The DCIT, Circle-2, Surat V. Shri Vinodkumar Chhabildas Lakdawala L/h. of late C.B. Lakdawala, Surat

ITA 206/AHD/2011

• Counselvise Citation: 20620514 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS SRDR
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMADABAD , , , , BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND .., SHRI T.R. MEENA, ACCOUNTANT MEMBER !.. , ' # $ # $ # $ # $ ITA NO. 206/AHD/2011 ASSESSMENT YEAR :2007-08 DY. COMMISSIONER OF INCOME- TAX, CIRCLE-2, ROOM NO.110, AAYKAR BHAVAN, MAJURA GATE, SURAT - 395001 V/S . LATE CHHABILDAS BHAGWANDAS LAKDAWALA, L/H SHRI VINODKUMAR CHHABILDAS LAKDAWALA, PROP. OF M/S SHAKTI TWISTING WORKS, 6 SOLAPURA COMPOUND, B/H ADARSH CHEMICALS, UDHNA, SURAT. PAN NO. A AAQ PL9872F (APPELLANT) .. (RESPONDENT) %& ' ( / BY APPELLANT SHRI K. C. MATHEWS, SR.D.R. )%& ' ( /BY RESPONDENT NONE *+, ' -' /DATE OF HEARING 31.03.2014 ./0 ' -' /DATE OF PRONOUNCEMENT 04.04.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF REVENUE WHICH HA S EMANATED FROM THE ORDER OF CIT(A)-II, SURAT, DATED 03.11.201 0 FOR ASSESSMENT YEAR 2007-08. THE SOLE GROUND OF REVENUES APPEAL IS AG AINST DELETING THE ADDITION OF RS.9,00,000/- ON ACCOUNT OF LONG TERM C APITAL GAIN INSPITE OF THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE ITS CLA IM. ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 2 2. THE A.O. OBSERVED THAT THERE WAS A SURVEY U/S. 1 33A OF THE IT ACT AT THE BUSINESS PREMISES ON 22.02.2007. DURING THE CO URSE OF SURVEY, THE STATEMENT U/S. 133A OF THE IT ACT WAS RECORDED ON O ATH OF SHRI CHHABILDAS BHAGWANDAS LAKDAWALA (ASSESSEE). IN HIS STATEMENT IN REPLY TO QUESTION NOS. 8 TO 10, HE HAD STATED THAT HE HAD SOLD HIS SH ARE (1/3 RD ) IN THE PROPERTY SITUATED AT 7/279, UNAPANI ROAD, LALDARWAJ A, SURAT TO M/S. RADHA CONSTRUCTION AND RECEIVED ON MONEY OF RS.17 ,85,000/- IN CASH FROM IT. IT WAS ALSO STATED IN REPLY TO QUESTION N O.11 THAT HE HAD ALSO GIVEN RS.3 LACS EACH TO (I) SHRI VASANTBHAI MAVJIBHAI PAT EL, (II) SHRI RAMESHBHAI MORARBHAI PATEL AND (III) SHRI DHIRABHAI MAGANBHAI PATEL TO VACATE THE PROPERTY. A LIST OF PERSONS TO WHOM AN AMOUNT OF R S.6,84,442/- WAS ADVANCED AS LOAN WAS ALSO FOUND FROM THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SURVEY. IT WAS ALSO STATED TH AT THIS AMOUNT WAS ADVANCED FROM THE ON MONEY RECEIVED IN CASH FROM THE SALE OF HIS PORTION OF PROPERTY TO M/S. RADHA CONSTRUCTION. ACCORDINGL Y, THE ASSESSEE ADMITTED AN ADDITIONAL INCOME OF RS. 8 LACS FOR THE F.Y. 06-07 RELEVANT TO A.Y. 2007-08 AND OFFERED FOR TAXATION. WHEN A.O. V ERIFIED THE COMPUTATION OF INCOME, IT WAS FOUND THAT ASSESSEE HAS OFFERED A N AMOUNT OF RS.7,95,000/- UNDER THE HEAD LONG TERM CAPITAL GAI N FOR TAXATION AND DEDUCTED AN AMOUNT OF RS.90,000/- AS TRANSFER FEE , BROKERAGE, ADVOCATE FEE ETC. THE A.O. GAVE REASONABLE OPPOR TUNITY OF BEING HEARD ON THIS ISSUE, THE ASSESSEE RESPONDED BY GIVING REP LY TO THE A.O. AFTER CONSIDERING THE ASSESSEES REPLY, IT WAS HELD THAT ASSESSEE DID NOT ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 3 PRODUCE THE ALLEGED TENANTS BEFORE HIM FOR VERIFICA TION. THE ASSESSEE HAD ALSO NOT FURNISHED ANY CONFIRMATION OR COPY OF RETU RN OF INCOME TO PROVE THAT HE HAD ACTUALLY PAID MONEY TO THE TENANTS AND THEY OFFERED THE SAME FOR TAXATION. EVEN THE ASSESSEE FAILED TO FURNISH AT LEAST THE PRESENT POSTAL ADDRESSES OF THESE PERSONS SO AS TO ENABLE THE DEPA RTMENT TO CONDUCT NECESSARY INQUIRY. ACCORDING TO HIM, THE ASSESSEE HAD TOTALLY FAILED TO DISCHARGE THE ONUS CASTED UPON HIM. THE PROPERTY W AS ON RENT. THE COPY OF RENT AGREEMENT DATED 05.01.1989 WAS FURNISHED BE FORE THE A.O. THE ASSESSEE HAD ALSO FURNISHED THE COPY OF POSSESSION RECEIPT. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAD NOT COMPLIED THE TERMS AND CONDITIONS MENTIONED IN THE RENT AGREEMENT. AS NO LEGAL NOTICE WAS GIVEN TO THE TENANTS FOR TAKING POSSESSION BACK. H E SIMPLY PAID RS. 9 LACS TO TAKE POSSESSION OF THE PROPERTY OWNED BY HIMSELF . THE LD. A.O. FOUND THIS DEVICE AS A COLOURABLE AND HE DID NOT ALLOW RS .9 LACS PAYMENT SHOWN IN THE NAME OF TENANTS AS DEDUCTION ON ACCOUNT OF P AYMENTS MADE TO THE TENANTS. SIMILARLY, HE ALSO DISALLOWED EXPENSES CL AIMED OF RS.90,000/- AS EXPENDITURE FOR TRANSFER FEE, BROKERAGE AND ADVOCAT E FEE. THE A.O. ASSESSED LONG TERM CAPITAL GAIN AT RS.17,85,000/- I N PLACE OF RS.7,95,000/- SHOWN BY THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE ASSES SEE CARRIED THE MATTER BEFORE THE CIT(A)WHO HAS ALLOWED THE APPEAL PARTIALLY BY OBSERVING AS UNDER: 4. DECISION: 4.1. AS BOTH GROUNDS OF APPEAL TAKEN BY THE APPELLA NT RELATE TO THE ADDITION OF RS. 9,90,000/- FOR COMPUTATION OF LONG TERM CAPITAL GAIN, ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 4 THEY ARE TAKEN UP TOGETHER FOR DISCUSSION AND DISPO SAL. THE FACTS OF THE CASE DISCUSSED ABOVE SHOW THAT THE APPELLANT MADE D ISCLOSURE OF ADDITIONAL INCOME OF RS. 8,00,000/- IN THE F.Y.2006 -07 RELEVANT TO ASSTT. YEAR 2007-08. THIS ADDITIONAL INCOME WAS FRO M THE 'ON-MONEY' OF RS. 17,85,000/- RECEIVED IN CASH FROM M/S RADHA CON STRUCTION. IN THE STATEMENT RECORDED DURING THE COURSE OF SURVEY, THE APPELLANT HAS ALSO STATED THAT RS. 3,00,000/- EACH WAS PAID TO THE TEN ANTS, VIZ. SHRI VASANTBHAI MAVJIBHAI PATEL, SHRI RAMESHBHAI MORARBH AI PATEL AND SHRI DHIRUBHAI MAGANBHAI PATEL TO VACATE THE PROPER TY AND IT WAS ALSO STATED BY HIM THAT THE SAID AMOUNT WAS PAID TO THE TENANTS FROM THE 'ON-MONEY' RECEIVED FROM M/S. RADHA CONSTRUCTION. W ITH RESPECT TO THE BALANCE AMOUNT OF RS.85,000/-, NO EXPLANATION WAS O FFERED. AS FAR AS THESE FACTS ARE CONCERNED, THE ASSESSING OFFICER HA S NOT DISPUTED THE SAME. IT IS ALSO NOT DISPUTED BY THE ASSESSING OFFI CER THAT THE PROPERTY SOLD WAS GIVEN ON RENT TO THE ABOVE TENANTS VIDE AG REEMENT DTD. 05.01.1989. WHAT THE ASSESSING OFFICER HAS DISPUTED IS THAT THERE IS NO EVIDENCE OF PAYMENT OF RS. 9,00,000/- TO THE ABOVE THREE PERSONS, THE ABOVE TENANTS HAVE NOT BEEN PRODUCED OR THEIR ADDRE SSES FURNISHED, THE RENT AGREEMENT SHOWED THAT THE TENANTS COULD BE VACATED BY GIVING ONE MONTHS NOTICE, AND THE APPELLANT HAS NOT TAKEN ANY LEGAL ACTION AGAINST THE TENANTS FOR GETTING THE PROPERTY VACATE D. IN THE CASE OF M/S RADHA CONSTRUCTION, A SURVEY WAS CARRIED OUT, WHEN AN AMOUNT OF RS.43.03 LAC WAS DECLARED AS UNDISCLOSED INCOME AND ENTRY TO THE EFFECT 'INCOME DECLARED DURING SURVEY AMOUNT GIVEN TO LAND OWNER' OF RS. 43.03 LAC WAS PASSED BY THE SAID FIRM ON 06.3.2 007. IN THE CASE OF THE APPELLANT, SURVEY U/S 133A OF THE ACT, WAS CARR IED OUT ON 22.02.2007 DURING WHICH THE APPELLANT ADMITTED TO H AVE RECEIVED HIS 1/3 RD SHARE FROM THE 'ON-MONEY' FROM M/S RADHA CONSTRUCT ION. THE APPELLANT'S 1/3 RD SHARE FROM THE 'ON-MONEY' IS RS.17,85,000/-. DURIN G THE COURSE OF SURVEY, IN THE STATEMENT GIVEN ON OAT H, THE APPELLANT STATED THAT HE HAD GIVEN RS. 9,00,000/- TO THREE TE NANTS TO VACATE THE PREMISES WHICH WAS SOLD TO M/S RADHA CONSTRUCTION A ND ADMITTED AN ADDITIONAL INCOME OF RS. 8,00,000/- IN THE F.Y. 200 6-07. ONE OF THE ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 5 GROUNDS ON WHICH THE ASSESSING OFFICER HAS DISMISSE D THE APPELLANT'S CLAIM OF RS. 9,00,000/- IS THAT THE ADDRESSES OF TH E TENANTS HAS NOT BEEN GIVEN. HOWEVER, FROM THE LETTER DTD.08.11.2.00 9 FILED BY THE APPELLANT BEFORE THE ASSESSING OFFICER, I FIND THAT THE APPELLANT HAS FURNISHED KABAJ RASID' DULY NOTARIZED ON STAMP PAPER OF RS. 1 00/- REGARDING PAYMENT OF RS. 3,00,000/- EACH TO THE ABO VE THREE TENANTS. THE SAME HAS BEEN DULY SIGNED BY THE APPELLANT. THE PAYMENT OF THE SAID AMOUNT OF RS. 9,00,000/- HAS BEEN MADE ON 31.0 1.2007 AND THE ABOVE RECEIPT IS NOTARIZED IN THE MONTH OF FEBRUARY , 2007. THEREFORE, AS FAR AS THE FACT REGARDING OCCUPATION OF THE PROP ERTY BY THE ABOVE TENANTS FROM JANUARY, 1989 IS CONCERNED, THE SAME I S RIOT DISPUTED. THE ASSESSING OFFICER HAS ONLY DISPUTED ACTUAL PAYM ENT OF RS.9,00,000/- TO THE ABOVE PERSONS. HOWEVER, AT THE SAME TIME, HE HAS NOT REJECTED THE ABOVE KABAJ RASID' DTD.05-.02 .2007 REGARDING RECEIPT OF RS. 9,00,000/- BY THE ABOVE THREE PERSON S. THE PROPERTY IN QUESTION WAS SOLD VIDE AGREEMENT FOR SALE MADE ON 2 1.5.2007 AND THE CHEQUE PAYMENT FOR THE SAME WAS RECEIVED ON 22.02.2 005. THE ABOVE TENANTS WERE RESIDING IN THE PROPERTY FROM JANUARY, 1989 ONWARDS I.E. FOR MORE THAN 16 YEARS AND IT IS OBVIOUS FROM THE P ERIOD OF TENANCY THAT THEY HAD DEVELOPED TENANCY RIGHT IN THE PROPERTY, A ND THEIR EVICTION FROM THE PROPERTY, UNDER THE LAW WAS DIFFICULT BECA USE THEIR RIGHT TO TENANCY WAS PROTECTED. IN THIS BACKGROUND OF THE MA TTER, THE APPELLANT HAD TO PAY RS.3,00,000/- EACH TO THE TENANTS FOR GE TTING HIS PROPERTY VACATED. THE ASSESSING OFFICER'S CONTENTION IS THAT THE ENTIRE TRANSACTION OF PAYMENT OF RS.9,00,000/- TO THE TENA NTS, DALALI CHARGES ETC. IS NOTHING BUT AFTER THOUGHT BY THE APPELLANT TO REDUCE THE TAX LIABILITY WHEN THE DEPARTMENT CAME INTO POSSESSION OF THE INFORMATION OF 'ON-MONEY PAYMENT: OF RS. 17,85,000;- TO THE APPELLANT. THIS CONTENTION OF THE ASSESSING OFFICER, HOWEVER, DOES NOT HOLD ANY GROUND AS DURING THE COURSE OF SURVEY ITSELF, IN TH E STATEMENT RECORDED ON OATH, THE APPELLANT WHILE ADMITTING TO HAVE RECE IVED 'ON-MONEY' OF RS.17,85,000/-, AT THE SAME TIME STATED THAT HE HAS PAID RS. 9,00,000/- TO THE THREE TENANTS. THUS, THE QUESTION OF 'AFTER THOUGHT' ON THE PART OF ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 6 THE APPELLANT CANNOT BE IMPUTED AND, THE APPELLANT FURNISHED ALL THE DETAILS RELATING TO 'ON-MONEY' DURING THE COURSE OF SURVEY. I, THEREFORE, HOLD THAT THE ASSESSING OFFICER HAS NOT REJECTED TH E ABOVE EVIDENCES REGARDING PAYMENT OF RS.9,00,000/- PAID TO THE TENA NTS AND ADDED THE SAME WITHOUT BRINGING ANY EVIDENCE ON RECORD, CONTR ARY TO THE EFFECT. I, THEREFORE, DELETE THE ADDITION OF RS.9,00,000/-. 4.2. IN SO FAR AS THE CLAIM OF RS.90,000/- MADE BY THE APPELLANT TOWARDS PAYMENT OF BROKERAGE, VAKIL FEE, TRANSFER F EE ETC., IS CONCERNED, I FIND THAT THE SAID EXPENSES HAVE BEEN PAID OUT OF THE TOTAL 'ON-MONEY' OF RS.17,85,000/- RECEIVED BY THE APPEL LANT. THE APPELLANT HAD DISCLOSED ADDITIONAL INCOME OF RS. 8,0 0,000/- OUT OF RS.17,85,000/-. AN AMOUNT OF RS. 9,00,000/- WAS STATED TO HAVE BEEN PAID TO THE THREE TENANTS FROM THE V ON-MONEY' RECEIPT OF RS. 17,85,000/-. THE DIFFERENCE OF RS. 85,000/- NOT DI SCLOSED BY THE APPELLANT DURING THE COURSE OF SURVEY REMAINED UNEX PLAINED. IN THE RETURN OF INCOME, THE APPELLANT HAS CLAIMED RS.90,0 00/- TOWARDS VARIOUS EXPENSES, THUS, THE FIGURE OF RS.90,000/- V IS-A-VIS THE BALANCE AMOUNT OF RS.85,000/- HAS NOT BEEN RECONCILED BY TH E APPELLANT. IN ANY CASE, THESE EXPENSES HAVE BEEN CLAIMED AGAINST THE DISCLOSURE OF ADDITIONAL AMOUNT MADE BY THE APPELLANT DURING THE COURSE OF SURVEY, HENCE NOT ALLOWABLE. THE ABOVE EXPENDITURE, IF ACTU ALLY INCURRED, IS ALLOWABLE AGAINST THE AMOUNT RECEIVED IN CHEQUE BY THE .APPELLANT, WHICH WAS ON 23.02.2005 RELEVANT TO ASSTT.YEAR 2006 -07 AND NOT ALLOWABLE AGAINST 'ON-MONEY' AMOUNT OF RS.17,85,000 /-. THE DOCUMENTARY EVIDENCES FILED BY THE APPELLANT REGARD ING PAYMENT OF RS.60,000/- TO DHARMESH A PATEL ALSO CANNOT BE RELI ED, UPON, AS THE CONFIRMATION DTD.09.11.2009 FURNISHED BY SHRI DHARM ESH A PATEL BEFORE THE ASSESSING OFFICER DOES NOT MENTION THE D ATE OF RECEIPT OF RS.60,000/- EXCEPT STATING THAT IT WAS RECEIVED IN THE F.Y. 2006-07, AND IT IS ALSO NOT STATED WHETHER THE PAYMENT RECEIVED IS IN CHEQUE OR CASH. I, THEREFORE, UPHOLD THE DISALLOWANCE OF RS.90,000/ - CLAIMED BY THE APPELLANT OUT OF THE 'ON-MONEY' RECEIVED OF RS.17,8 5,000/-. THIS GROUND OF APPEAL IS, THEREFORE, PARTLY ALLOWED. ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 7 4. NOW THE REVENUE IS BEFORE US. FROM THE SIDE OF ASSESSEE, NONE APPEARED. LD. SR. D.R. VEHEMENTLY SUPPORTED THE OR DER OF THE A.O. AND ARGUED THAT ASSESSEE HAS NOT SUBSTANTIATED HIS CLAI M BEFORE THE A.O. WITH EVIDENCES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. DURING THE COURSE OF SURVEY, IN THE STATEM ENT GIVEN BEFORE THE A.O., THE APPELLANT STATED THAT HE HAD GIVEN RS.9 L ACS TO 3 TENANTS TO VACATE THE PREMISES, WHICH WAS SOLD TO M/S. RADHA C ONSTRUCTION AND ADMITTED AN ADDITIONAL INCOME OF RS.8 LACS IN THE F .Y. 06-07. THE ASSESSEE HAS SUBMITTED KABJA RASID DULY NOTARIZED ON STAMP PAPER OF RS.100/- REGARDING PAYMENT OF RS.3 LACS EACH TO THE 3 TENANTS BEFORE THE A.O. VIDE LETTER DATED 08.11.2009. THE PAYMENT OF THE SAID AMOUNT OF RS.9 LACS HAD BEEN MADE ON 31.01.2007 AND THE ABOVE RECEIPT WAS NOTARIZED IN THE MONTH OF FEBRUARY 2007. AS FAR AS THE FACT REGARDING OCCUPATION OF THE PROPERTY BY THE ABOVE TENANTS FRO M JANUARY 1989 IS CONCERNED, THE SAME HAS NOT BEEN DISPUTED BY THE A. O. THE A.O. HAS ONLY DISPUTED ACTUAL PAYMENT OF RS.9 LACS TO THE AB OVE PERSONS. THE PROPERTY IN QUESTION WAS SOLD VIDE AGREEMENT FOR SA LE MADE ON 21.05.2005 AND THE CHEQUE PAYMENT FOR THE SAME WAS RECEIVED UP TO 23.02.2005, WHEREAS, SURVEY WAS CONDUCTED ON 22.02. 2007. THE THREE TENANTS WERE RESIDING IN THE PROPERTY FROM JANUARY 1989 ONWARDS I.E. FOR MORE THAN 16 YEARS. THEREFORE, CLAIM OF ASSESSEE F OR PAYMENT OF RS.3 LACS EACH TO THE TENANTS HAS BASIS AND ALL THE FACT S ADMITTED BY THE ITA NO. 206/AHD/11 A.Y. 07-08 DCIT VS. LATE CHHABILDAS BHAGWANDAS LAKDAWALA PAGE 8 ASSESSEE DURING THE COURSE OF SURVEY. SIMILARLY, T HE ASSESSEE INCURRED THE EXPENDITURE OF BROKERAGE, ADVOCATE FEE AND TRAN SFER FEE FOR WHICH HE HAS FILED THE DOCUMENTARY EVIDENCE BEFORE THE A.O. FROM ONE, SHRI DHARMESH A. PATEL. THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A). 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 04.04.2014 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA 1 1 1 1 ' '' ' )-2 )-2 )-2 )-2 320- 320- 320- 320- / COPY OF ORDER FORWARDED TO:- 1. %& / APPELLANT 2. )%& / RESPONDENT 3. - *7 / CONCERNED CIT 4. *7- / CIT (A) 5. 2; )-+ , , / DR, ITAT, AHMEDABAD 6. = >? / GUARD FILE. BY ORDER/ 1 , @/ B , $