Smt. Angoori Devi,, Sonepat v. ITO, New Delhi

ITA 15/DEL/2010 | 2006-2007
Pronouncement Date: 09-07-2010 | Result: Allowed

Appeal Details

RSA Number 1520114 RSA 2010
Bench Delhi
Appeal Number ITA 15/DEL/2010
Duration Of Justice 6 month(s) 4 day(s)
Appellant Smt. Angoori Devi,, Sonepat
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-07-2010
Date Of Final Hearing 30-06-2010
Next Hearing Date 30-06-2010
Assessment Year 2006-2007
Appeal Filed On 04-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO.15(DEL)/2010 ASSESSMENT YEAR: 2006-07 SMT. ANGOORI DEVI INCOME-TAX OFFICER THROUGH LEGAL HEIR SHRI VS. WARD-3 SONEPAT. RAGHUBIR SINGH H. NO.142 (H ARYANA). SECTOR-14 SONEPAT (HARYANA). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. SAMPATH ADVOCATE RESPONDENT BY: MS . PRATIMA KAUSHIK SR. DR ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE ASSESSEE EMANATES FROM TH E ORDER OF CIT(APPEALS) ROHTAK PASSED ON 11.11.2009 IN APPE AL NO. 283/SPT/08- 09 AND IT PERTAINS TO ASSESSMENT YEAR 2006-07 . THE ASSESSEE HAS TAKEN TWO GROUNDS IN THE APPEAL TO THE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN (I) UPHOLDING THE ORDER PASSED BY THE AO U/S 144 READ WITH SECTION 148 OF THE INCOME-TAX ACT 1961; AND (II) HOLDING THE AM OUNT OF RS. 4.00 LAKH AS INCOME FROM UNDISCLOSED SOURCES. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE PAID A SUM OF RS. 2.00 LAKH IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR FOR PURCHASE OF LAND BY ITA NO. 15(DEL)/2010 2 WAY OF EARNEST MONEY. THE SELLER RETURNED A SUM OF RS. 4.00 LAKH TO THE ASSESSEE IN THIS YEAR. THE AO HELD THAT THE WHOLE OF THE AMOUNT OF RS. 4.00 LAKH IS LIABLE TO BE TAXED AS UNEXP LAINED MONEY IN THE ASSESSMENT OF THIS YEAR. THE LD. CIT(APPEALS ) CONFIRMED THIS ACTION OF THE AO. 2.1 BEFORE US THE LD. COUNSEL REFERRED TO THE RETURN OF INCOME AND ITS ACCOMPANIMENTS FILED FOR ASSESSMENT YEAR 2005-0 6. THE BALANCE-SHEET SHOWS ADVANCE OF RS. 2.00 LAKH AS EARNEST MON EY FOR LAND. IT WAS SUBMITTED THAT THE ASSESSEE DESIRED TO PRODUCE THE SELLER FOR VERIFICATION OF THE TRANSACTION FOR WHICH TIME WAS SOUGHT FROM THE AO. HOWEVER THE AO PASSED THE ORDER BEFORE SUCH VERIFICATIO N COULD BE MADE. THE ASSESSEE ALSO FILED AFFIDAVIT OF SHRI RAJINDER THE SELLER FOR THE FIRST TIME BEFORE US TO THE EFFECT THAT AGRICULTURAL LAND WAS AGREED TO BE SOLD TO THE ASSESSEE FOR WHICH THE DEED SHALL BE EXECUTED AFTER HARVESTING THE CROP STANDING ON THE LAND. IN THIS YEAR THE BUYER HANDED OVER TO HIM EARNEST MONEY OF RS. 2.00 LAKH. THE ORAL AGREEMENT AT THAT POINT OF TIME WAS THAT IF PURCHASER REFUSES TO GET THE DEED EXECU TED THE EARNEST MONEY SHALL BE FORFEITED. HOWEVER IF THE SELLER RE FUSES TO EXECUTE THE DEED SHE WILL BE ENTITLED TO RECEIVE DOUBLE THE AMOU NT OF EARNEST MONEY. IN ITA NO. 15(DEL)/2010 3 THE INTERVENING PERIOD PRICES OF THE AGRICULTU RAL LAND SHOT UP AND THEREFORE HE DECIDED NOT TO EXECUTE THE DEE D BUT PAY THE BUYER A SUM OF RS. 4.00 LAKH. ON THE BASIS OF THE AFORESAID IT WAS THE CASE OF THE LD. COUNSEL THAT THE MONEY RECEIVED BY HER REPRESEN TED COMPENSATION FOR BREACH OF AGREEMENT WHICH IS NOT LIABLE TO TAX . 2.2 IN ORDER TO SUPPORT THE AFORESAID CONTENTION RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. J. DALMIA (1984) 149 ITR 215. THE QUESTION BEFORE THE COURT IN THAT CASE WAS WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE THE AMOUNT OF RS. 1 02 500/- IS ASSESSABLE AS CAPITAL GAINS OTHER THAN LONG-TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE? THE CASE PERTAINS TO A PROPERTY UNDER CONSTRUCTION BY M/S SATISH KUMAR SOOD & S ONS THE CONTRACTOR WHICH WERE OWNERS OF THE PROPERTY. THEY AGREED TO SELL THE PROPERTY ON 29.11.1996 TO SHRI KRISHAN PRASAD FOR A SUM OF RS . 4.95 LAKH. A SUM OF RS. 20 000/- WAS PAID IN CASH AS EARNEST MO NEY. THE CONSTRUCTION WAS TO BE COMPLETED IN ACCORDANCE WITH CERTAIN SP ECIFICATIONS MENTIONED IN THE AGREEMENT. THE SALE DEED PROVIDED FOR T RANSFERRING THE PROPERTY IN THE NAME OF THE BUYER OR HIS NOMINEE. IT WAS FURTHER PROVIDED THAT IF CONTRACTORS FAILED TO EXECUTE THE SALE DEED THE BUYER WILL BE ENTITLED ITA NO. 15(DEL)/2010 4 TO GET THE DEED EXECUTED THROUGH A COURT OF LA W BY SPECIFIC PERFORMANCE OF THE CONTRACT. THE BUYER NOMINATED J. DALM IA IN HIS PLACE FOR TRANSFER OF THE PROPERTY. HOWEVER THE OWNER DID NOT CONVEY THE PROPERTY TO J. DALMIA. WHEN THE MATTER CAME UP BEFORE THE COURT THE PARTIES REQUESTED THAT THE DISPUTE MAY BE REFERRED TO AN ARBITRATOR SHRI D.P. KAPOOR CHARTERED ACCOUNTANT. SHRI DALMIA ALSO AGREED TO GIVE UP HIS CLAIM FOR SPECIFIC PERFORMANCE OF THE CONTRACT BUT RETAINED HIS RIGHT TO CLAIM DAMAGES. AS PER THE AWARD THE OWNER WAS HE LD LIABLE TO REFUND THE AMOUNT OF RS. 20 000/- AND PAY DAMAGES OR COMPENSA TION OF RS. 1 02 500/-. A SUM OF RS. 1 000/- WAS ALSO AWARDED AS COST T O J. DALMIA. THE HONBLE COURT REFERRED TO THE PROVISIONS CONTAIN ED IN TRANSFER OF PROPERTY ACT UNDER WHICH TRANSFER OF PROPERTY MEANS AN ACT BY WHICH A PERSON CONVEYS PROPERTY TO ANOTHER. THEREFOR E IT WAS HELD THAT A MERE RIGHT TO SUE MAY OR MAY NOT BE THE PROPERTY BUT IT CANNOT CERTAINLY BE TRANSFERRED. ACCORDINGLY IT WAS HELD THAT T HE IMPUGNED AMOUNT WAS NOT LIABLE TO BE TAXED IN THE HANDS OF THE ASSE SSEE. 2.3 RELIANCE WAS ALSO PLACED ON THE DECISION O F HONBLE KOLKATA HIGH COURT IN THE CASE OF CIT VS. ASHOKA MARKET ING LTD. (1987) 164 ITR 654 WHERE THE QUESTION