IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M. PAN NO. : ADOPG3385R
A.Y. : 2007-08
ITO, Shri Girdharilal Govlana, 5(1), Indore. Indore vs
Appellant Respondent Appellant by : Shri Arun Dewan, Sr. DR Respondent by : Shri S.S.Deshpande and Shri Santosh Deshmukh, CAs
Date of Hearing : 01.05.2012 Date of : 09.05.2012 pronouncement
PER R. C. SHARMA, A.M.
This is an appeal filed by the Revenue against the order of CIT(A)-II, Indore, dated 20,07.2011 for the assessment year 2007-08.
2. Following grounds have been taken by the Revenue :-
1. On the facts and in the circumstances of the case, the order of the CIT(A) is contrary to the facts and law. 2
2. On the facts and in the circumstances of the case, the order of the CIT(A) erred in deleting the addition made u/s 69A of Rs. 13,35,000/- by holding that there was a joint bank account of assessee and his family, whereas information called for by Assessing Officer u/s 133(6) from bank revealed account in the name of assessee coupled with transaction enquiry statement made by the Assessing Officer which indicated that assessee is the sole account holder.
2.1 While holding so the ld. CIT(A) erred in not considering that the customer status in bank account was mentioned '01 normal' and not HUF account.
2.2 While holding so the ld. CIT(A) erred in considering evidence in contravention of Rule 46(3) of I.T. inform of annexures 2 to 5 as mentioned in the order which were not filed by assessee before Assessing Officer.
3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in holding that interest income of Rs. 4473/- earned through saving bank account is not of 3
assessee without appreciating that the assessee himself is the only account holder.
3. Rival contentions have been heard and records perused. Facts of the case are that the assessee is an employee of The Oriental Insurance Company Limited and derives income from salary. AIR information in this case revealed that the assessee has deposited cash of Rs. 1344800/- in Axis Bank Ltd. during the year. Assessee was specifically asked to explain the source of cash deposits. The assessee in his reply dated 28.10.2009 explained that "out of cash deposit in the Axis Bank Ltd., assessee deposited Rs. 9,50,000 was on 22.5.2006 with explanatory remark "sale proceed of sale of agriculture land of HUF vide agreement enclosed. He further deposited Rs. 3,85,000/- on 26.5.2006 with an explanatory remark sale proceed of sale of agricultural land of HUF". Assessee filed copy of sale agreement dated 18.05.2006 wherein in para 3 it is written as under :-
"That means we the sellers of 0.78 acre of land (34200 sq.ft. has made agreement in for sale of land of Rs. 24,00,000/- and we have taken advance from the purchaser Rs. 1,10,001/- received in cash" 4
Further in clause four it is stated "that the seller within five months from this date will get registered their names in their land record and will hand over copy of B-I and Patwari trace then being satisfied on those documents Rs. 3,90,000/- will be paid out of the balance agreement money and rest of the money will be paid within 15 months to the seller and land will be got registered in the name of purchaser." However, the Assessing Officer did not accept the assessee's contention and made the addition of Rs. 13,35,000/- u/s 69A of the Act as unexplained money. By the impugned order, Commissioner of Income Tax (Appeals) deleted the addition after having made the following observations :-
"4.1 Ground no. 1 to 6- It is seen from the copy of assessment order filed with appeal memo that the A.O. has made addition of Rs. 13,85,000/- while computing total income whereas in the body of order, the A.O. has given finding to make an addition of Rs. 13,35,000/- (9,50,000 plus 3,85,000). The appellant has taken a separate ground against this error of the Assessing Officer. It 5
is an admitted fact that the appellant is an employee of a nationalized insurance company and is bound to be regulated by the conduct rules of the company. It is also an admitted fact that the land in question which is purported to have been sold was owned jointly by two brothers (including the appellant) and the mother & sisters of the appellant. It is further an admitted fact that then bank account with Axis Bank was a joint account in the names of the appellant, his mother Smt. Balibai and his brother Bhagirath.
4.1.1 During assessment proceedings the A.O. recorded statement of Shri Bhagirath in which the later had confirmed the transaction of sale of ancestral agriculture land and joint ownership of bank account with the appellant and Balibai, the mother of the appellant. Even if the deposits in bank account are to be assess, the same are to be assessed in the hands of the A.O.P consisting of the appellant, his brother and his mother. The fact of sale of agriculture land and the deposit of money 6
in Axis Bank is proved by the appellant with the help of necessary evidences. The certificate showing joint ownership of bank account was very much before the A.O. at the time of assessment. The A.O. did not take pains to veify the contentions of the appellant and find out the truth of the matter. Similarly, the A.O. did not go through the documents like Bhoo Adhikar and Rin Pustika and form P-II wherein the names of Balibai w/o Kalu, Bhagirath and Girdhari were entered.
4.1.2 Further from the copy of registered sale deed entered between Baghirath s/o Shri Kalu and Gridhari son of Kalu on the one hand as seller and Shri Sunil Kumar s/o Sanghatmal and Shri Mohanlal s/o Shri Nandiram on the other hand as purchaser, it is seen that the agriculture lands bearing khasra no. 212/2/2/1 and Khasra No. 212/2/2/2 admeasuring 0.057 hectare and 0.263 hectare situated at village Arandia respectively were sold through the power of attorney holder Shri Amar Singh Dodiya. There were disputes between 7
the power of attorney holder Shri Amar Singh Dodiya on the one hand and the appellant with his brother on the other on transferring the land for a consideration only of Rs.4,80,000/- through a registered sale deed.
4.1.3 It is a different question as to whether this sale consideration can be accepted as correct and appellant's bank deposits in his joint account were to be treated as explained only to that extent. This question certainly does not ariwse in the present appeal. Accordingly, it is held that the deposits in the joint account of the appellant relate to the sale proceeds of the ancestral agricultural land of the appellant. It is also held that the unexplained bank deposits, if any, are assessable, if at all, in the hands of the AOP constituted by the appellant, his mother and brother holding the bank account jointly with the appellant and also those claiming as legal heirs of appellant's late father (i.e. appellant's sisters). Or in the respective hands in their individual capacities. That too, once entire 8
facts are examined, in entirety, in including taxability of such proceeds being non-empt as per contentions reused about nature of land sold, being agricultural or not and how and what agricultural activities were carried out. Further, for making correct assessment on the correct person or persons, statutory limitation u/s 147 subsists at least till 31.03.2012 and no liberty so to reassess needs to be given to the present A.O. in this order. Nor is there any need to record any finding or direction under Explanation to section 153 for making any such assessment or reassessment. For purposes of the present appeal, it shall suffice to hold that the bank deposits do not belong to the appellant in his individual capacity and the same thereof can therefore be subjected to tax in the appellant's individual capacity.
4.1.4 This view is supported by the following legal position as noted hereinafter :- "Nomination has now become a normal
feature with nomination being recognized for 9
bank deposits and account and even for holding of shares. Nomination has to be distinguished from assignment. In the context of life insurance, the Supreme Court in Sarbati Devi v. Usha Devi (1984) 55 Comp Cas 214 had held that a nominee gets the proceeds of the policy on behalf of the legal heirs, since the effect of nomination is merely to discharge the Life Insurance Corporation of its obligation under the policy. In the case of an attempt to differentiate the effect of nomination with reference to difference in the language employed in the case of the Government Savings Certificate Act, 1959, where there was a dispute regarding ownership of such certificates between the nominees and the legal heirs, the Supreme Court after review of a number of decisions held in Vishin N. Khanchandani v. Vidya Lachmandas Khanchandani (2000) 246 ITR 306 that such language did not make a difference as to the 10
scope of nomination, which is only to facilitate collection of the amount due to the estate of the deceased by the process of nomination without the production of a succession certificate or proof of title.
The impugned addition is therefore directed to be deleted."
Against the above order of the Commissioner of Income Tax (Appeals), the revenue is in appeal before us.
4. We have considered the rival submissions of the parties, gone through the orders of the authorities below and find from record that the assessee has sold his ancestral agricultural land and the amount was found to be deposited in the bank account of the assessee. This bank account was jointly owned by the assessee, his mother and brother. As per the finding recorded by Commissioner of Income Tax (Appeals), the agricultural land was jointly owned by legal heirs of the assessee's late father. In view of the finding recorded by Commissioner of Income Tax (Appeals) which has not been controverted, we find that there were following legal heirs of the deceased father of the assessee :- (i) The assessee himself
(ii) His brother, Shri Bhagirath (iii) His mother, Smt. Balibai
(iv) Two sisters
5. Thus, there were total five co-owners of the property, therefore, the assessee was liable to be assessed only with respect to his 1/5th share out of the total amount found to be deposited in the bank account. We also find that neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) has considered the contention of the assessee that the agricultural land was outside the municipal limit so as not to come within the purview of capital asset within the meaning of section 2(14) of the Act.
6. In view of the above discussion, we restore back the matter to the file of the Assessing Officer to examine whether the capital gain arising out of sale of such agricultural land was liable to be taxed in view of the same being arising out of the agricultural land not coming within the definition of capital asset. If the Assessing Officer finds that the agricultural land so sold comes within the definition of capital asset, then also the assessee is liable to be assessed only with respect to his 1/5th share only. Thus, at the most, the assesee can be taxed for 12
Rs. 2,67,000/- i.e. 1/5th of Rs. 13,35,000/-. We direct accordingly.
7. In the result, the appeal of the Revenue is allowed in part for statistical purposes.
This order has been pronounced in the open court on 9th May , 2012.
sd sd (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 9th May, 2012.