The DCIT, Circle-5, Ahmedabad V. Shri Rakesh Karsanbhai Patel, Ahmedabad

ITA 1291/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6880 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Salary income; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO1291&1292/AHD/2009 (ASSESSMENT YEARS:-2005-06) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, AHMEDABAD V/S 1. SHRI RAKESH KARSANBHAI PATEL. [ PAN: AGGPP 2910C] 2. SHRI KARSANBHAI KHODIDAS PATEL. [PAN: AGGPP 2909 K ], NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI R K DHANESTA, DR ASSESSEE BY:- SHRI S N SOPARKAR, AR O R D E R A N PAHUJA: THESE TWO APPEALS THE REVENUE AGAINST TWO SEPARATE ORDERS DATED 2-02-2009 AND 17-02-2009 OF THE LD. CI T(APPEALS)-XI, AHMEDABAD, FOR THE AY 2005-06,RAISE THE FOLLOWING GROUNDS : 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN HOLDING THE METHOD OF ACCO UNTING OF THE ASSESSEE AS CASH METHOD INSTEAD OF MERCANTILE ME THOD. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS.25,86,569/- IN THE CASE OF SHRI RAKESH KARSANBHAI PATEL AND RS.87,47,522/- IN THE CASE OF SHRI KARSANBHAI KHOD IDAS PATEL ON ACCOUNT OF ACCRUED INTEREST ON INVESTMENT MADE IN REC BONDS. 3. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS.4,55,000/- IN THE CASE OF SHRI RAKESH KARSANBHAI PATEL AND SHRI KARSANBHAI KHODIDAS PATEL ON ACCOUNT OF INCOME FROM HOUSE PROPERTY IN THE HANDS OF THE ASSESSEE INSTEAD OF IN THE CASE OF KARSANBHAI KHODIDAS PATEL (HUF). ITA NOS.1291 & 1292/AHD/2009 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD MAY BE SET ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. . SINCE SIMILAR ISSUES WERE INVOLVED , THESE APPEAL S WERE HEARD SIMULTANEOUSLY FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. 2. ADVERTING FIRST TO GROUND NOS. 1 & 2 IN THE SE APPEALS, FACTS, IN BRIEF, AS PER RELEVANT ORDERS IN THE CASE OF SHRI R AKESHBHAI K PATEL ARE THAT RETURN DECLARING INCOME OF RS.1,82,06,190/ - FILED ON 31-08- 2005 BY THE ASSESSEE, DERIVING INCOME FROM SALARY, LONG TERM CAPITAL GAINS, INTEREST & DIVIDEND ETC. BESIDES AGRICULTURA L INCOME, AFTER BEING PROCESSED ON 18.11.2005 U/S 143(1) OF THE INC OME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS SE LECTED FOR SCRUTINY WITH THE ISSUE OF A NOTICE U/S 143(2) OF THE ACT ON 24-05-2006. ON PERUSAL OF NOTES FORMING PART OF COMPUTATION OF INC OME, THE ASSESSING OFFICER [AO IN SHORT] NOTICED THAT THE AS SESSEE FOLLOWED CASH METHOD OF ACCOUNTING . HOWEVER, THE AO FOLLOW ING HIS FINDINGS IN THE PRECEDING ASSESSMENT YEARS CONCLUDED THAT ME THOD OF ACCOUNTING IS MERCANTILE FOR THE YEAR UNDER CONSI DERATION ALSO. SINCE THE ASSESSEE INVESTED FOLLOWING AMOUNTS IN RE C BONDS S.NO. YEAR OF INVESTMENT TOTAL AMOUNT OF INVESTMENT MATURITY VALUE DATE OF MATURITY 1 FY 2001-02 1,45,00,000 2,06,88,600 30-03-2007 2 FY 2002-03 2,21,00,000 3,04,00,000 14-09-2007 THE AO BROUGHT TO TAX INTEREST OF RS. 25,86,569/- ACCRUED ON ABOVE INVESTMENTS FOR THE YEAR UNDER CONSIDERATION , FOL LOWING CIRCULAR ITA NOS.1291 & 1292/AHD/2009 3 NO.2 DATED 15-02-2002 AND LETTER NO.225 DATED 12.0 3.1996 OF THE CBDT AND HIS OWN FINDINGS FOR THE AYS 2003-04 & 200 4-05. 2.1. LIKEWISE IN THE CASE OF SHRI KARSANBHAI K PATEL ,THE AO ADDED AN AMOUNT OF RS.87,47,522/- ON ACCOUNT INTER EST ACCRUED ON INVESTMENTS IN REC BONDS, HOLDING THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 3. ON APPEAL, THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN THE CASE OF SHRI RAKESHBHAI K PATEL I N THE FOLLOWING TERMS:- 2. IT IS SUBMITTED BY THE A.R. THAT THE A.O. HAS W RONGLY HELD THE APPELLANT'S METHOD OF ACCOUNTING AS MERCANTILE. HE HAS RELIED UPON THE ORDER OF THE PREVIOUS ASSESSMENT YEARS IN THIS REGA RD. HOWEVER, IT IS SUBMITTED THAT SIMILAR ISSUE WAS THERE IN THE PREVI OUS ASSESSMENT YEAR WHICH WAS DECIDED IN FAVOUR OF THE APPELLANT BY THE UNDERSIGNED RELYING UPON THE DECISION OF THE ITAT, AHMEDABAD, IN ONE OF THE GROUP CASES OF THE APPELLANT. THEREFORE, IT IS PLEADED THAT THE AD DITION OF RS.25,86,569/- TOWARDS ACCRUED INTEREST INCOME IS NOT JUSTIFIED, S INCE THE APPELLANT WILL OFFER THE SAME FOR TAX PURPOSE ON RECEIPT BASIS. 2.1 THE SUBMISSIONS MADE BY THE A.R. HAVE BEEN TAKE N INTO CONSIDERATION. IT IS SEEN THAT THERE WAS A SIMILAR ISSUE IN APPELLANT'S OWN CASE FOR A.Y. 2004-05 WHICH HAS BEEN DECIDED BY ME IN APPELLANT'S FAVOUR RELYING UPON THE DECISION OF THE ITAT'S DECISION VI DE ITA NO. 1855/AHD/2007 DATED 2/11/07 FOR A.Y. 2003-04. THERE FORE, FOLLOWING THE ABOVE DECISION, ADDITION MADE BY THE A.O. IS DELETE D. 3.1. LIKEWISE IN THE CASE OF KARSANBHAI K PATEL, TH E LD. CIT(A) FOLLOWING HIS OWN ORDER FOR THE AY 2004-05 ACCEPTED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF DECISION DATED 2.11.2007 O F THE ITAT IN ITA NO.1850/AHD./2007 IN THE CASE OF KISAN DISCRETIONAR Y FAMILY TRUST.. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). AT THE OUTSET, BOTH THE PARTIES AGREED THAT ISSUE IS SQUARELY COVERED BY THE DECISION DAT ED 2.11.2007 OF THE ITAT IN THE CASE OF SHRI RAKESHBHAI K PATEL IN ITA NO. 1855/AHD./2007 FOR THE AY 2003-04,FOLLOWED IN THE A Y 2004-05. ITA NOS.1291 & 1292/AHD/2009 4 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION OF THE ITAT . WE FIND THAT THE ITAT WHILE ADJUDICATING A SIMILAR ISSUE IN THE CAS E OF SHRI RAKESHBHAI K PATEL FOR THE AY 2004-05 IN THEIR DE CISION DATED 3.10.2008 IN ITA NO.1804/AHD/2008, FOLLOWED AN EARL IER DECISION DATED 02-11-2007 IN THE ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO.1855/AHD/2007, AND CONCLUDED AS UNDER:- 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO.1855/AHD/2007, DATED 02-11-2007. WE FIND THAT THE SECOND GROUND OF APPEAL TAKEN BEFORE THE TRIBUNAL I N THAT ASSESSMENT YEAR RELATES TO THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. IN THAT APPEAL, THE CIT(A) HAS HELD THAT THE ASSESSEE IS NOT FOLLOW ING THE CASH METHOD OF ACCOUNTING. THE ASSESSEE, THEREFORE, CAME IN APPEAL BEFORE THE TRIBUNAL BY TAKING THE GROUND THAT THE CIT(A) GROSSLY ERRED IN HOLDING THAT THE ASSESSEE IS NOT FOLLOWING THE CASH SYSTEM OF ACCOUNTING. WE FIN D THAT THE TRIBUNAL IN THAT ORDER UNDER PARAS 12 AND 12.1 ON THE SYSTEM OF ACCO UNTING FOLLOWED BY THE ASSESSEE, UPHELD THE ASSESSEES PLEA THAT THE ASSES SEE WAS CONSISTENTLY FOLLOWING THE CASH SYSTEM OF ACCOUNTING SINCE 1999- 2000, IN THE FOLLOWING MANNER: 12. SINCE THE FACTS AND CIRCUMSTANCES OF THE PRESEN T CASE AS WELL AS THE ISSUES WHICH RELATE TO THE ASSESSEES CLAIM OF HAVING FOLLOWED CASH SYSTEM OF ACCOUNTING AND WITH RESPECT TO VALID ITY AND DATE OF APPLICABILITY OF CIRCULAR NO.2 OF 2002, EXCEPT THE FACTS STATED HEREINAFTER, ARE, ADMITTEDLY, SIMILAR TO THE FACTS AND CIRCUMSTANCES AS WELL AS THE ISSUES AS WERE IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST, WE, AFTER FOLLOWING OUR DECISION IN T HE CASE OF KISAN DISCRETIONARY FAMILY TRUST, I.E. ITA NO.1850/AHD/20 07 FOR AY 2003- 04 RELEVANT PART OF WHICH HAS BEEN REPRODUCED HEREI NABOVE AND FOR THE FOLLOWING REASONS STATED HEREUNDER, UPHOLD THE ASSESSEES PLEA WITH RESPECT TO SYSTEM OF ACCOUNTING FOLLOWED AND T AXABILITY OF INTEREST ON DDBS/OFCPN ON CASH BASIS AND OUR DECISI ON IN THE CASE KISAN DISCRETIONARY FAMILY TRUST, APPLY MUTATIS MUT ANDIS TO THIS CASE ALSO. 12.1 IN ADDITION TO REASONS GIVEN UNDER PARAGRAPH N O.12 ABOVE FOR UPHOLDING THE ASSESSEES PLEA, THE OTHER REASON S IN SUPPORT OF OUR ABOVE CONCLUSION, ARE THAT SO FAR AS THIS CASE IS CONCERNED, IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS FOLLOWING CA SH SYSTEM OF ACCOUNTING, WAS DECLARING INCOME ON CASH SYSTEM, TH E INCOME SO ITA NOS.1291 & 1292/AHD/2009 5 DECLARED HAD BEEN ACCEPTED AS IT IS IN ORDERS U/S 1 43(3) OF THE ACT FOR ALL THE YEARS EXCEPT ASSESSMENT YEAR 1999-2000 WHEN THE CASH SYSTEM OF ACCOUNTING STOOD ACCEPTED, THOUGH NO ASSE SSMENT U/S 143(3) OF THE ACT WAS FRAMED. SINCE THE ASSESSEE HA S BEEN FOLLOWING THE CASH SYSTEM CONSISTENTLY SINCE AY 199 5-96 AND HA SNOT CLAIMED ANY CHANGE IN SYSTEM OF ACCOUNTING THE REAFTER, EITHER IN REGULAR RETURNS OF INCOME OR IN THE RETURN OF UN DISCLOSED INCOME FURNISHED UNDER CHAPTER XIV-B OF THE ACT, THERE WAS NO REASONS FOR THE AUTHORITIES TO ADOPT THE SYSTEM OF ACCOUNTING A S MERCANTILE SYSTEM WITHOUT MAKING OUT A CASE THAT EITHER THE AS SESSEE WAS, IN FACT, NOT FOLLOWING THE CASH SYSTEM OF ACCOUNTING O R HAVING FOLLOWED IN AY 1995-96 OR AT THE MOST IN AY 1999-2000 HAD NO T FOLLOWING THE SAME CONSISTENTLY IN SUBSEQUENT YEARS, THOUGH, FROM THE FACTS ON RECORDS, WE FIND THAT REVENUE HAS NOT BASED ITS DEC ISION ON THESE GROUNDS. THE REVENUES CASE, AS HAS BEEN OBSERVED F ROM PARAGRAPH NO.2.1 OF ASSESSMENT ORDER FOR AY 2002-03 AS WELL AS THE AY 2003-04, FOR ADOPTING THE SYSTEM OF ACCOUNTI NG AS MERCANTILE IN AY 2002-03 AND AY 2003-04 IS THE ME NTIONING OF SYSTEM OF ACCOUNTING AS MERCANTILE IN ASSESSMENT FOR BLOCK PERIOD WHICH ADMITTEDLY, WAS FOR THE PERIOD 01-04-1995 TO 27-09-2001. SINCE MENTIONING OF ACCOUNTING PERIOD IN BLOCK ASSE SSMENT, IN OUR OPINION, (AS HAS BEEN DISCUSSED IN THE CASE OF KISA N DISCRETIONARY FAMILY TRUST) COULD NOT BE A REASON FOR ADOPTING SY STEM OF ACCOUNTING AS MERCANTILE IN SUBSEQUENT ASSESSMENT YEARS AND THAT TOO WITHOUT COMPLYING WITH THE PROVISIONS OF L AW IN THIS RESPECT, WE UPHOLD THE ASSESSEES PLEA THAT THE ASS ESSEE WAS CONSISTENTLY FOLLOWING THE CASH SYSTEM OF ACCOUNTIN G, SINCE AY 1999-2000; MEANING THEREBY THAT ASSESSEES SYSTEM O F ACCOUNTING FOR AY 2003-04 WAS CASH SYSTEM. THESE FINDINGS, IN OUR OPINION, WILL EQUALLY BE APP LICABLE DURING THE YEAR UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE AFO RESAID DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE PRECED ING ASSESSMENT YEAR, WE HOLD THAT THE ASSESSEE WAS FOLLOWING THE CASH SY STEM OF ACCOUNTING AND, THEREFORE, WE DO NOT FIND ANY ILLEGALITY OR IN FIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS.70,45,596/- B EING ADDED BY THE AO ON ACCRUAL BASIS IN RESPECT OF INTEREST ON REC BONDS. THUS, GROUND NO.1 IN THE REVENUES APPEAL STANDS DISMISSED. 5.1 SIMILARLY, THE CLAIM OF THE ASSESSEE WAS ALL OWED IN THE CASE OF SHRI KARSANBHAI K PATEL, IN THE LIGHT OF VIEW TAKEN BY THE ITAT IN THEIR DECISION DATED 2-11-2007 IN THE CASE OF SHR I RAKESHBHAI K PATEL FOR AY 2003-04 IN ITA NO.1855/AHD/2007. ITA NOS.1291 & 1292/AHD/2009 6 6. INDISPUTABLY, FACTS AND CIRCUMSTANCES IN THE Y EAR UNDER CONSIDERATION ARE PARALLEL TO THE FACTS AND CIRCUMS TANCES PREVAILING IN THE PRECEDING AYS 2003-04 & 2004-05. THEREFORE, FOLLOWING THE VIEW TAKEN BY THE ITAT IN THEIR AFORESAID DECISIONS , WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT (A) IN THE INSTANT CASES. CONSEQUENTLY, GROUND NOS.1 AND 2 IN THE APPE AL ARE DISMISSED. 7. NEXT GROUND NO.3 IN THE THESE APPEALS RELATE TO ADDITION OF RS. 4,55,000/- ON ACCOUNT OF INCOME FROM HOUSE PROP ERTY. ON PERUSAL OF THE BALANCE SHEET OF THE PREVIOUS YEAR I N THE CASE OF SHRI RAKESHBHAI K PATEL, THE AO NOTICED THAT THE ASSESSE E JOINTLY OWNED THE FOLLOWING IMMOVABLE PROPERTIES: NIRMA HOUSE RS.26,96,436/- NIMA HOUSE RS.10,17,393/- FARM HOUSE RS.19,99,234/- FARM FURNITURE RS.12,34,992/- IN THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2004-05 , THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE INCOME FROM NIMA HOUSE PROPERTY SHOULD NOT BE DETERMINED AS PER THE PROVISIONS OF S ECTION 23 OF THE ACT, THE ASSESSSEE HAVING MORE THAN ONE SELF OCCUP IED PROPERTY. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO ADDED AN AMOUNT OF RS. 4,55,000/- IN THE A.Y. 2004-05. HO WEVER, THE AFORESAID PROPERTY OF NIMA HOUSE AND THE FARM HOUSE ETC. WERE NOT REFLECTED IN THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION. TO A QUERY BY THE AO, THE ASSESSEE REPLIED THAT THE SAI D PROPERTIES HAD BEEN TRANSFERRED TO KARSANBHAI KHODIDAS PATEL,HUF A ND THE FARM HOUSE AND ITS FURNITURE WERE TRANSFERRED TO SHRI KA RSANBHAI KHODIDAS PATEL. IN SUPPORT, THE ASSESSEE FILED AN A FFIDAVIT. ACCORDINGLY, IT WAS CONTENDED THAT THE ADDITION MAD E IN THE EARLIER AY 2004-05 UNDER THE HEAD INCOME FROM HOUSE PROPERT Y, CANNOT BE MADE DURING THE CURRENT YEAR AS THESE PROPERTIES NO LONGER BELONGED TO THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED A WORK ING OF ITA NOS.1291 & 1292/AHD/2009 7 COMPUTATION OF LONG TERM CAPITAL LOSS, WHICH WAS OT HERWISE NOT CLAIMED IN THE RETURN, BESIDES DETAILS OF PAYMENT THROUGH TWO CHEQUES DATED 6.10.2005 FOR AN AMOUNT OF RS.32,34,2 27/- & RS.14,68,750/-. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO OBSERVED AS UNDER:- 5.2 THE ASSESSEE'S ABOVE CONTENTION WAS EXAMINED C AREFULLY AND THE SAME WAS FOUND NOT ACCEPTABLE FOR THE FOLLOWING REA SONS. (I) THOUGH THE ASSESSEE HAS CLAIMED THAT THE PROPER TIES HAVE BEEN TRANSFERRED AND SHOWN IN THE ANNUAL ACCOUNTS, HOWEV ER, FROM THE RETURN OF INCOME, IT WAS TRANSPIRED THAT THE ASSESSEE HAS NOT FURNISHED COPY OF THE BALANCE SHEET AND OTHER DETAILS FROM WHICH IT COULD BE DEDUCED THAT THE ABOVE TRANSACTION WAS REALLY HAPPENED AND ALSO REFL ECTED IN THE BOOKS OF ACCOUNT AND THE RETURN OF INCOME, PRECISELY IN THE BALANCE SHEET, AS SUCH. (II) THE FARM HOUSE, NIMA HOUSE AND OTHER ASSETS OF THE ASSESSEE, WHICH ARE CLAIMED TO HAVE BEEN TRANSFERRED TO OTHER RELATED ENTITIES, ARE IMMOVABLE PROPERTIES IN NATURE AND THE SAME CAN ONL Y BE TRANSFERRED TO ANOTHER PERSON BY WAY OF PROPER AGREEMENT TO THIS E FFECT AND ALSO BY PAYING PROPER STAMP DUTY TOWARDS REGISTRATION OF SU CH AGREEMENT WITH THE REGISTRAR OF TRANSFER OF PROPERTY, AS SUCH. HOWEVER , THE ASSESSSEE HAS NOT SUBMITTED ANY SUCH DOCUMENTS/RECORDS TO SUGGEST THAT THE ABOVE ESSENTIAL LEGAL FORMALITIES HAS EVER BEEN COMPLIED WITH. (III) IN THE COMPUTATION OF INCOME, THE ASSESSSEE H AS NOT REFLECTED THE SALE/TRANSFER OF SUCH PROPERTY AND RESPECTIVE CAPIT AL GAIN/LOSS ON SUCH ACCOUNT. HAD IT BEEN A GENUINE TRANSACTION OF TRANS FER OF PROPERTIES, THE RESPECTIVE CAPITAL GAIN/LOSS SHOULD HAVE BEEN REFLE CTED IN THE RETURN OF INCOME. THUS NOT CLAIMING SUCH SO CALLED CAPITAL TR ANSACTIONS ON THE GROUND THAT THE CAPITAL LOSS WAS NOT TO BE CLAIMED, IS NOTHING BUT AN AFTERTHOUGHT ONLY. (IV) MOREOVER, THE ASSESSEE HAS SIMPLY PROVIDED THE DETAILS OF THE SO CALLED PAYMENTS THROUGH CHEQUES. THE ASSESSSEE HAS ALSO NOT PROVIDED BASIC DETAILS LIKE THE TOTAL CONSIDERATION FOR THE TRANSFER OF PROPERTY, FURTHER DETAILS OF AMOUNT RECEIVED ON SUCH TRANSACTION, WOR KING OF CAPITAL GAIN, IF ANY, OUT OF ABOVE DEALING ETC. MOREOVER IN ABSENCE OF AGREEMENT TO SALE OF PROPERTY ETC., IT CANNOT BE ASCERTAINED THAT THE ABOVE PAYMENTS WERE RECEIVED IN RESPECT OF THE ABOVE PROPERTIES ONLY. T HE DATE OF CHEQUE I.E. 06.10.2005 ALSO PERTAINS TO THE SUBSEQUENT YEAR ONL Y. THE ASSESSEE HAS NOT PROVIDED COPY OF BANK STATEMENT/BOOKS TO EXAMIN E THE NATURE OF ABOVE PAYMENT ETC. THUS THE ASSESSEE'S EXPLANATION IN RES PECT OF PAYMENT RECEIVED TOWARDS SALE OF THE ABOVE PROPERTIES WERE FOUND NON VERIFIABLE, AS SUCH. ITA NOS.1291 & 1292/AHD/2009 8 (V) THE ASSESSSEE HAS ALSO SIMPLY SUBMITTED AN AFFI DAVIT FROM THE ASSESSEE'S SIDE IN WHICH THE TRANSFER OF PROPERTY I N THE NAME OF OTHER RELATED ENTITIES HAVE BEEN MENTIONED. IT IS A SETTL ED LAW THAT THE AFFIDAVIT IS NOTHING BUT A SELF SERVING DOCUMENT WHICH CANNOT PA RTAKE THE NATURE OF EVIDENCE UNTIL AND UNLESS HAS BEEN SUPPORTED WITH O THER CIRCUMSTANTIAL EVIDENCES THERETO. MOREOVER, AN IMMOVABLE PROPERTY CANNOT BE TRANSFERRED SIMPLY ON AN AFFIDAVIT OR ORAL AGREEMEN T AS THE TRANSFER OF PROPERTY ACT STIPULATES NOT ONLY WRITTEN AGREEMENT TO THIS EFFECT, BUT ALSO PAYMENT OF REQUISITE STAMP DUTY ON SUCH TRANSACTION , FOR REGISTRATION OF SUCH TRANSACTION. (VI) THE ASSESSEE ALSO DID NOT FURNISH THE BALANCE SHEET AND COPY OF RETURN OF SHRI KARSANBHAI K. PATEL (HUF) TO PROVE T HAT NIMA HOUSE HAS BEEN REFLECTED THEREIN, AS CLAIMED. 5.3 FROM THE ABOVE FACTS AND CIRCUMSTANCES WHAT APP EARS IS THAT THE ASSESSEE HAS NOT TRANSFERRED THE PROPERTY TO OTHER RELATED ENTITIES AS SUCH, BUT HAS RESORTED TO A PAPER EXERCISE JUST TO AVOID OR CIRCUMVENT THE PROVISIONS OF SECTION 23 OF THE ACT. IN ABSENCE OF ANY SUPPORTING LEGAL DOCUMENTS AND OTHER INFORMATION, IT IS HELD THAT TH E ASSESSEE'S CONTENTION IS NOTHING BUT AN EYEWASH OR AFTERTHOUGHT TO AVOID THE LEGITIMATE TAX LIABILITY IN RESPECT OF THE ADDITIONAL HOUSE PROPER TY BEING OWNED BY HIM AND LIABLE FOR THE DEEMED PROPERTY INCOME U/S 23(4)(B) OF THE ACT. ACCORDINGLY ASSESSEE'S CONTENTION IS REJECTED WHILE HOLDING THA T THE PROPERTY UNDER CONSIDERATION I.E. NIMA HOUSE FOR ALL LEGAL AND PRA CTICAL PURPOSES STILL BELONGS TO THE ASSESSEE ONLY. ACCORDINGLY, INCOME F ROM HOUSE PROPERTY TOWARDS NIMA HOUSE, U/S 23 OF THE I.T. ACT IS WORKE D OUT AT RS.4,55,000/-, BASED ON THE WORKING GIVEN IN THE A.Y. 2004-05. 7.1 FOR SIMILAR REASONS, THE AO ADDED AN AMOUNT O F RS.4,55,000/- IN THE CASE OF SHRI KARSANBHAI K PATEL ALSO. 8. ON APPEAL, THE LEARNED CIT(A) DECIDED THE ISSUE IN THE CASE OF SHRI RAKESH KARSANBHAI PATEL IN THE FOLLOWING T ERMS:- 3. THE NEXT GROUND OF THE APPEAL IS WITH REGARD TO ADDITION OF RS.4,55,000/- UNDER THE HEAD INCOME FROM HOUSE PROP ERTY. IT IS SUBMITTED BY THE A.R. THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR THE APPELLANT HAS TRANSFERRED HOUSE PROPERTY TO SHRI KA RSANBHAI KHODIDAS PATEL HUF. THEREFORE, THE A.O. IS NOT JUSTIFIED TO MAKE AN ADDITION TOWARDS HOUSE PROPERTY INCOME ON THE GROUND THAT THE PROPER TY IS NOT TRANSFERRED BY REGISTRATION UNDER TRANSFER OF PROPERTY ACT. IT IS FURTHER SUBMITTED THAT THE PROPERTY IS ACTUALLY TRANSFERRED BY DEED AND NO W IN THE POSSESSION OF KARSANBHAI K PATEL, HUF. THEREFORE, THE PROPERTY IS NO LONGER IN THE CONTROL OF THE APPELLANT, AND HENCE, THE AO CANNOT HOLD THAT THE APPELLANT SHOULD HAVE DECLARED THE INCOME FROM SAID PROPERTY. THE AR ALSO RELIED UPON THE SUPREME COURTS DECISION IN THE CASE OF PO DDAR CEMENTS PVT. ITA NOS.1291 & 1292/AHD/2009 9 LTD. 226 ITR 625 AND ARGUED THAT SINCE THE POSSESSI ON IS HANDED OVER TO THE BUYER, THE APPELLANT CANNOT ADMIT INCOME FROM S AID PROPERTY. THE ARGUMENTS ADVANCED BY THE LEARNED AR ARE PERUSED. 3.1 HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE AO IS NOT JUSTIFIED TO MAKE THE A DDITION TOWARDS PROPERTY INCOME, SINCE THE SAID PROPERTY IS NO LONGER IN THE POSSESSION OF THE APPELLANT THEREFORE, THIS GROUND OF APPEAL IS ALLOW ED. 8.1 LIKE WISE ADDITION WAS DELETED IN THE CASE OF SHRI KARSANBHAI K PATEL ALSO. 9. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER OF THE AO AND CONTENDED THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS OR EVIDENCE BEFORE THE AO IN SUPPORT OF TH EIR CLAIM THAT THE AFORESAID PROPERTIES HAD INDEED BEEN TRANSFERRED T O SHRI KARSANBHAI KHODIDAS PATEL (HUF) OR SHRI KARSANBHAI KHODIDAS P ATEL. SINCE THE LD. CIT(A) WITHOUT REFERRING TO ANY DOCUMENT OR EVIDENCE CONC LUDED THAT THE PROPERTY IS TRANSFERRED AND NO LONGER IN POSSESSION OF THE ASSE SSEE, HE WAS NOT JUSTIFIED IN DELETING THE ADDITION. ON THE OTHER HAND, THE LEARN ED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT( A). 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FINDINGS IN THE RELEVANT ASSESSMENT ORDERS, THESE ASSESSEES DID NOT FURNIS H ANY EVIDENCE OR DETAILS BEFORE THE AO, EVIDENCING THAT THE AFORESA ID IMMOVABLE PROPERTIES HAD INDEED BEEN TRANSFERRED OR POSSESSION HANDED OVER TO SHRI KARSANBHAI KHODIDAS PATEL (HUF) OR SHRI KARSANBHAI KHODIDAS P ATEL. ACCORDING TO THE AO, THE PROPERTIES BEING IMMOVABLE, COULD BE TRANSFER RED TO ANOTHER PERSON BY WAY OF PROPER AGREEMENT TO THAT EFFECT AND BY PAYING PR OPER STAMP DUTY TOWARDS REGISTRATION OF SUCH AGREEMENT WITH THE REGISTRAR O F TRANSFER OF PROPERTY . HOWEVER, THESE ASSESSSEES DID NOT SUBMIT ANY SUCH DOCUMENTS/RECORDS BEFORE HIM. EVEN IN THE RETURN OF INCOME SUCH A TRANSACTI ON WAS NOT REFLECTED NOR THE ASSESSEES PROVIDED DETAILS OF THE TOTAL CONSIDERAT ION FOR THE TRANSFER OF PROPERTY AND THE AMOUNT RECEIVED ON SUCH TRANSACTION, WORKIN G OF CAPITAL GAIN ETC AND NOR ITA NOS.1291 & 1292/AHD/2009 10 EVEN COPY OF THE AGREEMENT OR COPY OF BANK STATEM ENT/BOOKS WHILE THE CHEQUES WERE ALSO DATED 06.10.2005 . THESE ASSESSE ES DID NOT FURNISH EVEN THE BALANCE SHEET OR COPY OF RETURN OF SHRI KARSANB HAI K. PATEL (HUF) TO PROVE THAT NIMA HOUSE HAD BEEN REFLECTED THEREIN, AS CLAI MED. ACCORDINGLY, THE AO ADDED AN AMOUNT OF RS.4,55,000/-, BASED ON THE WOR KING GIVEN IN THE A.Y. 2004- 05. ON APPEAL, THE LD. CIT(A) , WITHOUT REFERRING T O ANY DOCUMENTS OR EVIDENCE AND WITHOUT RECORDING HIS SPECIFIC FINDI NGS ON THE FACTS POINTED OUT BY THE AO IN THE ASSESSMENT ORDERS, DEL ETED THE ADDITION. THERE IS NO MATERIAL BEFORE US AS TO WHE THER OR NOT THE WRITTEN SUBMISSIONS OR THE DETAILS FILED BEFORE THE LD. C IT(A),WERE CONFRONTED TO THE AO. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE LD. CIT (A) HAVE NOT RECORDED HIS SPECIFIC FINDINGS ON THE FACTS POINTE D OUT BY THE AO IN THE ASSESSMENT ORDERS NOR PASSED A SPEAKING ORDER ON TH E ISSUE, WE ARE OF THE OPINION THAT MATTER NEEDS TO BE RECONSIDERED BY HIM . THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFES T ITSELF IN THE ORDER. SECTION 250(6) OF THE INCOME TAX ACT MANDATES THAT THE ORDE R OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHA LL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION. AS IS APPARENT FROM THE IMPUGNED ORDER, IN OUR OPINION, T HE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. TH E REQUIREMENT OF RECORDING OF REASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE AND SAFEGUARD TO ENSURE O BSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF E XTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE D ECISION-MAKING PROCESS. WE MAY POINT OUT THAT A DECISION DOES NOT MERELY MEA N THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS. STATE OF PUNJAB,(1995)1SCC 760(SC)]. 10.1 IN VIEW OF THE FOREGOING, ESPECIALLY WHEN T HE LD. CIT(A) HAVE NOT PASSED A SPEAKING ORDER ,WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. ITA NOS.1291 & 1292/AHD/2009 11 CIT(A) AND RESTORE THE ISSUE RAISED IN GROUND NO. 3 OF THESE APPEALS TO HIS FILE FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH L AW IN THE LIGHT OF OUR AFORESAID OBSERVATIONS, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED C IT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT. WITH THESE OBSERVATIONS, GROUND NO. 3 IN THE SE TWO APPEALS IS DISPOSED OF. 11. GROUND NOS. 4 & 5 IN THESE APPEALS BEING PR AYER AND GENERAL IN NATURE ,DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED. 12.. IN THE RESULT, BOTH THESE APPEALS ARE PARTLY ALLOWED, BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 8 -04-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 8 -04-2011 COPY OF THE ORDER FORWARDED TO: 1. 1.SHRI RAKESH KARSANBHAI PATEL, 2.SHRI KARSANBHAI KHODIDAS PATEL, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD 2. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, AHM EDABAD 3. CIT CONCERNED 4. CIT(A)-XI, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD