M/s Divine City Pvt. Ltd., Ujjain V. The ACIT 2(1), Ujjain

ITA 207/IND/2013

• Counselvise Citation: 20722714 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA; R VARSHNEY
• Assessee Lawyers: S S DESHPANDE
• Section: 69; 92

Judgement Text

M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO.207/IND/2013 A.Y. 2008-09 M/S DIVINE CITY PVT. LTD. UJJAIN ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 2(1) UJJAIN ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI R. VARSHNEY AND SHRI R.A. VERMA DATE OF HEARING 18.1 1 .2015 DATE OF PRONOUNCEMENT 7 . 12.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A), UJJAIN, DATED 19.2.2013 . M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 2 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE. DURING THE YEAR UNDER CONSIDERATION THERE WERE TWO PROJECTS UNDERGOING I.E. DIVINE PARK AT BHOPAL AND DIVINE CITY AT UJJAIN. THE RETURN OF INCOME WAS FILED ON 12.6.2009 DECLARING LOSS OF RS. 35,69,981/-. THE AS SESSING OFFICER MADE THE ADDITION OF RS. 48 LACS U/S 69 OF THE ACT AND OF RS. 25,11,809/- ON ACCOUNT OF INFLATION OF COST . THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 2. GROUND NOS. 1, 1.1,1.2 AND 1.3 ARE WITH REGARD TO SUSTAINING THE ADDITION OF RS. 48 LACS MADE BY THE ASSESSING OFFICER FOR PURCHASE OF LAND. THE BRIEF FACT S OF THIS ISSUE ARE THAT THE ASSESSEE PURCHASED LAND BELONGIN G TO THREE PERSONS, NAMELY, SMT. KANCHANBAI AND HER TWO SONS, SHRI RAMCHANDRA AND SHRI GAJRAJ SINGH FOR DECLARE D SALE CONSIDERATION OF RS. 74,49,000/- BY FOUR REGISTE RED SALE DEEDS. THE DETAILS OF THE SALE DEEDS ARE AS UNDER :- M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 3 DATE AREA AMOUNT RS. 15.6.2007 0.992 1310000 15.6.2007 2.707 3600000 15.6.2007 1.62 2160000 21.8.2007 0.116 375000 THE ASSESSING OFFICER NOTED THAT THE LAND WAS PURCHASE D FROM RAMCHANDRA PATEL THROUGH HIS AUTHORISED PERSON SHRI RAKESH S/O RAMCHANDRA PATEL AND SHRI AMAR SINGH PATEL, RELATIVE OF THE ASSESSEE AND THE SALE CONSIDERATION WAS R S. 1,22,45,000/-. THUS, THE INITIAL OBSERVATION OF THE ASSESSING OFFICER WAS FACTUALLY NOT CORRECT. THIS CONC LUSION OF THE ASSESSING OFFICER IS BASED ON THE STATEMENTS O F RAMCHANDRA PATEL, AFFIDAVITS AND THE RETURN OF INCOME FILE D BY RAMCHANDRA PATEL. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS LAND WAS PURCHASED FOR RS.74,45,000 /- M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 4 AS EVIDENT FROM THE REGISTERED SALE DEED. COPIES OF THE SALE DEEDS ARE ALSO PLACED IN THE PAPER BOOK AT PAGES 38, 61, 82 AND 51. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT ONE OF THE CO-OWNERS SHRI GAJRAJ SINGH HAS OFFER ED HIS SHARE OF INCOME ON THE BASIS OF SALE CONSIDERATION OF RS.74,45,000/-. HE SUBMITTED THAT AN AFFIDAVIT WAS ALSO FILED BY THE CO-OWNER STATING THAT HIS 1/3 RD SHARE COMES TO RS.24,81,666/-. THE REVENUES CASE THAT THERE WAS CAS H DEPOSIT IN THE BANK ACCOUNT OF SHRI RAKESH S/O RAMCHANDRA PATEL AND SHRI AMAR SINGH PATEL, WHO IS BROTHER-IN-LAW OF RAMCHANDRA PATEL AND SHRI RAM CHANDRA STATED THAT THE AMOUNT WAS RECEIVED AS SALE CONSIDERATION. AS PER THE REVENUE, THESE PERSONS WER E POWER OF ATTORNEY HOLDERS AND THEY HAVE REGISTERED THE SALE DEED ON BEHALF OF THESE CO-OWNERS OF THE PROPERTY AND THEY RECEIVED THE CASH FROM THE DIRECTOR OF THE COMPANY AND DEPOSITED THE SAME IN THEIR BANK ACCOUNTS, THEREFORE, THE M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 5 SOURCE OF THIS CASH DEPOSIT WAS SALE OF LAND BY THESE T HREE CO-OWNERS, SHRI RAMCHANDRA PATEL, SHRI GAJARAJ PATEL AND SMT. KANCHANBAI. 4. THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE SIDES AND ALSO CONSIDERED THE CASE LAWS. THERE IS NO DOCUMENTARY EVIDENCE THAT THE S ALE CONSIDERATION WAS OVER AND ABOVE THE SALE CONSIDERATION RECORDED IN THE SALE DEED OF RS. 74,45,000/-. THREE SALE DEEDS WERE REGISTERED ON 15.6.2007 AND ONE ON 21.8.2 007. THE CASH DEPOSITED IN THE BANK ACCOUNT OF SHRI AMAR SIN GH WAS IN SEPTEMBER, 2007. ONE OF THE CO-OWNERS, SHRI GAJRAJ, HAS OFFERED INCOME ON THE BASIS SALE CONSIDERAT ION OF RS.74,45,000/-. HE HAS ALSO GIVEN AN AFFIDAVIT THAT H E HAS RECEIVED ONLY 1/3 RD SHARE OF RS. 74,45,000/-. THIS WHOLE ADDITION IS BASED ON THE STATEMENT OF SHRI RAMCHANDRA PATEL TO EXPLAIN THE CASH DEPOSITED IN THE M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 6 BANK ACCOUNT OF HIS SON SHRI RAKESH PATEL AND HIS BROTHE R- IN-LAW SHRI AMARSINGH. THUS, IN OUR CONSIDERED VIEW , THE CONTENTS OF THE AFFIDAVIT TO EXPLAIN THE CASH DEPOSITED IN THE HANDS OF RAKESH PATEL AND AMARSINGH PATEL CANNOT BE RELIED UPON. THEY MAY BE POWER OF ATTORNEY HOLDER O F THE LAND AND SIGNED THE SALE DEED, HOWEVER, THE OWNERS OF THE PROPERTY SHRI RAMCHANDRA PATEL, GAJARAJ SINGH PATEL AND SMT. KANCHANBAI HAVE RECEIVED SALE CONSIDERATION OF RS.74,45,000/-. ONE OF THE CO-OWNERS HAS DECLARED TH E SALE CONSIDERATION AS RECORDED IN THE SALE DEED. THE STATEMENT OF ONE OF THE INTERESTED PARTY CANNOT BE MADE A BASIS TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. TH ERE IS NO CORROBORATIVE EVIDENCE THAT CASH DEPOSITED IN TH E ACCOUNT OF SON OF ONE OF THE CO-OWNERS AND HIS CLOSE RELATIVE WAS ORIGINATED FROM THE TRANSACTION OF THIS LAND . HON'BLE ITAT IN THE CASE OF SHREE PARSHWANATH M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 7 CONSTRUCTION VS. ITO; 24 ITJ 409 (TRI.INDORE) VIDE ORDER DATED 18 TH JULY, 2014 HELD AS UNDER :- UNDISCLOSED INVESTMENT U/S 69 OF THE INCOME- TAX ACT, 1961 ASSESSEE WAS A BUILDER ASSESSEE PURCHASED LAND SHOWING PURCHASE VALUE AT RS. 1,05,00,000/- - A.O. CALLED INFORMATION FROM SELLERS AND THEIR STATEMENT WAS RECORDED RELYING ON THEIR STATEMENT A.O. CONCLUDED THAT THE LAND WAS PURCHASED FOR RS.3,73,75,000/-. HE ADDED THE BALANCE AMOUNT HOLDING THAT CASH WAS DEPOSITED IN THE ACCOUNT OF THE SELLERS HELD STATEMENT OF THIRD PERSON CANNOT BE READ IN EVIDENCE AGAINST ANOTHER PERSON UNLESS AND UNTIL IT IS CORROBORATED WITH INDEPENDENT MATERIAL CASH WAS DEPOSITED IN THE ACCOUNT OF THIRD PERSON PRIOR TO SELL AND SOME OF THE CASH HAS BEEN DEPOSITED IN THE ACCOUNT OF THIRD PERSON PRIOR TO SELL AND SOME OF THE CASH HAS BEEN DEPOSITED EVEN ONE YEAR PRIOR TO SELL ASSESSEE IS NOT REQUIRED TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN THE ACCOUNT OF A THIRD PERSON NO CORROBORATIVE EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE CASH DEPOSIT RELATES TO SALE PROCEEDS. THE SALE IS EVIDENCED BY REGISTERED SALE DEEDS WHICH ARE SIGNED AND VERIFIED WHEN THE DOCUMENT IS IN WRITING AND THAT TOO REGISTE3RED, THE ORAL EVIDENCE LOSES ITS M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 8 CREDIBILITY IN VIEW OF SECTION 92 OF THE INDIAN EVIDENCE ACT AS PER VARIOUS CASES CITED BY ASSESSEE, ORAL EVIDENCE OF THIRD PERSON HAS LESS EVIDENTIARY VALUE THAN WRITTEN EVIDENCE WHICH IS REGISTERED AND WITNESSED, UNLESS IT IS BACKED BY CORROBORATIVE EVIDENCE. 6. CONSIDERING ALL THESE FACTS AND THE CASE LAWS RELIED UPON, WE FIND THAT THIS ADDITION WAS NOT CALLED FOR IN THE HANDS OF THE ASSESSEE. WE, THEREFORE, DIRECT TO DELE TE THE SAME. 7. THE ANOTHER ISSUE RAISED IN GROUND NOS. 2 AND 2.1 I S WITH REGARD TO MAINTAINING THE ADDITION OF RS.25,11,809 /- ON ACCOUNT OF DETERMINATION OF COST OF GOODS SOLD. 8. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT TO DECID E THE ISSUE IN CORRECT PERSPECTIVE, SOME MORE FACTS ARE REQUIRED ON RECORD. WE HAVE ALSO CONSIDERED THE ORDER OF THE LEARNED CIT(A) WHICH ITSELF IS NOT VERY CLEAR REG ARDING THE FACTS AS TO HOW HE HAS SUSTAINED THE ADDITION. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY AND F OR CLEAR M/S DIVINE CITY PVT. LTD. ITA NO. 207/IND/2013 9 FINDING OF FACTS, WE FIND IT APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME DE NOVO AFTER BRINGING ALL THE RELEVANT FACTS ON RECORD. T HE ASSESSEE SHALL COOPERATE IN SUBMITTING ALL THE RELEVANT FACTS. 9. IN THE RESULT, THE APPELLANT OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 7TH DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 7TH DECEMBER, 2015 DN/-