Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 8912 (ITAT-SURAT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 6 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-01-2024
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
08-01-2024
Assessment Year
2016-2017
Appeal Filed On
01-07-2021
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.113/SRT/2021 Assessment Year: (2016-17) (Hybrid Hearing) The DCIT, Central Circle – 2, Surat Vs. Jayantibhai Virjibhai Babariya, K-801, River View Heights, Mota Varachha, Surat, Gujarat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AFHPB0820M (Assessee) (Respondent) Assessee by Shri Vinod Kumar, Sr. DR Respondent by Shri Ashwin K. Parekh, CA Date of Hearing 09/01/2024 Date of Pronouncement 31/01/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2016-17, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-4, [in short “the ld. CIT(A)”], Surat, in Appeal No.CIT(A),Surat-4/10468/2018-19, dated 09.04.2021, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 21.12.2018. 2. The grounds of appeal raised by the Revenue are as follows: “(1) On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.41,80,150/- by accepting the additional evidences furnished by the assessee and without providing an opportunity for verification of the same or being heard to the Assessing Officer under Rule 46A of the I.T. Rules, ignoring the fact that the assessee has not furnished any such details before the AO in spite of providing sufficient opportunities. (2) On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition of Rs.1,28,93,303/- to Rs.25,50,899/- by 2 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya accepting the additional evidences furnished by the assessee and without providing an opportunity for verification of the same or being heard to the Assessing Officer under Rule 46A of the I.T. Rules, ignoring the fact that the assessee has not furnished any such details before the AO in spite of providing sufficient opportunities. (3) On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in admitting additional evidences under rule 46A despite the fact that the repeated opportunities were given to the assessee by the AO and he was not prevented by sufficient cause from producing the evidence during the course of assessment proceedings. (4) It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. (5) The assessee craves leave to add, alter, amend and/or withdraw any round(s) of appeal either before or during the course of hearing of the appeal.” 3. We shall take above grounds raised by the Revenue, one by one, as follows: Ground No.1 raised by the Revenue relates to deleting the addition of Rs.41,80,150/-. 4. Brief facts qua the issue are that assessee filed return of income on 11.01.2018, declaring total income at Rs.53,01,570/- for assessment year (A.Y.) 2016-17. Subsequently, the assessee filed revised return of income on 23.03.2018, showing total income at Rs.1,43,92,110/-. The assessee`s return of income was processed u/s 143(1) of the Act. Later on, the assessee`s case was selected for limited scrutiny through CASS. The notice u/s 143(2) of the Act was issued on 16/08/2018 which was duly served upon the assessee. Thereafter notice u/s 142(1) was issued on 06.09.2018 and 10.10.2018 and served upon the assessee. Further notice u/s 142(1) along with questionnaire was issued on 12.11.2018 and served upon the assessee. In response, Shri Ashwin Parekh, A.R. of the assessee attended and furnished the requisite details and documents before the assessing officer. The assessee derived salary income and interest income during the year under consideration. The assessee is also 3 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya a partner in various partnership firms and derived profit from the said firms. During the course of assessment proceedings, a detailed questionnaire was issued to the assessee on 08.12.2018 seeking various clarifications. In response, the assessee vide letter 12.12.2018 furnished his explanation. On perusal of explanation of the assessee and the balance sheet of the assessee, as on 31.03.2016, the value of the land was shown at Rs.7,41,80,150/-. However, in the submission furnished, the assessee has shown source of only Rs.7,00,00,000/-. Therefore, vide AO, letter dated 08.12.2018, the assessee was requested to explain the source of balance amount of Rs.41,80,150/- (Rs.7,41,80,150- Rs.7,00,00,000) with supporting evidence. In response to said notice, the assessee submitted its reply before the assessing officer. However, assessing officer rejected the contention of the assessee and held the amount of Rs.41,80,150/- is unexplained investment of the assessee u/s 69B of the Act as the assessee failed to explain the source of this investment in land and the same was therefore added to the total income of the assessee. 5. On appeal, ld CIT(A) deleted the addition, therefore, the Revenue is in appeal before us. 6. Learned DR for the Revenue argued that in respect of disallowance of claim of investment of Rs.41,80,150/- is concerned, the evidences in this regard were furnished by the assessee, for the first time, during the appellate proceedings, hence there is violation of Rule 46A of the Income Tax Rules, as an opportunity for verification of the same was not provided to the assessing Officer, hence matter may be remitted back to the file of the assessing officer for fresh adjudication. 4 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya 7. Shri Ashwin K. Parekh, Learned Counsel for the assessee argued that during the year the assessee purchased land bearing Block No. 181 of Vill. Khajod, Dist. Surat and invested Rs.7,41,80,150/-. The Assessing Officer accepted the source and explanation on investment of Rs.7,00,00,000/-. The Assessing Officer however, did not accept the source of Investment to the extent of Rs.41,80,150/-. The amount of Rs.41,80,150/-, represents the Stamp Duty, Registration fees and Advocate Fees. The assessee by his submission dated 12.12.2018, before assessing officer, in response to notice dated 07.12.2018 explained the source of Investment for Registration Fees and Stamp Duty as under: Date of payment Amount Paid Source of Investment 05.03.2016 7,00,000 Out of Cash withdrawn Rs.50,00,000/- on 12.02.2016 05.03.2016 34,30,000 Out of Cash withdrawn Rs.50,00,000/- on 12.02.2016 05.03.2016 50,000 Out of Cash withdrawn Rs.50,00,000/- on 12.02.2016 The assessee received Rs.50,00,000/- on 09.12.2016 for sale consideration of land bearing Block No. 273/A of Village Tatithaiya, Tal. Palsana, District Surat. This cheque was deposited in bank, the amount of Rs.50,00,000/- was withdrawn on 12.02.2016 from bank and Stamp Duty, Registration Fees and Advocate Fees of Rs. 41,80,150/- were paid. The assessing officer has examined all these evidences during the assessment stage, hence no additional evidences were furnished before the assessing officer. 8. We have considered the rival submissions and perused the relevant finding given in the impugned order of ld CIT(A). We note that during the assessment stage following documents and evidences were submitted by the assessee: 5 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya (i) Copy of Ledger Account of land bearing Block No. 181 of Khajod. (Page 9) (ii) Copy of Bank Statement showing the withdrawals of cash from Bank on 12.02.2016. (Page 10) (iii) Copy of cash book and evidences for payment of stamp duty and advocate fees (Page 11) (iv) Computation of Income showing the Long Term Capital Gain with ITR. (Page 12 to 16) (v) Copy of Ledger Account of land bearing Block No. 273A of Vill. Tatithaiya, Tal. Palsana. (Page 17 to 19) (vi) Copy of Notice dated. 07.12.2018. (Page 20 to 23) (vii) Copy of sale deed of land bearing Block No. 181 of Khajod. (Page 24 to 47) We note that Assessing Officer on page 2, Para 5 admitted to have verified the submission of assessee dated 12.12.2018, wherein the assessing officer had examined the amount of Rs. 41,80,150/-, hence question of additional evidence does not arise, therefore, we do not find merit in the submission of ld DR for the Revenue. 9. We note that submission of assessee dated 12.12.2018 about the source was examined by the assessing officer. The assessee had received Rs.50,00,000/- on 09.02.2016 for safe consideration of another land bearing No. 273/A of Village Tatilthaiya, Tal, Palsana, Dist – Surat. The assessee had withdrawn cash of Rs.50,00,000/- on 12.02.2016, for payment of Stamp Duty, Registration Fees with Sub-registrar, Surat and Advocate Fees, the total of which came to Rs.41,80,150/-. The assessee had submitted Ledger Account of land sold, computation of Long Term Capital Gain for sale of land, copy of Cash Book, copy of Bank Statements and Ledger Account of Investment in new land during the 6 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya year. On the basis of these evidences submitted before the Assessing Officer the assessee claimed that Provisions of section 69B of the Act are not applicable since assessee had explained the Source of Investment before the Assessing Officer. The ld CIT(A) noted that assessee had paid Advocate fees of Rs.50,000/- on 05.03.2016 which also appears in Cash Book submitted by assessee. For the receipt of Rs.50,00,000/- on 12.02.2016 the assessee had submitted the sale deed of land at Tatithaiya, Tal – Palsana, Dist – Surat. The receipt of Rs.50,00,000/- is supported by the reference of payment by purchaser to the assessee by cheque No. 000006, therefore, based on the above facts ld CIT(A) deleted the addition. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 10. In the result, ground No.1 raised by the Revenue is dismissed. 11. Ground No.2 and 3 raised by the Revenue relate to restricting the addition of Rs.1,28,93,303/- to Rs.25,50,899/- by accepting the additional evidences furnished by the assessee and without providing an opportunity for verification of the same to the assessing officer. The Ld. CIT (A) has erred in admitting additional evidences under Rule 46A of the Income Tax Rules. 12. Succinct facts qua the issue are that on perusal of the computation of income for the year under consideration, it was observed by the assessing officer that assessee has shown short term capital gain on sale of land at Block No. 273/A, Tantithaiya. However, in the audited balance sheet as on 31.03.2015, the sales of three lands have been shown a under: 7 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya (i) Block No.273/A - Rs.33,29,920/- (ii) Block No.274 - Rs.33,04,770/- (iii) Block No.275 - Rs.37,69,120/- Rs.1,04,03,810/- As per the sale document, at page 21, the sale of land refers to only Block No.273A and the short term capital gain has been shown at Rs.2,32,97,113/- in the computation of income. Accordingly, vide letter dated 08.12.2018, the assessee was asked to reconcile the same. 13. In response, the assessee submitted its reply before the assessing officer, vide letter dated 12.12.2018, as follows: “The reconciliation chart of Short Term Capital Gain on sale of hind bearing Block No.273/A, Block No.274 and Block No.275 of Village Tatithaiya, Tal. Palsana, Dist. Surat is enclosed. While the land was purchased, the 3 bocks were purchased as under: Thus, the total area of 3 land is 34,577 sq. mts. from the sale deed on page 21 of sale deed, the area of land is shown at 34577 sq. mt. which is in complete agreement with area of land as per registered purchase deeds as tabulated above. After purchase of 3 Blocks, the assessee applied for consolidation of 3 different Block into one block on 19.09.2015, The District Superintendent Land Revenue Records by Order dated 19.09.2015 by Order No.KJPSR/ /90/15-16 Consolidated the 3 blocks into one Block and informed the Mamlatdar by rectification letter No,49 on the basis of which the Mamlatdar passed the Mutation Entry No.5643 on 07.10,2015 whereby all the 3 blocks were consolidated into one single bock and the new block no. was also given as Block No.273/A to the total area of 3 blocks of 34577 Sq. Mts. In other words, from 07.10.2015 the entire 3 blocks ad-measuring 34577 sq. mts. were appearing as Block No.273/A in Revenue Records. All these facts have been enumerated with clear description in Registered Sale Deed of Page No.17. The relevant part of Page No. 17 is enclosed. The assessee purchased 3 land at Rs.1,04,03,810/-. The interest expenses of Rs.1,03,42,404/- were capitalized to these 3 lands as the unsecured loans in earlier years were utilized in purchase of 3 lands, Further the assessee Description of land Area of Land in Sq. Mts. Amount of Purchase consideration Block No. 273/A 11,864 Rs. 33,29,920 Block No. 274 11,773 Rs. 33,04,770 Block No,275 10,940 Rs. 37,69,120 8 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya incurred development expenses of Rs.25,50,899/- on wall construction and drainage line during the year. Therefore, the cost of acquisition is Rs.1,04,03,810/- + Rs.l,03,42,404/- + Rs.25,50,899/- = Rs.2,32,97,113/-. 14. However, the assessing officer rejected the contention of the assessee and noted that in the computation of income, under the head statement of short term capital gain, the assessee as shown as under: The assessee has shown the value of three land in the balance sheet as on 31.03.2015 at Rs.1,04,03,810/- against the value of Rs.2,32,97,113/- shown in the computation of income under the statement of short- term capital gain. The assessee has explained the difference in value in balance sheet and computation income on account of incurring further development expenses, wall construction and drainage line during the year. However, the assessee has not furnished any documentary evidence of the said expenses. Hence the amount of Rs.1,28,93,303/- (Rs.2,32,97,113- Rs.1,04,03,810) being the difference of value shown in the balance sheet and computation, of income was added to the total income of the assessee. 15. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has allowed the appeal of the assessee. The ld CIT(A) noted that assessee paid the premium for early clearance of titles of land in his favour. The assessee paid the premium of the land at Rs.1,03,42,404/-. The challan issued from the Treasury Department for payment made on 15.12.2015 was also submitted. As the payment is made in accordance with the provisions of State Land Laws, the non-payment of which would have otherwise Particular Sales Price/ Year Purchase Cost/ Year Transfer Expenses Cost of Improve ment Exempt Capital Cain Block 274 & 275 of Tatithaiya 3,63,06,000/- (05/01/2016) 2,32,97,113/- (24/02/2015) 0.00 0.00 0.00 1,30,08,887 9 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya created the backlogs in the title of the land owned by the Assessee, the same are eligible for deduction as cost of improvement from the sale consideration of land. Accordingly, the addition to the extent of Rs.l,03,42,404/- was deleted by ld CIT(A). About the payment of Rs.25,50,899/- for construction of wall on the land, the ld CIT(A) observed that no construction wall was found therefore the addition of Rs.25,50,899/- was confirmed in the hands of the assessee. 16. The ld. Senior Departmental Representative (ld. Sr. DR) for the Revenue, argued that Ld.CIT(A) erred in restricting the addition of Rs.1,28,93,303/- to Rs.25,50,899/- by accepting the additional evidences furnished by the assessee and without providing an opportunity for verification of the same to the Assessing Officer under Rule 46A of the I.T. Rules, and ignoring the fact that the assessee has not furnished any such details before the assessing officer, hence matter may be remitted back to the file of the assessing officer for fresh adjudication. 17. Shri Ashwin K. Parekh, Learned Counsel for the assessee, pleaded that assessee has never submitted additional evidences before the ld CIT(A). The CIT(A) had found from online portal and e-submissions and noted that assessee had submitted the land premium challan of Rs.1,04,03,810/- before the assessing officer and Compound Wall Construction Agreement dated 10.10.2015 before the Assessing Officer on 12.12.2018. Hence there were no any additional evidences before the ld CIT(A). The Assessing Officer has also accepted that the claim of Development Expenses and Land Premium Expenses were made by assessee in Computation of Income as well as by submission dated 12.12.2018. Hence, ld Counsel contended that additional evidences were 10 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya not submitted before ld CIT(A), therefore order passed by ld CIT(A) may be upheld on merits. 18. We have heard both sides in detail and also perused the records of the case including the paper book filed by the assessee. We note that assessee sold land bearing Block No. 273A, 274 and 275 of Tatithaiya during the year. The assessee had purchased this land on 24.02.2015 at Rs.2,32,97,113/- and sold the same on 05.01.2016 at Rs.3,63,06,000/-. The Assessee had submitted the Registered Sale Deed by e-submission online before the assessing officer. As per the facts recorded on Page No. 3 to Page No. 12 of the Registered Sale Deed the following facts are very relevant. (i) The assessee submitted copy of sale deed, which is enclosed. (Page 48 to 80 of paper book) (ii) The 3 plots of land bearing Block No. 273/A, 274, and 275 were consolidated and a new block No. 273/A was allotted. (iii) The Collector Surat by the Order dated 25.01.1994 in Case No. 89 of 93 suo motto reviewed the mutation entry No.1612 and invoked the Provision of Section 84(c) of the Agriculture Land Tenancy Act. (iv) Thereafter the matter is carried in appeal before the Additional Secretary of Revenue Department (SSRD) against the Order of Collector, Surat. The Order of Collector was confirmed in Tenancy Appeal No. 12/96 and the land was taken in possession of the Government of Gujarat. (v) The land owners at that time filed the Special Civil Application No. 8760 of 1997 before the Gujarat High Court and the Hon'ble High Court stayed the mutation entry in favour of the original land owners. 11 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya (vi) In the meanwhile another litigation was initiated by other persons for invoking the Provisions of Section 70A of the Agriculture land Tenancy Act and the Civil Suit was filed on 24.11.2004 in which the Hon'ble Court by order dated 09.08.2005 stayed the proceedings u/s 70A of the Agriculture land Tenancy Act. The Complainant filed the appeal before the Hon'ble Gujarat High Court and the proceedings were stayed till the date of sale. (vii) In the above circumstances though the assessee was permitted to have the possession as owner, the final decision was pending before the Civil Court and assessee was liable to pay the Premium of new tenure land u/s 70A and 84(c) of the agriculture land Tenancy Act. If after the sale, the issue of premium arises, the ownership of land would vest in favour of Government and the buyer would file a Criminal Suit against the assessee. At the time of purchase of land the assessee was not aware of all these litigation as the original owners from whom assessee purchased land withheld this facts of Court litigation by not Registering the Court orders in land records. From apparent records the facts of litigation are not discernible. (viii) No one was willing to purchase the land from assessee unless the issue of Premium u/s 70A and 84(c) of Agriculture land Tenancy Act is cleared. The assessee was left with two options, viz: (1) Either to wait for court order for non-application of Section 70A and 84(c) of Agriculture land Tenancy Act for long period. In the circumstances for several years assessee will not be able to sell the land or (2) To pay the premium and the issue would set at rest and the land would be free for sale. The assessee preferred the 2 nd option and paid the premium of Rs.1,03,42,404/-, which was allowed by ld CIT(A). 12 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya 19. In the Ledger Account filed online by assessee, the Accountant committed a mistake in writing the words “Land Premium” and wrongly wrote the description of “Interest Expenses”. The Revised Ledger Account correcting the mistake is enclosed. (Page 82 & 83 of paper book) We note that ld CIT(A) has rightly deleted the addition as the assessee had submitted all explanation and evidences before Assessing Officer vide e-submission dated 12.12.2018. The CIT(A) simply corrected the typing error and did not consider any new facts or evidences. Hence, Provisions of Rules 46A of the Income Tax Rules is not applicable, as no new evidences was considered by ld CIT(A). Before, ld CIT(A) the assessee explained that the land is new tenure land failing under the Provisions of Section 84(c) of the Agriculture Land Tenancy Act and is therefore, liable to pay the premium to the Government under section 70A of the Agriculture Land Tenancy Act for conversion of into new tenure kind into old tenure land. The Assessee had carried out litigation in the Civil Court but the same were pending since Song and therefore, Assessee paid the premium for early clearance of titles of land in his favour. The assessee paid the premium of the land at Rs.1,03,42,404/-. The challan issued from the Treasury Department for payment made on 15.12.2015 was also submitted. As the payment is made in accordance with the provisions of State Land Laws, the non- payment of which would have otherwise created the backlogs in the title of the land owned by the Assessee, the same are eligible for deduction as cost of improvement from the sale consideration of land. Accordingly, the addition to the extent of Rs.l,03,42,404/- was deleted by ld CIT(A). About the payment of Rs.25,50,899/- for construction of wall on the land, the ld CIT(A) gone through the sale deed of land and noted that no construction of wall was found, hence the Addition of Rs.25,50,899/- therefore was confirmed by ld CIT(A).On a careful reading of the 13 113/SRT/2021/AY.2016-17 Jayantibhai Virjibhai Babariya Ld.CIT(A) order and the findings thereon, we do not find any valid reason to interfere with the decision of ld CIT(A) therefore, we dismiss ground No.2 and 3 raised by ld CIT(A). 20. Ground Nos.4 and 5 raised by the Revenue are general in nature hence do not require adjudication. 21. In the combined result, appeal filed by the Revenue is dismissed. Order is pronounced on 31/01/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 31/01/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat
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