Subhashbhai Premaji Bhati, Ahmedabad V. The ITO, Ward-3(3)(5), Ahmedabad

ITA 1870/AHD/2017

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9650 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-09-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 10-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Additional evidence; Cost of acquisition; Corroborative evidences; Set aside
• Section: 147; 69; 148; 201; 251; 22

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ायपी ‘डी’ अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 1870/Ahd/2017 िनधा榁रण वष榁/Assessment Year: 2009-10 Shri Subhashbhai Premaji Bhati, 2, Cosmovilla Row House, Nr. Premchand Nagar, Satellite, Ahmedabad-380015 PAN : AIXPB 1539 J Vs. The Income-Tax Officer, Ward 3(3)(5), Ahmedabad ITA No. 1962/Ahd/2017 िनधा रणवष /Assessment Year: 2009-10 The Income-Tax Officer, Ward 3(3)(5), Ahmedabad Vs. Shri Subhashbhai Premaji Bhati, 2, Cosmovilla Row House, Nr. Premchand Nagar, Satellite, Ahmedabad-380015 PAN : AIXPB 1539 J अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri Suresh Gandhi, AR Revenue by : Shri M. Anand Kumar, Sr. DR सुनवाई सुनवाईसुनवाई सुनवाई क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख/Date of Hearing : 12.09.2023 घोषणा घोषणाघोषणा घोषणा क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख /Date of Pronouncement: 06.12.2023 आदेश आदेशआदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: These are cross appeals filed by the assessee and the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-3, Ahmedabad (hereinafter referred to as "CIT(A)") dated 29.06.2017 passed u/s 250(6) of the Income-tax Act, 1961, (hereinafter referred to as "the Act") for the Assessment Year (AY) 2009-10. 2. The ground raised by the assessee read as under:- 2 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 “The ld. CIT(A) has erred in law and on facts in confirming the addition on account of unexplained investment u/s.69 of the Act to the extent of Rs.38,91,733/- out of total addition of Rs.2,64,75,200/- made by the AO. In view of the fact that the payment made by the appellant as pertaining to his share [1/3rd] during the year in question having been made by account payee cheques as clearly mentioned in the purchase deed itself and the same being reflected in the bank statements furnished to the AO, the action of the Id. CIT(A) in confirming the said addition of Rs.38,91,733/- is wholly unjustified and bad in law and the impugned addition requires to be deleted.” On the other hand, the Revenue has raised following grounds in its appeal:- “1. The Ld.CIT(A) has erred in law and on facts in deleting addition of Rs. 2,25,83,467/- accepting the assessee submission that he has made only an amount of Rs. 84 lakh and balance amount of Rs. 1.66 crore made by Smt. Kamlaben Bhatti, his wife. Neither the assessee nor the ld.CIT(A) has brought on record any evidence to support the decision making. 2. The Ld.CIT(A) has erred in law and on facts in considering the assessee's share since there is no evidence to specify the share in property by the assessee or his wife. 3. The Ld.CIT(A) has not considered the fact that during the course of assessment proceedings the assessee has claimed loss individually though claimed to have purchased the property jointly of Rs. 2.50 Crore. 4. The Ld.CIT(A) has erred in law and on facts considering an amount of Rs. 50 lakh is made in the AY 2008-09 though not objected the sale, deed made during the period of A.Y. 2009-10 in respect of investment in property of Rs. 2,50,00,000/-. The Ld.CIT(A) decided all the issues without affording those documents to the AO for his comments as required. 6. The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 75,99,375/- out of total addition of Rs. 1,10,00,000/- accepting the market value of Rs. 18,97,000/- as on 31/03/1997 arrived by the District Collector. The cost of acquisition and market value are different one. While computing the capital gain, the assessee has to prove the cost of acquisition which he incurred for purchase of the property sold. 3 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 7. The Ld.CIT(A) has erred in deleting the addition of Rs. 1,32,41,206/- out of total addition of Rs. 1,34.66,205/- without any valid evidences accepting the submission of the assessee. 8. The Ld. CIT(A) has erred in law and on facts in rejecting claim of assessee’s loss of Rs.89,00,000/- considering the value of the property at Rs.2,50,00,000/- as against the value taken by the AO of Rs.2,64,75,200/- including stamp duty and registration charges of Rs.12,25,000/- and Rs.2,50,200/- respectively. “ 3. The facts relating to the case are that the Assessing Officer had information that the assessee had sold two immovable properties during the year under consideration for an amount of Rs.1.01 crores and Rs.51 lakhs respectively but had not returned capital gain on the same. Accordingly, the case of the assessee was reopened u/s 147 of the Act. Notice was issued to the assessee u/s 148 of the Act. Copy of reasons for reopening was supplied to the assessee. The assessee submitted to the Assessing Officer that it had incurred loss on the transactions of the sale of property and, therefore, had not returned the same in the return of income filed. The assessee had contended that property sold for Rs.51 lakhs had been purchased for Rs.2.50 crores during the year itself and the assessee accordingly had incurred a short term loss of Rs.1.99 crores; as for the property sold for Rs.1.01 crores, the entire sale consideration was set off against the capital loss of Rs.1.99 crores and the assessee contended that, in the net result, he had incurred capital loss. The Assessing Officer asked the assessee to demonstrate the source of purchase of immovable property during the year for Rs.2.50 crores plus Stamp Duty paid thereon of Rs.12,25,000/- and registration fees paid Rs.2,50,200, amounting in all to a total investment of Rs.2,64,75,200/-. In the absence of any reply filed by the assessee, he added the entire amount of investment made in immovable property to the tune of Rs.2,64,75,200/- u/s. 69 of the Act ,as made out of unexplained source. 4 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 4. Further, the capital loss returned by the assessee on the sale of this property for Rs.51 lakhs to the tune of Rs.1.99 crores was not treated to be genuine by the Assessing Officer since the assessee failed to offer any explanation as to why the property was purchased at such a high price of Rs.2.5 crores and sold immediately thereafter at such a low price of Rs.51 lakhs. In the absence of any explanation offered by the assessee, he held the loss of Rs.1.99 crores to be ingenuine and accordingly did not allow set off of the same from the capital gain of Rs.1.10 crores shown by the assessee on the sale of another immovable property. The entire capital gain of Rs.1.10 crores on the sale of second immovable property was, therefore, brought to tax under the head “capital gain” as being in the nature of Long Term Capital Gain earned by the assessee. 5. The Assessing Officer also noted that the assessee had deposited cash and cheques in two bank accounts to the tune of Rs.1.34 crores, the source of which remained unexplained. Accordingly, the said amounts were also added to the income of the assessee. 6. As a result the income of the assessee was assessed at Rs.4.01 crores as against income returned by the assessee of Rs.2.24 lakhs. 7. The matter was carried in appeal before the ld. CIT(A) where the assessee contended that he was not given due opportunity to file response to the queries raised during assessment proceedings. The ld. CIT(A) appreciated the same and considered all the explanations and evidences filed by the assessee before him he partly allowed the assessee’s appeal by way of reducing : • the addition made by the Assessing Officer on account of unexplained investment in immovable property of Rs.2.64 crores to Rs.38 lakhs; 5 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 • the addition of long term capital gain of Rs.1.10 crores to Rs.34 lakhs and • the addition made on account of unexplained source of cash and cheques deposited in banks to the tune of Rs.1.34 crores to Rs.2.25 lakhs. 8. Aggrieved by the same, both the assessee and the Revenue have come up in appeal before us – with the assessee challenging the order of the ld. CIT(A) confirming the additions made by the Assessing Officer, whereas the Revenue challenging the order of the ld. CIT(A) deleting the additions made by the Assessing Officer. 9. At the outset, ld. DR contended that the ld. CIT(A) had allowed substantial relief to the assessee by appreciating the evidences and explanations furnished by the assessee to the ld. CIT(A) without confronting the same to the Assessing Officer. He contended that all these additions made by the Assessing Officer were in the absence of any evidences and explanation furnished by the assessee during assessment proceedings and the assessee had furnished certain evidences and explanation to the ld. CIT(A) who suo moto appreciated the same without confronting them to the Assessing Officer and granted substantial relief to the assessee. He pleaded, therefore, that all the issues should be adjudicated only after confronting all the explanations and evidences to the Assessing Officer. The ld. Counsel for the assessee, though pleaded that the evidences were there before the Assessing Officer, but he was unable to establish the said fact before us to our satisfaction from the documents placed in the paper-book filed by him. 10. We have gone through the order of the Assessing Officer on each addition made. We have also gone through the order of the ld. CIT(A) 6 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 adjudicating each issue. We have heard both the parties and we hold that the entire case needs to go back to the file of the Assessing Officer for adjudication afresh after considering the evidences and explanations offered by the assessee on each issue. We hold so, finding merit in the contention of the ld. DR that the ld. CIT(A) suo moto appreciated the explanation and evidences filed by the assessee without seeking comments of the Assessing Officer on the same who was a party to the appeal filed by the assessee before him and without getting the facts verified by him. We shall be dealing with each addition separately to point out the infirmity in the order of the ld. CIT(A) as noted by us above. 11. Taking up first the issue of addition made of Rs.2,64,75,200/- u/s 69 of the Act, the facts of the case are that the assessee was found to have sold immovable property being an agricultural land situated at Mauje Okaf, bearing Survey No. 316, for Rs.51 lakhs during the impugned year on 27.01.2009. The assessee had submitted to the Assessing Officer that the impugned property had been purchased by him during the impugned year itself on 14.07.2008 for Rs.2.50 crores and he had also incurred registration cost of Rs.2,50,200/- + stamp duty of Rs.12,25,000/- thereon. As noted in the assessment order, in the absence of any explanation of the source of investment, the addition was made by the Assessing Officer u/s 69 of the Act. The findings of the ld. CIT(A) restricting the addition to Rs.38,91,733/- are at paragraph no.6.3 of his order as under:- “6.3 Decision: I have considered the facts of the case, assessment order and the written submission of the appellant filed during the course of hearing with and relevant supportings. It is seen that the appellant has purchase the immovable property being agriculture land situated at Mouje Okaf, bearing Survey No. 316 for total consideration of Rs. 2,50,00,000/-. The copy of the purchase deed 14.07.2008 has been placed on the record. In the said purchase deed at clause no. 9 the details of total payment of Rs. 2,50,00,000/- has been given. As 7 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 regards the source of the investment of Rs. 2,50,00,000/- in the said property the appellant has submitted all the relevant details, copies of bank statements reflecting the entries for payment made to the sellers as well as the confirmation of the parties who have given the unsecured loan to the appellant However, all these details were not available on the record of the AO since before it could be filed, the AO has passed the assessment order dated 22/12/2016. From the details filed by the appellant in support of the investment of Rs. 2,50,00,000/-, it is seen that there are two co-owners of the said agriculture land, one the appellant and other his wife Smt. Kamladevi S. Bhati. As per the ratio of payment made by both of them, their share in the purchased property is 1/3rd of appellant and 2/3rd is of his wife. Further, it is also seen that out of total payment of Rs. 2,50,00,000/- made for purchase of the said property, the total payment of Rs. 1,25,00,000/- has been made during the FY 2007-08 and balance payment of Rs. 1,25,00,000/- has been made during FY 2008- 09. The year-wise and the co-owner wise details of payment made for purchase of the property is as under: Sr. No. Name Payments made in F.Y.2007-08 Payments made in F.Y.2008-09 Total 1 Subhashbhai P. Bhatti (Appellant) 50,00,000 34,0,000 84,00,000 2 Kamlaben S. Bhatti 75,00,000 91,00,000 1,66,00,000 Total 1,25,00,000 1,25,00,000 2,50,00,000 In view of the above factual details of payment made for purchase of the impugned immovable property being agriculture land, the appellant submitted that the amount of Rs. 1,25,00,000/- paid during FY 2007-08 is beyond the jurisdiction of the AO and therefore, no addition can be made to the extent of Rs. 1,25,00,000/-. Similarly, the appellant also submitted that the payment made during the FY 2008-09 by his wife of Rs. 91,00,000/- is also outside the jurisdiction of the AO since the said payment has been made by other co-owner which is also an assessee under the Act and assessed to tax under the PAN- ACFPB 1295 D. It is not the case of the AO that appellant and his wife are one and the same and the appellant has made the investment of his own funds in the name of his wife. Thus, the total payment made by the appellant during the FY 2008-09 relevant to AY 2009-10 is only of Rs. 34,00,000/-. From the above details, it is clear that at the most addition which can be made in the hands of appellant is only of Rs. 34,00,000/- being the payment made during the year under consideration by the appellant as his share. Therefore, the total addition is restricted to Rs. 34,00,000/- plus 1/3 rd of Rs. 12,25,000/- being stamp duty paid in cash and registration fees of Rs.2,50,200/- paid in cash. Accordingly, 8 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 the appellant shares of 1/3 rd of stamp duty and registration fees comes to Rs. 4,91,733/-. Therefore, at the outset the addition in the hands of appellant of Rs. 34 ,00,000/- plus his share of stamp duty and registration fees of Rs 4,91,733/- totaling to Rs. 38 ,91,733/ is confirmed. Various documentary evidences have been submitted explaining the source of payment made in acquiring the said property. However, the same are rejected as not found, satisfactory. On page no.125 & 126 of the submission, a chart has been furnished explaining the sources of payment made. However, in absence of direct link, the same has not been accepted and accordingly, the contention of the appellant explaining the source of payment is rejected. Accordingly, the total addition made by the AO of Rs. 2,64,75,200/- is restricted to Rs. 38,91,733/-. Accordingly this ground of appeal is partly allowed.” 12. A perusal of the above reveals that the ld. CIT(A) notes that before him the assessee had submitted all relevant details of the source of investment including the copies of bank statement reflecting the entries for payment made to the sellers as well as the confirmation of the parties who gave the unsecured loan to the appellant. From these details, he gathered that the property was co-owned by the assessee along with his wife in the ratio of 1/3 rd and 2/3 rd , that out of total payment of Rs.2.5 crores made for the property, only Rs.1.25 crores was made during the impugned year, out of which only a payment of Rs.34 lakhs could be attributed to the assessee. The balance, he found and held from the details and evidences before him, to be attributable to investment made by his wife. Adding the cost of registration and stamp duty to the same, the ld. CIT(A) restricted the addition u/s 69 of the Act in the hands of the assessee amounting to Rs.38,91,733/-. 13. As is evident from the findings of the ld. CIT(A) himself, all details and evidences appreciated by him for arriving at this finding were not there before the Assessing Officer. Moreover, it is evident that even he had not cared to seek a remand report from the Assessing Officer on the evidences submitted. Though the ld. Counsel for the assessee contended that the ld. CIT(A) has 9 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 arrived at this conclusion by only noting the facts from the documents before him, the ld. DR has pointed out that the findings of the ld. CIT(A) that the assessee and his wife were co-owners of the property in the ratio of 1/3 rd and 2/3 rd needed deeper investigation and verification. He pointed out that ld. CIT(A) has attributed 2/3 rd of investment in the property to the wife of the assessee merely on the basis of details submitted by the assessee. He contended that this fact needed deeper inquiry and verification as to whether there was any genuine source from which his wife could have made such huge investment; that merely if it came from her bank account, the investment could be attributed to her was not a correct finding by the ld. CIT(A). We completely agree with ld. DR on this account. The ld. CIT(A) himself stating that the evidences and explanation appreciated by him being not there before the Assessing Officer and noting that these explanations and evidences needed deeper inquiry and verification, and also the fact that as per law, the ld. CIT(A) was required to seek a remand report from the Assessing Officer on the additional evidences filed by him, this matter needs to be restored back to the Assessing Officer to consider the explanation and evidences filed by the assessee and thereafter to pass an order in accordance with law. Needless to add, the assessee be given due opportunity of hearing. 14. The power of the Ld.CIT(A) to entertain additional evidences is regulated by Rule 46A of the Income Tax Rules, 1962, (in short “Rules”) which provides that the Ld.CIT(A) shall entertain additional evidences only after allowing reasonable opportunity to the AO to examine the same and produce evidence in rebuttal. Rule 46A of the Rules is reproduced for clarity: “46A. (1) The appellant shall not be entitled to produce before the [[Joint Commissioner] (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him 10 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely :— (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the 10 [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the [[Joint Commissioner] (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [[Joint Commissioner] (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer] has been allowed a reasonable opportunity— (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the [ [Joint Commissioner] (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.] 15. The second issue relates to the addition of Rs.1.10 crores made to the income of the assessee on account of Long Term Capital Gain on sale of second immovable property. The fact relating to the issue being that the amount of Rs.1.10 crores was a sale consideration received by the assessee of property bearing survey No.52 of village Sarkhej. During the assessment proceedings, the assessee had claimed set off of loss of Rs.1.99 crores incurred on sale of 11 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 another immovable property during the year against this sale consideration of Rs.1.10 crores and returned no capital gain to tax accordingly. The Assessing Officer rejected the assessee’s claim of set off of Short Term Capital Loss of Rs.1.99 crores finding it to be ingenuine and treated the sale consideration, therefore, of Rs.1.10 crores as Long Term Capital Gain earned by the assessee liable to tax. During the appellate proceedings, the assessee submitted documents, evidences and explanation on this issue, appreciating which the ld. CIT(A) restricted the addition to Rs.34 lakhs holding at paragraph no.7.3 of his order as under:- “7.3 Decision: I have considered the facts of the case, assessment order and the written submission with supporting evidences filed by the appellant during the course of appellate proceedings. It is seen that during the previous year 2008- 09, the appellant has sold the agriculture land admeasuring about 7588 Sq. Mtrs. situated at Survey No. 52 of Village Sarkhej, Ahmedabad for the total sales consideration of Rs. 1,10,00,000/-. In the return of income filed by the appellant, no capital gain on sale of this land was shown. Accordingly, the AO, on the basis of the information and the copy of the sale deed, added the entire sales consideration of Rs. 1,10,00,000/- as long term capital gain while observing that the appellant has not furnished any details of cost of acquisition of the property sold. From the copy of the sale deed, it is seen that out of total sales consideration of Rs. 1,10,00,000/-, the appellant has received the consideration of Rs. 86,00,000/- whereas balance consideration of Rs. 24,00,000/- has been received by the confirming party to the sale deed Shri Sharadbhai Bhati. This fact has been clearly stated in the sale deed in the schedule of payment given on page no.12 to 15. The AO has not taken into consideration this fact and made the addition of total sales consideration of Rs. 1,10,00,000/- in the hands of the appellant, which is factually not correct. Therefore, the addition which can be made in the hands of appellant is Rs. 86,00,000/- as against considered by AO of Rs.1,10,00,000/-. AO has further erred in Law by not giving benefit of deduction of cost of acquisition and the cost of improvement of the said land. During the appellate proceedings, the appellant has submitted that said land was purchased by the appellant on dated 21/06/1997 as stated in the Sale Deed on page no. 7. However, the appellant is not having the copy of the Purchase Deed in support of the cost of acquisition incurred for purchase of the said land during FY 1997-98. Further, after purchase of the said land, the appellant has also paid the land premium of Rs. 33,15,007/- to convert the new tenure land into old tenure. In fact, the details 12 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 of payment of premium has also been clearly mentioned in the sale deed dated 21/03/2009 on page no. 11. In absence of the copy of the Purchase Deed for determining the cost of acquisition, the appellant has relied upon the cost of Rs. 250/- per Sq. Mtrs as adopted by the District Collector to determine the amount of premium to be paid by the appellant in the letter dated 28/07/2008 issued by the District Collector which is placed on the page No. 143 of the submission. Accordingly, the appellant submitted that the cost of acquisition of the impugned agriculture land is required to be taken at Rs. 18,97,000/- (Rs. 250/- X 7588 Sq. Mtrs.) and its indexed cost of acquisition in the year of sale i.e. FY 2008-09 comes to Rs. 33,35,511/- (Rs. 18,97,000/- X 582 / 331). Thus, appellant submitted that to arrive at the correct amount of long term capital gain on sale of the impugned agriculture land of survey No. 52 of Village Sarkhej, the indexed cost of acquisition of Rs. 33,35,511/- and the cost of improvement being land premium paid of Rs. 33,15,007/- totaling to Rs. 66,50,518/- is required to be given deduction from the sales consideration of Rs. 86,00,000/- received by the appellant. The contention raised by the appellant is considered regarding deduction for cost of acquisition of land and cost of improvement. However, the entire amount cannot be considered as deduction since appellant's share is Rs.86, 00,000/- out of on total sales consideration of Rs. 1,10,00,000/- which comes to 78.18% and therefore, out of the total amount of cost of acquisition and cost of improvement of Rs. 66,50,518/-, the appellant's share will be Rs. 51,99,375/- and accordingly, AO is directed to re-compute the long term capital gain by taking the net sale of RS. 86,00,000/- less cost of acquisition and cost of improvement, as discussed above, as against the entire Sales consideration of Rs. 1,10,00,000/- considered by AO. This grounds of appeal is partly allowed. In view of the above findings, the AO is directed to take the long term capital gain at Rs 34,00,625/- on sale of the impugned land worked out as under: Sr. No. Particulars Amount Rs. Amount Rs. 1 Sales Consideration received by Shri Subhashbhai P. Bhati out of Total Sales Consideration of Rs. 1,10,00,000/- 86,00,000 2. Less: Indexed Cost of acquisition : a) Market Value of the property in the year of acquisition [Rs. 250/- X 7588 Sq. Mtrs.] b] Year of acquisition c] Index of the year of acquisition d] Index of year of sale 18,97,000 1997-98 331 582 13 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 3. Indexed cost of acquisition (a x d / c) 33,35,511 4. Less : Cost of improvement : Premium paid for conversion of the land into old tenure land as per the order of the Collector 33,15,007 5. Total Indexed cost of acquisition & Cost of Improvement (3 + 4) 66,50,518 6. Appellant’s share at 78.18% of Rs.66,50,518/- 51,99,375 7. Long Term Capital Gain on sale of the land (1-6) 34,00,625 Accordingly, the addition of the entire sales consideration of Rs. 1,10,00,000/- made by the AO is hereby deleted and the AO is directed to adopt the long term capital gain of Rs. 34,00,625/- worked out as above. The addition of Rs.34,00,625/- is hereby confirmed.” 16. As is evident from the above, the ld. CIT(A) has restricted the addition to Rs.34 lakhs appreciating the fact that the assessee has not received the entire sale consideration of Rs.1.10 crores but only Rs.86 lakhs and the balance consideration of Rs.24 lakhs has been received by the confirming party to the sale deed through Shri Sharadbhai Bhati. He has derived this fact from the sale deed itself. The ld. CIT(A) further has given the assessee the benefit of set off of cost of acquisition against the sale consideration based on a working submitted by the assessee. The order of the ld. CIT(A) notes the working of the assessee of the cost of acquisition to be based upon cost as adopted by the District Collector to determine the amount of premium to be paid by the assessee, and accordingly the ld. CIT(A) has accepted the cost of consideration to be Rs.66,50,518/-, reducing this from the sale consideration taken by him of Rs.86 lakhs, he has held the capital gain earned by the assessee on the sale of the impugned immovable property to be at Rs.34,00,625/- which he had 14 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 accordingly held is the amount which is liable to be taxed as the Long Term Capital Gain on the sale of the impugned property. 17. There is no doubt that the ld. CIT(A) has again appreciated the evidence and explanation of the assessee without confronting the same to the Assessing Officer. Admittedly no such explanation was given by the assessee to the AO. The Ld.CIT(A) has accepted the working of the cost of acquisition of the asset without confronting the same to the Assessing Officer or seeking a report from him on the veracity of the same. He has not even sought any comments of the Assessing Officer while accepting sale consideration to be only Rs.86 lakhs as opposed to Rs.1.10 crores mentioned in the sale deed. All evidences and explanation need verification and counter from the AO as per Rule 46A of the Rules.. Therefore, this issue also needs to be re-examined by the Assessing Officer considering the explanations and evidences furnished by the assessee after giving due opportunity of hearing to him. 18. We may add that the issue of genuineness of short term capital loss of Rs.1.99 crores which was rejected both by the Assessing Officer and the ld. CIT(A), be also examined by the Assessing Officer afresh. 19. The last issue pertains to source of cash and cheques deposited in bank remained unexplained to the tune of Rs.1.34 crores. The Assessing Officer made this addition in the absence of any explanation offered by the assessee while the ld. CIT(A) restricted it to Rs.2,25,000/- at paragraph No. 8.5 of his order as under:- “8.5 Decision: Since both the grounds of appeal no. 10 & 11 are inter-related, the same are being decided together. There is a clarion call from the highest echelon of the government to create an environment friendly to doing of 15 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 business in this country In the DO letter of Chairman No FTS 30311806/2016 dtd 01.11.2016, the field formation has been directed dispute it is equally important to take steps to prevent avoidable As a sequel to this a compendium of 22 circulars was circulated vide letterNo.CC2/ABD/Circulars/RTC /48/2016-17 dated 20.12.2016 entitled, “Calefactory circulars issued by CBDT to reduce litigation Settled/View/Department view.” The Hon'ble Supreme Court has ruled in the case of CIT Vs. Bajaj Tempo Ltd - 196 ITR 188 (SC) that the beneficial provisions have to be construed liberally so as to promote the purpose for which it was introduced Therefore, the substance of the matter has to be perused through the lense of independent evidences. For instance, acquisition of property for an amount of Rs.2,50,00,000/- is a credible evidence which cannot be ignored. Further CBDT's Circular No. 14(XL-35) dated 11-4-1955 is referred wherein it is stated that: “3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights it as one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative m guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him This attitude would in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department.” This issue relating to loss on sale of land is discussed on page no. 8 in para 12.1 wherein AO has observed that assessee has claimed short term loss of Rs.1,99,00,000/- on account loss from the land sold for Rs. 51,00,000/- which was purchased for Rs 2,50,00,000/- during the F.Y. 2008-09. The loss of Rs. 1,99,00,000/- was set off against the sale receipts of Rs. 1,10,00,000/- and net short term loss of Rs. 89,00,000/- has been claimed by the appellant. However, the loss of Rs. 1,99,00,000/-being short term capital loss is not shown in return of income filed and in the absence of justification for loss claimed during the reassessment proceeding, it has been treated unlawful, unjustified and un- considerable by the AO. I have carefully gone through the submission and observation of the AO. In principle, the stand taken by the AO is confirmed but on a different ground. At the outset, the findings of AO is confirmed that no prudent businessman will sale a property of Rs.2,50,00,000/- for a value of Rs.51,00,000/- within a short period of time. During the appellate proceedings, the appellant has furnished the reasons and justification for the loss which inter 16 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 alia includes location of the property, some anti-social elements, encroachment, approach road etc. All these contention are rejected and not accepted in absence of documentary evidence and therefore loss claimed on the sale of the said property of Rs.1,99,00,000/- is rejected and the sale consideration recorded in the books of account of Rs.51,00,000/- is considered as having been sold for an amount of Rs. 2,50,00,000/- i.e. at the amount at which said property has been acquired by the appellant. Therefore, the sale consideration declared by the appellant of Rs. 51,00,000/- is replaced with the sale consideration of Rs.2,50,00,000/-. Accordingly, the grounds of Appeal No.11 is rejected and the action of the AO in disallowing of loss is confirmed, however on the different reasons as stated by me hereinabove, i.e. loss on sale of land is not allowed but sale proceeds has been considered at the price at which the impugned property has been acquired i.e. Rs. 2,50,00,000/-. AO is directed to compute the capital gain accordingly. Coming to the amount deposited in the bank by cheque as well as in cash of Rs. 1,34,66,205/- as stated by the appellant in ground of Appeal No.10, I have considered the submission of the appellant on this issue and the relevant supporting evidences. In his submission, the appellant has pointed out that the correct amount of cash deposited into the Kalupur Comm. Co-Op. Bank Ltd. is of Rs. 61,70,755/- and not of Rs. 62,21,794/- considered by the AO. I have verified the mistake pointed by the appellant and it is found to be correct. Thus, the total cash deposit amount in the two bank accounts is of Rs. 1,16,89,980/- and not of Rs.1,17,41,019/- as stated by the AO in assessment order. As regards the source of the cash on hand available with the appellant, it is seen that the he has received the advance towards the agreement to sale of Banakhat rights in respect of land of Survey No 482 of village Bopal to one shri Dharmeshbhai M. Patel amounting to Rs. 55.00 lacs during March, 2008. Out of this amount of Rs. 55.00 lacs, the amount of Rs. 20.00 lacs have been received by cheque while balance amount of Rs. 35.00 lacs have been received in cash. In the MOU dated 28/03/2008 placed at page no. 201 & 202 of the submission, the fact of receipt of the consideration of Rs. 55.00 Icas has been clearly stated. Thus, the appellant was having the cash of Rs. 35.00 lacs available with him. Similarly, the appellant has also received the cash on hand balance from his late mother Jamnaben Premji as per her will. The copy of the will and the death certificate are placed on the record at page no. 116 to 121 of the submission. The appellant has submitted that the cash received from his mother is approximately of Rs. 15.00 lacs. Thus, at the beginning of the FY 2008-09, i.e. as on 01/04/2008, the appellant was having total cash on hand balance available with him of Rs. 50.00 lacs (Rs. 35.00 lacs + Rs. 15.00 lacs). Further, the appellant has also received his ½ share in cash consideration amounting to Rs. 99.50 lacs during the period from August, 2018 to January, 2009. In response to such an argument, month-wise cash in hand statement was required and the appellant has given a chart showing month-wise details 17 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 of cash on hand balance available at his disposal, amount deposited in the two bank accounts, amount of sales consideration received in cash and closing balance of cash. The same is reproduced as under: Chart showing availability of cash with the appellant and its telescoping with the cash deposited into the bank accounts of the appellant during FY 2008-09 The perusal of the said chart indicates negative balance of Rs. (-) 2,22,800/- in the month of August, 2008. Thus, entire cash deposit into the two bank accounts of the appellant is not explained with the source of the cash therefore the deposit to the extent of Rs. 2,25,000/- is considered as unexplained. Accordingly, out of the total cash deposits into the bank accounts of Rs. 1,16,89,980/- (rectified figure as discussed above), the cash deposits to the Sr. No . Month Opening Balance of cash available Cash received (sales considera tion) Cash deposite d in bank a/c with Bank of Baroda Cash deposite d in Bank a/c with the Kalupur Comm. Co. Op. bank Ltd. Total cash deposited Closing balance of cash available 1 2 3 4 5 6 7=(5+6) 8=(3+4-7) 1 Apr-08 50,00,000 - - 5,55,500 5,55,500 44,44,500 2 May-08 44,44,500 - 34,05,000 5,86,000 39,91,000 4,53,500 3 June-08 4,53,500 - 18,000 3,75,000 3,93,000 60,500 4 Jul-08 60,500 - - 2,83,300 2,83,300 (22,22,800) 5 Aug-08 (2,22,800) 20,00,000 13.28,225 2,18,000 15,46,225 2,30,975 6 Sep-08 2,30,975 15,00,000 - 13,45,110 13,45,110 3,85,865 7 Oct-08 3,85,865 15,00,000 - 5,30,500 5,30,500 13,55,365 8 Nov-08 13,55,365 15,00,000 - 10,63,345 10,63,345 17,92,020 9 Dec-08 17,92,020 15,00,000 - 2,59,000 2,59,000 30,33,020 10 Jan-09 30,33,020 19,50,000 6,00,000 4,93,000 10,93,000 38,90,020 11 Feb-09 38,90,020 - - 2,39,000 2,39,000 36,51,020 12 Mar-09 36,51,020 - 1,68,000 2,23,000 3,91,000 32,60,020 50,00,000 99,50,000 55,19,225 61,70,755 1,16,89980 32,60,020 18 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 extent of Rs. 1,14,64,980/- is considered as explained while giving benefit of telescoping it with the cash on hand available with the appellant as per the chart. Accordingly, the addition on account of cash deposit to the extent of Rs.1,14,64,980/- is deleted and the balance amount of Rs. 2,25,000/- is upheld. As regards, the cheques deposits into the said two bank accounts, totaling to Rs. 17,25,187/-, the appellant submitted that the same are received from proper banking channels. The appellant has successfully shifted the onus to the department. In absence of the proper verification of the nature of the credit entries by cheques / transfer, the additions made by the AO is not justified and therefore the same is deleted. Thus, out of the total additions of cash and cheque deposits of Rs.1,34,66,205/-, the additions of Rs.2,25,000/- is upheld and the balance amount of Rs.1,32,41,205/- is deleted.” 20. We have noted from the above that the ld. CIT(A) has appreciated the explanation of the assessee regarding the source of deposits as attributable to advance received towards agreement to sale of Banakhat rights in respect of land of Survey No. 482 ọf village Bopal. He has considered a MoU in this regard which has been filed by the assessee. He has also considered the explanation of the assessee that he had received cash from his late mother, taking note of the copy of will and the death certificate. All these were admittedly placed before the Ld.CIT(A) for the first time. Thus, it is evident that the ld. CIT(A) has appreciated the evidences and explanations, which were not there before the Assessing Officer, without confronting the same to him. We, therefore, consider it fair and proper and in the interest of justice to set aside this issue also to the file of the Assessing Officer to decide the same afresh after giving the assessee proper and sufficient opportunity of being heard and after taking into consideration the explanations and evidences furnished by the assessee. 21. In a nutshell, for the reasoning enumerated in foregoing paragraphs as above, all the issues raised in these appeals are restored to the file of the Assessing Officer who will in turn adjudicate these issues afresh after 19 ITA Nos. 1870 & 1962/Ahd/2017 Subhashbhai Premaji Bhati - Cross Appeals AY : 2009-10 considering assessee’s explanation and evidences, which were not before him earlier, and thereafter pass an appropriate order in accordance with law after giving adequate opportunity of being heard to the assessee. 22. In effect, both the appeals are allowed for statistical purposes. Order pronounced in the open Court on 06 /12/2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 06/12/2023