The ITO, Ward 2(6), Baroda V. Shri Vipul A. Shah, Baroda

ITA 1626/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9031 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: WAY OF VARIOUS SALE DEEDS; WAY OF VARIOUS SALE
• Keywords: Unexplained cash credit; Income from undisclosed sources; Peak credit; Source of fund; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 201

Judgement Text

ITA NO. 1626 / AHD/201 3 ASSESSMENT Y EAR: 20 0 9 - 10 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 1626 /AHD/201 3 ASSESSMENT Y EAR : 20 0 9 - 10 INCOME TAX OFFICER , WARD 2 ( 6 ), BARODA. .. .APPELLANT VS. VIPUL A. SHAH .. .. . RESPONDENT 4, NIV BUNGLOW, B/H. YASH COMPLEX, GOTRI ROAD, BARODA. [PAN: A FOPS 7332 C ] APPEARANCES BY JAMES KURIAN FOR THE A PPELLANT S.N. SOPARKAR WITH PARIN SHAH FOR THE R E SPONDENT HEARING CONCLUDED ON: 0 9 / 12 / 20 1 6 ORDER P RONOUNCED ON : 03 / 0 3 / 20 1 7 O R D E R PER PRAMOD KUMAR , AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING O FFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 28 TH FEBRUARY 2013, PASSED BY THE LEARNED C IT(A), IN THE MATTER OF ASSESSMENT UNDER SE CTION 143(3) OF THE INCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 20 0 9 - 10 . 2. I N THE FIRST GROUND OF APPEAL, THE A SSESS ING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE : - 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN RESTRICTING THE ADDITION OF RS.1,01,60,300/ - MADE U/S. 68 OF THE ACT ON ACCOUNT OF UNACCOUNTED CASH DEPOSI T S TO RS.17,61,021/ - WITHOUT APPRECIATING THAT THE ASSESSEE HAS FAILED TO DISCHARGE ONUS CAST UPON HIM. ITA NO. 1626 / AHD/201 3 ASSESSMENT Y EAR: 20 0 9 - 10 PAGE 2 OF 6 3. BRIEFLY STATED, THE RELEVANT MATE RIAL FACTS ARE AS FOLLOWS. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD MADE CASH DEPOSITS IN HIS EIGHT DIFFERENT BANK ACCOUNTS. THE DEPOSITS SO MADE AGGREGATED TO RS.1,01,60,300/ - . THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT BUT HE DID PR EPARE, BASED ON THE DATA AVAILABLE TO HIM, A CASH BOOK. THE ASSESSING O FFICER EXAMINED THE CASH BOOK AND FOUND THAT ON CERTAIN DATES IT SHOWS A NEGATIVE BALANCE. THE CASH BOOK S , AS ALSO NARRATION FOR DEPOSIT GIVEN THEREIN , WERE REJECTED . AGGRIEVED, ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A). LEARNED CITA), IN APPEAL, ACCEPTED THE SUBMISSION OF THE ASSESSEE TO THE LIMITED EXTENT THAT ONLY PEAK CREDIT SHOULD BE TAKEN AND REMITTED THE MATTER TO THE FILE OF THE ASSESSING O FFICER FOR VER IFICATION OF PEAK CREDIT AMOUNT OF RS.17,61,021/ - AS CLAIMED BY THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THE LEARNED CIT(A) ARE AS FOLLOWS : - I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFI CER. THE APPELLANT HAS NOT FULLY EXPLAINED THE SOURCES OF CASH DEPOSIT WHICH IS EVIDENT FROM THE CASH FLOW STATEMENT ATTACHED WITH ASSESSMENT ORDER WHICH ALREADY SHOWS NEGATIVE CASH BALANCE ON VARIOUS DATES INCLUDING NEGATIVE OPENING BALANCE. THE APPELLANT HAS NOT EXPLAINED THE REASONS OF THIS NEGATIVE CASH BUT HAS MERELY STATED THAT THERE IS MISTAKE IN DATES ETC. HENCE, THE CONTENTION OF APPELLANT THAT THE CASH I DEPOSITED IN BANK ACCOUNT IS EXPLAINED CANNOT BE ACCEPTED IN TOTALITY. AT THE SAME TIME THE AP PELLANT HAS CHANGED ITS - STAND AND THERE ARE DISCREPANCIES IN THE SUBMISSION MADE BEFORE ASSESSING OFFICER, THE ACTION OF THE ASSESSING OFFICER TO MAKE THE ADDITION AS UNEXPLAINED CASH CREDIT IS CORRECT. HOWEVER, THERE IS FORCE IN THE CONTENTION OF THE APP ELLANT ABOUT ALTERNATE ARGUMENT THAT NEGATIVE PEAK CREDIT ON 26.02.2009 OF RS.17,61,021/ - CAN ONLY BE CONSIDERED UNEXPLAINED AND THE REST AMOUNT IS EXPLAINED BY WAY OF WITHDRAWALS FROM OTHER BANK ACCOUNTS ETC. AND THIS NEGATIVE CREDIT HAS BEEN WORKED OUT B Y THE ASSESSING OFFICER HIMSELF IN THE CASH FLOW STATEMENT ATTACHED WITH THE ASSESSMENT ORDER. FROM THIS CASH FLOW STATEMENT, IT TRANSPIRES THAT THE ASSESSING OFFICER HAS CONSIDERED A L L DEPOSITS AND WITHDRAWALS IN RESPECT OF ALL THREE BANKS OF THE ASSESSEE ON DAY TO DAY BASIS. HENCE, THE APPELLANT'S CONTENTION THAT ONLY RS.17,61,021/ - SHOULD BE CONSIDERED AS UNEXPLAINED CASH DEPOSIT IS ACCEPTED SUBJECT TO FURTHER VERIFICATION BY THE ASSESSING OFFICER THAT THIS AMOUNT ACTUALLY REPRESENT THE 'PEAK CREDIT'. TH E BALANCE ADDITION OF RS.83,99,279/ - IS DIRECTED AS DISCUSSED ABOVE. ITA NO. 1626 / AHD/201 3 ASSESSMENT Y EAR: 20 0 9 - 10 PAGE 3 OF 6 4. THE ASSESSING O FFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE LEARNED CIT(A) AND IS IN APPAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD A ND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. WE FIND THAT IT IS AN UNDISPUTED POSITION THAT ASSESSEE HAD EIGHT BANK ACCOUNTS AND, THEREFORE, THE CASH DEPOSITS IN ONE ACCOUNT COULD INDEED BE EXPLAINED BY AVAILABILIT Y OF CASH WITHDRAWALS FROM OTHER ACCOUNTS OR BY AVAILABILITY OF CASH AS A RESULT OF SUCH WITHDRAWALS. IN THIS VIEW OF THE MATTER, LEARNED CIT ( A ) WAS QUITE JUSTIFIED IN HOLDING TH A T ONLY PEAK AMOUNT WAS TO BE BROUGHT TO TAX. AS FOR THE QUANTIFICATION OF SU CH PEAK AMOUNT, LEARNED CIT ( A ) HAS ANYWAY REMITTED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR NECESSARY VERIFICATION. WE SEE NO INFIRMITY IN THIS APPROACH OF THE LEARNED CIT ( A ) AND THE ASSESSEE IS NOT IN APPEAL AGAINST PARTIAL CONFIRMATION OF CAS H DEPOSIT AMOUNTS. IN OUR CONSIDERED VIEW, THE VIEWS SO EXPRESSED BY THE LEARNED CIT (A) WERE QUITE JUSTIFIED. WE APPROVE THE SAME AND DECLINE TO INTERFERE IN THE MATTER. 7. GROUND NO.1 IS THUS DISMISSED . 8. IN GROUND NO.2, THE GRIEVANCE RAISED IS AS FOLL OWS : - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS.21,01,111/ - MADE ON ACCOUNT OF RECEIPT OUT OF UNEXPLAINED SOURCE WITHOUT APPRECIATING THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE SO - CALLED TRANSACTION OF LAND WAS NOT SHAM - TRANSACTION. 9. THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER NOTED THAT THE ASSESSEE HAS SHOWN ADVANCE SALE OF LAND AT RS.21,01,111/ - . WHEN THE ASSESSING OFFICER EXAMINED THE DOCUMENTS REGARDING PURCHASE OF THIS PROPERTY, HE FOUND A DISCREPANCY INASMUCH AS WHILE DATE OF REGISTRATION OF DOCUMENTS WAS 05.11.2007, THE PAYMENTS WERE MADE ON 05. 0 1.2008. THE ASSESSING O FFICER WAS OF THE VIEW THAT SUCH AN INORDINATE DELAY IN MAKING PAYMENT WAS ITA NO. 1626 / AHD/201 3 ASSESSMENT Y EAR: 20 0 9 - 10 PAGE 4 OF 6 UNBELIEVABLE. HE ALSO NOTED THAT WHILE LAND WAS PURCHASED IN THE NAME OF ASSESSEE S MOTHER, THE BOOKS SHOW SALE OF LAND BY PROPRIETORSHIP CONCERN N IV I NFRASTRUCTURE. IN THIS BACKGROUND, HE REJECTED THE SALE TRANSACTION AS SHAM TRANSACTION AND TREATED THE SALE CONSIDERATION AS INCOME FROM OTHER SOURCES . WHILE DOING SO, HE OBSERVED A S FOLLOWS : - 7.4 THE AGREEMENT OF PURCHASE OF THE SO - CALLED SAID LAND WAS REGISTERED ON 5.11.2007 AND THE PAYMENT WAS GIV EN ON 5.1.2008. IT IS NOT KNOWN HOW THE ABOVE THREE PERSONS HAVE WAITED SUCH A LONG TIME TO COLLECT THEIR SALE CONSIDERATION FROM THE ASSESSEE. IN THE PRESENT CONTEST NOBODY WILL WAIT FOR LONG PERIOD FOR THE PAYMENT ONCE THE REGISTRATION HAS TAKEN PLACE BE CAUSE OF GREATER RISK INVOLVEMENT ANY POINT OF TIME THE ASSESSEE CAN DENY FOR THE PAYMENT. THE PAYMENT PROCEDURE AND CONTRACT WOULD BE BEFORE PURCHASE OF LAND AND NOT AFTER REGISTRATION EVEN THOUGH THEY MAY BE THE ASSESSEE RELATIVES OR CLOSE FRIENDS. IT CA N SEEN RIGHT FROM THE ABOVE THE ASSESSEE IS IN THE HABIT OF CHANGING HIS STAND VERY QUICKLY BY FURNISHING FALSE INFORMATION, INACCURATE PARTICULARS WHICH CAN SEEN FROM PAYMENTS AS WELL AS CHANGE OF PERSONS IN THE CONFIRMATION ETC. HENCE, IT IS TOTALLY UNRE ALISTIC AND UNBELIEVABLE SO FAR AS THE PURCHASE OF LAND DEALING. THE AMOUNT AS MENTIONED IN THE ORIGINAL PURCHASE DEED THE VALUE SHOWN AT RS.15,95,000 FOR THREE PERSONS PAYMENT MADE THROUGH CHEQUE .AND AS PER SUBMISSION THE AMOUNT FOR THE SAME PERSONS FOR SAME LAND AND SAME CHEQUES (APPEARED IN THE SALE DEED) AMOUNTING TO RS.21,99,000 . IT CAN FURTHER SEEN FROM DETAILS OF COPY OF AN AGREEMENT MADE IN A STAMP PAPER FURNISHED THAT THE ASSESSEE HAS UNDERTAKEN THE ASSESSEE TRY TO MISLEAD THE DEPARTMENT BY FURNI SHING CONCOCTED DOCUMENTS .FURTHER, THE LAND WAS PURCHASED IN THE NAME OF THE ASSESSEE'S MOTHER AND THE SAME LAND SOLD UNDER THE PROPRIETARY CONCERN OF NIV INFRASTRUCTURE VIDE COPY OF LEDGER ACCOUNT IT IS SEEN THAT THE ASSESSEE HAS SOLD THE SAID LAND ON 31 .3.2009 TO SHRI SANJAY R PATEL (GOTRI 921 SALES) AND VIRAL S OZA (GOTRI 921 SALES) OF RS.7,50,000 AND RS,13,51,111 RESPECTIVELY . IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS PURCHASED THE SAID LAND S.N.921 (GOTRI) IN HIS MOTHER'S NAME AND CLEVERLY SOLD I N HIS OWN SO - CALLED PROP. CONCERN NAMELY NIV INFRASTRUCTURE. HENCE THE ENTIRE GAMBIT IS NOTHING BUT A SHAM TRANSACTION . THEREFORE, THE CONSIDERATION OF RS.21,01,111 IS NOTHING BUT THE MONEY EARNED FROM UNDISCLOSED SOURCES OF INCOME, ACCORDINGLY, THE ENTIR E AMOUNT OF RS.21,01,111 IS ADDED TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S.271( 1 )(C) IS ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 10. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED C IT(A) WHO REVERSED THE ACTION OF THE ASSESSING O FFICER ON THE BASIS OF FOLLOWING REASONS: - I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. SINCE THE AMOUNT RECEIVED DURING THE YEAR IS EX PLAINED BY WAY OF CONFIRMATION, THE RECEIPTS CANNOT BE CONSIDERED AS ITA NO. 1626 / AHD/201 3 ASSESSMENT Y EAR: 20 0 9 - 10 PAGE 5 OF 6 UNEXPLAINED. EVEN IF THE RECEIPT IS CONSIDERED AS TAXABLE IN THE YEAR UNDER CONSIDERATION ONLY THE CAPITAL GAIN OUT OF THE SAME CAN BE TAXED. THE DISCREPANCY IN THE PURCHASE DEED VIS - A - VI S ACTUAL AMOUNT PAID DOES NOT MAKE THE SALE TRANSACTION SHAM. FROM THE RECORD, IT TRANSPIRES THAT THE LAND AT SURVEY NO. 921 AT GOTRI, BARODA WAS SOLD BY THE APPELLANT BY WAY OF VARIOUS SALE DEEDS WHICH ARE EXECUTED ON 30.09.2009 IN FAVOUR OF SHRI BHARAT M . CHAUHAN, SMT. JAYSHREE B. CHAUHAN AND A PPELLANT HAS CLAIMED THAT THEY ARE NOMINEES OF SHRI SANJAY R. PATEL AND SHRI VIRAL OZA FROM WHOM THE ADVANCES WERE RECEIVED IN A.Y. 2009 - 10. SHRI SANJAY R. PATEL ADVANCED RS.7,50,000/ - AND SHRI VIRAL S. OZA HAD ADVA NCED A SUM OF RS.13,51,111 / - RESPECTIVELY. BOTH THE PERSONS HAVE FILED THE CONFIRMATION WHICH IS AVAILABLE ON RECORD AND THEIR PANS ARE ALSO MENTIONED. THE ASSESSING OFFICER HAS NOT PREFERRED TO CONDUCT ANY ENQUIRY FROM THESE PERSONS AND SOLELY ON THE GROU ND THAT THE ASSESSEE HAS PURCHASED THE SAID LAND S.N. 921 (GOTRI) IN HIS MOTHER'S NAME AND SOLD IN HIS OWN SO CALLED PROP, CONCERN NAMELY NIV INFRASTRUCTURE, WHICH IS NOTHING BUT A SHAM TRANSACTION. ACCORDING TO THE ASSESSING OFFICER THE CONSIDERATION OF R S.21,01,111/ - IS NOTHING BUT THE MONEY EARNED FROM UNDISCLOSED SOURCES OF INCOME AND THEREFORE, HE ADDED THE SAME IN THE HANDS OF THE ASSESSEE. HOWEVER, AS MENTIONED ABOVE, THE LAND AT SURVEY NO. 921 AT GOTRI, BARODA WAS SOLD BY THE APPELLANT BY WAY OF VAR IOUS SALE DEEDS WHICH ARE EXECUTED ON 30.09.2009 IN FAVOUR OF SHRI BHARAT M. CHAUHAN, SMT. JAYSHREE B. CHAUHAN AND OTHERS AND COPIES OF ALL SALE DEEDS WERE AVAILABLE WITH THE ASSESSING OFFICER. SINCE NEITHER THE AGREEMENT OF SALE HAS BEEN EXECUTED DURING T HE YEAR NOR POSSESSION OF THE LAND HAS BEEN GIVEN DURING THE YEAR, EVEN THE CAPITAL GAIN HAS NOT ARISEN IN THE YEAR UNDER CONSIDERATION. THE SALE DEEDS FOR THESE LANDS WERE EXECUTED IN FAVOUR OF THEIR NOMINEES IN SUBSEQUENT YEAR I.E. F.Y. 2009 - 10 (A.Y. 201 0 - 11) AND THE ASSESSEE HAS OFFERED CAPITAL GAIN OF RS.3,03,910/ - IN A.Y. 2010 - 11 AS PER THE RETURN OF INCOME FILED BY THE APPELLANT. THE ASSESSING OFFICER HAS OPPORTUNITY TO EXAMINE THE CORRECTNESS OF THE CLAIM OF CAPITAL GAINS OF THE ASSESSEE AND WHATEVER ADDITION IS REQUIRED TO BE MADE CAN BE MADE IN CONCERNED A.Y. I.E. 2010 - 11, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.21,01,111/ - . 11. AGGRIEVED BY THE RELIEF SO GRANTED BY THE LEARNED CIT(A), THE ASSESSING OFFICER IS IN APPEAL BEFOR E US . 12. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 13. AS LEARNED CIT(A) RIGHTLY NOTES, THE ASSESSEE HAS SHOWN RECEIPT OF ADVANCE IN THE PRESENT YEAR A ND COMPLETE DETAILS ABOUT THE PERSONS FROM WHOM SUCH ADVANCE IS RECEIVED, THEIR PANS AND ALL OTHER RELEVANT DETAILS. HOWEVER, WITHOUT POINTING OUT ANY DEFECTS IN THIS CLAIM, THE ASSESSING O FFICER HAS PROCEEDED TO DISREGARD THE RECEIPT OF THIS ADVAN CE. EVEN IF IT IS ASSUMED THAT THERE WERE CERTAIN UNEXPLAINED DISCREPANCIES IN ITA NO. 1626 / AHD/201 3 ASSESSMENT Y EAR: 20 0 9 - 10 PAGE 6 OF 6 PURCHASE OF L A ND , THAT FACT WILL NOT RESULT IN THE PRESENT TRANSACTION BEING SHAM. THE CAPITAL GAINS HAVE BEEN OFFERED TO TAX IN SUBSEQUENT YEAR, AND ALL THESE ISSUES COULD BE EXAMINED IN THE COURSE OF PROCEEDINGS FOR THE SUBSEQUENT Y E AR SO FAR TAXATION OF INCOME IS CONCERNED. IN THE PRESENT CASE, THERE IS NO LEGALLY SUSTAINABLE REASON TO TREAT THE ADVANCE AS INCOME FROM OTHER SOURCES. THE ACTION OF THE ASSESSING O FFICER CA NNOT MEET ANY JUDICIAL APPROVAL. IN VIEW OF THESE DISCUSSIONS A S ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 14. GROUND NO.2 IS THUS DISMISSED. 1 5 . IN THE R ESULT, THE APPEAL IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF MARCH , 2017 . SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 3 RD DAY OF MARCH , 201 7 . PBN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD