The ITO, Ward- 7(4), Ahmedabad V. Smt. Savitaben Somabhai Patel, Ahmedabad

ITA 2152/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9977 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT JAVERI
• Keywords: Capital asset; Principle of natural justice
• Section: 143(3); 2(14); 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO.2151 /AHD/2013 (ASSESSMENT YEAR.2006-07) INCOME TAX OFFICER, WARD-7(4), AHMEDABAD APPELLANT VS. SHRI PAURAV SOMABHAI PATEL A-601, PARISHRAM TOWER, NARANPURA, AHMEDABAD-380013 RESPONDENT PAN: APTPP3605C & ITA NO.2152 /AHD/2013 (ASSESSMENT YEAR.2006-07) INCOME TAX OFFICER, WARD-7(4), AHMEDABAD APPELLANT VS. SMT. SAVITABEN SOMABHAI PATEL A-601, PARISHRAM TOWER, NARANPURA, AHMEDABAD-380013 RESPONDENT PAN: AFRPP5381B & ITA NO.2153 /AHD/2013 (ASSESSMENT YEAR.2006-07) INCOME TAX OFFICER, WARD-7(4), AHMEDABAD APPELLANT ITA NOS.2151 TO 2153/AHD/2013 (ITO VS. SHRI PAURAV S. PATEL & 2 ORS.) A.Y. 2006-07 - 2 VS. SMT. RASHMIKA SOMABHAI PATEL A-601, PARISHRAM TOWER, NARANPURA, AHMEDABAD-380013 RESPONDENT PAN: ALUPP0806C / BY REVENUE : SHRI JAYANT JAVERI, SR. D.R. /BY ASSESSEE : SHRI MEHUL THAKKAR , A.R. /DATE OF HEARING : 11.11.2016 /DATE OF PRONOUNCEMENT : 18.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE THREE REVENUES APPEALS FOR A.Y.2006-07 ARISE AGAINST SEPARATE ORDERS OF CIT(A)-XIV, AHMEDABAD; ALL DATED 11.06.2013, PASSED IN APPEAL NOS. CIT(A) XIV/WD. 7(4)/310/2012-13, CIT (A) XIV/WD. 7(4)/311/2012-13 & CIT(A) XIV/WD. 7(4)/309/2012-13, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX A CT, 1961; IN SHORT THE ACT. 2. WE NOTICE AT THE OUTSET THAT THE REVENUES CORRE SPONDING GROUNDS IN ALL THREE APPEALS ARE IDENTICALLY PLEADED AS UNDER: I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,01,25,080/- MADE IN THE CASE OF THE ASSESSEE A ND OF RS.32,21,930/- MADE ON PROTECTIVE BASIS IN THE CASE OF SHRI PAURAV PATEL, MINOR SON OF THE ASSESSEE AS ON-MONEY RECEIVED IN CASH ON SALE O F IMMOVABLE PROPERTY MADE BY THE ASSESSING OFFICER. II) THE CIT(A) HAS FURTHER ERRED IN LAW AND ON FACT S IN HOLDING THAT THE LAND IN QUESTION WAS LOCATED AT VILLAGE SHILAJ WHICH WAS BEYOND 8 KMS. FROM THE LIMITS OF AHMEDABAD MUNICIPAL CORPORATION AND T HEREFORE, WAS NOT FALLING UNDER THE AMBIT OF SECTION 2(14) OF THE ACT . ITA NOS.2151 TO 2153/AHD/2013 (ITO VS. SHRI PAURAV S. PATEL & 2 ORS.) A.Y. 2006-07 - 3 III) THE CIT(A) HAS FURTHER ERRED IN LAW AND ON FAC TS IN IGNORING THE DISCLOSURE MADE U/S. 132(4) OF THE ACT BY SHRI ROHI T P. MODI ON ACCOUNT OF SALE OF THE LAND IN QUESTION AND OTHER CIRCUMSTA NTIAL EVIDENCES DEMONSTRATING THE PAYMENTS MADE TOWARDS SALE CONSID ERATION OF THE LAND IN QUESTION. BOTH THE LEARNED REPRESENTATIVES STATE VERY FAIRLY THAT THESE THREE CASES INVOLVE IDENTICAL SET OF FACTS AS WELL. WE THUS PR OCEED TO TREAT ITA NO.2152/AHD/2013 IN CASE OF SMT. SAVITABEN S. PATEL AS THE LEAD APPEAL. 3. ALL THESE ASSESSEES ARE ASSESSED AS INDIVIDUALS. THE ONLY EXCEPTION IS IN CASE OF FIRST ASSESSEE SHRI PAURAV S. PATEL STAT ED TO BE A MINOR WHOSE CAPITAL GAINS HAVE BEEN ASSESSED IN THE HANDS OF SM T. SAVITABEN S. PATEL. SMT. SAVITABEN PATEL FILED HER RETURN ON 22.03.2007 DECLARING INCOME OF RS.2,47,289/-. THE ASSESSING OFFICER FAMED A REGUL AR ASSESSMENT IN HER CASE ON 29.12.2008 ASSESSING HER INCOME AS RS.2,47, 290/-. HE THEREAFTER FOUND REASONS TO BELIEVE THAT ASSESSEES TAXABLE IN COME LIABLE TO BE ASSESSED HAD ESCAPED ASSESSMENT. THIS MADE HIM TO ISSUE SEC TION 148 NOTICE DATED 19.03.2012. THE ASSESSEE DID NOT FILE ANY RETURN I N RESPONSE THERETO. THE ASSESSING OFFICER THEN FRAMED THE IMPUGNED RE-ASSES SMENT ON 28.02.2013. HE NOTICED IN COURSE THEREOF THAT THE ASSESSEE HAD SOLD THE IMPUGNED IMMOVABLE PROPERTY AT BLOCK NO.482 AND 742, SHILAJ, AHMEDABAD IN THE RELEVANT PREVIOUS YEAR. HER SHARE THEREIN AS DECLA RED WAS RS.9,77,834/- OUT OF THE GROSS CONSIDERATION OF RS.10 LACS. THE ASSE SSING OFFICER TOOK COGNIZANCE OF THE FACT THAT THE DEPARTMENT HAD COND UCTED A SEARCH IN CASE OF M/S. HIMALAYA GROUP OF COMPANIES. ONE SHRI ROHITBH AI MODI GOT RECORDED HIS STATEMENT IN COURSE THEREOF TO OFFER INCOME IN HIS RETURN. THE ASSESSING OFFICER VIEW ACCORDINGLY WAS THAT THE ASSESSEE WAS A BENEFICIARY OF THE SAID PURCHASE TRANSACTIONS BEING THE CORRESPONDING VENDO R. 4. WE PROCEED FURTHER TO NOTICE THAT THE ASSESSING OFFICER THEREAFTER GATHERED INFORMATION ON THE BASIS OF SAID SEARCH TO FORM AND OPINION THAT THE ITA NOS.2151 TO 2153/AHD/2013 (ITO VS. SHRI PAURAV S. PATEL & 2 ORS.) A.Y. 2006-07 - 4 ASSESSEE HAD IN FACT SOLD THE ABOVE IMMOVABLE PROPE RTY FOR RS.11,35,46,000/- INVOLVING ON MONEY OF RS.10,35,46 ,000/-. HE ACCORDINGLY WORKED OUT SMT. SAVITABENS SHARE AS RS .1,11,03,109/-. THIS ASSESSEE WOULD PLEAD THAT HER LAND SOLD WAS IN FACT AGRICULTURAL. THE ASSESSING OFFICER REJECTED THIS PLEA BY TERMING THE SAME AS AN IRRELEVANT ONE SINCE IT WAS A CASE OF AN ON MONEY ADDITION. H E FURTHER QUOTED SECTION 292C(1)(III) OF THE ACT TO DRAW A PRESUMPTION QUA T HE ALLEGED INCRIMINATING MATERIAL SEIZED DURING THE ABOVE STATED SEARCH. TH E ASSESSING OFFICER ACCORDINGLY ASSESSED THE IMPUGNED ADDITION OF RS.1, 01,25,080/- FOLLOWED BY ASSESSMENT OF RS.32,21,930/- PERTAINING TO HER M INOR SON NAMELY PAURAV PATEL IN HER HANDS. ASSESSEES TOTAL TAXABLE INCOM E WAS ACCORDINGLY COMPUTED AT RS.1,35,94,300/-. 5. WE NOW COME TO THE LOWER APPELLATE ORDER PASSED IN ASSESSEES APPEAL. THE CIT(A) DEALS WITH ALL THE RELEVANT ASP ECTS OF THE CASE. HE FIRST OF ALL COMES TO SEARCH STATEMENT OF SHRI ROHITBHAI MODI TO OBSERVE THAT THE ASSESSING OFFICER NEVER ALLOWED THE ASSESSEE TO CRO SS EXAMINE THIS DEPONENT DESPITE SPECIFIC REQUEST. HE FINDS THAT N OT EVEN A COPY OF THE ABOVE SEARCH STATEMENT WAS FURNISHED TO THE ASSESSE E WHICH VITIATES THE ENTIRE RE-ASSESSMENT BEING VIOLATIVE OF PRINCIPLES OF NATURAL JUSTICE. THE CIT(A) FURTHER OBSERVES THAT NEITHER THE ASSESSEE H AD SIGNED THE SEIZED MATERIAL IN QUESTION NOR THE SAME WAS RECOVERED FRO M HER PREMISES. HE THEREAFTER HIMSELF DEALS WITH SHRI MODIS SEARCH ST ATEMENT AND REPRODUCES THE SAME IN VERBATIM IN THE LOWER APPELLATE ORDER T O OPINE THAT EVEN THIS DEPONENT WAS NOT VERY SURE OF HAVING PAID THE IMPUG NED ON MONEY TO THE ASSESSEE NOR IS THERE ANY SUPPORTIVE EVIDENCE SINCE THE SEIZED MATERIAL ANNEXURE A IS A DUMB PAPER. THE CIT(A) CONCLUDES I N THE END THAT EVEN IN ANY CASE, THE IMPUGNED IMMOVABLE PROPERTY IS IN THE NATURE OF AGRICULTURAL LAND NOT ATTRACTING APPLICABILITY OF CAPITAL GAINS TAX BEING NOT A CAPITAL ASSET ITA NOS.2151 TO 2153/AHD/2013 (ITO VS. SHRI PAURAV S. PATEL & 2 ORS.) A.Y. 2006-07 - 5 U/S.2(14) OF THE ACT. HIS VIEW IS THAT EVEN IF THE REVENUES VERSION IS ACCEPTED, THE ON MONEY IN QUESTION WOULD STILL BE E XEMPT FROM TAXATION. 6. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS IN SUPPORT AND AGAINST THE IMPUGNED ON MONEY ADDITION. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAD NEITHER ALLOWED THE ASSESSEE TO CROSS EXAMINE SHRI ROHITBHAI MODI (SUPRA) NOR DID HE FURNISH THE SAID SEARCH STATEMENT TO THE ASSESSEE. HONBLE APEX COURT IN A RECENT JUDGM ENT IN CASE OF ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO.4228 OF 2006 D EALS WITH AN IDENTICAL VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE TO Q UASH THE SAID ASSESSMENT IN QUESTION FOR THIS SOLE REASON. WE DEEM IT APPROPRI ATE TO REPRODUCE THE RELEVANT OBSERVATION THEREIN AS UNDER: 'ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS G IVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORR ECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS S PECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOW EVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEAL T WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATE D THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIA L WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN A S TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/W ITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORIT Y TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATIO N AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN E ARLIER OCCASION WHEN THE ITA NOS.2151 TO 2153/AHD/2013 (ITO VS. SHRI PAURAV S. PATEL & 2 ORS.) A.Y. 2006-07 - 6 MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2 216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO TH E TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEM ENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE WE, TH US, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPE AL.' 7. LD. DEPARTMENTAL REPRESENTATIVE FAILS TO POINT A NY EXCEPTION THEREIN IN FACTS OR LAW. WE THUS HOLD THAT IMPUGNED RE-ASS ESSMENTS ARE LIABLE TO BE QUASHED. LD. DEPARTMENTAL REPRESENTATIVE IS FURTHE R UNABLE TO DISPUTE CORRECTNESS OF THE ABOVE LOWER APPELLATE FINDINGS O N MERITS AS WELL. WE THUS SEE NO REASON TO INTERFERE IN THE WELL REASONE D LOWER APPELLATE ORDER UNDER CHALLENGE. REVENUES LEAD APPEAL ITA NO.2152 /AHD/2013 FAILS. 8. SAME ORDER IN REVENUES OTHER TWO APPEALS ITA NO S.2151 & 2153/AHD/2013. 9. THESE THREE REVENUES APPEALS ARE ACCORDINGLY DI SMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 18/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE / CONCERNED CIT 4 - / CIT (A) ! '##$% & '% () / DR, ITAT, AHMEDABAD * !+, -. / GUARD FILE. ITA NOS.2151 TO 2153/AHD/2013 (ITO VS. SHRI PAURAV S. PATEL & 2 ORS.) A.Y. 2006-07 - 7 BY ORDER / % /( & '% ()