ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR V. SHRI RAJ KUMAR KANDOI, JAIPUR

ITA 1314/JPR/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6502 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRISH BEDI
• Assessee Lawyers: S L PODDAR ADV DHK
• Keywords: Capital asset; Income from undisclosed sources; Cost of acquisition
• Section: 143(3); 54F; 13; 153; 22; 69

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 1314/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR. CUKE VS. RAJ KUMAR KANDOI, 21-22, CHITRAKOOT MARG, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAZPK 5709 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI AMRISH BEDI (CIT-DR) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR (ADV.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/08/2020 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 07/09/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD.CIT(A)-IV, JAIPUR DATED 04/09/2018 FOR THE A.Y. 2011-12 IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S. 153 AND R.W.S. 245HA OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 7,50,000/- MADE BY A.O. ON ACCOUNT OF SCRAP TRADING. ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 2 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 68,30,220/- MADE BY A.O. ON ACCOUNT OF LONG TERM CAPITAL ON THE BASIS OF ASSESSEE OFFERING THE SAME INCOME BEFORE THE HONBLE ITSC. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 88,69,780/- MADE BY A.O. ON ACCOUNT OF UNDISCLOSED EXPENDITURE U/S 69 ON THE BASIS OF ASSESSEE OFFERING THE SAME INCOME BEFORE THE HONBLE ITSC. 2. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PANDEMIC. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT A SEARCH WAS CONDUCTED ON 18 JULY 2012 AT THE PREMISES OF ASSESSEE WHO BELONGS TO KANDOI GROUP, JAIPUR. THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 15 JULY 2011 DECLARING TOTAL INCOME OF RS.10,88,740/-. PURSUANT TO NOTICE ISSUED U/S 153A, THE ASSESSEE FILED RETURN OF INCOME DECLARING THE INCOME AS ORIGINALLY DECLARED. BEFORE THE ASSESSMENT COULD BE FINALIZED THE ASSESSEE FILED AN APPLICATION BEFORE SETTLEMENT COMMISSION ON 4 MARCH 2015. THE SETTLEMENT COMMISSION DID NOT ENTERTAIN THE APPLICATION BY THE ASSESSEE HOLDING THAT 'CONSIDERING THE FACTS OF THE CASE ABOVE, THE ISSUES EMANATING THEREFROM IS DISCUSSED IN FOREGOING PAGES, AND JUDICIAL OPINION AS NARRATED IN THE EARLIER PARA, WE ARE OF THE CONSIDERED OPINION THAT THE APPLICANTS HAVE FAILED TO MAKE EITHER A FAIR AND TRUE DISCLOSURE OR ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 3 GIVEN ANY SOUND BASIS FOR EXPLAINING THE MANNER OF EARNING SUCH UNDISCLOSED INCOME AND WORKING OUT SUCH INCOME. HENCE, THE MANDATORY CONDITIONS OF SECTION 245 C REMAIN UNFULFILLED, AS SUCH, THE COMMISSION IS UNABLE TO PROVIDE FOR THE TERMS OF SETTLEMENT AS REQUIRED UNDER SECTION 245D(6). ACCORDINGLY, THE APPLICATIONS IN BOTH CASES, ARE HEREBY REJECTED.' 3. DURING THE COURSE OF ASSESSMENT, THE A.O. MADE ADDITION OF RS. 7.50 LACS ON ACCOUNT OF SCRAP TRADING. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE ADDITION AFTER OBSERVING AS UNDER: 5. I HAVE CONSIDERED THE RELEVANT FACTS AND THE ARGUMENT ADVANCED. I FIND THAT DURING THE COURSE OF SEARCH NO MATERIAL IS FOUND WHICH SUGGESTS THAT THE APPELLANT WAS CARRYING ON SCRAP TRADING BUSINESS. THE INCOME WAS DECLARED BEFORE THE SETTLEMENT COMMISSION ONLY TO FULFILL THE REQUIREMENT OF APPLICATION FOR SETTLEMENT THAT THE INCOME WHICH IS NOT OTHERWISE DECLARED TO THE DEPARTMENT IS DECLARED IN THE APPLICATION FOR SETTLEMENT SO THAT THE CASE CAN BE ADMITTED BY HON'BLE SETTLEMENT COMMISSION. THE SOLE BASIS OF ADDITION IS THE DECLARATION BEFORE HON'BLE SETTLEMENT COMMISSION WHICH ITSELF HAS BEEN REJECTED BY THE HON'BLE SETTLEMENT COMMISSION HOLDING THAT 'THE APPLICANT HAS NOT FURNISHED ANY INFORMATION ABOUT QUANTITY OF SCRAP SOLD, PARTIES TO WHICH SUCH SCRAP WAS SOLD, OR ANY OTHER EVIDENCE INCIDENTAL TO PROCUREMENT, SUPPLY OR TRANSPORTATION OF SUCH SCRAP DURING THE PERIOD UNDER CONSIDERATION. THUS THE BASIS OF SURRENDER WAS SHROUDED IN MYSTERY.' THOUGH U/S 245 HA(3), THE AO SHALL BE ENTITLED TO USE ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE APPELLANT BEFORE THE HON'BLE SETTLEMENT COMMISSION OR THE RESULTS OF THE ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 4 ENQUIRY HELD OR EVIDENCE RECORDED BY THE HON'BLE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDINGS BEFORE IT AS IF SUCH MATERIAL, INFORMATION, ENQUIRY AND EVIDENCE HAD BEEN PRODUCED BEFORE THE AO, I FIND THAT EXCEPT THE DECLARATION BEFORE THE HON'BLE SETTLEMENT COMMISSION THERE IS NO MATERIAL IN POSSESSION OF AO TO HOLD THAT THE APPELLANT HAVE EARNED THE INCOME FROM SCRAP TRADING. AS PER SECTION 245 HA(2), WHERE A PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABATES, THE AO BEFORE WHOM THE PROCEEDING AT THE TIME OF MAKING APPLICATION WAS PENDING, SHALL DISPOSE OF THE CASE IN ACCORDANCE WITH THE PROVISION OF THIS ACT AS IF NO APPLICATION UNDER SECTION 245C HAS BEEN MADE . THE COMBINED READING OF SECTION 245 HA(2) AND 245 HA(3) SUGGEST THAT WHEREAS THE ASSESSMENT HAS TO BE MADE IN ACCORDANCE WITH THE PROVISION OF THE ACT AS IF NO APPLICATION FOR SETTLEMENT HAS BEEN MADE, THE AO IS ALSO ENTITLED TO USE THE MATERIAL AND INFORMATION PRODUCED BY THE APPELLANT BEFORE HON'BLE SETTLEMENT COMMISSION AS ALSO THE EVIDENCE RECORDED BY THE HON'BLE SETTLEMENT COMMISSION. IF THE INCOME IS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISION OF LAW, THE PRIMARY ONUS LIES UPON THE AO TO DEMONSTRATE THAT THE APPELLANT HAS EARNED CERTAIN INCOME. THERE IS NO MATERIAL BEFORE THE AO TO SUGGEST THAT THE APPELLANT HAS AN INCOME FROM SCRAP TRADING. WHILE COMPUTING THE INCOME IF THE AO IS TO USE THE MATERIAL AND INFORMATION PRODUCED BY THE APPELLANT BEFORE HON'BLE SETTLEMENT COMMISSION AS ALSO THE EVIDENCE RECORDED BY THE HON'BLE SETTLEMENT COMMISSION, IT SUGGESTS THAT BEFORE THE HON'BLE SETTLEMENT COMMISSION THERE WAS NO INFORMATION ABOUT THE QUANTITY OF SCRAP SOLD, PARTIES TO WHICH SUCH SCRAP WAS SOLD, OR ANY OTHER EVIDENCE INCIDENTAL TO PROCUREMENT, SUPPLY OR TRANSPORTATION OF SUCH SCRAP DURING THE PERIOD UNDER ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 5 CONSIDERATION. THUS THE FINDING OF HON'BLE SETTLEMENT COMMISSION IS THAT NO SUCH INCOME IN THE FORM OF SCRAP TRADING IS FOUND TO HAVE BEEN EARNED. AS RIGHTLY ARGUED BY THE LEARNED COUNSEL FOR THE APPELLANT THAT WHEN THERE IS NO MATERIAL EITHER BEFORE AO OR BEFORE HON'BLE SETTLEMENT COMMISSION THAT THE APPELLANT HAS EARNED THE INCOME, AND SINCE THE AO HAS NO OTHER EVIDENCE TO SUGGEST THAT ANY INCOME FROM SCRAP TRADING ACCRUED TO THE APPELLANT, THE ADDITION MADE SOLELY ON THE BASIS OF APPLICATION FILED BEFORE HON'BLE SETTLEMENT COMMISSION IS NOT SUSTAINABLE. JUST AS THE APPELLANT HAS ADMITTED BEFORE HON'BLE SETTLEMENT COMMISSION OF HAVING EARNED THE INCOME WITHOUT ANY BASIS, THE APPELLANT HAS ALSO DENIED BEFORE AO HAVING EARNED SUCH INCOME, IT WAS INCUMBENT UPON THE PART OF AO TO BRING ON RECORD CERTAIN MATERIAL FOR MAKING THE ADDITION. IN ABSENCE OF ANY SUCH MATERIAL AND IN VIEW OF THE FINDING OF HON'BLE SETTLEMENT COMMISSION AS WELL AS DENIAL OF APPELLANT HAVING EARNED INCOME FROM SCRAP TRADING, THE ADDITION OF 7 , 5 0 , 0 0 0 / - I S R E Q U I R E D T O B E D E L E T E D A N D I S H E R E B Y D E L E T E D . 4. NOW THE REVENUE IS IN APPEAL BEFORE THE ITAT. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT A DETAILED FINDING HAS BEEN RECORDED BY THE LD. CIT(A) TO THE EFFECT THAT THERE WAS NO MATERIAL BEFORE THE A.O. TO SUGGEST THAT THE ASSESSEE HAS INCOME FROM SCRAP TRADING. WE ALSO FOUND THAT WHILE REJECTING THE ASSESSEES APPLICATION BEFORE THE SETTLEMENT COMMISSION, THE SETTLEMENT COMMISSION HAS OBSERVED THAT THERE IS NO INCOME FROM SCRAP SALE AND ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 6 THERE WAS NO INCOME IN THE FORM OF SCRAP TRADING WAS FOUND. DETAILED FINDING SO GIVEN BY THE LD. CIT(A) AT PARA 5 OF HIS APPELLATE ORDER HAS NOT BEEN CONTROVERTED BY THE LD DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING GIVEN BY THE LD. CIT(A) AND WE UPHOLD THE SAME. 6. THE A.O. HAS ALSO MADE ADDITION OF RS. 68,30,220/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. IN THIS REGARD THE AO NOTED THAT THE ASSESSEE HAS DISCLOSED AN AMOUNT OF RS.68,30,220/- BEFORE SETTLEMENT COMMISSION ON ACCOUNT OF CAPITAL GAIN. NO SUCH INCOME IS DECLARED IN REGULAR RETURNS OR IN RESPONSE TO NOTICE U/S 153A. HE ACCORDINGLY APPLYING PROVISION OF SECTION 245 HA (3) OF THE ACT, MADE THE ADDITION. 7. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE ADDITION AFTER OBSERVING AS UNDER: 8. ON CONSIDERATION OF RELEVANT FACTS AND THE ARGUMENTS IT IS SEEN THAT THE SOLE BASIS OF ADDITION IS THE DECLARATION BY THE APPELLANT BEFORE THE SETTLEMENT COMMISSION, THE PROCEEDINGS BEFORE WHICH HAS ABATED. THERE IS NO FINDING BY SETTLEMENT COMMISSION THAT ANY INCOME IN THE FORM OF CAPITAL GAIN WAS EARNED BY THE APPELLANT OR ANY OTHER MATERIAL TO SUGGEST SO. EVEN DURING COURSE OF REGULAR ASSESSMENT ASSESSING OFFICER HAS NOT BROUGHT ON RECORD WHICH CAPITAL ASSET WAS SOLD, WHEN IT WAS ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 7 ACQUIRED, TO WHOM IT IS SOLD AND FOR WHAT CONSIDERATION. THE PROVISIONS CONTAINED FOR COMPUTATION OF CAPITAL GAIN REQUIRES THAT SUCH CAPITAL GAIN IS CHARGEABLE TO TAX IN RESPECT OF TRANSFER OF A CAPITAL ASSET. THUS THE LEAST THAT IS EXPECTED OF THE AO BEFORE BRINGING SURCHARGE IS THAT SOME CAPITAL ASSET WHICH WAS OWNED BY THE APPELLANT HAS BEEN TRANSFERRED DURING THE YEAR FOR CERTAIN CONSIDERATION OVER AND ABOVE THE COST OF ACQUISITION THEREOF. IN ABSENCE OF ANY SUCH MATERIAL DESCRIBING THE NATURE OF ASSET, YEAR OF ACQUISITION, YEAR OF TRANSFER, CONSIDERATION ACCRUING AS A RESULT OF TRANSFER, THE PROVISION OF SECTION 45 CANNOT BE APPLIED. WHILE CONSIDERING THE ADDITION ON ACCOUNT OF SCRAP SALE IN EARLIER PARAGRAPHS, I HAVE DISCUSSED THE SCOPE OF COMPUTING INCOME AS A RESULT OF ABATEMENT OF PROCEEDINGS BEFORE HON'BLE SETTLEMENT COMMISSION. APPLYING THE SAME CRITERIA, I HOLD THAT IN ABSENCE OF ANY EVIDENCE TO SUGGEST THAT THE APPELLANT HAS TRANSFERRED THE CAPITAL ASSET DURING THE YEAR UNDER CONSIDERATION AND HAVING EARNED ANY INCOME THEREFROM, THE ADDITION SOLELY ON THE BASIS OF DECLARATION BEFORE HON'BLE SETTLEMENT COMMISSION IS NOT JUSTIFIABLE. I THEREFORE, DELETE THE A D D I T I O N O F 6 8 , 3 0 , 2 2 0 / - . 8. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE ITAT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT DURING THE COURSE OF REGULAR ASSESSMENT, THE A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO THE EFFECT THAT THE ASSESSEE HAS SOLD ANY CAPITAL ASSET NOR ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 8 ANY FINDING WAS RECORDED TO THE EFFECT THAT WHEN SUCH ASSET WAS ACQUIRED TO WHOM IT IS SOLD AND FOR WHAT CONSIDERATION, IN ABSENCE OF ANY MATERIAL DESCRIBING NATURE OF ASSET, YEAR OF ACQUISITION, YEAR OF TRANSFER CONSIDERATION ACCRUING AS A RESULT OF TRANSFER, THE PROVISIONS OF SECTION 45 OF THE ACT CANNOT BE APPLIED. A DETAILED FINDING HAS BEEN RECORDED BY THE LD. CIT(A) TO THIS EFFECT IN PARA 8 OF HIS APPELLATE ORDER WHICH HAS NOT BEEN CONTROVERTED BY THE LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS SO RECORDED BY THE LD. CIT(A) AND WE UPHOLD THE SAME. 10. THE LAST GRIEVANCE OF THE REVENUE RELATES TO DELETION OF ADDITION OF RS. 88,69,780/- MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED EXPENDITURE U/S 69 OF THE ACT. IN THIS REGARD, FACTS OF THE CASE ARE THAT THE ASSESSEE ALONG WITH HIS 2 FAMILY MEMBERS WAS JOINTLY HOLDING A PLOT OF LAND NO. 58,58A AND 58B AT ARPIT NAGAR. DURING THE COURSE OF SEARCH A DOCUMENT MARKED AS ANNEXURE A-1 WAS FOUND FROM THE PREMISES OF THE BROTHER OF THE ASSESSEE. ON BEING QUESTIONED THE ASSESSEE AND OTHER CO-OWNERS ADMITTED THAT A SUM OF RS.2.43 CRORES WAS RECEIVED OVER AND ABOVE THE STATED CONSIDERATION FOR SALE OF THE ABOVE REFERRED PLOT OF LAND. ACCORDINGLY, THE ASSESSEE AND OTHER CO-OWNERS ADMITTED FOR HAVING EARNED ADDITIONAL LONG- TERM CAPITAL GAIN DURING THE FINANCIAL YEAR RELEVANT TO THE YEAR ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 9 UNDER APPEAL. HOWEVER DURING THE ASSESSMENT PROCEEDINGS THE FATHER OF THE ASSESSEE FILED AN AFFIDAVIT STATING THAT THE ON MONEY OF RS.2.43 CRORES RECEIVED ON SALE OF ARPIT NAGAR LAND BY HIS FAMILY MEMBERS BEING THE ASSESSEE AND TWO OTHERS WAS RECEIVED BY HIM AND IS RESPONSIBLE FOR THE SAME INCOME AND LIABLE TO TAX THEREON. THE ASSESSEE ALSO FILED SIMILAR AFFIDAVIT STATING THAT THE ON MONEY ON SALE OF ARPIT NAGAR LAND WAS RECEIVED BY HIS FATHER AND THE AMOUNT WAS USED BY HIM THEREFORE HE IS LIABLE FOR TAXATION ON THE SAME. THE AFFIDAVITS OF SHRI MANGI LAL KANDOI AND THE ASSESSEE ARE EXTRACTED BY THE AO IN THE ASSESSMENT ORDER. BASED ON THE AFFIDAVITS REFERRED ABOVE THE AO DID NOT MAKE ANY ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF RECEIPT OF ON MONEY ON SALE OF ARPIT NAGAR LAND. HOWEVER, THE AO NOTED THAT BEFORE THE SETTLEMENT COMMISSION THE ASSESSEE IS STATED TO HAVE MADE INVESTMENT FOR PURCHASE OF PROPERTY AT N-21, 22 A, HANUMAN VATIKA, VAISHALI NAGAR, JAIPUR. THE ASSESSEE IS STATED TO HAVE EARNED ON MONEY OF RS.2.43 CRORES ON SALE OF PLOT AT ARPIT NAGAR AND OUT OF THE SAID ON MONEY CLAIMED DEDUCTION U/ S 54F OF RS.1.57 CRORES. THOUGH THE AO DID NOT MAKE ANY ADDITION ON ACCOUNT OF ON MONEY RECEIVED ON SALE OF PLOT AT ARPIT NAGAR, BUT SINCE THE ASSESSEE IS STATED TO HAVE MADE INVESTMENT IN PROPERTY ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 10 AT HANUMAN VATIKA BY PAYING ON MONEY WHICH IS NOT DISCLOSED, THE INVESTMENT OF RS.1.57 CRORES CLAIMED AS DEDUCTION U/S 54F IS TO BE TREATED AS MADE OUT OF INCOME FROM UNDISCLOSED SOURCES AND HENCE REQUIRED TO BE ADDED IN THE HANDS OF THE ASSESSEE. THE AO ALSO NOTED THAT SINCE THE AMOUNT OF RS.68,30,220/- ON ACCOUNT OF CAPITAL GAIN IS ALREADY ADDED BEING DISCLOSED TO THE HON'BLE SETTLEMENT COMMISSION, TO THAT EXTENT THE SOURCE IS TREATED AS EXPLAINED AND HENCE ADDITION OF RS.88,69,780/- (RS.1,57,00,000 MINUS RS.68,30,220) WAS MADE. THE ASSESSEE CHALLENGES THE ABOVE ADDITION. 11. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE A.O. AFTER HAVING THE FOLLOWING OBSERVATION: 11. I HAVE CONSIDERED THE RELEVANT FACTS AND THE ARGUMENTS ADVANCED. THERE IS NO DISPUTE TO THE FACT THAT THE ON MONEY RECEIVED OF 2 . 4 3 C R O R E S C A M E T O B E A D D E D I N T H E H A N D S O F T H E F A T H E R O F T H E APPELLANT AND NOT THE APPELLANT OR OTHER CO-OWNERS. THE APPELLANT AS WELL AS HIS FATHER HAVE STATED THAT THE ON MONEY WAS RECEIVED BY SHRI MANGI LAL KANDOI AND NOT THE APPELLANT. THE AFFIDAVITS ALSO STATES THAT THE ON MONEY WAS USED BY SHRI MANGI LAL KANDOI. WHEN THE APPLICATION WAS FILED BEFORE HON'BLE SETTLEMENT COMMISSION, THE APPELLANT HAS ADMITTED TO HAVE EARNED CAPITAL GAIN ON SALE OF LAND AT ARPIT NAGAR. AT THE SAME TIME HE HAS CLAIMED DEDUCTION U/S 54F ON ACCOUNT OF ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 11 INVESTMENT OUT OF THE ON MONEY RECEIVED ON SALE OF PLOT AT ARPIT NAGAR. IT IS TO BE NOTED THAT ON THE BASIS OF AFFIDAVITS THE A S S E S S I N G O F F I C E R H A S C H O S E N T O T A X T H E I N C O M E A M O U N T O F 2 . 4 3 CRORES IN THE HANDS OF SHRI MANGI LAL KANDOI AND NOT THE APPELLANT. IF THE ON MONEY IS RECEIVED BY AND IS TAXABLE IN THE HANDS OF SHRI MANGI LAL KANDOI AND NOT THE APPELLANT, IN THE SAME BREATH THE INVESTMENT OUT OF SUCH ON MONEY CAN BE EXPLAINED ONLY BY SHRI MANGI LAL KANDOI AND NOT THE APPELLANT. THUS THE ON MONEY PAID ON ACQUISITION OF PROPERTY AT HANUMAN VATIKA, VAISHALI NAGAR, JAIPUR IS TO BE CONSIDERED AS PAID BY SHRI MANGI LAL KANDOI AND NOT THE APPELLANT. BASED ON THE APPLICATION BEFORE SETTLEMENT COMMISSION BY THE APPELLANT, THE APPELLANT HAS DISCLOSED CAPITAL GAIN AS WELL AS DEDUCTION U/S 54F OUT OF SUCH CAPITAL GAIN. HOWEVER SINCE THE CAPITAL GAIN ITSELF IS NOT TAXABLE IN THE HANDS OF THE APPELLANT AS DONE BY THE ASSESSING OFFICER, THE INVESTMENT OUT OF SUCH CAPITAL GAIN CANNOT BE CONSIDERED IN THE HANDS OF THE APPELLANT. IT IS ALSO SETTLED PRINCIPLE THAT THE SOURCE AND APPLICATION OF THE INCOME BOTH CANNOT BE TAXED. IN THE PRESENT CASE THE SOURCE OF INVESTMENT IS THE ON MONEY RECEIVED ON SALE OF PLOT AT ARPIT NAGAR. THE APPLICATION IS BY WAY OF PAYMENT OF ON MONEY FOR ACQUISITION OF PROPERTY AT HANUMAN VATIKA, VAISHALI NAGAR, J A I P U R . T H E S O U R C E I S 2 . 4 3 C R O R E S W H E R E A S T H E A P P L I C A T I O N I S O F 1 . 5 7 C R O R E S . T H E S O U R C E I S T A X E D I N T H E H A N D S O F S H R I MANGILAL KANDOI. THEREFORE THE APPLICATION SHOULD ALSO BE EXPLAINED BY HIM AND BEING LESS THAN THE SOURCE NO FURTHER ADDITION IS REQUIRED TO BE MADE. THE ASSESSING OFFICER CANNOT BLOW HOT AND COLD SIMULTANEOUSLY OR CAN RESORT TO APPROBATE AND REPROBATE. IF ONE PART OF THE STATEMENT IS CONSIDERED TO BE TRUE, HE CANNOT IGNORE THE OTHER PART. EITHER THE STATEMENT HAS ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 12 TO BE ACCEPTED OR REJECTED BUT IN TOTALITY AND NOT TO THE EXTENT IT SUITS THE REVENUE. VARIOUS CASE LAWS RELIED BY THE LEARNED COUNSEL FOR THE APPELLANT IN THIS REGARD ARE APT AND APPLYING THE SAME IT CAN BE HELD THAT WHEN THE SOURCE IS TAXED IN THE HANDS OF SHRI MANGI LAL KANDOI, THE APPLICATION THEREOF IS ALSO TO BE CONSIDERED IN THE HANDS OF MANGI LAL KANDOI AND NOT THE APPELLANT. THE AO WHILE CONSIDERING THE ISSUE HAS MADE A D D I T I O N O F 8 8 , 6 9 , 7 8 0 / - S I N C E H E H A S A L S O A D D E D T H E S U M O F 6 8 , 3 0 , 2 2 0 / - W H I C H I S C O N S I D E R E D A S E X P L A N A T I O N T O W A R D S INVESTMENT. HOWEVER SINCE I HAVE ALREADY DELETED THE ADDITION O F 6 8 , 3 0 , 2 2 0 / - . I A M R E Q U I R E D T O C O N S I D E R T H E A D D I T I O N O F 1 . 5 7 CRORES BUT SINCE THE SAME IS CONSIDERED AS EXPLAINED OUT OF THE R E C E I P T O F O N M O N E Y O F 2 . 4 3 C R O R E S I N T H E H A N D S O F S H R I M A N G I LAL KANDOI, NO FURTHER ADDITION IS REQUIRED TO BE MADE IN THE HANDS OF THE APPELLANT HEREIN. I THEREFORE DELETE THE ADDITION O F 8 8 , 6 9 , 7 8 0 / - . 12. AGAINST WHICH, THE REVENUE IS IN FURTHER APPEAL BEFORE THE ITAT. 13. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE A.O. HAS MADE ADDITION OF RS. 88,69,780/- ON ACCOUNT OF INVESTMENT IN ARPIT NAGAR PLOT. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAD DELETED THE ADDITION BY OBSERVING THAT THIS PLOT WAS BELONGING TO SHRI MANGI LAL KANDOI AND THE SALE PROCEEDS OF THE SAME IS ALSO ADDED IN HIS END BEING FATHER OF THE ASSESSEE. THE ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 13 LD. CIT(A) HAS FURTHER HELD THAT SINCE THE SALE OF PLOT HAS BEEN TAXED IN THE HANDS OF THE FATHER OF THE ASSESSEE I.E. SHRI MANGI LAL KANDOI, THE COST OF ACQUISITION SHOULD ALSO BE CONSIDERED IN THE HANDS OF SHRI MANGI LAL KANDOI AND NOT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF COST OF ACQUISITION. A DETAILED FINDING HAS BEEN RECORDED BY THE LD. CIT(A) TO THIS EFFECT IN PARA 11 OF HIS APPEAL ORDER WHICH HAS NOT BEEN CONTROVERTED BY THE LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) FOR DELETING THE SAID ADDITION. HENCE, WE UPHOLD THE SAME. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2020. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/09/2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CENTRAL CIRCLE-3, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SHRI RAJ KUMAR KANDOI, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) ITA 1314/JP/2018_ ACIT VS RAJ KR. KANDOI 14 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1314/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR