Rameshbhai G. Hirani, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(3), RAJKOT-GUJARAT

CO 47/RJT/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9303 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI
• Assessee Lawyers: D R ADHIA A R
• Keywords: Business income; Corroborative evidences; Retraction
• Section: 147; 131; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NO. 582/RJT/2012 / ASSESSMENT YEAR 2006-07. THE I.T.O. WARD 2(3), RAJKOT. ( / APPELLANT V/S RAMESHBHAI GORDHANBHAI HIRANI, MATRU CHHAYA 10, BHAGIRATH SOCIETY, OPP. KHODIYAR MILLS, MATRU CHHAYA, RAJKOT. PAN- ABQPH7476N / RESPONDENT C.O. NO. 47/RJT./2012 IN ITA NO. 582/RJT/2012 / ASSESSMENT YEAR 2006-07. RAMESHBHAI GORDHANBHAI HIRANI, MATRU CHHAYA 10, BHAGIRATH SOCIETY, OPP. KHODIYAR MILLS, MATRU CHHAYA, RAJKOT. PAN- ABQPH7476N ( / APPELLANT V/S THE I.T.O. WARD 2(3), RAJKOT. / RESPONDENT IN ITA NO. 652/RJT/2012 / ASSESSMENT YEAR 2006-07. RAMESHBHAI G. HIRANI, 10, BHAGIRATH SOCIETY, OPP. KHODIYAR MILLS, MATRU CHHAYA, RAJKOT. PAN- ABQPH7476N ( / APPELLANT V/S THE A.C.I.T. CIRCLE-2, RAJKOT. / RESPONDENT ! '# / REVENUE BY DR. J.B. JHAVERI, D.R. $% ! '# / ASSESSEE BY SHRI D.R. ADHIA, A.R. ' & ' %( / DATE OF HEARING 01/01/2014 ) %( / DATE OF PRONOUNCEMENT 10/01/2014 ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 2 / ORDER PER B. R. JAIN, A. M. : THESE CROSS APPEALS AND CROSS OBJECTION ARISE AGAIN ST THE ORDER DATED 31/08/2012 OF SHRI YOGESH PANDE, THE LEARNED CIT(A)-III, RAJKOT BY RAISINS THE FOLLOWING GROUNDS:- GROUNDS OF ITA NO. 582/RJT./2012M IN REVENUES APPE AL (I) THE LD. CIT(A)-III, RAJKOT HAS ERRED IN LAW AN D ON FACT IN RESTRICTING THE ADDITION OF RS. 93,75,000/- TO THE TUNE OF RS. 51,04,080/- MADE ON ACCOUNT OF UNDISCLOSED PROFIT O N SALE OF PLOT OF LAND. (II) ON THE FACTS OF THE CASE, THE LD. CIT(A)-III, RAJKOT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (III) IT IS, THEREFORE, PRAYED THAT THE ORDER OF TH E LD. CIT(A)-III, RAJKOT MAY BE SET ASIDE AND THAT OF THE ORDER OF TH E A.O. MAY KINDLY BE RESTORED BACK. GROUNDS OF C.O. NO. 47/RJT./2012 AND I.T.A. NO. 652 /RJT/2012 IN ASSESSEES APPEAL. 1.1 THE LD. CIT(A)-III HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 3,64,000/-, CON SIDERING THE SAME AS ON ACCOUNT OF UNEXPLAINED SOURCE OF CASH. T HE SAME NEEDS DELETION. 1.2 WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 3,64,00 0/-, CONSIDERING THE SAME AS ON ACCOUNT OF UNEXPLAINED S OURCE OF CASH WITHOUT GIVING STATUTORY AND SPECIFIC NOTICE F OR MAKING SUCH ADDITION WHICH AMOUNT TO ENHANCEMENT AS REQUIR ED UNDER THE ACT. THE SAME NEEDS DELETION. 1.3 WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 3,64,00 0/-, CONSIDERING THE SAME AS ON ACCOUNT OF UNEXPLAINED S OURCE OF CASH WITHOUT GIVING STATUTORY AND SPECIFIC NOTICE F OR MAKING SUCH ADDITION WHICH AMOUNT TO ENHANCEMENT AS REQUIR ED UNDER THE ACT. THE SAME NEEDS RESTORATION TO THE LD . CIT(A) FOR ADOPTING JUDICIAL GUIDELINES. 2.1 THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN IS SUING DIRECTION TO RETAIN ADDITION OF RS. 51,04,080/-, CONSIDERING THE SAME AS PROFIT MADE BY THE ASSESSEE IN SALE OF LAND. THE SA ME NEEDS DELETION. ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 3 2.2 WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 51,04,0 80/-, CONSIDERING THE SAME AS PROFIT MADE BY THE ASSESSEE IN SALE OF LAND WITHOUT GIVING STATUTORY AND SPECIFIC NOTIC E FOR MAKING SUCH ADDITION WHICH AMOUNT TO ENHANCEMENT AS REQUIR ED UNDER THE ACT. THE SAME NEEDS DELETION. 2.3 WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 51,04,0 80/-, CONSIDERING THE SAME AS PROFIT MADE BY THE ASSESSEE IN SALE OF LAND WITHOUT GIVING STATUTORY AND SPECIFIC NOTIC E FOR MAKING SUCH ADDITION WHICH AMOUNT TO ENHANCEMENT AS REQUIR ED UNDER THE ACT. THE SAME NEEDS RESTORATION TO THE LD . CIT(A) FOR ADOPTING JUDICIAL GUIDELINES. 3.1 THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN IS SUING DIRECTION TO RETAIN ADDITION OF RS. 1,60,000/-, CONSIDERING T HE SAME AS GODOWN RENT EARNED BY THE ASSESSEE. THE SAME NEEDS DELETION. 3.2 WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 1,60,00 0/-, CONSIDERING THE SAME AS GODOWN RENT EARNED BY THE A SSESSEE WITHOUT GIVING STATUTORY AND SPECIFIC NOTICE FOR MA KING SUCH ADDITION WHICH AMOUNT TO ENHANCEMENT AS REQUIRED UN DER THE ACT. THE SAME NEEDS DELETION. 3.3 WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ISSUING DIRECTION TO RETAIN ADDITION OF RS. 1,60,00 0/-, CONSIDERING THE SAME AS GODOWN RENT EARNED BY THE A SSESSEE WITHOUT GIVING STATUTORY AND SPECIFIC NOTICE FOR MA KING SUCH ADDITION WHICH AMOUNT TO ENHANCEMENT AS REQUIRED UN DER THE ACT. THE SAME NEEDS RESTORATION TO THE LD. CIT(A) F OR ADOPTING JUDICIAL GUIDELINES. 4. TAKING INTO CONSIDERATION THE LEGAL, STATUTORY, FACTUAL AND ADMINISTRATIVE ASPECTS, NO ADDITION OF EACH OF THE ABOVE ITEMS MENTIONED AT PARAGRAPHS 1.1 TO 1.3, 2.1 TO 2.3 AND 3.1 TO 3.3 OUGHT TO HAVE BEEN DIRECTED TO RETAIN. THE ADDITION S NEED DELETION. 5. WITHOUT PREJUDICE, THE ASSESSMENT MADE BEING BAD IN LAW DESERVES ANNULMENT. 6. WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND R EASONABLE OPPORTUNITY HAS BEEN PROVIDED. THE ASSESSMENT NEEDS ANNULMENT. 7. WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN L AW IN FACTS IN NOT INQUIRING THE MATTER NOR GOING INTO DEPTH AND H AS ERRED IN ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 4 ISSUING DIRECTION FOR RETAINING SUCH HUGE ADDITIONS AS STATED ABOVE. THE ASSESSMENT BASED ON IRRELEVANT STATEMENT AND ILLEGAL EVIDENCES NEEDS ANNULMENT. 8. WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN L AW IN FACTS IN NOT CONSIDERING THAT THE ASSESSEE HAS NEVER MADE AN Y STATEMENT BEFORE THE A.D.I. AND STATEMENT OF HIS BR OTHER WAS NOT BINDING TO HIM. THE ASSESSMENT BASED ON IRRELEV ANT STATEMENT AND ILLEGAL EVIDENCES NEEDS ANNULMENT. 9. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AN D/OR SUBSTITUTE ANY OR ALL GROUND OF APPEAL BEFORE THE A CTUAL HEARING TAKES PLACE. 2 . BRIEFLY THE FACTS ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 2 ND JUNE, 2005 DECLARING INCOME OF RS. 19,174/-. THIS RETURN STOOD PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 (HEREINA FTER REFERRED AS THE ACT). SUBSEQUENT THERETO A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 12/3/2010. THIS NOTICE WAS SERVED ON 19/3/2010 TO THE ASSESSEE . THE REASONS RECORDED FOR REOPENING THE CASE ARE AS UNDER:- IN THIS CASE, THE ACIT, CENTRAL CIRCLE-2, RAJKOT V IDE HIS LETTER NO. ACIT/CC-2/TRANSFER/09-10 DATED 14-7-2009 HAS FORWA RDED RETENTION FOLDER OF SHRI RAMESH GORDHANBHAI HIRANI. IN HIS ST ATEMENT RECORDED U/S 131 DATED 28/7/2006 BY ADIT (INV.)-1, RAJKOT SH RI SURESH G. HIRANI HAS STATED ON OATH THAT HE HAD MADE INVESTME NT IN 100 LAND PLOT LOCATED IN RAJKOT AT GURUDEV PARK, KUVADVA RO AD IN FY 2004- 05 AND HE HAS ALSO SOLD 50 PLOTS (OUT OF PLOTS PURC HASED IN FY 2004- 05) IN FY 2005-06 WHICH REQUIRES EXAMINATION AND HE NCE THIS CASE, NEEDS TO BE REOPENED FOR FY 2004-05 AND 2005-06 REL EVANT TO AY 2005-06 AND 2006-07. IN THE RETURN OF INCOME FILED BY HIM FOR AY 2005-06 AND 2006-07, HE HAS SHOWN CONSTRUCTION LABO UR INCOME OF RS. 95,310/- AND RS. 1,14,630/- RESPECTIVELY. HENCE , IT SEEMS THERE IS AN UNDERSTATEMENT OF INCOME IN RETURN OF INCOME AND HENCE ACTION U/S 147 OF THE IT ACT IS REQUIRED. I AM SATISFIED T HAT ACTION U/S 147 IS REQUIRED. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE OUTRIGHTLY DENIED THE ADMISSION MADE IN THE STATEME NT RECORDED DURING SURVEY. THE ASSESSEE ALSO FILED AN AFFIDAVIT DATED 22/11/2010 ALONGWITH WRITTEN SUBMISSIONS ON 25/11/2010. THE ASSESSING OF FICER, HOWEVER, DID NOT ALLOW RETRACTION AS IT WAS A CLEAR VOLUNTARY AD MISSION MADE ON OATH ON 28/7/2006 WHEN ALMOST FOUR YEARS HAVE PASSED. BASED ON HIS ADMISSION, ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 5 THE ASSESSING OFFICER COMPUTED THE BUSINESS INCOME OF ASSESSEE AT RS. 93,75,000/- AS UNDER:- 1. PROFIT ON SALE OF PLOT AT GURUDEV PARK= NO.OF PLOTS X AREA X SALE PRICE-NO. OF PLOTS X ARE A X PURCHASE PRICE= [50X125X4000]-[50X125X3500]= RS. 31,25,000/- ADD:- PROFIT ON SALE OF REMAINING PLOTS (ON PROTEC TIVE BASIS) [50X125X4000]-[50X125X3500]= RS. 31,25,000/- 2. PROFIT ON SALE OF PLOTS AT JAI GURUDEV PARK [50X125X4000]-[50X125X3500]= RS. 31,25,000/- TOTAL BUSINESS INCOME DISCLOSED RS. 93,75,000/- ADD:- INCOME AS PER RETURN RS. 19,174/- THUS THE TOTAL TAXABLE INCOME OF THE ASSESSEE FOR AY 2005-06 IS RS. 93,94,174/- 3 . IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE MAD E ELABORATE SUBMISSIONS AND ALSO LAID ON HIS RECORD COPY OF AFF IDAVIT AND DOCUMENTS, THAT WERE AVAILABLE BEFORE THE ASSESSING OFFICER A LSO. IT WAS CLAIMED THAT IN THE STATEMENT RECORDED IN SURVEY PROCEEDINGS, TH E ASSESSEE NOWHERE STATED THAT HE HIMSELF HAS SOLD AND PURCHASED PLOTS OF LAND. IT WAS CATEGORICALLY AFFIRMED THAT THERE IS NO MATERIAL ON RECORD WITH THE ASSESSING OFFICER TO SAY THAT THE ASSESSEE HAS MADE ANY INVESTMENT OR CARRIED ANY BUSINESS IN PURCHASE AND SALE OF THESE PLOTS UNDER CONSIDERATION. THE ASSESSEE ONLY CARRIED OUT ACTIVI TY OF SALE AND PURCHASE ON BROKERAGE BASIS AND THE AFFIDAVIT DATED 25/11/20 10 REFERRING TO THE SALE OF PLOTS MENTIONED IN THE SEIZED DIARY, HAS GIVEN I NCOME OF RS. 25 TO 40 PER SQ.YARD ONLY AS BROKERAGE ON DEALING OF SUCH LA ND. 3.1 THE LD. CIT(A) AFTER TAKING REPORT FROM THE ASSESS ING OFFICER, FOUND THAT SEIZED DIARY AND STATEMENT WERE PROVIDED TO TH E ASSESSEE ONLY DURING THE COURSE OF ASSESSMENT AND AS SUCH, THE ASSESSEE HAD MADE A VALID RETRACTION AT THE EARLIEST TIME AVAILABLE TO HIM. T HE ASSESSING OFFICER RELIED ON THE POCKET DIARY SEIZED DURING THE SURVEY, THIS DIARY, ONLY REVEAL THAT APPELLANT HAD COLLECTED THE ADVANCE FROM PROSPECTIV E BUYERS AND THEN PAID CASH TO THE LAND OWNERS. THERE ARE ONLY A FEW PAYMENTS TO LAND OWNERS AND ALSO TO SHRI MANOHAR SINGH JADEJA, WHOSE NAME IS APPEARING ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 6 IN THE DIARY BUT ALL SUCH PAYMENTS HAVE BEEN MADE A FTER RECEIVING THE SALE PROCEEDS FROM THE SALE OF PLOTS OF LAND IN THE PERI OD NOVEMBER, 2005 TO JULY, 2006. HE FOUND THAT EXCEPT FOR THE PAYMENT OF RS. 15 LACS AS LOAN TO SHRI JILABHAI BHARVAD ON 23/12/2005, WHICH IS APPEA RING IN DIARY AT PAGE 72, ALL OTHER PAYMENTS TO THE LAND OWNERS WERE MADE BY THE APPELLANT OUT OF CASH AVAILABLE TO HIM AS PER THE SEIZED DIARY FR OM THE SALE PROCEEDS COLLECTED PRIOR TO SUCH PAYMENTS. HE, THEREFORE, DE TERMINED UNEXPLAINED APPLICATION OF CASH FROM THE DIARY AT RS. 3,64,000 AS UNDER:- DIARY PG. NO. DATE PAYMENT RECEIPT NARRATION PARTICULARS/EXPLANATIONS BALANCE 4 30/11/2005 100000 BLOCK NO. 3 RECEIVED PLOT BLOCK NO. 3 TOKEN AMOUNT FROM SHRI BABUBHAI RAMANI 100000 4 30/11/2005 51000 RECEIVED JAY GURUDEV- 2 PLOT TOKEN AMOUNT FROM SHRI MANSUKHBAHI 151000 3 01/12/2005 70000 RECEIVED JAY GURUDEV PLOT TOKEN AMOUNT FROM SHRI JAYANTIBHAI GARAGE HONDAWALAI 221000 4 06/12/2005 40000 GODOWN RENT RECEIVED RENT HAWALA AMOUNT FROM SHRI GORDHANBHAI FOR NAVAGAM GODOWN-1 (10-11 MONTHS) 261000 6 06/12/2005 250000 BLOCK NO. 1 RECEIVED PLOTS SALE TOKEN AMOUNT FROM SHRI PRAKASH VALA 511000 71 06/12/2005 280000 RECEIVED PLOT TOKEN AMOUNT FROM SHRI MANUBHAI 791000 6 12/12/2005 20000 GODOWN RENT RECEIVED RENT HAWALA AMOUNT FOR NAVAGAM GODOWN-2 WHICH WAS EARLIER GIVEN AS LOAN TO SOMEONE. 811000 7 13/12/2005 25000 RECEIVED TOKEN AMOUNT FROM SHRI RAMJI BHAGAT 836000 6 14/12/2005 200000 RECEIVED TWO PLOTS SALE TOKEN AMOUNT FROM SHRI BATUK SOJITA 1036000 7 16/12/2005 100000 RECEIVED PLOT SALE TOKEN AMOUNT FROM SHRI BHARATBHAI. 1136000 72 23/12/2005 1500000 GIVEN AMOUNT OF RS. 15 LACS AS LOAN IN CASH TO SHRI JILABHAI BHARVAD ON 23/12/2005 -364000 THE LD. CIT(A) TREATED THE SAME AS INCOME OF THE A SSESSEE. ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 7 3.2 THE LD. CIT(A) ALSO FOUND THAT THE ASSESSEE IN HI S AFFIDAVIT DATED 25/11/2010 ADMITTED THAT IN THE ASSESSEES DIARY, T HE AMOUNTS OF SALE OF PLOTS RECEIVED BY HIM HAVE BEEN ENTERED. IN THE SAM E AFFIDAVIT, ASSESSEE HAS ALSO STATED THAT HE HAS EARNED COMMISSION BETWE EN 25 TO 40 PER SQ YARD IN THE SALE OF SUCH LAND. THE LD. CIT(A), HOWE VER, DID NOT FIND ANY MENTION OF RECEIPT OF BROKERAGE IN THE SEIZED DIARY . HE, THEREFORE, REQUIRED THE ASSESSING OFFICER TO EXAMINE THE APPELLANT ON H IS ISSUE. THE APPELLANT DID NOT PRESENT HIMSELF FOR EXAMINATION BEFORE THE ASSESSING OFFICER. THE LD. CIT(A), THEREFORE, DID NOT ACCEPT THE EARNING O F BROKERAGE BY THE ASSESSEE AS THERE WAS NO SUPPORTING EVIDENCE ON REC ORD IN THIS REGARD. 3.3 . THE LD. CIT(A) FOUND THAT DIARY SHOWS THAT THE APPELLANT HAS COLLECTED SALE PROCEEDS FROM THE PROSPECTIVE BUYERS OF THE PLOTS OF LAND AND HAS SUBSEQUENTLY PASSED ON PART OF THAT MONEY T O THE OWNERS OF THE LAND. THE APPELLANT HAD NAMED ONE PERSON SHRI HIREN BHAI CHANDUBHAI KAPADIA IN HIS AFFIDAVIT AS THE OWNER OF THE LAND. THIS PERSON WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER IN REMAND PRO CEEDINGS NOR BEFORE THE LD. CIT(A). AFTER APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CT(A) ALLOWED THE DEDUCTION OF THE AM OUNT PASSED ON BY THE ASSESSEE TO THE OWNERS OF LAND AS APPEARING IN THE DIARY AND CALCULATED EXCESS OF CASH COLLECTED FROM PROSPECTIVE BUYERS AN D WORKED OUT EXCESS AMOUNT OF RECEIPTS PERTAINING TO THE YEAR UNDER CON SIDERATION AT RS. 73,27,500/-. HE ALSO FOUND THAT THE APPELLANT HAD E ARNED GODOWN RENT OF RS. 1,60,000/- IN FINANCIAL YEAR 2005-06 RELATABLE TO THE YEAR UNDER CONSIDERATION. THE DIARY ALSO REVEALS THAT THERE WE RE RECEIPTS OF RS. 1,41,84,500/- IN THE SUBSEQUENT YEAR I.E. F.Y. 2006 -07 RELEVANT TO A.Y. 2007-08 AS PER ENTRIES APPEARING IN THE DIARY AND T HE APPELLANT HAD PAID RS. 65 LACS TO THE OWNERS OF THE LAND IN THAT YEAR. THERE WAS, THUS, EXCESS OF SALE OVER PURCHASE OF LAND BY RS. 1,50,12,500/- I.E. RS. 73,27,500 + RS. 1,41,84,500 (-) RS. 65,00,000 = RS. 1,50,12,000/- I N TWO YEARS. HE THEN ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 8 CONSIDERED IT APPROPRIATE TO DIVIDE THE OVERALL EXC ESS OF RS. 1,41,84,500/- IN TWO FINANCIAL YEARS ON THE BASIS OF SALE TURNOVE R FOR THE PURPOSE OF MERCANTILE METHOD OF ACCOUNTING IN BOTH THE YEARS I .E. A.Y. 2005-06 AND 2006-07 IN THE RATIO OF RS. 73,27,500 : 1,41,84,500 (OR 34:66) AND THUS WORKED OUT AN AMOUNT OF RS. 51,04,080/- IN EXCESS O F SALE AND PURCHASE OF PLOTS OF LAND AND SUSTAINED THE ADDITION AS INCO ME THEREOF OVER AND ABOVE THE ADDITION OF RS. 1,60,000/- ON ACCOUNT OF GODOWN RENT. 4 . THE LD. D.R. CONTENDS THAT THE ASSESSEE IN HIS ST ATEMENT RECORDED DURING THE SURVEY HAS ADMITTED OF SALE AND PURCHASE OF PLOTS AND THE ASSESSING OFFICER BROUGHT TO TAX THE ENTIRE INCOME ON THAT BASIS TO TAX IN THE YEAR UNDER CONSIDERATION INCLUDING RS. 31,25,00 0/- ADDED ON PROTECTIVE BASIS DURING THIS YEAR, THOUGH THE TRANSACTIONS OF THE SAME REFLECTED IN THE DIARY WERE OF A SUBSEQUENT YEAR. THE LD. CIT(A), HO WEVER, ALLOCATED THE SALE IN TWO YEARS WITHOUT ANY RATIONAL AND RESTRICT ED ADDITION TO RS. 51,04,080/- ONLY WITHOUT ANY REASONABLE BASIS. IT H AS, THEREFORE, BEEN CONTENDED THAT THE ORDER OF THE LD. CIT(A) NEEDS TO BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 5 . ON THE OTHER HAND, SHRI D.R. ADHIA, LEARNED COUNS EL FOR THE ASSESSEE ASSAILING THE IMPUGNED ORDER, CONTENDS THA T THE LD. CIT(A) IS NOT JUSTIFIED IN REACHING THE CONCLUSION THAT THE ASSES SEE HAS EARNED PROFIT IN SALE AND PURCHASE OF PLOTS WHEREAS THE ASSESSEES C LAIM THROUGH THE AFFIDAVIT FILED IS THAT HE HAS CARRIED OUT SUCH ACT IVITY ON BROKERAGE BASIS ONLY. THE ASSESSEE HAS ALSO STATED THAT THE LAND BE LONGS TO SHRI HIRENBHAI CHANDUBHAI KAPADIA BUT THE DEPARTMENT DID NOT DISPR OVE THE CLAIM MADE BY THE APPELLANT. THE LAND DID NOT BELONG TO THE AS SESSEE. IT CANNOT BE SAID THAT THE SALE PROCEEDS ALSO BELONG TO HIM. THE ASSESSEE ONLY COLLECTED SALE PROCEEDS ON BEHALF OF THE OWNER OF T HE LAND AND NOT AS HIS OWN MONEY. IT, THEREFORE, IS WRONG TO HOLD THAT THE ASSESSEE AFTER COLLECTING THE MONEY, HAS MADE PAYMENT TOWARDS PURCHASE OF LAN D FOR HIMSELF. AT ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 9 BEST ONLY, BROKERAGE INCOME COULD HAVE BEEN BROUGHT TO TAX IN HIS HANDS. EVEN OTHERWISE, THERE IS NO RATIONAL IN THE WORKING OUT THE EXCESS AS THE LD. CIT(A) HIMSELF ADMITS AND IMPOUNDED DOCUMENT RE VEALS THAT THE ADVANCES RECEIVED AND PAYMENTS MADE WERE ONLY AS PA YMENTS IN ACCOUNT AND NOT THAT THE TRANSACTIONS OF SALE AND PURCHASE ARE CONCLUDED DURING THE YEAR UNDER CONSIDERATION. THE AFFIDAVIT OF THE ASSESSEE HAS NOT BEEN REJECTED. EVEN THOUGH, THE ASSESSEE DID NOT PRESENT HIMSELF BEFORE THE ASSESSING OFFICER, THE LD. CIT(A) HIMSELF DID NOT C AUSE ENQUIRY NOR REQUIRE THE ASSESSEE TO FURNISH EVIDENCE IN SUPPORT OF HIS AFFIDAVIT. THE ASSESSEE, THEREFORE HAD REASONABLE PRESUMPTION THAT WHATEVER HE HAS STATED IN THE AFFIDAVIT STAND ADMITTED. THERE WERE THUS NO JUSTIF ICATION IN WORKING OUT THE SURPLUS OF RS. 51,04,080/- AND TREATING THE SAME AS INCOME OF THE YEAR UNDER CONSIDERATION. THE POCKET DIARY FOUND IS ALSO NOT A SYSTEMATIC CASH BOOK AND DOES NOT CONTAIN ALL THE TRANSACTIONS OF C ASH ACCOUNT. THUS ADDITION SUSTAINED ALSO ARE REQUIRED TO BE DELETED. 6 . WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE LD. CIT(A) FOUND THAT THE ASSESSEE WAS PROVIDED WITH CO PY OF STATEMENT ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE REFORE, HE HAD NO EARLIER OPPORTUNITY TO RETRACT HIS STATEMENT TAKEN DURING THE SURVEY AND HE DID NOT KNOW AS TO HOW THE STATEMENT WAS TO BE USED AGAINST HIM ON ANY EARLIER OCCASION. HE, THEREFORE, FOUND NO FAULT IN THE TIMING OF RETRACTION OF STATEMENT BY THE ASSESSEE. THE ISSUE OF RETRACTION OF STATEMENT HAS NOT BEEN ASSAILED BY THE REVENUE IN APPEAL. THE LD. CIT (A) HAS FOUND THAT THE DIARY SHOWS THAT THE ASSESSEE HAS COLLECTED SAL E PROCEEDS FROM THE PROSPECTIVE BUYERS OF THE PLOTS OF LAND AND THEREAF TER SUBSEQUENTLY PASSED ON PART OF COLLECTIONS TO THE OWNERS OF THE LAND. T HIS FINDING OF FACT HAS BEEN ADMITTED BY THE REVENUE AND NO CONTRARY MATERI AL IN THIS REGARD HAS BEEN LAID ON RECORD NOR BROUGHT TO OUR NOTICE. THE POCKET DIARY FOUND DURING THE COURSE OF SURVEY AND IMPOUNDED BY THE IN COME TAX ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 10 DEPARTMENT IS NOT A SYSTEMATIC CASH ACCOUNT OF THE ASSESSEE. THERE IS NO PLEA BY REVENUE THAT THE POCKET DIARY FOUND DURING SURVEY IS A CASH BOOK MAINTAINED BY ASSESSEE IN REGULAR COURSE OF BUSINES S NOR THAT IT GIVES A CORRECT AND RELIABLE CASH ACCOUNT OF BUSINESS OF AS SESSEE. THE LD. CIT(A) HIMSELF HAS ALSO FOUND THAT THE RECEIPTS AND PAYMEN TS PERTAIN TO TWO DIFFERENT YEARS I.E. F.Y. 2005-06 RELEVANT TO A.Y. 2006-07 UNDER APPEAL AND F.Y 2006-07 RELEVANT TO A.Y 2007-08, WHICH IS NOT T HE YEAR UNDER APPEAL. OUT OF THE TOTAL RECEIPTS, AN AMOUNT OF RS. 1,41,84 ,500/- IS FOUND ATTRIBUTABLE TO THE SUBSEQUENT YEAR. THE LD. CIT(A) FOUND THAT ONLY AN AMOUNT OF RS. 73,27,500/- IS THE EXCESS OF THE RECE IPTS OVER PAYMENTS MADE BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATIO N AND THEREAFTER HE WORKED OUT THE SURPLUS OF SALE OVER PURCHASE ON THE BASIS OF THESE TWO YEARS SURPLUS ON PROPORTIONATE BASIS AND TREATED RS . 51,04,080/- AS INCOME FOR THE YEAR UNDER CONSIDERATION. SUCH A BAS IS ADOPTED BY THE LD. CIT(A) DO NOT HAVE ANY RATIONAL NOR IS ACTUAL EARNI NG OF INCOME BY THE ASSESSEE. EVEN THE PLOT-WISE CALCULATIONS OF RECEIP TS AND PAYMENTS HAS NOT BEEN MADE BY HIM. IT HAS NOT BEEN BROUGHT ON R ECORD AS TO HOW THE SURPLUS ARISING ON OTHERS LAND COULD BE TREATED AS INCOME AS THE TRANSACTION IN THE POCKET DIARY WERE BY ITSELF NOT A SYSTEMATIC CASH ACCOUNT OF RECEIPT AND PAYMENT OF THE APPELLANT. SUCH SURPL US WORKED OUT, THEREFORE, DID NOT CONSTITUTE INCOME OF THE ASSESSE E, MORE PARTICULARLY WHEN THE LD. CIT(A) NOR THE REVENUE AUTHORITIES BRO UGHT ON RECORD ANY MATERIAL TO SHOW THAT THE TRANSACTION OF SALE AND P URCHASE STAND CONCLUDED DURING THE YEAR UNDER CONSIDERATION. ADMITTEDLY WHE N THE ADVANCES ONLY HAVE BEEN RECEIVED AGAINST SALES, THE SAME DO NOT C ONSTITUTE INCOME OF THE ASSESSEE AS HAS ALSO BEEN HELD BY THE HONBLE R AJASTHAN HIGH COURT IN THE CASE OF CIT VS. VINAY PRATAP SINGH (2012) 34 6 ITR 83 (RAJ.). ON THE OTHER HAND, THE ASSESSEE HAS DEPOSED IN HIS AFF IDAVIT THAT HE WAS ACTING ONLY AS A BROKER AND CLAIMED TO HAVE EARNED BROKERAGE INCOME ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 11 THEREFROM. THIS AFFIDAVIT HAS NOT BEEN REJECTED NOR ASSESSEE WAS CALLED UPON TO SUPPORT THIS CLAIM. REAL INCOME ON SALE AND PURCHASE OF PLOTS AS HAS ALSO BEEN STATED BY THE ASSESSEE-APPELLANT, BEL ONGS TO SOME OTHER PERSONS. THIS FACT, THEREFORE, SHALL BE FOUND FOR B RINGING THE REAL INCOME TO TAX IN THE HANDS OF THE PERSONS TO WHOM IT REALLY B ELONGS AS THE APPELLANT IN HIS AFFIDAVIT HAS IDENTIFIED THE OWNER AND NAMES OF THE BUYERS, ARE BORNE OUT IN THE IMPOUNDED DIARY. IN THE PECULIAR FACTS A ND WHEN THE TRANSACTION OF SALE AND PURCHASE OF PLOTS IS ALSO NOT FOUND CON CLUDED DURING THE YEAR UNDER CONSIDERATION, NO PROFIT THEREON CAN BE SAID TO HAVE ACCRUED OR ARISEN TO THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION. THE DEPARTMENT SHALL BE AT LIBERTY TO BRING TO TAX ANY PROFIT OR INCOME ON ACCOUNT OF SUCH TRANSACTIONS ONLY WHEN THEY ARE FOU ND CONCLUDED. THE ADDITION SUSTAINED ON IRRELEVANT CONSIDERATION FOR RS. 51,04,080/-, IS THEREFORE, DIRECTED TO BE DELETED AND AS A CONSEQUE NCE, THE GROUND RAISED IN APPEAL BY REVENUE BEING DEVOID OF ANY MERIT, STA NDS REJECTED AND ASSESSEES GROUND NO. 2 IN APPEAL STANDS ALLOWED. 7 . IN GROUND NO. 1 IN APPEAL, THE ASSESSEE HAS ASSAI LED ADDITION OF RS. 3,64,000/- ON ACCOUNT OF UNEXPLAINED SOURCE OF CASH . 8. HAVING HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND AS HAS ALSO BEEN FOUND BY THIS TRIBUNAL HEREINBEFORE IN TH E EARLIER GROUNDS THAT THE POCKET DIARY FOUND AND IMPOUNDED DURING THE COU RSE OF SURVEY WAS NOT A SYSTEMATIC CASH ACCOUNT, IT CANNOT BE INFERRED TH AT THE SHORTAGE OF CASH OF RS. 3,64,000/- ON A PARTICULAR DATE APPEARING TH E SAID DIARY WAS UNEXPLAINED CASH AVAILABLE WITH THE ASSESSEE. IT WA S THE BOUNDEN DUTY OF THE LD. CIT(A) TO HAVE PUT THE ASSESSEE TO NOTICE I N THAT REGARD AND SOUGHT EXPLANATION FROM HIM. THIS, HOWEVER, HAS NOT BEEN D ONE. WE, THEREFORE, SET ASIDE THIS ADDITION AND REMIT THE MATTER BACK T O THE ASSESSING OFFICER FOR AFFORDING OPPORTUNITY TO THE ASSESSEE TO ENABLE HIM TO SET OUT HIS CASE AND THEREAFTER TAKE DECISION IN THAT REGARD IN ACCO RDANCE WITH LAW. ITA582 & 652/RJT/2012 & C.O. 47/RJT./2012 12 9. IN GROUND NO. 3, THE ASSESSEE HAS ASSAILED SUSTENA NCE OF ADDITION OF RS. 1,60,000/- ON ACCOUNT OF ENTRIES OF GODOWN R ENT. 10. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD . THE IMPOUNDED DIARY REVEAL ENTRIES OF GODOWN RENT IN THE IMPOUNDE D DIARY. THE RENT IS IN THE NATURE OF INCOME. THE ASSESSEE IS NOT FOUND TO HAVE DENIED THE CORRECTNESS OF THIS ENTRY. WE, THEREFORE, DO NOT FI ND ANY MERIT IN SUSTENANCE OF ADDITION THEREOF AS INCOME OF THE ASS ESSEE. GROUND NO. 3 IN APPEAL STANDS REJECTED. 11. ALL OTHER GROUNDS RAISED IN APPEAL BY ASSESSEE AND ALSO IN THE CROSS OBJECTION STAND COVERED BY THE AFORESAID ORDER AND AS SUCH NO SPECIFIC DECISION THERETO HIS REQUIRED TO BE GIVEN. THE SAME ACCORDINGLY STANDS DISPOSED OF. 12. IN THE RESULT, APPEAL BY REVENUE STANDS DISMISSED AND CROSS APPEAL BY ASSESSEE STANDS PARTLY ALLOWED. THE CROSS OBJECT ION BY ASSESSEE BECOMES INFRUCTUOUS, THE SAME STAND DISMISSED ACCOR DINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 10/01/2014. SD/- SD/- ( T. K. SHARMA ) ( B. R. JAIN ) '* /JUDICIAL MEMBER #( '* / ACCOUNTANT MEMBER *#+ ,*-/ ORDER DATE 10/01/2014 /RAJKOT *RANJAN / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- THE I.T.O., WARD 2(3), RAJKOT. 2. /RESPONDENT- (I) RAMESH GORDHANBHAI HIRANI, RAJKOT . (II) THE A.C.I.T., CIRCLE-2, RAJKOT 3. '-2- % & 3% / CIT-I, RAJKOT. 4. & 3%- / CIT (A)-III, RAJKOT. 5. 789 % , , / DR, ITAT, RAJKOT 6. 9; <= / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.