Nitin Ishwarbhai Patel, Ahmedabad V. ITO, Ward-6(1)(1), Ahmedabad

ITA 2105/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8535 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Assessee Lawyers: KIRITBHAI SONI
• Keywords: Sale consideration of property below Jantri Value; Gift; Additional evidence; Set aside
• Section: 56(2)(vii)(b); 50C; 143(2)

Judgement Text

ITA NO.2105/AHD/2018 A.Y. 2014-15 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER (CONDUCTED THROUGH VIRTUAL COURT) ITA NO.2105/AHD/2018) ASSESSMENT YEAR: 2014-15 SHRI NITIN ISHWARBHAI PATEL VS. INCOME TAX OFFICER , 2, UMIYA ESTATE, WARD 6(1)91), AHMEDABAD. OPP. KHODIYAR NAGAR POLICE CHOWKY, RAKHIYAL, AHMEDABAD 380 023. [PAN AKVPP 8860 C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KIRITBHAI SONI, A.R. RESPONDENT BY : SHRI S.S. SHUKLA, SR. D.R. DATE OF HEARING : 09.08.2021 DATE OF PRONOUNCEMENT : 11.08.2021 O R D E R PER RAJPAL YADAV, VICE PRESIDENT : THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 5 TH SEPTEMBER, 2018 PASSED FOR ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE HAS TAKEN 5 GROUNDS OF APPEAL BUT T HE GRIEVANCE REVOLVES AROUND A SINGLE ISSUE NAMELY THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.51,65,600/- TO THE TOTAL INCOME OF THE ASSESS EE WHICH WAS ADDED WITH THE AID OF SECTION 56(2)(VII)(B) OF THE INCOME TAX ACT, 1961 B Y THE A.O. 3. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES W E HAVE GONE THROUGH THE RECORDS CAREFULLY. ITA NO.2105/AHD/2018 A.Y. 2014-15 PAGE 2 OF 5 4. THE BRIEF FACTS ACCORDING TO THE ASSESSING OFFIC ER ARE THAT THE ASSESSEE IS PROPRIETOR OF PARTNERSHIP FIRM M/S. SHREE MAHALAKSH MI ENTERPRISE WHICH IS ENGAGED IN THE BUSINESS OF METAL FABRICATION. HE IS ALSO PART NER IN PARTNERSHIP FIRM M/S. VIMAL ELECTRICALS. HE HAS FILED HIS RETURN OF INCOME ON 26 TH SEPTEMBER, 2014 DECLARING TOTAL INCOME AT RS.2,86,290/-. 5. THE CASE OF THE ASSESSEE WAS SELECTED FOR COMPUL SORY SCRUTINY UNDER CASS. THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASS ESSING OFFICER THAT THE ASSESSEE PURCHASED A LAND VIDE REGISTERED DEED NO.10360/2013 DATED 22.07.2013. THE LD. ASSESSING OFFICER FURTHER OBSERVED THAT FOR THE PUR POSE OF STAMP DUTY CHARGES, THE STAMP DUTY VALUATION AUTHORITY HAVE DETERMINED THE VALUE AT RS.2,43,31,200/-. THUS THE LEARNED ASSESSING OFFICER HAD CONFRONTED THE AS SESSEE AS TO WHY THE DIFFERENCE BETWEEN THE SALE CONSIDERATION SHOWN BY THE ASSESSE E VIS-A-VIS THE VALUE DETERMINED BY THE STAMP DUTY VALUATION AUTHORITY SHOULD NOT BE CONSIDERED AS DEEMED GIFT UNDER SECTION 56(2)(VII)(B)(II) OF THE I.T. ACT, 1961. I T IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS PURCHASED THIS PROPERTY JOINTLY WITH O NE SHRI RAJESHBHAI RANCHODBHAI PATEL IN EQUAL SHARES. THE ASSESSEE HAS FILED REPL Y CONTENDING THEREIN THAT ACTUAL DEED COULD NOT BE MATERIALISED AND NO TRANSACTION O F LAND TAKEN PLACE. THE ASSESSING OFFICER DID NOT AGREE WITH ALL THESE CONTENTIONS AN D HE MADE ADDITION OF RS.51,65,600/- AS DEEMED GIFT UNDER SECTION 56(2)(V II)(B)(II) OF THE I.T. ACT. 6. DISSATISFIED WITH THE DISALLOWANCE, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). HE FILED APPLICATION FOR PR ODUCTION OF LAND RECORDS UNDER RULE 46A. THE LD. CIT(A) HAS CALLED FOR REMAND REPORT A ND THEREAFTER CONSIDERED THE EVIDENCE. LD. CIT(A) CONCURRED WITH THE ASSESSING OFFICER AND DISMISSED THE APPEAL. 7. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE FIND THAT THE LD. ASSESSING OFFICER HAS NARRATED THE FACTS IN HIS REMAND REPORT WHICH H AS BEEN REPRODUCED AT PAGE NO.2 PARA NO.4.2 OF THE LD. CIT(A)S ORDER. THE FOLLOWI NG DETAILS DESERVE TO BE NOTED: ITA NO.2105/AHD/2018 A.Y. 2014-15 PAGE 3 OF 5 4. ADMISSION OF ADDITIONAL EVIDENCES:- 4.1 IT IS SUBMITTED THAT DURING THE COURSE OF ASSES SMENT PROCEEDING THE ASSESSEE HAD CONTENDED THAT THE PURCHASE OF LAND PR OPERTY FOR RS.1,40,00,000/- AS PER SALE DEED NO.GDR/10360/2013 COULD NOT MATERIALISE AND ACTUALLY HE COULD NOT TAKE PHYSICAL POSSESSION OF THE LAND DUE TO PENDING LITIGATIONS. HE THEREFORE CONTENDED THAT THE ADDIT ION OF RS.51,65,600/- SHOULD NOT BE MADE ON ACCOUNT OF THE DIFFERENCE IN MARKET VALUE OF THE PROPERTY BY ADOPTING STAMP DUTY PAID. 4.2 THE ASSESSEES CONTENTION REGARDING LITIGATION IN THIS CASE IS THAT THE SELLERS, VIDE ENTRY NO.2135/28/6/1991, HAD EARLIER SOLD THE SAID 10465 SQ. MTR. LAND AT BLOCK NO.135(21) AT SURVEY NO.165/KUDASAN T O ONE SHRI RAMANBHAI MANGALDAS PATEL. THEREAFTER ON 04.12.2012, WHILE G IVING EFFECT TO AN APPELLATE ORDER RELATED TO A LAND AT BLOCK NO.258/KUDASAN, TH E RECORD OF THIS LAND AT SURVEY NO.135 WAS WRONGLY MUTATED, INSTEAD OF SURVE Y NO.258, BY THE MISTAKE OF CIRCLE OFFICER OF THE REVENUE DEPARTMENT WHICH R ESULTED INTO THE EFFECT THAT THE ORIGINAL SELLERS AGAIN BECAME OWNERS OF THE LAN D IN REVENUE RECORDS. SHRI RAMANBHAI MANGALDAS PATEL HAD FILED CIVIL SUIT AND THE MATTER WAS SUBJECTED TO JUDICIAL PROCEEDINGS BEFORE THE VARIOUS REVENUE AUTHORITIES. IN THE MEANTIME, THE ASSESSEE HAD PURCHASED THE LAND FROM THE THREE LADIES BY EXECUTING THE SALE DEED ON 18.07.2013, BELIEVING TH E WRONGLY MUTATED ENTRY NO.7071. ON THIS ISSUE, VIDE ORDER DATED 12.01.201 5, THE HONBLE HIGH COURT OF GUJARAT IN SCA NO.11080/2013 HAS SET ASIDE THE ISSU E TO THE MAMLADAR, GANDHINAGAR FOR RECONSIDERATION, THE MAMLADAR, GAN DHINAGAR, VIDE ODER DATED 10.06.2015, HAD PASSED THE ODER REJECTING THE SALE DEED NO.10360/2013 EXECUTED BY THE ASSESSEE FOR PURCHASE OF THE LAND IN QUESTION. THE FORM NO.7 DATED 20.12.2016 ISSUED BY THE DISTRI CT COLLECTOR, GANDHINAGAR SHOWS OWNERSHIP OF THE ENTIRE 10465 SQ. MT. LAND AT SURVEY NO.135/KUDASAN IN THE NAME OF SHRI RAMANLAL MANGALDAS PATEL. 4.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD MADE ABOVE CONTENTIONS AND MADE SUBMISSION THAT THE LAND PURCHASE WAS SUBJECTED TO LITIGATIONS AND ALSO SUBMITTED THE FORM OF FORM- 6, 7/12 EXTRACTS, SHOWING THE LAND OWNERSHIP OF SHRI RAMANBHAI MANGALDAS PATEL AN D MUTATION OF ENTRY NO.7071 IN VILLAGE FORM. HOWEVER, BEFORE YOUR HONO UR, THE ASSESSEE HAS SUBMITTED THE ADDITIONAL EVIDENCES IN THE FORM OF C OPY OF ORDER DATED 12.01.2015 PASSED BY THE HONBLE HIGH COURT OF GUJA RAT, THE CONSEQUENTIAL ORDER PASSED BY THE MAMLADAR AND THE ORDER OF REJEC TION OF SALE DEED (NAMANJOOR) ORDER DATED 20.12.2016 OF DISTRICT COLL ECTOR, GANDHINAGAR. THUS, IT IS A CASE OF ASSESSEE MAKING A CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HOWEVER THE SUPPORTING DOCUMENTS ARE F URNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE YOUR HONOUR. CONSIDERING THE ISSUE INVOLVED AND NATURE AND CHARACTER OF THE CLAIM, THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE MAY KINDLY BE ADMITTED, I F DEEMED FIT. 8. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ALL THESE DOCUMENTS ON RECORD IN THE PAPER BOOK. A PERUSAL OF THE ABOVE FACTS REVEA LS THAT THE LAND MEASURING 10465 ITA NO.2105/AHD/2018 A.Y. 2014-15 PAGE 4 OF 5 SQ. MTRS. WAS COMPRISED AT BLOK NO.135(21) AT SURVE Y NO.165/KUDASAN. THIS LAND WAS ORIGINALLY SOLD TO ONE SHRI RAMANBHAI MANGALDAS PAT EL SOMEWHERE IN 1991 AND IN THE RECORD AN ENTRY WAS RECORDED BEARING NO.2135/28/6/9 1. IT REVEALED THAT WHILE ENTERING MUTATION OF THE LAND, A DISPUTE AROSE BECAUSE THIS LAND ACTUALLY BEARS BLOCK NO.258/KUDASAN WHEREAS WHILE SANCTIONING THE MUTATI ON IN THE NAME OF RAMANBHAI MANGALDAS PATEL THE REVENUE AUTHORITIES HAVE SANCTI ONED MUTATION AT SURVEY NO.135. AT THE INSTANCE OF RAMANBHAI MANGALDAS PATEL, LITIG ATION WAS INITIATED FOR RECTIFICATION OF THIS ERROR. HOWEVER, WHILE RECTIFYING THIS ERRO R THE REVENUE AUTHORITIES AGAIN COMMITTED AN ERROR VIDE WHICH THEY HAVE SANCTIONED THE MUTATION IN FAVOUR OF ORIGINAL LAND OWNER INSTEAD OF RAMANBHAI MANGALDAS PATEL. D URING THE PENDENCY OF DISPUTE REGARDING CORRECTION OF REVENUE ENTRIES THE ERSTWHI LE OWNER I.E. 3 SISTERS WHOSE LAND SOLD TO RAMANBHAI MANGALDAS PATEL RESOLD THIS PIECE OF LAND TO THE EXTENT OF 50% TO THE ASSESSEE AND RAJESHBHAI. IN OTHER WORDS, OUT O F TOTAL LAND MEASURING 10465 SQ. MTR., LAND MEASURING 5232 SQ. MTR. HAS BEEN SOLD TO THE ASSESSEE AND RAJESHBHAI RANCHODBHAI PATEL. TO BE MORE SPECIFIC, ORIGINALLY NATHAJI BECHARJI WAS THE OWNER OF THIS LAND WHO SOLD IT TO RAMANBHAI MANGALDAS PATEL. THE MUTATION ENTRIES WERE NOT RECORDED CORRECTLY AND A DISPUTE AROSE WHILE GIVING EFFECT TO THE ORDER OF THE REVENUE AUTHORITIES. THE REVENUE OFFICIAL WRONGLY SANCTION ED MUTATION IN THE NAME OF NATHAJI BECHARJI I.E. 3 SISTERS WHO ARE THE VENDORS OF THE ASSESSEE NAMELY RAIBEN NATHJI, SHANTABEN NATHJI & KANTABEN NATHJI. WHEN THIS FAC T CAME TO THE NOTICE OF RAMANBHAI MANGALDAS PATEL HE INITIATED CIVIL PROCEE DINGS AND ULTIMATELY THE DISPUTE LANDED AT THE HONBLE HIGH COURT. THE MUTATION ENT RY SANCTIONED IN FAVOUR OF THE ASSESSEE I.E. 7071 AND CHALLENGED BY RAMABBHAI WAS REVOKED AND ULTIMATELY RESTORED IN THE NAME OF RAMANBHAI. 9. WITH THIS BACKGROUND, THE CONTENTION OF THE ASSE SSEE IS THOUGH INITIALLY IT COULD BE SAID THAT THE LAND WAS PURCHASED BY THE ASSESSEE BUT ULTIMATELY IN REALITY THIS TRANSACTION NEVER MATERIALISED RATHER TO SOME EXTEN T IT WAS A FRAUD UPON THE ASSESSEE. IT IS ALSO NOT ASCERTAINABLE WHETHER ANY CAPITAL GA IN TAX WAS LEVIED IN THE HANDS OF THE VENDOR ON THE STRENGTH OF SECTION 50C OF THE I.T. A CT. THE LEARNED FIRST APPELLATE AUTHORITY DID NOT APPRECIATE THESE FACTS RATHER SWE PT AWAY WITH THE FACTS THAT THE ASSESSEE CONTINUED TO MAKE PAYMENT INSPITE OF THIS DISPUTE. ON THE STRENGTH OF THIS POINT, IT APPEARS THAT THE LD. FIRST APPELLATE AUTH ORITY HAS CONSTRUED THAT SALE ITA NO.2105/AHD/2018 A.Y. 2014-15 PAGE 5 OF 5 TRANSACTION HAS TAKEN PLACE AT A LOWER RATE AND, TH EREFORE, A DEEMED GIFT IS TO BE ASSUMED IN THE HANDS OF THE ASSESSEE. HOWEVER, AFT ER GOING THROUGH THE MATERIAL ON RECORD INCLUDING COPIES OF REVENUE RECORD ENTRIES O N THE STRENGTH OF THE DECISION OF HONBLE HIGH COURT OF GUJARAT AND MAMLATAR, WE ARE SATISFIED THAT ACTUALLY NO TRANSACTION HAS BEEN MATERIALISED FOR WHICH IT COUL D BE ASSUMED THAT DEEMED GIFT IS ASSESSABLE IN THE HANDS OF THE ASSESSEE. IN VIEW O F THE ABOVE DISCUSSION, WE ALLOW THIS APPEAL AND DELETE THE ADDITION OF RS.51,65,600 /- ADDED BY THE ASSESSING OFFICER WITH THE AID OF SECTION 56(2)(VII)(B)(II) OF THE I. T. ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF AUGUST, 2021. SD/- SD/- WASEEM AHMED RAJPAL YADAV (ACCOUNTANT MEMBER) (VICE PRESIDENT) AHMEDABAD, THE 11 TH DAY OF AUGUST, 2021 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD