Shalimar Town Planners Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5128/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86784 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SM REDDY
• Keywords: Unexplained investment; Capital asset
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI N.K. SAINI AND SHRI I.C. SUDHIR ITA NO. 5 1 28 /DEL/201 3 ASSESSMENT YEAR: INCOME - TAX OFFICER, VS. SHRI RAM KUMAR DUHAN, WARD - 4, H. NO. 107 6, SECTOR - 6, SONEPAT. NEW DELHI (PAN: A BBPD4307P ) (APPELLANT) (RESPONDENT) APPE LLANT BY: SH. SM REDDY, CIT(DR) RESPONDENT BY: SHRI VIJAY GUPTA, CA ORDER PER I.C. SUDHIR : JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE GROUND THAT THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.1,13,02,000 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INVESTMENT FRO M UNDISCLOSED SOURCES BY HOLDING THE SAME AS EXPLAINED IGNORING THE FACT THAT THE ASSESSEE WAS UNABLE TO FURNISH ANY SUSTAINABLE DOCUMENTARY EVIDENCE WITH REGARD TO HIS CONTENTION OF BEING A FARMER AND HIS CONTENTION THAT THE LAND WAS TRANSFERRED IN HIS NA ME WITHOUT ANY CONSIDERATION, WHEREAS THE SALE DEEDS NOS. 3535/2008 AND 3536/2008 CLEARLY SHOW THAT FULL CONSIDERATION AMOUNTING TO RS.22,35,000 AND RS.84,28,000 WAS PAID BY THE ASSESSEE TO SHRI S.N. THAKUR AND ALSO THE FACT THAT RS.1,34,100 AND 2 RS.5,05,70 0 WAS ALSO EXPANDED TOWARDS PAYMENT OF STAMP DUTY FOR THIS TRANSACTION INVOLVING THE LAND TRANSFERRED IN THE NAME OF THE ASSESSEE. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFICER NOTED FROM THE INFORMATION AVAILABLE WITH HIM THAT THE ASSESSEE HAD PURCHASED IMMOVEABLE PROPERTY IN MAHARASHTRA ABOUT WHICH THE ASSESSEE SUB MITTED THAT THE AGRICULTURAL LAND PURCHASED IN MAHARASHTRA DURING THE YEAR BELONGED K.T.C. DEVELOPERS PVT. LTD., 169 - GF, POCKET - A, SECTOR - 17, DWARKA, DELHI BUT STANDS IN HIS NAME. THE ASSESSEE SUBMITTED FURTHER THAT K.T.C. DEVELOPERS PVT. LTD. WAS INCORPOR ATED ON 25.10.2006 WITH S/SHRI SURESH KUMAR KANSAL, S.N. THAKUR AND HANUMANT CHAHHAL AS PROMOTION DIRECTOR AND HE JOINED AS DIRECTOR ON 15.4.2007 AND TILL THEN THE COMPANY HAD ALREADY PURCHASED AGRICULTURAL LAND FOR RS.2,29,900. IT WAS EXPLAINED THAT DUE T O CERTAIN STATES ACTS WHICH DID NOT ALLOW A NON - FARMER TO PURCHASE OR GET AGRICULTURAL LAND TRANSFERRED, THE ABOVE MENTIONED LAND PURCHASED IN THE NAME OF COMPANY WAS TO BE REGISTERED (MUTATED) NOW IN THE NAME OF SHRI S.N.THAKUR, DIRECTOR 3 WHO WAS HAVING TH E STATUS OF A FARMER. THE COMPANY WAS ENGAGED IN THE BUSINESS OF DEVELOPING A RESIDENTIAL TOWNSHIP AT VILL:ARAL, TE HSIL KARJAT, DISTT. RAIGARH (MAHARASHTRA) AND THAT WAS POSSIBLE ONLY IF THE AGRICULTURAL LAND WAS CONVERTED INTO AGRICULTURAL LAND AND THERE MUST BE AT LEAST TWO DIRECTORS IN THE COMPANY IN THE STATUS OF FARMERS. FURTHER, IT WAS IN THE INTEREST OF COMPANY THAT THE LAND SHOULD BE IN THE NAME OF TWO DIRECTORS. AS THE ASSESSEE WAS HAVING THE STATUS OF A FARMER AND TO REMOVE THE HURDLE FOR CONVERTI NG AGRICULTURAL LAND TO KNOWN AGRICULTURAL LAND, THE LAND WHICH WAS ALREADY IN THE NAME OF SHRI S.N. THAKUR WAS TRANSFERRED IN THE NAME OF ASSESSEE WITHOUT ANY CONSIDERATION. 4. THE ASSESSING OFFICER NOTED THAT NO AGRICULTURE INCOME WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND FURTHER NO EVIDENCE WAS FILED ON THE CLAIM THAT HE IS A FARMER. HE NOTED FURTHER THAT SALE DEEDS NOS. 3535 AND 3536/2008 SHOW THAT FULL CONSIDERATION AMOUNTING TO RS.22,35,000 AND RS.84,28,000 WAS PAID BY THE ASSESSEE TO SHRI S.N. THAKUR. APART FROM THIS, RS.1,34,100 AND RS.5,05,700 WAS INCURRED TOWARDS STAMP DUTY. ON THE BASIS OF THE ABOVE STATED SALE DEEDS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ABOVE STATED PAYMENTS WERE MADE BY THE ASSESSEE. HE ACCORD INGLY HELD THAT THE ASSESSEE H AD MADE AN INVESTMENT OF RS.13,02,800 IN THE 4 PURCHASE OF AGRICULTURAL LAND FROM UNDISCLOSED SOURCES AND MADE ADDITION ACCORDINGLY. THE ASSESSEE QUESTIONED THE ADDITION MADE BY THE ASSESSING OFFICER BEFORE THE LEARNED CIT(APPEA LS) AND THE LEARNED CIT(APPEALS) AFTER DISCUSSING THE ISSUE IN DETAIL HAS DELETED THE ADDITION. 5. THE LEARNED DR SUBMITTED THAT WHILE DELETING THE ADDITION IN QUESTION, THE LEARNED CIT(APPEALS) HAS IGNORED THE FACT THAT THE ASSESSEE WAS UNABLE TO FURNIS H ANY SUSTAINABLE DOCUMENTARY EVIDENCE WITH REGARD TO HIS CONTENTION ON BEING A FARMER. THE LEARNED CIT(APPEALS) ALSO IGNORED THIS MATERIAL FACT THAT THE LAND WAS TRANSFERRED IN THE NAME OF ASSESSEE WITH SOME AGREED CONSIDERATION AS EVIDENCE FROM THE SALE DEEDS AND STAMP DUTY WAS ALSO PAID THEREUPON. 6. THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER AND REFERRED THE PROVISIONS OF BENAMI TRANSACTION (PROHIBITION) ACT, 1988 AND THE FIDUCIARY UNDER COMPENSATION ACT, 1956 AND INDI AN TRUST ACT. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. RAM RICHPAL (1994) - 209 ITR 658 (ALL.); II) CIT VS. RAKESH S. AGGARWAL (2010) 36 SOT 148 (AHD.); III) CIT VS. SMT. B. INDERANI O.P. NOS. 6628 & 6702 OF 1991 27 - 9.1994 (HON'B LE KARNATAKA HIGH COURT); IV) ITO VS. HANUMAN PRASAD SHUKLA (2010) - 194 TAXMAN 15 (DEL.) (MAG.); 5 V) CIT VS. ABHINASH KANT (2011) - 15 TAXMAN.COM 347 (P.&.H.C.); & VI) CIT VS. FAZILKHA DABWALI TPT. CO. (P) LTD. (2005) 144 TAXMAN 376 (P.&H). 7. AFTER HAVIN G GONE THROUGH THE ABOVE CITED DECISIONS, WE FIND THAT THE R ATIO LAID DOWN THEREIN SUPPOTS THE CASE OF THE PRESENT ASSESSEE WHEREIN AN MOU WAS ENTERED BY K.T.C. DEVELOPERS PVT. LTD. WITH ITS DIRECTORS/SHAREHOLDERS DATED 05.07.2007, DECLARING THAT THE LAND/ PROPERTY BOUGHT IN THE NAME OF THE DIRECTOR SHALL BE THE SOLE PROPERTY OF THE COMPANY. ALMOST SIMILAR WERE THE FACTS IN THE CASE OF CIT VS. ABINASH KANT (SUPRA ) (HON'BLE PUNJAB & HARYANA HIGH COURT). IN THAT CASE, ASSESSEE HAD DEPOSITED HUGE CASH IN HIS BAN K ACCOUNT. ON BEING ASKED TO EXPLAIN THE SOURCE OF DEPOSIT, THE ASSESSEE CONTENDED THAT HE MADE PURCHASE AND SALE OF PROPERTY ON BEHALF OF HIS HUF. ASSESSING OFFICER NOTICED THAT AGREEMENT FOR SALE OF PROPERTIES WERE MADE BY THE ASSESSEE IN HIS INDIVIDUAL NAME AND BANK ACCOUNT WAS ALSO MAINTAINED IN INDIVIDUAL CAPACITY. ACCORDINGLY, HE HELD THAT THE DEPOSITS WERE INCOME OF THE ASSESSEE AS AN INDIVIDUAL AND MADE ADDITION. THE LEARNED CIT(APPEALS) AFTER APPRECIATION OF EVIDENCE DELETED ADDITION HOLDING THAT THE DEPOSITS MADE IN CASH WERE RELATED TO HUF OF ASSESSEE. ON FURTHER APPEAL BY THE REVENUE, ITAT UPHELD THE ORDER OF THE 6 LEARNED CIT(APPEALS). HON'BLE HIGH COURT IN THE APPEAL PREFERRED BY THE REVENUE UPHELD THE ORDER OF THE ITAT IN FAVOUR OF THE ASSESSEE . SIMILAR VIEW HAS BEEN EXPRESSED IN THE OTHER CITED DECISIONS. IN VIEW OF THE RATIO LAID DOWN IN THE CITED DECISIONS, WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY DECIDED THE ISSUE RAISED IN THE GROUND IN FAVOUR OF THE ASSESSEE. FOR A READ Y REFERENCE, THE FINDING OF THE LEARNED CIT(APPEALS) IN PARA NOS. 6 & 6.1 OF THE FIRST APPELLATE ORDER IS BEING REPRODUCED HEREIN UNDER: 6. I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. M/S. KTC DEVELOPERS PVT. LTD. ENGAGED IN THE BUSINE SS OF DEVELOPING A RESIDENTIAL TOWNSHIP IN MAHARASHTRA, ACQUIRED AGRICULTURAL LANDS AND INTENDED TO COVERT THEM TO NON AGRICULTURAL LANDS. AS PER THE PREVALENT STATE LAWS, AGRICULTURAL LANDS CAN BE ACQUIRED IN THE NAME OF SH. S.N. THAKUR WERE TRANSFERRED I N THE NAME OF THE APPELLANT. THAT THIS TRANSFER IS WITHOUT ANY CONSIDERATION IS EVIDENT FROM THE FROKT KHAT. THE VALUE OF THE LAND MENTIONED IN THE SAID FROKT KHAT WAS ONLY FOR THE PURPOSE OF STAMP DUTY AND REGISTRATION FEE. THE LANDS HELD IN THE NAME OF S H. S.N. THAKUR AND TRANSFERRED BY THE S.N. THAKUR IN THE NAME OF THE APPELLANT ARE SHOWN IN THE AUDITED BALANCE SHEET OF M/S. KTC DEV. PVT. LTD. THE AFFIDAVIT DT. 1.10.2010 OF SH. S.N. THAKUR TO THE AFFECT THAT THE TRANSFER OF LANDS TO THE APPELLANT WITHOU T CONSIDERATION WAS AS PER THE POLICY OF THE COMPANY AND FOR ADMINISTRATIVE REASONS ALSO RE - IN - FORCE THE ABOVE. THE MOU ENTERED BY M/S. KTC DEV. PVT. LTD. WITH ITS 7 DIRECTORS/SHAREHOLDERS DATED 5.7.2007 DECLARING THAT THE LAND/PROPERTY BOUGHT IN THE NAME OF DIRECTORS SHALL BE THE SOLE PROPERTY OF THE COMPANY EVIDENCES THIS FACT. THE STAMP DUTY AND REGISTRATION FEE HAS BEEN PAID BY THE COMPANY, AS EVIDENT FROM THE BANK STATEMENT. THE FACT THAT THOUGH THE LANDS HAVE BEEN IN THE NAMES OF SH. S.N. THAKUR AND THE APPELLANT, THE BENEFICIAL OWNER IS M/S. KTC DEV. PVT. LTD. IS EVIDENT FROM THE PAYMENTS MADE BY THE COMPANY FOR ACQUIRING THE LANDS AND DECLARING THEM IN THE BALANCE SHEET OF THE COMPANY. THE AGRICULTURAL LANDS HELD IN THE NAMES OF DIRECTORS SH. S.N. THAK UR AND THE APPELLANT HAVE BEEN DULY REFLECTED IN THE BALANCE SHEET OF M/S. KTC DEV. PVT. LTD., WHOSE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE ACT. THE LAND UNDER CONSIDERATION ALONG WITH OTHER LANDS OF THE COMPANY HAVE BEEN SOLD BY A SALE DEED DATE D 16.10.2010 BY SH. S.N. THAKUR AND THE APPELLANT BEING THE FIST PARTY AND M/S. ORACLE REALTY DEVELOPERS AND OTHERS, BEING THE SECOND PARTY AND M/S. KTC DEV. PVT. LTD. THROUGH ITS DIRECTORS SH. S.N. THAKUR AND THE APPELLANT, BEING CONSENTING PARTY , FOR A CONSIDERATION OF RS.3,80,00,000 OUT OF WHICH RS.45.00 LACS EACH HAVE BEEN RECEIVED BY M/S. KTC DEVELOPERS PVT. LTD. ON 20.10.2010 AND 23.10.2010 AS PER THE BANK STATEMENT OF M/S. KTC DEVELOPERS PVT. LTD. THIS FACT HAS BEEN CONFIRMED BY THE A.O. IN THE REM AND REPORT. 6.1 FROM THE ABOVE, IT IS EVIDENT THAT THE APPELLANT HAD NOT INVESTED ANY AMOUNT FOR THE TRANSFER OF AGRICULTURAL LAND IN HIS NAME FROM SH. S.N. THAKUR, AS THE LAND ALWAYS REMAINED BELONGING TO M/S. KTC DEV. PVT. LTD. THIS IS REFLECTED IN THE A UDITED BALANCE SHEET AND P & L A/C OF M/S. KTC DEV. PVT. LTD. AND THE FACT OF PAYMENT OF STAMP DUTY AND REGISTRATION FEE BY THE COMPANY AND RECEIPT OF SALE CONSIDERATION 8 VIDE SALE DEED DT. 16.10.2010 BY THE COMPANY. THE ADDITION MADE BY THE A.O. OF RS.1,13 ,02,800 TOWARDS UNEXPLAINED INVESTMENT IN THE LANDS IN THE HANDS OF THE APPELLANT IS THEREFORE, DELETED AND THE GROUND OF APPEAL IS ALLOWED. 8. AS DISCUSSED ABOVE, THE ORDER OF THE LEARNED CIT(APPEALS) ON THE ISSUE IS COMPREHENSIVE AND REASONED ONE. IT IS ALSO SUPPORTED BY THE CITED DECISIONS BEFORE US BY THE LEARNED AR. WE THUS DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 9. IN RESULT, THE APPEAL IS DISMISSED. D ECISION PRONOUNCED IN THE OPEN COURT ON 17 . 0 2 . 201 5 SD/ - SD/ - ( N.K. SAINI ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 / 0 2 /201 5 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR