C I T JAIPUR V. M/S PINKCITY BUILDERS

ITA/279/2009

AI Insights

The case involves two appeals by the Commissioner of Income Tax against M/s Pinkcity Builders concerning alleged undisclosed investments in real estate. The primary legal questions revolved around the justification for the deletion of additions made by the tax authorities, which were challenged in the tribunal and subsequently in the High Court. The tribunal had earlier dismissed the department's appeal and allowed the assessee's appeal, leading to the current proceedings. The High Court's decision focused on the adequacy of evidence presented by the tax authorities and the legal principles governing such assessments.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 768864 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 18-07-2017
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANDEEP TANEJA
• Assessee Lawyers: ANUROOP SINGHI; ADITYA VIJAY
• Keywords: Block assessment; Cross Examination; Cross-examination; Income Tax; Undisclosed investment; Property Dealer
• Section: 45D(4)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 279 / 2009 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus 1. M/s Pinkcity Builders, H-56, Hawa Sarak, Civil Lines, Jaipur Through Partners:- 2. Smt. Vijay Kanwar Lodha (Deceased) 3. Shri Ummaid Singh Lodha S/o Late Shri B.N. Lodha, R/o- A- 110, Atrey Path, Shyam Nagar, Ajmer Road, Jaipur. 4. Smt. Neelam Lodha W/o Shri Ranveer Singh Lodha, R/o -75, Gaurav Nagar, Civil Lines, Jaipur. ----Respondents Connected With D.B. Income Tax Appeal No. 144 / 2011 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus 1. M/s Pinkcity Builders, H-56, Hawa Sarak, Civil Lines, Jaipur Through Partners:- 2. Smt. Vijay Kanwar Lodha (Deceased) 3. Shri Ummaid Singh Lodha S/o Late Shri B.N. Lodha, R/o- A- 110, Atrey Path, Shyam Nagar, Ajmer Road, Jaipur. 4. Smt. Neelam Lodha W/o Shri Ranveer Singh Lodha, R/o - 75, Gaurav Nagar, Civil Lines, Jaipur. ----Respondents _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Sandeep Taneja _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH (2 of 5) [ITA-279/2009] Judgment 18/07/2017 1. In both these appeals common question of law and facts are involved, they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeal of the department and allowed the appeal of the assessee. 3. This court while admitting the appeals framed the following substantial question of law:- 3.1 Appeal No.279/2009 admitted on 6.4.2009 “1. Whether on the facts and circumstances of the case, the Tribunal was justified in deleting the entire addition of Rs.25,91,306/- made on account of undisclosed investment of the assessee in plot located at Shyam Nagar, Jaipur by ignoring the deposition of the property dealer? 2. Whether the Tribunal was justified in deleting the addition of Rs.40,41,131/- made on account of undisclosed investment in land at Nityanand Nagar, Queens Road, Jaipur?” 3.2 Appeal No.144/2011 admitted on 4.10.2012 “Whether on the facts & circumstances of the case, the Tribunal was justified in deleting the entire addition of Rs.25,91,306/- made on account of undisclosed investment of the assessee in plot located at Shyam Nagar, Jaipur by ignoring the deposition of the property dealer?” (3 of 5) [ITA-279/2009] 4. Counsel for the appellant has taken us to the order of the tribunal as well as CIT(A) and contended that the view taken by the tribunal is contrary to law and the appeal deserves to be allowed. 4.1 He further contended that the addition of Rs.40,41,131/- was also deleted from the account of the assessee as M/s Lodha Builders. 5. We have heard counsel for the parties. 6. Before proceeding with the matter, we may observe that on issue no.1 while considering the addition of Rs.25,91,306/-, the tribunal has observed as under:- “In our view the ld. CIT(A) was not justified in relying upon the statements of Sh. Ashok Jain that the plot in question was purchased through him at Rs.10 lac without appreciating that no opportunity of cross examination of Sh. Ashok Jain was afforded to the assessee and further that the AO in the block assessment of Mrs. Neelam Lodha had himself come to the conclusion that Mrs. Neelam Lodha was absolute owner of the plot. It is also worth nothing that when Mrs. Neelam Lodha during the course of search taken place on 16.11.1999 was found by the A.O. in the process of transfer of said plot, he was not justified in holding that the assessee firm had made profit of Rs.25,91,306/- in the period relevant to A.Y. 1997-98. Admittedly, no document was found or noticed during the course of search for any investment by the assessee firm hence, simply on the basis that the initial investments and some construction of skeleton house were made by the assessee firm, such huge unjustified addition cannot be made in the hands of the assessee. So far as investment in construction in the house on the plot by the assessee is concerned, it was submitted that investment was appearing in its books of accounts. This (4 of 5) [ITA-279/2009] skeleton house was allotted to Mrs. Vijay Kanwar Lodha on 31.3.1996 against her capital and thereafter it was bequeathed to Sh. Sajjan Singh Lodha vide her Will dated 12.9.2001. Considering all these material facts we are of the view that there was no any occasion before the A.O. and ld. CIT(A) to make any addition in question. We thus, while setting aside orders of the lower authorities on the issue direct to delete the addition sustained by the ld. CIT(A) at Rs.19,45,000/- on account of presumed investment+capital gain u/s 45D(4) of the Act in respect of property in question by estimating its market price at Rs.20 lac without any basis available to them that too in a case of block assessment. The ground no.1 of the appeal preferred by the revenue is thus rejected and that of the assessee is allowed.” 6.1 On the other issue, the tribunal in para no.10 & 11 held as under:- “The ld. AR at the outset of hearing has pointed out that the assessee firm had advanced Rs.1,50,000/- for the plot but it was pruchased by M/s Lodha Builders. The addition for the property at 2, Nityanand Nagar, Jaipur was considered by the AO as well as ld. CIT(A) in the hands of M/s Lodha Builders. Now the issue stands finally concluded by the decision of Jaipur Bench of the Tribunal in IT (SS) A. Nos.1 & 7/JP/2005 dated 28.9.2007 vide para no.19 of the order in the case of M/s Lodha Builders for the block period 1.4.1989 to 16.11.1999. He submitted further that advance of Rs.1.5 lac made by the assessee firm is now bad debts as no amount was returned back to it. Considering the above aspect of the matter we are of the view that the ld. CIT(A has rightly deleted the addition on the basis that the entire addition has been considered in the case of M/s Lodha Builders. The first appellate order on the issue is thus upheld. Ground no.2 is thus rejected.” (5 of 5) [ITA-279/2009] 7. It is made clear that the upheld judgment in the case of M/s Lodha Builders will not preclude the department to argue other matter of Lodha Builders. For the present case, the addition of the amount was rightly deleted from the account of the assessee. 8. In view of the above, the issues are answered in favour of the assessee and against the department. 9. The appeals stand dismissed. A copy of this judgment be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Brijesh 43-44. "