The ITO,Vapi Ward-4, Nani Daman V. Shri Dahyabhai Vallabhbhai Patel, Nani Daman

ITA 1246/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8916 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Assessee Lawyers: RASESH SHAH
• Keywords: Capital asset; Business income
• Section: 143(3); 10(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, VAPI, WARD - 4, DAMAN (APPELLANT) VS SHRI DAHYABHAI VALLABHBHAI PATEL, GHELWAD FALIA, DABHEL, NANI DAMAN, PAN: ACCPP2846H (RESPONDENT) REVENUE BY : MR. ALBINUS TIRKEY , SR. D . R. ASSESSEE BY: MR. RASESH SHAH , A.R. DATE OF HEARING : 09 - 03 - 2 017 DATE OF PRONOUNCEMENT : 22 - 03 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 20 09 - 10 , AR IS ES FROM ORDER OF THE CIT(A), VALSAD DATED 19 - 02 - 2013 IN APPEAL NO. CIT(A)/VLS/429/11 - 12 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1246 / A HD/20 13 A SSESSME NT YEAR 200 9 - 10 I.T.A NO. 1246/AHD/2013 A.Y. 2009 - 10 PAGE NO ITO VS. SHRI DAHYABHAI VALLABHBHAI PATEL 2 2. THE REVENUE HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) HAS ERR ED IN DELETING THE ADDITION OF RS. 22,28,399/ - MADE ON ACCOUNT OF REIMBURSEMENT OF TA/DA RECEIVED FROM LOK SABHA TREATING THE SAME AS EXEMPT U/S. 10(14) OF THE ACT W ITHOUT APPRECIATING THE FACT THAT SECTION 10(14) USE THE TERMS ONLY 'ANY SUCH ALLOWANCE' AND NOT 'REIMBURSE MENT'. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN TREATING THE ADDITION MADE OF RS. 1,03,43,250/ - UNDER THE HEAD OF LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS INVOLVED IN BUSINESS OF FREQUENT LAND TRANSACTIONS FOR MANY YEARS. 3. IN THIS CASE, THE RETURN OF INCOME DECLARING INCOME OF RS. 7 , 13 , 063/ - AND AGRICULTURAL INCOME OF RS. 62 , 380 WAS FILED ON 31 ST MARCH, 2010. SUBSEQUENTLY, THE CASE W AS SELECTED AND NOTICE U/S. 143( 2) OF THE ACT WAS ISSUED ON 2 0 TH SEPTEMBER, 2010. BOTH T HE GROUNDS OF APPEAL ARE BEING DECIDED AS UNDER: - GR. 1 R EIMBU RSEMENT OF DA/TA. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS AFTER VERIFICATION OF THE P & L A/C. , BALANCE SHEET AND CAPITAL A/C , THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD SHOWN TA/DA RECEIVED FROM LOK SABHA AMOUNTING TO RS. 22 , 28 , 399/ - IN THE P & L A/C. THE ASSESSING OFFICER FURTHER STATED THAT THE ASSESSEE HAD SHOWN TA/DA RECEIVED FROM LOK SABHA AS EXEMPT FROM THE TOTAL INCOME THEREFORE, THE ASSESSEE WAS ASKED WHY THE TA/DA RECEIVED SHOULD NOT BE ADDED TO HIS TOTAL I.T.A NO. 1246/AHD/2013 A.Y. 2009 - 10 PAGE NO ITO VS. SHRI DAHYABHAI VALLABHBHAI PATEL 3 INCOME AS INCOME FRO M UNEXPLAINED SOURCES. THEREFORE, T HE ASSESSING OFFICER ADDED THE TA/DA AMOUNT OF RS. 22 ,2 8 , 8 89/ - TO HIS TOTAL INCOME AND ALSO STAT ED THAT ASSESSEE WAS GIVEN MORE THAN SUFFICIENT OPPORTUNITY TO EXPLAIN THIS CASE BUT THE ASSESSEE FAI LED TO MAKE COMPLIANCE . AGGRIEVED AGAINST THE ADDITION MADE BY ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD . CIT(A). LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - DECISION : - I HAVE CONSIDERED THE OBSERVATION OF THE A O IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. IT APPEARS FROM THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER THAT THE AO IS TOTALLY CONFUSED WITH THE ISSUE. THE APPELLANT WAS A MEMBER OF PARLIAMENT DURING THAT PERIOD FOR WHICH HE RECEIVED TA/DA REIMBURSEMENT AS AN MP AS PER THE ENTITLEMENT. THE APPELLANT HAD MENTIONED THE SAID AMOUNT THE RETURN OF INCOME TO FURNISH ACCURATE PARTICULARS OF INCOME AND ACCORDINGLY CLAIMED IT AS EXEMPTED IN T HE RETURN OF INCOME HOWEVER, THE LAO WRONGLY TREATED THE SAME AS INCOME OF THE ASSESSEE ON THE GROUND THAT THE SAME HAS BEEN INCURRED IN CASH OUT OF HIS UNEXPLAINED SOURCE AND THE SAME HAS NOT BEEN OFFERED FOR TAX. WHAT A VAGUE CONCLUSION BY THE AO. ON THE ONE HAND HE ACCEPTS THAT THE TA/DA RECEIVED BY THE HON'BLE MP IS REIMBURSED AMOUNT AND ON THE OTHER HAND HE ADDS IT AS INCOME IN THE HANDS OF THE APPELLANT. THE AO HAS NOT GIVEN ANY REASONS HOW HE CAME TO THE CONCLUSION THAT THE APPELLANT HAD INCURRED SUC H AMOUNT IN CASH FROM UNACCOUNTED SOURCE? DEFINITELY, THE AO'S OBSERVATION IN THIS REGARDS IS WITHOUT ANY BASIS. THE FACT IS THAT THE AMOUNT RECEIVED FROM LOK SABHA AS TA/DA BY THE APPELLANT IS NOT TAXABLE U/S. 10(14) OF THE ACT. HENCE, THE AO IS DIRECTED TO DELETE THE ADDITION. ACCORDINGLY, THIS GROUND IS ALLOWED. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL RELIED ON THE ORDER OF THE LD. CIT(A). I.T.A NO. 1246/AHD/2013 A.Y. 2009 - 10 PAGE NO ITO VS. SHRI DAHYABHAI VALLABHBHAI PATEL 4 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD .WE NOTICED THAT THE LD. CIT(A) HAD DELETED THE ADDITION MADE ON ACCOUNT OF TA/DA REIMBURSEMENT ON THE GROUND THAT THE ASSESS RECEIVED TA/DA REIMBURSEMENT AS AN MP AS PER ENTITLE MENT WHICH WAS EXEMPT U/S 10(14) OF THE ACT. IN VIEW OF THE ABOVE FACTS AND FINDINGS , WE DO NOT FIND ANY REASON TO INTERFERE IN THE DECISION OF THE LD.CIT(A). GR. 2 SALE TRANSACTION S : - 7. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT ASSESSEE HAD SOLD VARIOUS NON - AGRICULTURAL LANDS AS UNDER: - SR. NO. SURVEY NO./ SITUATE D AT PURCHASER NAME TOTAL AREA TOTAL SALE VALUE 1 651, DABHE L M/S. DECCAN CANS & PRINTERS PVT. LTD 4700 SQ. MTR 47,00,000/ - 2 117/1, 2, DABHE L SHRI SH ANKARLA L KESHARAM CHAUDHAR Y 3007 SQ. MTR. 10,59,500/ - 3 117/1, 117/2, 120/1, 120/2 DABHE M/S. RISHABH PLAST INDUSTRIES 950+1784+3007+351+817+356+ 1220 15,00,000/ - I.T.A NO. 1246/AHD/2013 A.Y. 2009 - 10 PAGE NO ITO VS. SHRI DAHYABHAI VALLABHBHAI PATEL 5 L 4 120/2, 120/3, 120/1, 117/2 HERCULES PLASTIC PVT. LTD. 3007+817+1220+ AND 1000 SQ. MTR. 30 ,83,750/ - TOTAL 1,03,43,250 / - THE ASSESSING OFFICER FURTHER STATED THAT ON PERUSAL OF RE TURN OF INCOME AND OTHER DETAIL SUBMITTED DURING THE COURSE OF A SSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE SALE TRANSACTION OF ABOVE STATED LANDS HA D NOT BEEN OFFERED AS INCOME FOR TAXATION UNDER THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW CAUSE WHY THE RECEIPT OF S OLD PROPERTY AMOU N T ING OF RS. 1,03,43,250/ - SHOULD NOT BE ADDED TO THE TO T AL INCOME AS UNACCOUNTED I NCOME . T HE ASSESSING OFFICER STATED THAT ASSESSEE FAILED TO MAKE ANY COMPLIANCE THEREFORE,HE ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE AS HIS UNDISCLO SED INCOME . AGGRIEVED AGAINST THIS ADDITION, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A ). THE LD. CIT(A) HAS PARTLY ALLOWED THIS APPEAL BY STATING THAT SALE PROCEED OF THESE LANDS SHOULD BE TAXED UNDER THE HEAD CAPITAL GAIN BY OBSERVING AS UNDER: - 8.3 DECISION : - I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THERE IS NO DISPUTE THAT THE APPELLANT HAD SOLD 4 PIECES OF N.A. LAND FOR A CONSIDERATION OF RS. 1,03,43,253/ - WHICH WAS NOT SHOWN IN THE RETURN OF THE APPELLANT. THE A O WAS RIGHT IN BRINGING IT TO TAX. AT THE SAME TIME THE ID. AR HAS A POINT WHICH MERITS CONSIDERATION. THE ID. AR CONCEDED THAT THE AMOUNT DESERVED TO BE TAX NOT AS BUSINESS INCOME BUT SHOULD BE TAXED UNDER HEAD 'CAPITAL GAIN'. AS SUBMITTED THE ABOVE REFER RED PLOTS WERE VERY OLD PROPERTIES ACQUIRED BY THE APPELLANT I.T.A NO. 1246/AHD/2013 A.Y. 2009 - 10 PAGE NO ITO VS. SHRI DAHYABHAI VALLABHBHAI PATEL 6 LONG BACK BEFORE 01.04.1981 EITHER BY HIM - SELF OR BY WAY OF INHERITANCE. SALE CONSIDERATION OF THE LANDS (LAND BEING CAPITAL ASSET) SHOULD BE TAXED UNDER THE HEAD CAPITAL GAIN. THEREFORE, THE AO IS DIRECTED TO RE - WORK THE CAPITAL GAIN OUT OF SALES PROCEEDS AND TAX ACCORDINGLY. THE ID. AR IS DIRECTED TO SUBMIT THE COMPUTATION OF CAPITAL GAIN AS PER LAW BEFORE THE AO WITHIN 7 DAYS FROM THE RECEIPT OF THE ORDER. ACCORDINGLY, THIS GROUND IS PARTLY ALL OWED. 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE NOTICED THAT SOLD LAND WAS VERY OLD PROPERTIES ACQUIRED BY THE ASSESSEE LONG BACK EITHER BY HIM - SELF OR BY WAY OF INHERITANCE. WE FIND THAT THE ASSESSEE WAS NOT IN THE BUSINES S OF TRADING IN PLOTS OF LAND AND THE ASSESSEE HAD OWNED THE SAID LAND FOR A NUMBER OF YEARS BEFORE THE SALE OF THESE LANDS MATERIALIZED . WE FURTHER FIND THAT ASSESSING OFFICER HAD NOT SU BSTANTIATED HIS FINDINGS WITH ANY CONCRETE MATERIAL TO TAX THE SALE PROCEE DS AS BUSINES S INCOME AGAINST TAXING UNDER THE HEAD CAPITAL GAIN AS H ELD BY THE LD. CIT(A). THEREFORE , IN VIEW OF THE ABOVE FACTS AND FINDINGS WE DISINCLINED TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). 9. IN THE RESULT THE APPEAL OF THE RE VENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 22 - 03 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 22 /03 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE I.T.A NO. 1246/AHD/2013 A.Y. 2009 - 10 PAGE NO ITO VS. SHRI DAHYABHAI VALLABHBHAI PATEL 7 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,