Shri Babubhai Merabhai Parmar, Ahmedabad V. The Income Tax Officer, Ward-7(1)(5), Ahmedabad

ITA 1145/AHD/2017

AI Insights

The case involves two appeals by Shri Babubhai Merabhai Parmar against the orders of the CIT(Appeals)-7, Ahmedabad, concerning the assessment year 2012-13. The primary contention was regarding the addition of Rs. 42,84,150 as unexplained investment under Section 69C of the Income Tax Act, which was confirmed by the CIT(A). The assessee argued that this amount was actually paid by his co-owner, Shri Pradeep Parmar, who had received compensation from GIDC for land acquisition. The Tribunal examined the evidence presented, including bank statements and affidavits, and concluded that the additions and the subsequent penalty were not justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299944 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 10-05-2017
• Other Referred Cases: CIT vs. Raman Kumar Suri (2013) (29 taxmann.com 231)(Bom)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice; Cost of acquisition
• Section: 131; 69; 271(1)(c); 69C; 143(1); 250; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . N o s . 11 4 5 /A h d/2 01 7 & 1 7 7/ A h d / 20 1 9 ( A s se ss m e nt Y e a r : 20 12- 13 ) Sh r i B a b u bh ai M er ab h ai P ar m a r Vil la ge C ha r a l , Po s t: Sa na d , Ah me da bad - 3 82 11 0 Vs . I T O War d - 7 ( 1) ( 5 ) , A h me da ba d [ P AN N o. A E C P P2 2 47 L ] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divatia, A.R. & Shri Samir Vora, A.R. Respondent by: Shri Sanjay Jain, Sr. D.R. D a t e of H ea r i ng 02.03.2023 D a t e of P r o no u n ce me nt 15.03.2023 O R D E R Both appeals filed by the same assessee are against the order passed by the Ld. CIT(Appeals)-7, Ahmedabad on 03.01.2017 & 14.11.2018 for A.Y. 2012-13. ITA No. 1145/Ahd/2017 (A.Y. 2012-13):- 2. The grounds of appeal raised by the assessee are as under: “1.1 The order passed u/s. 250 on 03.01.2017 for A.Y.2012-13 by CIT(A)-(7), A’bad, confirming additions of Rs.42,84,150/- u/s. 69C as unexplained investment is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding that the appellant had made payment of Rs. 64,52,150/- towards his 50% share in land at Charal, Sanand so that the balance Rs. 42,84,150/- remaining after considering actual payment of Rs. 21.68 lacs by the appellant was unexplained investment u/s.69C. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) has grievously erred law and or in facts in confirming the addition of Rs.42,84,150/- made u/s. 69C by AO. ITA Nos. 1145/Ahd/2017 & 177/Ahd/2019 Shri Babubhai Merabhai Parmar vs. ITO Asst.Year–2012-13 - 2 – 3.1 The Ld. CIT(A) has failed to appreciate that the unless there is an evidence to prove that the appellant had actually paid Rs.42,84,150/-, the addition made u/s.69C is wholly illegal and unlawful. The appellant had produced sufficient evidence to prove that the said payment was made by the co-owner. It is therefore prayed that the addition of Rs. 42,84,150/- made by the AO should be deleted.” 3. The assessee was an employee of BSNL and filed his return of income on 18.06.2012 declaring total income of Rs. 2,32,410/-. The same was processed under Section 143(1) of the Act and statutory notice were issued and served to the assessee. The assessee furnished the details / evidences through the Authorized Representative. The Assessing Officer observed that the assessee had purchased the property at a price of Rs. 1,21,68,000/- on 27.05.2011 at Charal, Tal: Sanand jointly with another co-owner. The expenses towards stamp duty of Rs. 5,96,300/- and registration fee of Rs. 1,40,000/- for the purchase cost of land which comes to Rs. 1,29,04,300/-. The assessee received Rs. 1,46,00,000/- from sale proceeds of the agricultural property held by five co-owners which was acquired by GIDC and he has made investment of Rs. 1,41,81,600/-. From the various details and bank statement it was observed by the Assessing Officer that during the relevant period the assessee received payment of Rs. 3,91,48,634/- from GIDC on 25.05.2011 in the joint account maintained by the co-owners, but the assessee alongwith his cousin brother Shri Pradip Gandabhai Parmar purchased a plot of land at a price of Rs. 1,21,68,000/- before the receipt of the said amount from GIDC. The entire purchase consideration was paid in cash except the payment of Rs. 21,68,000/- made by the cheque on 27.07.2011 by the assessee. The Assessing Officer observed that after recording the statement under Section 131 on 26.11.2014, the assessee had 50% share of the land for the statement recorded under Section 131 of the Act on 11.12.2014 that of co-owner Shri ITA Nos. 1145/Ahd/2017 & 177/Ahd/2019 Shri Babubhai Merabhai Parmar vs. ITO Asst.Year–2012-13 - 3 – Pradipkumar Gandabhai Parmar he stated that he purchased land and the assessee as well as assessee’s co-owner has equal share of land i.e. 50% of each. The Assessing Officer made addition of Rs. 42,84,150/- towards unexplained investment under Section 69 of the Act and Rs. 2,00,000/- in respect of cash deposit in joint bank accounts. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. A.R. submitted that the assessee purchased jointly with his cousin land for price of Rs. 1,21,68,000/- and incurred cost of stamp duty, registration of Rs. 7,36,300/-, thus, total cost of Rs. 1,29,04,300/- out of which the assessee had paid only Rs. 21,68,000/- and balance was paid by co-owner Shri Pradeep Parmar. However, the Assessing Officer treated the difference of Rs. 42,84,150/- between 50% of price and actual payment as undisclosed income (64,52,150 – 21,68,000). The Ld. A.R. submitted that his cousin has borrowed Rs. 1 crore from Kanjibhai Fulabhai Koli who had received huge compensation of more than 3 crore. The evidence showing the source of said amount furnished to Assessing Officer such as Dena Bank statement, land acquisition notice from GIDC and the Assessing Officer has not disputed his source of advance to co-owner. The co-owner Shri Pradeep Parmar filed affidavit dated 15.11.2014 confirming the payments of purchase of price and its source. The Assessing Officer had recorded statement of Pradeep Parmar on 26.11.2014 but no adverse comments had been given by Assessing Officer in respect of stating that he admitted his 50% but it does not mean having paid only to the extent of his share. The parties mutually adjusted payments depending upon financial conditions. The assessee filed his affidavit. The burden under Section 69/69A lie upon Revenue to prove that the assessee had ITA Nos. 1145/Ahd/2017 & 177/Ahd/2019 Shri Babubhai Merabhai Parmar vs. ITO Asst.Year–2012-13 - 4 – made the impugned payment which it has failed and drawn presumption and surmise only in view of confirmation of the co-owner and no contrary evidence. Therefore, the Ld. A.R. submitted that no such payment alleging unexplained investment was made by the assessee. The Ld. A.R. relied upon the decision of Bombay High Court CIT vs. Raman Kumar Suri (2013) (29 taxmann.com 231)(Bom). The Ld. A.R. further submitted that no contradiction is explained by the CIT(A) was there in assessee’s case. The assessee had repaid the amount of Shri Pradeep Parmar what he had paid on his behalf. Without prejudice to this submission the Ld. A.R. submitted that the expenses of stamp duty, registration paid out of withdrawal from Bank account as stated in reply given to the Assessing Officer so addition to that extent called for. 6. The Ld. D.R. submitted that the assessee at no point of time as stated that why the payment was made in cash when the amount lying in the bank and there was no evidence to prove that the purchase of land was in respect of the sale compensation from third party. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that it is an undisputed fact that the assessee purchased jointly with Shri Pradeep Parmar who was a cousin of the assessee and agricultural land for the total consideration of Rs. 1,21,68,000/-. The assessee through bank details and the details given by the co-owner established that at the time of the transaction the assessee paid only Rs. 21,68,000/-, though his share was 50%. This aspect was totally overlooked by the Assessing Officer. The Assessing Officer ignore the statement given by the co-owner that is cousin of the assessee and simplicitor made addition. The ITA Nos. 1145/Ahd/2017 & 177/Ahd/2019 Shri Babubhai Merabhai Parmar vs. ITO Asst.Year–2012-13 - 5 – Assessing Officer presume that the assessee paid his share of purchase price but from the records the same appears to be that the assessee at that particular time paid only Rs. 21,68,000/- and the balance was paid by the co-owner Shri Pradeep Parmar. The co-owner i.e. Shri Pradeep Parmar also established the source of the said amount of Rs. 1 crore thereby stating that the same was borrowed from Shri Kanjibhai Fulabhai Koli and to that extent has given the details that GIDC has compensated Rs. 3,19,26,530/- to Shri Kanjibhai Filabhai Koli and from that fund the co-owner received a loan from the said party. This crucial aspect were not taken into account by the Assessing Officer as well as by the CIT(A) and ignored the evidences produced by the assessee. Thus, the addition made by the Assessing Officer does not sustain. Hence, appeal of the assessee is allowed. ITA No. 177/Ahd/2019(A.Y. 2012-13):- 8. The grounds of appeal raised by the assessee are as under: “1.1 The order passed u/s. 250 on 14.11.2018 for A.Y. 2012-13 by CIT(A)-(7), A’bad, confirming penalty of Rs.10,95,120/- imposed towards addition of Rs.42,84,150/- u/s. 69C as unexplained investment is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in confirming the penalty of Rs.10,95,120/- u/s. 271(1)(c) in respect of addition of Rs.42,84,150/- u/s. 69C as unexplained investment. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) has grievously erred law and or in facts in confirming that the appellant had failed to explain satisfactorily the source of Rs.42,84,150/- and thereby upholding the penalty of Rs.10,95,120/- u/s. 271(1)(c). It is therefore prayed that the penalty of Rs.10,95,120/- imposed by AO and upheld by CIT(A) deserves to be deleted.” ITA Nos. 1145/Ahd/2017 & 177/Ahd/2019 Shri Babubhai Merabhai Parmar vs. ITO Asst.Year–2012-13 - 6 – 9. The Ld. A.R. submitted that the CIT(A) erred in confirming penalty as no element of concealment involved and assessee declared correct income. 10. The Ld. D.R. relied upon the assessment order and order of CIT(A). 11. Heard both the parties and perused all the relevant material available on record. The issue is relating to penalty under Section 271(1)(c) for concealment of income. But in the present case, the assessee has given explanation about the addition of Rs. 42,84,150/- to the Assessing Officer and as the assessee has paid only Rs. 21,68,000/- at the time of transaction and his cousin paid the rest of the amount. Thus, the invocation of Section 271(1)(c) of the Act was not justified by the Assessing Officer. Hence, the penalty under Section 271(1)(c) does not sustain. Appeal being ITA No. 177/Ahd/2019 filed by the assessee is allowed. 12. In the combined result, both the appeals filed by the assessee are allowed. This Order pronounced in Open Court on 15/03/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 15/03/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/ Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad