Addition for Cash Deposited in Joint Account cannot be made to an Account holder if he/she Proves that same belongs to other Joint A/c Holder
This is an Appeal by the Revenue and Cross Objection (CO) by the assessee arising out of the Order by the Commissioner of Income Tax (Appeals), Bathinda (‘CIT(A)’, for short) dated 14.09.2015 for Assessment Year (AY) 2009-10, allowing the assessee’ s appeal contesting her assessment u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) dated 09.12.2011.
2. The brief facts of the case, in-so-far as the relevant, are that the assessee’ s – a teacher (in a Government institution) by profession, returning salary income, bank accounts with Axis Bank and HDFC Bank were observed to bear cash deposits at Rs.49 lacs (22.10.2008) and Rs. 1 lac (on 22.09.2008) respectively. The same stood deemed as her income u/s. 68 in the absence of any explanation being furnished. The matter traveled to the Tribunal at the instance of the assessee, which restored the matter back to the file of the first appellate authority, who had earlier declined admission of additional evidence, directing him to do so and adjudicate afresh in accordance with law. The ld. CIT(A) admitting the said evidences, called for a remand report from the Assessing Officer (AO), who, however, sent his report dated 18.02.2015 without commenting on the evidences led by the assessee (paras 6, 9 of the impugned order). The source of the cash deposit of Rs.49 lacs was explained to be an ‘agreement to sell’ (ATS) dated 22.10.2008 entered into by Sh. Sadhu Singh (s/o Sh. Sunder Singh), the assessee’s father, with one, Swaraj Singh s/o S. Kunda Singh, for sale of his 33 Kanals, 17 Marlas of land at village Sandhwan, Tehsil Faridkot, receiving Rs.50 lacs in cash (PB pgs. 12-16). Further, this was as the bank account under reference was a joint bank account of Sadhu Singh with his daughters, i.e., the assessee and Kulwinder Kaur. The account, it was explained, had in fact been opened by Sadhu Singh, and the names of his two daughters included to comply with the KYC norms, as he being an agriculturalist did not have Permanent Account Number (PAN). Of the said amount of Rs. 50 lacs, Rs.49 lac was deposited in the said bank account on the very same day, issuing cheques for Rs.7 lacs (save one, which was for Rs.6 lacs) to each of the 6 daughters, including the assessee, i.e., at an aggregate of Rs.41 lacs (PB pg. 7). Confirmations from the daughters to that effect were filed (PB pgs. 17-27). The sale, as envisaged in the ATS, was completed on 16.04.2009. The sale deed was registered at the circle rate of Rs.34.53 lacs per acre, i.e., as against the agreed sale rate (as per ATS) of Rs.40.50 lac per acre, receiving six demand drafts of Rs.28.50 lacs each from each of the six persons to whom the land was sold, and the balance Rs.92,86,562/- received in cash (para 9 of the impugned order). The transaction stood completed thus. As regards the difference in the sale price, i.e., between that specified in the ATS (Rs.40.50 lacs per acre) and the sale deed (Rs.34.53 lacs per acre), the same was considered by the ld. CIT(A) as of no consequence as it was a matter of common practice to under-report sale so as to reduce the incidence of stamp duty. And, therefore, would not be determinative of the actual sale price, so as to bring the excess amount to tax as undisclosed income, unless, of course, there is evidence to show that the sale deed reflected the actual sale consideration, i.e., the amount that changed hands, even as held in CIT v. Intezar Ali  372 ITR 651 (All). There was in fact a case for examining the transaction from the purchase side in-as-much as it was apparent that the purchase price/consideration had been suppressed. The overwhelming evidence, however, in his view, was toward the cash deposited in Axis Bank as belonging to the assessee’ s father, Sadhu Singh, who only had deposited the same in his bank account. No case was made out against the assessee. The Revenue had in fact also reopened the assessment of Kulwinder Kaur u/s. 147, i.e., in view of Rs.49 lac deposited in her (joint) Axis Bank account on 22.10.2008, though, on verification, had found nothing amiss and accepted her returned income for AY 2009-10 (PB pgs. 66-67) (paras 6-15 of the impugned order). The addition having been deleted thus, the Revenue is in appeal, raising the following grounds:
‘1. The ld. CIT(A) has erred in deleting addition made by the AO u/s. 68 of the Act, without appreciating the fact that the asses see failed to prove source of the amount credited to the bank account of the assessee.
2. The CIT(A) has erred in failing the appreciate that the onus to prove source of the amount credited in the bank account of the assessee was on him as held by the Hon’ble Supreme Court in the case of Kale Khan Mohammad Hanif vs. CIT-50 ITA 1 and followed by the Hon’ble Punjab and Haryana High Court in the case of CIT vs. Lachhman Das Oswal-126ITR 446.
3. The CIT(A) has erred in relying on the decision in the case of Intezar Ali 372 ITR 651, without appreciating that the facts of the case are quite different in as-much-as no witness to sale deed has deposed before any authority and the assessee has never disputed the value of the property before the registering authority as was done in the case of Intezar Ali.”
4. The CIT(A) erred in not taking cognizance of remand report submitted by AO vide No. 1075 dated 18.02.2015 and has not appreciated that the assessee was afforded sufficient opportunities during assessment proceedings to prove source of cash deposited Rs. 50 lacs in the bank account; that the assessee failed to submit any agreement executed on prescribed stamp paper and registered with the State Revenue Department or other relevant record and that the assessee filed only affidavit before CIT(A) which had no evidentiary value.’
3. We have heard the parties, and perused the material on record.
3.1 The assessee has also preferred a CO, raising legal grounds, which though is time barred by a period of 411 days. The condonation petition does not speak of any sufficient cause for the substantial delay. The same is therefore not maintainable. The ld. AR, the assessee’ s counsel, Sh. P. N. Arora, Advocate, when questioned on this, would state that he did not wish to press the same, making an endorsement to that effect on the CO itself.
3.2 The Revenue’s case before us was that it was wrong to state (on the part of the ld. CIT(A)) that the AO had not offered any comments per his remand report dated 18.02.2015 (at PB pgs. 55-56), the relevant part of which, read out during hearing, reads as under:
‘Evidence: Copies of Title Deed of Land
AO’s Comments: These are two registered sale deeds of land one is for Rs.24,62,500/- executed on 16.4.2009. In this sale deed only Rs.2,50,000/- is stated to be received before the Sub-Registrar and rest of the amount of Rs.22,12,500/- is received through Bank Drafts. The second sale deed is for Rs.9,90,000/- executed on 16.04.2009. In this sale deed Rs.6,00,000/- is stated to be received before the Sub-Registrar and an amount of Rs.3,30,000/- is received through Bank Draft and nothing has been mentioned about balance of Rs.60,000/-. Both these sale deeds have been executed by the same person, i.e., Sh. Sadhu Singh S/o Sh. Sunder Singh, S/o Hari Singh of Village Sandhwan, Tehsil Faridkot and also bears the signature of assessee Smt. Harman Preet Kaur as being daughter of Sh. Sadhu Singh, seller. These documents show that Sh. Sadhu Singh received money of Rs.8,50,000/- (600000+250000) in cash and Rs.25,42,500/- through Bank Drafts from the sale of land. This money of Rs.8,50,000/- received by Sh. Sadhu Singh (father of Smt. Harmanpreet Kaur) received on 16.04.2009 gains no merit as the amount of Rs.49,00,000/-, of which the addition has made in the hands of Smt. Harmanpreet Kaur, stands deposited in the bank on 22.10.2008. Hence, this document/evidence is also devoid of merit.’
(emphasis, by underlining, ours)
How could, the ld. Departmental Representative (DR) would asseverate, Rs.50 lacs be paid as advance when the sale deeds subsequently executed, purportedly on the basis thereof, are for a total of Rs.34.53 lacs? There is apparently no mention of the ATS, or the advance made there-under, he would continue, in the sale deed/s, and the entire cash that actually changed hands on the sale of land was Rs.8.50 lacs only, given before the Sub-Registrar on 16.04.2009. The ATS is clearly a sham document. The ld. CIT(A) ought to have caused further verification of facts by the AO or, enjoy as he does co-terminus powers, do it himself, and which he failed to.
3.3 We further observe that while the ATS is with one, Swaraj Singh, the sale deed – conspicuous by its absence, states of the sale consideration having been received from six persons, i.e., the land stands sold not to one but to six persons, while the agreement for its sale was with one. Further, the six demand drafts total to Rs. 171 lacs. Adding the cash component of Rs.93 lacs (approx.), totals to Rs.264 lacs, while the total sale consideration, even at the rate of Rs.40.50 lac per acre, i.e., as per the ATS, works to Rs.1,71,36,562/-. How could this be? The ld. CIT(A) has failed to note these apparent anomalies. Why, we wonder, did the ld. CIT(A) not seek explanation from the assessee on these conflicting ‘facts’, and issue his definite findings upon examinations/verification, clarifying the matter. On the contrary, he states of the AO not offering any comments vide his remand report dated 26.02.2015 (PB pg. 54), which in fact is the forwarding letter by the Jt. CIT, Range 3, Ferozepur, to the remand report dated 18.02.2015 by the AO. This is precisely what the Revenue’s seeks to emphasize per its Ground 4. The matter, perhaps, needs to travel to the file of the ld. CIT(A), who was apparently given a set of documents by the assessee different from that to the AO.
The question, however, as we see it, is not the amount at which the land was actually sold, which is in the following year, but whether the cash deposit of Rs.49 lacs could be said to form part of the transaction of sale of land by the assessee’ s father. Sh. Arora, on being required by the Bench to reconcile the sale deed/s, i.e., as adduced before the AO in the remand proceedings, on the basis of which therefore he has made his comments, and that produced before the ld. CIT(A), and which therefore forms the basis of his order, would, after seeking time to produce the sale deed/s, show that the land particulars referred to in the ATS were the same as that mentioned in two sale deeds dated 16.04.2009 (PB pgs. 75-83), – which are in agreement with that mentioned by the AO in his remand report, seeking to under-score that the assessee’ s father did indeed sell the land under reference – at whatever sum. Further, as clarified by the ld. CIT(A), investigation by the Revenue in the case of Kulwinder Kaur – the assessment order (for AY 2009-10) in whose case is sans any findings to be of any value, shows that the stamp paper on which the ATS is executed was indeed purchased on 22.10.2008. It would therefore be incorrect to conclude that the ATS, witnessed by two independent persons, besides being signed also by the six daughters, is a sham document. Why, if it was indeed, as contended, a fabricated document, would it mention the sale rate in excess of that stated in the sale deed/s. There is, at the same time, and only expectedly, no reference to the ATS therein. How could, then, the ATS explain the nature and source of the cash deposited on 22/10/2008? Further, the sale deeds, which bear the details of the land, state of one Akshay Kumar (s/o Sh. Vinod Kumar), for Rs. 9.90 lacs) and Sushma w/o Sh. Umesh Kumar and Anju w/o Sh. Parvinder (both sons of Sh. Om Prakash), for Rs. 24.625 lacs, as the purchasers. Thus, apart from difference in amount, the buyers too are also different, with each of the three documents, viz. the ATS; the two sale deeds produced before the AO and the tribunal; and that (or, is it affidavit, as the Revenue claims per its Gd. 4) furnished before the ld. CIT(A), stating different ‘facts’. Without doubt, there is much that needs to be explained, including the taxability of the income arising on the sale of land which, again, the ATS being an unregistered document, would be in the following year, i.e., AY 2010-11(CIT v. Balbir S. Maini  398 ITR 531 (SC)). There is accordingly no question of the assessee having explained, much less satisfactorily, the nature and source of the cash deposited in her Axis bank account on 22.10.2008.
Continuing further, anyone of the joint account holders could deposit his money therein, so that an assessment on the basis of deposit/s therein could be made in the hands of an account holder. It is equally open, it follows, for an account holder to show that the money held/deposited in a joint account does not belong to him but to another account holder, rebutting the presumption of law u/s. 69/69A, which are only rules of evidence incorporating the principles of common law jurisprudence, as explained by the Hon’ble Apex Court time and again (refer: Chuharmal v. CIT  172 ITR 250 (SC)). In the present case, no other credit, apart from Rs.49 lac deposited cash on 22.10.2008, has been attributed to the assessee. Further, of the said Rs.49 lacs, Rs.41 lacs stands distributed/gifted by the assessee’ s father equally (almost) among his six daughters. Only a father would do so and, impliedly, qua his own property. The unmistakable inference that arises is that the said amount belonged to Sh. Sadhu Singh, the assessee’ s father. As such, irrespective of whether the source thereof has been satisfactorily explained by the assessee or not, and which we categorically find as not, the same cannot be deemed as the assessee’ s income; the asses see having led sufficient evidence to show that the same did not belong to her, but, in all probability, to her father, with she being, in fact, one of the beneficiaries of the said sum, i.e., along with her other siblings. This, we may add, is also the sum and substance of the impugned order. The addition for Rs.49 lacs, therefore, as in the case of the assessee’ s sister, Kulwinder Kaur, needs to be deleted. We direct accordingly.
3.4 This leaves us with the sum of Rs.1 lac deposited cash in the assessee’s HDFC Bank account, which does not appear to be a joint account. The source thereof is explained to be the income of the assessee’s husband, Sh. Jagwinder Singh, stated to be an agriculturist. No evidence toward the same, however, has been brought on record by the assessee at any stage (refer para 3 of the impugned order). So, however, we observe that though the assessee raised this issue as well before the ld. CIT(A), he has not adjudicated thereon. The same, therefore, cannot form the subject matter of the Revenue’s appeal before us. Not surprisingly, no arguments in its respect were urged before us. No interference is therefore called for.
4. In the result, the Revenue’s appeal is dismissed, and the assessee’ s CO is dismissed as not maintainable.
Order pronounced in the open court on June 29, 2018