IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM ITA No. 799/JP/2014 Assessment Year : 2010-11. Shri Arun Kumar Ranka, cuke Asstt. Commissioner of Income- 25, 939-940, SBBJ Street, Vs. tax, Central Circle-2, Choura Rasta, Jaipur. Jaipur. PAN No. AALPR 1472 J Appellant Respondent Assessee by : Shri Vijay Goyal (C.A) Revenue by: Shri O.P. Bhateja (Addl. CIT) Date of Hearing : 14.09.2016. Date of Pronouncement : 07/10/2016. ORDER PER SHRI KUL BHARAT, JM. This appeal by assessee is directed against order of ld. CIT (A), Central, Jaipur dated 07.10.2014 pertaining to A.Y. 2010-11. assessee has raised following grounds of appeal :- 1. On facts and in circumstances of case and in law ld. CIT (A) erred in confirming addition of Rs. 45,83,700/- on account of alleged Unaccounted investment in land by holding that assessee has purchased land in village Shivdaspura in F.Y. 2009-10 from Shri Bhanwar Lal Meena. 2. On facts and in circumstances of case and in law ld. CIT (A) erred in confirming action of ld. AO of assessing profit from sale of land as short term capital gain at Rs. 3,12,14,434/- as against declared and claimed long term capital gain by assessee of Rs. 3,07,31,705/-. 2 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. 3. That order of ld. CIT (A), confirming addition made by AO is arbitrary, whimsical, capricious, perverse and against law and facts of case. order of ld. CIT (A) in this regard deserves to be set aside and addition made by ld. AO deserves to be deleted. 2. Briefly stated facts of case are that case of assessee was picked up for scrutiny assessment and assessment was framed under section 143(3) of IT Act, 1961 (hereinafter referred to as Act) vide order dated 30.03.2013. While framing assessment, AO computed income at Rs. 3,52,12,980/- against income declared at Rs. 2,95,18,020/-. AO computed short term capital gain at Rs. 3,12,14,434/- against long term capital gain declared at Rs. 3,07,31,705/-. While adopting index cost at Rs. 51,83,576/-, in which cost of land was shown at Rs. 28,90,183/- purchased in financial year 1999-2000. AO also made addition of Rs. 45,83,700/- as unaccounted investment in land. assessee aggrieved by this order, preferred appeal before ld. CIT (A), who after considering submissions of assessee dismissed appeal. 3. Now assessee is further in appeal before Tribunal. 4. Ground No. 1 is against confirming addition of Rs. 45,83,700/- on account of alleged unaccounted investment in land. 4.1. ld. Counsel for assessee reiterated submissions as made in written submission. ld. Counsel submitted that ld. CIT (A) held that farmers have sold agricultural land to Shri Bhanwar Lal Meena in FY 1999-2000. Shri Bhanwar Lal Meena is name lender of assessee, therefore, land should be held as purchased by assessee in FY 1999-2000. In event Shri Bhanwar Lal 3 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. Meena is not held as name lender of assessee, then capitgal gain cannot be taxed in hands of assessee, as registered sale deed was executed by Shri Bhanwar Lal Meena in favour of M/s. Mahatma Gandhi Charitable Society for Education and Research for Rs. 3,59,15,281/-. ld. Counsel submitted that ld. CIT (A) has held that requisite sale deed dated 24.09.2009 between Shri Bhanwar Lal Meena and Shri Arunb Kumar Ranka is reliable evidence which proves that this land was transferred by Shri Bhanwar Lal Meena to assessee in AY 2010-11. It is submitted that in said sale deed assessee is not buyer but seller of land and Shri Bhanwarl Lal Meena is buyer. Therefore, land in question was not transferred to assessee by Shri Bhanwar Lal Meena. He submitted that assessee is acting under power of attorney given by farmers transferred legal titles of land in favour of Shri Bhanwar Lal Meena on behalf of farmers. He submitted that factual position is that during year under appeal on 02.02.2010 assessee sold part of his land situated at Shivdaspura, which was purchased in name of Shri Bhanwar Lal Meena. land was sold to M/s. Mahatma Gandhi Charitable Society for Education and Research for Rs. 3,59,15,281/-. It is submitted that land totaling to 7.73 Hectare was purchased by assessee in FY 1999-2000 in name of Shri Bhanwar Lal Meena for Rs. 45,83,700/-. He drew our attention to receipts obtained from farmers which are enclosed at paper book pages 62-103. He submitted that investment in land was made by assessee but documents were prepared in name of Shri Bhanwar Lal Meena who was trusted man of assessee. land was purchased through unregistered agreement to sale. 4 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. After registration of Sale Deed in favour of Shri Bhanwar Lal Meena, original agreement of sale executed in FY 1999-2000 was not retained by assessee. He submitted that in this registered sale deed mode and date of payment is duly mentioned. He further submitted that even oral agreement to sale is valid agreement. He submitted that lower authorities have failed to appreciate facts in right perspective and proceeded to make addition on whims and fancies which is not permissible in law. 4.2. On contrary, ld. D/R opposed submissions and supported orders of authorities below. ld. D/R submitted that admittedly sale deed was executed in financial year relevant to year under appeal. ld. D/R further submitted that search action was carried out at premises of assessee and no documents related to transfer of land in question was found or disclosed by assessee. He submitted that under these facts orders of authorities below was justified. 