Shri Suresh J. Patel, Surat V. The Dy.CIT, Central Circle-3, Surat

ITA 1931/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5776 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRASENJIT SINGH
• Keywords: Unexplained investment; Cost of acquisition
• Section: 153A; 234B; 132

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD [CAMP AT SURAT] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ IT(SS)A.NO.272, 273, 274 AND 275/AHD/2014 / ASSTT. YEAR: 2006-07, 2007-08, 2008-09, 2009-10 AND ITA.NO.1931/AHD/2014 ASSTT.YEAR 2011-12 SHRI SURESH J. PATEL SHIV SADAN ICHHANATH TEMPLE ATHWALINES SURAT 395 007. PAN : ADIPP 6181 A VS DCIT, CIR.3 SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI MEHUL SHAH REVENUE BY : SHRI PRASENJI T SINGH, CIT - DR / DATE OF HEARING : 27/04/2017 / DATE OF PRONOUNCEMENT: 01/06/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE LD.CIT(A) HAS DECIDED ALL THESE APPEALS FOR THE ASSTT.YEARS 2006- 07, 2007-08, 2008-09, 2009-10 AND 2011-12 BY SEPARA TE ORDERS DATED 18.3.2014. IT(SS)A NO.272 /AHD/2014 AND 4 OTHERS 2 2. IN THE ASSTT.YEAR 2006-07, ASSESSEE HAS RAISED F OUR GROUNDS OF APPEAL WHEREAS IN ALL OTHER YEARS, HE HAS RAISED THREE GRO UNDS OF APPEAL. THUS, EXCEPT ONE ADDITIONAL GROUND RAISED IN THE ASSTT.YEAR 2006 -07, ALL OTHER GROUNDS IN ALL THE ASSESSMENT YEARS ARE COMMON. THEREFORE, WE HEARD ALL APPEALS TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY THIS COMMON ORDER. 3. FIRST WE TAKE INDEPENDENT GROUND RAISED IN THE A SSTT.YEAR 2006-07, WHICH IS NOT COMMON IN ALL OTHER YEARS. THIS IS GR OUND NO.1. THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRM ING ADDITION OF RS.4,85,000/-. 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH UNDER SE CTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED ON 8.6.2010 IN THE CASE S OF DIFFERENT BUILDERS AT SURAT. THE ASSESSEE WAS ALSO COVERED UNDER SEARCH ACTION, AND CONSEQUENTLY NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 8.6.2011. IN RESPONSE TO THIS NOTICE, THE ASSESSEE HAS FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2,77,951/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT DURING THE COURSE OF SEARCH AT THE RESIDENC E OF THE ASSESSEE, PURCHASE DEED INVENTORISED AS ANNEXURE A-2 PERTAINED TO LAND AT S.NO.113/2, 115 AND 116 AT MOJE -UNN, SURAT WAS FOUND. A PERUSAL OF THIS PURCHASE DEED INDICATED THAT THE ASSESSEE HAD PURCHASED THE ABOVE LAND ALON G WITH SHRI FAROOKBHAI VALIBHAI VIDE PURCHASE DEED DATED 17.9.2005. THE L AND WAS PURCHASED FOR A CONSIDERATION OF RS.4,85,000/-. THE AO FURTHER OBS ERVED THAT THOUGH THE PURCHASE CONSIDERATION WAS SHOWN AT RS.4,85,000/- I N THE PURCHASE DEED, BUT FOR THE PURPOSE OF STAMP DUTY VALUATION, ITS VALUE WAS ADOPTED AT RS.95,85,200/-. AFTER DEBITING THE PURCHASE COST O F RS.4,85,000/-, THE LD.AO WORKED OUT ADDITIONAL INVESTMENT MADE BY THE VENDEE AT RS.92.00 LAKHS. SINCE THE ASSESSEE HAS HALF-SHARE IN THE TOTAL PURC HASES, THEREFORE, HE MADE ADDITION OF RS.48,42,600/-. IT(SS)A NO.272 /AHD/2014 AND 4 OTHERS 3 5. ON APPEAL, THE LD.CIT(A) HAS OBSERVED THAT ADDIT ION IN THE HANDS OF THE PURCHASER CANNOT BE MADE WITH THE HELP OF SECTION 5 0C OF THE ACT. THE VALUE ON WHICH STAMP DUTY WAS PAID IS TO BE DEEMED AS FUL L SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS IN THE HANDS OF THE SELLER AND NO ADDITION ON THE BASIS OF DEEMING FICTION CAN BE MAD E IN THE HANDS OF THE PURCHASER. THEREFORE, THE LD.CIT(A) HAS DELETED TH E ADDITION MADE BY THE AO ON THE BASIS OF DEEMING PURCHASE CONSIDERATION PAID BY THE ASSESSEE. HOWEVER, THE LD.CIT(A) HAS OBSERVED THAT THE SALE C ONSIDERATION OF RS.4,85,000/- SHOWN IN THE PURCHASE DEED WAS NOT SH OWN AS INVESTMENT IN THE BOOKS OF ACCOUNTS, THEREFORE, THE LD.CIT(A) HAS TRE ATED THIS AMOUNT AS UNEXPLAINED INVESTMENT. THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE LAND WAS PURCHASED BY TWO PERSONS. THEREFORE, TOTA L CONSIDERATION CANNOT BE ASSESSED TO TAX IN THE CASE OF THE ASSESSEE. THE A SSESSEE WAS OWNER TO THE EXTENT OF HALF-SHARE AND AT THE MOST HE CAN BE ASKE D TO GIVE EXPLANATION FOR THE SOURCE OF HALF-SHARE OF RS.4,85,000/-. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE ADDITION WAS MA DE ON THE BASIS OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH, WHICH IS PURCHASE DEED. THE PURCHASE DEED WAS IN THE NAME OF TWO PERSONS WHO HA VE PURCHASED THIS LAND IN EQUAL SHARES. THEREFORE, ADDITION OF TOTAL INVE STMENT CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. WE DIRECT THE AO TO TREAT U NEXPLAINED INVESTMENT TO THE EXTENT OF 50% OF RS.4,85,000/-. ADDITION TO TH IS EXTENT IS CONFIRMED AND THIS GROUND OF APPEAL IS PARTLY ALLOWED. 7. GROUND NOS.3 AND 4 IN ASSESSMENT YEAR 2006-07 AR E COMMON WITH GROUND NOS.2 AND 3 IN ALL OTHER YEARS. THESE GROUN DS ARE GENERAL IN NATURE AND DO NOT CALL FOR RECORDING OF ANY SPECIFIC FINDING, HENCE, THEY ARE REJECTED IN ALL THESE ASSESSMENT YEARS. IT(SS)A NO.272 /AHD/2014 AND 4 OTHERS 4 8. GROUND NO.2 IN THE ASSTT.YEAR 2006-07 IS VERBATI M SAME AS GROUND NO.1 IN ALL OTHER YEARS. THIS GROUND READS AS UNDE R: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THELD.CIT(A) HAS ERRED IN GIVING A GENERAL DIRECTION INSTEAD OF SPECIFIC DIRECTION FOR ADJUSTMENT OF CASH SEIZED AG AINST ADVANCE TAX, SELF-ASSESSMENT TAX ETC AND HENCE HAS ERRED IN CALC ULATING INTEREST U/S.234B OF THE IT ACT, 1961. 9. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT IN THE ASSTT.YEAR 2006-07 THE ASSESSEE HAS RAISED A SPECIF IC GROUND TO THIS EFFECT BEFORE THE LD.CIT(A). HE TOOK US GROUND NO.2 RAISE D BEFORE THE LD.CIT(A). IT READS AS UNDER: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LD.AO HAS MADE A MISTAKE IN CHARGING O F INTEREST U/S.234B OF THE IT ACT, 1961. 10. SIMILAR GROUND WAS RAISED IN OTHER YEARS. THE LD.CIT(A) HAS NOT RECORDED ANY FINDING ON THIS ISSUE IN THE ASSTT.YEA R 2006-07 AND 2007-08. IN THE ASSTT.YEAR 2008-09, THE LD.CIT(A) HAS REPRODUCE D THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO CHARGING OF INTEREST UN DER SECTION 234B OF THE INCOME TAX ACT, BUT DID NOT ADDRESS THE ARGUMENTS R AISED BY THE ASSESSEE. THE LD.CIT(A) HAS SIMPLY OBSERVED THAT THE AO IS DI RECTED TO CHARGE INTEREST UNDER SECTION 234B AS PER LAW. THIS VERY FINDING HA S BEEN MADE IN OTHER YEARS. GRIEVANCE OF THE ASSESSEE IS THAT DURING TH E COURSE OF SEARCH, RS.50.00 LAKHS WERE FOUND IN CASH WHICH WERE SEIZED. THE AS SESSEE HAD MOVED AN APPLICATION ON 14.9.2010 REQUESTING THE AO TO ADJUS T THE CASH SEIZED TOWARDS ADVANCE TAX REQUIRED TO BE PAID BY THE ASSESSEE. T HE ASSESSEE HAS SPECIFICALLY REQUESTED THAT A SUM OF RS.10 LAKHS OUGHT TO BE ADJ USTED FOR THE ASSTT.YEAR 2007-08 AND 2010-11 AND RS.30 LAKHS SHOULD BE ADJUS TED FOR THE ASSTT.YEAR 2011-12. IN SUPPORT OF HIS CONTENTIONS, THE LD.COU NSEL FOR THE ASSESSEE PRODUCED INVENTORY OF CASH PREPARED DURING THE COUR SE OF SEARCH. THUS, THE IT(SS)A NO.272 /AHD/2014 AND 4 OTHERS 5 LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.C IT(A) OUGHT TO HAVE DECIDED, WHETHER THE ASSESSEE HAS COMMITTED ANY DEF AULT WITHIN THE MEANING OF SECTION 234B AND ANY INTEREST IS REQUIRED TO BE COMPUTED AGAINST THE ASSESSEE AS DONE BY THE AO. HE FURTHER RELIED UPON THE ORDERS OF THE ITAT PASSED IN THE CASE OF KANISHKA PRINTS PV. LTD. VS. ACIT, 143 ITD 716 (AHD- TRIB.). ACCORDING TO THIS DECISION, THE EXPLANATION APPENDED TO SECTION 234B OF THE INCOME TAX ACT, BY WAY OF FINANCE ACT, 2013 IS APPLICABLE FROM JUNE, 2013. ACCORDING TO THIS EXPLANATION, THE CASH SEIZ ED WOULD BE ADJUSTED TOWARDS SELF-ASSESSMENT TAX INSTEAD OF ADJUSTING IT TOWARDS ADVANCE TAX PAYABLE BY AN ASSESSEE. IN THE CASE OF ASSESSEE TH IS EXPLANATION IS NOT APPLICABLE, AND THEREFORE, THE CASH SEIZED DURING T HE COURSE OF SEARCH SHOULD BE ADJUSTED AGAINST THE ADVANCE TAX LIABILITY OF TH E ASSESSEE. THIS ASPECT OUGHT TO HAVE BEEN DETERMINED BY THE LD.CIT(A) BEFORE REL EGATING THE ISSUE TO THE AO FOR COMPUTING THE AMOUNT OF INTEREST. 11. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT AS FAR AS THE ASPECT, WHETHER THE ASSESSEE HAS MOVED AN APPLICATION FOR A DJUSTMENT ON SEIZED CASH AGAINST ADVANCE TAX LIABILITY IS CONCERNED, IT IS A FACTUAL ISSUE, WHICH NEEDS VERIFICATION AT THE LEVEL OF THE AO. NO DIRECTION CAN BE ISSUED WITHOUT VERIFYING THE AMOUNT OF CASH SEIZED, WHETHER ANY RE QUEST WAS MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S OR PRIOR TO THAT. 12. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. THE LD.CIT(A) HAS NOT RECORDED ANY FIND ING ON THE GROUNDS RAISED BY THE ASSESSEE IN THE ASSTT.YEAR 2006-07 AND 2007- 08. SIMILARLY, WITH REGARD TO THE FACTS STATED BY THE ASSESSEE BEFORE U S THAT A REQUEST WAS MADE FOR ADJUSTMENT OF SEIZED CASH AGAINST ADVANCE TAX LIABI LITY, NO FINDING IS DISCERNIBLE FROM THE ORDERS OF THE LD.CIT(A) IN OTH ER YEARS. THEREFORE, WE DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF THE LD.CIT(A) FOR FRESH IT(SS)A NO.272 /AHD/2014 AND 4 OTHERS 6 ADJUDICATION. WHILE DEALING WITH THIS ISSUE, THE L D.CIT(A) SHALL KEEP IN MIND THE ORDER OF THE ITAT IN THE CASE OF KANISHKA PRINT S P.LTD. (SUPRA), 143 ITD 716. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTI CAL PURPOSE IN ALL THE ASSESSMENT YEARS. 13. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PART LY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2017 AT AHMEDABAD. SD/- SD/- ( AMARJIT SINGH ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER