ORDER
D.R. Singh, JM
With this common order, we shall dispose of these two appeals filed by the revenue against the orders of Commissioner (Appeals), Ludhiana, dated 23-4-1997, for the assessment year 1994-95 and dated 2-12-1996, for the assessment year 1993-94, because the issue involved in both these appeals are identical and the decision of one appeal is going to affect the outcome of the decision on the other appeal.
2. In ITA No. 776/Chandi/1997; assessment year 1994-95, the revenue has taken the following effective ground :
(1) The learned Commissioner (Appeals), Ludhiana, has erred both in law and on facts in directing to take the sale consideration of the house property situated at 34, Club Road, Ludhiana, at Rs. 36,80,000 as against Rs. 46,68,000 taken by the assessing officer.
3. In ITA No. 277/Chandi/1997; assessment year 1993-94, the revenue has taken the following ground :
(1) That on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 3,39,048 made on account of long-term capital gain.
4. The relevant and material facts for the disposal of ground No. 1 of appeal in ITA No. 277/Chandi/1997; assessment year 1993-94, filed by the revenue, are that the assessee sold his residential house No. 34, Club Road, Ludhiana, to Shri Vijay Kumar, his wife Smt. Sneh Lata and their two sons Shri Avinash Kumar and Shri Rajnish Kumar for a total sum of Rs. 36,80,000 as agreed vide agreement dated 18th July, 1992.
4.1 A search and seizure operation took place at the residence of the assessee and Shri Vijay Kumar, and the copy of agreement dated 18-7-1992, was seized from the residence of the assessee but certain loose papers indicating the following payments totalling to Rs. 35,68,000 in cash and through bank pay orders were seized from the premises of Shri Vijay Kumar :
15-7-1992
Kapoor
50,000
18-7-1992
Kapoor
4,50,000
2-9-1992
Manmohan
7,84,000
11-9-1992
Kapoor
7,84,000
16-2-1993 34,
Club Road
15,00,000
In addition to above, it was further revealed that a sum of Rs, 6 lacs was paid through four pay orders. So, the assessing officer held that the total sale consideration of Rs. 41,68,000 (Rs. 35,68,000 + Rs. 6,00,000) was received by the assessee though agreement indicating the sale price at Rs. 36,80,000.
4.2 The assessing officer was also of the opinion that this excess payment of Rs. 5 lacs must have been made by Shri Vijay Kumar to the assessee on account of some dispute which had taken place between the assessee and the purchaser. He was also of the view that in case only Rs. 36,80,000 would have been paid by Shri Vijay Kumar to the assessee, then there was no need to record the transaction of Rs. 35,68,000 and so, treating the same as documentary evidence and after considering the reply of the assessee as detailed in his order, and after rejecting the same, the assessing officer took the sale price of the property at Rs. 41,68,000 against Rs. 36,80,000 declared by the assessee and worked out the long-term capital gain and made the impugned addition of Rs. 3,39,048 in the assessment year 1993-94.
4.3 Against the order of the assessing officer, the assessee, filed an appeal before the Commissioner (Appeals) and submitted that the four dates i.e., 15-7-1992, 18-7-1992, 2-9-1992 and 11-9-1992, reflected in the loose papers tally with the payments made on the dates of registration deeds because on these dates amounts were received in cash. It was also submitted that as far as fifth amount of Rs. 15,00,000 reflected in the loose papers dated 16-2-1993, is concerned, the same was not paid to the assessee because it was not relevant to the dates of any of the events. Further, according to the assessee, the purchaser Shri Vijay Kumar must have withdrawn this amount for utilising in future, partly for payment to the assessee to the extent of balance amount of Rs. 10,12,000 and partly for renovation of the house purchased by him as was also admitted by him before the Assistant Commissioner.
4.4 The assessee further submitted that as per agreement dated 18-7-1992, the sale deed had to be executed by 30-9-1992, but due to some dispute, the sale deeds in respect of balance property were only completed on 29-3-1993 and 2-4-1993, and the balance amount of cash of Rs. 10, 12,000 along with pay orders was received by the assessee on the above two dates. It was also submitted by the assessee that this payment of Rs. 15,00,000 shown on 16-2-1993, by Shri Vijay Kumar, only words, “34 Club Road” have been mentioned in the loose papers but the name of the assessee has not been mentioned whereas in respect of other payments, Shri Vijay Kumar has mentioned the name of the assessee. The assessee further contended that this date of 16-2-1993, was not relevant to the date of any event and so, it cannot be said that this amount was paid by the purchaser Shri Vijay Kumar to the assessee.
4.5 The assessee further contended that in fact this payment of Rs. 15 lacs shown on 16-2-1993, by Shri Vijay Kumar can only be explained by., Shri Vijay Kumar as to why he has withdrawn this amount and as to how this amount has been utilised by him and so, the assessing officer cannot ask the assessee to explain the payment of this amount by Shri Vijay Kumar.
4.6 Lastly, the assessee contended that since the assessing officer failed in proving that Shri Vijay Kumar has made this payment to the assessee on 16-2-1993, so he was not justified in taking the sale consideration of the house at Rs. 41,68,000 against Rs. 36,80,000 shown by the assessee and making the impugned addition on account of long-term capital gain.
4.7 learned Commissioner (Appeals), after considering the submissions of both the parties made before him, came to the conclusion that the sale consideration of the house was Rs. 36,80,000 as shown by the assessee and not Rs. 41,68,000 taken by the assessing officer, and deleted the impugned addition made by the assessing officer on the following reasonings
(i) Firstly, with regard to the contention of the assessee that this amount of Rs. 15 lacs withdrawn by Shri Vijay Kumarlon 16-2-1993, must have been used by Shri Vijay Kurnar for making the balance payment of Rs. 10,12,000 to the assessee on 29-3-1993 and 2nd April, 1993, i.e., on the dates of execution of registered sale deeds in respect of the house and for renovation of the house purchased by Shri Vijay Kumar. The Commissioner (Appeals) made the following observations in his order
“In support of this contention of the assessee, the assessee has also submitted that the assessing officer had himself estimated the expenditure on renovation of the house by Shri Vijay Kumar at Rs. 5 lacs. He further observed that though the assessing officer sought to rebut this argument of the assessee by stating that separate withdrawals were made by Shri Vijay Kumar for this purpose to the extent of Rs. 2,97,181 between 12-9-1992 and 10th April, 1993, and Rs. 2,52,400 between 9th April, 1993, and 15-6-1993, a list showing such expenditure was also placed before the Commissioner (Appeals) and after perusing the same, the Commissioner (Appeals) found that total expenditure shown in this list amounted to Rs. 2,97,181 which did not relate to the renovation of the house because the payments are shown to have been made to various persons like V.K. Singhal, Parveen Garg, SDM, Charan, Deed Writer, Tandon Advocate and many others. So, these cannot be said to have been used towards renovation of the house of Shri Vijay Kumar.
The Commissioner (Appeals) further observed that some payments were made for cement, bricks, 34, Club Road, etc. which only worked out to Rs. 52,710, whereas the assessing officer has estimated the expenditure towards renovation of the house to the extent of Rs. 5 lacs. Hence, the Commissioner (Appeals) was of the opinion that the assessee has not made any separate withdrawals for the period from 12th Sept., 1992 to 10th April, 1993 and 9-4-1993 to 15-6-1993, for incurring expenditure on renovation of the house.”
(ii) Secondly, regarding the issue whether the payment of Rs. 15 lacs was made to the assessee by Shri Vijay Kumar by withdrawing the same on 16-2-1993, the Commissioner (Appeals) observed :
“That in respect of every paymgnt made by the purchaser Shri Vijay Kumar, the name of the assessee in terms of ‘Manmohan’ or ‘Kapoor’ is written whereas in respect of payment of Rs. 15 lacs, words ’34 Club Road’ are written. He further observed that the assessing officer recorded the statement of Shri Avinash Maini, Broker, through whom transactions were entered into but he also confirmed that sale consideration of this property was Rs. 36,80,000. He also has filed a suit in the civil court on 21st March, 1994, wherein recovery of commission from both the parties has been claimed on sale consideration of Rs. 36,80,000.
