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2017 DIGILAW 90 (JK)

Commissioner of Income Tax v. Nagar Singh

2017-02-28

ALOK ARADHE, N.PAUL VASANTHAKUMAR

body2017
Judgment Alok Aradhe, J.—Both the aforesaid appeals, preferred under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act), were admitted for hearing by this Court vide Order dated 3l.03.2015 on the following substantial questions of law:— “1. Whether the ITAT was right in deleting the addition of Rs.66,19,200/- made by the A.O. on account of undisclosed payment for purchase of land and ignoring the agreement to sell as also the final registration deed. 2. Whether the ITAT could have granted any relief to the assessee (respondent) ignoring that measurement of land was got done only after making full payment and getting the land registered in his name and ignoring that the money worth the land registered necessarily stood paid by the assessee. 3. Whether the ITAT was right in deleting the addition of Rs.24,00,000/- made by the CIT(A) on the basis of entries found on the seized documents and that the assessee failed to submit any evidence to the contrary.” In order to answer the aforesaid substantial questions of law, few facts need mention which are stated infra: 2) A search was conducted under Section 132 of the Act on 19.06.2007 in the office of the assessee and number of documents were seized from M/s Kisan Flour Mills in which assessee happened to be a partner. During the course of search an agreement to sale was found. The aforesaid agreement was ,executed for purchase of 37 Kanals of land at Jammu, for a consideration of Rs.5.40 crores. However, in the sale deed, the sale consideration was mentioned as Rs.3,72,72,000/-. The assessment was, therefore, framed under Sections 153A/143(3) on 25.03.2009 and the difference of Rs.1,67,28,000/- was treated as unexplained investment by the assessee and the share of the assessee in the property in question was quantified at 40%. Accordingly an addition of Rs.66,91,200/- was made to his returned income. 3) Being aggrieved, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals). It was the case of the assessee before the Appellate Authority that the sale deed was executed in respect of only 29 Kanals and 18 Marlas of land as against 37 Kanals mentioned in the agreement. Before the Appellate Authority, copy of demarcation report was also filed. It was the case of the assessee before the Appellate Authority that the sale deed was executed in respect of only 29 Kanals and 18 Marlas of land as against 37 Kanals mentioned in the agreement. Before the Appellate Authority, copy of demarcation report was also filed. The Commissioner of Income Tax (Appeals) partly allowed the appeal of the assessee vide order dated 14.03.2013 and addition on account of unaccounted investment was restricted to Rs.60.00 lakhs and the share of the assessee was worked out to Rs.24.00 lakhs. 4) Being aggrieved, the assessee filed an appeal before the Income Tax Appellate Tribunal, Amritsar Bench. The Appellate Tribunal vide order dated 28.04.2014 allowed the appeal preferred by the assessee. In the aforesaid factual background the Revenue has approached this Court by filing the aforesaid appeals. 5) Learned counsel for the appellant submitted that the decision of the Income Tax Appellate Tribunal is erroneous and it ought to have been appreciated that no prudent person would register the land without actually measuring the same before making the entire payment. It is further submitted that it ought to have been appreciated that the entire amount as agreed between the negotiating parties as per the agreement for sale was paid by the assessee. On the other hand, learned counsels for the assessee have supported the order passed by the Appellate Tribunal and have referred the agreement for sale executed between the assessee and one P.L. Saraf. 6) We have considered the respective submissions made by the learned counsels for the parties and have perused the record. It is well settled in law that this Court will not interfere with the findings of fact until and unless the same are shown to be perverse or based on no evidence. See Vijay Kumar Talwar v. CIT, (2011) 1 SCC 673 and Mangalore Ganesh Beedi Works v. CIT, (2016) 2 SCC 556 . 7) Before proceeding further we deem it appropriate to produce the relevant extract of the agreement for sale in question, which reads as under:— “This agreement to sell is made between She Pyare Lal Saraf and Ch. Nagar Singh R/o 33 AID Gandhi Nagar, Jammu, whereby party of 1st part She P.L. Saraf has agreed to sell 37 kanal and situated at Narwal Bye Pass Road, Jammu for Rs.5.40 crores only. Nagar Singh R/o 33 AID Gandhi Nagar, Jammu, whereby party of 1st part She P.L. Saraf has agreed to sell 37 kanal and situated at Narwal Bye Pass Road, Jammu for Rs.5.40 crores only. An amount of Rs.2.00 crores has been paid as advance against the above said amount of Rs.5.40 crore. Both the parties have agreed for balance payments as and when sale deeds are executed in court of sub- registrar, Jammu. Any dispute which may arise on account of title of land or with army adjoining the proposed land, shall be the responsibility of the party of 1st part Sh. P.L. Saraf (Power of attorney holder) and if land at sight measures less than 37 kanal, amount shall be reduced proportionately.” 8) From the perusal of the relevant extract of the agreement, it is evident that an agreement for sale of land in question was subject to the condition that the amount of consideration would vary depending upon the actual measurement of the land at the time of registration of the sale deed. As per the receipts produced before the Authorities, an amount of Rs. 60.00 lakhs was received in cash by the vendor, namely, Pyare Lal Saraf on 07.06.2006. An amount of Rs. 66.00 lakhs was returned by the vendor, namely, Pyare Lal Saraf in cash. An amount of Rs. 98,72,000/- was paid by Cheque and balance amount of Rs. 2,74,00,000/- was paid in cash. Thus, the total sale consideration was Rs. 3,72,72,000/-. In support of the stand taken by the assessee that he is the owner of the land measuring 29 Kanals and 18 Marlas, copy of Map as well as Photographs and Affidavit of the vendor, namely, Pyare Lal Saraf was filed. The sale deed has been executed in respect of land measuring 29 Kanals and 18 Marlas and therefore, the sale consideration was reduced proportionately and the sale deed was executed for a consideration of Rs.3.72 crores instead of Rs.5.40 crores. It is pertinent to mention here that the Revenue has failed to point out any infirmity with regard to reduction of the sale consideration before the Income Tax Appellate Tribunal as has been reflected in Paragraph 12 of the order by the Tribunal. It is pertinent to mention here that the Revenue has failed to point out any infirmity with regard to reduction of the sale consideration before the Income Tax Appellate Tribunal as has been reflected in Paragraph 12 of the order by the Tribunal. The questions whether sale deed was executed in respect of 29 Kanals and 18 marlas or the same was executed in respect of a bigger area and the sale consideration In respect of the aforesaid transaction, are pure questions of fact. The findings in this regard have been recorded by the Appellate Tribunal on the basis of meticulous appreciation of evidence on record which by no stretch of imagination can be said to be perverse or based on no evidence. 9) In view of the preceding analysis, insofar as first substantial question of law is concerned, it is evident that there was no undisclosed payment to the tune of Rs.66,91,200/-. Therefore, the Income Tax Appellate Tribunal has rightly deleted the addition of aforesaid amount. Accordingly, the first substantial question of law is answered. 10) So far as second substantial question of law is concerned, in view of the stipulation contained In the sale deed, the sale consideration was dependent on the area which was to be ascertained on the basis of measurement. Therefore, after the measurement of land was got done, the sale deed was executed for a consideration of Rs.3.72 crores instead of Rs.5.40 crores and the money paid for by the assessee was duly accounted for. Therefore, the Income Tax Appellate Tribunal has rightly granted relief to the asseessee. Accordingly, the second substantial question of law is answered. 11) On the basis of material available on record, the Income Tax Appellate Tribunal has rightly deleted the addition of Rs.24.00 lakhs made by the Commissioner of Income Tax (Appeals). Accordingly, the third substantial question of law is answered. In the result the appeals fail and are hereby.