The ITO, Ward-2(2)(1), Ahmedabad V. Dushyant U Patel, Ahmedabad

ITA 1197/AHD/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1499 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Opportunity of cross examination; Documents seized
• Section: 69; 148; 132; 143(3); 207; 13

Judgement Text

, ‘D’ । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI WASEEM AHMED, ACCOUNTANT MEMEBR आयकर अपील सं./I.T.A. No. 1197/Ahd/2019 A/w. CROSS OBJEC TI ON No. 212/Ahd/2019 ( Assess ment Ye ar : 2011-12) In co me T ax Of fi ce r W ar d -2 (2 )( 1), A h me dab ad / V s . Du shy a nt U P at el 19 47, P at el V as, O l d Va daj , As hr a m R oa d, Ah me da bad - 3 80 0 13 यी ल सं./ ीआ आर सं./P A N / G IR N o . : BH K P P 0 2 7 7 Q (Appellant/Respondent) . . (Respondent/Cross Objector) र क र स /Revenue by : Sh ri M oh d. Us ma n, CI T. DR . अपील र स /Assessee by : Ms. Nupur Shah & Shri Dhiren Shah, A.Rs. स क र D a t e o f H e a r i n g 19/04/2022 घो ! क र /D a t e o f P r o n o u n c e m e n t 23/05/2022 ORDER PER MAHAVIR PRASAD, JM: The captioned appeal and Cross Objection have been filed at the instance of the Revenue and assessee against the order of the Commissioner of Income Tax (Appeals)-10, Ahmedabad (‘CIT(A)’ in short) vide Appeal No. CIT(A)-10/10360/17-18, dated 06.05.2019 arising out of assessment order dated 28.12.2017 passed by the Assessing Officer ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 2 - (AO) under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act) concerning AY 2011-12. 2. The grievances, in Revenue’s appeal and assessee’s Cross Objection, raised being common, both the cases were heard together and disposed of by the common order. 3. The ground of appeal raised by Revenue reads as under: “1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs 7,25,27,970/-under section 69 of the Act, without properly appreciating the facts of the case and the material brought on record. 2. The CIT(A) has erred in law and on facts in not appreciating the fact that when the sellers of the impugned land had admitted the receipt of on-money and had offered the same for taxation, it is implicit that the purchasers of the land had paid the on-money which has not been accounted' for in the books of account of the purchaser. 3. The CIT(A) erred in fact- and law in not noticing the provisions of Section 292C of the IT Act which raises a presumption that the contents of the books of account, other documents seized during course of search u/s 132 are true.” 4. The facts of the case that in this case a search was took place and statement of one Shri Motibhai R. Prajapati recorded under s.132(4) of the Act on 22.07.2011. In this case, assessee has not filed return of income for A.Y. 2011-12 and during search operation department seized certain documents and it was found that assessee Shri Dushyant U Patel has purchased land at Gatrad, Survey No.244, 252, 253, 254,255, 256, 260, 261, 265, 268, 270, 271, 272, 273, 276, 277, 279, 280, 281, 283, 285 and 286 and had paid Rs.2,10,23,722/- in cheque and had also given on money to the following persons: 1) Shri Motibhai R. Prajapati Rs.l,51,50,66l/- 2) Shri Bhagwanbhai R. Prajapati Rs.1,51,50,659/- 3) Shri Kanlibhai R. Prajapati Rs.2,19,37, 118/- ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 3 - 4) Shri Sachin M Prajapti Rs.1,15,15,921/- 5) Shri Kalpesh B Prajapati Rs.1,15,15,920/- 6) Shri Yatin K,Prajapati Rs. 47,29,724/- TOTAL Rs.8,00,00,003/- 4.1 Thereafter, a show cause notice was served to the assessee as follows: "On the basis of the evidences and data made available from the file, it is noticed that you have purchased land at Gatrad vide Survey Nos., 244, 252, 253, 254, 255, 256, 260, 261, 265, 268, 269, 270, 271, 272, 273, 276, 277, 279, 280,281, 283, 285 and 286 and you have paid on money to Shri Motibhai R. Prajapati, Bhag\vanbhai R. Prajapati, Kantibhai R. Prajapati, Sachin M. Prajapati, Kalpesh B. Prajapati and. Yatin K. Prajapati The on-money portion along with the payment made on paper for land purchased by you worked out as under: On money payent by Dnsltyant U. Patelfor Gatrad land Survey No, Receipient Consideratio n paid on paper On money Payment Total on money paid B.No. 244 Motibhai R. Prajapati 227625 875718 Bhagwanbhai R. Prajapati 227625 875718 Kantibhai R. Prajapati 227625 875719 Total 682875 2627155 2627155 B.NO. 252 Motibhai R. Prajapati 182100 700575 Bhagwanbhai R. Prajapali 182100 700575 Kantibhai R. Prajapati 182100 700575 Total 546300 2101725 2101725 B.NO. 253 Motibhai R. Prajapati 531150 2043440 Bhagvanbhai R. Prajapati 531150 2043440 Kantibhai R. Prajapati 531150 2043440 Total 1593450 6130320 6130320 B. NO. 254 Motibhai R. Prajapati 280800 1080297 Bhagvvanbhai R. Prajapati 280800 1080296 Kantibhai R. Prajapati 280800 1080294 Total 842400 3240887 3240887 B. NO. 255 & 269 Kantibhai R. Prajapati 386925 1488578 Sachin M. Prajapati 386925 1488578 Kalpesh B. Prajapati 386925 1488578 Total 1160775 4465734 4465734 B. NO. 260 Motibhai R. Prajapati 144150 554574 Bhagwanbhai R. Prajapati 144150 554574 ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 4 - Kantibhai R. Prajapati 144150 554574 Total 432450 1663722 1663722 B.NO. 261 Motibhai R. Prajapaii 113850 438004 Bhagwanbhai R, Prajapati 113850 438004 Kantibhai R. Prajapati 113850 438004 Total 341550 1314012 1314012 B.NO. 265 Motibhai R. Prajapati 37950 146001 Bhagwanbhai R. Prajapati 37950 146001 Kantibhai R. Prajapati 37950 146001 Total 113850 438003 438003 B. No. 268 Motibhai R. Prajapaii 235200 904861 Bhagwanbhai R. Prajapati 235200 904861 Kantibhai R. Prajapati 235200 904861 Total 705600 2714583 2714583 B. No. 270 Motibhai R. Prajapati 151725 583716 Bhagvanbhai R. Prajapati 151725 583716 Kantibhai R. Prajauati 151725 583716 Total 455175 1751148 1751148 B. No. 271 Motibhai R. Prajapaii 45525 175144 Bhagwanbhai R. Prajapati 45525 175144 Kantibhai R. Prajapati 45525 175144 Total 136575 525432 525432 B. No. 272 Motibhai R. Prajapati 75900 292002 Bhagwanbhai R. Prajapati 75900 292002 Kantibhai R. Prajapati 75900 292002 Total 227700 876006 876006 B. No. 273 Motibhai R. Prajapati 91050 350288 Bhagvanbhai R. Prajapati 91050 350288 Kantibhai R. Prajapati 91050 350288 Total 273150 1050864 1050864 B. No. 276 Motibhai R. Prajapati 531150 2043440 Bhagwanbhai R. Prajapati 531150 2043440 Kantibhai R. Prajapati 531150 2043440 Sachin M. Prajapa 531150 2043440 Kalpesh B. Prajapati 531150 2043440 Yatin K. Prajapali 531150 2043705 Total 3186900 12260905 12260905 B. No. 277 Motibhai R. Prajapati 91050 350288 Bhagwanbhai R. Prajapali 91050 350288 Kantibhai R. Prajapati 91050 350288 Total 273150 1050864 1050864 ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 5 - B. No. 283 Motibhai R. Prajapali 212475 817434 Bhagwanbhai R. Prajapati 212475 817434 Kantibhai R. Prajapati 212475 817434 Sachin M. Prajapati 212475 817434 Kalpesh B. Prajapati 212475 817434 Yatin K. Prajapali 212475 817434 Total 1274850 4904604 4904604 B. No. 285 Motibhai R. Prajapati 151725 583716 Bhagwanbhai R. Prajapati 151725 583716 Kantibhai R. Prajapati 757725 583716 Total 455175 1751148 1751148 B. No. 286 Motibhai R. Prajapati 834675 3211162 Bhagvanbhai R. Prajapati 834675 3211162 Kantibhai R. Prajapati 834675 3211162 Total 2504025 9633486 9633486 B. No. 279 Kantibhai R. Prajapati 478050 1839154 Sachin M. Prajapati 478050 1839154 Kalpesh B. Prajapali 478050 1839154 Total 1434150 5517462 5517462 B. No. 280 Sachin M. Prajapati 129000 496289 Kalpesh B. Prajapati 129000 496289 Yatin K. Prajapati 129000 496289 Total 387000 1488867 1488867 B. No. 281 Sachin M. Prajapati 356700 1372296 Kalpesh B. Prajapati 356700 1372296 Yatin K. Prajapati. 356700 1372296 Total 1070100 4116888 4116888 B. No. 256 Kalpesh B. Prajapti 993080 2904155 2904155 Grand Total 19090280 72527970 On the basis of above discussion it is proved that the assessee has paid on money in cash to the tune of Rs. 7,25,27,970/- to above mentioned persons over and above the payment of Rs. 2,10,23,722/-. Further, the fact that you have paid on-money to above assessees in cash for land purchase of Gatrad is substantiated by the Assessment Orders passed in the Group cases of Prajapati family by the ACIT, CC-1(4), Ahmedabad dated 31.01.2014, wherein assessee have accepted the on-money as their unaccounted income and offered it for taxation. 4. In view of the above, you are requested to provide the details of source for purchasing the land mid source of unaccounted money paid for the same, and P&L of the concerned year along with documentary evidence. 5. Your explanation/submission/details should reach the undersigned on 15.12.2017 at 11.00 a.m. Please note that if you fail to furnish any explanation by the given date, ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 6 - assessment in your case for the assessment year will be finalized without affording any further opportunity, so this may be treated as last opportunity." 4.2 In response to show cause notice, assessee wrote a letter to the AO that proceedings against assessee should be dropped and cited several judgments. It is pertinent to mention here that during the course of search the main person, Shri Motibhai Revabhai Prajapati, had admitted in his statement recorded on oath u/s 132(4) of the I.T.Act on 22/07/2011 that he had sold the land at Gatrad (approximately 37 Bighas), to the assessee on various dates from June, 2010 to January, 2011 which were duly registered as per the registered sale deeds. As all the seller parties had declared the receipt on money on the sale of land and have offered the save and protection in their return of income and have also paid taxes thereon. On the basis of the statement, an addition of Rs.7,25,27,970/- was added to the income of the assessee. 5. Against the addition, assessee preferred first statutory appeal before the CIT(A) who partly allowed the appeal of the assessee and granted relief. On the basis of the statement of searched person under s.132(4) of the Act in absence of any identification of incriminating seized material cannot be considered as a material found and seized during the course of search proceedings as an incriminating material against the impugned assessee. 6. Now, Revenue has come before us. 7. We have gone through the relevant records and impugned order. In this case, learned AO relied on the statement recorded in connection with the search and seizure proceedings in the case of Galaxy Group. The situation remained same at the level of learned AO while disposing off ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 7 - objection raised against reopening of assessment. The learned AO has relied upon the statement of Shri Motibhai Revabhai Prajapati recorded u/s. 132(4) of the Act on 22.07.2011, question / answer No. 8. The assessee has alleged that he was not provided the copy of statement u/s. 132(4) of the Act dated 22.07.2011 of Shri Motibhai Revabhai Prajapati for granting the opportunity to him for his rebuttal and further to cross examine Shri Motibhai Revabahi Prajapati. It is evident from the order of the learned CIT(A) that opportunity of cross examination was not granted to the assessee. The learned CIT(A) also cited case law of Hon'ble Gujarat High Court in the case of CIT vs. Ramanbhai B. Patel in Tax Appeal No. 207 to 210 of 2008. Subsequently, in case of the Hon'ble High Court of Judicature for Rajasthan Bench at Jaipur in the case of CIT, Central, Jaipur vs. Smt. SunitaDhadda, Jaipur & Others i.e. (i) D.B, Income Tax Appeal No. 197/2012, (ii) D.B. Income Tax Appeal No. 199/2012, (iii) D.B, Income Tax Appeal No. 198/2012, wherein it is held that non providing of opportunity of cross examination by the assessee on the statement recorded behind the back of the assessee and assessee categorically requested for the cross examination. But, the same was not granted to the assessee for the best reason known to the learned AO. Moreover, the statement of Shri Motibhai Revabhai Prajapati has recorded in general and in vague manner at the alleged on-money of approximately 8 Crore and he has also not identified any land survey number, other land co-owners name and on- money collection by different members of Prajapati Family by stating the on-money amount received by respective members of Prajapati family. The statement of the searched person u/s.132(4) of the Act in absence of any identification of incriminating seized material cannot be considered as a material found and seized during the course of search proceedings as an incriminating material against the impugned assessee. In view of the above, we do not find any merit in the appeal filed by the Revenue and we ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 8 - do not incline to interfere in the order passed by the CIT(A) and to our considered opinion, learned CIT(A) had passed a detailed and reasoned order and same does not require any kind of interference at our end. 8. In the result, appeal filed by the Revenue is dismissed. 9. Now, we come to Cross Objection. In Cross Objection, assessee has taken following objections: “1. The Ld.CIT (A) has erred in law and on facts in confirming the action of the Ld. AO in reopening the assessment under section 147 of the Act by issuing the notice u/s. 148 of the Act dated 30.03.2017 and passing the order under section 143(3) r.w.s.147 of the Act. On facts and circumstances of the as well as various judicial pronouncements relied upon by the Respondent, the Ld. AO ought to have quashed the reassessment order rendered u/s. 143(3) r.w.s.147 of the Act on the ground of lack of jurisdiction under wrong provisions of the Act. 2. The Ld. CIT(A) rightly held that the Ld.AO has grossly violated the provision of Income-tax Act and principle of natural justice by not providing the statement of Shri Motibhai Revabhai Prajapati dated 22.07.2011 in question answer no.8 which was relied upon by the Ld.AO for the first time in the order passed u/s. 143(3) r.w.s.147 of the Act. Thus, according to the settled legal position laid down by the Apex Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise Kolkata II and the judicial pronouncements of the Hon’ble jurisdictional Gujarat High Court in the case of CIT vs. Ramanbhai B. Patel in Tax Appeal No.207 to 210 of 2008 and various other High Courts' decision. The appellant could not be visited with erroneous additions based on statements of third party who are not allowed to be cross verified and cross-examined since it amounts to violation of principles of natural justice and proceedings become a nullity. 3. The Ld.CIT(A) has further held that the statement relied upon by the Ld.AO is general and vague for the alleged on money as no survey number of the land and other co-owners name has been identified by the maker of the statement. Thus, the statement of searched person u/s. 132(4) of the Act in absence of any identification of incriminating material merely oral statement cannot be used as incriminating material against the assessee and has no evidentiary value in the light of the ratio laid down in the case of Addl.CIT vs. Lata Mangeshkar (97 ITR 696) and Prarthna Construction Pvt. Ltd., Tax Appeal No.79 of 2000 (Guj.). The Ld.ClT(A) has rightly quoted on page no.49 that "I am getting impression that Prajapati Group desired to cooperate with the department to disclose certain amounts for payments of additional taxes and for that reason only mentioned receipt of 'On-money' without identifying either asset or the appellant." Thus the Ld.CIT(A) has rightly noted that "from the record ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 9 - available it is notice that the Ld.AO had no corroborative material to back the allegation of the appellant for 'on money' payment except the statement of Shri Motibhai Revabhai Prajapati". The Ld.CIT(A) has rightly stated that the statement has been given in round about manner without any specific mention such as particular plot number or particular name of assessee. 4. The Ld.CIT(A) has not erred in law and on facts in not noticing the provision of Section 292C of the I.T Act which raises a presumption that the contention of the books of account, other documents seized during the course of search u/s. 132 are true is not applicable in case of the assessee as there was no search in case of assessee. That the provision of section 132(4) r.w.s.292C of the Act is applicable in case of searched assessee's case and the Ld.AO has not brought on record any seized material in the reassessment order in case of the assessee identifying the seized material of searched assessee's case. 5. It is submitted that any addition u/s.69 can be made only if it found that there is actual investment not recorded in the books. Addition u/s.69 cannot be made on presumption. Most pertinently when the property is purchased by appellant as per Jantri Rate and in absence of any evidence as acceptable in law indicating any such alleged payments in cash. The facts of appellant's case is squarely covered by the decision of Hon'ble jurisdictional Gujarat High Court in the case of CIT-II vs. Kantibhai Revidas Patel (2014) 42 taxmann.com 128 (Guj.), ITO vs. Bharat V. Mehta (2015) 60 taxmann.com 31 (Guj.).” Since, above cross objections are supporting the order of learned CIT(A) and we have granted relief to the assessee, therefore, same is also dismissed as infructuous. 10. In the combined result, the appeal filed by the Revenue and Cross Objection of the assessee are dismissed. Sd/- Sd/- (WASEEM AHMED) (MAHAVIR PRASAD) ACC OUNTANT MEMB ER JUDICIAL MEMBER Ahmedabad: Dated 23/05/2022 True Copy S.K.SINHA ेश ! " #े" / Copy of Order Forwarded to:- ". र / Revenue 2. आ दक / Assessee This Order pronounced in Open Court on 23/05/2022 ITA No. 1197/Ahd/2019 a/w. CO No. 212/Ahd/2019 [Dushyant U Patel] A.Y. 2011-12 - 10 - %. सं&ं'( आयकर आय ) / Concerned CIT 4. आयकर आय ) - अपील / CIT (A) ,. - . /ीय 01 1 '(2 आयकर अपील य अ'(कर!2 अ34द & द / DR, ITAT, Ahmedabad 5. / 67 8 ल / Guard file. By order/आद श स 2 उप/स3 यक पं ीक र आयकर अपील य अ'(कर!2 अ34द & द ।