOK INTO CONSIDER ATION THE FOLLOWING FACTS, AS PUT FORWARD BY THE ASSESSEE AND NOT CONTR OVERTED BY THE AO, EITHER IN THE ASSESSMENT ORDER, OR IN THE REMAND RE PORT: I) THE REPORT OF THE HALQA PATWARI, PREPARED ON THE DIRECTION OF THE TEHSILDAR, WHICH REPORT WAS FILED BY THE ASSESS EE AS ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A), COULD NO T BE CONTROVERTED BY THE AO. RATHER, IN THE REMAND REPOR T, THE AO ADMITTED THAT THE TEHSILDAR, SETTLEMENT, JAMMU H AD, VIDE HIS LETTER DATED 23.02.2013, VERIFIED THE REPO RT. AS PER THIS REPORT, THE ACTUAL LAND TRANSFERRED MEASURED 2 9.18 ITA NO.502(ASR)/2013 13 KANALS, AS AGAINST THE TOTAL LAND OF 37 KANALS, AS ORIGINALLY PROPOSED TO BE TRANSFERRED VIDE THE AGREEMENT TO SE LL. II) IT WAS THE REDUCTION OF THE AREA OF THE LAND C OUPLED WITH THE REDUCTION OF THE FRONT PORTION OF THE LAND BY TWENT Y FEET, WHICH LED TO THE REDUCTION OF THE SALE CONSIDERATIO N FROM INITIALLY AGREED AT RS.5.40 CRORES TO RS.3,72 CRORE S. III) THE RECEIPT OF RS.3.72 CRORES BY THE SELLER, A S MENTIONED ON THE NON-JUDICIAL STAMP PAPER SEIZED DURING THE SURV EY BORE THE SAME DATE AS THAT ON WHICH THE DEAL WAS REGISTE RED. IV) THE APPREHENDED INSTANCES OF REDUCTION OF FRONT POR TION OF THE LAND, DISPUTE WITH THE ARMY AND REDUCTION OF TH E TOTAL AREA OF THE LAND, ALL STOOD SPECIFICALLY STATED IN THE AGREEMENT TO SELL. 11. MOREOVER, UNDER EXACTLY SIMILAR CIRCUMSTANCES, THE TRIBUNAL IN THE CASES OF CH. NAGAR SINGH AND CH. JAGAR SINGH (SUPRA ), CO-PURCHASERS OF THE ASSESSEE, HAS DELETED SIMILAR ADDITIONS, BY OBS ERVING AS FOLLOWS: 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT AS P ER THE CERTIFICATE OF TEHSILDAR, SETTLEMENT, JAMMU, WHO HAS VERIFIED AND SUBMITTED THAT THE ACTUAL LAND IN POSSESSION WAS 29 KANALS 18 MARL AS AND THIS FACT CANNOT BE DISPUTED. THE AO IS NOT JUSTIFIED IN IGNORING THAT THE ASSESSEE DID NOT GET THE FRONT PORTION I.E. 20 FEET OWNED BY THE NATIONAL HIGHWAY WHICH BELONGED TO SOME OTHER PERSO N. THIS HAS BEEN STATED BY SH. PYARE LAL SARAF AND WE FIND NO R EASON FOR NOT ACCEPTING BY THE AO THIS EXPLANATION OF THE ASSESSE E. THEREFORE, THE TWO REASONS AS EXPLAINED BY THE ASSESSEE BEFORE BOT H THE AUTHORITIES BELOW AND BEFORE US THAT THE LAND GIVE N AS A RESULT OF RESETTLEMENT OF DEAL WAS OF RS.3.72 CRORES INSTEAD OF RS.5.40 CRORES I.E. THE REDUCTION OF FRONT PORTION OF 20 FEET AS M ENTIONED HEREINABOVE, HAS DEFEATED THE COMMERCIAL EXPEDIENC Y OF THE LAND AND REDUCTION OF LAND FROM 37 KANALS TO 29 KANALS 1 8 MARLAS LEADING TO FURTHER REDUCTION OF PRICE. THIS REDUCTI ON OF PRICE IS PART OF THE AGREEMENT WHICH HAS BEEN PLACED ON RECORD AND N O DEFECT IN THE SAME HAS BEEN POINTED OUT BY THE REVENUE IN THIS RE GARD. EVEN IF TAKING PROBABILITIES THEN