Thereafter, the Commissioner (Appeals) observed that the assessing officer has not been able to make out a case against the assessee because according to the Commissioner (Appeals) as to how the amount of Rs. 15 lacs withdrawn by Shri Vijay Kumar, purchaser, and how it was utilised by him, can only be explained by the purchaser, Shri Vijay Kumar and not by the assessee. The Commissioner (Appeals) further observed that even the receipt of cash to the tune of Rs. 36,810,000 has been accepted by the Assistant Commissioner in wealth-tax cases for the assessment years 1993-94 and 1994-95 as cash in hand and so, in these circumstances, the addition made on this account by the assessing officer was deleted by the Commissioner (Appeals).
4.8 Before us, learned departmental Representative for the revenue, placed strong reliance on the reasoning given in paras 3 to 5 of the order of the assessing officer at p. 3 and submitted that the assessing officer has rightly made the impugned addition for the sale consideration of the house received by the assessee at Rs. 46,68,000 against Rs. 36,80,000 shown by the assessee and so, the assessing officer has rightly made the impugned addition with regard to the long-term capital gain.
4.9 learned authorised representative for the assessee, on the other hand, placed strong reliance on the reasoning given in the order of the Commissioner (Appeals) and reiterated the submissions which he made before the tax authorities below and again made reference to pp. 19 to 23 of the paper book, which are photocopies of the residence of Shri Vijay Kumar, purchaser. In addition, in order to support that sale consideration of the house was agreed at Rs. 36,80,000, the assessee placed reliance on pp. 34 to 42 of the paper book, i.e., copy of the civil suit filed by the broker, indicating that since there was a dispute with respect to the commission to be paid to the broker, Shri Avinash Maini, so he filed a civil suit in the civil court against the assessee mentioning the sale consideration of the property at Rs. 36,80,000 and claiming commission on the same.
4.10 learned authorised representative for the assessee also referred to WT returns at pp. 57 to 60 of the paper book in which the assessing officer, who has made the assessment in the income-tax proceedings, has also made the assessment in wealth-tax cases and has accepted the receipt of cash to the tune of Rs. 36,80,000 by the assessee on account of sale of this house in the assessment years 1993-94 and 1994-95. Page 59 of the paper book indicates details as to how the cash was received. Page 58 shows that Rs. 36,80,000 have been accepted by the assessing officer in the wealth-tax cases.
4.11 Lastly, the learned authorised representative for the assessee contended that the assessing officer has not brought on record sufficient material to show that this withdrawal of Rs. 15 lacs by Shri Vijay Kumar can been attributed as payment to the assessee and so, the Commissioner (Appeals) in his well-reasoned and well-discussed order has rightly taken the value of the house at Rs. 36,80,000 against Rs. 41,68,000 taken by the assessing officer and the Commissioner (Appeals) has rightly deleted the impugned addition.
4.12 We have considered the rival submissions of both the parties, perused the material on record and carefully gone through the orders of the tax authorities below.
4.13 In this case, in order to give a finding on the ground of appeal involving the addition of Rs. 3,39,048 made on account of long-term capital gain, we are required to resolve the issue whether the sale consideration declared by the assessee at Ms. 36,80,000 is correct or the sale consideration taken by the assessing officer at Rs. 41,68,000 is correct. The assessing officer, while coming to the conclusion that the total sale consideration of the house was Rs. 41,68,000, relied upon the payments of Rs. 35,68,000 shown to have been made by Shri Vijay Kumar either through cash or through bank pay order from 15-7-1992 to 16-2-1993, revealed from the loose papers seized from the residence of Shri Vijay Kumar. Secondly, the assessing officer placed reliance on other payments amounting to Rs. 6 lacs paid through bank pay orders by Shri Vijay Kumar. In view of these documents, the assessing officer drew a presumption that the payments were made by Shri Vijay Kumar to the assessee in respect of the sale of the house in question and so, he took the total value of the house at Rs. 41,68,000 against Rs. 36,80,000 declared by the assessee. It is important to mention here that except for a payment of Rs. 15 lacs, the assessee seems to have admitted that the other payments were made by Shri Vijay Kumar to the assessee, relating to the sale transactions. It is also important to mention that except for the presumption of the assessing officer that the payment of Rs. 15 lacs was also made by Shri Vijay Kumar to the assessee by withdrawing this amount on 16-2-1993, the assessing officer has not brought on record any other such evidence on the basis of which it could be said with certainty that the amount of Rs. 15 lacs withdrawn by Shri Vijay Kumar on 16-2-1993, was paid to the assessee as a sale consideration of the house in question.
