The ACIT, 5(1), Indore V. Shri Raj Kumar Shambhudayal Agrawal, Indore

ITA 148/IND/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8243 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2021
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S C.P. RAWKA; VEENUS RAWKA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Additional evidence; Cost of acquisition
• Section: 147; 144; 143(3); 50C; 142(1); 143(2)

Judgement Text

अपील य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.148/Ind/2017 Assessment Year:2011-12 ACIT 5(1) Indore बनाम/ Vs. Shri Raj Kumar Shambhudayal Agrawal Indore (Appellant) (Respondent ) P.A. No.ADCPA0468M Revenue by Shri Rajeeb Jain, CIT-DR Respondent by S/Shri C.P. Rawka & Veenus Rawka, CAs Date of Hearing: 13.10.2021 Date of Pronouncement: 17.11.2021 आदेश / O R D E R PER MANISH BORAD: The above captioned appeal at the instance of Revenue is directed against the order of Ld. Commissioner of Income Tax(Appeals)-III, (in short ‘CIT(A)’), Indore dated 25.11.2016 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 27.02.2014 framed by DCIT-5(1) Indore. Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 2 2. Brief facts of the case as culled out from the records are that the assessee is an individual and engaged in the business of running Petrol Pump. Assessee is also partner in a firm namely M/s Anil Enterprises. E-return of income for A.Y. 2011-12 filed on 31.03.2012 declaring income of Rs.11,99,410/-. Case selected for scrutiny followed by serving of notices u/s 143(2) & 142(1) of the Act. Case selected for scrutiny due to AIR information regarding sale of property. Partial submissions were made on behalf of the assessee and adjournment was sought to make the remaining submission but remained noncompliant subsequently. Ld. AO accordingly completed the assessment u/s 144 r.w.s. 143(3) of the Act, after making various additions at Rs.6,60,68,133/- and computing assessed income at Rs.6,72,67,543/- in the following manner:- 16. With the above remarks the income of the assessee is assessed as under:- Income as per return Rs. 11,99,410/ Add: Addition on account of undisclosed investment in purchase of property as per para 13:- A.Property purchase at Race course Road 4,75,38,000/- B.Agri. Land Purchased at Gram Nipania 96,00,000/- C. Registry expenses for the purchase of 54,79,800/- Above mentioned properties Total: 6,26,17,800/- 6,26,17,800/- Addition on account of undisclosed capital gain as per para 14 Rs. 16,50,333/- Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 3 Addition on account of unexplained cash deposit as per Para 15 Rs. 18,00,000/- Total Income Rs. 6,72,67,543/- 3. Aggrieved assessee preferred an appeal before the ld. CIT(A). Assessee filed additional evidences. Ld. CIT(A) called for the remand report and after considering the same as well as reply/submission filed by the assessee partly allowed the assessee’s appeal. 4. Now the revenue is in appeal before this Tribunal raising following grounds: 1.Whether in the facts and circumstances of the case, Ld.CIT (A) erred in deciding the issues relying on additional evidences without even admitting them as per Rule 46A and deleting the various additions 1 disallowances made by AO. 2.Whether in the facts and circumstances of the case the Ld. CIT (A) has erred in deleting addition of Rs. 4,75,38,000/- ignoring the findings in the assessment order and remand report & also not verifying the source of investment made by the assessee. 3.Whether in the facts and circumstances of the case, Ld. CIT (A) has erred in deleting addition of Rs. 94,00,000/- ignoring the findings in the assessment order and remand report & also not verifying the source of investment made by the assessee. 4.Whether Ld. CIT (A) has erred in deleting the sum of Rs. 54,79,800/- which was incurred for purchasing properties at Race Course Road, & Nipania ignoring the findings in the assessment order, remand report and without verifying the source of expenses. 5.Whether Ld. CIT (A) has erred in deleting Rs. 14,00,223/- out of the addition made of Rs. 16,50,000/- on account of capital gain. 6.Whether Ld. CIT (Appeals) has erred in deleting addition of Rs. 18 lacs made on account of cash deposits in bank account. 7.The appellant craves leave to add to or deduct from or otherwise amend the above rounds of appeal. 5. Ld. DR vehemently argued supporting the order of Assessing Officer along with furnishing remand report dated 19.01.2015 and Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 4 submitted that the ld. CIT(A) erred in deciding the issue relying on additional evidences without admitting them as per Rule 46A of the Income Tax Rules. 6. Per contra ld. counsel for the assessee apart from placing reliance on the finding of Ld. CIT(A) also referred to the paper book dated 02.01.2019 containing 57 pages, Paper book dated 29.07.2019 containing 38 pages and paper book dated 04.01.2021 containing 16 pages. 7. We have heard rival contentions and perused the records placed before us and carefully gone through the paper book filed by both sides. 8. Apropos to ground no.1 through which the revenue has raised an issue that additional evidences were admitted by the ld. CIT(A) in contravention to Rule 46An of the Income Tax Rules. We find that the additional evidences were filed before the ld. CIT(A). All these evidences were forwarded to the ld. AO and remand report was called for. Ld. DR has himself submitted the copy of remand report dated 07.01.2015 wherein for each of the issues raised before the ld. CIT(A) remand report has been furnished. We, therefore, find no merit in this ground raised by the revenue and the same is Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 5 dismissed. 9. Apropos to ground no.2 relating to addition of Rs. 4,75,38,000/- contention of the assessee before Lower authorities is that this amount pertains to purchase consideration paid by partnership firm M/s Anil Enterprises for purchase of land and all the payments have been made through account payee cheque, therefore, the addition was wrongly made in the hands of assessee. We find that Ld. CIT(A) has dealt this issue in detail in the impugned order deleting the addition observing as follows:- Ground no.3 6. This ground of appeal is related to addition of Rs4,75,38,OO0/-on account of alleged undisclosed investment made. I have gone through the assessment order, contentions of the AO for making the addition, remand report, counter comments on the remand report and the material available on record. The appellant has pleaded that the addition of Rs.4, 75,38,000/ - on account of alleged undisclosed investment made in the hands of the assessee is arbitrary as the property was purchased by a firm which is a separate entity and not by the assessee as individual and hence the addition so made without considering the facts and material on record deserves to be deleted. As per the appellant submission, the property was purchased by the firm M/s Anil Enterprises in which appellant was one of the partners. In his support, he filed the purchase deed and partnership deed of the said firm Mils Anil Enterprises and its audit report for F.Y. 2010-11. 6.1 The submissions made by the appellant are reproduced as below:- "The property has been purchased by a partnership firm M/s Anil Enterprises and deed has been executed by the Assessee in the capacity of a partner along with other partner Shri Satish Chandra Gupta.. This aspect has been duly reflected in the title deed. The Ld AO has assessed, the investment in the hands of the assessee just for the reason that the purchaser firm has not filed its return of income. So for the fault of other, the assessee has been penalized. As regards source of investment, though the assessee is not duty bound but being a representative of purchaser firm, copies of bank account are herby submitted which reflects payment made for the consideration of property by way of cheque. It may kindly be appreciated that details of cheque are available in the title deed which can be cross verified form the Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 6 bank account. Therefore, even in the case of the partnership firm, there is no iota of unexplained income. Even otherwise also, there is no question of treating the amount as unexplained income in hands of the assessee." 6.2 On going through the assessment order as well as the submissions of the appellant, it is abundantly clear that this property belongs to the firm and not to the appellant. This is also clear from the title deed of the property. The appellant has also explained the source of investment in the hands of the firm by filing the bank account. Thus, when the property has been acquired by the firm and duly reflected there, than there is no question of any addition on account of unexplained investment. This ground of appeal is allowed. 9.1 From perusal of the above finding of Ld. CIT(A) as well as the paper book filed before us, we find that there was a transaction of purchase of land carried out on 29.11.2010 and the purchase consideration along with stamp duty and other charges were Rs. 4,75,38,000/-. On perusal of the purchase deed we find that this purchase was made by a partnership firm M/s. Anil Enterprises and in the purchase deed name of two partners are mentioned namely Shri Satish Chandra Gupta and assessee Shri Rajkumar Shanbhudayal Agrawal. Though the PAN No. of both the partners is mentioned but the documents clearly shows that purchase has been made in the name of M/s Anil Enterprises. Before us Ld. DR failed to controvert this fact. We, therefore, find no inconsistency in the finding of Ld. CIT(A) deleting the impugned addition by observing that the alleged sum is a purchase consideration paid by separate entity to purchase immovable property in its name for which no addition was called for in the hands of assessee. Accordingly, ground no.2 raised by the revenue stands dismissed. Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 7 10. Apropos to ground no.3 relating to addition of Rs.94,00,000/- for the alleged undisclosed investment in the purchase of agricultural land in the hands of assessee, we find that Ld. AO made the addition for undisclosed investment of Rs.96,00,000/- and when the matter came up before the ld. CIT(A) complete details of purchase of this agricultural land was filed and duly examined by the ld. CIT(A) who observed that the said agricultural land was purchased by three persons including the assessee and the share of assessee is 1/3 rd . Ld. CIT(A) has dealt this issue giving following finding: This ground of appeal is related to addition of Rs. 96,00,000 / - a/ c of undisclosed investment in purchase of Agricultural land in the hands of appellant. I have carefully gone through the assessment order, contentions of the AO for making the addition, remand report, counter comments on the remand report and the material available on record. 7.1 The appellant has purchased agriculture land in co- ownership with Smt. Vimlabai Agrawal and Shambhudayal Agrawal which is evident from title deed as on 05/06/2010 submitted during the course of assessment proceedings as well as appeal proceedings. 7.2 It has been submitted by the appellant that his investment amounted to Rs.30 lac and the remaining Rs.60 lacs have been invested by above two people equally. The appellant has further claimed that the AO has assessed the Rs.96 Lacs under this head by adopting stamp duty value of the property without appreciating that law in force as on date of execution of deed did not permit the AO to adopt stamp duty value in hands of purchaser. It has been further submitted that so far as the quantification of investment is concerned, the AO has not relied upon the aspect of co-ownership. It has been further stated by the appellant that it is surprising that the contents of purchase deeds have been summarily rejected by the AO, but on the other hand the AO has invoked Section 147 in the case of Smt. Vimla Agrawal, one of the co-owners and examined the investment made by her. On going through the details of the property, it is clear that the property has been purchased by the appellant in co-ownership with two other family members namely Smt. Vimla Bai Agrawal and Shri Shambhudayal Agrawal. These Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 8 facts are clearly evident from the deed of 05.06.2010 submitted by the appellant. Thus, the entire investment cannot be added in the hands of the appellant alone. 7.3 As regard the investment made by the assessee, it is submitted that the funds have moved from the assessee’s bank account which is evident from the bank statement enclosed and copy of document executed, a copy of which has also been submitted during the course of appeal hearing. Therefore the said investment stands fully disclosed. Date wise details of cheques issued for purchase of the property has been submitted which are as under:- S.No. Name Date of chq. Chq. No. Amount 1 Rajkumar Agrawal 30.05.2010 994407 of SBI 15,00,000/ - 2 Rajkumar Agrawal 06.07.2010 9944500f SBI 15,00,000/- 7.4 Thus, the share of investment of the appellant has been fully explained. As far as the addition by virtue of stamp duty valuation of the property is considered, a total amount of Rs.6,00,000/ - is to be added equally in the hands of all the three co-owners. Thus, as far as the appellant is concerned the addition on this amount is restricted to Rs. 2,00,000/- Which is his share of the additional stamp duty valuation in the property in proportion to the share he enjoys in the property. Thus, the appellant gets a relief of Rs. 94,00,000 / - on this ground. The AO is free to take action in the case of other two co- owners namely Smt. Vimla Bai Agrawal and Shri Shambhudayal Agrawal for adding the additional stamp duty valuation of the property so purchased. This ground of appeal is partly allowed. 10.1 From perusal of above finding we find that there was transaction of purchase of agricultural land by three persons. Assessee is one of the co-owners and he has paid the purchase consideration by cheque totalling to Rs. 30,00,000/- and the source of this investment is though banking channel in the bank account placed on record supporting this fact. We, therefore, find no reason to interfere in the finding of Ld. Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 9 CIT(A) giving relief of Rs.94,00,000/-. We, thus dismiss revenue’s ground no.3. 11. Apropos to ground no.4 relates to the addition of Rs.54,79,800/-. We find that this amount is towards registry expenses which comprises of two parts, firstly sum of Rs.46,95,800/- incurred towards purchase of land by M/s. Anil Enterprises which has been discussed by us while dealing with ground no.2 in the preceding paras and the remaining amount of Rs.7,84,000/- relates to the agricultural land purchased with two other co-owners, dealt by us in ground no3 in the preceding paras. We find that ld. CIT(A) has given relief to assessee for a sum of Rs.54,79,800/- observing as follows: Ground no.5 8. This ground of appeal is related to the addition of Rs.54,79,800/- towards registry expenses. I have carefully perused the assessment order, the submissions of the appellant, the remand report, the counter comments of the appellant on the remand report and the material on record. The appellant has submitted that the Registry expenses of Rs.46, 95,800/ - represent the expenses of relates to the property owned by the firm and the expenses of Rs.7,84,000/- relate to the agricultural land owned by three co-owners and hence the same deserves to be deleted from the income of the assessee. The above expenditure including the registry expenses are related to the property in question in ground no.3 which has actually been purchased by the firm Anil Enterprises. 8.1 The appellant has stated that the expenditure relating to the Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 10 registration expense stand explained from the bank account which clearly shows that funds amounting to Rs.45,00,000 /- and Rs.5,00,000/- have been paid to Veena Mangal, Stamp vendor on 05.02.2011 and 10.02.2011 respectively. I am inclined to agree with the appellant submission that even otherwise also the appellant's case can't be subjected to any addition on this count as the property has been purchased by partnership firm. 8.2 As regards registration expenses, in respect of purchases of agriculture land by the assessee in co-ownership with other two persons referred to in ground no.4 , it has been submitted by the appellant that all the three co-owners carry different business in different field and the appellant's share amounting to Rs.2,87 ,000/- has been met from out of the funds available with him in his business of JCB plying and other agencies as disclosed in Return of Income. I have carefully verified all the facts stated by the appellant and also examined the documents including the return of income so produced. After a detailed and through verification, I have reached to the conclusion that the registry expenses pertaining to the property belonging to the firm the source of which has incidentally been also explained cannot be added in the hands of the appellant. Further, as far as the registration expenses of the other property is concerned, as the share in the hands of the appellant stands explained; the same can also not be added in the appellant's hand. Thus, this ground of appeal is allowed and the addition is deleted in full. 11.1 From perusal of the above finding and also in view of our finding while dealing as ground no.2 & 3 of the instant appeal, we find that Ld. CIT(A) was justified in deleting the addition of Rs.46,95,800/-, since it pertains to the purchase of land by a separate entity i.e. partnership firm M/s Anil Enterprises and similarly for the remaining sum of Rs.7,84,000/- also the addition is rightly deleted as the assessee is only 1/3 rd owner of the agricultural land purchased and the sum of Rs.7,84,000/- is a total amount of expenses of which assessee’s share is of Rs.2,87,000/- and the source of this amount has been duly Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 11 explained by the assessee which is from the business of JCB and others. Income is disclosed in the return of income. We, therefore, find no reason to interfere in the finding of Ld. CIT(A). Ground no.4 of the revenue’s appeal stands dismissed. 12. Apropos to ground no.5 of revenue’s appeal relating to addition of Rs.14,00,223/- deleted by the Ld. CIT(A) out of the total addition of Rs.16,50,000/- made by the Ld. AO we find that this addition arises out of the transaction of sale of agricultural land purchased by the assessee during the year. Assessee has claimed to have disclosed Short Term Capital Gain of Rs.9,00,000/-. Ld. CIT(A) has given relief to the assessee giving following finding: 8.This ground of appeal is related to addition of undisclosed capital gain' .amounting to Rs.16,50,333/- . The AO has made addition of Rs.16,50,333/- on account of Short term capital gain, which is worked out as under:- 1 The sale proceeds received u/s 50C Rs.1,47,35,000/- 2 Less: Registry Expenses Rs.7,84,000/- 3 Purchase cost Rs.90,00,000/- 4 Total STCG work out Rs.49,51,000/- 5 STCG of each co-owner (one third) in the hands of assessee Rs.16,50,333/- 9.1 Since 'the appellant has already offered of Rs.9,00,000/- as capital gain· in the return of income for taxation, difference, of Rs.7,50,330/- (16,50333-9,00,000), is treated as concealed' particulars of income. This is in accordance with' the remand report so submitted by the AO. I agree with finding of the A.O. in respect of addition made on account of short Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 12 term capital gain, however only the share of this Rs.7,50,330/ - can be added in the hands of the appellant. This share works out to Rs.2,50, 110/- at Thus the addition on this ground in the appellant's hand is restricted Rs.2,50, 110/-, at the same time, the AO is free to take action in the case of other two co-owners. This ground of appeal is partly allowed. 12.1 From perusal of the finding of Ld. CIT(A) as well as observations made by the lower authorities, we find that agricultural land purchased in the co-ownership of three persons including the assessee was sold during the year. Assessee is liable to pay tax only on his share of income. Ld. AO made the addition of Rs. 16,50,333/-. Ld. CIT(A) gave a relief of Rs.9,00,000/- observing that this amount has already been taxed in the return of income. Out of the balance amount of Rs.7,50,330/-, Ld. CIT(A) confirmed the addition of Rs.2,50,110/- in the hands of assessee. We note that assessee had already offered Short Term Capital Gain of Rs.9,00,000/- in its return of income being 1/3 rd share of the property sold during the year. Ld. CIT(A) has rightly confirmed the addition of Rs. 2,50,110/- in the hands of assessee. Ld. DR did not raise any objection to this contention that Rs.9,00,000/- has been offered by the assessee in the return of income. We, therefore, find no inconsistency in the finding of Ld. CIT(A) and accordingly Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 13 confirm the same. Thus ground no.5 raised by the revenue is dismissed. 13. Apropos to ground no.6 relating to addition of Rs.18,00,000/- on account of cash deposited in bank Account, we find that there was a deposit of cash of Rs.18,00,000/- in the bank account of the assessee held with IDBI Bank. No details were placed before Ld. AO. Thereafter before Ld. CIT(A) submission was made that the assessee possessed a JCB machine and the same was sold during the year and consideration was received in cash which was deposited in the bank account. Ld. CIT(A) has dealt to this issue observing as follows: 10. This ground of appeal IS related to the addition of Rs.18,00,000/ - in the hands of the assessee as unexplained cash deposit in bank. I have carefully perused the assessment order, the submissions of the appellant, the remand report, the counter comments of the appellant on the remand report and the material on record. 10.1 The submission made by the appellant are reproduced as below: “The ld. AO has termed the documents supporting the source of cash deposited as colorful story without going to the merits of the documents furnished by the assessee He possessed a JCB machine which was sold to Shri Ram Singh S/o Shri Amar Singh ji for a consideration of Rs.11,00,000/-. A copy of sale letter is enclosed here with in support of the submission explaining the receipt of Rs.16 lacs. The sale letter Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 14 contains the full details including the details of the JCB as well as the name and address of the purchaser. The Ld. AO has doubted this documents only on the ground that it was manually prepared. This perception on the part of AO is incurred in the legal parley. No document can be rejected out rightly just because it is manually prepared. The identity of the purchaser stands explained by the above documents. Therefore, the opinion of Ld. AO is not acceptable. Please refer previous submission B part, pg no.37 & 41-48.” 10.2 On carefully examining of the factual submission made by the appellant along with the associated documents so produced, I agree with the contention of the appellant and find that the cash deposit of Rs.18 lacs stands explained. Thus, the addition on this ground is deleted and the appeal on this ground is allowed. 13.1 From perusal of the above finding of Ld. CIT(A) we find that submission made by the assessee contained certain mistakes and the submission in itself are not sufficient enough to explain the source of cash deposit in bank. In the submission firstly it is stated that JCB machine was sold to Shri Ram Singh for consideration of Rs.11,00,000/-. Thereafter during the proceedings before Ld. CIT(A) assessee has claimed to have filed a sale letter towards sale of JCB machine against a consideration of Rs.16,00,000/-. Both submission of the assessee are contradictory. The instant appeal relates to A.Y. 2011-12 and almost 10 years have passed since then. We, therefore, under the given facts and circumstances of the case and to put an end to the litigation, being fair to both the parties and in the interest Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 15 of justice, are of the considered view that against the alleged cash deposit of Rs.18,00,000/-, we accept the source of alleged cash deposit to the extent of Rs.11,00,000/- as explained towards the sale consideration received in cash from sale of JCB machine and Rs.3,00,000/- being accumulated cash saving from earning of JCB machine and other income and accordingly hold that the assessee has successfully explained the source of cash to the extent of Rs.14,00,000/- as against the addition made at Rs.18,00,000/- and therefore addition of Rs.4,00,000/- is sustained in the hands of assessee. Thus, ground no.6 of the revenue’s appeal is partly allowed. 14. Ground No.7 is general in nature which needs no adjudication. 15. In the result, Appeal of the Revenue in ITANo.148/Ind/2017 is partly allowed. Order pronounced as per Rule 34 of I.T.A.T., Rules 1963 on 17.11.2021. Sd/- (RAJPAL YADAV) Sd/- (MANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER Shri Rajkumar Shambhudayal Agrawal ITA No.148/ind/2017 16 Indore; दनांक Dated : 17 /11/2021 Patel/PS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore