ACIT Vs Sanjeev Agrawal (ITAT Indore)
ITAT Indore held that the deeming fiction created in section 50C cannot be extended to the provision of section 69 or 69B or any other of the Act in the case of purchaser to make the purchaser liable for tax.
Facts- A.O. has made addition only on the strength of copy of registered sale deed executed by Shri Amit Kumar Patni in favour of partnership firm M/s. Shiva Reality wherein the assessee was also a partner. AO noted that the assessee purchase land of 0.67 hectare situated at gram Samardha Kaliyasot on 07.09.2011, showing consideration of Rs. 35 lakh therein as against fair market value based on registrar stamp duty of Rs. 57,70,000/- .
AO show cause the assessee that why an amount of Rs. 22,70,000/- should not be treated as undisclosed investment in the purchase of From para 23 to 23.6 we note that the AO after observing the facts discernable from the register sale deed went upon to held that the firm has infused huge cash towards purchase of above land and the quantum undisclosed cash investment would not be less than the prevailing market rate or market value whichever is higher therefore he finally held that the assessee firm has made investment in land of Rs. 57,70,000/- and at the time of registry out of disclosed income and the registry was made of Rs. 35 lakhs only. The AO made addition of Rs. 22,70,000/- in hands of assessee on substantive basis and in the hands of firm M/s Shiva Reality on protective basis treating the same as unexplained investment u/s. 69B of the Act.
CIT(A) granted relief to the assessee. Accordingly, being aggrieved, revenue has preferred the present appeal.
Conclusion- The Ld. CIT(A) rightly observed that the deeming fixation of section 50C of the Act can be applied in the case of seller only and not in the case of purchaser and the provision of section 56(2)(vii)(b) is applicable with effect from A.Y. 20 14-15 onward and not for A.Y. 20 12-13. The Ld. CIT(A) rightly relied on the order of ITAT Chandigarh Bench in the case of ITO vs. Inderjeet Kaur (supra), wherein it was held that the deeming fiction created in section 50C cannot be extended to the provision of section 69 or 69B or any other of the Act in the case of purchaser to make the purchaser liable for tax. In the present case, the AO has made addition u/s. 69B of the Act which is applicable only when the Assessing Officer successfully discharge onus, lay on his shoulder, establishing that the assessee has made investments which is not recorded in the books of accounts of the assessee or the amount recorded in the books pertaining to the transaction exceeds the actual consideration paid by the assessee and in such a situation when the assessee offers no explanation about such excess amount or the explanation offered by him is, in the opinion of the A.O., not satisfactory. In the present case the assessee requested to call upon the seller to explain the situation but the summon issued u/s. 131 of the Act to the seller was served and the replied in writing to dak of the AO. Merely because the seller was not present in person before the AO, the assessee cannot be alleged to have made any unexplained investment which could entitle the AO to make addition u/s. 69B of the Act. Therefore the Ld. CIT(A) was right in deleting the addition on this issue.
FULL TEXT OF THE ORDER OF ITAT INDORE
This appeal filed by the Revenue is directed against the order dated 14.08.2020 of the Ld. CIT(A), Bhopal, relating to Assessment Year 2012-13.
2. The grounds of appeal raised by the revenue read as under:-
1. On the facts and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 6,50,00,000/- made by the Assessing officer on account of voluntary surrender u/s 132(4) of the Income Tax Act, 1961.
2. On the facts and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 75,61,000/- and Rs. 6,25,000/- made by the Assessing officer on account of unexplained transactions.
3. On the facts and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 82,35,639/- made by the Assessing officer on account of overdraft interest.
4. On the facts and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 3,53,80,000/-, Rs. 49,00,000/-, Rs. 18,50,000/-, Rs. 22,70,000/- made by the Assessing officer on account of on money payment against the land purchase.
3. Apropos ground no. 1 the learned CIT(DR) submitted that the AO was right in making addition in this regard because during the course of statement recorded u/s. 132(4) of the I.T Act 1961 on 22.10.2011 and 15.11.2011, the assessee Sanjeev Agrawal has offered total undisclosed to the tune of Rs. 17,25,00,000/- in the hands of himself, his family members and his business concerns. The learned CIT(DR) further submitted that subsequently again vide letter dated 23.04.20 12 before the DDIT-(Inv.)-1, Bhopal the assessee again confirmed the said surrender of Rs. 17.25 crores. The learned CIT(DR) further submitted that in the case of ACIT vs. Hukum Chand Jain reported as (2010) 191 Taxmann.com 319 (Chhatisgarh) , the Hon’ble Chhatisgarh High Court has held that the admission is one important piece of evidence but it cannot be said it is conclusive. The learned CIT(DR) submitted that in this case Hon’ble High Court considered the judgement of Hon’ble Rajasthan High Court in the case of Ramjas Naval vs. CIT 183 CTR (Raj) 144 wherein it was held that assessee admits that he is disclosing undisclosed income at his free will without any threat and express his inability of submit any documentary evidence during the search proceedings then subsequent contention of the assessee that the income found during the search proceedings in genuine has to be held that afterthought. Therefore the AO was right in making addition in this regard and the Ld. CIT(A) had deleted the same without any cogent reason. Therefore the first appellate order may kindly be set aside by restoring that of the AO.
4. Replying to the above the learned counsel of the assessee strongly supported the first appellate order submitted that the AO has made addition which was not sustainable on the basis of surmises of conjectures which was rightly deleted by the Ld. CIT(A). The learned counsel drawing our attention towards relevant part of the first appellate order submitted that during the course of search proceedings the assessee submitted brief details and declared Rs. 4 crores has work in progress in Sagar Premium Towers, Rs. 1 crore advance given to the parties and Rs. 90 lakh was cash kept at side Sagar Premium Towers and Rs. 85 lakh kept at side at Sagar The learned counsel further explained that besides that above Rs. 6.75 crore declaration the assessee made miscellaneous surrender of Rs. 10.50 crore and it was submitted that the same shall be confirmed after study of all loose papers.
5. The learned counsel further submitted that subsequently after filing of return u/s. 153A of the Act, assessee did not find any investment linking with said remaining of amount of Rs. 10.50 crores but however just to by piece of mind and reduced the litigation the assessee shown Rs. 4 crores in his tax return and return of his wife under income from other sources. The learned counsel submitted that the voluntary surrender amount of Rs. 25 crores was reduced to Rs. 10.75 crores and balance amount of Rs. 6.50 crores was deducted as there was no corroborative evidence on record to corroborate the conclusion of the AO. The AO, that the assessee has earned income undisclosed sources at Rs. 6.50 crores over and above of Rs. 3 crores disclosed in the return of income.
6. The learned counsel, supporting the first appellate order, vehemently pointed out that the AO has failed to bring on record any positive or adverse evidence having nexus with the assessee or business transaction carried out by the assessee or by pointing out assessee connection with the seized documents in name or otherwise. Therefore, it was rightly concluded by the Ld. CIT(A) that the addition made by the AO was not on the basis of any incriminating material found during the course of search but only on the basis of statement of assessee Shri Sanjeev Agrawal only. The learned counsel also pointed out that during the post search enquiries no irregularity or adverse material have been brought on record and only addition made was towards income declared in the statement recorded u/s. 132(4). The learned counsel also place reliance on the various decisions including as listed below:-
1. ACIT (1) vs. Sudeep Maheshwari ITA No. 524/Ind/2013
2. Kailasben Mangarlal Chokshi Vs. Commissioner of Income Tax-(2008) 14 DTR 257 (Guj.)
3. Shree Ganesh Trading Co. Vs. Commissioner of Income Tax, Tax Case No.8 of 1999
4. Ms/ Ultimate Builders vs. ACIT Central-II, Bhopal ITA No. 134/Ind/201 9
5. Kailashben Manharlal Choksi 328 ITR 411 (200)
6. CIT vs. Jaya Lakshmi Ammal (2017) 390 ITR 189 (Mad.)
7. ACIT vs. Shri Yogesh Kumar Hotwani 30 ITJ 353/380 (Ind-tri)
7. The learned counsel submitted that without making any reference to any incriminating material found during the course of search suggesting of earning of unaccounted income the Ld. CIT(A) was right in deleting the addition by following the order of ITAT Indore Bench in the case of Ms/ Ultimate Builders (supra) and other judgments including judgment of Hon’ble Gujarat High Court in the case of Kailashben Manharlal Choksi (supra).
8. The learned counsel lastly submitted that during the course search and seizure operation the assessee was under stress and was not able to peruse his books of accounts and financial statements nor was able to consult his tax advisor therefore the assessee in all fairness kept open the heads of declared amount and after considering the entire facts and circumstances surrendered amount of Rs. 10.75 crores and also paid tax thereon. Therefore, remaining amount of Rs. 6.50 crore was rightly deleted by the Ld. CIT(A) having no substance and without support of any adverse material.
9. On careful consideration of above submissions first of all we note that the AO made addition on the basis of statement recorded by the Investigation Wing during the course of search and seizure operation on 22.02.2011 and 15.11.2011 of assessee Shri Sanjeev Agrawal and subsequently, vide letter dated 23.04.20 12 he again confirmed the said surrender. The said letter dated 23.04.20 12 has also been reproduced by the AO in para 13.3 at page no.9 and 10 of the assessment order.
10. However, at the time of filing return of assessee, his wife and other related concern the assessee including amount of Rs. 05.75 crore in the name of M/s. Agrawal Constructions towards projects namely; Sagar Premium Towers (work in progress to parties) & Sagar Landmark of Rs. 3 crore in his own account and Rs. 2 crore on account of his wife Mrs. Kiran Agrawal, totalling of Rs. 10.75 crores and also paid due tax thereon. This created a difference of Rs. 6.50 crores which was impliedly retracted by way of showing less amount of surrender money. This was picked up by the AO for making addition in the hands of assessee.
11. From careful perusal of the relevant part of the first appellate order, we further note that the learned first appellate authority after considering the stand of the AO, replying and explanation of the assessee concluded that the assessee has made the deduction of Rs. 6.5 crores by submitting that no such undisclosed income was earned and therefore no such income was required to be offered to tax. For the sake of completeness, we find appropriate to reproduced the relevant cooperative part of the first appellate order which read as follows:-
4.5.1 During the course of search at various premises of appellant various incriminating material/documents were found and seized. These documents were also confronted to appellant and the appellant in reply made voluntary surrender of Rs. 17.25 crores on various accounts. The brief details of additional income offered during the course of search are as under:-
