AI Insights
The case involves the Income Tax Department (Revenue) appealing against the decision of the Commissioner of Income Tax (Appeals) which had deleted the additions made by the AO on unexplained cash deposits and investments in properties by the late Smt. Nanhi J. Walia, represented by her legal heir Shri Jasjeet Singh Walia. The AO had initially made these additions following a search and seizure operation under section 132 of the Income Tax Act, which revealed substantial unexplained cash deposits and discrepancies in property transactions. The CIT(A) found that the assessee had maintained regular books of account and had adequately explained the sources of the cash deposits, leading to the deletion of the additions. However, the Tribunal found merit in the Revenue's appeal concerning the property investments, noting that the purchase considerations were significantly lower than the stamp duty valuations, suggesting underreporting of income.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 130339 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 7 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
12-07-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
02-05-2023
Assessment Year
2011-2012
Appeal Filed On
15-11-2021
Judgement Text
Page 1 of 10 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No. 142/Ind/2021 (Assessment Year:2011-12) ACIT Central-1 Bhopal Vs. Late Smt. Nanhi J. Walia (through Legal heir Shri jasjeet Singh Walia) 188, Rijwan Bagh, VIP Road, Lalghati Bhopal (Appellant / Revenue) (Respondent/ Assessee) PAN: AABPW 2476 M Revenue by Shri P.K. Mishra, CIT-DR Assessee by Ms. Nisha Lahoti & Shri Vijay Bansal, ARs Date of Hearing 03.05.2023 Date of Pronouncement 13 .07.2023 O R D E R Per Vijay Pal Rao, JM: This appeal by the Revenue is directed against the order dated 10.08.2021 of Commissioner of Income Tax(Appeal)-3 Bhopal, for Assessment Year 2011-12. The Revenue has raised following grounds of appeal: “1.On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.51,66,900/- made by the AO on account of unexplained cash deposits in bank accounts. IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 2 of 10 Page 2 of 10 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.3,29,42,500/- made by the AO on account of unexplained investment.” 2. Ground No.1 is regarding addition made by the AO on account of unexplained cash deposit in the bank account was deleted by the CIT(A). There was a search and seizure action u/s 132 of the Act at the residential premises of the assesse as well as premises of other concerns/business associates on 20 th June 2012. Thereafter the AO issued notice u/s 153A on 29.10.2013 and in response to the said notice the assesse filed return of income for the assessment years 2007-08 to 2012-13 including the assessment year under consideration. The assessment year under consideration is abated assessment by virtue of search dated 20.06.2012 because on the date of the search the assessment was pending and not completed. Therefore, the assessment proceedings u/s 153A would be in the nature of regular assessment and not reassessment. During the course of assessment proceedings the AO noted from the bank statement of the assessee that the assesse has deposited huge cash in her bank account for the assessment years 2007-08 to 2013-14 and for the year under consideration a sum of Rs.51,66,900/- was found deposited. The AO issued notice u/s 142(1) and asked the assesse to explain source of cash deposit and also as to why the cash deposit in the bank account should not be treated as undisclosed and added to the total income of the assesse. The assesse filed the reply and also produced the cash book and explained that all the deposits in the bank account are duly recorded in the books of account as well as the source of the cash was explained from the cash book entries as well as bank account statements. The AO was not satisfied with the reply of the assesse and held that investments made by the assesse in the nature of cash deposit in the bank account is not disclosed in the books of account and the same was treated as unexplained investment u/s 69 of the Act. On appeal the Ld. CIT(A) has considered the explanation and reply of the assessee filed before the AO IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 3 of 10 Page 3 of 10 and also entries as recorded in the regular books of account of the assesse. The Ld. CIT(A) has held that the evidence produced by the assessee explained each and every transaction recorded in the books of account. As the assesse is maintaining regular books of account and consequently addition made by the AO was deleted. 3. Before the Tribunal the Ld. DR has submitted that the assesse failed to explain the source of cash deposited in the bank account therefore, AO was justified in making addition of the cash deposit. He has further submitted that mere recording in the books of account without explaining the source of the cash is not sufficient to discharge its onus. He has relied upon the order of the Assessing Officer. 4. On the other hand, ld. AR of the assessee has submitted that the assesse has produced cash book which contains all the entries of deposit in the bank account. He has referred to page 216 to 219 of the paper book and submitted that all the entries of cash deposit are duly recorded in the cash book and therefore, there cannot be any doubt about the source of the deposit of the cash. She has also referred to the bank statement and submitted that there is a withdrawal of Rs.65 lac on 05.10.2010 and thereafter on 27.10.2020 an amount of Rs.50 lac was deposited out of the said withdrawal amount. The deposit in the bank account is explained by the bank statement when there is prior withdrawal of higher amount then the deposit. She has referred to credit entry of Rs.1 cror on 04.10.2010 out of which a sum of Rs. 61,00,000/- was withdrawn and subsequently deposited. The Ld. AR has referred to para 7.8 of the AO and submitted that the AO has not disputed that the assesse is maintaining regular books of account which were produced before the AO. The case law relied upon by the AO are not applicable in the facts of the present case as in that case there was no books of account maintained by the assesse. 5. We have considered the rival submissions as well as relevant material on record. The Assessing Officer issued show cause notice to the assessee for explaining source of the cash deposit in the bank account. IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 4 of 10 Page 4 of 10 The AO has recorded this fact that the assessee in reply has submitted the copy of the books of account and particularly the cash book containing the entries of the cash transactions including deposit in the bank account. The AO without doubting the entries in the books of account has made the addition of the cash deposit of Rs.51,66,900/- for the year under consideration by treating the same as unexplained investment and deemed income from undisclosed source u/s 69 of the Act. The finding of the AO is contrary to the record and particularly the entries in the bank account itself wherein there are various entries of deposit and withdrawal and the assessee has explained source of deposit as prior withdrawal from the bank account. Sufficient fund in the bank account was also credited through banking channel therefore, by considering these facts the Ld. CIT(A) has deleted this addition in para 4.3 to 4.3.2 as under: “43 Ground No 4 & 5 for AYS 2007-08, 2009-10 to 2013-14- Through these grounds of appeal, the appellant has challenged addition of R$ 55,000/- in AY 2007-08, Rs.1,65,000/- in A.Y.2009-10, Rs.5.94,700 in A.Y.2010- 11, Rs.51,66,900/- in A.Y.2011-12, Rs.4,27,000/- in A.Y. 2012-13 and Rs.87,000/- in AY 2013-14 on account of cash deposits in the bank account. The AO during the course of assessment proceedings required the assessee to explain source of cash deposit in his bank account in AYS 2007-08, 2009-10 to 2013- 14. The assessee in reply submitted that the cash deposit is fully recorded in regular books of accounts. The AO after considering reply of the assessee did not find the same acceptable and stated that the assessee has failed to establish source of cash deposits and made additions to the income for the appellant in AYS 2007-08, 2009-10 to 2013-14. 4.3.1 I have considered the facts of the case, plea raised by the appellant, remand report and findings of the AO. The appellant before me has taken a plea that the cash deposit in bank account is fully recorded in regular books of account. In support appellant has filed copy of cash book and ledger account of bank which were also found and seized during the course of search. On perusal of evidences on record it was found that each and every transaction is recorded in books of accounts and appellant has maintained regular books of accounts. On the other hand the AO has invoked provisions of section 69 of the Act which covers any investment which has not been recorded in books of accounts. In the instant case, the entire transactions are recorded in books of accounts and have been taken into consideration before filing of return. IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 5 of 10 Page 5 of 10 4.3.2 In view of the above discussion, additions made by the AO amounting to Rs.55,000/- in AY 2007-08, Rs.1,65,000/- in A.Y.2009- 10, Rs.5,94,700/- in A.Y.2010-11, Rs.51,66,900/- in A.Y.2011-12, Rs.4,27,000/- in A.Y. 2012-13 and Rs.87,000/- in AY 2013-14 are Deleted. Therefore, appeal on this ground is Allowed.” 6. In the proceedings before us the AO has not brought any facts or material on record to show that the entries in the books of account as well as entries in the bank account which are not matching and the same are not correct or based on actual transactions. Once the deposits in the bank account are duly recorded in the books of accounts than the provisions of section 69 are not attracted. Accordingly we do not find any error or illegality in the impugned order of the Ld. CIT(A) qua this issue. 7. Ground No.2 is regarding the addition made by the AO on account of unexplained investment in the plots of lands. Ld. DR has submitted that during the post search inquiry it was found that the assessee has purchased four properties during the financial years 2009-10 & 2010-11 out of which three properties were purchased during the financial year 2010-11 relevant to the assessment year under consideration. The details of properties purchased by the assessee, purchase consideration declared/ shown in the sale deed and fair market value/stamp duty valuation are given by the AO in para 8 of the assessment order. There is a huge difference in the purchase consideration shown in the sale deed in comparison to the stamp duty valuation which is ranging from 100 % to 200%. Ld. DR has submitted that in the case of M/s. Kymore Iron Pvt. Ltd. the husband of the assessee admitted the payment of on-money from 100% to 200% of the purchase consideration shown in the sale deed. The AO accordingly adopted the fair market value of the property as the actual purchase consideration paid by the assessee and differential amount was treated as unexplained investment as on-money payment by the assessee for the year under consideration. The AO has calculated unexplained investment to the tune of Rs.3,29,42,500/-. He has submitted that the Ld. CIT(A) has deleted the addition by assuming incorrect facts of fair market value. The AO issue the summons to the sellers but no response was received. Thus, the Ld. DR has submitted that it is undisputed fact that IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 6 of 10 Page 6 of 10 the market price of land is always more than the stamp duty valuation, therefore, the AO was justified in taking stamp duty valuation as fair market value of the properties purchased by the assessee. 8. On the other hand, Ld. AR has submitted that this issue is covered by the order dated 18.11.2022 of this Tribunal in case of DCIT vs. Shri Jasjeet Singh Walia in ITANo.183/Ind/2020. She has contended that when there is no material found to show that the assessee has actually made the payment of more than the purchase consideration recorded in the sale deed then the addition made by the AO is based on the assumption and surmises. She has supported the impugned order of CIT(A). 9. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has given details of the fair market value and the valuation shown by the assessee of the properties purchased during the year under consideration in table given in para 8 at serial 2 to 4 as under: Sr. No. Description of properties Seller Registered value (in Rs.) Fair Market Rate (in Rs.) 2 Land bearing Khasara No.18/2/1/6/3(18 /2/1/6/4 Mrs. Namrata Chopra w/o Dr. Sandeep chopra, R/o Dr. Chopra Niwas, 52, Almeda Park, Bandra Mumbai (M.H. and Shri Rajesh Kokane R/s: A-706, Empress Court, survey no.67/B, Empress county, Sopan Bagh, Pune-411001 85,00,000 1,93,60,000 3 Land bearing Khasra no.18/2/1/6/6/3, 18/2/1/6/4/3 measuring 0.222 Dr. H.S. Kapoor S/0 late Shri Prakash Chand Kapoor, R/s. 102-H, Ridge Road, Idgah Hills Bhopal 42,50,000 1,29,32,000 IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 7 of 10 Page 7 of 10 hec. Village- Kohefiza, Ph no. 23, Vikaskhand- Fanda, The-Huzur, Bhopal DOR: 23.02.2011 4 Land bearing Khasra no.18/2/1/6/6/3 18/2/1/6/6/4/4 measuring 0.222 hec. (i.e.- 0.55 acre) with constructed are a measuring on ground floor is 857.41 sq.mt and on 1 st floor is 428.73 sq mt. village-Kohefiza, Phno.23, Ward no.5 Vikashkhand Fanda, The-Huzur, Bhopal DOR- 23.02.2011 Dr. Rajdeep Kapoor S/on Dr. H.S. Kapoor R/o 102 H, Rij Road Idgah Hills Bhopal 72,50,000 2,06,50,500 10. From the details as recorded by the AO it is clear that the notified circle rate/the stamp duty valuation of all these properties is ranging from 200% to 300% of the purchase consideration shown in the sale deed. Though the assessee has objected to the adoption of the fair market value as the actual purchase consideration paid by the assessee however, it is not case of the assessee that these properties are having any disadvantage or defects due to bad location or narrow excess etc. which may lead to the market price of the property less than the prevailing fair market value and stamp duty valuation. It is well known fact that in Indian it is almost impossible to find the market rate of land less than the notified circle rate being stamp duty valuation and that too only 1/3 or ½ of the stamp duty valuation. It is beyond conceivable possibilities that a land situated in the IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 8 of 10 Page 8 of 10 capital city of the State having no defect or disadvantage could be available at price of 1/3 or ½ of the notified circle rate or stamp duty valuation. Therefore, this glaring facts lead to the only logical conclusion that purchase consideration shown in the sale deed is not real consideration. The AO has considered the crucial fact revealed by the husband of the assessee in the statement that on-money was paid for purchase of properties. The AO has adopted the stamp duty valuation as fair market price and held that the assessee had paid the purchase consideration at least equivalent to stamp duty valuation. The assessee has not produced any material in support of the claim that actual fair market value of these properties is the purchase consideration shown in the sale deed. As regards the order of this Tribunal dated 18.11.2022 in case of DCIT vs. Shri Jasjeet Singh Walia (supra) the Tribunal has upheld the finding of Ld. CIT(A) as under: “23. During first-appeal, the assessee made a detailed submission to Ld. CIT(A). After considering submission of assessee, Ld. CIT(A) deleted additions by observing and holding as under: “4.6.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant before me has strongly contended that the said properties were not purchased by the appellant, however, the said properties were sold by appellant. Since the lands were rural agricultural lands and therefore, capital gain from such sale was exempt u/s 10(37) of the Act. In support appellant has filed copies of registered deeds. On perusal of copies of registered deed it was found that the observations made by the AO were factually incorrect. The appellant has sold the abovementioned lands. Both the lands were rural agricultural lands. Since, the lands under consideration were rural land, therefore, the capital gain arising on same of such land is exempt uls 10(37) of the Act which has been claimed" by the appellant in return of income at Rs. 11,11 ,220/-. The AO has accepted the exemption claimed by the appellant and no addition was made on this account. IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 9 of 10 Page 9 of 10 4.6.2 In. view of the above discussion, the addition made by the AO was factually incorrect and deserves to be deleted. Thus, addition made by the AO amounting to Rs. 64,35,000/- is Deleted. Therefore, appeal on this ground is Allowed.” 24. On a careful consideration, we observe that the Ld. CIT(A) has clearly observed that the Ld. AO has made addition on a factually incorrect footing that the assessee had purchased the lands. In fact, the assessee has sold the lands and not purchased as claimed by Ld. AO. Thus, the very foundation of addition adopted by Ld. AO is incorrect. We further observe that the Ld. CIT(A) has also found that the impugned lands sold by assessee were rural agricultural lands whose capital gain was not taxable under the scheme of Income-tax Act. During hearing before us, the Ld. DR could not contradict these finding made by Ld. CIT(A). Therefore, we have no reason to upset the finding of Ld. CIT(A). Consequently, we are inclined to uphold the action of Ld. CIT(A). Thus, Ground No. 9 of Revenue is also dismissed.” 11. It is clear from the facts recorded in the case of DCIT vs. Shri Jasjeet Singh Walia (supra) that it was a case of capital gain on sale of agricultural land exempted u/s 10(37) of the Act and therefore, the Ld. CIT(A) deleted the addition made by the AO on account of capital gain on the ground that it will not have any revenue effect as the capital gain arising from agricultural land is exempted u/s 10(37) of the Act. In the said case there was no finding of fact that the assessee did not receive any amount over and above the sale consideration shown in the sale deed. Even otherwise in case of capital gain the provisions of section 50C are applicable which are deeming provisions and therefore, the question of actual sale consideration received by the assessee is irrelevant. Accordingly, the said decision of the Tribunal does not cover the issue involved in the case of the assessee before us. The stamp duty valuation is a matter of record and not disputed by the parties being recorded in the sale deed itself at the time of registration. Therefore, in absence of any other material or IT(SS)A No.142/Ind/2021 Late Smt. Nanhi Walia Page 10 of 10 Page 10 of 10 evidence produced by the assessee the stamp duty valuation is relevant and material evidence on the issue of on-money exchanged hands. The AO had given details of stamp duty valuation of each land and purchase consideration claim to have been paid by the assessee as shown in the sale deed which are not in dispute. Therefore, by considering facts and circumstances of the case the only logical conclusion can be arrive that the purchase consideration shown by the assessee in the sale deed is not the real payment made by the assessee and hence addition deleted by the CIT(A) by ignoring the glaring facts and undisputed fair market value is not justified. Accordingly, we set aside the impugned order of ld. CIT(A) and restored the matter of the AO. 12. In the result, appeal of Revenue is partly allowed. Order pronounced in the open court on 13.07.2023. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 13.07.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
Other Referred Cases
DCIT vs. Shri Jasjeet Singh Walia
Laws Referred To
Income Tax Act
1:1 Consultation on Tax Litigation
₹0
1:1 Consultation on SME Listing
₹0
Consultation on Entity Formation
₹0
CRM Implementation Plan
₹0
Rectification Letter - Application for rectification of mistake under Section 154 of I.T. Act
Mehul₹0
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026
Why Lacoste Won a 20-Year Trademark Battle Against Crocodile ?
Team Counselvise - March 10, 2026
SEBI Resets Mutual Fund Rules: A Structural Shift for Investors
Team Counselvise - March 13, 2026