KAMAL KISHORE CHANDAK v. INCOME TAX OFFICER
[Citation -2006-LL-0428-18]

Citation 2006-LL-0428-18
Appellant Name KAMAL KISHORE CHANDAK
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 28/04/2006
Assessment Year 1999-2000
Judgment View Judgment
Keyword Tags income from house property • sale of agricultural land • cost of construction • agricultural holding • stamp duty valuation • ad hoc disallowance • agricultural income • sale consideration • state government • valuation report • registered deed • ad hoc addition • capital account • cost of land • capital gain • cash payment • advance tax • sale deed • tubewell
Bot Summary: The assessee claimed that he had sold an agricultural land along with tubewell situated at Osian Road, Khinvsar for Rs. 3,10,000 on 23rd April, 1998 and the sale proceeds were applied in the construction of these shops to the extent of Rs. 2,30,000 and the remaining sum of Rs. 80,000 was spent in the construction of other property during the financial year 1998-99 relevant to assessment year under consideration. The assessee had filed an affidavit before the learned AO which was ignored being not properly raised but this affidavit filed before the AO clearly spelt out the claim of the assessee. The assessee had himself declared that out of his sale proceeds of agricultural land sold along with tubewell at Rs. 3,10,000, the assessee had spent Rs. 80,000 towards the construction of the property situated at Dakota Ka Bas, Village Khinvsar. The assessee is the owner of the agricultural land whose details are available in the paper book and the same were filed before the AO. The assessee has submitted the complete details of agricultural holding along with the activities carried out by him during the relevant period and the same were d u l y supported by the revenue records and the certificate issued by the agricultural office. The statement of the assessee that he provided irrigation facility to his neighbours on cash payment, also in a way, supports the case of the assessee as from this fact it is proved that the assessee had enough irrigation facility to grow crops. The assessee has also filed a certificate of Assistant Agricultural Officer wherein the average production of particular crop in the area in which agricultural land of the assessee are situated have been given. The AO has not gathered any evidence to establish that the assessee had actually understated the investment and the burden is on the Revenue to prove that real investment as shown by the assessee is understated and he cannot rely merely on the fair market value.


Hari Om Maratha, J.M.: These are cross-appeals which are filed against order of CIT(A) dt. 5th June, 2003 for asst. yr. 1999-2000. facts of case are that assessee filed his return of income on 27th March, 2000 declaring income of Rs. 1,67,580 income from house property and from interest besides agricultural income of Rs. 3,30,000. survey under s. 133A was carried out on 29th Oct., 1998 in case of this assessee. As result of survey, various additions were made when case was picked up for scrutiny. We will discuss more relevant facts while dealing with each and every ground of appeals. ITA No. 368/Jd/2003; Asst. yr. 1999-2000 This is appeal of assessee in which five grounds have been taken. Ground Nos. 4 and 5 do not require any adjudication; therefore, same are hereby dismissed. Ground No. 1 relates to confirmation of addition of Rs. 2,39,609 made on account of investment done in construction of shops at village Khinvsar. During course of survey, assessee had surrendered amount of Rs. 8,00,000 on account of investment made in immovable properties while making his statement which was recorded on 9th Nov., 1998 and also deposited advance tax accordingly. But assessee did not include surrendered amount in his return of income. assessee was required to file valuation report of shops situated at bus stand, Khinvsar. assessee filed this report dt. 18th Jan., 2002 given by one Shri Onkarnath Khanna, Jodhpur according to which cost of construction of these shops was estimated at Rs. 2,64,609. But assessee showed cost of these ships at Rs. 1,25,000 including Rs. 1,00,000 being cost of land. In his statement of affairs filed along with return of income, assessee explained difference between costs of construction shown by him. assessee claimed that he had sold agricultural land along with tubewell situated at Osian Road, Khinvsar for Rs. 3,10,000 on 23rd April, 1998 and sale proceeds were applied in construction of these shops to extent of Rs. 2,30,000 and remaining sum of Rs. 80,000 was spent in construction of other property during financial year 1998-99 relevant to assessment year under consideration. AO disbelieved above contention of assessee being belated version. assessee did not maintain books o f account, however, he had filed statement of affairs in shape of balance sheet showing figures of previous years also. He also filed details of interest, rent, capital account along with return of income. learned CIT(A) also confirmed finding of learned AO but accepted claim of assessee that he had sold agricultural land for Rs. 3,10,000 on 23rd April, 1998 but did not accept claim that sale proceeds were utilized in construction of these shops. reasons for which was that assessee, neither during survey nor in his statement recorded on 9th Nov., 1998, took such stand. We have heard rival submissions and perused evidence on record. We agree with learned CIT(A) that assessee had received sale consideration of Rs. 3,10,000 on 23rd April, 1998, which is date prior to or during impugned investment was made in construction of shops in question. This fact stands proved by registered documents, which cannot be antedated or postdated. Department could not controvert this fact. It is true that assessee took this stand at very belated stage. assessee himself showed cost of land and construction at Rs. 1,25,000 which included cost of land Rs. 1,00,000, in statement of affairs. At fag end, assessee claimed that sale consideration of Rs. 3,10,000 received on 23rd April, 1998 was also used towards construction of these shops to greater extent. assessee made surrender and retracted same but also paid advance tax on surrendered amount of Rs. 8,00,000, which was surrendered on account of investment in various properties. clear fact which emerges from above controversy is that assessee had made surrender and had paid advance tax, but later retracted and took plea that Rs. 2,30,000 out of Rs. 3,10,000 were spent in construction of these shops. fact of sale of agricultural land for Rs. 3,10,000 has been accepted by learned CIT(A) and Department is not in appeal against this finding. Now, question arises as to what happened to sale proceeds of Rs. 3,10,000, thereafter. assessee has not claimed this amount to have been spent somewhere else and assessee has not claimed this amount to have been spent somewhere else and Revenue has also not established this fact. Therefore, when there are two possibilities which come out of given set of facts, one which is in favour of assessee, has to be accepted and only fact that assessee made this claim at very fag end of assessment proceedings, would not be rejected entirely although it has to be deeply scrutinized. Be that as it may, as we have stated above, version which suits assessee has to be accepted in absence of any contrary proof on record. Moreover, assessee had filed affidavit before learned AO which was ignored being not properly raised but this affidavit filed before AO clearly spelt out claim of assessee. This fact goes to support case of assessee to some extent. We are of considered opinion that even though claim of use of sale proceeds was taken at later point of time, yet this has great evidentiary value. factum of sale stand established and there is no evidence that this amount was used somewhere else therefore, this explanation has to be considered in correct perspective without simply ignoring it to be afterthought. Hence, we accept this ground of appeal taken by assessee and delete impugned addition, by holding that assessee has properly explained investment in shops out of disclosed income. second ground of appeal relates to addition of Rs. 80,000 made in respect of investment in construction of property at Dakota Ka Bas, Village Khinvsar. assessee had himself declared that out of his sale proceeds of agricultural land sold along with tubewell at Rs. 3,10,000, assessee had spent Rs. 80,000 towards construction of property situated at Dakota Ka Bas, Village Khinvsar. Since, learned CIT(A) has accepted sale of property for amount of Rs. 3,10,000 and assessee had himself declared this expenditure in this property and there being no other evidence to contrary in possession of Department, in view of our above findings where we have accepted expenditure of Rs. 2,31,000 out of Rs. 3,10,000 towards shops, we have to accept this claim of assessee as well. Therefore, we order to delete amount of Rs. 80,000 from hands of assessee. Ground No. 3 relates to disallowance of Rs. 1,00,000 out of claim of assessee for agricultural income of Rs. 3,30,000. AO disallowed Rs. 1,50,000 out of total claim made by assessee. learned CIT(A) further restricted disallowance to Rs. 1,00,000. We have heard rival submissions and perused evidence on record. assessee is owner of agricultural land whose details are available in paper book and same were filed before AO. assessee has submitted complete details of agricultural holding along with activities carried out by him during relevant period and same were d u l y supported by revenue records and certificate issued by agricultural office. In our opinion when Revenue has itself accepted factum of agricultural income, same cannot be reduced only on whims in absence of any concrete evidence on record to reach particular conclusion. assessee had also filed evidences in support of agricultural income, copies of which are also filed before us. averments of affidavit filed in support of agricultural income remained uncontroverted throughout. In view of these facts, we are of considered opinion that AO was not justified in making additions by rejecting part of agricultural income simply on basis of non-availability of sale vouchers because agriculturist is not required to maintain any books of account. Copies of Girdawari are on record, which prove that crops were grown on land belonging to assessee. statement of assessee that he provided irrigation facility to his neighbours on cash payment, also in way, supports case of assessee as from this fact it is proved that assessee had enough irrigation facility to grow crops. assessee has also filed certificate of Assistant Agricultural Officer wherein average production of particular crop in area in which agricultural land of assessee are situated have been given. These facts also support version of assessee. sum total of above discussion is that assessee has been able to establish his case and Department has not been able to rebut same. Therefore, this ad hoc addition cannot survive and hence we order to delete addition of Rs. 1,00,000. In result, appeal of assessee is partly allowed. ITA No. 338/Jd/2003 (1999-2000) This is appeal of Revenue in which two grounds of appeal have been taken, which are extracted hereinbelow: "(i) Deleted entire addition of Rs. 6,70,935 made on account of understatement of purchase consideration for house at Jodhpur. (ii) Deleted Rs. 50,000 out of addition of Rs. 1,50,000 made on account of treating agricultural income from undisclosed sources." Ground No. 1 relates to deletion of addition of Rs. 6,70,935 made on account of understatement of purchase consideration for house situated at Jodhpur. AO made this addition on basis of valuation done by sub-registrar for stamp duty purposes. State Government has fixed rate of different assessment years for purpose of stamp duty collection. assessee purchased house property in financial year 1997-98, which relates to asst. yr. 1998-99 whereas AO made addition in year 1999-2000. According to s. 50C, which was introduced w.e.f. 1st April, 2003 by Finance Act, 2002, capital gain is to be levied on seller for difference of amount given in registered deed and valuation taken for stamp purposes. AO, however, made impugned addition which was deleted by learned CIT(A). We have heard rival submissions. undeniable fact of this issue is that AO made addition of Rs. 6,70,935 being 50 per cent of alleged understated investment of Rs. 13,41,870 which was worked out on basis of value determined by registration authority. AO has not gathered any evidence to establish that assessee had actually understated investment and burden is on Revenue to prove that real investment as shown by assessee is understated and he cannot rely merely on fair market value. No addition under s. 69B of Act for this reason only can be thus made. Moreover, this is settled law that on basis of stamp duty valuation no addition can be made as this has not been held to be good parameter to determine real cost of particular property which was subject-matter of sale deed for registration purposes. Therefore, we do not find infirmity in findings of learned CIT(A) and hence same stands confirmed. Thus, this ground of appeal cannot be allowed. Ground No. 2 relates to deletion of Rs. 50,000 out of Rs. 1,50,000 made on account of treating agricultural income as from undisclosed sources. Since, we have already decided this issue while dealing appeal of assessee and in consonance of our finding that ad hoc disallowance cannot be sustained, this ground of appeal has to be dismissed. In result, appeal of assessee is allowed and that of Department is dismissed. *** KAMAL KISHORE CHANDAK v. INCOME TAX OFFICER
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