4.3. We have heard rival contentions and perused material available on record. Undisputed facts that emerge from records are that sale deed dated 24th September 2009 was executed by original owners of land in favour of Shri Bhanwar Lal Meena through General Power of Attorney holder Shri Arun Kumar Ranka, assessee. As per this sale deed, original land owners have stated that sum of Rs. 45,83,700/- was paid to them on 18.12.1999 by Shri Bhanwar Lal Meena. assessee has also placed on record receipts given by land owners acknowledging receipt of money in year 1999. receipts are duly notarized and placed on record. assessee has also placed on record 5 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. registered power of attorney in favour of assessee narrating therein payments made to land owners in year 1999. AO as well as ld. CIT (A) proceeded to make addition of amount of Rs. 45,83,700/- as unaccounted investment in land during FY 2009-10 relevant to assessment year under appeal. ld. CIT (A) while rejecting explanation of assessee has observed as under :- Thus, no evidence was found of transfer of this land by agriculturists to appellant in AY 2000-01, either during course of search in 2006 or during course of survey on 29.9.2010. These documents were never presented by appellant before Department even through this is only reliable evidence required in support of his submissions. (vi) As for statements of appellant, his brother and Sh. Bhanwar Lal Meena, it is seen that there is inherent inconsistency in them. Sh. Bhanwar Lal Meena was not sure which land was being referred to. In response to question no. 5, he has stated that land was purchased inJagatpura. He reiterated information in response to question no. 6. Subsequently, he states that this land is in Shivdaspura clearly his statement is not reliable evidence because he has not given any specific information supported by any evidence. Similarly, statements of appellant and his brother are held to be unreliable evidence. Since no surrender was made as per admission in these statements while filing return of income. AR of appellant has himself admitted in written submissions dated 9.9.2014 that oral statement cannot supersede documentary evidence. Reliance has been placed on finding of Hon. Apex court in case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala (1973) 19 ITR 18 wherein it was held that admission though important piece of evidence cannot be said to be conclusive. I agree with these submissions of AR. Hon. Jurisdictional High court has also held in case of CIT vs. Ashok Kumar Soni 291 ITR 172 that admission made in statement is not conclusive proof and can always be rebutted and explained. As per detailed discussion above it is seen that at no stage has appellant brought on record any evidence to show that land in Shivdaspura was transferred by agriculturists to appellant in 1999-2000 FY. 6 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. (vi) Furthermore, it is seen that appellant has not shown details of payment for purchase of land in A.Y. 2000-10 nor has this land been shown as part of his stock in A.Y. 2000-01. Thus in absence of any direct evidence by way of IT returns of company, or individuals of this group, or revenue records of State Govt., or revenue records of Patwari, to show that this land was purchased by appellant in A.Y. 2000-01 his submission cannot be accepted. It is settled judicial principle that additions cannot be made on conjectures or surmises. On basis of same principle it is held that relief cannot be granted to assessee on conjectures and surmises in absence of direct and reliable evidence. Therefore, it is held that this land was purchased by appellant in A.Y. 2010-11 from Sh. Bhanwar Lal Meena for amount of Rs. 45,83,700/-. No evidence was submitted during course of assessment proceedings or appellate proceedings to show source of payment for this land from regular books of accounts by appellant therefore investment in this land by appellant of Rs. 45,83,700/- is to be added to his income u/s 69. Short term capital gain ascertained by AO at Rs. 3,12,14,434/- is confirmed. Now issue to be decided is whether investment relates to year under appeal or during FY 1999-2000. There is no dispute with regard to sale deed dated 24th September, 2009. As per this sale deed, owners of land have stated that they have received money during F.Y. 1999-2000. AO has not examined original land owners in respect of receipts given by them. It is settled position of law that document is to be read as whole. ld. CIT (A) has confirmed addition on basis that no evidence was found for transfer of this land by land owners to assessee in A.Y. 2000-01. These documents were never presented by appellant before department. In our considered view, non disclosure of investment by assessee in financial year 1999-2000 would not ipso facto make investment as unexplained 7 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. investment in year when sale deed was executed. issue is what should be year of investment - year when sale deed is executed or year when actual money was paid. assessee in support of its contention that investment was made in year 1999-2000 through Shri Bhanwar Lal Meena and owned these investments as undisclosed benami transaction, submitted receipts issued by original land owners. It is true that onus is on claimant to prove that investment was made during particular year. To discharge that onus, assessee has placed on record registered sale deed which narrates details of payment and also receipts issued by land owners. It is also noteworthy that land was transferred by land owners through assessee as Power of Attorney holder. assessee has owned investment made by recorded buyer of land, namely Shri B.L. Meena. There is no dispute to this extent. revenue has not placed any material either in form of Statement of land owners or in form of any documentary evidence related to land in question demonstrating that claim of assessee is wrong. In absence of material evidence rebutting claim of assessee that investment was made during FY 1999- 2000 cannot be rejected on basis of mere suspicion. Under these facts, in our considered view, ld. CIT (A) was not justified in treating investment in year under appeal. Therefore, addition made on this basis cannot be sustained, same is hereby deleted. 5. Apropos Ground No. 2, ld. Counsel for assessee submitted that authorities below were not justified in treating acquisition of land in year under appeal. ld. Counsel submitted that merely because sale deed was 8 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. executed during year under appeal would not make year of transfer year under appeal. He submitted that ld. CIT (A) was not justified in confirming action of AO to treat surplus arising out of transfer of capital asset as short term capital gain. 5.1. On contrary, ld. D/R supported orders of authorities below. 5.2. We have heard rival contentions and perused material available on record. We find that AO in para 5 of his order has observed that land was purchased in FY 1999-2000 and exercise of documentation has been done to avoid higher incidence of tax in form of short term capital gain and to show that unaccounted investment was made beyond period for which no action is possible under provisions of IT Act. ld. CIT (A) has confirmed this finding of AO and computed short term capital gain at Rs. 3,12,14,434/-. There is no dispute with regard to fact that in respect to both transactions i.e. sale and purchase, sale deed was registered during year under appeal. However, AO while computing cost of acquisition of land has taken cost of acquisition money claimed to have been paid by assessee during FY 1999- 2000. During course of hearing query was raised to ld. D/R how there would be such vast difference between cost of acquisition and sale consideration, when both transactions are treated to be executed in same year. Ld. D/R could not give satisfactory reply. When AO proceeded to compute capital gain on basis of stamp valuation adopted by Stamp Valuation Authority for purpose of computing short term capital gain, AO ought to have taken market value for cost of acquisition as well. At no stretch of imagination there can 9 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. be so much increase in value of property within one year. Had AO adopted cost of property on basis of prevailing rate in year under appeal, in that event short term capital gain as computed by AO would have become NIL. AO has not treated notional cost as unexplained investment of assessee. Therefore, it can be inferred that AO was not sure with fact that transfer actually took place in year under appeal. Under these facts, we are unable to sustain finding of both ld. CIT (A) and AO. When ld. CIT (A) has accepted that transfer took place during year under appeal then what should be cost of acquisition of such land during year under appeal. This aspect is not even examined by ld. CIT (A). Admittedly, revenue has not come in appeal. Therefore, after considering facts of case, we are unable to sustain short term capital gain as computed by AO at Rs. 3,12,14,434/-. 5.3. So far contention of assessee that actual transfer took place during FY 1999-2000 as assessee had given money to concerned land owners during FY 1999-2000 is concerned, assessee has demonstrated that amount was given to land owners during FY 1999-2000 by placing receipts issued by land owners. Neither AO nor ld. CIT (A) has rebutted documentary evidences by examining concerned executors and it is also observed that some of receipts are duly notarized by Notary. AO did not examine Notary to ascertain truth. As per section 2(47), if transfer takes place in manner as prescribed under section 53A of Transfer of Property Act, in that event transfer would relate to year when part performance is made by concerned assessee, but not in year when sale deed is 10 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. executed by transferor. As per assessee, possession was actually taken by assessee from land owners. However, land continued to remain in name of land owners in revenue record. AO has also not verified this fact. revenue has not placed any material on record suggesting that claim as made by assessee, which is duly narrated in Sale Deed on basis of which transaction is subjected to computation of short term capital gain. Hence, addition made by AO cannot be sustained. AO has in mechanical manner proceeded as if facts narrated in sale deed were not correct to extent of payment of sale consideration in FY 1999-2000 and rest of contents were accepted. For rejecting claim, AO ought to have brought on record positive material suggesting that what is stated in sale deed in respect of payment of money is not true. Hence approach of AO is not justified and cannot be sustained. This ground of assessee s appeal is allowed. 6. In result, appeal of assessee is allowed. Order is pronounced in open court on 07/10/2016. Sd/- Sd/- ( BHAGCHAND) ( KUL BHARAT ) Accountant Member Judicial Member Jaipur Dated:- 07/10/2016. Das/ Copy of order forwarded to: s 1. Appellant- Shri Arun Kumar Ranka, Jaipur. 2. Respondent ACIT Central Circle-2, Jaipur. 3. CIT(A). 4. CIT, By order, 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 799/JP/2014) Assistant. Registrar 11 ITA No. 799/JP/2014 Shri Arun Kumar Ranka, Jaipur. Arun Kumar Ranka v. Asstt. Commissioner of Income-tax, Central Circle-2, Jaipur