The ACIT, Central Circle-3, Surat V. Shri Hanubhai Virjibhai Patel, Surat

ITA 2009/AHD/2009

• Counselvise Citation: 200920514 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 19-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA
• Assessee Lawyers: KK SHAH
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. MOHAN A LANKAMONY, AM) ITA NO. 2009/AHD/2009 A. Y.: 2004-05 THE A. C. I. T., CENT. CIRCLE-3, ROOM NO.507,AAYAKAR BHAVAN, MAJURA GATE, SURAT VS SHRI HANUBHAI V. PATEL, 9, SHANTIVAN SOCIETY, LAMBE HANUMAN ROAD, SURAT PA NO. ADGPP 3511 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. S. PARIDA, CIT DR RESPONDENT BY SHRI K. K. SHAH, AR DATE OF HEARING: 14-12-2011 DATE OF PRONOUNCEMENT: 16-12-12-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , AHMEDABAD DATED 02-03-2009 FOR ASSESSMENT YEAR 2004-05. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO.1, THE REVENUE CHALLENGED THE DELET ION OF ADDITION OF RS.4,53,760/- ON ACCOUNT OF PROFIT ON S ALE OF LAND. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD FILED RETURN OF INCOME SHOWING TAXABLE INCOME AT RS.23,85,160/- (INCLUDING DISCLOSURE OF ITA NO.2009/AHD/2009 ACIT, CC 3, SURAT VS SHRI HANUBHAI V. PATEL 2 RS.23,00,000/-) IN RESPONSE TO NOTICE U/S 153A OF T HE IT ACT. THE AO MADE ADDITION OF RS.4,53,760/- ON ACCOUNT OF ALLEGE D PROFIT ON SALE OF LAND AT SR. NO.745, 755/1 AND 626 MOJE DUMAS, SURAT . DURING THE SEARCH PROCEEDINGS, SAUDA CHITTI WAS FOUND WHEREIN THE ASSESSEE WAS SELLER AND SOME OTHER PARTIES WERE BUYERS. THE SAID SAUDA CHITTI SIMPLY CONTAINED TERMS OF DEAL, THERE WAS NO PROOF OR EVIDENCE OR ACTUAL PURCHASE OR SALE OF LAND. THERE WAS ALSO NO PROOF OF ANY RECEIPT OR PAYMENT ON ACCOUNT OF THIS LAND. THE AO HAD ESTIMATED 12% PROFIT ON ALLEGED TRANSACTION OF RS.2.26 CRORES AND ACCORDINGLY ESTIMATED PROFIT AT RS.27,23,760/-. THE ASSESSEE WI THOUT PREJUDICE HAD DISCLOSED RS.22,70,000/- ON ACCOUNT OF LOOSE PA PER AND ACCORDINGLY DIFFERENCE OF RS.4,53,760/- WAS ADDED T O THE INCOME OF THE ASSESSEE. ADDITION WAS CHALLENGED BEFORE THE LE ARNED CIT(A) AND IT WAS SUBMITTED THAT THREE WAS NO TERMS OF SAUDA I NCLUDING DETAILS OF PAYMENT. THE ASSESSEE WAS NOT OWNER OF THE LAND AT SR. NO.785 AND 626 AND THE TRANSACTIONS DID NOT MATERIALIZE. NO TR ANSACTION COULD BE MATERIALIZED AS SHRI BHIMBHAI N. MOTHAWADIA CANNOT BE OWNER OF THE PROPERTIES AND THERE WAS NO TRANSFER, THEREFORE, NO TRANSACTION WAS MATERIALIZED. NOW, THE ASSESSEE HAS SURRENDERED 10% PROFIT ON THE SAME AND DISCLOSED RS.22,70,000/- WHICH WOULD SERVE THE PURPOSE. THE LEARNED A O DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT NO TRANSACTION COULD BE MATERIALIZED, HOWEVER, THE LEARNED CIT(A) AGREED TO THE SUBMISSION OF THE ASSESSEE THAT UNDIS CLOSED INCOME IS ALREADY DISCLOSED ON THE SAME TRANSACTION AT RS.22, 70,700/-. NO BASIS WAS FOUND FOR ESTIMATING THE INCOME BY THE AO BY APPLYING 12% AS PROFIT RATE. ADDITION WAS ACCORDINGLY DELETE D. ITA NO.2009/AHD/2009 ACIT, CC 3, SURAT VS SHRI HANUBHAI V. PATEL 3 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND REFERRED TO PARA 8.1 OF THE ASSESSMENT ORDER TO SHOW THAT THE A O HAS FURTHER ESTIMATED THE PROFIT BY APPLYING PROFIT RATE OF 12% AND MADE ADDITION OF RS.90,000/- SEPARATELY WHICH IS NOT CHALLENGED B Y THE ASSESSEE IN APPEAL. HE HAS, THEREFORE, SUBMITTED THAT THERE WAS A BASIS TO COMPUTE THE UNDISCLOSED INCOME BY APPLYING PROFIT R ATE OF 12%. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE AO HAS NOWHERE POINTED OUT HIS BASIS FOR COMPUTING THE INCOME ON A CCOUNT OF UNDISCLOSED INCOME BY APPLYING PROFIT RATE OF 12%. THE ADMITTED FACTS ARE THAT THE SEIZED PAPERS DID NOT CONTAIN ANY PROO F OF RECEIPT OF PAYMENT ON ACCOUNT OF THE LAND IN QUESTION. THE SEI ZED PAPERS MERELY CONTAINED TERMS OF THE DEAL BUT THERE WAS NO PROOF OR EVIDENCE OF ACTUAL PURCHASE OR SALE OF THE LAND. SI NCE THE SEIZED PAPERS DID NOT DISCLOSE MARGIN OF THE PROFIT IN THE TRANSACTION, THEREFORE, WHILE MAKING THE ADDITION, THE AO SHOULD HAVE BROUGHT SOME EVIDENCE OR MATERIAL ON RECORD TO JUSTIFY ENHA NCEMENT IN THE UNDISCLOSED INCOME DISCLOSED BY THE ASSESSEE. MEREL Y BECAUSE OF ANOTHER TRANSACTION THE INCOME AS COMPUTED BY APPLY ING 12% PROFIT FOR WHICH THE ASSESSEE DID NOT CHALLENGE IS NOT GRO UND TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). SINCE THE AO WANTED TO ENHANCE THE UNDISCLOSED INCOME ESTIMATED BY THE ASSESSEE BU T BASIS THEREOF SHOULD HAVE BEEN ESTABLISHED BY THE AO IN THE ASSES SMENT ORDER. SINCE THE SEIZED PAPERS DO NOT CONTAIN ANY SUCH EST IMATE OF THE ITA NO.2009/AHD/2009 ACIT, CC 3, SURAT VS SHRI HANUBHAI V. PATEL 4 PROFIT, THEREFORE, ADDITION MADE BY THE AO WAS ONLY ON AD HOC BASIS WITHOUT SUPPORTING BY SEIZED PAPER OR EVIDENCE OR M ATERIAL ON RECORD. THE LEARNED CIT(A) WAS, THEREFORE, JUSTIFIED IN DEL ETING THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE HAS NOT MERIT AND IS DISMISSED. 6. ON GROUND NO.2, THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.2,50, 000/- ON ACCOUNT OF INITIAL INVESTMENT/SEED MONEY OUT OF TOTAL ADDITION OF RS.4,89,000/- .THE AO ESTIMATED THE MINIMUM INITIAL INVESTMENT IN LAND /SEED MONEY FOR CARRYING OUT SUCH TRANSACTION AT RS.10,00,000/- AND CONSIDERED THE AVAILABILITY OF THE FUNDS WITH THE ASSESSEE AT RS.5,11,000/- AS THE DALALI INCOME FROM ASSESSMENT YEAR 2001-02 TO 2003- 04 AND HENCE, ADDITION OF RS.4,89,000/- WAS MADE ON ACCOUNT OF UN ACCOUNTED SEED MONEY/INITIAL INVESTMENT IN THE LAND AND ADDITION W AS MADE ACCORDINGLY. THE ASSESSEE DENIED THE INVESTMENT IN THE PROPERTY AND EXPLAINED THAT SUFFICIENT FUNDS WERE AVAILABLE WITH THE ASSESSEE. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSES SEE THAT ESTIMATE OF INVESTMENT IN A SUM OF RS.10,00,000/- IS WITHOUT ANY BASIS AND CONSIDERING AVAILABILITY OF FUNDS WITH THE ASSESSEE PART ADDITION OF RS.2,00,000/- WAS DELETED. 7. THE LEARNED DR MERELY RELIED UPON THE ORDER OF T HE AO. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. NO B ASIS IS SHOWN BY THE AO FOR ESTIMATING THE INITIAL INVESTMENT IN A S UM OF RS.10,00,000/- . IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON REC ORD AND FURTHER NO MATERIAL IS BROUGHT ON RECORD BY THE LEARNED DR TO CONTRADICT THE ITA NO.2009/AHD/2009 ACIT, CC 3, SURAT VS SHRI HANUBHAI V. PATEL 5 FINDINGS OF THE LEARNED CIT(A), WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THIS GROUND HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 9. NO OTHER POINT IS ARGUED OR PRESSED. 10. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD