Commissioner Of Income Tax, Kota v. Order

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 322 / 2011 COMMISSIONER OF INCOME TAX, Kota ----Appellant Versus M/s Khandelwal Shringi & Co. 1B, Kotari Road, Gumanpura, Kota ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo Jain with Ms. Shiva GoyalFor Respondent(s) : Mr. Mahendra Gargeiya _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 21/08/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal preferred by the department. 2.This Court while admitting the matter framed the followingquestion of law:- “Whether on the facts and circumstances of thecase and in law the ITAT was justified indeleting the addition of Rs. 5.13 crore made bythe AO on account of unexplained investmentin purchase of agricultural land on the basis ofsale agreement and other documents foundand impounded during the course of survey u/s133 in which the sale consideration was Rs.7.00 crores.?” 3.Counsel for the appellant has taken us to the order of AOand contended that the AO after considering the evidence onrecord has come to the conclusion as under:- “Hence, it is established that the sellers wereagreed to sale his land of 4.47 + 5.74 hqtrs. forRs. 7.00 crores because of the market value ofland was Rs. 7.00 crores in that case. It is alsostated that no prudent businessman or sellerwould like to sale the land costing of Rs.7.00crores or more in only Rs. 1.87 crore. It is alsonot believable looking to the circumstances of thecase. Sequence of events clearly establishes thatthe sellers have back out from earlier agreementbecause new purchasers might have been offeredconsideration over Rs. 7.00 crores for theimpugned land. Consequently, the sellers changedthe attitude due to greediness. It is well knownfact that no body ready to sell his property lessthan the market value. But in the instant case, itis surprised to note that sellers have agreed tosell their property in 1.87 crores only instead ofRs. 7.00 crores. This mean that sellers have tobear the loss of Rs. 5.13 crores (7.00-1.87crore).” In the light of facts and circumstances of thecase, I am of the opinion that it is not possiblethat a person who has sold his land in Rs. 7.00crores and after breaking the contract sold toanother persons in a very lower cost i.e. 1.87crores only. The contention of the assessee firm isnot acceptable that it has made a furtheragreement to share the profit earned fromdeveloping/plotting/selling of plots/constructingand selling of row house and buildings etc. I therefore, reject the plea treating as anafterthought story of the firm to evade the taxand make the addition to the total income of theassessee firm which comes at Rs. 5.13 crores andassume that the assessee firm invested the samefrom its undisclosed sources/income during theyear under consideration which has not beenshown by the assessee firm in its return of totalincome. Therefore, penalty proceedings u/s 274r.w.s.271(1)(c) are also being initiated separatelyfor furnishing of inaccurate particulars ofincome/concealing particulars of income on thisaccount. 4.Counsel for the respondent has taken us to the order of CIT(A) wherein it has been held as under:- I therefore, reject the plea treating as anafterthought story of the firm to evade the taxand make the addition to the total income of theassessee firm which comes at Rs. 5.13 crores andassume that the assessee firm invested the samefrom its undisclosed sources/income during theyear under consideration which has not beenshown by the assessee firm in its return of totalincome. Therefore, penalty proceedings u/s 274r.w.s.271(1)(c) are also being initiated separatelyfor furnishing of inaccurate particulars ofincome/concealing particulars of income on thisaccount. 4.Counsel for the respondent has taken us to the order of CIT(A) wherein it has been held as under:- “To sum up, I do not agree with decision of theassessing officer to use the agreement to sell13.25 hectares of land at Rs. 8.25 crores thatwas never executed, and the offer to purchase10.21 hectares, a part of the same 13.25hectares, for Rs. 7.00 crores that was notaccepted and taken to a logical conclusion, asevidence of fair market value of the land inquestion. Besides these two the assessing officerdid not bring any other evidence to show thatmarket value of impugned 10.21 hectares wasRs. 7.00 crores. Further, I hold that thecomparison by the assessing officer betweenqualitativelydifferentagreementswithcompletely different terms and conditions wasnot appropriate. The assessing officer did notbring on record any evidence to show that theappellant had indeed paid Rs. 7.00 crores toSatya Narain Kanchhal and Rukmani DeviKanchhal for land admeasuring 10.21 hectares.In given facts and circumstances, the decision ofthe assessing officer to add Rs. 5.13 crores is notconfirmed. Grounds 2 and 3 are accepted.” 5.In view of the concurrent finding of the Tribunal andfollowing decisions in case of K.P. Varghese v/s ITO & Anr.(1981) 131 ITR 597 (SC), CIT vs. Shivakamini Co. (P) Ltd.(1986) 159 ITR 171 (SC), CIT vs. Raja Narendra (1994) 210 ITR250 (Raj.), CIT vs/ Bhanwarlal Murwatiya (2008) 215 CTR 489,he contended that no interference is called for. 6.He relied on the decision of Rajasthan High Court in thecase of CIT vs. K.K. Enterprises reported in (2008) 13 DTR 289(Raj.) wherein it has been held as under:- “6. So far as question No. 1 is concerned,Assessee sold his plots at an average rate of Rs.18.66 per sq.ft. The Assessing Officer mainlyrelied on the statement of Shri S.L. Dak and therates taken by the Sub Registrar, and adopted 5.In view of the concurrent finding of the Tribunal andfollowing decisions in case of K.P. Varghese v/s ITO & Anr.(1981) 131 ITR 597 (SC), CIT vs. Shivakamini Co. (P) Ltd.(1986) 159 ITR 171 (SC), CIT vs. Raja Narendra (1994) 210 ITR250 (Raj.), CIT vs/ Bhanwarlal Murwatiya (2008) 215 CTR 489,he contended that no interference is called for. 6.He relied on the decision of Rajasthan High Court in thecase of CIT vs. K.K. Enterprises reported in (2008) 13 DTR 289(Raj.) wherein it has been held as under:- “6. So far as question No. 1 is concerned,Assessee sold his plots at an average rate of Rs.18.66 per sq.ft. The Assessing Officer mainlyrelied on the statement of Shri S.L. Dak and therates taken by the Sub Registrar, and adopted value of the plots at Rs. 40 per sq.ft. LearnedITAT has mentioned in its order that one of thepurchasers of two plots, viz. Shri B.S. Bomb, wasalso examined by Assessing Officer, who hadpurchased two plots worth Rs. 36,000 each, andon same consideration sale-deeds wereregistered. Assessing Officer has not discussedthe statement of Mr. Bomb. Apparently, therewas no other reliable material on record beforethe Assessing Authority to assume sale of plotsat Rs. 40 per sq.ft. Learned Counsel for theappellant relied on 226 ITR 344 (Smt. AmarKumari Surana v. Commissioner of Income Tax),in which on account of sufficient material onrecord and in absence of explanation by theassessee, an inference was drawn that propertywas sold for more amount than shown in the saledeeds. This case does not help to the revenue asin the case in hand, apparently, there was nomaterial before the Assessing Officer to come toa conclusion that property was sold at the rate ofRs. 40 per sq.ft. Learned Counsel for therespondentplacedrelianceonMANU/SC/0300/1981 : [1981]131ITR597(SC)(K.P. Verghese v. ITO), in which it was held thatassessee must be shown to have received morethan what is declared or disclosed by him asconsideration. Difference in market value andconsideration declared in sale-deed is notsufficient for assumption of higher consideration.HealsoplacedrelianceonMANU/SC/0248/1986 : [1986]159ITR71(SC)(CIT v. Shivakami Co. Pvt. Ltd.), in which it washeld that unless there is evidence that more thanwhat was stated was received, no higher pricecan be taken to be the basis for computation ofcapital gains. It was further held that capitalgains tax is intended to tax the gains of theassessee, not what an assessee might havegained, and what is not gained cannot becomputed as gained. He also placed reliance ontwo judgments of this Court. In the case reportedin (2008) 3 DTR (Raj) 115 (CIT v. BhanwarlalMurwatiya), it was held that the questionwhether any higher consideration than the onementioned in the sale deed did pass from theassessee to the seller is a pure question of factand the department having failed to show thatany relevant material has been ignored ormisread by the CIT(A) or the Tribunal whiledeleting the addition made by AO, suchquestions, in any case, are required to beanswered against the Revenue and in favour ofthe assessee. In other case reported in (2008) 3 DTR 142 (CIT v. Kishan Kumar and Ors.), it washeld that while computing undisclosed incomeunder Section 158BB, the rates of property fixedby Stamp Valuation Authority for the purposes ofregistration of sale deeds, cannot be taken to bethe price for which the property was purchased. DTR 142 (CIT v. Kishan Kumar and Ors.), it washeld that while computing undisclosed incomeunder Section 158BB, the rates of property fixedby Stamp Valuation Authority for the purposes ofregistration of sale deeds, cannot be taken to bethe price for which the property was purchased. 7. Aforesaid citations make it clear that inabsence of evidence on record, higher price forsale of land cannot be presumed from theconsideration shown in registered sale deeds andrates of property fixed by Stamp ValuationAuthority for registration purposes cannot betaken to be the price for which property mighthave been sold. Thus, there was no justificationfor the Assessing Officer to estimate selling priceof land at Rs. 40 per sq.ft. instead of Rs. 20 persq.ft. and for CIT(A) to presume selling price atRs. 22 per sq.ft. and thus learned ITAT has notcommitted any error in allowing the appeal of therespondent assessee and hence question No. 1 isanswered against Revenue.” 7.We have heard counsel for both the sides. 8.Taking into consideration, the contention raised by counsel for the respondent that the issue is now covered by the decisionand observations made by the CIT(A), we have gone throughthe complete documents which were earlier executed and we arein complete agreement with the finding given by CIT(A. 9.In that view of the matter, we see no reason to interferewith the matter. 10.The issue is answered in favour of the assessee against thedepartment.department. 11.Hence, the appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/83