Harpreet Singh Sodhi vs Income Tax Officer, Ward 58(3)

“5.1.

Please furnish copy of Agreement made by you for sale of this property. The Copy of agreement may please be given in English or Hindi version. The documentary evidence regarding your share in the immovable property sold.

5.2

Details of immovable property sold by you during the year. Copy of sale deed may kindly be furnished.

5.3.

Documentary evidence in respect of purchase cost of immovable property sold by you.

5.4.

Documentary evidence of cost of improvement, if any.

5.5

Documentary evidence of sale consideration received from sale of immovable property.

5.6

Fair market value of immovable property.

5.7

The value calculated by stamp valuation authority for the purpose of paying the stamp duty.

5.8.

Calculation of capital gain.

5.9.

Copy of bank statement reflecting the amount of sale consideration."

“The assessee has shown sale consideration in respect of alleged property is only Rs.20,00,000/-(collectively with co-owner Rs.40,00,000/-), is not acceptable. In this case the actual sale consideration received by the assessee Rs.69,00,000/-(assessee's share) There is clear information received from DDIT/ADIT (INV)-I, AMRITSAR that the actual sale consideration of the alleged property is Rs.1,38,00,000/-(Rs.69,00,000/- as asessee's share). From analysis of information, it is clear that the sale agreement for the said property was made to the tune of Rs. 1,38,00,000/- on 07.05.2017 with Smt. Mandip Kaur w/o Sukhjinder Singh and Harpreet Singh Sodhi&Gurpreet Kaur. As per the term and conditions of the agreement, a cash payment of Rs. 20,00,000/- along-with 18,00,000/- through bank transfer was received by the seller at the time of executing the sale agreement. Further, later on during the course of investigations, it has been found that the said agreement matured and the sale deed in respect of this property mentioned in the agreement, has been executed on 06.02.2019 for a total consideration of Rs.40,00,000/- only. Further, from the analysis of the bank account transactions of the purchasers, it has been observed that the details of the payment mentioned in their respective sale deed are not matching with their bank account transactions details. It is further observed that various payments from bank account of Smt. Mandip Kaur have been made from the period of 07.05.2017 (i.e. date of sale agreement) to March 2019 (i.e. date of sale deed) to the sellers i.e Sh. Harpreet Singh and Smt. Gurpreet Kaur. From this bank account No. 630510310001480 with Bank of India of Smt. Mandip Kaur a total payment of Rs.26,12,500/- has been made during this period. No other payments details could be found in the bank account transactions of the purchasers to be made to Sh. Harpreet Singh Sodhi and Smt. Gurpreet Kaur as mentioned in respective sale deeds. From the above, it is clear that the payment details mentioned in the sale deed are not true and t are not true and the consideration been paid to the tune of in respect of this immovable property has perty has already been p Rs.1,38,00,000/- as per the term and cond and conditions mentioned in the agreement. The purchasers made a total payment of Rs. 1,38,00,000/- out of which only Rs.26,12,500/- have been made through bank transfer from the bank account of Smt. Mandip Kaur for the period of May 2017 to March 2019 and the rest amount of Rs.1,11,87,500/- is paid in cash. The sellers had received total amount of Rs. 1,38,00,000/- as a sale consideration. However, the sale deed in the case was shown to be executed for Rs.40,00,000/- only to evade the tax and stamp duty value. Thus, it was clear through in-depth investigation that the assessee has received sale consideration to the tune of Rs. 69,00,000/(50% share of total sale consideration of Rs.1,38,00,000/-), however, sale deed in the shown to be executed for Rs.40,00,000/-only(Rs.20,00,000/- as assessee's share).

On perusal of the assessee has agreement is forged, is not acceptable, as from the details inquiry and investigation, it has been found that the agreement was made for total consideration of Rs.1,38,00,000/-. Further, the copy of agreement has also been provided to the assessee by the department. Therefore, request of the assessee to provide original copy of agreement, is also not acceptable. Since the information and supporting documents relied upon for, has duly been provided to the assessee, therefore, assessee's request to cross examine the same is also not acceptable.

The income earned by the assessee is treated as short term capital gain in the absence of details with documentary evidence on the part of the assessee. Considering the facts of the case, this amount of Rs.69,00,000/- is added to the total income of the assessee as short term capital gain. Penalty proceeding u/s 270A of The Act are initiated against the assessee for under reporting of income, separately.

4. Conclusion Drawn:

During the course of the assessee has sale consideration in respect of alleged property is only Rs.20,00,000/-(collectively with co-owner Rs.40,00,000/-), is not acceptable. In this case the actual sale consideration received by the assessee Rs.69,00,000/- (assessee's share) There is clear information received from DDIT/ADIT (INV)-I, AMRITSAR that the actual sale consideration of the alleged property is Rs.1,38,00,000/-(Rs.69,00,000/- as asessee's share). From analysis of information, it is clear that the sale agreement for the said property was made to the tune of Rs. 1,38,00,000/- on 07.05.2017 with Smt. Mandip Kaur w/o Sukhjinder Singh and Harpreet Singh Sodhi&Gurpreet Kaur. As per the term and conditions of the agreement, a cash payment of Rs. 20,00,000/- along-with 18,00,000/- through bank transfer was received by the seller at the time of executing the sale agreement. Further, later on during the course of investigations, it has been found that the said agreement matured and the sale deed in respect of this property mentioned in the agreement, has been executed on 06.02.2019 for a total consideration of Rs.40,00,000/- only. Further, from the analysis of the bank account transactions of the purchasers, it has been observed that the details of the payment mentioned in their respective sale deed are not matching with their bank account transactions details. It is further observed that various payments from bank account of Smt. Mandip Kaur have been made from the period of 07.05.2017 (i.e. date of sale agreement) to March 2019 (i.e. date of sale deed) to the sellers i.e Sh. Harpreet Singh and Smt. Gurpreet Kaur. From this bank account No. 630510310001480 with Bank of India of Smt. Mandip Kaur a total payment of Rs.26,12,500/- has been made during this period. No other payments details could be found in the bank account transactions of the purchasers to be made to Sh. Harpreet Singh Sodhi and Smt. Gurpreet Kaur as mentioned in respective sale deeds. From the above, it is clear that the payment details mentioned in the sale deed are not true and the consideration in respect of this immovable property has already been paid to the tune of Rs.1,38,00,000/- as per the term and conditions mentioned in the agreement. The purchasers made a total payment of Rs.1,38,00,000/- out of which only Rs.26,12,500/- have been made through bank transfer from the bank account of Smt. Mandip Kaur for the period of May 2017 to March 2019 and the rest amount of Rs.1,11,87,500/- is paid in cash. The sellers had received total amount of Rs.1,38,00,000/- as a sale consideration. However, the sale deed in the case was shown to be executed for Rs.40,00,000/- only to evade the tax and stamp duty value. Thus, it was clear through in-depth investigation that the assessee has received sale consideration to the tune of Rs. 69,00,000/(50% share of total sale consideration of Rs.1,38,00,000/-), however, sale deed in the shown to be executed for Rs.40,00,000/-only(Rs.20,00,000/- as assessee's share).

Thus, it is clear from the above that Rs 1,11,87,500/- (assessee's share comes to Rs.55.93,750/-) is received in cash Therefore, provision of section 269SS is violated in the case. The relevant reproduced as under OME TAX DEPART Portion of 269SS of The Act is

(iv)

……."Specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

Therefore, penalty u/s 271D is attracted in the case.

On perusal of the assessee has agreement is forged, is not acceptable, as from the details inquiry and investigation, it has been found that the agreement was made for total consideration of Rs.1,38,00,000/-. Further, the copy of agreement has also been provided to the assessee by the department. Therefore, request of the assessee to provide original copy of agreement, is also not acceptable. Since the information and supporting documents relied upon for, has duly been provided to the assessee, therefore, assessee's request to cross examine the same is also not acceptable.

The income earned by the assessee is treated as short term capital gain in the absence of details with documentary evidence on the part of the assessee. Considering the facts of the case, this amount of Rs.69,00,000/- is added to the total income of the assessee as short term capital gain. Penalty proceeding u/s 270A of The Act are initiated against the assessee for under reporting of income, separately.

The onus of proving the correctness of the income is on the assessee. If it is disputes the liability for tax, it is for the assessee to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, it is entitled to treat it as taxable income. Merely making the claim without furnishing supporting evidences does not absolve the assessee of the responsibility in discharging the onus with regard to the determination of income. The burden of proof squarely lies on the assessee. In the absence of the same, I am constrained to hold that the assessee has not discharged Its burden of proof.

In this case Video Conferencing on the request of the assessee was allowed on 05.03.2024 at 4:30 PM. On the said date assessee being engaged, has requested for Video Conferencing on the extended date. Therefore, on 06.03.2024 at 2:15 PM the assessee has been allowed and attended video conferencing.

It is clear that assessee has received Rs.55.93,750/-(assessee's share) is received in cash. Therefore, provision of section 269SS is violated in the case. The relevant portion of 269SS of The Act is reproduced as under: ".......... (iv) "Specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

Therefore, penalty u/s 271D is attracted in the case.

5. Table of variations:

S.No	Description	Amount (in INR)
1.	Income as per Return of Income filed	Rs. 6,72,260/-
2.	Income as computed u/s 143(1)(a)
3.	Variation in respect STCG	Rs. 69,00,000/-
4.	Total Income determined as per the above proposal	Rs.75,72,260/-

Assessed accordingly u/s 147 read with section 1448 of the Income-tax Act, 1961. Credit given for taxes paid as per records. Interest charged u/s 234A, 234B & 234C of the Income tax Act, as applicable. Demand Notice issued accordingly. Notices u/s 274 of Income tax Act, 1961 are issued in respect of penalty proceedings are initiated u/s 270A of the Income Tax Act, 1961.”

6.

DECISION:- In this case, the Assessing Officer, after detailed examination of the information received through the Insight Portal and subsequent investigation, concluded that the assessee had understated the sale consideration of an immovable property. The assessee contended that the sale consideration was only 20,00,000/- (his share out of 40,00,000/-collectively with the co-owner) as reflected in the registered sale deed. However, the investigation revealed that the actual agreement for sale, dated 07.05.2017, was executed for a total consideration of 1,38,00,000/- with Smt. Mandip Kaur, out of which 20,00,000/-was received in cash and 18,00,000/- through bank transfer at the time of the agreement. The remaining payments were made between May 2017 and March 2019, and the total consideration of 1,38,00,000/- was fully received by the sellers, Harpreet Singh Sodhi and Gurpreet Kaur, though the registered sale deed was executed only for 40,00,000/- in February 2019, thereby understating the actual transaction value to evade tax and stamp duty. The AO observed that from the purchaser's bank account, only 26,12,500/-was transferred through banking channels, while the balance amount of 1,11,87,500/-was paid in cash. Since the assessee held a 50% share in the property, his share of the total sale consideration was determined to be 69,00,000/-, out of which 55,93,750/- was received in cash. The AO rejected the assessee's claim that the agreement was forged, stating that the copy of the agreement was duly provided to the assessee by the department and that there was no merit in the request to produce the original copy or to allow cross-examination, as all supporting material relied upon had already been furnished.

Given that the assessee failed to produce documentary evidence regarding the cost of acquisition, cost of improvement, or exemption claimed under relevant provisions such as section 54, 54B or 54F, the AO treated the entire consideration of 69,00,000/- as short-term capital gain and added it to the assessee's total income. In addition, since substantial consideration was received in cash, a clear violation of section 269SS was established, thereby attracting penalty provisions under section 271D. The AO emphasized that the burden of proof lay squarely on the assessee to substantiate its claims and burden.

Further, as the assessee under-reported his income by disclosing only 20,00,000/-as his share in the sale deed against actual receipts of 69,00,000/-, penalty proceedings under section 270A were also initiated separately. The AO concluded that the assessee had not discharged his onus in proving the correctness of income and that the entire consideration was to be brought to tax. Video conferencing opportunities were provided to the assessee on two occasions in March 2024, which were duly attended, yet the assessee failed to provide satisfactory explanation or evidence. Thus, the AO held that 69,00,000/-representing the assessee's share in the transaction was taxable as short-term capital gains, along with initiation of penalty proceedings for violation of section 269SS and under-reporting of income.

7.

The assessee, being aggrieved by the order of the Assessing Officer, preferred an appeal under section 246A of the Income Tax Act and raised multiple grounds of challenge. It was first contended that the assessment order itself is bad in law as well as on facts and cannot be sustained. The appellant disputed the action of the Assessing Officer in presuming the sale consideration of his share in the property at 169,00,000/- solely on the basis of a photocopy of an alleged forged Ikraarnama (Agreement to Sell). It was argued that the document relied upon was bogus in nature and had already been contested by the appellant, yet the Assessing Officer wrongly rejected this contention. Further grievance was raised that the Assessing Officer did not allow the appellant's request for cross-examination of the documents relied upon and proceeded merely on the basis of a photocopy which, according to the appellant, had no evidentiary value under the Income Tax Act. Another ground taken was that the Assessing Officer made an addition of 69,00,000/- as short-term capital gains even though the appellant had duly disclosed the transaction in his return of income as long-term capital gains, which was in line with the nature of the property sold. The appellant thus claimed that the assessment order is unsustainable in the light of the facts and circumstances of the case.

In response, the assessee filed his return of income, wherein he disclosed the impugned property transaction by declaring the gain under the head "Long Term Capital Gain." During the reassessment proceedings, the assessee was confronted with the Ikraarnama received from the Investigation Wing. The assessee, however, contended that the document was a forged and bogus photocopy, carrying no evidentiary value, and further argued that the reopening was unjustified and without proper basis.

The Assessing Officer, after carefully considering the assessee's submissions, held that the assessee had failed to substantiate the claim of forgery or fabrication of the Ikraarnama. No cogent evidence was produced by the assessee to rebut the authenticity of the document. The AO, therefore, rightly concluded that the consideration mentioned in the Ikraarnama represented the true transaction value, i.e., 69,00,000/-, and consequently computed the income under the head "Short Term Capital Gain" instead of "Long Term Capital Gain," as claimed by the assessee. The reassessment was thus completed on the basis of tangible and specific material available on record.

In appeal, under Ground No. 1, the assessee has challenged the validity of the reopening under Section 147, contending that the action was unwarranted and based on irrelevant material. Under Ground No. 6, the assessee has denied liability for charging of interest under Sections 234A, 2348, and 234C of the Act. In support of these grounds, the assessee has relied upon certain judicial precedents claiming that reassessment cannot be sustained on the basis of uncorroborated or disputed documents.

The submissions of the assessee have been duly considered. It is observed that the information in possession of the AO was not vague or general in nature but was specific, credible, and directly relatable to the assessee. The Ikraamama clearly revealed the sale consideration of the property at 69,00,000/-. This constituted tangible material enabling the AO to form a bona fide belief that income had escaped assessment. It is settled law that at the stage of initiation of reassessment, what is required is a prima facie belief of escapement of income and not conclusive proof thereof. The assessee's contention that the document was a forged photocopy has not been established by any supporting evidence. Mere denial does not nullify the evidentiary value of a document received from the Investigation Wing. The case law relied upon by the assessee is distinguishable on facts, since those pertained to cases where the material relied upon by the AO was found to be non-specific or unconnected with the assessee, whereas in the present case, the document clearly pertained to the assessee's property transaction. Hence, the reliance placed by the assessee is misplaced and not applicable.

As regards the charging of interest under Sections 234A, 234B, and 234C, it is a settled legal position that levy of such interest is mandatory and consequential in nature once there is a determination of tax liability. The assessee's ground denying liability of interest, therefore, cannot be accepted.

In view of the above discussion, it is held that the action of the Assessing Officer in reopening the assessment on the basis of specific information received from the DDIT (Inv.), Amritsar, and computing the capital gains by adopting the consideration of 69,00,000/- mentioned in the Ikraanama is fully justified in law. The assessee's arguments are devoid of merit, and the case laws cited are not relevant in the present factual matrix. Consequently. Ground Nos. 1 and 6 raised by the assessee are dismissed.

10.

Ground No. 2 to 5:- The Assessing Officer, after receiving credible information from the DDIT (Inv.), Amritsar, duly verified the material and found that the assessee had entered into an Ikraamama in respect of the sale of half portion of his property, wherein the sale consideration was recorded at 169,00,000/-Since this material was directly related to the transaction of property and indicated higher consideration than what the assessee had disclosed in his return, the AO was legally bound to take cognizance of such information. During the course of assessment proceedings, the assessee was provided opportunities to explain his stand, but no substantive evidence was produced to rebut the authenticity of the document. In the absence of any credible explanation, the AO proceeded to assess the income on the basis of the available record and brought the undisclosed consideration to tax.

The assessee, in grounds of appeal 2 to 5, has contended that the AO erred in presuming the sale consideration of the half portion of property at 69,00,000/- on the basis of a photocopy of an Ikraamama which was allegedly forged, bogus, and without evidentiary value. It was also argued that the AO wrongly rejected the claim that the said document was not genuine, that the right of cross-examination was denied, and that the addition was made despite the fact that the assessee had already declared capital gains on the sale of the same property in his return of income. The assessee further contended that the addition as short-term capital gain was unsustainable when the assessee had disclosed it as long-term capital gain.

In support of these grounds, the assessee submitted that the Ikraarnama relied upon was only a photocopy and could not be considered valid evidence in law, that the document itself was fabricated and therefore had no evidentiary value, and that reliance upon such a document without allowing cross-examination of the alleged parties to the agreement was a violation of the principles of natural justice. The assessee also stressed that since the transaction of sale of property was already declared in the return of income under the head long-term capital gain, the AO could not have enhanced the consideration and reclassified the gain as short-term.

The arguments advanced by the assessee cannot be accepted. The information received from the DDIT (Inv.), Amritsar, was not only credible but also specific and directly connected to the property transaction undertaken by the assessee. The Assessing Officer, in discharge of his statutory duty, is bound to act upon such concrete material placed before him. The assessee's plea that the Ikraarnama was forged or fabricated remains wholly unsubstantiated, as no cogent or independent evidence was furnished to prove the alleged fabrication. Mere denial of the authenticity of the document cannot override the cogent and reliable material gathered during investigation and relied upon by the AO. It is a settled legal position that once incriminating material is brought on record, the burden lies on the assessee to rebut the same with convincing evidence, which in this case has not been discharged.

The contention regarding denial of cross-examination is also without merit. Proceedings under the Income-tax Act are quasi-judicial in nature, and the AO is empowered to act upon any material which is relevant, credible, and has a direct nexus with the income sought to be assessed. Cross-examination is not an absolute or automatic right in such proceedings, particularly in circumstances where the assessee has failed to place on record any positive evidence to disprove the contents of the document. The Hon'ble Courts have time and again held that unless the assessee demonstrates prejudice by showing how cross-examination would alter the conclusion, a mere plea of denial cannot be a ground to discard evidence that has probative value.

In the present case, the assessee has neither disproved the validity of the Ikraarnama nor produced any counter-documentary evidence in support of his claim. Instead, the AO's findings are based on tangible material directly impacting the computation of income. Therefore, the assessee's arguments on the grounds of alleged forgery, denial of cross-examination, and reliance on self-serving submissions stand rejected as untenable.

The assessee's submission that the photocopy of the Ikraarnama has no evidentiary value under the Income-tax Act is also misplaced. It is settled law that the AO, while making an assessment, is not fettered by the strict rules of evidence as applicable under the Indian Evidence Act, but is entitled to rely upon any material that has a reasonable nexus to the issue under consideration. The reliance placed by the assessee on case law to contend otherwise is distinguishable on facts and not applicable to the present case. The cited judgments relate to circumstances where either the document was wholly unconnected with the assessee or where the assessee had conclusively proved the document as fabricated, which is not the case here.

On the issue of classification of capital gains, it is noted that the AO has correctly examined the facts of the case. The assessee declared the sale consideration at a lower amount and classified the gain as long-term, whereas the Ikraamama established that the actual consideration was higher and liable to be taxed. The AO has acted within his jurisdiction to recompute the capital gains on the correct sale consideration. The claim that the gain should be treated as long-term has also not been supported with convincing evidence regarding the period of holding.

Considering the above, the action of the AO is in accordance with law. The assessee's arguments are devoid of merit and cannot be accepted. The reliance on irrelevant case law further weakens the appellant's case, as the factual matrix here is entirely different. Therefore, the grounds of appeal 2 to 5 are dismissed.

11.

The assessee has placed reliance on certain judicial precedents to support his contentions before the appellant authority. However, on careful examination, it is evident that the facts and ratio of the relied-upon decisions do not apply to the present case. In the relied cases, the additions were deleted primarily on the grounds that the Assessing Officer had based his conclusion on unverified statements or documents without any independent corroboration directly linking the assessee to the alleged transaction. The Courts in those instances held that in absence of tangible nexus with the assessee, such evidence could not form the sole basis of addition.

In the present case, however, the situation is materially different. The Assessing Officer acted upon a specific and credible report from the DDIT (Inv.), Amritsar, supported by the Ikraarnama, which is a contemporaneous document directly relating to the assessee's property transaction. Unlike the cases cited by the assessee, the document in question is not a mere third-party statement but a written agreement that establishes a direct nexus with the assessee's dealings. The assessee has not been able to furnish any concrete proof to substantiate his allegation that the document is forged or fabricated. Mere denial does not render such evidence unreliable, especially when it originates from an official investigation.

The reliance placed on judicial precedents regarding the right of cross-examination is also misplaced. While it is true that cross-examination is an important component of natural justice, it is not an absolute or unqualified right under income-tax proceedings, which are quasi-judicial in nature. Courts have consistently held that unless an assessee assessee demonstrates actual prejudice caused by denial of cross-examination, the assessment cannot be held invalid merely on this ground. In the present case, the assessee has failed to show how the absence of cross-examination has prejudiced his case, particularly when no counter-evidence has been produced.

Thus, the case laws cited by the assessee are factually distinguishable and legally inapplicable in the present context. The reliance on them does not weaken the validity of the AO's action, which was based on specific, credible, and directly connected material evidence. Therefore, the arguments of the assessee premised on these decisions cannot be accepted.

12.

Additional Ground:- The Assessing Officer, on the basis of the credible andspecific information received from the DDIT (Inv.), Amritsar, rightly initiated proceedings and brought to tax the income arising out of the transaction recorded in the Ikraarnama pertaining to the assessee's property. The action of the AO was firmly grounded in law, as he is duty-bound to assess income that has either escaped assessment or has not been disclosed fully and truly by the assessee. The AO relied on direct and cogent material that had a live nexus with the assessee, and therefore his action cannot be faulted.

In the additional ground of appeal, the assessee has contended that the AO failed to follow due process and that the addition made on the basis of the Ikraarnama is unsustainable. It is argued that the AO ought to have ignored the so-called forged or fabricated document and that reliance placed on it is contrary to law. In support of this contention, the assessee reiterated his submissions that the document is not genuine and claimed that reliance on such material is violative of the principles of natural justice, Further, the assessee has such additions cannot be sustained. attempted to rely upon certain judicial precedents to assert that in absence of proper cross-examination and verification, such wever, are not acceptable. The AO acted strictly within These arguments, howev the framework of law by relying upon the credible information received from the investigation wing. The onus was on the assessee to rebut the incriminating material with credible evidence, which he has failed to discharge. The mere allegation of forgery without any supporting proof cannot displace the presumption of correctness attached to the material obtained from an official source. The plea of violation of natural justice on the ground of cross-examination is also misplaced, as proceedings under the Income-tax Act are not strictly bound by the Evidence Act, and cross-examination is not an absolute right. Unless the assessee can show what prejudice has been caused by the absence of cross-examination, such a plea remains only academic.

As regards the reliance placed by the assessee on certain case laws, it is observed that the same are distinguishable on facts and do not apply to the peculiar circumstances of the present case. In those decisions, the additions were made on the basis of third-party statements or unverifiable documents without any corroborative evidence directly connecting the assessee. In the instant case, however, the Ikraarnama is a contemporaneous document directly relating to the assessee's property transaction, and therefore has evidentiary value. The attempt of the assessee to draw parallel from those judgments is therefore misplaced and irrelevant.

Considering the facts and circumstances of the case, it is evident that the AO has acted in accordance with law and based on tangible material. The assessee's contentions raised through the additional ground of appeal lack merit, are unsupported by evidence, and are devoid of legal force. Therefore, the additional ground of appeal is dismissed

13.

In the result, the appellant's appeal is Dismissed.”