BEFORE THE HONBLE COU RT WAS WHETHER ON THE ITA NO. 15(DEL)/2010 5 FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TR IBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE SUM OF RS. 1.00 LAKH RECEIVED B Y THE ASSESSEE AS DAMAGES FROM NEW CENTRAL JUTE MILLS LTD. FOR NON-PERFORMANCE OF AGREEMENT IS NEITHER A REVENUE RECEIPT NOR A SHORT-TERM CAPITAL GAIN? IT MAY BE MENTIONED HERE THAT THE ASSESSEE WAS P AID LIQUIDATED DAMAGES OF RS. 1.00 LAKH IN THE COURSE OF A BUSINESS TRA NSACTION. THE COURT HELD THAT THE TITLE OF THE PROPERTY WAS NOT MARKETABLE AS THERE WAS A PRIOR MORTGAGE AND THUS IT WAS NOT POSSIBLE FOR THE ASSESSEE TO PURCHASE THE PROPERTY. FOR THE TRANSACTION THE ASSESSEE D ID NOT PART WITH ANY MONEY OR STOCK-IN-TRADE. THUS NO COST WAS INVOLVED I N ACQUISITION OF THE AFORESAID SUM OF RS. 1.00 LAKH. THEREFORE THE QUESTION WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 2.4 RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TRAVANCORE RUBBER & TEA CO. LTD. VS. CIT (2000) 243 ITR 158. THE MAIN QUESTION BEFORE THE COURT WAS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TR IBUNAL WAS RIGHT IN HOLDING THAT THE SUM OF RS. 3 95 229/- CANNOT BE CONSIDERED TO BE A REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE? THE HONBLE COURT MENTIONED THAT THE ASSESSEES RIGHT TO RECOV ER THE COMPENSATION WAS TO ITA NO. 15(DEL)/2010 6 PLACE IT THE SAME POSITION AS IS THE BREACH H AD NOT TAKEN PLACE. IF THE AGREED SUM OF MONEY HAD BEEN RECEIVED BY THE ASSESSEE THEY WOULD HAVE BEEN CREDITED IN ITS ACCOUNT AS A CAPITAL RECEIPT. THIS BEING SO THE FORFEITED AMOUNT MUST ALSO BE TREATED AS CAP ITAL RECEIPT NOT LIABLE TO TAX AS INCOME. 3. IN REPLY THE LD. DR REFERRED TO THE ASS ESSMENT ORDER WHICH SHOWS THAT A LARGE NUMBER OF OPPORTUNITIES WE RE GIVEN TO THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SUM OF RS. 4.00 LAKH RECEIVED BY HER. NO SATISFACTORY EXPLANATION WAS GIVEN. THE AMOUNT OF ADDITIONAL SUM OF RS. 2.00 LAKH WAS CREDITED TO THE CAPITAL ACCOUNT WITHOUT TAKING IT THROUGH THE PROFIT AND LOSS ACCOUNT. THE LEARN ED CIT(A) ALSO FURNISHED OPPORTUNITY TO THE ASSESSEE BUT NO EVIDENCE CO ULD BE BROUGHT ON RECORD FROM THE ALLEGED SELLER OF IMMOVABLE PROPERTY. IT HAS BEEN MENTIONED BY THE LD. CIT(A) THAT THERE IS NO CONFIRMATION OF PAYMENT OF EARNEST MONEY NOR FOR RECEIVING BACK THE SUM OF RS. 4.00 LAKH . HE TOOK INTO ACCOUNT THE SURROUNDING CIRCUMSTANCES AND THE HUMAN PRO BABILITIES. BY RELYING ON THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 AND SUMATI DAYAL VS. CIT 214 ITR 801 HE CAME TO THE CONCLUSION THAT THE ALLEGED RECEIPT OF RS. 4.00 LAKH WAS THE ITA NO. 15(DEL)/2010 7 ASSESSEES OWN MONEY. SHE ALSO OPPOSED ADMISSI ON OF ADDITIONAL EVIDENCE. IT WAS STRONGLY CONTENDED THAT TH E WHOLE OF THE MONEY IS TAXABLE IN THE HANDS OF THE ASSESSEE AS UNEXPL AINED MONEY. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE A ND RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE HAS PLACED ADDITION AL EVIDENCE BEFORE US BY WAY OF AFFIDAVIT OF THE COUNSEL AND THE AFFIDAV IT OF RAJINDER THE SELLER OF THE LAND AT PAGE NOS. 7 TO 9 OF THE PAPER BO OK. NO PRAYER HAS BEEN MADE TO ADMIT THIS EVIDENCE. NO APPLICATION HAS BEEN MOVED FOR ADMISSION OF THIS EVIDENCE. IN FACT IT WAS POI NTED OUT ONLY IN THE COURSE OF HEARING THAT THESE AFFIDAVITS CONSTITUTE ADDIT IONAL EVIDENCES. LOOKING TO THE FACT THAT SUFFICIENT OPPORTUNITIES HAVE BEEN GRANTED BY THE AO AND THE LD. CIT(APPEALS) TO THE ASSESSEE TO EXPLAIN HE R CASE OR FILE EVIDENCE WE THINK IT FIT NOT TO ADMIT THIS ADDITIONAL E VIDENCE. 4.1 COMING TO THE FACTS OF THE CASE THE ACCOU NTS PERTAINING TO ASSESSMENT YEAR 2005-06 WERE THERE BEFORE THE A O WHICH CLEARLY SHOWED THAT SHE HAD ADVANCED A SUM OF RS. 2.00 LAKH AS EARNEST MONEY FOR LAND. THUS THE REVENUES RECORD SHOWS THAT SUCH MONEY WAS ADVANCED ALTHOUGH THE NAME OF SELLER AND OTH ER PARTICULARS OF LAND ITA NO. 15(DEL)/2010 8 WERE NOT FURNISHED. NONETHELESS IT STANDS EST ABLISHED THAT THE MONEY WAS ADVANCED FOR PURCHASE OF LAND. THERE IS NO OTHER LAND IN RESPECT OF WHICH THE MONEY WAS ADVANCED EXCEPT THE ONE B ELONGING TO RAJINDER. IN THIS YEAR THE ASSESSEE RECEIVED RS. 4.00 LAKH AND CREDITED EXTRA AMOUNT OF RS. 2.00 LAKH TO HER CAPITAL ACCOUNT . THE ONLY INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF FACTS ON REC ORD IS THAT THE ASSESSEE CREDITED A SUM OF RS. 2.00 LAKH TO HER CAPITAL ACCOUNT FOR WHICH THERE IS NO SATISFACTORY EVIDENCE ON RECORD. IN ABSENCE OF TENDERING PROPER EVIDENCE BEFORE LOWER AUTHORITIES WE ARE U NABLE TO HOLD THAT THIS AMOUNT WAS RECEIVED FROM SHRI RAJINDER IN RE SPECT OF BREACH OF AGREEMENT FOR SALE OF LAND. IN OTHER WORDS TH E CREDIT OF RS. 2.00 LAKH IN CAPITAL ACCOUNT REMAINS UNEXPLAINED. IN VIEW THE REOF THIS AMOUNT CANNOT BE SAID TO BE CONNECTED WITH ANY LAND DEAL. C ONSEQUENTLY WE NEED NOT CONSIDER THE CASE LAW CITED BY THE LD. COUNSE L. THEREFORE IT IS HELD THAT ONLY A SUM OF RS. 2.00 LAKH COULD BE TAXED IN T HE HANDS OF THE ASSESSEE. 5. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. 6. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 JULY 2010. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 9TH JULY 2010. SP SATIA ITA NO. 15(DEL)/2010 9 COPY OF THE ORDER FORWARDED TO:- SMT. ANGOORI DEVI SONEPAT. ITO WARD-3 SONEPAT. CIT(A) CIT THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR. ASSISTANT REGISTRAR.