THE MATTER GOES IN FAVOUR OF THE ASSESSEE THAT DUE TO REDUCTION OF FRONT PORTION OF 20 FEET, THE WHOLE PLAN OF BUILDING THE FLATS ON THE PORTION OF LAND AS WELL AS THE COMMERCIAL EXPEDIENCY. BUT SINCE SUBSTANTIAL AMOUNT HAS ALREAD Y BEEN PASSED TO THE SELLER, THEREFORE, THE ASSESSEE CANNOT COME BACK AND ITA NO.502(ASR)/2013 14 THEREFORE, THE DEAL GOT RESETTLED AT RS.3.72 CRORES INSTEAD OF RS.5.45 CRORES AS PER ANNEXURE. THE STATEMENT TAKEN DURING SEARCH HAVE EVIDENTIARY VALUE IS UNDISPUTED AND IN THE PRESEN T CASE BOTH THE REASONS FOR REDUCTION OF LAND AND WITH REDUCTION O F FRONT PORTION HAS BEEN STATED BY THE SELLER CANNOT BE DISPUTED BY THE LD. CIT(A). THE LD. CIT(A) IS NOT JUSTIFIED IN DOUBTING THE ASSESSE E THAT HE HAS NOT RECEIVED RS.60 LACS AND THEREFORE, IS NO JUSTIFIED IN RETAINING THE PROPORTIONATE OF RS.60 LACS TO THE ASSESSEE. ACCOR DINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. 13 . NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.342(ASR)/2013 AND APPEAL OF THE REVENUE IN ITA NO.376(ASR)/2013 IN THE CASE OF CH. JAGAR SINGH. SINCE THE FACTS IN THE PRESENTS APPEAL ARE IDENTICAL TO THE FACTS IN ITA NO.341(ASR)2011 IN THE APPEAL OF THE ASSESSEE AND IN ITA NO.375(ASR)/2013 IN THE APPEAL OF THE REVENUE, DECI DED BY US HEREINABOVE AND AS MENTIONED HEREINABOVE, OUR ORDE R IN THE CASE OF CH. NAGAR SINGH IN ITA NO.3419ASR)/2013 (ASSESSEES APPEAL) AND IN ITA NO.375(ASR)/2013 (REVENUES APPEAL) SHALL B E IDENTICALLY APPLICABLE IN THE CASE OF ITA NO.342(ASR)/2013 (AS SESSEES APPEAL ) AND IN ITA NO.376(ASR)/2013 (REVENUES APPEAL), ACC ORDINGLY ALL THE GROUNDS OF ASSESSEE ARE ALLOWED AND THAT OF THE RE VENUE ARE DISMISSED IN THE CASE OF CH. JAGAR SINGH. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S IN ITA NOS.341 & 342(ASR)/2013 ARE ALLOWED AND THAT OF THE REVENUE IN ITA NOS. 375 & 376(ASR)/2013 ARE DISMISSED. 12. THE SAID TRIBUNAL ORDER HAS NOT BEEN SHOWN TO H AVE BEEN EITHER UPSET, OR EVEN STAYED, ON APPEAL, OR UNDER SECTION 254 OF THE ACT. THE SAME IS, THEREFORE, MUTATIS MUTANDIS, ON ALL FOURS QUA THE PRESENT ASSESSEE TOO. AND MUTATIS MUTANDIS, PARTICULARLY BE CAUSE THE ADDITION OF RS.6 LACS SUSTAINED BY THE LD. CIT(A) IN THE PRESEN T CASE HAS NOT BEEN CHALLENGED BY THE ASSESSEE BEFORE US. 13. THUS, IN VIEW OF THE ABOVE DISCUSSIONS, WE FIND THAT THE LD. CIT(A) HAS PASSED A DETAILED AND WELL REASONED ORDER, WHIC H REQUIRES NO INTERFERENCE. ACCORDINGLY, WE UPHOLD THE SAME AND D ISMISS THE APPEAL OF THE REVENUE. ITA NO.502(ASR)/2013 15 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH DEC EMBER, 2015. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: CH. RAKESH KUMAR, JAMMU. 2. THE ITO, DCIT, CENTRAL CIRCLE, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.