The ACIT, Circle -1(1), Baroda V. Alaukik Trading& Inv. Ltd., Baroda

ITA 1069/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8915 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-08-2009
• Assessment Year: misc
• Appeal Filed On: 08-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: J P SHAH
• Keywords: Opportunity of being heard; Competent authority; Documents seized; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 26/08/09 DRAFTED ON: 18/0 9/09 ITA NO.1069/AHD/2005 ASSESSMENT YEAR : 1987-88 THE ACIT CIRCLE-1(1) BARODA VS. ALAUKIK TRADING & INV.LTD. INDUMATI MAHAL, RAJMAHAL ROAD BARODA PAN/GIR NO. : - (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI C.K.MISHRA, SR.D.R. RESPONDENT BY : SHRI J.P. SHAH, A.R. O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-III, BARODA DATED 27/01/2005 F OR ASSESSMENT YEAR 1987-88, BY RAISING FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A)-V, BARODA ERRED IN (1) DELETING ADDITION OF RS.86,77,234/- MADE ON A CCOUNT OF ON-MONEY RECEIVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER PASSE D BY THE ASSESSING OFFICER. ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 2 - 3. IT IS, THEREFORE PRAYED THAT THE ORDER OF THE CI T(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. THE BRIEF FACTS OF THE CASE ARE THAT ORIGINAL RETURN WAS FILED ON 31/07/1987. THE CASE WAS RE-OPENED U/S.147 ON 25/ 01/1991 BY ISSUE OF NOTICE U/148 OF THE I.T. ACT, 1961. THE RE-ASSE SSMENT PROCEEDINGS WERE DROPPED VIDE ORDER DATED 29/03/1993. SUBSEQUE NTLY, THE CASE WAS RE-OPENED U/S.147 ON 19/01/1996 BY ISSUE OF NOT ICE U/.148. THE ORDER WAS PASSED ON 16/01/1998 DETERMINING TOTAL IN COME AT RS.88,77,464/-. THE MAIN GROUND OF ADDITION WAS ON ACCOUNT OF UNACCOUNTED ON-MONEY AMOUNTING TO RS.86,77,234/- ALLEGEDLY RECEIVED BY THE ASSESSEE-COMPANY FROM M/S.J & R A SSOCIATES TO WHOM THE ASSESSEE-COMPANY HAD GIVEN ONE PIECE OF LA ND FOR DEVELOPMENT. THE ADDITION WAS PROPOSED ON THE BASIS OF THE STATEMENT OF SHRI AJITSINGH C. GAEKWAD U/S.132(4) O F THE I.T. ACT, 1961 WHO WAS AT THE TIME DIRECTOR OF THE ASSESSEE-C OMPANY. THIS WAS FURTHER CORROBORATED BY THE STATEMENT OF SHRI JAYANT GANDHI, PARTNER OF J & R ASSOCIATES RECORDED U/S.131. THE SE STATEMENTS WERE RECORDED IN CONSEQUENCE OF A SEARCH CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI AJITSINGH GAEKWAD. THE LEARNED C IT(APPEALS), ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 3 - BEFORE WHOM THE ASSESSEE HAD FILED AN APPEAL, SET A DSIDE THE MATTER WITH THE DIRECTION TO THE ASSESSING OFFICER TO ALLO W FULL OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND RE-FRAME THE ASS ESSMENT ORDER CONSIDERING EVIDENCES OR OTHER MATERIAL THAT MAY BE PRODUCED BY THE ASSESSEE-COMPANY BEFORE HIM. 3. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS A S PURSUANT TO ORDER OF LD.CIT(APPEALS), THE ASSESSING OFFICER PRO VIDED COPIES OF FOLLOWING STATEMENTS TO THE ASSESSEE:- (I) STATEMENT OF SHRI AJITSINGH GAEKWAD RECORDED U/ S.132(4) ON 8.3.1990 AT BEHIND KASHI VISHWANATH TEMPLE, BARO DA (39 PAAGES) (II) STATEMENT OF MRS. MRUNALINIDEVI PAUR RECORDED U/S.131(1A) AT LAXMI VILAS PALACE, BARODA ON 17.4.1990 (9 PAGES ). (III) STATEMENT OF SHRI AJITSINGH GAEKWAD RECORDED U/S.131(1A) ON 3.4.1990 AT AAYAKAR BHAVAN, 3 RD FLOOR, BARODA 4. THE ASSESSING OFFICER, THEREAFTER, ALLOWED CROSS -EXAMINATION OF SHRI AJITSINGH GAEKWAD BY THE ASSESSEE. DURING THE COURSE OF CROSS-EXAMINATION, CERTAIN QUESTIONS WERE PUT UP WH ICH HAVE BEEN REFERRED TO BY THE LD. ASSESSING OFFICER AS UNDER: - Q.1. PLEASE IDENTIFY YOURSELF. A.1. I AM AJITSINGH C GAEKWAD, RESIDENT OF BEHIND KASHI VISHWANATH TEMPLE, BARODA. AGED 61. ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 4 - Q.2. I AM SHOWING YOU YOUR STATEMENT RECORDED ON OA TH TAKEN ON 8.3.1990, WHEREIN YOU WERE ASKED QUESTIONS FROM 1 TO 239 AND SECOND STATEMENT RECORDED ON 3.4.1990. DO YOU STILL MAINTAIN THE SAME FACTS AS MENTIONED BY YOU IN YOUR STATEMENT OR YOU WANT TO ALTER THE SAME. A.2. I DO NOT CHANGE MY STATEMENT AT ALL. Q.4. WHILE PASSING THE ASSESSMENT ORDER IN THE CASE OF ALAUKIK TRADING & INVESTMENT LTD. FOR A.Y. 1987-88 DATED 16.1.1998, THE THEN ASSESSING OFFICER, DY.CIT (ASST .) S.R.1, BARODA MENTIONED THAT YOU HAVE GIVEN A STATEMENT TH AT THE OFFICIAL RATE FIXED FOR THE DEVELOPER IS RS.2.50 PE R SW.FT., BUT UNOFFICIAL PRICE IS RS.26 PER SQ.FT. WHETHER YOU H AVE GIVEN ANY SUCH STATEMENT. A.4. NO. MY STATEMENT IS AVAILABLE WITH THE DEPARTM ENT. 5. THEREAFTER, THE ASSESSEE-COMPANY FURNISHED VIDE ITS LETTER DATED 17/03/2003 AN EXPLANATION TO THE ASSESSING OFFICER, WHEREIN IT WAS POINTED OUT THAT SHRI AJITSINGH C.GAEKWAD, CEASED TO BE THE DIRECTOR OF THE ASSESSEE-COMPANY SINCE 31/12/1989. THE DOCUMENTS SEIZED IN THE SEARCH WERE NEVER EXECUTED BY THE COM PANY. IF THEY ARE RELEVANT, THEN THEY MAY RELATE TO SHRI AJITSINGH C. GAEKWAD PERSONALLY. SHRI AJITSINGH GAEKWAD HAS NEVER CONFI RMED IN HIS STATEMENT DATED 08/03/1990 AND 03/04/1990 THAT THER E ARE DIFFERENT OFFICIAL AND UNOFFICIAL RATES OF THE PROPERTY BEARI NG SURVEY NO.399. IT ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 5 - IS ONLY THE ASSESSING OFFICER WHO HAS ASSUMED THAT OFFICIAL RATE OF THE LAND IS RS.2.25 PER SQ.FT. WHEREAS UNOFFICIAL RATE IS RS.26.26 PER SQ.FT. EVENTHOUGH SHRI JAYANT GANDHI HAS CONFIRMED UNOFFIC IAL RATE PREVAILING AT RS.26.26 PER SQ.FT., BUT THIS STATEME NT WAS NOT SUBJECTED TO CROSS-EXAMINATION. IN ANY CASE, THE ASSESSING O FFICER DID NOT AGREE WITH THE ASSESSEE AND MADE THE ADDITION OF RS .86,77,234/- HOLDING THAT ASSESSEE HAS FAILED TO FURNISH ANY FRE SH EVIDENCE. 6. THE LEARNED CIT(APPEALS) EXAMINED WHOLE ISSUE IN DETAIL. HE NOTED THAT LOOSE-PAPER NO.67 SEIZED FROM THE RES IDENCE OF SHRI AJITSINGH GAEKWAD CONTAINED FOLLOWING INFORMATION:- 1. SCHEME U/S.21 HAS BEEN SANCTIONED BY THE COMPET ENT AUTHORITY ON 2 ND AUGUST, 1986 TO CONSTRUCT 275 DWELLING UNITS IN 34.303 SQ.MTRS. BY THE COMPETENT AUTHORITY AND ADDITIONAL COLLECTOR, BARODA. 2. THE WORK OF CONSTRUCTING DWELLING UNITS HAS BE EN ENTRUSTED TO J&R ASSOCIATES. 3. THE RATE OF LAND IS RS.26/- SQ.FT. FOR THE WHOL E LAND. THE AMOUNT WILL BE PAID WITHIN 18 MONTHS FORM THE DATE THE CLEAR TITLE IS GIVEN TO THEM. 4. THE PROPERTY WILL BE DIVIDED IN THREE PARTS AND THE POSSESSION WILL BE GIVEN TO THE DEVELOPERS FOR EACH PART ON RECEIVING FULL PRICE OF THAT PART. ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 6 - 5. THE OFFICIAL RATE CANNOT EXCEED MORE THAN RS.2. 50/- PER SQ.FT. FOR THE WHOLE LAND WHICH WILL BE DEDUCTED FR OM THE PRICE OF RS.26/- MENTIONED UNDER ITEM NO.3. 6. THE AMOUNT OF RS.6,00,000/- HAS BEEN RECEIVED ON 25 TH JUNE, 1986 AND RS.2,00,000/- HAS BEEN RECEIVED ON 8 TH SEPTEMBER, 1986 FROM THE DEVELOPERS MENTIONED UNDER ITEM NO.2. 7. THE COPY OF THE DOCUMENT NO.67 WAS PROVIDED TO T HE ASSESSEE FOR HIS COMMENTS. THE LEARNED CIT(APPEALS) AFTER C ONSIDERING THE STATEMENT OF THE ASSESSEE AND THE ARGUMENTS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HELD THAT :- (I) SHRI J.R. GANDHI IN HIS STATEMENT DATED 21/03/ 1990 AND 22/03/1990 ANDSHRI AJITSINGH GAEKWAD IN HIS STATEME NT DATED 13/03/2003 AND CROSS-EXAMINATION DID NOT REVEAL THA T M/S.J.R. ASSOCIATES MADE ANY PAYMENT OF 'ON-MONEY' FOR LAND TRANSACTION. (II) TRANSACTION OF THE LAND WAS NOT COMPLETED SINC E THE LAND IN QUESTION WAS A DISPUTED LAND AND THE COURT CASE REGARDING OWNERSHIP OF THE LAND WERE PENDING. THUS, NO CLEA R TITLE WAS GIVEN TO M/S.J.R. ASSOCIATES. (III) ONLY A SUM OF RS.7 LACS WAS PAID TO THE AS SESSEE WHICH WAS DISCLOSED IN THE BALANCE-SHEET AS ADVANCE/LIABI LITY IN THE NAME OF M/S.J.R. ASSOCIATES. (IV) THERE WAS ONLY AN ORAL AGREEMENT REGARDING UNO FFICIAL RATE AND INCRIMINATIVE EVIDENCE WERE FOUND DURING T HE COURSE ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 7 - OF SEARCH INDICATING THAT ANY 'ON-MONEY' WAS ACTUAL LY PAID BY M/S.J.R.ASSOCIATES. (V) THE DEFINITION OF WORD TRANSFER AS PROVIDED U /S.2(47) OF THE I.T. ACT, 1961 WILL NOT APPLY TO THE PROPOSE D SALES CONSIDERATION BUT MAY APPLY ONLY TO AN AMOUNT OF RS .7 LACS RECEIVED IN ADVANCE. ACCORDINGLY, LEARNED CIT(APPE ALS) DELETED THE ADDITION. 8. AGAINST THIS, LD.DR SUBMITTED THAT DOCUMENT NO.6 7 REVEALED UNOFFICIAL RATE AT RS.26.26 PER SQ.FT. WHICH SHOULD BE APPLIED FOR WHOLE LAND. ENTIRE AMOUNT WAS REQUIRED TO BE PAID WITHIN EIGHTEEN (18) MONTHS FROM THE DATE OF THE CLEAR TITLE GIVEN TO M/S.J.R.ASSOCIATES. THE LAND WAS HANDED OVER TO M/S.J.R.ASSOCIATES. THEREFORE, IT WILL BE A TRANSF ER WITHIN THE MEANING OF SECTION 53A OF TRANSFER PROPERTY ACT. 9. AGAINST THIS, LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT SALE DID NOT MATERIALIZE. THEREFORE, QUESTION OF HANDING OVER ANY 'ON-MONEY' BY M/S.J.R.ASSOCIATE S TO THE ASSESSEE DID NOT ARISE. SECONDLY, SHRI J.R. GANDHI WAS NEVE R SUBJECTED TO CROSS-EXAMINATION. THIRDLY, THE DOCUMENT WAS NOT F OUND FROM THE PREMISES OF THE COMPANY, BUT FOUND FROM POSSESSION OF SHRI AJITSINGH GAEKWAD. THE COMPANY CANNOT BE SUBJECTED TO TAX ON THE ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 8 - BASIS OF DOCUMENT FOUND FROM THE POSSESSION OF A TH IRD PARTY. IN ANY CASE, THE ASSESSEE-COMPANY IS CONCERNED WITH THE L AND TRANSACTION WHICH WAS AN INDIVIDUAL AFFAIR OF SHRI AJITSINGH GA EKWAD WHO HAS SUBSEQUENTLY LEFT THE COMPANY AS ITS DIRECTOR. HE SUBMITTED TO CONFIRM THE ORDER OF THE LEARNED CIT(APPEALS). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN OUR CONSIDERED VIEW, THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LEARNED CIT(APPEALS). THE REASONS ARE:- (I) FIRSTLY, LAND DEAL DID NOT MATERIALIZE AND TIT LE OF THE LAND WAS NEVER PASSED OVER TO M/S.J.R.ASSOCIATES. DOCUM ENT NO.67 HAS TO BE READ AS A WHOLE. THE TRANSFER OF ' ON-MONEY' WAS SUBJECT TO PASSING OVER OF THE TITLE TO M/S.J.R .ASSOCIATES. AFTER SUCH A LONG PERIOD, ALMOST 20 YEARS, THE DEPA RTMENT WAS NOT IN A POSITION TO SHOW WHETHER LAND DEAL IS FIN ALLY MATERIALIZED OR NOT. ONCE THE LAND DEAL IS NOT MAT ERIALIZED, THE TRANSFER OF 'ON-MONEY' TO THE COMPANY BY M/S.J.R.A SSOCIATES CANNOT BE PRESUMED. ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 9 - (II) SECONDLY, NEITHER SHRI GAEKWAD NOR SHRI GANDHI HAS EVER STATED, OR ATLEAST SHOWN TO US TO HAVE SO STATED BY THE DEPARTMENT THAT M/S.J.R.ASSOCIATES HAS PAID ANY 'ON -MONEY' TO THE ASSESSEE-COMPANY. (III) THIRDLY, THE CONCEPT OF OFFICIAL AND UNOFFICI AL RATES ARE TOTALLY PERSONAL AND THEY ARE NOT SUPPORTED BY ANY COVENANT OR AN AGREEMENT. (IV) FOURTHLY, DOCUMENT NO.67 IS FOUND FROM THE PRE MISES OF SHRI GAEKWAD. THE NEXUS OF THE ASSESSEE-COMPANY W ITH THIS DOCUMENT HAS NOT BEEN FULLY ESTABLISHED. IT IS NO T SHOWN THAT IT IS AN AGREEMENT BINDING M/S.J.R.ASSOCIATES AND T HE ASSESSEE- COMPANY. (V) FINALLY, THE QUESTION OF INVOKING SECTION 53A OF TRANSFER PROPERTY ACT, IN THE ASSESSMENT YEAR 1987- 88, WOULD NOT ARISE BECAUSE CLAUSE (V) OF SECTION 2(47) OF TH E I.T. ACT, ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 10 - 1961 WAS INTRODUCED BY THE FINANCE 1987 W.E.F. 01/0 4/1988. THIS WOULD BE APPLICABLE FOR ASSESSMENT YEAR 1988-8 9 ONWARDS AND NOT FOR THE ASSESSMENT YEAR 1987-88. 11. NOTWITHSTANDING, FOR INVOKING SECTION 53A, THE RE SHOULD BE A WRITTEN AGREEMENT BETWEEN THE PARTIES ACCORDING TO WHICH ONE PARTY MUST PERFORM HIS PART OF THE AGREEMENT. IN THE P RESENT CASE, NO SUCH WRITTEN AND SIGNED AGREEMENT BETWEEN THE TWO P ARTIES ARE SHOWN TO HAVE EXISTED. EVEN THE QUESTION OF TAXING SUM OF RS.7 LACS (OR FOR THAT MATTER RS.8 LACS MENTIONED IN DOCUMENT NO.67 W HICH MONEY IS SUPPOSED TO HAVE BEEN TRANSFERRED FROM M/S.J.R.ASSO CIATES TO ASSESSEE-COMPANY) CANNOT BE TREATED AS REVENUE RECE IPT BECAUSE IT WAS ONLY AN ADVANCE AGAINST THE SALE OF LAND WHICH IN THE EVENT OF FAILURE OF THE DEAL COULD BE FORFEITED BY THE ASSES SEE-COMPANY AND THIS THEREAFTER WOULD BECOME PART OF THE SALE PROC EED IF THE ASSESSEE SALES THE LAND IN FUTURE. NO MATERIAL IS PRODUCED BY THE REVENUE TO SHOW AS TO WHEN THIS LAND WAS FINALLY TRANSFERRED F ROM THE ASSESSEE- COMPANY TO EITHER M/S.J.R.ASSOCIATES OR TO SOMEBODY ELSE AND WHAT WAS THE CONSIDERATION THEREFOR. THEREFORE FOR THE REASONS AS STATED ITA NO.1069/AHD/2005 ACIT VS. ALAUKIK TRADING & INV. LTD. ASST.YEAR 1987-88 - 11 - ABOVE, WE CONFIRM THE ORDER OF THE LEARNED CIT(APPE ALS) AND DISMISS THE APPEAL OF THE REVENUE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 25/09/2009. SD/- SD/- ( MAHAVIR SINGH ) ( D.C.AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 25 / 09 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-III, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD