HETAL BRIJESH UKANI,AHMEDABAD V. .ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), SURAT

ITA 156/SRT/2023

AI Insights

The case involves Hetal Brijesh Ukani, the legal heir of Brijesh P. Ukani, who appealed against the order of the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals) confirming the addition of Rs. 76.51 lacs as unexplained investment under Section 69 of the Income Tax Act. The addition was based on a draft Satakhat found during a survey at the office of Turnish B Kania, which was not signed or executed. The Tribunal examined the validity of the reopening of the assessment and the merit of the addition, ultimately finding in favor of the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473438 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2023
• Other Referred Cases: Peass Industrial Engineers (P) Ltd. Vs DCIT, Kalpesh Mafatlal Patel Vs DCIT, PCIT Vs Shaileshkumar Ramachandra Shah, Rajubhai Jalabhai Bhadiyadara, Mukesh Agarwal, Alpesh Babubhai Panchal Vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Reassessment proceedings; Unexplained investment; Principle of natural justice
• Section: 147; 148; 143(3); 142(1); 143(1); 271(1)(c); 48; 69; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No. 156/Srt/2023 (Assessment Year: 2008-09) (Hybrid hearing) Hetal Brijesh Ukani, C/o-Harsha Engineers Limited, Sarkhej Bavla Road, Changodar, Ahmedabad-382213 (Gujarat). PAN No. AFXPS 5808 L Vs. A.C.I.T., Circle-1(1)(1), Surat, 108 Ayakar Bhavan, Majura Gate, Surat-395001. Appellant/ Assessee Respondent/ Revenue Assessee represented by Shri Mohit Balani, Advocate Department represented by Shri Mukesh Jain, Sr.DR Date of hearing 30/10/2024 Date of pronouncement 09/12/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Hetal Brijesh Ukani, being legal heir of Brijesh P Ukani, is directed against the order of the National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] dated 02/02/2023 for the Assessment Year (AY) 2008-09. Following grounds of appeal have been raised by the assessee. “1. The learned CIT(A) has erred in law and on facts in confirming the action of the ld. AO in assuming jurisdiction to pass such order against the Appellant. In the facts and circumstances of the case, that order passed by the ld. AO is void ab initio and it deserves to be set aside. 2. Alternatively and without prejudice to the above, the learned CIT(A) has erred in law and on facts in confirming the action of the ld. AO in reopening the assessment u/s 147 of the Act. 3. The learned CIT(A) has erred in law and on facts in confirming the action of the ld. AO in adding Rs. 76,51,000/- on account of alleged unexplained investments of Late Shri Brijest P. Ukani u/s 69 of the Act in the hands of the appellant. 4. Alternatively and without prejudice, the learned CIT(A) has erred in law and on facts in making the above addition in the hands of Appellant again leading ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 2 to double taxation. Since, such addition has already been done in the hands of Parshottambhai N. Ukani. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s 234A/B/C of the Act. 7. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in initiating penalty u/s 271(1)(c) of the Act. 8. The appellant craves leave to add, amend, alter, edit, delete, modify or changed all or any of the grounds of appeal at the time of or before the hearing of the appeal.” 2. Brief facts of the case are that the assessee (Brijesh P Ukani) had not filed return of income for A.Y. 2008-09. The case of assessee for A.Y. 2008-09 was reopened on the basis of information received from ACIT, Central Circle-4, Surat that the Investigation Wing, Surat carried out a search and survey action on builders and land dealers in Surat on 27/12/2022. During the course of search and survey action, a compact disc (CD) from the computer in the office of Mr. Turnish B Kaniya and Mrs. Meera T Kaniya was recovered. On perusal of data contained in said CD, it was found that there was various draft satakat in the computer of Turnish Kania. From one of the satakat it was revealed that the assessee Brijesh P Ukani had purchased a property situated at Revenue Survey No. 47, Gabhani, Surat for a consideration of Rs.76.51 lacs. The payment of sale consideration mentioned on the said Satakhat, was shown in cash. Brijesh P Ukani passed away in 2011, the assessee Hetal Brijesh Ukani being his wife and legal heir, who has contested assessment proceedings. The Assessing Officer, thus recording reasons of reopening that income of Brijesh P Ukani has escaped assessment. The ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 3 Assessing Officer issued notice under Section 148 of the Income Tax Act, 1961 (in short, the Act) dated 30/03/2015. Copy of reasons recorded were also provided to the appellant. On service of notice under Section 148, the appellant through her counsel informed the Assessing Officer that she has no knowledge about the transaction carried out by her husband. The appellant also informed that her husband was director in various companies. Names of such companies were also provided. On receipt of such letter, the Assessing Officer issued notice under Section 142(1) of the Act on 16/11/2024 asking the assessee to furnish the details of investment in immovable property during Financial Year 2008-09 by her husband, copy of return alongwith computation of income filed by her husband, copy of all bank statements which are linking to purchase a property, copy of purchase deed of property situated at survey No. 47, Gabhani, Surat and assessment order for A.Y. 2008-09, if any. The Assessing Officer in the said show cause notice, directed the appellant to attend his office on 26/11/2015. The Assessing Officer recorded that neither the appellant attended nor filed any written submission. The Assessing Officer issued final show cause notice dated 12/02/2016. Contents of such show cause notice are recorded on page 3 of assessment order, wherein the appellant was asked to make the compliance of earlier notice. The Assessing Officer noted that no reply was received by him. The Assessing Officer completed the assessment under Section 143(3) r.w.s. 147 of the Act on 08/03/2016 and made addition of Rs. 76.51 Crore under section 69A, on the basis of information received from ACIT, Central Circle, Surat. ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 4 3. Aggrieved by the additions in the assessment order, the appellant filed appeal before the ld. CIT(A). In the appeal, the appellant challenged the action of Assessing Officer in reopening as well as in making addition on account of unexplained investment. The appellant filed detailed written submission. Submission of appellant are recorded in para 4 at page No. 3 to 8 of impugned order. The appellant in her submission, submitted that the return of income was filed with ITO, Ward 6(3), Ahmedabad declaring income of Rs. 2,71,270/-. The return of income was processed under Section 143(1) of the Act. The Assessing Officer reopened the case on the basis of information from ACIT, Central Circle- 4, Surat that a CD was impounded from the office of Mr. Turnish B Kaniya and Mrs. Meera T Kaniya, wherein as per Satakhat, Late Brijesh P Ukani (her husband) purchased a property on a consideration of Rs. 76.51 lacs in cash. His case was reopened on the basis of Satakhat impounded from the premises of third party. The Assessing Officer misinterpreted the Satakhat and erroneously concluded that there was escapement of income. No physical copy of Satakhat was found from the office of Turnish B Kaniya. Survey was carried out under Section 133A on his premises on 27/12/2012 and from the data stored in his computer, a CD was prepared and impounded. Such Satakhat was unsinged and unregistered, it has no evidentiary value in the eyes of law, it could not have been used for reopening of the case. Satakhat contained the reference of 100 rupees stamp which was not found, which proved that the document was never executed. The deceased assessee has been shown as a sole purchaser in Satakhat while there are multiple purchasers in the final sale deed, hence, there is no question of ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 5 making any cash payment by deceased assessee alone. Final sale deed was executed on 31/03/2008 wherein there are four purchasers including deceased assessee. Thus, there is contradiction in the Satakhat and sale deed which shows Satakhat was never executed. In the sale deed dated 31/03/2008, there is no reference of Satakhat, the deceased assessee purchased the said property vide sale deed dated 31/03/2008 and there is no reference of satakat prior to execution of sale deed that any Satakhat was executed. As per the sale deed, total sale consideration is of Rs. 4,90,000/- which was fully paid. On the basis of such contention, the appellant stated that the Satakhat and the sale deed has no correlation. Draft Satakhat cannot be used for a reopening. It is a normal practice to use standard formats for documents for reference as and when similar document is to be drafted, only basic changes such as name of the parties, description of assets, dates and amounts are made and rest of the standard part remained untouched which saves substantial time in drafting the documents. Such Satakhat was unsinged and was retrieved only in soft copy from a CD. Such Satakhat was found in the office of a lawyer as it is a usual practice to retain such document for minor change for each of the client. A final sale deed is entirely different. Such Satakhat is merely a draft document cannot be a basis to make addition. There is no trace of cash payment in excess of the amount shown in the registered document. The appellant also relied on various case laws. 4. The ld. CIT(A) on considering the submission of assessee, upheld the action of Assessing Officer in reopening by taking a view that in this case, information was found during the survey operation that there was a transaction of purchase of ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 6 property in cash on specific date by a specific person. The information is categorical and factual data which came to be believed for making an opinion. The ld. CIT(A) by referring the decision of Hon'ble Gujarat High Court in Peass Industrial Engineers (P) Ltd. Vs DCIT (2020) 114 taxmann.com 718 (Gujarat) held that evidence found during the search in case of third party was sufficient to form a belief about escapement of income and issuance of notice under Section 148 was justified. 5. On the addition of unexplained investment, the ld. CIT(A) held that payment of consideration was shown in cash, as per the reasons recorded which was not contradicted by appellant at any stage of proceeding. Factual owning of property and mode of classification was also not contradicted by the appellant before the Assessing Officer. The Assessing Officer held that such investment in property are from unexplained source. The Assessing Officer rightly invoked the provisions of Section 69 of the Act. Other contention of appellant as recorded by ld. CIT(A) that similar addition was also proposed in case of father or original assessee, the ld. CIT(A) noted that such statement is not supported by any evidence. The ld. CIT(A) by recording that the circumstances of the case and in law, the action of Assessing Officer is upheld. Further aggrieved, the appellant has filed present appeal before this Tribunal. 6. We have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue. The ld. AR of the assessee submits that Ground No. 1 and 2 of appeal relates to validity of reopening under section 147 and issuance of notice ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 7 under section 148. The ld. AR of the assessee submits that the Investigation Wing carried out a survey under Section 133A on the office premises of Mr. Turnish B Kaniya and Mrs. Meera T Kaniya, Advocate. During the survey action, a draft of Satakhat was in the computer of said Advocate. The said Satakhat was unsigned and undated which was never executed. On the Satakhat, the name of assessee Shri Brijesh P Ukani (now deceased) was mentioned as a purchaser of plot of land at Gabhani, Surat. The said Satakhat also contained the size of the plot and alleged agreed sale consideration of Rs. 76.51 lacs. On the basis of which, the Assessing Officer reopened the case of assessee. Notice under Section 148 of the Act dated 30/03/2015 was served upon the assessee. The ld. AR of the assessee submits that the assessment was reopened on the basis of 3rd party information. The Assessing Officer reopened the case on the basis of his presumption based on the contents of unsigned undated Satakhat. The Assessing Officer in the reasons recorded presumed that assessee has paid cash amount of Rs. 76.51 lacs being one of purchaser. The ld. AR of the assessee submits that in the same survey action on Turnish B Kaniya, similar various other Satakhat in respect of some other land of different village in respect of other survey number containing the name of Shaileshbhai Manubhai Dhamelia was also found showing the sale consideration and area of land. The alleged satakat is not legally enforceable document. The Assessing Officer has not verified actual facts before issuing notice under section 148. There is no live link between the reasons recorded and escapement of income. ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 8 On merit on the case, which is subject matter of Ground No. 3, the ld. AR of the assessee submits that even on merit, his case is covered by the decision of Surat Tribunal in Kalpesh Mafatlal Patel Vs DCIT ITA No. 48 & 49/Srt/2017 dated 19/12/2022. The ld. AR of the assessee submits that in case of Kalpesh Mafatlal Patel Vs DCIT (supra), similar addition was made on the basis of survey action on Turnish B Kania wherein on the basis of similar Satakhat/draft Satakhat, the addition on account of unexplained investment of purchase of land was made, however, the same were deleted, copy of decision is filed on record. The ld. AR of the assessee submits that neither the seller has accepted that any on-money was received from assessee and his co-owner nor there is evidence of actual payment of additional amount by deceased assessee to the seller. The case of assessee was reopened that the assessee has made investment by making a cash payment. The assessee during the assessment, categorically stated that the assessee is having owner of 1/4 of land and remaining land was purchased by other co-owners. The ld. AR of the assessee thus, submits that the Assessing Officer made addition without bringing any corroborative evidence on merit. The assessee and his co-owner had purchased the land at the Jantri value determined by the Stamp Valuation Authority. There is no allegation in the assessment order that the assessee has shown less consideration than the value of asset determined by the Stamp Valuation Authority. The ld. AR of the assessee submits that the Assessing Officer while making addition of Rs. 76.51 lacs solely relied upon the copy of draft Satakhat, which was found from the premises of 3rd party. The survey party/Investigating Officer has not recorded the statement of Turnish ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 9 B Kaniya Advocate for connecting such document with the assessee. Turnish B Kaniya is the sole witness from whose possession, such document was recovered to explain its veracity. In fact, such document is never signed or executed or was prepared with the consent of assessee. The document was not recovered from the possession of seller. Incidentally, the particulars of land purchased by assessee cannot be a basis for making huge addition on the basis of alleged Satakhat which has no relation with assessee. The assessee has no relation with Turnish B Kaniya Advocate. The assessee do not know Turnish B Kaniya. The ld. AR of the assessee submits that no addition was made in the hands of seller on account of on-money on the basis of same Satakhat which was solely made basis of addition in the hands of assessee. The ld. AR of the assessee submits that on similar set of facts, the Hon’ble Jurisdictional High Court in the case of PCIT Vs Shaileshkumar Ramachandra Shah in Tax Appeal no. 871/2019 dated 20/01/2020 while dismissing the appeal of revenue by referring the decision of Tribunal in case of Rajubhai Jalabhai Bhadiyadara ( ITA No. 2025/Ahd/2016-AY 2013-13), wherein similar satakat in the form of soft copy in the computer of Turnish B Kaniya Advocate was found, which was neither signed, dated nor stamped, has held that such document has no evidentiary value. Tarnish B Kaniya was not the Advocate of that assessee. Thus, no addition can be made in respect of unsigned unstamped Satakhat which has not been registered and found from the person who is not connected with the assessee. The Hon’ble High Court held that no appeal was filed by revenue in case of Rajubhai Jalabhai Bhadiyadara (supra), thus, appeal of revenue against the Shaileshkumar Ramesh Chandra Shah ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 10 (supra) was also dismissed. The ld. AR of the assessee submits that in various cases, wherein similar unsigned undated unstamped draft Satakhat was found during course of survey either at the office of Vasudev Goplani, Advocate or Tarnish B Kaniya, the addition made by various Assessing Officers were either deleted by first appellate authority or by Tribunal. The copy of such decisions are also placed on record. The ld. AR of the assessee submits that he has good case on validity of reopening as well as on merit. To support his various submissions, the ld AR for the assessee relied on the decision of Surat Tribunal in Kaplesh Mafatlal Patel Vs DCIT in ITA No. 48 & 49/Srt/2017 dated 19/12/2022. The assessee has filed following documents on record;  Copy of letter dated 17/06/2015 alongwith the reasons recorded for reopening.  Copy of reply dated 13/07/2015.  Copy of Draft Satakhat recovered from the premises of Tarnish Kania.  Copy of sale (Purchase) deed by deceased assessee.  Copy of written submissions filed with the CIT(A). 7. The ld AR of the assessee also relied on the following case laws to support his submissions on the validity of reopening as well as on merit;  CIT Vs Kelvinator of India Limited (2010) 320 ITR 561-SC,  CIT Vs AKME Projects Limited (2014) 42 taxmann.com 379-Delhi,  Kalpesh Mafatlal Patel Vs DCIT in ITA No.48 & 49/Srt/2017. 8. On the other hand, the ld CIT-DR for the revenue supported the orders of lower authorities. The ld CIT-DR for the revenue submits that during the survey action in the office of Turnish B Kaniya, Advocate, a draft of Satakhat was found. On the satakhat, name of assessee and Shri Brijesh P Ukani as a purchaser is ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 11 mentioned. With regard to ground No. 1 and 2 of appeal which relates to reopening of the case under Section 147 of the Act, the ld. Sr. DR for the revenue submits that for recording reasons and making belief that income has escaped assessment, the Assessing Officer was having tangible information in the form of report from Investigation Wing that in the survey action, certain incriminating material in the form of Satakhat was found. The ld. Sr. DR for the revenue submits that though in the Satakhat, the assessee has shown as a purchaser, however, the fact remained the same, the particulars mentioned on the Satakhat and ultimate transaction of purchase of land are exactly matching with regard to size, location and situation of land in fact, the same land which is mentioned on the Satakhat was produced by the assessee. At the time of recording reason about the escapement of income is sufficient and not the full proof satisfaction of the Assessing Officer. Thus, no fault can be found in the action of Assessing Officer, so far as recording of reasons and issuance of notice under Section 148 of the Act is concerned. Against ground No. 3 of appeal which relates to addition on merit, the ld. Sr. DR for the revenue submits that the assessee ultimately purchased the same land which is shown in the Satakhat. As per Satakhat, has shown a consideration of Rs. 76.51 lacs. Thus, the remaining part of sale consideration shown in the Satakhat is nothing but an unaccounted investment of assessee. No direct evidence is generally found, however, the circumstances of transaction clearly suggests that there is unaccounted investment against the purchase of land. ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 12 9. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We have also deliberated on the case laws as well as various documents relied upon by the ld. AR of the assessee. Firstly, we are considering ground No. 3 of appeal which relates to addition of Rs. 76.51 lacs. We find that the Assessing Officer made addition of Rs. 76.51 lacs by taking view that assessee has purchased the above land which is shown in the Satakat found from the CD impounded from the office of Turnish Kania Advocate. The Assessing Officer held that Satakhat has evidentiary value, which contained details of seller and buyer which are actually recorded in a reversed manner but other specification like measurement of land and location are as per registered sale deed. Registered sale deed is drafted by Turnish B Kania, denial is made with the intent of concealment of fact and unexplained investment. Ultimate sale deed dated 29.03.2008 and Satakhat has so many correlation/common facts. We find that before ld CIT(A) the appellant filed detailed written submission, copy of which is placed on record at page No. 30 to 45 of paper book. In the written submissions, the appellant specifically stated that ultimately the property was purchased by four persons, including deceased assessee. There is no reference of alleged satakat in the final sale deed. Entire additions are based on the assumption. There is no evidence of cash payment in excess of the sale consideration. We find that no specific findings were given by ld CIT(A) in his order on various contention of the appellant. We find that the appellant has filed copy of final sale deed dated 31.03.2008. In the final sale deed there are four purchaser of the property. ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 13 10. We find that on similar set of facts, on similar addition, the Division Bench of Surat Tribunal in case of Alpesh Babubhai Panchal Vs ITO, ITA No. 2078/Ahd/2016, dated 10.01.2019, wherein the additions were made on the basis of similar survey action in case of Tarnish B Kania and Smt. Meera T Kania, Advocates, the additions deleted by holding that addition is made without any basis and no corroborative evidence on record. The Satakhat was found from the third party and that no addition can be made on the basis of undated, unsigned and unstamped soft copy of Satakhat. Similar view was taken in Kalpesh Mafatlal Patel Vs DCIT (supra), wherein similar draft Satakhat found from office of Tarnish B Kania, Advocate was made basis of addition. Thus, we find merit in the submissions of the ld AR of the facts that no independent investigation of facts was carried out by the Assessing Officer. Even for the sake of presumption, if it is considered that the assessee has purchased the property in furtherance of the satakat, entire addition of alleged cash consideration shown in the satakat cannot be at the hand of appellant. Thus, the additions made by Assessing Officer is not justified. 11. We find that SMC Bench of this Tribunal in Mukesh Agarwal (in ITA No. 362/Srt/2022 dated 18.05.2023) while considering the similar addition on the basis of similar Satakhat found in survey action from the office of Vasudev Goplani Advocate held that the Assessing Officer solely relied on the document found at the business premises of third party. It was also held that the Assessing officer neither called Tarnish Kania Advocate, during reassessment proceedings nor made any independent investigation on fact from purchaser and deleted the ITA No. 156/Srt/2023 Hetal Brijesh Ukani Vs ACIT 14 addition. We further find that Hon’ble Jurisdictional High Court almost on similar set of facts in PCIT Vs Shaileshkumar Ramachandra Shah in Tax Appeal No. 371 of 2019 dated 20.02.2020, while confirming the order of Surat Tribunal in deleting the similar addition based on similar Satakhat found in the search action on Turnish B Kania, Advocate, wherein such Satakhat were unsigned, undated and unstamped held that such document has no evidentiary value in the eyes of law and dismissed the appeal of revenue. Thus, in view of aforesaid factual and legal discussions, and taking consistent view we, direct the Assessing Officer to delete the entire addition. In the result, the ground No. 3 of the appeal is allowed. 12. Considering the fact that we have allowed ground No.3 and directed to delete the entire addition, therefore, adjudication on ground No.1 and 2 have become academic. 13. In the result, this appeal of assessee is allowed. Order announced in open court on 09 December, 2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 09/12/2024 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat // True Copy // "