Rahul Ramesh Sanghvi, Ahmedabad V. Dy. Commissioner of Income Tax,CC-2(4), Ahmedabad

ITA 1833/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9616 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Unexplained investment; Difference of opinion; Validity of assessment; Competent authority
• Section: 143(3); 153A

Judgement Text

ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER IT A NO. 1833 / AHD /201 5 ASSESSMENT YEAR: 20 10 - 11 RAHUL RAMESH SANGHVI VS. D.C.I.T., B/34, DHAVAL AVENUE, CENTRAL CIRCLE - 2(4) B/H. PANCHVATI PE T ROL PUMP, AHMEDABAD. OFF. C.G. ROAD, LAW GARDEN, AHMEDABAD. [PAN B RLPS 7328 Q ] (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI VIJAY RANJAN RESPONDENT BY : SHRI VILAS V. SHINDE DATE OF HEARING : 30.11 .201 5 D ATE OF PRONOUNCEMENT : 10 . 0 2 .2016 O R D E R PER RAJPAL YADAV, J.M. : ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LEARNED CIT ( A ) DATED 24.03.2015 PASSED IN A SSESSMENT YE A R 2010 - 1 1 . 2. GROUNDS OF APPEAL TA KEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE NO.8 OF THE I.T.A.T. RULES, 1963 , THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. 3. IN BRIEF, GRIEVANCE OF THE ASSESSEE IS TWO FOLDS NAMELY (A) L EARNED CIT(A) HAS ERRED IN CONFIRMING THE VALIDITY OF ASSESSMEN T ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 2 OF 7 ORD E R PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT (B) L EARNED CIT ( A ) HAS ERRED IN CONFIRMING ADDITION OF RS.8,05,000/ - AS UNEXPLAINED INVESTMENT. 4. FIRST WE TAKE UP GROUND NO.2. B RIEF FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE OPERATION WAS CARRIED OUT IN THE GROUP CASE OF S ANGHVI GROUP. A NOTICE UNDER SECTION 153A WAS ISSUED UPON THE ASSESSEE WHO FILED HIS RETURN OF INCOME ON 31.01.2002 DECLARING TOTAL INCOME OF R S.1,74,400/ - . ON SCRUTINY OF THE ACCOUNT, IT WAS REVE ALED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE INVESTMENT IN PROPERTY AT MAITRI FLAT FROM WHICH HE WAS DERIVING RENTAL INCOME. ACCORDING TO THE ASSESSING OFFICER , THE ASSESSEE FAILED TO DISCLOSE T HE INVESTMENT MADE BY HIM IN PURCHASE OF THIS FLA T. THE ASSESSING OFFICER MADE AN AD DITION OF RS.8,05,000/ - ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASE OF FLATS . 5. APPEAL TO T HE LEARNED CI T(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES W E HAVE GONE THROUGH THE RECORDS CAREFULLY. L EARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE SUBMISSION S OF THE ASSESSEE MADE BEFORE THE ASSESSING OFFICER. WE FIND THAT THIS SUBMISSION HAS NOT BEEN NOTICED BY THE ASSESSING OFFICER AND NOT CONSIDERED IN THE RIGHT PERSPECTIVE. THEREFORE, WE DEEM IT PERTINENT TO TAKE COGNISANCE OF THE LETTER WRITTEN BY THE ASSESSEE DISCLOSING COMPLETE DETAILS . IT READ AS UNDER : - SUB: ASSESSMENT PROCEEDINGS FOR A.Y. 2005 - 06 TO 2011 - 12 ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 3 OF 7 WITH REFERENCE TO THE CAPTIONED SUBJECT THE ASSESSEE HA S BEEN SHOW CAUSED AS TO WHY THE AMOUNT FIXED FOR PURCHASE OF MAITRI FLATS SHOULD N OT BE ADDED BACK TO THE TOTAL INCOME SINCE THE AMOUNT SO FIXED IS OUTSTANDING A ND POSSESSION IN RESPECT OF THE S A ID FLATS HAS BEEN GIVEN TO THE ASSES SEE. IN HIS CONNECTION, THE ASSESSEE SUBMITS AS UNDER : 1. THE ASSESSEE A LONG WITH T EN FAMILY MEMBERS OF DHIRAJLAL SANGHVI (WHO IS THE UNCLE OF ASSESSEE) DECIDED TO PURCHASE FLATS IN THE SCHEME NAMED MAITRI APARTMENTS OWNED BY AHOK VIHAR CO - OPERATIVE H OUSING SOCIETY LIMITED (REGISTERED IN 1996) AND DEVELOPED BY GAYATRI INFRASTRUCTURE LIMITED AND GAYATRI BUILD SERVICE. ALL DISCUSSIONS AND DECISIONS WERE BEING M AD E BY SHRI DHIRAJLAL V. SANGHVI. 2. THE SAID SCHEME IS SITUATED ON REVENUE SURVEY NO.138/2, 150/1 AND 150/2 AT VILLAGE MOTERA, TA: CITY, DIST: GANDHINAGAR. THE BRIEF HISTORY OF THE SCHEME IS THAT, AS STA T ED SUPRA, THE SOCIETY WAS REGISTERED IN 1996. THE SCHEME WAS LAUNCHED AROUND 2000. THE LAW PREVAILING AT THAT TIME WAS THAT IF ANY PERSON BEC OMES A MEMBER OF A CO - OP E RATIVE HOUSING SOCIETY, AND IF T HE ALLOTMENT IS DONE PRIOR TO 31 ST AUGUST, 2001 , THERE WAS NO REQUIREMENT OF EXECUTING A CONVEYANCE DEED IN RESPECT OF THE PURCHASE OF THE FLAT AND ONLY THE ALLOTMENT AND THE POSSESSION LETTER WAS EN OUGH TO HOLD THE LEGAL OWNERSHIP OF T HE PROPERTY. IN VIEW OF THE FACT THAT THE ALLOTMENT WAS DONE BY THE SOCIETY PRIOR TO 31 ST AUGUST, 2001, NO CONVEYANCE DEED WAS REQUIRED TO BE EXECUTED AS PER THE PROVISIONS OF THE LAW AND UNDER THAT CIRCUMSTANCES THE S OCIETY/DEVELOPER HAS NO T DONE A NY CONVEYANCE DEED IN RESPECT OF PURCHASE OF PROPERTY. THE COPY OF THE ALLOTMENT LET T ER IS ALR EA DY SUBMITTED ALONG WITH MY EARLIER SUBMISSION. 3. IT IS ALSO SUBMITTED THAT THE SCHEME COMPRISES OF NEARLY 275 UNITS AND IN RES PECT OF NONE OF THE UNITS, THE SOCIETY H A S EXECUTED CONVEYANCE DEED IN RESPECT OF THE UNITS ALLOTTED TO THE MEMBERS OF THE SOCIETY. 4. WITH REFERENCE T O T HE GESTATION PERIOD BETWEEN THE ALLOTMENT LETTERS ISSUED AND THE ACTUAL POSSESSION GIVEN BY ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 4 OF 7 THE DEVEL OPER OF THE SCHEME, IT IS SUBMITTED THAT AS STATED, THE SCHEME GOT LAUNCHED IN 2000 AND THE PLANS WERE PUT FOR APPROVAL ON 25.08.2000. THE COPY OF THE PLAN IS ALREADY SUBMITTED IN MY EARLIER SUBMISSION. ON 26 TH JANUARY, 2001 THERE WAS AN EARTHQUAKE IN TH E CITY AND THE CONSTRUCTION OF MULTI - STOREYED BUILDINGS WERE PUT ON HOLD. THEREAFTER THE BUILDERS WERE UNDER OBLIGATION TO MEET REVISED REQUIREMENTS OF CONSTRUCTION OF MULTI STORY BUILDING AND WERE REQUIRED TO PUT REVISED PLANS FOR THE SCHEME. THE INDIAN STANDARD CODE IS: 1893 WAS SUITABLY UPDATED IN 2002 SO AS TO ADDRESS THE VARIOUS DESIGN ISSUES BROUGHT OUT IN THE EARTHQUAKE BEHAVIOUR OF THE R C BUILDINGS. THE RECOMMENDATIONS HAVE ALREADY BEEN SUBMITTED VIDE MY EARLIER SUBMISSION . MOREOVER THERE WERE A LSO CERTAIN DIFFERENCE OF OPINION BETWEEN THE DEVELOPER AND MEMBER OF THE SCHEME ABOUT THE NATURE AND COMPOSITION OF THE SCHEME . 5. ALL THIS GOT RESOLVED IN 2006 - 07 AND THE BUILDER THEREAFTER ON 30.03.2007 PUT REVISED PLANS BEFORE THE COMPETENT AUTHORITY, THE COPY OF WHICH IS ENCLOSED VIDE ANNEXURE 16 IN THE SUBMISSION OF DHIRAJLAL V. SANGHVI. ACCORDINGLY THE CONSTRUCTION GOT RE - STARED IN APRIL 2007 ONWARDS WHICH WAS COMPLETED IN 2008 - 09 AND THE POSSESSIONS WERE GIVEN TO MEMBERS OF THE SCHEME THEREAFTER . 6 REGARDING THE PAYMENT TO BE MADE FOR THE PURCHASE OF FLATS, IT IS SUBMITTED THAT A TOTAL OF 11 FLATS WERE BOOKED INCLUDING ONE OF THE ASSESSEE FOR A TOTAL CONSIDERATION OF RS.88.55 LACS. OUT OF RS.88.55 LACS, RS.76.40 LACS WERE PAID TO THE DEVELOPER OF THE SAID SCHEME AND THE BALANCE OF 12.15 LACS WAS PAYABLE TO THE DEVELOPER, WHICH INCLUDED RS.8.05 LACS PERTAINING TO THE AS S ESSEE. THE ASSESSEE ALONG WITH THE OTHER FAMILY MEMBERS HAS ALREADY FURNISHED - (A) THE COPY OF CONFIRMATION ACCOUNT ISSUED B Y G A YATRI INFRASTRUCTURE LTD., AND GAYATRI BUILD SERVICES; (B) GAYA T RI INFRASTRUCTURE AND G A YATRI BUILD SERVICES HAVE SPECIFICALLY MENTIONED AND ACCEPTED THAT THE AMOUNT ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 5 OF 7 PAID TO THE EXTENT OF RS.76.40 LACS IS DISCLOSED IN THEIR BOOKS OF ACCOUNT; AND (C) GAYATRI INFRASTRUCTURE HAS ALSO ACCEPTED THAT A SUM OF RS.8.05 LACS PERTAINING TO THE ASSESSEE IS PAYABLE BY THE ASSESSEE AND IS OUTSTANDING IN ITS BOOKS OF ACCOUNT. THE COPY OF CONFIRMATION ACCOUNT IS ALREADY FILED BEFORE YOUR GOODSELVES. 7. ACCORDINGLY , THE REASONS FOR NOT MAKING THE PAYMENT OF RS.12.15 LACS (RS.8.05 PERTAINING TO THE ASSESSEE) WAS ON ACCOUNT OF CERTAIN DISPUTES AND DIFFERENCE OF OPINION WITH THE DEVELOPERS, WHICH REMAINED UNRESOLVED TILL THE DATE OF SEARCH AND ACCORDINGLY T HE AMOUNT WA S OUTSTANDING A S ON THAT DATE. 8. IN VIEW OF THE ABOVE YOUR GOODSELVES IS KINDLY REQUESTED NOT TO TAKE AN ADVERSE ACTION WITH REFERENCE TO THE AMOUNT PAYABLE TO GAYATRI INFRASTRUCTURE LIMITED AMOUNTING TO RS.8.05 LACS FOR PURCH AS E OF T HE FLAT. HOPE THE A BOVE MEET WITH YOUR REQUIREMENTS. HOWEVER, IF ANY FURTHER DETAILS OR INFORMATION ARE REQUIRED IN THIS CONNECTION, THE ASSESSEE SHALL BE GLAD TO FURNISH THE SA ME UPON HEARING FROM YOU R GOODSELVES. 7. APART FROM TH E ABOVE , LEARNED COUNSEL FOR THE ASSESSE E TOOK US THROUGH ALLOTMENT LETTER DATED 11.07.2001. THE ASSESSEE HAS MADE PAYMENT OF RS.3,50,000/ - ON 11.04.2013 AND REMAINING RS. 3,50,000 / - ON 24.06.2013. I N THE LIGHT OF ABOVE MATERIAL , LET US MAKE AN ANALYSIS ON T HE FINDING RECORDED BY THE R EVENUE AU THORITIES BELOW. A PERUSAL OF THE ORDER OF ASSESSING OFFICER AS WELL AS LEARNED CIT(A) WOULD REVEAL THAT THEY DISBELIEVED THE STORY OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS POSSESSING THE FLAT FROM 2009. HE HAS BEEN EARNING RENTAL INCOME AND W ITHOUT MAKING ANY PAYMENT HOW HE COULD ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 6 OF 7 HAVE BEEN GIVEN POSSESSION OF THE PROPERTY. UNDER THIS ASSUMPTION BOTH TH E AUTHORI T IE S HAVE CONCURRED THAT UNEXPLAINED INVESTMENT IN FLAT DESERVES TO BE ASSESSED IN THE HANDS OF THE ASSESSEE . IN OUR OPINION , THE LEA RNED R EVENUE AUTHORITIES HAVE FAILED TO APPRECIATE THE CONTENTIONS MADE BY THE ASSESSEE. CASE OF T HE ASSESSEE WAS THAT E LEVEN FAMILY MEMBERS HAD BOOKED ELEVEN FLATS. A CONSOLIDATED PAYMENT WAS MADE . O N ACCOUNT OF CERTAIN DISPUTE AND DELAY IN CONSTRUCTIO N OF THE PROJECT , PAR T PAYMENT WAS NOT MADE AND ULTIMATELY THAT NON - PAYMENT REMAINED ALLOCATED FOR THE SHARE OF THE A SS ESSEE. HE HAS MADE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE AND ULTIMATELY ACCOUNT HAS BEEN SETTLED WITH THE BUILDER. NOW THE QUE ST ION IS , IF FACTS ARE BEING VIEWED WITH THIS ANGLE THAT FAMILY MEMBERS OF DHIRAJLAL SANGHVI HAD MADE BULK BOOKING AND EVERY MEM B ER WAS ALLOTTED A SH A RE CERTIFICATE OF THE SOCIETY A S WELL A S ALLOTMENT LETTER , T HEY HAVE BEEN GIVEN POSSESSION. ONE TENTH PAYMENT MIGHT HAVE BEEN RETAINED BY THE FAMILY . IF THIS BULK BOOKING IS TREATED AS A SINGLE TRANSACTION , TH EN NO UNUSUALNESS WOULD BE DISCERNABLE BECAUSE PART PAYMENT NOT M ADE EARLIER WAS PAID AFTER POSSESSION. IF WE PIT THESE TWO ASPECTS AGAINST EACH OTHER I.E. PRES UMPTION OF TH E R EVENUE AUTHORITIES THA T WITHOUT MAKING ANY PAYMENT , NO POSSESSION COULD BE DELIVERED TO THE ASSESSEE VIS - A - VIZ CONTENTION OF THE ASSESSEE THAT FAMILY HAD BOOK ED ELEVEN FLATS AND THEY HAVE MADE PAYMENT OF RS.7 6,40,000/ - OUT OF THE TOTAL PAYM ENT THEN SCALE WOULD TILT IN FAVOUR OF THE EXPLANATION OF THE ASSESSEE , THAT S OME PART PAYMENT MIGHT HAVE NOT BEEN MADE BY THE FAMILY BUT THE FLAT MIGHT HAVE BEEN ALLOTTED. THERE WAS ALREADY HUGE DELAY OF SEVEN TO EI GHT Y E ARS IN CONSTRUCTION AND COMPLETION OF THE PROJECT . THE PAYMENT MIGHT HAVE BEEN STOPPED BY THE FAMILY. CONSIDERING ALL THESE ASPECTS , IT IS POSSIBLE THAT NO PAYMENT W A S ITA NO.1833/ AHD/ 2015 ASSESSMENT YEAR: 2010 - 11 PAGE 7 OF 7 ALLOCATED QUA TH E FLAT OF THE ASSESSEE , OTHERWISE ELEMENT OF SOME PAYMENT EVEN TO THE SHARE OF ASSESSEE OUGHT TO HAVE CO NSTRUED. IN OUR OPINION , THERE IS NO EVIDENCE WITH THE R EVENUE TO HARBOUR A BELIEF THAT THE ASSESSEE HAS MADE UNEXPLAINED INVESTMENT . THIS ADDITION IS MADE ONLY ON PR ESUMPTION, THEREFORE , WE ALLOW THIS GROUND OF APPEAL AND DELETE TH E ADDITION OF RS.8,05, 000/ - MADE BY THE ASSESSING OFFICER. 8. AS FAR AS GROUND NO.1 IS CONCERNED , WHEREBY VALIDITY OF ASSESSMENT UNDER SECTION 153A IS BEING CHALLENGED, LEARNED COUNSEL FOR THE ASSESSEE DID NOT ADVANCE ANY ARGUMENT ON T HIS ISSUE. THIS GROUND OF APPEAL IS REJECT ED. 9. AS FAR AS CHARGING OF INTEREST IS CONCERNED , IT IS CONSEQUENTIAL IN NATURE. THIS GROUND OF APPEAL IS REJECTED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF FEBRUARY , 201 6 . SD/ - SD/ - MAN ISH BORAD RAJPAL YADAV ( ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 10 TH DAY OF FEBRUARY , 2016 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONE R (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD