RANJEET SINGH YADAV, Jaipur V. ACIT, Jaipur

ITA 11/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5380 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 03-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Keywords: Unexplained cash credit; Unexplained investment; Document seized; Source of fund; Documents seized
• Section: 143(3); 153A; 68; 69; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH EQDQY DS-JKOR] U;KF;D LNL; DS LE{K BEFORE: SHRI MUKUL K. SHRAWAT, JUDICIAL MEM BER VK;DJ VIHY LA-@ ITA NO. 11/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04. SHRI RANJEET SINGH YADAV, R/O 146, AVADH PURI, KALWAR ROAD, JHOTWARA, JAIPUR. CUKE VS. THE ACIT, CENTRAL CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: A AOPY 4757 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/03/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/03/2016. VKNS'K@ ORDER PER MUKUL K. SHRAWAT, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM THE ORDER OF LD. CIT (APPEALS), ALWAR DATED 25.10.2013. IN RESPECT OF T HE FIRST ISSUE OF UNEXPLAINED INVESTMENT UNDER SECTION 69, THE APPELLANT HAS RAIS ED FOLLOWING GROUNDS :- 1. THAT ON THE FACTS, IN TOTALITY OF THE CIRCUMSTANCE AND MATERIAL ON RECORDS, THE LEARNED ASSESSING OFFICER GROSSLY ERRE D IN HOLDING THAT THE AMOUNT OF RS. 5,21,000/- IS UNEXPLAINED CASH CREDIT AND ADDING IT U/S 68 OF THE ACT. 1.1 THAT THE APPELLATE AUTHORITY GROSSLY ERRED IN HOLDI NG THAT INVESTMENT OF RS. 5,21,000/- (SUPRA) IS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 2 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT 1.2 THAT THE APPELLATE AUTHORITY GROSSLY ERRED IN FOLLO WING THE ORDER OF CIT (A)(CENTRAL), JAIPUR WHILE DECIDING THE APPEAL WHEN THE ORDER OF INCOME TAX APPELLATE TRIBUNAL WAS MADE AVAILABLE . 1.3 THAT THE INCOME TAX APPELLATE TRIBUNAL IS FINAL FAC T FINDING BODY AND ITS DECISION IS BINDING UPON THE LOWER APPELLAT E AUTHORITY. 2. AN ASSESSMENT FOR A.Y. 2003-04 WAS COMPLETED UND ER SECTION 153A READ WITH SECTION 143(3) DATED 30.12.2009. THE ADMITTED FACT UAL POSITION IS THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS ENGAGED IN REAL ESTATE BUSIN ESS AND ALSO LAUNCHED VARIOUS PROJECTS. THE ASSESSEE WAS SUBJECTED TO A REVENUE A CTION UNDER SECTION 132 OF IT ACT DATED 16.11.2007. ON THE BASIS OF CERTAIN DOCUMENTS ALLEGED TO BE INCRIMINATING DOCUMENTS, THE ALLEGATION OF THE AO WAS THAT CERTAI N INVESTMENT IN IMMOVABLE PROPERTY WAS MADE WHICH WAS OVER AND ABOVE THE ACTUAL TRANSA CTION RECORDED IN THE AGREEMENTS. AS PER AO, THERE WAS REAL AGREEMENT W ITH ONE SHRI RANJEET YADAV. THEN THERE WAS SECOND AGREEMENT ENTERED INTO WITH HOUS ING SOCIETY. AS PER THE SEIZED DOCUMENTS, THE ASSESSEE HAD PAID A SUM OF RS. 5,21, 000/- TO A SELLER OF THE LAND, NAMELY SHRI MADAN LAL SHARMA. THIS LAND WAS ACQUIR ED IN RESPECT OF A PROJECT KNOWN AS GOVIND VATIKA PROJECT. TO EXPLAIN THE SOURCE O F INVESTMENT, THE ASSESSEE HAS SUBMITTED THAT THE MONEY WAS RECEIVED IN ADVANCE FO R BOOKING OF THE PLOTS WHICH WAS USED FOR MAKING THE SAID PAYMENT. HOWEVER, THE AO H AS DISCARDED THE CASH FLOW STATEMENT AND TAXED RS. 5,21,000/- U/S 68 OF IT ACT . 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, LD. CIT (A) HAS REFERRED AN EARLIER ORDER OF LD. CIT (A)(CENTRAL), JAIPUR DATED 11.10.2010 AND FOLLOWING THE VIEW EXPRESSED THEREIN THE ADDITION OF RS. 5,21 ,000/- MADE U/S 69 WAS CONFIRMED. 3 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT 4. WITH THIS BRIEF FACTUAL BACKGROUND, AT THE OUTSE T, I HAVE BEEN INFORMED THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004-05 TO 08-09 ITAT A BENCH JAIPUR IN ITA NOS. 1418 TO 1422/JP/2010 AND CROSS APPEALS BY THE REVENUE VIDE ORDER DATED 16.11.2011 IT WAS HELD IN RESPECT OF GOVIND VATIKA PROJECT AS UNDER :- 2.16 THE BULK BOOKING OF FLATS IS BY SHRI RAM NIWAS JI YADAV FOR PLOT NO. `126, 127, 130, 131, 133, 137-139. AS PER CHRONOLOGICAL, THE P AYMENTS IN CHART AT PAGES 187 TO 189 ARE:- 11-01-2004 RS. 51,000 03-02-2004 RS. 5,50,000 19-03-2004 RS. 1,00,000 06-04-2004 RS. 3,00,000 10-04-2004 RS. 1,09,000 14-04-2004 RS. 11,000 ALL THE ABOVE ENTRIES EXCEPT OF RS. 11,000/- ARE AV AILABLE AT SEIZED EXHIBIT A-19 PAGE 2 AND COPY OF SUCH PAGE IS AVAILABLE AT PAGE 179 OF P APER BOOK. HOWEVER, THE TOTAL MENTIONED AT A-19 PAGE 2 IS 11,21,000/- AND SUCH TO TAL IS THE SAME AS OF ALL THE ENTRIES MENTIONED ABOVE. IT MEANS THAT NO SEPARATE ENTRY OF RS. 11,000/- IS THERE BUT THIS AMOUNT IS INCLUDED. PAGE 2 OF EXHIBIT A-19 ALSO CON TAINS THE RECEIPT FROM SHRI DEVENDER AND THESE ARE THE SAME AS CONTAINED IN ALL THE RECE IPTS OF GOVIND VATIKA PROJECT. THE ENTRIES ARE ONLY FOR GOVIND VATIKA PROJECT WHILE CA SH FLOW STATEMENT IS FOR THE PROJECTS FOR THE FINANCIAL YEAR AND HENCE THERE WILL BE DIFF ERENCE IT IS NOTED THAT CASH IN HAND AS ON 31-03-2005 AND 31-03-2006 IS MORE THAN OF RS. 50 ,000 /- AND HENCE ASSESSEE IS LIABLE TO WEALTH TAX. THE EXPLANATION OF THE ASSESSEE THAT IT IS RECEIVING FUNDS FROM INVESTORS FOR BULK PURCHASES IS FOUND TO BE CORRECT FROM THE RECORDS AND SUCH INVESTORS HAVE PERHAPS SOLD THE PLOT BEFORE THE SOCIETY ISSUED PAT TAS. WHEN THE SEIZED RECORD INDICATE BOTH THE RECEIPTS AND PAYMENTS THEN SUCH ENTRIES AR E TO BE ACCEPTED UNLESS THE ASSESSEE WAS NOT ABLE TO ESTABLISH IT. THE ASSESSEE MADE A REQUEST TO THE AO TO ISSUE SUMMONS RECORDS WERE SEIZED IN THE YEAR 2007 BUT NO EFFORT MADE TO ANALYSE SUCH RECORDS. WE HAVE ALSO GONE THROUGH THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SEARCH. THE REVENUE ASKED THE ASSESSEE AS TO WHE THER HE HAS WORKED FOR GUMAN 4 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT GROUP I.E. THE GROUP WHICH WAS ALSO DOING THE REAL ESTATE BUSINESS. SEARCH OPERATIONS WERE CONDUCTED IN THAT GROUP AND PERHAPS SEARCH ACT ION AGAINST ASSESSEE WAS INITIATED FOR HIS ASSOCIATION WITH GUMAN GROUP. THE ASSESSEE STATED THAT GUMAN GROUP OFFERED TO GET THE PLOTS BOOKED IN THEIR PROJECT FROM INTEN DED CUSTOMERS AND THE GROUP WAS WILLING TO PAY RS. 20/- PER SQ. YARD WHILE HE DEMAN DED RS. 35/- PER SQ. YARD AND HENCE THE DEAL DID NOT MATERIALIZE. THE ASSESSEE WAS ALSO ASKED THE QUESTIONS ABOUT THE ENTRIES IN THE DOCUMENTS. THE ASSESSEE STATED THAT NO REGULAR BOOKS OF ACCOUNTS WERE KEPT AND ONLY DIARIES WERE MAINTAINED. IT MEANS THA T THERE WERE RELEVANT DOCUMENTS TO ASCERTAIN THE TRANSACTIONS. IT IS TRUE THAT IN TRAN SACTION OF REAL ESTATE, THE MONEY PASSED ON IS NOT ALWAYS THE ACCOUNTED MONEY. THE ASSESSEE IS ONLY A CONDUIT AND THE REVENUE HAS PERHAPS TAKEN NO ACTION AGAINST THE PERSONS WHO RECEIVED THE CONSIDERATION OVER AND ABOVE THE CONSIDERATION SHOWN IN THE SALE DEEDS . SO FAR AS THE ASSESSEE IS CONCERNED, IT IS CLEAR THAT SEIZED DOCUMENTS SHOW T HE SOURCE OF FUNDS. HENCE, THERE IS NO QUESTION OF MAKING ADDITION OF RS. 40,54,325/- P LUS RS. 60,75,000/-. WHILE RECORDING SUCH FINDINGS, WE HAVE CONSIDERED THE TOTAL ASSET P OSITION FILED BEFORE THE LOWER AUTHORITIES. HENCE, THESE ADDITIONS ARE DELETED AND GROUNDS OF APPEAL NOS 2 AND 3 ARE ALLOWED. 4.1. MY ATTENTION HAS BEEN DRAWN ON A CHART PLACED ON PAGE 13 PARA 1.13 OF THE ORDER OF THE TRIBUNAL WHEREIN THE IMPUGNED AMOUNT O F RS. 5,21,000/- WAS REFERRED MARKED AS A-7/20 AND THE DATES OF PAYMENT WERE RECO RDED AS 9 TH FEBRUARY, 2003 AND 15 TH MARCH, 2003. IN SHORT, THE PRESENT STATUS OF THIS ISSUE IS THAT LD. CIT (A) HAS REFERRED AN EARLIER ORDER OF LD. CIT (A) (CENTRAL) AND AFFIRMED THE ACTION OF THE AO. HOWEVER, THAT ORDER OF LD. CIT (A)(CENTRAL) WAS SUB JECT TO APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS DECIDED THIS ISSUE AS PER THE PARAGRAPH REPRODUCED ABOVE. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH ALREADY PRONOUNCED IN 5 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT ASSESSEES OWN CASE, I HEREBY DIRECT TO DELETE THE ADDITION. THESE GROUNDS ARE, THEREFORE, ALLOWED. 5. THE NEXT ISSUE IS IN RESPECT OF DISALLOWANCE OF DEVELOPMENT EXPENSES AND THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 2. THAT ON THE FACT, IN TOTALITY OF CIRCUMSTANCES THE LEARNED ASSESSING OFFICER GROSSLY ERRED IN COMPUTING THE PROFIT OF GO VIND VATIKA PROJECT AT RS. 19,98,070/- ON ESTIMATION BASIS AND THEREBY MAK ING ADDITION OF RS. 6,66,023/-. 2.1. THAT THE LEARNED LOWER AUTHORITY ERRED IN NOT ALLOWING THE 1/3 RD DEVELOPMENT EXPENSES. 2.2. THAT THE APPELLATE AUTHORITY GROSSLY ERRED IN FOLLOWING THE ORDER OF CIT (A)(CENTRAL) JAIPUR WHILE DECIDING THE APPEAL W HEN THE ORDER OF INCOME TAX APPELLATE TRIBUNAL WAS MADE AVAILABLE. 6. THE ASSESSEE HAS CLAIMED DEVELOPMENT EXPENSES IN RESPECT OF GOVIND VATIKA PROJECT TOTALING RS. 41,26,096/- RELATED TO THE FIN ANCIAL YEAR 2002-03 TO 04-05. ON THE BASIS OF AN ENQUIRY CONDUCTED BY THE INSPECTOR AT T HE PROJECT SITE, THE AO HAS ALLEGED THAT A VERY NOMINAL/BASIC DEVELOPMENT WAS CARRIED O UT BY THE ASSESSEE. THE AO HAS, THEREFORE, DISALLOWED 1/3 RD OF THE DEVELOPMENT EXPENSES. THE TOTAL DISALLOWAN CE WAS COMPUTED AT RS. 19,98,070/- AND THE APPORTIONED AMO UNT FOR 2003-04 WAS AT RS. 6,66,023/- WHICH WAS ACCORDINGLY TAXED IN THE HANDS OF THE ASSESSEE. 7. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, LD. CIT (A) HAS AGAIN REFERRED THE PREVIOUS ORDER OF LD. CIT (A)(CE NTRAL) JAIPUR DATED 11.10.2010 FOR A.Y. 2005-06 AND HELD THAT THERE WAS NO CHANGE IN T HE FACTS OF THE CASE HENCE ON THE SAME LINES THE ADDITION WAS CONFIRMED. 6 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT 8. I HAVE BEEN INFORMED THAT THIS ISSUE HAS ALSO BE EN DECIDED BY RESPECTED COORDINATE BENCH, JAIPUR IN THE ORDER CITED SUPRA D ATED 16.11.2011 IN THE FOLLOWING MANNER :- 3.8 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THAT DEVELOPMENT EXPENSES ARE NOT VERIFIABLE AND NO DOCUMENTS FOUND TO ASCERTAIN THE QUANTUM OF DEVELOPMENT EXPENSES. IT IS DEFINITELY AN ESTIMATE. THE QUANTUM OF DEVEL OPMENT COST OF COLONY CLAIMED IS RS. 41,26,096/- AND 1/3 RD OF THIS HAS BEEN DISALLOWED. IF THE DISALLOWANCE A S MADE BY THE AO IS CONSIDERED THEN NET PROFIT WILL COME TO 13.12% A ND THIS IS QUITE EXCESSIVE. HENCE, ONE HAS TO ASCERTAIN THE ESTIMATED EXPENSES. IN THE INS TANT CASE, PROFIT PER SQ. YARD SHOWN BY THE ASSESSEE IS RS. 25.62/- PER SQ. YARD. DURING THE COURSE OF SEARCH PROCEEDING, THE STATEMENT OF ASSESSEE WAS RECORDED AND IT WAS STATE D BY HIM THAT HE DEMANDED RS. 35/- PER SQ. YARD AS COMMISSION ON THE SELLING OF THE PL OT WHILE THE GUMAN GROUP OFFERED RS. 20/- PER SQ. YARD. THIS IS FOR SUBSEQUENT ASSESSMEN T YEARS. IF THE DISALLOWANCE AS MADE BY THE AO IS CONSIDERED THEN PROFIT WILL BE RS. 82/ - PER SQ. YARD. HENCE IT IS OBSERVED THAT DISALLOWANCE AS MADE BY THE AO IS EXCESSIVE. I N THE CASE OF MANGLAM PROJECT, THE ASSESSEE HAS SHOWN PROFIT OF RS. 26/- PER SQ. YARD AND THE AO MADE AN ADDITION MAKING THE PROFIT AT RS. 52/- PER SQ. YARD,. THE LD CIT(A) HAS DELETED THE ADDITION THOUGH THE REVENUE IS IN APPEAL BUT THE PROFIT PER SQ. YARD AS CONFIRMED BY THE LD CIT(A) IS RS. 26/- PER SQ. YARD. HENCE, THE FACT HAS BEEN CONSIDERED W HILE ESTIMATING THE DISALLOWANCE TO BE MADE. IN THE REAL ESTATE BUSINESS CONDUCTED BY T HE ASSESSEE, HE WAS TO FIX THE PRICE PER SQ. YARD AND HENCE IT IS APPROPRIATE TO ASCERTA IN PROFIT PER SQ. YARD THEN THE PROFIT AS PERCENTAGE OF TURN OVER. FOR ALL THE PROJECTS, WE WILL BE ESTIMATING THE PROFIT AND YARD STICK WILL BE ON THE BASIS OF PROFIT PER SQ. YARD. WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE THE DISALLOWANCE FOR ASSESSMENT YEAR 20 04-05 AND 2005-06 AT RS. 1,12,485/- AND RS. 1,77,765/- WHICH IS 1/3 RD OF DISALLOWANCE CONFIRMED BY THE LD. CIT(A) AS AGA INST RS. 3,37,455/- AND RS. 5,33,395/- MADE BY THE LD CI T(A) AFTER CONSIDERING THE PROFIT SHOWN BY THE ASSESSEE IN THE RETURNS U/S 153A OF TH E ACT FROM THE PROFITS AS UNDISCLOSED INCOME. 7 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT SINCE THE RESPECTED COORDINATE BENCH HAS GIVEN PART RELIEF TO THE ASSESSEE, THEREFORE, ON THE SAME LINES, I HEREBY DIRECT THE AO TO COMPUT E THE PROPORTIONATE DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION AS WELL. WITH THESE DI RECTIONS, THIS ISSUE IS RESTORED BACK TO THE FILE OF THE AO. GROUNDS MAY BE TREATED AS A LLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/201 6. SD/- EQDQY DS-JKOR (MUKUL K. SHRAWAT) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/03/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-SHRI RANJEET SINGH YADAV, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT CENTRAL CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 11/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 8 ITA NO. 11/JP/2014 SHRI RANJEET SINGH YADAV VS. ACIT