The DCIT,Cen-circle, Thrissur V. Sri.T.G. Chandrakumar, Thrissur

ITA 67/COCH/2018

AI Insights

The case revolves around the assessment of capital gains tax on the sale of land, where the Income Tax Department contended that T.G. Chandrakumar, the assessee, was the actual owner of the land sold through four other individuals who were his employees. The Department argued that these individuals were merely benamidars (name lenders) and that the real transaction involved a higher sale consideration than reported. The CIT(A) had earlier deleted the additions made by the Assessing Officer, but this decision was contested by the Revenue in the Tribunal. The Tribunal examined the validity of the agreements, the evidence of ownership, and the actual sale consideration, ultimately deciding in favor of the Revenue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115470 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2018
• Other Referred Cases: CIT v. B.M. Kharwar [1969] 72 ITR 603 (SC), Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC), Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC), CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349, NTPC v. CIT [1998] 229 ITR 383 (SC), CIT v. Balbir Singh Maini [2017] 398 ITR 531 (SC), Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244 (SC), ITO v. Rattan Lal [1984] 145 ITR 183 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Salary income; Additional evidence; Onus to prove; Retraction; Capital Gains
• Section: 131; 139; 143(3); 54B; 143(2); 72; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Sanjay Arora, Accountant Member and Shri Sandeep Gosain, Judicial Member ITA No. 67/Coch/2018 (Assessment Year: 2008-09) Dy. CIT, Central Circle S.T. Nagar, Thrissur-1 vs. T.G. Chandrakumar, Prasunam – Thattuthaparambil (H) Sree Ramakrishna Asram Lane Punkunnam, Thrissur – 680002 [PAN: ABBPC2303A] [Appellant] [Respondent] Appellant by: Smt. J.M. Jamuna Devi, Sr. DR Respondent by: Shri C.B.M. Warrier, FCA Date of Hearing: 31.01.2023 Date of Pronouncement: 03.04.2023 O R D E R Per: Bench This is an Appeal by the Revenue against the Order dated 18/12/2017 by the Commissioner of Income Tax (Appeals)-III, Kochi (‘CIT(A)’ for short) allowing the Assessee’s apppeal contesting his assessment under sction 143(3) read with section 153C of the Income Tax Act, 1961 (‘the Act’ hereinafter) dated 31/03/2016, for the Assessment Year (AY) 2008-09. 2. It would be relevant to recount the background facts of the case. A search u/s. 132 of the Act in the group cases of Dr. P.H. Abdul Majeed and M/s. Sevana Group of medical stores and connected cases was conducted by the Revenue from 18/12/2013 to 14/02/2014. An Agreement dated 03/01/2007 between Dr. Abdul Majeed and Smt. Lakshmidevi Gopinathan of one part (as buyers) and Shri P.M. Vijayan, Shri A.A. Balachandran, Shri P. Manoj, Shri K.J. Thomas and the assessee, of the second part (as sellers), for sale of 384.5 cents of land at Village Ayyanthole, ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 2 | P a g e Pukunnam, Puzhakkal Road, Thrissur, at the rate of Rs. 2,24,000 per cent, i.e., for a sum of Rs. 861.28 lacs, was found and seized from the residence of Dr. Ramakrishna Ambadi (PB-1, pgs. 17-25). The sale consideration per the registered sale deeds in respect thereof, executed subsequently, was however at Rs. 170.27 lacs. There was, thus, an escapement of income from assessment at Rs. 691.01 lacs. Per the instant assessment, initiated u/s. 153C, income in respect of 276.87 cents of this land, registered (separately) in the name of the four sellers, i.e., other than the assessee, is brought to tax, which has been done by the Revenue substantively in the hands of the assessee and protectively in the hands of the respective sellers. 3. The matter being principally factual, we shall proceed by discussing the evidences that led the Assessing Officer (AO) to his adjudication and, then, to that by the ld. CIT(A) in deleting the same, and which stands impugned before us. 4.1 The Bench observing that the capital gain assessed did not include that on 107.63 cents, i.e., the balance out of the total land, admittedly belonging to the assessee, it was clarified by Shri Warrier, the ld. counsel for the assessee, that assessment has been on the basis of the execution of the sale deed/s, being for AY 2009-10 qua this part of land, and for AY 2008-09, the current year, qua 276.87 cents, having been sold on 25/8/2007. We find this as apposite. There was admittedly no delivery of possession per the sale agreement dated 03/1/2007, which is also not a registered document. In any case, we observe no dispute as to the year of assessment in respect of the transfer/s under reference. 4.2 Our second preliminary observation is that the matter at hand cannot be regarded as covered in favour of the assessee, as contended before us by Shri Warrier with reference to the order by the first appellate authority in the assessee’s case for AY 2007-08, which has attained finality in view of the dismissal of the Revenue’s appeal there-against by the Tribunal, taking us through the respective orders (PB-3, pgs.1-5, 6-35, 36-50). The income, he explained, returned by the ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 3 | P a g e assessee for AY 2009-10 on the basis of the sale deed dated 28/05/2008, i.e., qua 107 cents of land, was sought to be assessed for AY 2007-08 for 50 cents on the basis of delivery of it’s possession during the relevant previous year. The transaction being admitted, the assessee got part-relief on the basis of the value declared in the sale deed, i.e., Rs. 1 lac per cent, as against the assessed rate of Rs. 2.24 lac per cent. Sure, the Revenue’s appeal has been dismissed by the Tribunal (ITA No. 504/Coch/2017, dated 19.11.2019), but the same is u/s. 268A, and even as clarified per sub-section (3) thereof, would have no bearing on the merits of the case. The decision by the first appellate authority for that year, as for the current year, cannot bind this Tribunal, so that the matter cannot be regarded as covered, and would require being adjudicated by it on merits. The same would though be relevant and taken into account, i.e., in respect of the quantum; the ownership being not in issue in that case. The assessee’s CO (# 54/Coch/2018) in the instant case was clarified by Sh. Warrier to have raised the technical issue of the validity of the assessment and, further, of having been dismissed as withdrawn by the Tribunal on 19/11/2019. The matter, we further observe, had been adjourned in the past on the request of the assessee to enable adjudication by the first appellate authority in the case of the sellers, assessed protectively. The same stand since decided following adjudication by the first appellate authority in the assessee’s case for AY 2007-08, i.e., qua quantum. As regards ownership, there is no definite finding by the ld. CIT(A) vide his near identical orders dated 03/2/2021 (PB-2), merely directing the AO to adopt the rate of rs.1 lac per cent, i.e., as in the case of the assessee. While two sellers have accepted the same, the other two (P.M. Vijayan & A.A. Balachandran) have kept the matter alive by preferring second appeal before the Tribunal, whose order in the instant case, being represented, again, by Sh. Warrier, would equally apply thereto. The stand of the parties, as explained, being the same, hearing in the matter was proceeded with, with the consent of the parties, on this premise. 4.3 The issue/s that therefore survives, and on which it was contested, is: ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 4 | P a g e a) the person/s in whose hands income on sale of land is to substantially assessed; b) the quantum of capital gains. On being enquired in the matter, a seller admitted to being benamidars of Shri T. G. Chandrakumar, the assessee, they being in fact employees in his different concerns. Their statements to that effect, as indeed of the purchasers, as well as the three brokers through whom the transaction was undertaken, were recorded u/s. 132(4), or as the case may be, u/s. 131 of the Act in assessment proceedings. It is these statements, which were duly confronted to the assessee, as well as the surrounding facts and circumstances, which form the basis of the impugned assessment; the AO’s findings, summed up at para 9 (xxii) to (xxiv), reading as under: (pgs. 15-16) ‘(xxii) The following facts are revealed from an analysis of the facts relating to the so-called sellers of the property: a) All the four persons, viz. Sri. KJ Thomas, Sri. P Manoj, Sri. A. A. Balachandran and Late PM Vijayan, were closely connected with Sri. T G Chandrakumar, and are/were his employees. b) Two of the persons who had a major share of the property in their names had business concerns which were stopped due to losses during the FY 2004-05. However, the sale proceeds are claimed to have been routed through the books of the concern which had stopped functioning three or more years prior to the sale of land. c) No part of the sale proceeds is routed through bank accounts of the concerned persons. Even for receipt of advance and the claim of refund of the same no entry in bank statement is seen. d) With reference to the statements from the brokers recorded during the course of search, the statement given by one agrees with those by the others on all main issues. (xxiii) The assessee is a businessman running several business concerns in own name and in the names of family members and is an influential person. Using people who were associated with him and who were employees in his business concerns, he had enacted the land deal. The so-called co-owners of the property were, in fact, his benamidars only. Immediately after the sale of the property, he had undertaken purchase of a plantation in Palakkad. As everybody is aware of, real estate transactions involve a lot of on-money payments, usually equivalent to 5 ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 5 | P a g e times to 10 times more than the registered value. What was received in cash beyond the document value, is paid by way of on-money in another transaction. This is the only reason why the receipts have not gone through bank accounts in respect of the other persons. In fact, during the assessment proceedings for the Assessment Year 2009-10, the issue of sale of land and assessment of capital gains had cropped up. (xxiv) In view of the above, assessee was the real owner of 384.5 cents of land, part of which he apportioned among his own benamidars with the intention of suppression of income. Therefore, I am justified to treat the assessee as the real owner of 384.5 cents of land the capital gains arising from the transaction of property during the year is assessed substantively in the hands of the assessee and protectively in the hands of the persons by whom the documents have been registered, viz. Sri. KJ Thomas, Sri. P Manoj, Sri. AA Balachandran and Late PM Vijayan, for the Assessment Year 2008-09, sale value taken @ 2,24,000/- per cent as per copy of the signed agreement seized.’ 4.4 Long-term capital gain was accordingly assessed by reducing from the sale consideration of Rs. 620.19 lacs, i.e., @ Rs. 2.24 lac per cent, the indexed cost of acquisition for each of the four sellers, at Rs. 6,13,25,694 (Rs. 613.26 lacs). The same stands deleted in first appeal by the ld. CIT(A), holding as under: (pgs.25-26) ‘10. I have gone through the assessment order and submission of the appellant. The Assessing Officer decided to tax Long Term Capital Gains in the hands of the appellant mainly because all the four persons, i.e., Shri. P. Manoj, Shri. P.M. Vijayan, Shri. A.A. Balachandran and Shri. K.J. Thomas, were closely associated with the appellant, Shri. T. G. Chandrakumar, and because, it was the appellant who negotiated the sale of land on behalf of everyone. The Assessing Officer also held that the other four persons were men of little or no means and that they neither interested in the land nor earned any share of profit. The Assessing Officer also alleged that the transactions were not routed through bank accounts of these four people. Even though subsequently retracted, the Assessing Officer placed reliance on the statements of these people recorded during the course of the search. ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 6 | P a g e Ultimately, the Assessing Officer concluded that four people mentioned above were benamidars of the appellant. Shri. T.G. Chandrakumar and, therefore, assessed the capital gains in the hands of the appellant on substantive basis and (in) the hands of four other people on protective basis. The learned Authorized Representative of the appellant has objected to the action of the Assessing Officer and has given evidences to rebut the facts narrated by the Assessing Officer. It is seen that Shri. P.M Vijayan and Shri. A.A. Balachandran are income-tax assessees since 1985. Both these people purchased the said property in January, 2001 and accounted them in this (their) SSI units M/s. Prasun Industries and M/s. Trust Rubbers, respectively. One person Mr. Salim had also filed a case against Shri. P.M. Vijayan for an 18 feet road to approach his property. In his submission, the appellant has also given details of cheques getting cleared in Sri. P.M. Vijayan's account. Similarly, he submitted a copy of the balance-sheet of M/s. Trust Rubber owned by Shri. A.A. Balachandran, wherein Shri. Balachandran has withdrawn an amount of Rs.30,20,000/- and has withdrawn an amount of R.6,40,000/- for paying tax on capital gains. I find the submission of the appellant and evidences annexed as self- explanatory. All the four persons are identifiable and documents of land also support (the) assessee's contention. Big chunks of land were given to Shri. K.J. Thomas and Shri. P. Manoj. In view of submission of the assessee and facts of this case, in my opinion, the Assessing Officer was not justified in treating these four people as benamidars of the appellant and assessing the whole of capital gains in the hands of the appellant on substantive basis. The addition is hereby deleted. The appeal is allowed.’ The same stands assailed before us, raising the following grounds: ‘1. The Commissioner of Income Tax (Appeals) erred in deleting additions of Rs.6,13,25,694/- on account of capital gains arising from the sale of 276.87 cents of land at Ayyanthole by four benamidars in the hands of Shri T.G. Chandrakumar. 2. The Commissioner of Income Tax(Appeals) overlooked that an agreement dated 03/01/2007 was seized during search which showed that property having ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 7 | P a g e areas 384.5 cents at Ayyanthole, of which the properties in the name of the 4 individuals were a part, was agreed to be sold to Dr. P.H. Abdul Majeed and Smt. Laxmi Devi Gopinathan for a consideration of 2.24 lakhs per cent. 3. The Commissioner of Income Tax (Appeals) overlooked that each of the sellers of property, had stated under oath that land in their names actually belonged to Shri T.G. Chandrakumar. 4. The Commissioner of Income Tax (Appeals) overlooked that sellers Manoj and Vijayan, Balachandran, K.J. Thomas were either employees of Shri T.G. Chandrakumar or had close connection with Shri T.G. Chandrakumar. 5. The Commissioner of Income Tax (Appeals) overlooked that the brokers, Shri C.R. Joseph, Shri K.K. Sunil and Shri Ratheesh Vega, who were involved in the deal also stated under oath the land belonged to Shri T.G. Chandrakumar. 6. The Commissioner of Income Tax (Appeals) overlooked that Shri P.K. Ramachandran, power of attorney holder of Smt. Laxmidevi Gopinathan (one of the purchasers) admitted that 384.5 cents of land was purchased from Shri Chandrakumar although the land was held in the name of various persons. 7. The Commissioner of Income Tax (Appeals) overlooked (that) no part of the sale proceeds is routed through the bank accounts of the concerned persons thus proving that they were only name lenders. 8. It was claimed during appeal stage that a few of the sellers received money from the purchasers. The CIT (Appeals) has discussed the same in the appellate order as ground for deleting this addition. However, this is a new piece of evidence and the Assessing Officer should have received an opportunity to comment on the same. However, the opportunity was not afforded to the AO. 9. The Commissioner of Income Tax (Appeals) erred in giving credence to retraction filed by the sellers of land and brokers. The CIT(A) overlooked that retractions filed contradicting the statements recorded in the wake of search, are an afterthought and lack credibility.’ 4.5 As apparent, relief stands allowed to the assessee by the ld. CIT(A) on the following basis: a) the statements on oath having been retracted; and b) evidences led by the assessee before him. The same would in turn give rise to the issue as to if the AO’s findings have been suitably met, and toward the same, whether the retraction/s is valid (Gd.9) and, secondly, if in respect of the evidences relied upon for the first time before the ld. CIT(A), the conditions with regard to their admissibility as well as qua reliance, ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 8 | P a g e enshrined in rule 46A (of the Income Tax Rules, 1962), mandatory in character, are satisfied. The other grounds highlight the various factual aspects of the case. 5. Before us, Shri Warrier was at pains to emphasize that the Agreement dated 03/01/2007 was cancelled soon-after, i.e., on 17/01/2007, on the buyer realising that a part of the subject land was ‘puramboku’, i.e., land not in the name of any person, right over which therefore vests with the Government. The deal was, accordingly, settled at Rs. 1 lac per cent, for which a revised agreement was entered into on 07/3/2007, with sale for 107 cents being registered vide sale deed dated 28/05/2008 for Rs. 107 lacs, of which Rs. 50 lacs was received by the assessee on 16/3/2007 on delivery of possession of 50 cents. 6.1 Our first observation in the matter is that the ld. CIT(A) has not met any of the observations/findings by the AO vide para 9 [(i) to (xxiv)/pgs. 4-16] of his order, part of which is reproduced hereinbefore, and it is this that, as afore-noted, stands sought to be highlighted by the Revenue per its various Grounds, save Gd. 8, which assails the admission of additional evidences by him as being without following the procedure prescribed in its respect. There is, further, no reference in his order and, consequently, no finding as to the cancellation of the Agreement dated 03.1.2007, which forms the cornerstone of the assessee’s case, particularly qua quantum. Likewise for the orders by the first appellate authority in the individual cases of the four sellers, assessed protectively by the Revenue. The plea of cancellation is in fact a tacit acceptance of the validity of the Agreement, i.e., in law. The same having been found during search, has evidentiary value u/s. 292-C of the Act. In fact, none of signatories denied signing it; rather, confirm their signatures. That apart, there is nothing either found during search or brought on record evidencing it’s cancellation, so that the said plea is backed only by a bald statement, leading to, as we find, several inconsistencies. In fact, cancellation of, as indeed any modification to the Agreement, as where the time for making payment thereunder is extended, or monies stipulated thereunder paid, etc. would stand to be recorded therein, either on ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 9 | P a g e it’s back, as specified in Cl. 4 thereof, as indeed stated by Dr. Majeed, or as addendum thereto, with the parties signing in token of their acceptance. In the instant case, on the contrary, as observed, the new Agreement dated 07/3/2007 (PB- 1, pgs. 49-57) is by and between the assessee and Sh. Arun Majeed, acting for themselves, i.e., is not signed by all the original signatories, which only would make it valid. Its perusal reveals as under: a) it is an agreement for 107 cent of the subject land, between Shri T.G. Chandrakumar (TCG), the assessee, and Sh. Arun Majeed s/o Dr. A Majeed; b) it bears no reference to the earlier agreement dated 3.01.2007 and, therefore, to it’s cancellation on 17.01.2007; c) there is, consequentially, no reference to ‘puramboku’, i.e., the defect for which the land deal is stated to have been cancelled; d) there is, again, surprisingly, no reference to advance of Rs. 100 lacs paid on entering the Agreement on 03.01.2007 and, therefore, to its return, in whole or in part, in the new Agreement; That is, the Agreement dated 07/3/2007 is de hors that dated 03/1/2007; between a different set of parties, and for a part of the said land. This is flummoxing as it is, as explained, entered only in lieu/modification of the original agreement on its cancellation. Once a valid Agreement, as that dated 03/1/2007, is entered into, it has a legal effect (CIT v. B.M. Kharwar [1969] 72 ITR 603 (SC)). The same can be ignored only at the peril of an adverse inference and, two, can be changed only with the mutual consent of all concerned. Both the Menon family and Dr. Majeed, as well as the four sellers other than the assessee-respondent, are conspicuous by their absence in the new Agreement, and neither is there anything to suggest the presence of the three brokers, and which cannot be. As afore-noted, there is no evidence of the cancellation of the earlier Agreement. In fact, it stands acted upon, with all but one sale deed (for 107 cents) being executed within the validity period of the Agreement (04/10/2007), with time being not of essence. Further, the entire advance of Rs. 100 lacs, admittedly paid on entering it on 03.1.2007, is paid cash, as is it’s return, stated ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 10 | P a g e to be on its cancellation on 17.01.2007. Likewise, for the payment of commission to the brokers at Rs. 10 lacs, again, a no mean sum. Why, one may ask, if it was indeed meant to be disclosed? There are no answers, and at any stage, to these questions. There is, further, no recording of this cash receipt/payment and, thus, it’s stated return, in the personal books of the assessee or of his several concerns, or any of the four sellers. Why? And if this is not enough, the agreement dated 07.03.2007, is, as the AO observes (at para 9(xx)), executed on a stamp paper dated 09/03/2001 in the name of the assessee, the seller, making it highly suspect. The original Agreement dated 03/01/2007 is, in contrast and, as expected, on a stamp paper dated 30/12/2006, i.e., close to the date of Agreement, and in the name of Dr. Majeed, the buyer, as is usually the case. No response was forthcoming from Sh. Arun Majeed on being confronted therewith (Q.7 of his statement u/s. 131, dated 07/1/2015 (PB- 1, pgs. 47-48)). We find no explanation for this state of affairs, which is bizarre inasmuch as the new agreement, on which the assessee relies, is founded only on the cancellation of the earlier Agreement. The reference to payment vide cheque dated 07/03/2007 therein is again a pointer to it having been written subsequently, even as admitted by Dr. Majid on 15/01/2015, inasmuch as only a cheque prior to that date could be encashed on 07/03/2007. The second Agreement is only a make-believe. 6.2 We, next, discuss the other evidences. In our view, the statements of the three real estate agents who brokered the transaction, being independent, have a higher evidentiary value. This is as both the purchasers and sellers are, in contradistinction, interested parties, having an interest in projecting the disclosed transactions as the real state of affairs. While the sellers would be liable to tax on capital gains on, the buyers would have to show the source of, the agreed, higher consideration (Rs. 861.28 lacs). Their statements, therefore, unless corroborative, cannot be taken at face value. Why, the sellers may even return capital gains on the disclosed transactions, that being the very purpose of transferring land in their names, i.e., if it is indeed so. Nothing therefore turns on the returning of capital gains on the ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 11 | P a g e impugned transaction by two sellers, which though is not at rs. 2.24 lac per cent but Rs. 0.20 lac per cent, i.e., at less than 10% thereof. Unless, therefore, accompanied by proper verification and finding, of which there is though no claim, and nothing on record to support, even acceptance of such returns would matter little (Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC); Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC)). We may though hasten to add that the burden to prove that the apparent is not real is on the Revenue (CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349)). 6.3 That the three stated Brokers were involved in the deal is not denied, even as it stands confirmed on the basis of the letter by Dr. Abdul Majeed to the Circle Inspector, East Nadar PS, in 2007. Each of them per their statements u/s. 131, i.e., dated 09/01/2014 (Shri C.R. Joseph), 10/01/2014 (Shri K.K. Sunil) and 20/01/2014 (Shri Ratheesh Vega), i.e., during the period the search proceedings were on, and the final part of which stands extracted earlier, confirmed as under:- a) the negotiations for transfer of the subject land (384.5 cents) at Ayyanthole, which is a single plot, were done in their presence; b) these negotiations were between Dr. Abdul Majeed and TGC, the assessee, at the latter’s residence at Punkunnam, Thrissur, as a single transaction; c) that the subject land belonged to the assessee; d). that they did not know any of the other sellers; e) a rate of Rs. 2.50 lac per cent was initially proposed by the assessee, though finally agreed at Rs. 2.24 lac per cent between the parties; d) a token advance of Rs. 1 lac was paid cash, and the balance advance (Rs. 99 lac) was to be paid to the assessee on signing the agreement; and e) that brokerage of Rs. 10 lac (approx.) was received from the assessee in cash, which was split equally between them. (para 9(xiv), (xv)/pgs.9-12 of the assessment order) It is pertinent to note that as per the Brokers even the other co-buyer, i.e., Smt. Laxmi Devi Gopinathan (LG), either herself or through her power of attorney ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 12 | P a g e Dr. P.K. Ramachandran Menon (RM), her brother, was not present during the negotiations. That the purchase rate was Rs. 2.24 lac per cent was also confirmed by RM vide his statement u/s. 131 dated 07/01/2014. This was again confirmed by LG, one of the signatories to the agreement, vide her statement u/s. 131 dated 06/02/2014, as well as by her sister, Smt. Rani Menon (vide her statement u/s. 132(4) dated 10/02/2014) (pgs.6-8 of the assessment order for AY 2007-08). And, further, that LG represented the Menon siblings, whose share in the subject land was 58 cents, valued at Rs. 1.30 crore. None of this is in fact denied by the assessee, whose case, as afore-noted, is the cancellation of the Agreement dated 03/01/2007, soon after, on 17/01/2007, returning the advance in view of the stated defect of ‘puramboku’, resulting in downscaling the purchase price to Rs. 1 lakh per cent. 6.4 With this factual background, we may take up the aspect of sale rate first (see para 4.3(b)); the two issues being in fact inter-related. We find little merit in the assessee’s case qua the rate of Rs. 1 lac per cent. We have already noted absence of any substantive or contemporaneous evidence toward the cancellation of the Agreement dated 03/1/2007, so that it obtains (para 6.1). None of the brokers, each of whom separately confirmed the sale agreement (at Rs. 2.24 lac per cent), mentioned of the same failing on account of ‘puramboku’ (or any other reason for that matter), and a fresh agreement being entered into subsequently on 07/03/2007. The broker/s, it may be noted, would be the first person to be contacted by the buyer/s on a defect in the land coming to light. Per their statements on oath in February, 2014, the Menon sisters separately confirmed the rate of Rs. 2.24 lac per cent, also explaining that their share amounted to Rs. 130 lacs which, after adjusting accounts between them, was pooled by them. This was also confirmed by Dr. RM, who represented the Menon family, further confirming: a) that the property purchased from TGC, the assessee, though was held in the names of various persons; b) that the property was purchased in the name of Sh. Arun Majeed, s/o Dr. Abdul Majeed, and LG, his sister. (para 9(xii)/pg.9 of the assessment order) ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 13 | P a g e This was also confirmed by Dr. Majeed per his statement u/s. 131 dated 15/1/2015, who had not only represented the buyers in negotiations with the assessee-seller, but also admittedly handled the entire financial aspect of the transaction, both on behalf of his son, Shri Arun Majeed (refer answer to Q.5 of his statement dated 07/1/2015), as well as the Menon family (as had indeed been confirmed earlier by LG on 06/02/2014 in answer to Q.7), also giving details of the consideration paid (Rs. 729.12 lac) in respect of 325.5 cents registered in the name of his son. The assessee, on being confronted therewith, and extended opportunity to cross-examine Dr. Majeed, declined to vide his letter dated 25/02/2015 (para 14/pg. 19 of the assessment order for AY 2007-08). There is no whisper of cancellation of the Agreement by any of the 3 brokers in their statements. Thus, even as we proceeded by stating of the buyer being an interested party, whose statement therefore cannot be regarded as of an independent party, he has also confirmed the value stated in the agreement dated 03/01/2007. On the assessee, however, seeking further time in the assessment proceedings, he was allowed opportunity for cross examination, which took place on 18/03/2015, whereat, besides Dr. Majeed and his son, Arun Majeed, brokers Sh. K.K. Sunil and Sh. C.R. Joseph were also present. Dr. Majeed would state that though the agreement was cancelled on 17/01/2007, it was with the help of mediators restored on 20/01/2007. He further admits to being compelled to state so (i.e., the truth), as it was no longer possible for him to reiterate his earlier statements (dated 18/12/2013, 14/02/2014 & 25/03/2014), as LG, who had one copy of agreement, had documented the sale consideration of Rs. 2.24 lac per cent and, in fact, transferred Rs. 1.30 cr. to Dr. Majeed’s bank account, as had been confirmed by him on 14/2/2014. The restoration of the agreement renders it’s cancellation, itself sans any evidence, or the return of cash, as of no consequence. The assessee did not cross-examine Arun Majeed, while the two brokers present also confirmed their earlier statements in principle (para 21, pgs. 11-13 of the assessment order). The cancellation of the Agreement dated 03/01/2007, which is a very detailed Agreement, would, where so, be backed by various materials and incidences; rather, ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 14 | P a g e being noted therein itself. The same assumes relevance as the same is stated as the basis of downscaling the sale price from Rs. 2.24 lac to Rs. 1 lac or, as the case may be, Rs. 0.20 lac, per cent. The impugned order is silent on this, i.e., on quantum. This is ostensibly for the reason that the ld. CIT(A) has decided the issue of ownership qua the subject land (276.87 cents) in favour of the assessee, so that the assessment itself does not survive. Though, therefore, normally the matter would go back to his file in case we decide differently on the aspect of ownership, it may not be necessary to do so in the instant case as the ld. CIT(A) himself has decided this aspect of the assessee’s case for AY 2007-08, relied upon by the assessee before us. His own findings, being in respect of the same transaction, would equally apply for the current assessment year as well. The basis of the rate of Rs. 1 lac per cent, i.e., as per the subsequent sale deed, is the return of advance on 17/01/2007 on cancellation (PB-1, pg.26). To what effect, one may ask, the same when there is, in the first place, no evidence of receipt of Rs. 100 lac as advance on 03/01/2007, which is being refunded back on 17/01/2007? The production of receipt of Rs. 100 lacs dated 17/01/2007 on ‘cancellation’ of agreement would be of no consequence in view of the restoration of agreement on 20/01/2007. We have already stated that the theory of cancellation of the agreement and execution of new one on 07/03/2007 is no more than a hoax, an afterthought. None of the brokers retracted their statements qua sale consideration, with, rather, Dr. Majeed stating of restoration of the Agreement on 20/01/2007, so that it obtains. There is in fact no question of any retraction on this aspect, as the rate of Rs. 2.24 lac per cent is admitted, and it is only subsequently that the same is claimed to have been revised. Why, noting a defect, one would rescind the agreement, giving notice to the other side, and that would be the end of the matter, particularly where the advance stands, as stated, returned back. The revised agreement, if at all, would be by and between the parties to the Agreement, on a fresh stamp paper procured at the relevant time, stating the complete particulars that led to the cancellation of the earlier one. The new ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 15 | P a g e Agreement, between a different set of parties, on a stamp paper purchased by the assessee years earlier, if anything, disproves the plea of cancellation (see para 7.2). 6.5 As regards the defect per se, stated to be the reason for the cancellation, there is firstly nothing on record to demonstrate it. The subject land is in front of the residence of Dr. Menon, and it is this that may have led the Menons to become interested in it’s purchase. How could he be not aware of a part of the land belonging to the Corporation? Further, even as the AO puts it, Dr. Majeed is a regular dealer in lands, so that he could not possibly have lost sight thereof (para 9(vi)). The stated defect, i.e., a part (unspecified) of land being ‘puramboku’, is in fact not substantiated by any material, and at any stage. How, and why, one may ask, is the same then agreed to be purchased at a lower rate of Rs. 1 lac inasmuch as that would not by itself remove the defect? There is nothing on record to exhibit, or even a claim, of the defect being removed, much less by 20/01/2017, the date on which the agreement is stated to be, after cancellation on 17/01/2017, restored. How, in any case of the matter, then, the subsequent agreement or sale deeds executed? In fact, Dr. Majeed himself states on 14/02/2014 that the commercial value of the entire land would be lost as the Corporation was planning to construct commercial buildings thereon. How, further, one wonders, was the land registered in the name of the sellers in the first place, the ‘Description of the Properties’, 6 in number, totalling 384.5 cents, forming a Schedule to the Agreement. And, then, subsequently in the name of the buyers, which is at 325.5 cents (Arun Majeed) and 58 cents (Menons). The same totals 383.5 cents. From the seller’s side, the total land sale deed is 107 cents (assessee) and 276.87 cents (others), i.e., at a total of 383.87 cents. Only one of the figures could be correct. Both being less than 384.5 cents agreed for sale, this perhaps explains ‘puramboku’, i.e., to that extent. Per contra, the very fact of sale deeds having been subsequently registered for 383.87 cents, brought to tax, disproves the plea of ‘parumboku’ except perhaps on 0.63 cents of land. We are conscious that land at 107.63 cents is ascribed to the assessee (TGC), and 326.5 ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 16 | P a g e cents to Arun Majeed, eliminating the difference. We are only stating the extent to which, if at all, the defect of puramboku could be possible; the sale deed executed by the assessee (not on record) on 28/05/2008 being stated to be for 107 cents. 6.6 We are also conscious that for two sellers (i.e., A.A. Balachandran (151 cents) and P.M. Vijayan (116 cents)), the sale deeds were executed at Rs. 0.20 lac per cent, while that for other three, i.e., P. Manoj (5.4 cents); K.J. Thomas (4.47 cents); and the assessee (107 cents), at Rs. 1 lac per cent. The land, map of which is drawn in the separate appellate orders dated 03/2/2021 of the four sellers (PB-2), is confirmed by the Brokers as a single plot, and the agreement, a single transaction. Two commercial buildings were being planned at the consolidated land, as confirmed by Dr. Majeed on 14/2/2014. Even if therefore the Agreement had been cancelled, i.e., assuming so, the revised Agreement would be, as the earlier one, at a uniform rate. We also observe Dr. Majeed stating the rate of rs. 2.24 lac per cent as only for bank purposes, and that the assessee alleges that he had duped LG by not disclosing her the sale price of Rs. 1 lac, and receiving the sum reckoned at the higher rate (Rs. 1.30 cr.) from her. The argument is both, un-evidenced and misconceived. If, as stated, the Agreement dated 03/01/2007 was for bank purposes, where is the actual Agreement for Rs. 1 lac, which would be entered between the parties before or latest by 03/01/2007? The same was not found. There is in fact no whisper of this ‘actual’ Agreement. There is further no application made to the Bank by the buyer/s. Why, it is not even shown that bank finance was involved in purchase. The argument also misses the point that LG herself is a signatory to the Agreement and, therefore, would be a signatory to the actual Agreement as well, i.e., either herself, or through her POA, RM. She couldn’t be duped, a serious charge. Where, finally, is the question of Agreement dated 03/01/2007 being cancelled, when it is, as being canvassed, not the actual Agreement, but only one meant for an ulterior purpose? 6.7 For the reasons afore-stated, in our view, the rate of Rs. 2.24 lac per cent stands conclusively established. (also refer para 7.1) ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 17 | P a g e 6.8 Next, we consider the issue of ownership of the subject property, i.e., to the extent of 276.87 cents (para 4.3(a)). The basis of the assessee’s challenge, as afore- noted, is the retraction of their stand by the sellers and, further, of evidences furnished by the assessee qua their utilization of sale money and returning income by way of capital gains. The latter, as afore-stated, would be by itself of no consequence inasmuch as the whole purpose of holding property benami is to save on tax. Returning income in their hands would thus only be in consonance with and to give effect to the scheme of fraud being perpetrated on the Revenue. We shall consider the case of each of the four sellers separately as, apart from the overall factual background, the burden is on the Revenue to establish the case qua each. The assessee, to begin with, runs two propriety concerns, viz. Gem Chem India and Gem Electricals and Sanitary Works. He owns 90% share in Gemco Rubber Pvt. Ltd. and owns plantation at Kannabra, Palakkad. Besides, he has shares in Micro Pipes Pvt. Ltd. and Kanjirappilly Amusement Park Pvt. Ltd. That is, is an influential and wealthy man. Shri P. Manoj (5.4 cents), a family man, aged 34 years, admitted vide a sworn statement dated 07/1/2014 to working as an office boy in Gemco Rubber Pvt. Ltd., earning Rs. 80,000 annually. He had, admittedly, no means to buy land, which was transferred to him by the assessee on 18/12/2006 for Rs. 1.02 lacs. He, on being questioned, had no clue of the sale details, further stating of having been informed by the assessee of purchasing about 5 cents of land at Ayyanthole in his name, sold in fy 2007-08, as had indeed been the case for the other three sellers. His subsequent retraction, unevidenced, is per written submissions furnished by the assessee on 15/12/2014. The same is to be per his sworn affidavit, which could then be subject to cross examination. Two, no reason is given for ‘retraction’ inasmuch as stating the earlier statement as having been given under the influence of alcohol, only needs to be stated to be rejected. He admitted to having not received any part of the sale consideration. The assessee has stated of transferring land to ‘help’ him. This falls in face of his admission of having not received any part of the sale consideration. Help, understandable as he had 10 years relations with the assessee, is ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 18 | P a g e where money, to fulfil a need, as his sister’s marriage, is transferred in his bank a/c. Rather, the very fact of registering purchase in his name in December, 2006, i.e., when negotiations with Dr. Majeed for sale were on, put pays the assessee’s case. 6.9 The case of the second person, i.e., Sh. K.J. Thomas, is on the same lines. Working as a manager in M/s. Gem Lights, belonging to the assessee’s son, is again a family man of no means, returning, as in the case of P. Manoj, a meagre income (rs. 0.66 lacs) u/s. 153C. 4.47 cents of land stands transferred to him by the assessee, again on 18.12.2006, i.e., days prior to it being agreed for sale for rs. 2.24 lac per cent, for a stated consideration of Rs. 90,000, ostensibly with a view to help him. The ‘arrangement’ stares one in the face. Much less proving the capacity, there is nothing to show of saving being accumulated, or even expended, nor indeed is there anything to show receipt of sale consideration by the ostensible seller. There has been no rebuttal of these primary facts at any stage nor indeed any explanation for the sale days after the purchase, which is surely not at market value, whether reckoned at rs. 2.24 lac or even rs. 1 lac per cent. As apparent, negotiations for sale, culminating into an agreement on 03/01/2007, were on at the relevant time, i.e., of ‘purchase’. The transaction is clearly motivated with an ulterior purpose of saving on tax, leading to the same irresistible inference of it being a managed transaction. 6.10 Like inferences arise in the case of Sh. Balachandran and Sh. Vijayan; the apparent differences in facts between them, as also vis-à-vis the former two, being found not material so as to alter the final conclusion on facts. Land stands purchased in both the cases, incidentally and inexplicably, on the same day, i.e., 08.01.2001. The only common factor between them, as we observe, is the assessee; both being his trusted employees, known to him for long. For instance, Sh. Balachandran admits to having worked in his concern, M/s. Teesons, Kolazhi, till 1985, i.e., even prior to setting up his concern, Trust Rubber. Specific facts in relation thereto are discussed separately, as follows. Sh. Balachandran admits in his statement u/s. 132(4) dated 07/1/2014 (PB-1, pgs. 97-105), to be closely associated with the ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 19 | P a g e assessee, working as a foreman in his company, Gwmco Rubber, drawing a monthly salary of Rs. 12,000, besides Rs. 8,000 p.a. as bonus. He further states of having purchased land from Kallada Group for Rs. 2,400 per cent (appx.), though could not tell the name of the person who represented the said Group in the said purchase. The sale deed, however, revealed the land to have been purchased instead from: - Jacob V. Elias and John V. Elias, sons of xxxxxx, 25 cents for Rs. 57,500, i.e., at the rate of Rs. 2300 per cent and; - Dilip s/o xxxx, 75 cents at Rs. 69,000, i.e., at the rate of Rs. 920 per cent. Or, at an average rate of Rs. 1265 per cent. None of them are stated, much less shown, to be of Kallada Group. He is thus unaware of the person/s from whom, as well as the rate at which, he purchased the land, he is stated to be the owner of, some years ago. How could this be? Further, though he admits to signing the Agreement dated 03/1/2007 bearing the sale rate at Rs. 2.24 lac per cent (Q.7), he had no explanation for the sale being effected at a rate less than 10% thereof. This is unconceivable if he had actually sold the land. He was, further, unable to tell the bank account in which the sale proceeds were deposited. Equally, the name of the person who paid him cash, or of the person/s to whom he paid money in discharge of the debt/s, stated to be incurred in running a propriety concern (by the name Trust Rubbers since 1987) in loss since 1995, up-to 2004-05. All this is completely un- evidenced, making the purchase of land by him in 2001 itself as most improbable. Why, he states, without evidence though, of receiving cheque for rs. 29 lacs (Qs. 8, 9), even as the sale amount of rs. 30.20 lacs stands paid cash. To most of the questions, his answer is: ‘I don’t remember’. The facts speak for themselves, and unmistakingly point to he being an owner only in the name. All he, stated to be an income-tax assessee, needed to do was to produce the balance-sheets of his firm, Trust Rubber, which would exhibit the source of the purchase as well as incurring losses over the years, as well as the utilization of the sale proceeds. Why, he would have filed returns for the said period, claiming losses, which are again conspicuous ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 20 | P a g e by their absence. Further, he would have sure obtained receipts from the creditors on settlement of the dues incurred on suffering losses for years; rather paid them through bank. In fact, incurring losses for over a decade itself suggests abundance of capital, either own or borrowed, which only would enable running the proprietary firm for years at a loss, raising substantial doubts as to the source of this capital and, in turn, about the veracity of the stated ‘facts’. No wonder, his statement, even as the AO observes, is marked by forgetfulness, which is near total. This is in fact improbable, if not un-believable for a person who had incurred continuous losses for a decade, implying being driven to penury and indebtedness, in receipt of Rs. 30+ lacs, which bails him out, while he has no clue as to where this sum disappeared, which, it needs to be appreciated, and even as the AO points out, would be a bounty, and there is no question of not knowing it’s destination. Why, his share in the advance sum of Rs. 100 lacs, i.e., on pro-rata basis, works to over rs. 39 lacs; again, a huge sum for a man of his means, particularly considering his financial distress; the balance-sheet (as on 31/3/2008) of Trust Rubber on record (PB-1, pgs. 79-83) exhibiting capital at meagre rs. 0.20 lacs. The same removes any doubt that one may have harboured as to the truth of what stands stated. Even as its receipt in cash is unexplained, the entire stated sale consideration (rs. 30.20 lacs) is withdrawn through the capital account on 25.8.2007, the sale date. That is, the day it is deposited in the firm. The withdrawal of money immediately makes its deposit in the first place as of no consequence. The same is only a book entry, made with an ulterior purpose of depicting cash receipt. The business of the firm stands ceased much earlier, and the cash has not gone to swell his capital in the firm. That is, one is still clueless about the destination of cash. No creditor is paid despite liabilities as on 31/3/2008 being at rs. 18.48 lacs, nor is it banked. In fact, the bank account on record (PB-1, pg. 91) was opened only later on 26/9/2007, i.e., after and closure of the firm, as well as the sale on 25/8/2007. Further still, even the capital-gains tax of Rs. 6.40 lacs, paid on 31.07.2008, a year later, is not out of the cash received, but out of Rs. 7.40 lacs deposited in July, 2008 ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 21 | P a g e by cheque, which was traced to T.C. Praveen, the assessee’s son! His return (PB-1, pgs. 84-85), as also the assessment order u/s. 143(3) dated 31/12/2010 (PB-1, pgs. 92-95), reflects no salary income, but miscellaneous income, described in accounts and the assessment order as commission (rs. 15,000); hire charges (rs. 30,000); and part-time chemist (rs. 12,000). It is thus clear that having admittedly stopped his business in fy 2004-05, he was not working for the assessee at the relevant time. That is, was without work, doing odd jobs. In short, in dire straits. Yet, he does not remember what he did with rs. 30.20 lacs received cash on 25.8.2007. In fact, these odd incomes were not returned per the original return on 31.7.2008, but only per the sec. 153C return, filed subsequently on 25/8/2014, and tax thereon (Rs. 26,953) deposited on 21.01.2011 on service of the notice of demand pursuant to assessment dated 31/12/2010. It is thus clear that neither the books of account nor the balance- sheet (as on 31/3/2008) of Trust Rubber was available at the time of filing the return on 31/7/2008. And stand made only for being produced at the time of assessment, proceedings in which, commencing with the issue of notice u/s. 143(2) on 22/9/2008, ended with hearing on 10/11/2010. We have already noted that recording of cash in the books of Trust Rubber is only by way of a book-entry, with a view to create a semblance of ‘evidence’ of it being accounted. The assessee has also placed the balance-sheet (as on 31/3/2009) of M/s. Astro Treads, another proprietary firm, in his compilation (PB-1, pgs. 86-90). The firm bearing no activity but only a carry- over of the assets of the erstwhile firm, Trust Rubber, it’s purport is not understood. It is stated that the old premises was vacated as TGC had to sell the factory premises housing the said firm. How, we wonder, then, ‘Building’ and ‘Electrical Installation’ continue to be reflected in the books of the new firm? Further, relocation of the fixed asset would in any case entail expenditure, as indeed an alternate accommodation, requiring its acquisition, even if rented. No such expenditure is found! The purpose of new firm, as indeed of it’s balance sheet, is not understood. The same being not referred to during hearing, there was no occasion to seek any clarification in the matter. Why, it cannot, for that reason, be in law regarded as part ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 22 | P a g e of the Tribunal’s record. Cash at rs. 14.50 lacs is entered in it’s accounts on 01/4/2008, so that the balance cash (rs. 15.70 lacs) is admittedly unexplained. This is quizzical in view of reflection of cash-in-hand as on 31/3/2008 in the cash statement (PB-1, pg. 107) at Rs. 28.45 lacs. Even the cash entered in accounts gets reflected at rs. 12.94 lacs as on 31/3/2009, so that it remains unutilized even after over 19 months of receipt! Reflecting cash-in-hand, rather, proves its non- utilization. It is only a cash flow statement, including cash receipt from all sources, including odd jobs, and that expended, paid, or deposited, that would qualify to be a proper account of cash, and exhibit it’s utilization toward proving the beneficial ownership of cash. Why, even this would stand to be verified for its veracity, examining the various persons to whom it is, not routed through bank, stated as paid. The money trail is completely missing. 6.11 We next consider the case of Sh. P.M. Vijayan, represented, in view of his demise, by his wife, Smt. Komalam Vijayan. Her statement (u/s. 131, dated 22.01.2014) is characterized by the words: ‘I don’t know’, i.e., ignorance. The same would therefore necessarily have to be guided by the material on record. The principal document being relied upon is the balance-sheet (as on 31/3/2008) of his proprietary concern, M/s. Prasun Industries (PB-1, pgs. 108-111). No tax return has been filed u/s. 139 despite admitted capital gain of rs. 17.33 lacs, and other income of rs. 2.25 lacs, as seen from the tax return (PB-1, pgs. 112-113). Why? To no answer. Filing tax return on the basis of the sale deed, even otherwise incumbent, is only in discharge of a legal obligation. We have in fact already opined that returning capital gains on the subject land would be by itself of little consequence; rather, in sync with the scheme to project the apparent as the real. Not so doing, as appears from the assessment order u/s. 153C r/w s.143(3) dated 28/3/2016, which mentions only of return u/s. 153C dated 30/1/2015 (PB-2, pgs. 1-9), rather defeats the case of the parties, the buyers and the sellers, which entails substantial tax savings for both, at the threshold. The said return reflects a regular income of pension (rs. 32,682) ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 23 | P a g e and salary (from Gemco Rubber) at rs. 66,600, i.e., barely sufficient to meet two ends meet. The capacity to purchase land in 2001 is thus not demonstrated, which only required filing the return and balance-sheet for that year. Like-wise, for the stated improvements to land in fys. 2002-03 & 2003-04, at rs. 60,000 each. No wonder, the same were not accepted in assessment dated 28/3/2016, assessing capital gain protectively. As it's perusal shows, his wife, is not aware of the purchase of the subject land, though confirmed him to be, after retirement, working for Gemco Rubber; purchase of 15 cents of land in 1990, on which he constructed his residential house. Further, the money received in 2000-2001 on sale of ancestral property was utilized for marriage of their daughter, Kavitha. Coming to the balance-sheet of Prasun Industries, as in the case of Trust Rubber, so that it cannot be a coincidence, cash representing sale proceeds (rs.23.20 lacs), is, save rs. 2 lacs, withdrawn on 25/8/2007, the sale date, i.e., the date of its deposit, so that it is only a book-entry, a camouflage, so as to ‘exhibit’ its recording. This becomes all the more incongruous as the said firm, as explained in the assessment proceedings (pgs. 115- 119), stood closed in March, 2005 due to financial crises, and no part of it is used to discharge creditors. Further, his capital therein as on 31/3/2008, which can be in view of closure of business, safely regarded as on 31/3/2005, is at rs. 0.86 lacs, as against outstanding liabilities at rs. 21.61 lacs, i.e., nearly 25 times! Sure, there are matching assets, but it is clear that they are not realizable as else they would not continue outstanding years after closure of business. The difference of rs. 2 lacs, though not material, is not understood, even as the same having not been referred to during hearing, there was no occasion to seek explanation in its respect. In short, the destination of ‘cash receipt’ of rs. 23.20 lacs remains unknown, even as he is debt ridden, and even as such a sum, as the AO also observes, would make a drastic change in their life. The same is included in the cash flow statement (pg. 116) at rs. 3.58 lacs instead of rs. 23.20 lacs. Why? Reflecting it, in whole or in part, as cash- in-hand, stated at rs. 4 lacs (as on 31/3/2008), is of no consequence; rather, confirms non-utilization. The same surprisingly does not even include tax paid at rs. 3.45 lacs. ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 24 | P a g e Why? Further, Sh. Vijayan admittedly advanced rs. 18 lacs as interest-free loan to Sh.T.C. Praveen s/o TGC (assessee), as soon as it is received from Dr. Majeed (on 19/3/2007 & 21/3/2007/refer bank statement at pg. 114), in two instalments of rs. 9 lacs each. Needless to add, no satisfactory explanation in its respect stands provided at any stage. If anything, it clarifies of he being used as a conduit, with money being exchanged between the principal characters. Though stated to be present at the time of negotiation for sale, i.e., as per the retracted statement dated 26.3.2015 by one of the brokers, Sh. Ratheesh Vega, the same contradicts his earlier statement as well as that by the other two brokers taken in 2015 and, besides, does not explain the reason for his stating otherwise initially, whereat his statement was in agreement with that by the other two, stating of none of the four sellers, i.e., other than the assessee, being present for negotiations, and which remains unchanged. Sure, it may here be relevant to state that the said absence would only be indicative, as it could be that they had given authority to the assessee to transact on their behalf, which would itself only be where all of them have complete trust in him, developed over years, suggesting a long and continuing association, involving finance in all likely-hood. However, none has stated so; there being in fact no whisper of any such authority being given. Rather, the brokers admitted to not know him, as also the other 3 sellers, and which is inconceivable if they are the actual owners selling their land/s inasmuch as, where so, they would be contacted by the broker/s in the first place. We have already stated of non- accounting of the cash advance on entering the Agreement on 03/1/2007, even as his share therein works to rs. 30+ lacs. It is again inexplicable that the land, agreed to be sold for rs. 2.2.4 lac per cent, is subsequently not sold even at the rate Rs. 1 lac, but at 1/5 thereof, the destination of which though remains unknown. We also note that the assessee contends of one, Sh. Salim, having filed a suit against Sh. P.M. Vijayan for right of way, which found weight with the ld. CIT(A). The same, if at all, would have a bearing on the value of the land. This is as a suit would only be maintainable against the registered holder of the property. The AO has vide para 9(vii) clarified ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 25 | P a g e that the Agreement dated 03/1/2007 bears full mention of the said civil suit resulting in Sh. Vijayan being allowed custody over 116 cents of land. Not only, thus, the argument is false; it, even if true, would have no bearing on the value as the same is in the knowledge of the parties entering the contract. The entire case is a made-up. In sum 7.1 The issue arising, in sum, is the validity of the deletion of the impugned addition in law, in the facts and circumstances of the case. The matter was examined from the stand-point of both – the ownership of the subject land by the assessee, in whose hands substantive assessment stands made, as well as the quantum of the capital gains. Qua the latter aspect, in the absence of any finding per the impugned order, reliance was placed by the assessee-respondent on the order by the first appellate authority, being incidentally the same person, in the assessee’s own assessment for AY 2007-08 (refer para 4.2), which in turn stands followed by the first appellate authority for the current year in case of the ostensible sellers, assessed protectively. There is, however, no specific finding therein as to ownership, being sans any finding qua the relevant aspects viz. the validity of the agreement dated 03/01/2007; it’s cancellation; retraction; utilisation of sale proceeds, etc. Our examination, which is, as is to be the case, on the basis of the material on record, leads to a unequivocal finding of the assessee being the owner of the subject land, a contiguous piece; the executor of it’s sale per a single transaction; and the beneficiary of the sale proceeds. The common factor between all the four sellers is the assessee; they being employees in his different concerns, or that of his son, Shri T.C. Praveen. The capacity (to purchase) by the sellers, absence of which is apparent, is completely un demonstrated, with two (of four) being transferred land by the assessee at less than 10% of the obtaining price, with a view to, as stated, ‘help’ them! In the absence of any explicit or implicit authority, his sole presence in the negotiation with the buyers, being represented by Dr. Abdul Majeed, is a significant indicator of the de ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 26 | P a g e facto ownership of the land. Of no less import is not-knowing any of the other sellers by the three brokers, who would rather contact them in the first place. The statement of the brokers, as indeed the sellers themselves, are a complete give-away; the latter having little clue of the transaction, much less of its finer details. The retractions, months later, are unsubstantiated nor backed by corroborative material, i.e., are factually and legally untenable, as opposed to that by the principal buyer, duly cross-examined, bringing parity between the different statements. There being a complete absence of money trail, the sellers have been found to be puppets. The Agreement dated 03/1/2007, which also bears the statutory presumption as to truth u/s. 292C, is found valid. Its cancellation as well as the defect leading thereto, is completely unevidenced. There is no explanation for the non-receipt of payment by cheque/s nor as to why it stands sold at either Rs. 1 lac per cent (9.87 cents) or at Rs. 20,000/- per cent (267 cents), working to an average of Rs. 22852 per cent, i.e., at about 10% or the originally agreed price of Rs. 2.24 lac per cent, within a period of 8 months. So much for the collective bargaining power, stated to be the reason for all of them, including the assessee – who admittedly owns the land that fronts the road, and through which access to the land of other four could be had, for coming together for the sale of land. Not surprisingly, the land is sold, in all four cases, on the same date, i.e., 25/8/2007. Contrast this with, and in any case, it needs to be noted that this land was subsequently sold at Rs. 6.70 lacs per cent, i.e., in February, 2010 (refer assessment order dated 28/03/2016 of Shri K.J. Thomas for AY 2008-09/PB-2, pgs.85-96). Even if subsequently scaled down to Rs. 4.80 lacs per cent, as Dr. Majeed clarifies (vide his statement u/s. 132(4) dated 18/12/2013 / PB-1, pgs.27-36); the said difference not concerning us here, the lower figure again represents a 114% increase over the agreed price of Rs. 2.24 lacs per cent within 3 years of the Agreement dated 03/1/2007, justifying the same. The return of the capital gain by two sellers is of no consequence; the same being only be give effect to the benami transitions (refer: ITO v. Rattan Lal [1984] 145 ITR 183 (SC); Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244 (SC)). ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 27 | P a g e Why, the money to pay the tax is itself either unexplained (Rs. 3.45 lacs) or comes from the assessee (or his family member) (Rs. 6.40 lacs), who stands the benefit by off-loading his tax liability. Scrutiny of the material led to demonstrate utilization of sale proceeds, not banked, reveals it to be sans evidence; rather, an attempt to mislead. Though, therefore, liable to be ignored to the extent it stands adduced as additional evidence, having been admitted without recording any satisfaction of the conditions of admissibility, the same, intertwined with other material, has been considered, finding it as not assisting and, rather, defeating the assessee’s case. 7.2 As regards the assessee’s claim u/s. 54B, made for AY 2009-10, the same stood denied by the AO stating the same as applicable only where the agricultural land purchased is subsequent to the transfer of the land being used for agricultural purposes by the assessee, while in the instant case the same stands purchased earlier on 17/04/2007. This would equally apply for the current year; the subject land having been sold on 25/8/2007. We state this as, where otherwise valid, we would have, despite absence of any claim for the current year, restored the matter to the file of the AO for an examination thereof on merits, i.e., in the interest of justice. This is as, without doubt, it is a correct income that is liable to be assessed and brought to tax (NTPC v. CIT [1998] 229 ITR 383 (SC)). This, despite the fact that there is nothing on record to show, nor even a claim at any stage, that the subject land, located at a commercially prime location in Thrissur, had been used in the two years prior to it’s sale for any agricultural activity. That would form the subject matter of adjudication on merits. The claim, its merit apart, in fact impugns the assessee’s case further. The purchase of a rubber plantation in April, 2007, which forms the basis of the claim u/s. 54B, completes the money trail; the assessee having admittedly received Rs. 100 lacs by way of advance on 03/01/2007 in pursuance of an Agreement found valid and not cancelled. We have already noted the absence of any entries in its respect in the assessee’s accounts (or that of any of his concerns), nor indeed of Dr. Majeed; the claim of its return being itself a proof of having paid ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 28 | P a g e it. Two, it explains the Agreement dated 07/03/2007, not shown to be referred to in the sale deed dated 28/05/2008, found by the AO as an afterthought, whereat possession of 50 (51) (out of 107) cents of land is stated to have been given on receipt of Rs. 50 lac by 16/3/2007, so that a transfer in law (s. 2(47)(v) of the Act) has taken place, necessitating reopening of his assessment for AY 2007-08. If, therefore, transfer to that extent (50 cents) has taken place in AY 2007-08, the exemption u/s. 54B thereon, where exigible, could only be for that year (i.e., AY 2007-08). We may though state that the amendments to the Registration Act, 1908 and Transfer of Property Act, 1882 (vide Registration and Other Related Laws (Amendment) Act, 2001), no cognizance to part performance can be given, even as explained in CIT v. Balbir Singh Maini [2017] 398 ITR 531 (SC). We have, on facts, found the Agreement dated 07/03/2007 to be a make-believe. The Tribunal for AY 2009-10 (PB-1, pgs.72-78) proceeds on the basis of the validity of the said Agreement; the same being not an issue before it. In fact, it refers to an Agreement dated 17/3/2007 (refer para 2 of it’s order), which appears to be a mistake inasmuch as the order by the first appellate authority (PB-1, pgs.64-71) makes reference only to the Agreement dated 07/3/2007. 7.3 Working of the capital gain in the case of Shri P. Manoj & Shri K.J. Thomas would not be as short-term capital gain, as made in their protective assessments, but as long-term capital gains, ignoring the purchase dated 18/12/2006, i.e., substituting it with the actual cost (and date) of acquisition by the assessee (TGC). 8.1 We, in view of the foregoing, find no merit in the assesse’s case, while surely in that of the Revenue, both as regards the beneficial owner of the subject land, the capital asset, as well as the quantum of the sale consideration, which thus finds our approval, vacating the findings per the impugned order. We decide accordingly. 8.2 The Registry is hereby directed to place a copy of this order in the appellate folders of the two sellers in whose case appeals have been preferred before the ITA No. 67/Coch/2018 (AY 2008-09) Dy. CIT v. T.G. Chandrakumar 29 | P a g e Tribunal (P.N. Vijayan & A.A. Balachandran), so that the Bench deciding their appeals, notices and has the benefit of this order. 9. In the result, the Appeal by the Revenue is allowed on the aforesaid terms. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 Sd/- Sd/- (Sandeep Gosain) (Sanjay Arora) Judicial Member Accountant Member Dated: April 03, 2023 Copy to: 1. The Appellant 2. The Respondent 3. The CIT - Central, Kochi 4. The Sr. DR, ITAT, Cochin 5. Guard File