Paramjit Singh v. Income Tax Officer, Phagwara 2, Phagwara

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 401 of 2009 Date of decision 10.2.2010 Paramjit Singh ...Appellant Versus Income Tax Officer, Phagwara 2, Phagwara ... Respondents CORAM:HON'BLE MR. JUSTICE M.M. KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Mr.Ravish Sood ,Advocatefor the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The assessee has approached this Court by invoking theprovisions of Section 260 A of the Income Tax Act, 1961 (for brevity 'theAct')challenging order dated 17.12.2008 (A.6) passed by the Income TaxAppellate Tribunal, Amritsar (for brevity 'The Tribunal') in ITA No. 373ASR -2007 in respect of assessment year 2003-04. The Tribunal whileaccepting the appeal of the Revenue has expressed the view that ostensiblesale consideration of the land disclosed in the registered sale deed dated24.9.2002 deserves to be added to the income of the assessee- appellant.The Tribunal has dis-regarded the statement made on affidavit by thevendor S/Shri Tirath Singh and Surmukh Singh, who are the real uncles ofthe assesse- appellant. They have stated in the affidavits that infact no saleconsideration had passed hands and they had relinquished their share in thelanded property. The object of executing sale deed was only to handoverlanded property to the assessee- appellant as they are well settled in United ITA No. 401 of 2009 Kingdom since 1960's and 1970's. After the case was remanded back to theCIT(A), a report was obtained by the CIT(A) in respect of the aforesaidaffidavits filed by the vendor. The Assessing Officer asked Tirath Singh sonof Pakhar Singh certain questions. The answer to question Nos. 5 and 6 areextracted below for ready reference: “ Q.No.5 . As per Regd. Deed a sum of Rs. 24,65,000/- wasgiven to both the sellers by Sh. Paramjit Singh who purchasedland.given to both the sellers by Sh. Paramjit Singh who purchasedland. Ans. I have not received any amount from Sh. Paramjit Singhfor selling the piece of land (1/2 share )at the time ofregistration and not even before registration. The value of landmentioned in the Deed i.e. Rs. 24,65,000/- is only the reserveprice fixed by the Govt. for charging stamp duty. No amountwas passed to the sellers by the purchaser.for selling the piece of land (1/2 share )at the time ofregistration and not even before registration. The value of landmentioned in the Deed i.e. Rs. 24,65,000/- is only the reserveprice fixed by the Govt. for charging stamp duty. No amountwas passed to the sellers by the purchaser. Q.6. Why did you not receive any amount as saleconsideration ?consideration ? Ans. My brother Tarlochan Singh f/o Sh. Paramjit Singhrendered financial help to me as well as Sh. Tirath Singh insettling abroad. As such in lieu of the same we have given upour share in ancestral property in favour of our brother Sh.Tarlochan Singh with liberty to get the sale deed executed inthe name of any one at any time. Keeping in view of above theproperty mentioned above has been transferred to Sh. ParamjitSingh son of Sh. Tarlochan Singh. A sum of Rs. 1.5 lakh wasgiven by Sh. Tarlochan Singh as help for settling us in abroadabout 45-48 years back.” Likewise, identical questions were asked to Surmukh Singh who hasgiven the same answers. The CIT(A) had accepted the version of theassessee- appellant as is evident from the order dated 17.2.2006 (A.11).However, on appeal to the Tribunal the views expressed by the CIT(A) hasnot been accepted. The view of the Tribunal is discernible from thefollowing extracts of its order which reads thus: Likewise, identical questions were asked to Surmukh Singh who hasgiven the same answers. The CIT(A) had accepted the version of theassessee- appellant as is evident from the order dated 17.2.2006 (A.11).However, on appeal to the Tribunal the views expressed by the CIT(A) hasnot been accepted. The view of the Tribunal is discernible from thefollowing extracts of its order which reads thus: “ 4.1................. In our opinion, in this case, the sale deed reflectthe payment of sale consideration of Rs. 24,65,000/-. The saledeed executed was duly registered before the RegistrationAuthority. The assessee's past record is not upto themark............................... The Ld. CIT(A) relied on the affidavitmade by the vendors, who were close relative of the assessee.In our opinion, the affidavit filed by the assessee from thevendors is merely a self servicing document. No credence canbe made to it. In our opinion, the Ld. CIT(A) has not properlyarrived at the findings of the fact........................ . In the presentcase, the Ld. CIT(A) relied on the affidavit from the twovendors and he has lost sight of the fact of stating saleconsideration at Rs. 24,65,000/- in sale deed. It is an admittedfact that the assessee became owner of the impugnedagricultural property by virtue of sale deed and not by GiftDeed. Since, it is a sale deed. It should be considered as saledeed only and not as a Gift deed. When we consider sale deedas sale deed, the consideration reflected in the sale deed whichis accepted by the Registration Authority for the purpose ofStamp Duty, the value mentioned therein is relevant. In the present case, sale deed reflected consideration of Rs.24,65,00/-. This is the document on which the Ld. CIT(A)placed reliance. The story of the assessee is that the relative ofthe assessee has executed sale deed without anyconsideration ............................. Hence, the AO has reason tobelieve that consideration reflected is not explained, to betreated as unexplained investment. We are of the opinion thatthere is nothing wrong in business being done in such a way asto escape taxation. Every person is entitled so as to arrange hisaffairs as to avoid taxation but the arrangement must be realand genuine................... Hence, the real intention of the partydifferent from the apparent intention and that affidavit cannotgive effect, though the affidavit legally correct or valid. Furtherthe assessee's sale deed cannot be executed between the vendorand the assessee without consideration and there is no disputeregarding genuineness of the agreement. The AO has not madeany attempt to interpret agreement in favour of the Departmentto enable him to collect more tax. The sale deed was enteredbetween the vendors ad the assessee at their free will and attheir choice. Now the assessee is telling that there is no passingof consideration of Rs. 24,65,000/- and consideration noted inthe sale deed have no value. The argument of the assessee isabsurdly wrong argument for which no credence should begiven and AO have not right to vary the terms of the contractbetween the parties and in the same way, the assessee has noright to change the contents of the sale deed, which are already executed and reached finality with the intention to reduce its tax liability. Hence, in our opinion, the considerationmentioned in the sale deed to be considered as saleconsideration passed between these two parties and to beassessed as unexplained investment of the assessee, since theassessee has not explained the source of investment. .......... “ executed and reached finality with the intention to reduce its tax liability. Hence, in our opinion, the considerationmentioned in the sale deed to be considered as saleconsideration passed between these two parties and to beassessed as unexplained investment of the assessee, since theassessee has not explained the source of investment. .......... “ Mr. Ravish Sood, learned counsel for the appellant has vehementlysubmitted that the arrangement made between the father of the assessee-appellant and both his uncles should have been given due credence as wasrightly done by the CIT(A) and once his uncles have stated on oath that noconsideration has passed to them then it should not be imagined that theamount has passed hands which is hidden income of the assessee- appellantand therefore liable to be added. The learned counsel has pointed out that inthe account of the assessee- appellant the amount remained deposited is notmore than few thousands at any time and such a huge amount of over 24Lacs could not have been paid by him. We have thoughtfully considered the submissions made by the learned counsel and are of the view that they do not warrant acceptance.There is well known principle that no oral evidence is admissible once thedocument contains all the terms and conditions. Sections 91 and 92 of theIndian Evidence Act, 1872 (for brevity 'the 1872 Act') incorporate theaforesaid principle. According to Section 91 of the Act when terms of acontracts, grants or other dispositions of property has been reduced to theform of a documents then no evidence is permissible to be given in proof ofany such terms of such grant or disposition of the property except thedocument itself or the secondary evidence thereof. According to Section 92 ITA No. 401 of 2009 of the 1872 Act once the document is tendered in evidence and proved asper the requirements of Section 91 then no evidence of any oral agreementor statement would be admissible as between the parties to any suchinstrument for the purposes of contradicting, varying, adding to orsubtracting from its terms. According to illustration 'b' to Section 92 if thereis absolute agreement in writing between the parties where one has to paythe other a principal sum by specified date then the oral agreement that themoney was not to be paid till the specified date cannot be proved.Therefore, it follows that no oral agreement contradicting/ varying theterms of a document could be offered. Once the aforesaid principal is clearthen ostensible sale consideration disclosed in the sale deed dated 24.9.2002(A.7) has to be accepted and it cannot be contradicted by adducing any oralevidence. Therefore, the order of the Tribunal does not suffer from any legalinfirmity in reaching to the conclusion that the amount shown in theregistered sale deed was received by the vendors and deserves to be addedto the gross income of the assessee- appellant. For the reasons afore mentioned this appeal fails and the sameis dismissed. (M.M.Kumar) Judge 10.2.2010okg (Jitendra Chauhan)Judge