Taxability of Difference between sale consideration mentioned in sale deed and that mentioned in paper found during enquiry

Short Over view : Unaccounted money paid by assessee in cash towards purchase of land was rightly taxed by AO.

Assessee claimed plot of land to have been purchased for Rs. 49 lakhs. During the course of enquiry, it was revealed that land was sold to assessee for a consideration of Rs. 3 crores. Accordingly, AO taxed the differential amount as unaccounted income.

 It is held that as evident, AO relied upon piece of paper containing some calculations all these papers were filed along with the remand report copies of which were furnished to the assessee also. The sums mentioned therein tallied with contents of the statements as well as the bank statements of sellers. The statements of sellers were confirmed by brokers and the events and facts were confirming each other. In the circumstances AO was justified in reaching conclusion that actual sale consideration was Rs. 3 crores and the unaccounted money was paid by the assessee in cash to sellers and such an amount was taxable in the hands of assessee.

Decision: Against the assessee.

Distinguished: Bangodaya Cotton Mills Ltd. v. CIT (2011) 330 ITR 104 (Cal-HC) : 2011 TaxPub(DT) 34 (Cal-HC).

IN THE ITAT, DELHI BENCH

PRASHANT MAHARISHI, A.M. & K.NARASIMHA CHARY, J.M.

Vinay Gupta v. Asstt. CIT

ITA No. 5257/Del/2012

15 November, 2018

Assessee by: Barun Kumar Gupta, Advocate & Alok Shukla, CA

Revenue by: J.K. MishraCommissioner Departmental Representative

K. Narasimha Chary, J.M.

The present appeal filed by the assessee is directed against the Order, dt. 27-7-2012 in Appeal No. 25F/2008-09 passed by the learned Commissioner (Central), Gurgaon (“Commissioner (C)”) in relation to assessment year 2006-07.

2. Brief facts of the case are that the assessee in an individual. He is partner in M/s. S.O. Sales Corporation, M.R. Faridabad and Chairman of M/s. Shri Bankey Behari Educational Trust, and Director of M/s. Deep Medical Centre (P) Ltd. He derived his income during the year from the partnership firm and from other sources.

3. A search and seizure operation was conducted at the residential premises of the assessee on 7-9-2006 and documents inventorised as Annexure A-1were seized from the residential premises and A-1 to A-3 from M/s. S.O. Sales Corporation and A-1 to A-22 from Advance Institute of Technology and Management, A-1 to A-22 from M/s. Deep Medical Centre (P) Ltd. Were seized/impounded. At search time cash of Rs. 96,651 and jewellery valued at Rs. 6,35,847 were found.

Jewellery valued at Rs. 9,68,957 was also found from the locker No. 90 OBC, Sector-19, Faridabad in the name of Manju Gupta.

4. It was found that land measuring 98 kanals 12 marla located at Village Aurangabad Tehsil Hodal, Faridabad, Haryana was purchased on 15-12-2005 in the name of Bankey Bihari Education Trust, 969, Sector 15, Faridabad through Shri Vinay Gupta, Chairman from the ten villagers of Village Mitrol, Tehsil Hodal, Distt. Faridabad (“sellers”) and the sale has been registered for Rs. 49,22,706. It turned out during the enquiry that such land was sold to the assessee for a consideration of Rs. 3,01,96,750. The sale was registered in the name of Bankey Behari Educational Trust through him for a sum of Rs. 49,22,706.

When examined, it was stated by the sellers that an advance amount of Rs. 30 lacs was received at the time of agreement by way of cheque for Rs. 2 lacs and balance by cash. The sellers also produced a document said to be in the handwriting of the assessee containing the calculation of the sale consideration in the following way :–

44,25,954.00

10,13,296.00

54,39,250.00

6,00,000.00

5. Subsequently, one Shri Vikram Singh Chauhan, the attester of the sale deed was examined on 10-11-2006. Pursuant to his statement one Shri Veer Pal Chaudhary, who identified the land was also examined on 10-11-2006. Learned assessing officer recorded that the statements of the sellers and the brokers are in conformity with each other and establish the fact that the land was purchased by the assessee @ R.24.5 lacs per acre for a total consideration of Rs. 3,01,96,250; that an advance of Rs. 30 lacs was paid at the time of agreement, out of which Rs. 28 lacas was in cash and Rs. 2 lacs by cheque; that the remaining amount of Rs. 2,71,96,250 was paid directly by the assessee on 15-12-2005 to the sellers when the sale deed was registered; and that a compensation of Rs. 2.5 lacs was also paid to the sellers for crops and tube wells located in the land.

6. Learned assessing officer, thereupon, required the assessee to reveal the source of unaccounted investment of Rs. 2,58.24,044 for purchase of land but the assessee has never furnished the details, as such, notice under section 142(1) dated 2-7-2008 was issued to the assessee. Assessee contended that the land of 98 K 12 M was purchased in the name of Bankey Behari Educational Trust on 15-12-2008 for a total consideration of Rs. 49,22,706 and the land measuring 7.5 acres was purchased for Rs. 21,98,000. Assessee further contended that there is no reason for the assessee to put his undisclosed income and resources in the sale in favour of the public charitable trust and no evidence/documents were found during the search at the residence of the assessee.

7. It is recorded by the learned assessing officer that the assessee was provided an opportunity to cross examine on 6-11-2006 by the DDIT(Inv.) but the assessee has not availed the same. Subsequently by letter dated 10-11-2006, further opportunity was granted to cross examine these witnesses but the assessee failed to avail the same also. In these circumstances, leaned assessing officer recorded a finding that the material available on record establishes that the assessee made the payment for the sale transaction out of his unaccounted money and added Rs. 2,58,24,044 to the income of the assessee.

8. Aggrieved by such an addition, assessee challenged the same before the learned Commissioner (Appeals) stating that no adequate opportunity was granted to him and there was violation of principle of natural justice and also that there were no grounds to make the huge addition of Rs. 2,58,24,044 in his hands when the property was purchased by the trust, there was no need to put his money. The matter was remanded to the learned assessing officer for providing an opportunity to the assessee for cross examination of the witnesses. However, learned assessing officer by remand report dated 25-2-2011 submitted that cross examination of the sellers by the assessee was fixed on 15-11-2010 but it seems on that a letter was addressed seeking adjournment and such a letter was received on 16-11-2010; that another letter dated 22-11-2010 was filed in receipt counter and was received by the learned assessing officer on 26-11-2010, but such a letter does not contain any reference of the cross examination of the witnesses. On 11-1-2011 at 10.30AM though the assessee appeared before the assessing officer and the witnesses came by 11.30AM, but by looking at them approaching the chamber of the assessing officer, the assessee simply left the premises to never come back despite repeated phone calls. However, the assessee leveled an allegation by way of affidavit dated 7-6-2012 that on the date fixed for cross examination, he waited at the office of the learned assessing officer till 2 PM and there were no witnesses for cross examination. Learned Commissioner (Appeals) considered all these circumstances in detail and recorded a finding that the reason for non cross examination of the witnesses is attributable to the conduct of the assessee himself, and the assessee cannot have any grievance of the same.

9. Learned Commissioner (Appeals) further recorded that the oral evidence of the witnesses is well corroborated by the calculation on the slips and the entire issue stood properly confronted by the learned assessing officer. In respect of the decisions in the case of Paramjit Singh v. ITO, (2010) 323 ITR 588 (P&H-HC) : 2010 TaxPub(DT) 1488 (P&H-HC) and CIT v. Babulal Jivanlal Patel (Guj), the learned Commissioner (Appeals) stated that the facts of those cases are different from the facts of the case on hand, and the oral evidence was corroborated by the evidence in the form of piece of paper purchased at the time of recording statements of the witnesses.

On a perusal of all the facts involved in this matter and in the light of the statement of the witnesses, learned Commissioner (Appeals) reached a conclusion that the learned assessing officer rightly made the addition in the hands of the assessee and confirmed the same.

10. Assessee is, therefore, in this appeal before us stating that the learned assessing officer wrongly assumed the jurisdiction under section 153A of the Income Tax Act, 1961 in the absence of any incriminating evidence and the learned Commissioner (Appeals) committed an error in confirming the same.

11. It is the argument of the learned Authorised Representative that when nothing was recovered during the search, the authorities are not justified in making any addition. It is also argued that when the purchaser was M/s. Bankey Behari Education Trust, there is no reason for the assessee to throw his money, whether accounted or unaccounted into it. It is further submitted that the authorities below are not justified in relying on the untestified statements of the witnesses. It is further submitted that the handwriting on the slip containing the calculation of the sale consideration, does not belong to the assessee and without obtaining any expert opinion; the authorities are not justified in relying upon the same.

12. In support of his contentions, learned Authorised Representative placed reliance on the decisions reported in Bangodaya Cotton Mills Ltd. v. CIT (2011) 330 ITR 104 (Cal-HC) : 2011 TaxPub(DT) 34 (Cal-HC) for the principle that when the person from whom the documents were seized was not produced for cross examination, the addition cannot be upheld. Further reliance is placed on the decisions reported in JJ Enterprises v. CIT (2002) 254 ITR 216 (SC) : 2002 TaxPub(DT) 676 (SC), CIT v. Vikas Electronics (International) (P) Ltd. in (IT Appeal No. 1407 of 2006, dt. 27-8-2007) : 2008 TaxPub(DT) 925 (Del-HC), and CIT v. Bithika Nag and Sumar Nag 204 taxation 255 (ITAT) (Kolkata) for the principle that no addition could be made on exemptions and guesswork. CIT v. Balaji Wires (P) Ltd. (2008) 304 ITR 393 (Del-HC) : 2008 TaxPub(DT) 921 (Del-HC) is relied upon for the principle that in the absence of any corroborating evidence to connect the searched material, no addition could be made.

Lastly, reliance is placed on CIT v. Kabul Chawla (2016) 380 ITR 573 (Del-HC) : 2015 TaxPub(DT) 3486 (Del-HC), PCIT v. Saumya constructions 81 taxmann.com 292 (Gujarat) and Meeta Gutgutia (2017) 395 ITR 526 (Del-HC) : 2017 TaxPub(DT) 1767 (Del-HC) is a relied upon for the principle that in the absence of any incriminating material qua the assessment year under consideration no addition could be made.

13. Per contra, it is the submission of the learned Departmental Representative that it is incorrect to state that nothing was recovered during the search, but as a matter of fact, the documents stated by the learned assessing officer in his order which includes the sale deed in favour of the trust were recovered during the search. Learned Departmental Representative further submitted that post search enquiries also form part of the search proceedings. Learned Departmental Representative drew our attention to paragraph Nos. (iv) at page 11 of the assessment order and para 8 of the first appellate order wherein the aspect of opportunity for cross examination was dealt with to submit that reasonable opportunity was provided to the assessee to cross examine the witnesses.

14. Learned Departmental Representative submitted that the issue in this matter is not as to who purchased the land, but the crux of the issue for the purpose of tax law is as to whose taxable income went in payment of the unexplained sale consideration. When such an issue is dealt with in the light of the statements of the sellers as well as the brokers corroborated by the piece of paper containing the calculations of sale consideration, the assessee cannot assail the same stating that the impugned addition was made merely on the basis of statement of two of the sellers of the land.

Learned Departmental Representative submitted that having not availed the opportunity to substantiate the contention that it is unexplained money of the sellers alone that was deposited in their bank account, the assessee cannot now take such a plea. For these reasons, the learned Departmental Representative prayed for dismissal of the appeal.

15. We have heard the learned counsel for the assessee and learned Departmental Representative and also gone through the record. As rightly recorded by the learned Commissioner (Appeals), there is no dispute as to the purchase of 12.5 acres of land by M/s. Bankey Behari Charitable Trust on 15-12-2005 under the sale deed registered for a consideration of Rs. 49,22,709 and there were 10 sellers involved in the sale transaction. All the sellers belong to the same family and one Mr. Bishan Singh and one Mr. Bhagirath are two of such shareholders. It is also not in dispute that the assessee is the Chairman of the trust.

16. As rightly pointed out by the learned Departmental Representative, the question relevant for tax purposes before the revenue authorities was not as to who purchased the land. The question that was relevant and considered by the revenue authorities was what is the real sale consideration–whether it is Rs. 3,01,96,250 or Rs. 49,22,706-and wherefrom the sale consideration had flown. As a part of the search proceedings the revenue collected evidence by way of statements of the sellers and the brokers coupled with the calculation slip in respect of the sale consideration and basing on this the tentatively reached a conclusion that the sale consideration is not Rs. 49,22,706 but it was Rs. 3,01,96,250. It could be seen from the letter dated 22/24-12-2010 of the learned Commissioner (Appeals) that, when the learned assessing officer in his letter simply stated that the sellers hve not attended the office nor any reply was filed them, learned Commissioner (Appeals) expressed a sincere concern that in case sellers do not respond, an alternative measure to safeguard the interest of revenue would be to tax such cash received by them in their hands as the fact of availability of the cash is proved in their hands; that in the absence of any evidence to substantiate the fact that the same has been received by them from the purchaser of the property or in the hands of the purchaser after fulfilling the legal requirements.

17. It is therefore clear that the revenue is concerned with the taxability of the unaccounted money that had flown into the sale transaction and resulted in the sale consideration. The revenue was thinking of the alternatives whether it should be in the hands of the sellers are in the hands of the buyers that such an amount has to be brought to tax. The above letter clearly establishes the concern of the revenue that they were looking for the evidence as to whether it is the unaccounted money of the sellers that was deposited into their bank accounts or it was the unaccounted money of the purchaser that has not entered into the sale deeds. The option available to the Revenue was to the conduct the enquiry in the presence of both the parties so that the Revenue can reach a definite conclusion as to include hands such money has to be taxed. By the time the Department was in possession of the evidence in the shape of the statements of the sellers and brokers supported by the entries of the slip calculating the sale consideration. Assessee disputed the veracity of the statements and the genuineness of the calculation slip. In the circumstances nothing no other way was left to the authorities but to test the veracity of the statements in the cross examination by the assessee so that the truth could be reached.

18. Originally the statements of the sellers were recorded on 2-11-2006 and those of the brokers were on 10-11-2006. The assessment order speaks that the assessee was provided opportunity twice by the DDIT (Inv) to cross-examine the persons whose statements had been recorded. Learned assessing officer proceeded further to examine the sellers on oath on 12-9-2008. Assessee was provided an opportunity to cross examine the witnesses but he failed to do so.

During the 1st appellate proceedings, by way of remained proceedings, learned assessing officer was required to give an opportunity to the assessee for cross-examining the witnesses.

19. Learned assessing officer, in his remand report dated 25-2-2011 stated that the assessee was present on 11-1-2011 at 10:30 AM and the witnesses were present by 11:30 AM. However on the two witnesses approaching the Chamber of the learned assessing officer, the assessee simply left the premises to never come back despite repeated phone calls. When the question as to whose version has to be accepted, learned Commissioner (Appeals) rightly preferred the version of the learned assessing officer to the version of the assessee. Learned assessing officer has no reason to record any false statement in his remand report and he does not stand to gain by writing anything falsehood. Unless otherwise proved, presumption is in favour of the revenue that the proceedings are conducted properly and regularly and a particular procedure is followed in a particular case. On the other hand, the conduct of the assessee as recorded by the learned assessing officer in the assessment order and also subsequently during the remand proceedings appears to be correct because of the interest of the assessee involved in this matter. If really the sellers deposited thereon unaccounted money in the bank on the name of the sale consideration for the land, nothing should have prevented the assessee from cooperating with the Department from eliciting such truth in the cross examination. For the reasons best known to the assessee, he wilfully abstained from participating in the enquiry process and conducting the cross-examination of the witnesses. The remand report submitted by the learned assessing officer was considered by the learned Commissioner (Appeals) in the light of the affidavit of the assessee given on 7-6-2012.

20. Be that as it may, it is pertinent to note that even before us the assessee did not seek any opportunity for cross-examination of the witnesses. All the circumstances unmistakably point out that by non-cooperation with the process of cross-examination of the sellers with reference to the sale consideration and also the person who paid the same, the assessee prevented the Department from reaching the truth.

This conduct of the assessee leads to the irresistible inference that had participated in the process the result would be against his contentions and interest and that is the reason why he abstained himself in the participation of the process.

21. Learned Commissioner (Appeals) recorded that it cannot be said that the assessee was not aware of the progress India played proceedings as attendance was quite regular and copies of the remand report’s were given to him for necessary rejoinders, which is complied with and issuance and proper service of summons/letters for cross-examination experiment stage is therefore not in dispute. It makes the things clear that for the reasons best known to the assessee he had chosen not to avail the opportunities to cross-examine the witnesses so as to clear his claim that he was not the source of the cash paid for the land, and importantly the allegations were not correct and were false. Learned Commissioner (Appeals) is justified in recording that any prudent man, if alleged to have been the culprit of an action which he denies vehemently, will definitely make all concerted efforts to right the wrong and he would have grabbed the opportunity afforded to him to disprove the findings of the learned assessing officer or the statements of the sellers and brokers by making himself available to cross-examine the witnesses.

22. It is, therefore, not a case of not providing an opportunity for cross-examination to the assessee, but is a case where the assessee deliberately failed to avail the same. The decisions in Bangodaya Cotton Mills Ltd. v. CIT (2011) 330 ITR 104 (Cal-HC) : 2011 TaxPub(DT) 34 (Cal-HC), therefore, is not applicable to the facts of the case. Further, the conclusions reached by the authorities below are not based on any guesswork but only based on the material available on record. The conduct of the assessee in not cooperating with the Department in their endeavour to reach the person in whose hands the unaccounted money had to be taxed only probablizes and strengthens the conclusions reached by the authorities.

23. This case relates to the assessment year 2006-07 and the sets took place on 7-9-2006. By such date the assessment was pending and is not a case of awaited assessment. We therefore are of the considered opinion that the cases relied upon by the assessee to say that in the absence of any incriminating evidence the authorities are not justified in making any addition. In the case of CIT v. Kabul Chawla (2016) 380 ITR 573 (Del-HC) : 2015 TaxPub(DT) 3486 (Del-HC) the Hon’ble Delhi High Court held that insofar as pending assessments are concerned, the generation to make the original assessment and the assessment under section 153 A merges into one, only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing are brought to the record of the assessing officer. In this matter, therefore, learned assessing officer is justified in considering not only the sale deeds that were found during the search proceedings but also the other material in the shape of statements of the sellers and the slip containing the calculations in respect of sale consideration. We therefore find that the decisions relied upon by the assessee in the cases where the assessments were concluded, have no application to the facts of the case on hand.

24. In respect of the evidence on record, impugned order speaks that the learned assessing officer relied upon the piece of paper containing some calculations and the name “Bishan”, and all these papers were filed alongwith the remand report dated 25-2-2011 copies of which were furnished to the assessee also. The sums mentioned therein tallied with the contents of the statements as well as the bank statements of the sellers. The statements of the sellers were confirmed by the brokers and the events and facts are confirming each other. In the circumstances the revenue did the best it could do to find out the truth and the assessee denied himself an opportunity to wriggle himself out of the situation and such a conduct only shows that he is no good defence.

25. For the reasons stated above, we are of the considered opinion that in the given circumstances the authorities below are justified in reaching the conclusion that the sale consideration was Rs. 3,01,96,750 and the unaccounted money of Rs. 2,58,24,044 was paid by the assessee in cash to the sellers and such an amount is taxable in the hands of the assessee. We accordingly do not find any illegality or irregularity in the impugned orders. While upholding the same, we find that the appeal of the assessee is devoid of merits and is liable to be dismissed. We accordingly dismiss the same.

26. In the result, appeal of the assessee is dismissed.