4.14 On the other hand, we find that in this case neither Shri Vijay Kumar has been examined by the assessing officer as to whom the payment of Rs. 15 lacs withdrawn on 16-2-1993, was made by him nor he anywhere stated to the assessing officer that this entire amount was paid by him to the assessee towards the sale consideration of the house in question. Similarly, the assessing officer examined the broker, Shri Avinash Maini, who stated before the assessing officer that the sale consideration agreed and paid between the parties was Rs. 36,80,000. From the veracity of his statement, we find that when a dispute arose between the broker, seller and purchaser in respect of payment of commission, the broker filed a civil suit mentioning the sale consideration of the house at Rs. 36,80,000 on which the seller and purchaser had not paid the agreed commission to him and later on, the dispute regarding the commission was settled by the award of the Court. It is clear that had there been sale consideration of the house agreed between the parties and the broker at Rs. 41,68,000 as mentioned by the assessing officer, the broker would have definitely demanded the commission in the civil court suit on this amount instead of Rs. 36,80,000.
4.15 It is further important to mention here that in the loose seized papers against the payment of Rs. 15 lacs on 16-2-1993, by Shri Vijay Kumar, only words “34 Club Road” have been mentioned but the name of the assessee does not find any mention, whereas against the other four payments from 15th July, 1992 to Ilth Sept., 1992, names “Kapoor” and “Manmohan” have been mentioned which means that these payments appearing on the loose seized papers related to the assessee because his name is Manmohan Kapoor. The assessee has also brought to our notice that these payments also pertained to the dates either shown, to have been reflected on the dates of agreements executed between the assessee and Shri Vijay Kumar or pertained to the dates of payments made at the time of execution of sale deeds, whereas the date 16-2-1993, is not related to any of the date of agreement to sale or the execution of sale deed because the sale deeds in respect of the balance property were completed on 29-3-1993 and 2-4-1993, on which dates the balance amount of Rs. 10,20,000 in cash along with pay orders was received by the assessee.
4.16 The presumption of the assessee that the purchaser Shri Vijay Kumar may have withdrawn this amount of Rs. 15 lacs reflected in the loose papers against the date 16-2-1993, partly for making the balance payment of Rs. 10,12,000 to the assessee in future at the time of execution of the sale deed on 29-3-1993 and 2-4-1993, and the balance amount was withdrawn by him for utilisation of the same for renovation of the house 34 Club Road, and that the entire amount of Rs. 15 lacs was not paid to the assessee, also does not seem to be incorrect because Shri Vijay Kumar in his case has admitted the renovation of the house before the assessing officer who not agreeing with the expenditure incurred by Shri Vijay Kumar for renovation of the house, had estimated the same at Rs. 5 lacs, meaning thereby that the assessing officer himself has accepted that Shri Vijay Kumar incurred a sum of Rs. 5 lacs for renovation of the house.
4.17 Even from the discussion in the order of the Commissioner (Appeals), we find that he rightly concluded that out of the withdrawal of Rs. 15 lacs on 16-2-1993, Shri Vijay Kumar utilised the amount partly for renovation of the house and partly for making the balance payment to the assessee, and that the entire amount of Rs. 15 lacs was not paid to the assessee.
4.18 In this case, we also find that the assessing officer has not enquired from Shri Vijay Kumar that after withdrawing an amount of Rs. 15 lacs on 16-2-1993, as reflected in the seized loose sheets, where and how the same was utilised. We are also of the opinion that since the loose papers were seized from the residence of Shri Vijay Kumar, then he was the best person to explain to the assessing officer as to how the amount of Rs. 15 lacs was utilised by him and so, the assessing officer was not justified in asking for explanation from the assessee as to how this amount was utilised by Shri Vijay Kumar when the assessee in so many words has tried to explain to the assessing officer from the relevant agreements and execution of sale deeds that after 16-2-1993, the payment of Rs. 10,12,000 was only made by Shri Vijay Kumar to the assessee and the balance amount out of Rs. 15 lacs withdrawn by Shri Vijay Kumar was not paid to the assessee.
4.19 It is further important to mention here that the assessing officer in wealth-tax returns furnished by the assessee for the assessment years 1993-94 and 1994-95 i.e., for assessment years also under consideration before us in income-tax appeals, accepted the sale price of the house in question received by the assessee at Rs. 36,80,000. We are surprised by this inconsistent approach of the assessing officer that in wealth-tax case of the assessee, he has accepted the sale consideration of the same house received by the assessee at Rs. 36,80,000, whereas in the incometax for the assessment year 1993-94 he has taken the same at Rs. 41,68,000 while working out the long-term capital gain and in the assessment year 1994-95, the assessing officer has taken the sale consideration of the same house at Rs. 46,68,000 for working out the long-term capital gain simply because while processing the return for the assessment year 1994-95 he found that on 15th July, 1992 and 18-7-1992, i.e., before and at the time of first sale agreement, the assessee is shown to have received Rs. 5 lacs and at the time of execution of second sale agreement executed on 1-10-1992, the assessee is shown to have received another amount of Rs. 5 lacs and this also cropped up in the comments offered by the assessing officer during the course of appellate proceedings before the Commissioner (Appeals) for the assessment year 1993-94 when the assessing officer, on the basis of these two agreements, sought to enhance the sale value of the house to Rs. 46,68,000 against Rs. 41,68,000 taken by him in the assessment year 1993-94 while passing the assessment order.
4.20 We may mention here that even this discrepancy raised by the assessing officer on the basis of which he sought to enhance the sale consideration received by the assessee to Rs. 46,68,000 from Rs. 41,68,000 was also satisfactorily explained by the assessee before the Commissioner (Appeals), wherein the assessee submitted that in fact there was no new payment made by Shri Vijay Kumar in the second agreement dated 1-10-1992, but the payment was only reflected in the agreement shown to have been received by the assessee because on account of dispute, the first agreement dated 18-7-1992, could not be acted upon by the parties. So, the second agreement was executed in which the date of execution of sale deed was extended. That in fact through the second agreement, neither fresh payment of Rs. 5 lacs was made by Shri Vijay Kumar nor the same was received by the assessee. The assessing officer was not able to prove anything contrary to this assertion of the assessee before the Commissioner (Appeals).
4.21 Hence, we are of the opinion that even the third presumption of the assessing officer that the additional payment of Rs. 5 lacs reflected in the second agreement dated 1-10-1992, in excess of Rs. 41,68,000 was received by the assessee as mentioned in the assessment order, has also been rightly rejected by the Commissioner (Appeals).
4.22 For the reasons stated above, we are of the opinion that the Commissioner (Appeals) has rightly accepted the sale consideration of the house in question received by the assessee at Rs. 36,80,000 against Rs. 41,68,000 taken by the assessing officer in the assessment year 1993-94 and Rs. 46,68,000 in the assessment year 1994-95 for the calculation of long-term capital gain. Consequently, the Commissioner (Appeals) has rightly deleted the impugned addition of Rs. 3,39,048 made by the assessing officer on account of long-term capital gain in assessment year 1993-94 and accordingly, the order of Commissioner (Appeals), in this regard, is upheld and ground of appeal taken by the revenue is rejected.
4.23 Now, we shall take up the appeal in ITA No. 776/Chandi/1997, assessment year 1994-95, filed by the revenue relating to the grievance of the revenue that the Commissioner (Appeals) has wrongly taken the sale consideration of the house property situated at 34, Club Road, Ludhiana, at Rs. 36;80,000 as against Rs. 46,68,000 taken by the assessing officer.
4.24 In view of our finding given in appeal ITA No. 277/Chandi/1997, assessment year 1993-94, filed by the revenue hereinabove in this order, wherein we have already held the sale consideration of the house in question received by the assessee at Rs. 36,80,000 against Rs. 41,68,000 taken by the assessing officer in the assessment year 1993-94 and 46,68,000 in the assessment year 1994-95 to be correct, so, on the same reasoning we hold that the Commissioner (Appeals) has rightly taken the sale consideration of the house in question received by the assessee at Rs. 36,80,000 against Rs. 46,68,000 taken by the assessing officer in the assessment year 1994-95 and accordingly the order of the Commissioner (Appeals), in this regard, is upheld and the ground of appeal taken by the revenue is rejected.
5. In the result, both the appeals filed by the revenue, are dismissed.