SHRI SIDDIQUE ZIKAR GHANIWALA, Nagpur V. D.C.I.T. CEN TRAL CIR. AMRAVARI NOW ADDITIONAL CHARGE WITH ACIT, CENT. CIR-2,nAGPUR, Nagpur

ITA 158/NAG/2016

AI Insights

The case involves two appeals by the assessee, Shri Siddique Zikar Ghaniwala, against the common order passed by the Commissioner of Income Tax (Appeals)-3, Nagpur, for the assessment years 2004-05 and 2005-06. The appeals were related to additions made by the AO on account of unexplained investments following a search and seizure operation under section 132 of the Income Tax Act. The Tribunal examined the submissions and evidence presented, including affidavits and documents related to an agreement to purchase property, and found that the additions were not substantiated by any material evidence.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 132787 (ITAT-NAGPUR)
• Duration Of Justice: 16 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2022
• Assessment Year: misc
• Appeal Filed On: 08-09-2006
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Set aside
• Section: 132; 143(3); 142(1); 143(2); 153C

Judgement Text

आयकर अपीलीय अधिकरण न्यायपीठ नागपूर में । IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR (Through Virtual Court) BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA Nos.157 & 158/NAG/2016 धनिाारण वर्ा / Assessment Years : 2004-05 & 2005-06 Shri Siddique Zikar Ghaniwala, Main Road, Banosa, Daryapur, Dist.-Amravati – 444803 PAN : ABAPG2571K .......अपीलार्थी / Appellant बनाम / V/s. Deputy Commissioner of Income Tax, Central Circle, Amravati ......प्रत्यर्थी / Respondent Assessee by : N O N E Revenue by : Shri Kailash G. Kanojiya सुनवाई की तारीख / Date of Hearing : 09-11-2022 घोषणा की तारीख / Date of Pronouncement : 23-11-2022 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : Both these appeals by the assessee against the common order dated 30-11-2015 passed by the Commissioner of Income Tax (Appeals)-3, Nagpur [‘CIT(A)’] for assessment years 2004-05 and 2005-06. 2. We find that this appeal was filed with a delay of 33 days. On perusal of the affidavit along with medical certificate, upon hearing ld. DR, we condone the said delay. 2 ITA Nos.157 & 158/NAG/2016, A.Ys. 2004-05 & 2005-06 3. We find no representation on behalf of the assessee nor any application filed seeking adjournment. Thus, the assessee called absent and set ex-parte. Therefore, we proceed to dispose of the appeal by hearing the ld. DR and perusing the material available on record. 4. Since, the issues raised in both the appeals are similar basing on the same identical facts. Therefore, with the consent of ld. DR, we proceed to hear both the appeals together and to pass a consolidated order for the sake of convenience. 5. First, we shall take up appeal in ITA No. 157/NAG/2016 for A.Y. 2004-05. 6. The only issue is to be decided in ground No. 1 is as to whether the CIT(A) justified in confirming the addition made by the AO on account of unexplained investments. 7. Brief facts relating to the issue on hand are that the assessee is an individual engaged in the business of trading in sugar on a wholesale basis. He conducts his business under the name and style as “M/s. S.J. Ghaniwala” which is a proprietary concern. A search and seizure action was conducted on 14-02-2007 in the case of Ghaniwala group u/s. 132 of the Act. Various premises belonging to the assessee were stated to have covered in the said search action. According to the AO, certain documents were seized from the residence of assessee as per panchnama dated 15-02- 2007 under Exhibit B1 and agreement to purchase (isar chitthi) is at page 15 of serial number 1 of Annexure B-1 stated to have been drawn between the assessee and another person. A notice dated 03-10-2007 was issued to the assessee u/s. 153C of the Act to file return of income within 30 3 ITA Nos.157 & 158/NAG/2016, A.Ys. 2004-05 & 2005-06 days. The assessee filed return of income declaring a total income of Rs.1,25,815/-. Notices u/s. 143(2) and 142(1) of the Act were also issued to the assessee, in response to which the assessee represented through his authorized representative before the AO. 8. In the said assessment proceedings, the AO observed that the assessee was to purchase an old house for a total sum of Rs.6,25,000/- and the payments were made in installments on 10-03-2004, 30-03-2004, 30-05-2004 and 31-12-2004 for a sum of Rs.1,00,000/-, 60,000/-, 1,40,000/- and 3,25,000/-, respectively. Since, the amounts of Rs.1,00,000/- and Rs.60,000/- were paid in the financial year concerning the year under consideration, the AO asked the assessee to explain the contents of the agreement to purchase deed. The assessee submitted his explanation which is reproduced at pages 2 and 3 of the assessment order stating by referring to page 21 that the agreement to purchase (issar chitthi) was cancelled due to dispute in the property status and filed confirmation letter of the alleged owner by name Abdul Razzaq Haji Daud. Further, referring page 20 stated that the content in page 20 does not belong to him or his family members. His relative Raffique Ghaniwala has given hand loan of Rs.3,00,000/- and the receipt were kept with him for safe keeping as a mediator. 9. The AO found that the explanation of the assessee as not acceptable. According to the AO there was no documentary proof showing the cancellation of agreement to purchase (issar chitthi) and did not believe the confirmation of letter issued by Abdul Razzaq Haji Daud stating non- receipt of Rs.1,00,000/- in view of his endorsement on agreement to purchase (issar chitthi) showing receipt of the said amount in the agreement. Therefore, holding that the statement of hand loan to Abrahar 4 ITA Nos.157 & 158/NAG/2016, A.Ys. 2004-05 & 2005-06 Razzaq Ghaniwala by Raffique Ghaniwala is an afterthought and added sum of Rs.1,00,000/- and Rs.60,000/- to the total income of the assessee vide its order dated 17-11-2008 passed u/s. 153C r.w.s. 143(3) of the Act. Having aggrieved by the order of AO, the assessee preferred an appeal before the First Appellate Authority. A contention was raised before the CIT(A) that the alleged payments involved in the year under consideration is to be made in future only and there was no payment made by the assessee. It was brought to the notice of the CIT(A) by referring to agreement to purchase (issar chitthi) is a future agreement for purchase of plot. The CIT(A) did not accept the said submissions of the assessee and confirmed the order of AO in making addition on account of unexplained investments. Having not satisfied with the order of CIT(A), now, the assessee is before the Tribunal. 10. Heard both the parties and perused the material available on record. We find the same submissions as made before the AO were reiterated before the CIT(A) which is evident from paras 11 to 14 of the impugned order. The CIT(A) did not accept the submissions of the assessee and held refusal to own agreement to purchase (issar chitthi) is a self serving statement of the assessee. Further, he was of the opinion whether the property transaction as finally taken place or not is immaterial and for no explanation regarding the cash payment, he confirmed the order of AO. On perusal of the submissions of the assessee before the AO and the CIT(A) along with the material filed in the form of paper book before this Tribunal containing 1 to 66 pages specifically the affidavit at pages 34 to 36, we note that the contents of the said affidavit stands corroborates with the submissions of the assessee, that due to disputes no transaction caused effected in terms of the agreement to purchase (issar chitthi), we note that when it is not materialized into final deed which obviously the payments 5 ITA Nos.157 & 158/NAG/2016, A.Ys. 2004-05 & 2005-06 alleged to have been made by the assessee must have returned back. In this regard, both the authorities below did not examine whether the said alleged payments stated to have been paid by the assessee and reflecting in the agreement to purchase (issar chitthi) returned to the assessee or not. There is no document or whatsoever brought on record by the authorities below that the said transaction was materialized in terms of the agreement to purchase (issar chitthi). Now, it is a case of CIT(A) that the subsequent transaction is immaterial the assessee has to explain the source of cash payment, in our view does not hold good admittedly the affidavit placed at pages 34 and 35 clearly shows that no transaction is materialized in terms of the agreement to purchase (issar chitthi) and the money reflected therein are received back. Further, we also noted that during the course of assessment proceedings, there was a letter of confirmation issued by the Abdul Razzaq Haji Daud about the cancellation of agreement to purchase (issar chitthi) as well as non-receipt of Rs.1 lakh. It is to be noted that the contention of the assessee is that no amount was paid and the said agreement to purchase (issar chitthi) was only agreed to purchase said property in future. This aspect was not at all considered by the AO and the CIT(A) but both the authorities below went out to disbelieve the version of the assessee as an afterthought. We note that admittedly, the AO added an amount of Rs.1,60,000/- to the total income of the assessee on account of undisclosed investment which is evident from computation vide para 7 of the AO’s order. The CIT(A) also without verifying whether there is any investment as brought on by the AO in terms of alleged cash payments reflected in agreement to purchase (issar chitthi). Before us nothing was brought on record to show that the alleged cash payments towards purchase of property were resulted into any investment. Therefore, in the absence of any corresponding asset stated to have been materialized in terms of agreement to purchase (issar chitthi), the addition as confirmed 6 ITA Nos.157 & 158/NAG/2016, A.Ys. 2004-05 & 2005-06 by the CIT(A) is not justified. Thus, the order of CIT(A) is set aside and the grounds raised by the assessee are allowed. 11. In the result, the appeal of assessee is allowed. ITA No. 158/NAG/2016, A.Y. 2005-06 12. We find that the issues raised in the appeal and the facts in ITA No. 158/NAG/2016 are identical to ITA No. 157/NAG/2016 except the variance in amount. Since, the facts in ITA No. 158/NAG/2016 are similar to ITA No. 157/NAG/2016, the findings given by us while deciding the appeal of assessee in ITA No. 157/NAG/2016 would mutatis mutandis apply to ITA No. 158/NAG/2016, as well. Accordingly, the appeal of assessee is allowed. 13. In the result, both the appeals of assessee are allowed. Order pronounced in the open court on 23 rd November, 2022. Sd/- Sd/- (Dr. Dipak P. Ripote) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 23 rd November, 2022. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-3, Nagpur 4. The CIT (Central), Nagpur 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, नागपूर, / DR, ITAT, Nagpur. 6. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune