Shri Salim A.Kherani, Vapi V. The ACIT.,Vapi Circle, Vapi

CO 269/AHD/2011

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2670 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Deemed owner of house property; Business income; Income from undisclosed sources; Corroborative evidences
• Section: 80C; 143(3); 50C; 133A; 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, VAPI CIRCLE, VAPI (APPELLANT) VS SHRI SALIM A. KHERANI, ADIL VILLA, ATUL SOCIETY, VALSAD ROAD, VAPI PAN:ACRPK1118L (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI JAMES KURIAN , SR. D . R. ASSESSEE BY: S H RI S.N. SOPARKAR WITH SHRI PARIN SHAH , A.R. DATE OF HEARING : 14 - 12 - 2 016 DATE OF PRONOUNCEMENT : 20 - 01 - 2 017 / ORDE R P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL AND ASSESSEE S CROSS OBJECTION FOR A.Y. 2008 - 09 , AR ISE FROM ORDER OF THE CIT(A), VALSAD DATED 26 - 08 - 2011 IN APPEAL NO. CIT(A)/VLS/285/10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2870 & CO NO. 269 / A HD/20 11 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.15,03,323/ - ON ACCOUNT OF UNLEGITIMATE AN D UNGENUINE EXPENSES OF LAND. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THAT THE ADDITION OF RS.8,00,000/ - MADE IN RESPECT OF LOANS RECEIVED THROUGH PROPER SOURCE IN EARLIER YEARS. 3) ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.19,52,853/ - TOWARDS ALLEGED BENAMI INVESTMENT IN THE NAME OF JAYESH .D. PATEL U/S 69 OF THE ACT . 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.10,05,600/ - TOWARDS ALLEGED BENAMI INVESTMENT IN THE NAME OF YUSUF D. PATEL U/S 69 OF THE ACT . 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.80,00,000/ - IN RESPECT OF LOANS AND ADVANCES. 6) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.20,00,000/ - U/S 69 OF THE ACT BEING ESTIMATED VALUE OF ANC ESTRAL PROPERTY. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN CROSS OBJECTION: - 1. LD. CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF AO IN COMPUTING DEEMED ANNUAL VALUE OF PLOT WITH FARM HOUSE AND HOUSE AT DAMAN AND FURTHER TAX ING IT AS INCOME FROM HOUSE PROPERTY. ALTERNATIVELY, THE VALE COMPUTED BY AO IS EXCESSIVE AND SO THE SAME SHALL BE REDUCED APPROPRIATELY. 2. LD. CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF ID. AO IN NOT TREATING RENTAL INCOME FROM AIRTEL TOWER AT MORAI AS INCOME FROM HOUSE PROPERTY AND THEREBY DISALLOWING STANDARD DEDUCTION OF RS. 29, 819/ - CLAIMED BY THE APPELLANT U/S 24 OF THE ACT. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 3 3. LD. CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS. 49, 65, 306/ - BY T REATING THE DIFFERENCE BETWEEN ACTUAL SALE PRICE ON SALE OF LAND AND STAMP VALUATION PRICE AS SUPPRESSED SALE RECEIPTS OF THE APPELLANT. THE LEARNED CIT (A) HAS GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT THE CONCERNED LAND WAS A BUSINESS ASSET OF THE A PPELLANT AND SO THE PROVISIONS OF SECTION 50 C OF THE ACT HAS NO APPLICATION IN THE FACTS OF THE CASE. 4. THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS. 8, 80, 150/ - BEING INCOME OF FAMILY MEMBERS CLUBBED IN THE HAND S OF THE APPELLANT. 5. LEVY OF INTEREST U/S 234 B & 234 C OF THE ACT IS UNJUSTIFIED. 6. LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS UNJUSTIFIED. 4. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 9 , 20 , 250/ - WAS FILED ON 4 TH SEPTEMBER, 2008. IN THIS CASE , SURVEY ACTION U/S. 133A OF THE ACT WAS TAKEN PLACE ON 19 TH MARCH, 2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD REQUESTED THE ASSESSEE TO FILE THE DETAILS ON VARIOUS ISSUES. THEREAFTER, ON VERIFICATION OF VAR IOUS ISSUES, THE ASSESSING OFFICER MADE ADDITION UNDER DIFFERENT HEADS AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.2,24,60,500 . THE BRIEF FACTS OF THE CASE ARE DISCUSSED ISSUE WISE ALONG WITH GROUNDS OF APPEAL AS FOLLOWS: - GROUNDS OF APPEAL OF R EVENUE GROUND OF APPEAL NO. 1 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO CLARIFY THE ACTIVITIES OF DOING BUSINESS IN THE OF PURCHASE AND SALE OF LAND AS IN THE RETURN OF INCOME THE I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 4 RESULTANT INCOME HAD BEEN OFFERED AS CAPITEL GAINS. IT WAS ALSO STATED THAT ASSESSEE HAD ADMITTED DURING THE COURSE OF SURVEY THAT INCOME FROM LAND TRANSACTIONS WERE BUSINESS INCOME. THE ASSESSING OFFICER ALSO OBSERVED THAT MOST OF THE EXPENSES FOR IMPROVEMENT IN LAND PER TAINED TO ASSESSMENT YEAR 2007 - 08 WHICH WERE NOT RELATED TO THE YEAR UNDER CONSIDERATION, THEREFORE, THE ASSESSING OFFICER DISALLOWED THE LAND DEVELOP MENT CHARGES OF RS.15,03,323 ON THE GROUND THAT THESE WERE THE PRIOR PERIOD EXPENSES NOT PERTAINED TO THE YEAR UNDER CONSIDERATION. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) DELETED THE ADDITION STATING THAT THE ASSESSEE HAD BEEN IN THE BUSINESS OF DEALING IN LAND AND THE INCOME FROM SALE OF LAND WAS ACCOUNTED AS BUSINESS INCOME. THEREFORE, ANY EXPENDITURE INCURRED ON LAND BEFORE SALE WAS ADDED TO THE COST OF THE LAND. HE FURTHER STATED THAT THE PROFIT ON SALE OF LAND WAS DECID E D ONLY AFTER ALL THESE EXPENSES WERE TAKEN INTO AC COUNT. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 7.3 DECISION : - I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBM ISSION. I AGREE WITH THE AR OF THE APPELLANT THAT THE DEVELOPMENT EXPENSES INCURRED ON THE LAND AT BALITHA BEARING SURVEY NO. 251/2/P - 1 WERE INCURRED IN F.Y.2006 - 07 AMOUNTING TO RS. 12,91,403/ - . THE SAID EXPENSES ARE BROUGHT FORWARD AS COST (WORK - IN - PROGRE SS) TOWARDS THE LAND WHICH WAS SOLD DURING THE YEAR UNDER CONSIDERATION. NO EXPENSES WERE CLAIMED IN THE P&L ACCOUNT IN EARLIER YEAR BUT BEING PART OF THE LAND COST AND THEREFORE, IT IS ADDED TO THE COST OF LAND. THE APPELLANT HAS BEEN IN THE BUSINESS OF D EALING IN LAND. THE INCOME FROM SALE OF LAND IS ACCOUNTED AS BUSINESS INCOME. THUS, ANY EXPENDITURE INCURRED ON LAND BEFORE SALE IS ADDED TO THE COST OF THE LAND. THE DEVELOPMENT OF LAND OR WHAT THE APPELLANT SPENT ON LAND BEFORE SALE HAS DIRECT I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 5 BEARING O N THE COST OF THE LAND. THE PROFIT ON SALE OF THAT LAND IS DECIDED ONLY AFTER ALL THESE EXPENSES ARE TAKEN INTO ACCOUNT. IT IS A FACT THAT THE APPELLANT INCURRED SOME EXPENSES IN THE PREVIOUS YEAR NOT RELEVANT TO THE CURRENT ASSESSMENT YEAR. BUT AS THE APP ELLANT CONTENDED, THE EXPENSES ON LAND IS CONTINUOUS AND ONLY ADD TO THE COST OF LAND. WHEN THAT PIECE OF LAND IS SOLD THE PROFIT IS DETERMINED ACCORDINGLY AND SHOWN IN THE BOOKS OF A/C. IN THIS CASE THE APPELLANT BROUGHT TO MY NOTICE THAT THE TOTAL COST OF LAND WAS RS. 23,34,029/ - . THE SALES PROCEEDS OF THIS LAND MADE DURING THE YEAR AS PER SALE DEED RS. 33,00,000/ - THEREBY PROFIT OF RS 9,65,971/ - WAS DERIVED BY THE APPELLANT WHICH IS REFLECTED IN THE P&L A/C. OF THE APPELLANT. THE CONTENTION OF THE AO WA S THAT SINCE THE EXPENDITURE INCURRED WAS NOT DURING THE F.Y. RELEVANT TO THE A.Y., THE APPELLANT IS NOT ENTITLED FOR SUCH DEDUCTION. THE AO ALSO MISSED TO LOCATE WHETHER THE APPELLANT HAD DEBITED THOSE EXPENSES IN THE P&L A/C IN THAT YEAR OR NOT. IN THIS BACK GROUND WHAT IS CLEAR IS THAT THE APPELLANT IS DEALING IN LAND AND THE PROFITS ON SALE OF LAND IS SHOWN AS BUSINESS INCOME. THE INCURRED CERTAIN EXPENSES OVER THE YEARS FOR DEVELOPING THE LAND WHICH BY ANY MEANS ADD TO THE COST OF THE LAND. THE APPELL ANT ALSO DERIVED INCOME OF RS. 9,65,971/ - FROM THE SALE OF THAT LAND. THEREFORE, THE SAID DEVELOPMENT EXPENSES WERE ELIGIBLE FOR INCLUSION OF COST OF LAND. THUS, AO IS DIRECTED TO DELETE THE ADDITION OF RS.15,03,323/ - MADE IN THIS GROUND. ACCORDINGLY, THE APPELLANT SUCCEEDS IN THIS GROUND OF APPEAL. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF ASSESSING OFFICER AND CONTENDED THAT LD. CIT(A) HAS INCORRECTLY ALLOWED THE PRIOR PERIOD EXPENDIT URE IN DETERMINING THE EXPENSES OF LAND DEVELOPMENT. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE RELIED ON THE ORDER OF THE LD. CIT(A) AND ALSO REFERRED TO THE VARIOUS PAGES OF THE PAPER BOOK IN SUPPORT OF HIS CLAIM THAT N O EXPENSES WERE CLAIMED IN THE P&L ACCOUNT IN EARLIER YEAR BUT BEING PART OF THE LAND COST WAS ADDED TO THE COST OF LAND. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 6 7. AFTER HEARING BOTH THE SIDES AND ON PERUSAL OF THE MATERIAL ON RECORD, WE NOTICED T HAT THE SAID LAND DEVELOPMENT EXPENSES WERE ADDED TO THE COST OF LAND FR OM YEAR TO YEAR BASIS . WE NOTICED THAT T HESE EXPENSES WERE BROUGHT FORWARD AS OPENING COST AND USED TO BE SHOWN BY THE ASSESSEE IN THE BALANCE SHEET IN EARLIER YEAR AND NOT CLAIMED AS EXPENSES IN EARLIER YEARS BUT HAVING PART OF THE LAND ADDED TO THE COST OF THE LAND. WE FIND THAT T HE INCOME FROM SALE OF LAND WAS ACCOUNTED AS BUSINESS INCOME AND TH E PROFIT ON SALE OF THAT LAND WAS DECIDED ONLY AFTER ALL THESE EXPENSES WERE TAKEN INTO ACCOUNT. THEREFORE, AFTER CONSIDERING THE ABOVE FACTS AND FINDINGS , WE UP HOLD THE DECIS ION OF THE LD. CIT(A) . GROUND OF APPEAL NO. 2 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT IN THE BALANCE SHEET AS ON 31 ST MARCH, 2008, THE ASSESSEE HAD SHOWN LOAN OF RS. 4 LACS FROM PERFECT PAPER T RADERS AND ANOTHER LOAN OF RS. 4 LACS FROM R. J. PAPER MILLS PVT. LTD. THE ASSESSING OFFICER OBSERVED THAT IN THE BALANCE SHEET AS ON 31 ST MARCH, 2009 NO SUCH UNEXPLAINED LOAN S WERE REFLECTED IN THE NAME OF R. J. PAPER MILLS PVT. LTD AND AGAIN ON PERUSA L OF BALANCE SHEET AS ON 31ST MARCH 2010 NO SUCH LOAN WERE SHOWN IN THE NAME OF PERFECT PAPER TRADERS . T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD WRITTEN OFF OF THE SE UNSECURED LOAN, THEREFORE, HE TREATED THESES LOAN AS NOT GENUINE AND ADDED RS. 8 LACS AS UNEXPLAINED CREDITS U/S. 68 OF THE ACT. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 7 9. AGGRIEVED AGAINST IMPUGNED ADDITIONS MADE BY THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE LD. CIT(A) DELETED THE ADDITION STATING THAT AS PER TERMS OF PAYMENT OF CONTR ACT THE ASSESSEE HAD RECEIVED RETENTION MONEY FOR CERTAIN PERIOD FROM M/S. R. J. PAPER MILLS LTD AND PERFECT MILLS LTD . WHEN THEY FAILED TO FULFILL THE TERMS AND CONDITIONS THE ASSESSEE HAD FORFEITED THE RETENTION MONEY. THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 9.3 DECISION : - I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF] THE APPELLANT IN THE WRITTEN SUBMISSION. I HAVE PERUSED THE FACTUAL MATRIX OF THE CASE, T HE SUBMISSION MADE BY THE APPELLANT. CONSIDERING THE LEGAL POSITION REFERRED TO HEREIN ABOVE ONE HAS TO SEE WHETHER A RIGHT HAD BEEN CREATED IN FAVOR OF THE APPELLANT TO RECEIVE A SUM OF RS. 8,00,OOO/ - . AS PER THE TERMS OF PAYMENT OF CONTRACTS, RETENTION M ONEY RECEIVED BY APPELLANT FOR CERTAIN PERIOD FROM THE DATE OF RECEIPT. AS M/S R.J. PAPER MILLS LTD AND PERFECT PAPER MILLS LTD. FAILED TO FULFILL THE TERMS AND CONDITIONS, THE APPELLANT FORFEITED THE RETENTION MONEY. IT IS WELL SETTLED PRINCIPLE THAT WHEN THE TERMS OF CONTRACTS PROVIDES FOR RETENTION MONEY DURING THE GUARANTEE PERIOD THE INCOME COMPRISED IN RETENTION MONEY WOULD ACCRUE ONLY WHEN THE GUARANTEE PERIOD IS OVER AND THE SAID AMOUNT BECOMES DUE. FROM THE FACTS AND RELEVANT CIRCUMSTANCES OF THE C ASE IT IS CRYSTAL CLEAR THAT THE SUM OF RS. 8,00,000/ - WHICH WAS RIGHTLY CLAIMED AS THE INCOME WHEN THE PERIOD IS OVER I.E. IN THE A.Y. 2009 - 10 AND 2010 - 11 IN RESPECT OF M/S R.J. PAPER MILLS LTD AND PERFECT PAPER MILLS LTD. CONSIDERING THE ABOVE FACTS, I H OLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 8,00,000/ - BEING THE RETENTION MONEY IN RESPECT OF THE CONTRACTUAL OBLIGATION AND THEREFORE THE SAME IS DELETED. THUS, THE APPELLANT SUCCEEDS IN THIS GROUND OF APPEAL. 10. DU RING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 8 THE ORDER OF LD. CIT(A) AND ALSO REFERRED RELEVANT PAGES OF TH E PAPER BOOK SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS. 11. AFTER HEARING BOTH THE SIDES AND ON PERUSAL OF MATERIAL ON RECORD, WE FIND THAT ASSESSING OFFICER HA D NOT BROUGHT COMPLETE FACT ABOUT THE NATURE OF AMOUNTS RECEIVED BY THE ASSESSEE. IN VIEW OF THE CLEAR FINDINGS OF THE LD.CIT(A) THAT THESE AMOUNTS WERE RECEIVED AS RETENTION MONEY FROM THE TWO PARTIES WHICH WERE FORFEITED BY THE ASSESSEE BECAUSE OF NON - FULFILLING OF TERMS AND CONDITIONS BY BOTH THE PARTIES , WE UPHOLD THE DEC ISION OF THE LD. CIT(A) ON THIS ISSUE. GROUND OF APPEAL NO. 3 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER STATED THAT ASSESSEE WAS DOING TRANSACTION OF PURCHASE AND SALE OF LAND AND WAS DEPOSITING THE RECEIPT IN THE BANK ACCOUNT OF JAYESH D. PATEL. HE ALSO STATED THAT DURING SURVEY ACTION, SHRI JAYESH D. PATEL ADMITTED THAT THE ASSESSEE H A D ACCESSE TO HIS BANK ACCOUNT. T HE ASSESSING OFFICER CONCLUDED THAT THE AMOUNT DEPOSITED IN THE B ANK A/C. OF JAYESH PATEL WAS NOTHING BUT THE AMOUNT DEPOSITED BY THE ASSESSEE, T HEREFORE, THE ASSESSING OFFICER ADDED THIS AMOUNT U/S. 69 AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. 13. AGGRIEVED AGAINST THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER, T HE ASSESSEE FILED APPEAL BEFOR E THE LD. CIT(A). THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 9 STAT ING AMOUNT DEPOSITED IN THE BANK A/C. OF JAYESH PATEL HAD BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH CLEARLY ESTABLISH THE FLOW OF FUND FROM THE A /C. OF THE ASSESSEE TO THE A/C. OF JAYESH PATEL. IN VIEW OF THIS, THE LD. CIT(A) STATED THAT THE AMOUNT DEPOSITED IN THE A/C. HAD BEEN ACCOUNTED IN THE BOOKS OF A/C. OF THE ASSESSEE. THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 11.3 DECISI ON : - I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE AO MADE THE ADDITION ON THE BASIS OF STATEMENTS RECORDED AT THE TIME OF SURVEY WHERE THE APPELLANT HAD ACCEPTED THAT THE AMOUNT DEPOSITED IN THE BANK A/C. OF JAYESH PATEL BELONGED TO THE APPELLANT. THIS FACTS WERE FURTHER CONFIRMED BY JAYESH PATEL IN THE STATEMENTS RECORDED U/S. 131 OF THE ACT. THE AO PRESUMED THAT THE A MOUNT IN THE JAYESH PATEL BANK A/C. WAS THE UNACCOUNTED INCOME OF THE APPELLANT. THERE IS NO DISPUTE THAT THE APPELLANT HAS BEEN PURCHASING AND SELLING OF LAND THROUGH VARIOUS AUTHORIZED PERSONS AND MR. JAYESH PATEL WAS ONE OF THEM. WHAT IS ESSENTIAL HERE WAS THAT WH ETHER THE AMOUNT DEPOSITED IN THE BANK A/C. OF JAYESH PATEL HAVE BEEN RECORDED IN THE BOOKS OF A/C OF THE APPELLANT. THE ID. AR MADE ELABORATE SUBMISSION BEFORE ME. HE ALSO PRODUCED LEDGER A/C OF JAYESH PATEL IN THE BOOKS OF THE APPELLANT. THE LEDGER A/C C LEARLY SHOWS THE FUND FLOWS FROM APPELLANT'S ACCOUNT TO THE A/C OF JAYESH PATEL. THEREFORE, I HAVE NO HESITATION TO CONCLUDE THAT THE AMOUNT DEPOSITED IN THE A/C. OF JAYESH PATEL HAS DULY BEEN ACCOUNTED IN THE APPELLANT'S BOOKS OF A/C. IN THIS CIRCUMSTANCE S, THE ADDITION MADE BY THE AO AMOUNT TO DOUBLE TAXATION. MOREOVER, THE AMOUNT TRANSFERRED TO JAYESH PATEL A/C WAS THROUGH A/C PAYEE CHEQUES WHICH FURTHER! STRENGTHEN THE CONTENTION OF THE APPELLANT. THEREFORE, JUSTICE DEMAND THAT SUCH ADDITION IS NOT LEGA LLY TENABLE. THUS, AO IS DIREC TED TO DELETE THE ADDITION MAD E IN THIS GROUND. THE APPELLANT SUCCEEDS IN THIS GROUND OF APPEAL. 14. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE RELIED ON THE I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 10 ORDER OF THE CIT(A) AND ALSO REFERRED TO THE VARIOUS PAGES OF PAPER BOOK. ON PERUSAL OF THE MATERIAL ON RECORD, WE FIND THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MAD E BY THE ASSESSING OFFICER AS THE A/C. OF THE ASSESSEE SHOW S THAT AMOUNT WAS TRANSFERRED TO THE A/C. OF THE JAYESH PATEL THROUGH A/C. PAYEE CHEQUE WHICH WAS DULY ACCOUNTED IN THE BOOKS OF ASSESSEE. GROUND OF APPEAL NO. 4 15. DURING THE COURSE OF APPELLAT E PROCEEDINGS, THE ASSESSING OFFICER STATED THAT ASSESSEE HAD ADMITTED U/S. 131 OF THE ACT THAT ASSESSEE HAD BEEN DOING TRANSACTIONS IN THE NAME OF YUSUF D PATEL. THEREFORE , THE INVESTMENT IN SURVEY NO. 2 5 2 /2 AND IN SURVEY NO. 253WERE NOTHING BUT BENAM I INVESTMENT OF YUSUF D. PATEL MADE BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER TAXED THIS AMOUNT U/S. 68 OF THE ACT AS BENAMI INVESTMENT OF THE ASSESSEE. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE CI T(A). THE LD. CIT(A) HAD DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT AMOUNT TRANSFERRED TO THE BANK A/C. OF YUSUF D. PATEL WA S RECORDED IN THE BOOKS OF THE ASSESSEE AND THIS ADDITION WOULD AMOUNT TO DOUBLE TAXATION. THE DECISIO N OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 12.3 DECISION : - I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. FROM THE FACTUM OF THE CASE IT IS CLEAR THAT THE ISSUE IS SIMILAR TO THE GROUND 7 ABOVE. FOR THE SAKE OF BREVITY AND TO AVOID THE REPETITION MY DECISION ALSO SIMILAR TO THE DECISION IN DECIDING THE GROUND 7 ABOVE. THAT MEANS, I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 11 THE AMOUNT TRANSFERRED TO THE BANK A/C OF YUSUF PATE L WAS RECORDED IN THE BOOKS OF THE APPELLANT AND ADDITION WILL AMOUNT TO DOUBLE TAXATION. THUS, THIS GROUND OF APPEAL IS ALSO ALLOWED. 16. DURING THE COURSE OF APPELLATE PROCEEDINGS, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF ASSESSING OFFICE R AND ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE RELIED ON THE ORDER OF THE LD. CIT(A) AND REFERRED VARIOUS PAGES OF PAPER BOOK. AFTER CONSIDERING THE SUBMISSION OF BOTH THE SIDES AND ON PERUSAL OF MATERIAL ON RECORD, WE FIND SIMILAR TO THE ABOVE S TATED CASE OF JAYESH PATEL THE AMOUNT TRANSFERRED TO THE A/C. OF YUSUF D PATEL WERE DULY REFLECTED IN THE BOOKS OF A/C. OF THE ASSESSEE , THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD.CIT(A). GROUND OF APPEAL NO. 5 17. THE AS SESSING OFFICER STATED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE WAS REQUESTED TO PROVIDE CONFIRMATION OF UNSECURED LOAN RECEIVED FROM M/S. ALOK INDUST RIES LTD AND FROM SURENDRA JIWR AJKAR. IN THIS CONNECTION, THE ASSESSING OFFICER STAT ED THAT ASSESSEE HAS NOT SUBMITT ED THE INFORMATION WITHIN THE TIME SOUGHT,THEREFORE, THE UNSEC URED LOAN WAS TREATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF A/C. OF THE ASSESSEE AND ADDED U/S. 68 OF THE ACT. AGGRIEVED AGAINST THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER, THE ASSSSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HA D ALLOWED THE APPEAL OF THE APPEAL STATING THAT BOTH THE TRANSACTIONS WERE GENUINE AND SAME WERE VERIFIED FROM THE BANK I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 12 STATEMENT OF THE ASSESSEE AS WELL AS C ONFIRMATION RECEIVED FROM THE PARTIES . THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 13.3 DECISION : - 1 HAVE CONSIDERED CAREFULLY THE OBSERVATION' OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. IT IS CLEAR FROM THE LEDGER ACCOUNT AND CONFIRMATION GIVEN BY THE ALOK INDUSTRIES LTD. THAT THE ASSESSEE SOLD LAND IN EARLIER YEAR AND IN CURRENT YEAR ALSO. THE PAYMENT AMOUNTING TO RS. 55,00,000/ - FOR THE SALE OF LAND IS RECEIV ED THROUGH BANK ACCOUNT. THERE IS NO DOUBT ABOUT THE GENUINENESS OF TRANSACTIONS MADE BETWEEN THE PARTIES AS THE COPY OF REGISTERED SALE DEED WAS PRODUCED BEFORE THE AO AND VERIFIED BY HIM AT THE TIME OF ASSESSMENT PROCEEDINGS. SO FAR AS PAYMENT AMOUNTING TO RS. 25,00,000/ - TO SURENDRA JIVRAJKAR IS CONCERNED, IT IS RECEIVED BY THE ASSESSEE IN THE YEAR 2006 AS A UNSECURED LOAN. THE SAME WAS REPAID THROUGH BANK BY THE ASSESSEE IN THE MONTH OF MAY, 2010. THE SAME IS VERIFIED FROM THE BANK STATEMENT OF THE ASSE SSEE AS WELL AS THE CONFIRMATION RECEIVED FROM SHRI SURENDRA JIVRAJKAR. CONSIDERING THE ABOVE FACTS, BOTH THE TRANSACTIONS ARE GENUINE. THEREFORE, THE ADDITION MADE BY THE AO IS NOT TENABLE IN THE EYES OF LAW. THEREFORE, THE ADDITIONS MADE BY THE AO AMOUNT ING TO RS. 55,00,000/ - AND RS. 25,00,000/ - IN RESPECT OF ALOK INDUSTRIES LTD. AND SURENDRA JIVRAJKAR ARE DELETED. THUS, THIS GROUND OF APPEAL IS ALLOWED. 18. AFTER HEARING BOTH THE SIDES AND ON PERUSAL OF MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE SE F ACT WERE NOT DISPROVED THAT ASSESSEE SOLD LAND IN EARLIER YEAR AND IN CURRENT YEAR AND THE PAYMENT OF RS. 55 LACS FOR THE SALE OF LAND WAS RECEIVED THROUGH BANK A/C. WHICH WAS EVIDENT FROM THE COPY OF REGISTERED SALE DEED. REGARDING OTHER PAYMENT OF 20 LA CS TO SHRI SURENDRA JIVRAJKAR, IT WAS RECEIVED BY THE ASSESSEEE IN THE EARLIER YEAR 2006 AS AN UNSECURED LOAN AND THE SAME WAS REPAID THROUGH BANK BY THE ASSESSEE IN THE MONTH OF MAY, 2010, AS PER BANK STATEMENT AND THE CONFIRMATION RECEIVED FROM THE PARTY . WE FIND THAT THE FACTS AND FINDINGS OF THE LD. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 13 CIT(A) AS ABOVE CLEARLY INDICATE THE GENUINENESS OF THESE TRANSACTIONS, THEREFORE, WE UPHOLD THE DECISION OF THE LD.CIT(A). GROUND OF APPEAL NO. 6 19. DURING THE COURSE OF APPELLATE ASSESSMENT, THE ASS ESSING OFFICER STATED THAT ASSESSEE WAS ASKED TO VERIFY THE OWNERSHIP OF ADI L VILLA AS THE SAME WAS NOT REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE. IN THIS REGARD, THE ASSESSEE STATED THAT I T WAS ANCEST RAL PROPERTY BUT THE ASSESSING OFFICER ADDED THE ESTIMATED VALUE OF RS. 20 LACS ON THE GROUND THAT NO PROOF HAD BEEN SUBMITTED . AGGRIEVED AGAINST THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAD DELETED THE ADDITION BY STATI NG THAT NO COST WAS INCURRED BY THE ASSESSEE FOR ACQUIRING THE VILLA AS THE PROPERTY WAS VERY OL D AND THE SUCCESSION CERTIFICATE WAS ISSUED IN THE YEAR 19 3 3 WAS SUBMITTED BY THE ASSESSEE. THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 14.3 DECI SION : - I HAVE CONSIDERED CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBM ISSION. THE AO PRESUMED THAT THI S ANCESTRAL HOUSE WAS NOT REFLECTED IN THE B OOKS OF A/C OF THE APPELLANT AND ESTIM ATED COST OF THE HOUSE AT RS. 20,00,000 / - AND ADDED IN THE HAND OF THE APPELLANT U/S.69 OF THE ACT, NO EVIDENCE WAS BROUGHT ON RECORDS BY THE AO TO JUSTIFY THE ESTIMATION AND THE ADDITION THEREOF. BEFORE ME THE ID. AR CONTENDED THAT THE SAID PROPERTY I.E. ADIL VILLA, AN ANCESTRAL PROPERTY INHERITED FROM HIS FATHER. THEREFORE, NO COST WAS INCURRED BY THE APPELLANT FOR ACQUIRING THE VILLA. THEREFORE, THE VALUE OF THE PROPERTY IS NIL FOR THE APPELLANT. THERE WAS NO UNEXPLA INED INVESTMENT MADE BY THE APPELLANT IN THE SAID PROPERTY AS CONCLUDED BY THE AO WITHOUT ANY COGENT EVIDENCE. IN FACT A COPY OF THE CITY SURVEY RECORD I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 14 SHOWING THE| PROPERTY IS VERY OLD AND SUCCESSION CERTIFICATE ISSUED IN THE YEAR 1993 SUBMITTED BEFORE' M E. IN THIS CIRCUMSTANCES, I HAVE N O HESITATION TO HOLD THAT THERE IS NO MERITS IN MAKING THE SAID ADDITION U/S. 69 OF THE ACT. THUS, THE AO IS DIRECTED TO DELETE THE ADDITION AND THIS GROUND OF APPEAL IS ALLOWED. 20. AFTER HEARING BOTH THE SIDES, WE FI ND THAT THE FACTS AND FINDINGS OF THE LD. CIT(A) CLEARLY INDICATE IT WAS AN ANCESTRAL PROPERTY ACQUIRED BY SUCCESSION AS PER THE SUCCESSION CERTIFICATE MENTIONED BY THE LD.CIT(A).IN VIEW OF THE FACT AND FINDINGS WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD.CIT(A). CO NO. 269/AHD/2011FILED BY THE ASSESSEE GROUND NO .1 OF CO OF THE ASSESSEE 21. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO CLARIFY THE ISSUE OF NOTIONAL INCOME FROM THE H OUSE PROPERTY. IN THIS CONNECTION, THE ASSESSEE SUBMITTED THAT THERE WERE FOUR OFFICE PREMISES OCCUPIED BY THE ASSESSEE FOR HIS BUSINESS PURSES. THERE IS ONE PLOT WITH FARM HOUSE AND ASSESSEE SUBMITTED THAT IT MAY BE CONSIDERED AS DEEMED LET OUT HOUSE PRO PERTY BUT NO FAIR RENTAL VALUE WAS SUBMITTED BY THE ASSESSEE TO ARRIVE AT THE ANNUAL VALUE FROM SUCH PROPERTY. FURTHER, REGARDING BUILDING , THE ASSESSEE OPTED THIS AS OCCUPIED HOUSE PROPERTY WHICH WAS DESCRIBED AS ANCESTRAL PROPERTY. IN ADDITION TO THE A BOVE, THE HOUSE AT DAMAN WAS SAID TO BE SELF OCCUPIED BUT THE ASSESSEE OPTED FOR THE SAME AS DEEMED LET OUT HOUSE PROPERTY. AFTER CONSIDER ING I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 15 THE SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD OFFERED TO TAX T W O PROPERT IES P LOT WITH FARM HOUSE AND HOUSE AT DAMAN AS THE DEEMED LET HOUSE PROPERTY AND THE IMMOVABLE PROPERTY REFLECTED IN THE BALANCE SHEET AS OFFICE NOL. 1/17, 2/17, 2/18 AND 2/22 WERE CLAIMED TO BE USED FOR BUSINESS PURPOSES. IN THIS CONNECTION, THE ASSESSING O FFICER STATED THAT ASSESSEE HAD NOT SHOWN ANY INCOME FROM THE BUSINESS DURING THE YEAR. HE ALSO STATED THAT ON PERUSAL OF RETURN OF INCOME FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08, 2009 - 10 AND 2010 - 11 IT WAS SEEN THAT THE ASSESSEE WAS NOT DERIVIN G ANY BUSINESS INCOME AND SIM PLY MAKING A CLAIM THAT ALL THESE FOUR PREMISES USED FOR BUSINESS PURPOSES. THE ASSESSING OFFICER FURTHER STATED THAT ASSESSEE FAILED TO PRODUCE ANY SUPPORTING EVIDENCES AGAINST HIS CLAIM. THEREFORE, THE ASSESSING OFFICER AR RIVED AT INCOME FROM HOUSE PROPERTY AFTER CONSIDERING THESE FOUR PREMISES AS DEEMED LET OUT. HE FURTHER STATED THAT ASSESSEE HAD NOT SUBMITTED ANY DETAIL OF THE SAME FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET OUT. HE DETERMINED THE RENTAL INCOME AS UNDER: - A) OFFICE NO. I/17 RS.0,16,800/ - B) OFFICE NO.2/17 RS.0,16,800/ - C) OFFICE NO.2/18 RS.0,16,800/ - D) OFFICE NO.2/22 RS.0,16,800/ - E) PLOT WITH FARM HOUSE RS.2,52,000/ - F) HOUSE AT DAMAN RS.0,84,000/ - TOTAL RS.4,03,200/ - I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 16 22. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAD PARTLY ALLOWED THE APPEA L OF THE ASSESSEE BY STATING AS UNDER: - DECISION : - I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLA AT IN THE WRITTEN SUBMISSION. IN RESPECT OF OFFICES NO. 1/17,2/17, 2/18 AND 2/22,1 FOUND THAT THE APPELLANT HAS CONDUCTED THE BUSINESS AND USED THE SAME FOR THE BUSINESS PURPOSES ONLY. THE ACTION OF THE AO IS NOT WITHOUT ANY VERIFICATION AND EVIDENCES PUT FOURTH FOR MAKING ADDITION. THEREFORE, THE ACTION! OF THE AO IS NOT CORRECT IN MAKING THE ADDITION OF RS. 67,2OO/ - IN RESPECT OF THE} SAID OFFICES. SO FAR AS PLOT WITH FARM HOUSE AND THE HOUSE AT DAMAN ARE CONCERNED. THE AR OF THE APPELLANT NOT PRODUCED ANY COGENT EVIDENT TO PROVE THAT THE VALUE OF THE SAID PROPERTIES IS LOWER TH AN THE VALUE ASSESSED BY THE AO. THEREFORE, THE ADDITION MADE BY THE AO IN RESPECT OF PLOT WITH FARM HOUSE AND HOUSE AT DAMAN IS CORRECT. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 23 . AFTER HEARING BOTH THE SIDES AND ON PERUSAL OF THE MATERIAL ON RE CORD, WE FIND THAT THE LD. CIT(A) HAD MENTIONED COMPLETE FACTS IN HIS FINDINGS ON THE BASIS OF WHICH HE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE .RE GARDING PLOT WITH FARM HOUSE AT DAMAN WAS CONCERNED, ASSESSEE FAILED TO PRODUCE ANY COGENT EVIDENCE T O PROVE THAT VALUE OF THE SAID PROPERTY WAS LOWER THAN THE VALUE ASSESSED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A) . GROUND N O. 2 OF CO OF THE ASSESSEE I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 17 24 . GROUND NO . 2 OF CO IS NOT PRESSED BY ASSESSEE AT THE TIME OF HEARING. SO, T HE SAME IS DISMISSED AS NOT PRESSED. GROUND NO. 3 OF CO OF THE ASSESSEE 25 . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT VALUATION OF THE PROPERTY CO NSIDERING THE STAMP PAID OF RS.4,05,000/ ACTUAL VALUE ARRIVED AT RS. 82 , 65 , 306 / - WHEREAS THE ASSESSEE HAD SHOWN SALE CONSIDERATION OF RS. 33 ,OO,OOO ONLY. IN VIEW OF THIS TH E ASSESSING OFFICER STATED THAT ASSESSEE HAD SUPPRESSED THE SALE OF THE LAND RS. 49 , 65 , 306/ - THEREFORE,HE ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. AGGRIEVED AGAINST TH IS IMPUGNED ADDITION THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE ADDITION MADE BY THE ASSES SING OFFICER. THE DECISION OF THE CIT(A) IS REPRODUCED AS UNDER: - DECISION : - I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS CONTENTION RAISED BY THE AR OF THE APPELLANT IN WRITTEN SUBMISSION. FROM THE FINDING OF THE AO IT IS VERY; CLEAR THAT THE APPELLANT HAS SHOWN THE SALE CONSIDERATION OF LAND AT RS.33,00,00/ - AND THE STAMP DUTY PAID WAS RS.4,05,000/ - . THE REGISTRAR OF STAMP DUTY VALUED THE PROPERTY AT RS.82,65,306/ - FOR WHICH HE CHARGED STAMP DUTY OF RS.4,05,0 00/ - . THE CATCH HERE IS WHY SHOULD A PRUDENT BUSINESS MAN SALE HIS LAND BELOW THE MARKET PRICE OR EVEN BELOW THE STAMP DUTY SUB - REGISTRAR PRICE? FROM THE RECORDS, IT IS CLEAR THAT THE APPELLANT HAS BEEN DEALING LAND FOR THE A COUPLE OF BIG INDUSTRIES LOCAT ED IN VAPI & DAMAN. I HAVE GONE THROUGH THE MODUS OPERANDIE ADOPTED BY THE APPELLANT IN THE BUSINESS OF LAND DEALING/TRADING. THE APPELLANT PURCHASES AGRICULTURAL LAND FROM THE FARMERS THROUGH HIS AUTHORIZED PERSONS BECAUSE HE CANNOT DIRECTLY PURCHASE THES E LAND DUE TO CERTAIN RESTRICTIONS IN BUYING AND SELLING OF AGRICULTURAL LAND. THEN THOSE LAND I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 18 ARE DEVELOPED WHEREVER NECESSARY AND CONVERT THEM IN TO THE NON - AGRICULTURAL PLOTS. THIS PROCESS OF CONVERTING LAND INTO NA ITSELF ADD VALUE TO THE LAND. THE NA LAND IS REQUIRED FOR COMMERCIAL PURPOSE MAINLY FOR INDUSTRIAL/CONSTRUCTION PURPOSES. THE STATUS CHANGE OF LAND FROM AGRICULTURAL TO NA FETCHES BIG MARGIN N THE LAND DEALING. BY UNDER QUOTING THE LAND PRICE, THE APPELLANT DERIVES TWO BENEFITS - I) AVOID C.G .TAX BY THE FIRST PURCHASER AND II) AVOID BUSINESS PROFIT FROM THE SECOND SALE I.E. NA LAND. THE STAMP DUTY SUB - REGISTAR HAS TO COLLECT STAMP DUTY ON THE SALE OF LAND AS PER THEIR GUIDELINES AND AS PER THE PRICE DETERMINED BY THEM IRRESPECTIVE OF THE VALE MENTIONED IN THE SALES DEED. THE BIG QUESTION IS WHY SHOULD THE APPELLANT SELL HIS LAND BELOW MARKET PRICE? THE APPELLANT HAS NO ANSWER. AS ADMITTED BY THE APPELLANT, THE LAND WAS DEVELOPED BY SPENDING HUGE AMOUNT (REFER GROUND NO. 3 ABOVE) WHICH WAS ALLOW ED AS COST OF LAND. WITH ALL SUCH EFFORTS THE LOGIC OF SELLING THE LAND BELOW SUB - REGISTRAR PRICE IS NOT CONVINCING NOT THE APPELLANT GAVE ANY PLAUSIBLE EXPLANATION. THE APPELLANT UNNECESSARILY DRAG PROVISION U/S. 80C WHICH THE AO HAD NOT INVOKED. WHAT THE AO HAS DONE WAS A LOGICAL AND FACTUAL ANALYSIS OF SALE PRICE OF THE LAND IN QUESTION AND THE VALUATION ADOPTED BY THE SUB - REGISTRAR, STAMP DUTY WAS TAKEN AS AN EVIDENCE TO CORROBORATE HIS FINDING. THE APPELLANT DID NOT FURNISH ANY EXPLANATION BEFORE ME WH Y HE HAS SOLD THE LAND BELOW THE PRICE DETERMINED BY THE SUB - REGISTRAR, STAMP DUTY. THE APPELLANT HAD ALSO NOT DEMONSTRATED THAT THE SALE WAS A DISTRESS SALE. THERE ARE AMPLE INSTANCES, WHERE UNDER VALUATION IN THE LAND DEALS ARE MADE BY THE PARTIES. IN TH IS CASE ALSO BY UNDER VALUING THE LAND THE APPELLANT HAD SUPPRESSED THE PROFITS ON SALE LAND. IN VIEW OF THE ABOVE AM CONSTRAINED TO AGREE WITH THE FINDING OF THE AO BECAUSE THE APPELLANT COULD NOT DEMONSTRATE ANY PLAUSIBLE REASONS WHY THE LAND WAS SOLD FO R BELOW THE PRICE DETERMINED BY THE SUB - REGISTRAR, STAMP DUTY. THE NEXT LOGICAL QUESTION CAME TO MY MIND IS THAT SHOULD THE ENTIRE SALES PRICE DIFFERENCE BE ADDED TO THE INCOME OF THE APPELLANT. MY THOUGHT GOES TO ANSWER YES BECAUSE THE ENTIRE ACCOUNTED LA ND DEVELOPMENT EXPENSES HAD BEEN ADDED TO THE COST OF LAND AND ALLOWED BY THE DEPARTMENT. THEREFORE, THERE IS NO CHANGE IN THE DEBIT SIDE OF THE P&L A/C. IN TERMS OF COST OF LAND. SO THE MARGIN/PROFIT REMAINS ENHANCED BY THE DIFFERENCE AMOUNT OF SALE PRICE . THEREFORE, THERE IS NO SCOPE FOR ADJUSTMENT OF EXPENSES AND HENCE THE SALE PRICE DIFFERENCE CONSTITUTE SUPPRESSED INCOME OF THE APPELLANT. THUS, THE ADDITION MADE BY THE AO IN THIS GROUND IS CONFIRMED AND THE APPEAL IN THIS GROUND IS DISMISSED. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 19 26 . DURI NG THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. COUNSEL STATED THAT THE LD. CIT(A) WAS NOT CORRECT IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER. HE REFERRED TO THE VARIOUS PAGES OF THE PAPER BOOK SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS. THE LD. AUTHORIZED REPRESENTATIVE STATED THAT PROVISION OF SECTION 50C WHICH PERMITS ADOPTION OF VALUE AS PER STAMP DUTY AUTHORITY FOR COMPUTING CAPITAL GAIN AND SAME WERE NOT AT ALL APPLICABLE FOR COMPUTING BUSINESS INCOME OF THE ASSESSEE. HE ALSO RELIED ON THE JUDICIAL PRONOUNCEMENT I.E. (2010) 320 ITR 345 (MAD) THIRUVENGADAM INVESTMENTS (P.) LTD. 26.1 ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE CIT(A). 27 . WE HAVE CONSIDERED THE SUBMISSION MADE BY BO TH SIDES AND PERUSED THE MATERIAL ON RECORD. W E FIND THAT THE LAND IN QUESTION WAS BUSINESS ASSET AND NOT CAPITAL ASSET .BECAUSE OF BUSINESS ASSET THE SUBSTITUTION OF ACTUAL SALE PRICE WITH STAMP DUTY WITHOUT ANY FURTHER SUPPORTING EVIDENCES THAT ASSESSE E HA D SUPPRESSED THE SALE WAS NOT JUSTIFIED AS THE ASSESSEE HAD NOT SHOW N CAPITAL GAIN IN THIS CASE. WE HAVE ALSO PERUSED THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE IN THE CASE OF CIT VS. THIR VENG ADAM INVESTMENT PVT. LTD. 320 ITR 345 (2010). WE FIND THAT IN THIS CASE IT WAS STATED THAT INVOCATION OF SECTION 50C OF THE ACT CAN BE MADE TO FIND OUT THE TRUE VALUE OF THE CAPITAL ASSET AND IN THE VERY FACT AND CIRCUMSTANCES OF THE CASE , WHERE THE ASSESSEE TREATED THE ASSET AS BUSINESS AND NOT I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 20 CAPI TAL ASSET THERE IS NO QUESTION OF INVOKING THE PROVISION OF SECTION 50C OF THE ACT. THE PART OF THE FINDING OF THE HON BLE HIGH COURT OF MADRAS IS REPRODUCED AS UNDER: - 7. IT IS NOT IN DISPUTE THAT THE ACTIVITY OF THE ASSESSEE IS PROPERTY PROMOTER. IT CA N BE GATHERED FROM THE FACTS AVAILABLE ON RECORD THAT THE ASSESSEE HAS OBTAINED POWER OF ATTORNEY FROM THE OWNER OF THE PROPERTY AND PAID A SUM OF RS. '3,19,49,496 TO THE OWNER OF THE PROPERTY AND ALSO INCURRED EXPENDITURE IN A SUM OF RS. 2,55,87,815 IN CO NNECTION WITH THE SAID PROPERTY FOR THE ASSESSMENT YEAR 2004 - 05 AND THE BALANCE OF RS. 63,61,681 DURING THE ASSESSMENT YEAR 2004 - 05. THE AMOUNTS SO PAID WERE SHOWN UNDER THE HEAD 'LOANS AND ADVANCES' IN THE BALANCE - SHEET AND NOT UNDER THE HEAD 'FIXED ASSET S'. LATER ON, THE PROPERTY WAS SOLD TO M/S. MRF LIMITED FOR A SUM OF RS. 5 CRORES BY A DEED OF CONVEYANCE, IN WHICH, THE ASSESSEE REPRESENTED THE OWNER IN THE CAPACITY OF THE POWER OF ATTORNEY. THE ASSESSING OFFICER, IN ORDER TO DETERMINE THE VALUE OF THE PROPERTY, HAS INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AND THEREBY BROUGHT THE ENTIRE AMOUNT TO RS. 6,94,45,920. THE APPELLATE AUTHORITY HAS DELETED THAT PORTION OF THE ORDER OF THE ASSESSING OFFICER TAKING THE SALE CONSIDERATION AT RS. 6,94,45,920 AS AGAINST RS. 5 CRORES THE APPARENT SALE CONSIDERATION SHOWN IN THE SALE DEED. THE TRIBUNAL ALSO, TAKING NOTE OF THE FACTS STATED ABOVE, HAS COME TO THE CONCLUSION THAT INVOCATION OF SECTION 50C OF THE ACT IS NOT WARRANTED AS THE PROPERTY WAS NEVER HELD BY THE ASSESSEE AS CAPITAL ASSET AND AS PER THE ACCOUNTS ALSO, THE AMOUNT GIVEN TO THE OWNER OF THE PROPERTY HAS BEEN SHOWN AS LOANS AND ADVANCES THEREBY THE PROPERTY HAS BEEN TREATED AS BUSINESS ASSET AND NOT AS CAPITAL ASSET. THE INVOCATION OF SECTION 50 C OF THE ACT AS CAN BE SEEN FROM THE PROVISIONS OF THE ACT CAN BE MADE IN ORDER TO FIND OUT THE TRUE VALUE OF THE CAPITAL ASSET. IN THE VERY FACTS AND CIRCUMSTANCES OF THE CASE, THE PROPERTY IN THE HANDS OF THE ASSESSEE WAS TREATED AS BUSINESS ASSET AND NO T AS CAPITAL ASSET, THERE IS NO QUESTION OF INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT, WHICH IS, AS ALREADY STATED, PERTAINING TO DETERMINING THE FULL VALUE OF THE CAPITAL ASSET. THE TRIBUNAL HAS TAKEN IN AID THE OBSERVATION OF THE MUMBAI BENCH IN THE CASE OF INTERLOK HOTELS (P.) LTD. V. ITO [2009] 122 TTJ (MUMBAI) 145, WHICH, IN OUR CONSIDERED VIEW, IS IN CONSONANCE WITH THE STATUTORY PROVISIONS AND IS WELL IN ACCORDANCE WITH LAW. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 21 27 .1 IN VIEW OF THE ABOVE MENTIONED FACTS AND LEGAL FINDINGS, WE A LLOW THIS GROUND OF CO OF THE A SSESSEE ON THIS ISSUE. GROUND N O. 4 OF CO OF THE ASSESSEE 28 . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT FROM THE STATEMENT RECORDED DURING THE SURVEY TH E ASSESSEE HAD STATED THAT ASSETS WERE IN HIS NAME BUT THE INCOME FROM THE SAME WERE SHOWN IN THE NAME OF FAMILY MEMBER. THE ASSESSING OFFICER HAD CLUBBED THE INCOME OF THE FAMILY MEMBERS WITH INCOME OF THE ASSESSEE ON THE BASIS OF INFORMATION PROVIDED BY THE ASSESSEE THAT ALL THESE FO UR PERSONS WERE BENAMIDARS FOR THE ASSESEE . LD. CIT(A) HA D DISMISSED THE APPEAL OF THE ASSESSEE. THE DECISION OF TH E LD. CIT(A) IS STATED AS UNDER: - 10.3 DECISION ; - I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER. I HAVE ALSO CAREFULLY CONSIDERED THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION, APPELLANT SURVEY U/S. 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES AND STATEMENT U/S. 131 WAS RECORDED ON 2.04.2008. IN THE STATEMENT 11/8.131 OF THE ACT, THE APPELLANT HAD CONCEDED THAT THE PROPERTIES ARE BELONG TO HIM BUT INCOME FROM THOSE PROPERTIES ARE SHOWN IN THE NAME OF THE FAMILY MEMBERS. THIS FACTS HAS NOT BEEN REBUTTED BY THE APPELLANT EVER. FURTHER, DURING THE ASSESSMENT PROCEEDING THE AO GAVE AMPLE OPPORTUNITIES B UT THE APPELLANT HAD NOT CONTROVERTED TO THE BASIC FACTS. THUS IN THAT CASE CAN THE INCOME OF THE APPELLANT FROM THE PROPERTY OWNED BY BE SHARED WITH OTHER? THE ANSWER IS SIMPLE NO. BY DOING SO THE APPELLANT TRYING TO REDUCE THE TAX BURDEN WHICH IS NOT PER MISSIBLE AS PER LAW. THE ID. AR'S PLEA THAT THE BENEFICIARIES HAVE FILED THE R/I AND PAID THE TAX DOES NOT HOLD MUCH WATER IN THIS CASE. WHAT IS LEGALLY TO BE COMPLIED MUST BE COMPLIED. THE APPELLANT FOR THE REASONS BEST KNOWN TO HIM WANTED TO SPLIT INCOME WITH THE FAMILY MEMBERS HAS NO LEGAL SANCTION AND THEREFORE, CANNOT BE ALLOWED. IN THIS CIRCUMSTANCES, I AM IN AGREEMENT WITH THE FINDING I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 22 OF THE AO AND THE ADDITION MADE BY HIM IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 29. WE HAV E HEARD BO TH THE SIDES AND PERUSED THE MATERIAL ON RECORD . WE FIND THAT THE PROPERTIES WERE BELONGING TO THE ASSESSEE BUT INCOME FROM THOSE PROPERTIES WERE SHOWN IN THE NAME O F THE FAMILY MEMBERS. THIS FACT HAD NOT BEEN REBUTTED BY THE ASSESSEE. IN VIEW OF THE CLEAR FACTS REPORTED IN THE ORDER OF THE LD. CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD.CIT(A). 30. IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED AND THE CO OF THE ASSESSEE IS PARTLY ALLOWED. 31. GROUND NO S . 5 AND 6 OF THE CO OF THE ASSESSEE ARE OF GENERAL NATURE, SO, THEY DO NOT REQUIRE ANY ADJUDICATION. ORDER PR ONOUNCED IN THE OPEN C OURT ON 20 - 01 - 201 7 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOU NTANT MEMBER AHMEDABAD : DATED 20 /01/2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 2870 & CO NO. 269 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. SHRI SALIM A. KHERANI 23 BY ORDER/ , / ,