The DCIT, Circle-5(3), Ahmedabad V. Shri Ajaybhai Haribhai Patel, Ahmedabad

ITA 2365/AHD/2015

AI Insights

This case involves an appeal by the Department against the decision of the CIT(A) which had deleted an addition made by the Assessing Officer regarding unexplained investments in land purchases by the assessee, Shri Ajaybhai Haribhai Patel. The original addition was based on loose papers found during a survey at the premises of another co-owner, Shri Hitendra B. Patel, which allegedly indicated cash payments for the land purchases. However, both the CIT(A) and the Tribunal found no evidence that the assessee had made any such cash payments, particularly after similar claims against Shri Hitendra B. Patel were not substantiated in earlier proceedings under section 263 of the Income Tax Act. The Tribunal agreed with the CIT(A)'s conclusion that the additions made were without any factual basis and thus dismissed the Department's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131423 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-06-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 06-08-2015
• Other Referred Cases: Kalyanji Mavji & Co. Vs. CIT(SC) 102 ITR 287
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Cost of acquisition; Difference of opinion; Change of opinion; Reassessment proceedings; Set aside
• Section: 131; 148; 263; 143(3); 54B; 133A; 153

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e Dy. CIT, Circle-5 (2 ), Ah medabad (Appellant) Vs Shri Ajaybhai Haribh ai Patel, 45/A, Sardar Patel Colony, B/h Telephon e Exch ange, C. G. Road , Ah med abad PAN: AB XPP1822 D (Resp ondent) Asses see b y : Shri S. N. Sopa rkar, Sr. A. R. & Shri Parin Shah, A. R. Revenue by : Shri Bhola ram Dev ashi, Sr. D. R. Date of hearing : 14-06 -2 023 Date of pronouncement : 14-07 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax, CIT(A), Ahmedabad-5, in proceeding u/s. 143(3) r.w.s. 147 of the Act vide order dated 28/05/2015 passed for the assessment year 2009-10. ITA No. 2365/Ahd/2015 Assessment Year 2009-10 I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 2 2. The Department has raised the following grounds of appeal:- “1. The Ld. CIT(A) has erred in law and on facts in holding that the initiation of reassessment proceedings was not in accordance with the provisions of law as there was no discussion on the issue in the original assessment order an no details were called for question of change of opinion does not arise, reliance is placed on Kalyanji Mavji & Co. Vs. CIT(SC) 102ITR287. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,65,81,571/- made on account of unexplained investment in purchase of land as the addition was made on the basis of evidences found during the course of survey in the case of co- purchaser of the land and his admission regarding payment of on- money. 3. On the facts and circumstances of the case, the Ld.CIT(A) ought to have upheld the order of the Assessing officer. 4. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the order of the Assessing Officer be restored to the above extent.” 3. The brief facts of the case are that the assessee had purchased agricultural land at survey no. 117 and survey no. 153 at Sarkhej, District Ahmedabad having his share @ 12.50% therein. Other co-owners were Shri Hitendra B. Patel and Parimal S. Patel having their share of 50% and 37.5% respectively in the aforesaid land. The aforesaid land was purchased by these three persons vide sale deed dated 11-12-2008 for total consideration of Rs. 1,63,89, 600/-. Since the assessee had 12.50% share in the aforesaid land, hence total cost in the hands of the assessee (including document expenses and purchase cost), for survey no. 117 and survey no. 153 was Rs. 7,11,182/- and Rs. 14,58,474/- respectively. Likewise, the other co-owners I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 3 Shri Hitendra B. Patel had paid the total amount of Rs. 81,94,800/- for its share of 50% in the aforesaid two lands. Survey proceedings u/s. 133(1) of the Act was carried out at the premises of M/s. Bhailal A. Patel, a firm in which Shri Hitendra B. Patel was a partner on 27-08-2008. During the course of survey, certain loose papers were found and impounded indicating details of the payments for the purchase of the lands. On the basis of entries in loose papers, M/s. Bhailal A Patel (partnership firm) surrendered undisclosed investment of Rs. 6,63,26,283/- as cash payment on purchase of the aforesaid two lands. Subsequently, in the case of Shri Hitendra B. Patel the claim of exemption u/s. 54B of the Act was made in respect of the cheque amount of Rs. 81,94,800/- and also for the cash payment found noted on the aforesaid impounded papers at Rs. 6,63,26,283/-. Thereafter, scrutiny assessment u/s. 143(3) of the Act was completed in the case of Hitendra B. Patel in which the total income as returned by Shri Hitendra B Patel was accepted, in which deduction u/s. 54B of the Act as claimed was also allowed. 3. In the light of the above facts, re-assessment proceedings were initiated in the case of the assessee on the ground that the loose papers pertained to other half of the transaction being carried out by the assessee and his co-purchaser namely Shri Parimal Suresh Patel. Accordingly, the Assessing Officer added a sum of Rs. 1,65,81,571/- as unexplained investments in the hands of the assessee with the following observations:- “Further, it is pertinent to once again mention here that the loose papers impounded during the course of survey proceedings in the case of Shri Hitendra B. Patel also included pages at Sr.No.5 & 6 I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 4 of Annexure A which reflects the entries and the same pertains to the other half of the transaction being carried out by the co-purchasers namely the assessee and Shri Parimal Suresh Patel. Thus, in light of the above-mentioned loose papers 5 & 6 of Annexure A, it is no longer in doubt that the payments have been made by the co-purchasers for their 50% share in which the assessee's share was 12.50% in the land at Survey No. 117 & 153 of Sarkhej. Even though the assessee has not offered the same amount as his income in his return of income filed on 24.04.2014 in response to the office notice u/s 148 dtd. 26.03.2014. In view of the above discussion, findings of the CIT-IV, Ahmedabad in the proceedings u/s.263 of the Act and since the assessee could not explain the nature and source of entries of cash found and payments of such cash made to the seller of the land for purchase of land which is tallies with the entries made and found in the loose papers, I hereby, therefore, make an addition of Rs.1,65,81,571/- to the total income of the assessee being the unexplained money invested for purchase of land. Penalty proceeding u/s 271(l)(c) of the Act is hereby initiated for furnishing inaccurate particulars of income and thereby concealing the particulars of income by the assessee. (Addition of Rs.l,65,81,571)” 4. In appeal before ld. CIT(A), the ld. CIT(A) allowed the appeal of the assessee on merits by observing that the Assessing Officer has not brought out any details and evidences in the proceedings that the assessee being one of the co-owners had made any payments in cash for purchase of the aforesaid properties. Further, the sellers of the land have clearly denied of having received any cash payment in their statement recorded u/s. 131 of the Act on 09-12-2019. Further, in survey proceedings u/s. 133A of the Act Shri Hitendra B Patel has not admitted any cash payment having been made by assessee and Shri Parimal S. Patel as co-owners of the land. The impounded documents do not reflect any cash payments having been made by the I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 5 assessee or Shri Parimal S. Patel, for purchase of the land and most importantly even the ld. CIT-IV, Ahmedabad in order passed order u/s. 263 of the Act on 19-03-2014 has held that there was non-payment of any cash by Shri Hindrendra B. Patel in respect of the aforesaid properties. Therefore, the assessee submitted that since in the case of Shri Hintendra B. Patel, it has been held by the department in 263 proceedings that there has been no cash payment done for the purpose of property, the very basis of initiating re-assessment proceedings in the case of the assessee does not survive. While allowing the appeal of the assessee, the ld. CIT(A) made the following observations:- “Decision: 4.4. I have considered the facts of the case and submission made by the appellant. The detailed discussion on issue of addition and law about the facts and submission of the appellant have already been made in the ground No. 1 in the preceding paras of this order. It has been noticed that he AO has not brought out any details and evidences in the proceedings that the appellant being one of the co-owners had made any cash payments on purchase of the aforesaid lands. On the one hand, the sellers of the lands namely; Shri Rohitbhai C. Modi and Shri Saurabh R. Modi in their statements recorded u/s. 131 of the Act on 09/12/2013 have clearly denied of having received any cash payments, over and above to the cheque payments received as per the sale deeds. Further, in the survey proceedings u/s. 133A, Shri Hitendra B. Patel had not admitted any payments having made by the appellant and Shri Parimal S. Patel being co-owners of the land on purchase of the aforesaid two surveys of land. Even, the appellant and Shri Parimal S. Patel, both the co-owners have demed of making any payments on purchase of the aforesaid two surveys of land/The basis of the issue i.e. impounded documents do not reflect any cash payments having made by appellant or Shri Parimal S. Patel on purchase of the land. The non - payment of any cash, even by Shri Hitendra B. Patel has been observed by the CIT - IV, Ahmedabad in his order passed u/s. 263 of the I. T. Act, 1961 on 19/03/2014. In pursuance to the order u/s. 263 of the I. T. Act, the AO completed the I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 6 assessment in the case of Shri Hitendra B. Patel u/s. 143(3) r.w.s. 263 of the I. T. Act withdrawing the claim of deduction u/s. 54B of the I. T. Act on the cash payments for the reason that Shri Hitendra B. Patel has failed to prove that any " cash payments have been made by him on purchase of the aforesaid lands in which the appellant and Shri Parimal S. Patel were also co-owners. So, when no cash payments in the case of Shri Hitendra B. Patel have been held then how any cash payments could have been presumed by appellant and Shri Parimal S. Patel being co-owners of the two surveys of land. In view of the aforesaid discussion and in absence of any evidences on record, addition made by the AO for the cash payment of Rs. 1,65,81,571/- in the hands of appellant is without any base and hence, the same is deleted. Thus, ground No. 2 is allowed.” 5. The Department is in appeal before us against the aforesaid order passed by ld. CIT(A). The ld. Departmental Representative primarily relied upon observations made by the Assessing Officer in the assessment order. In response, the ld. counsel for the assessee submitted that in the instant case, proceedings u/s. 148 of the Act were initiated on the basis of certain loose documents found at the premises of M/s. Bhailal A Patel, which indicated that certain cash payments for the purchase of aforesaid two properties have been made by Shri Hintendra B Patel, who was a co-owner of the aforesaid two properties, along with the assessee and Shri Parimal S. Patel. However, in the 263 proceedings, ld. CIT-IV, Ahmedabad has itself held that Shri Hitendra Patel has not made any cash payments for purchase of property. Accordingly, since the very basis on which additions were made by the Department in the assessee’s hands have been deleted in the hands of the co-owner, Shri Hitendra B Patel, then looking into the instant facts ld. CIT(A) has correctly deleted the additions in the hands of the assessee. I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 7 6. We have heard the rival contentions and perused the material on record. On going through the facts of the instant case, observations made by the ld. CIT(A), in the appellate proceedings and arguments put forth by the parties before us, we are of the considered view that ld. CIT(A) has not erred in facts and in law in deleting the additions in the assessee’s hands which were made on the basis of loose documents found in survey proceedings on 27-08-2008, which indicated that Shri Hitendra B Patel, co-owner of the two parties had made unexplained cash payments for purchase of the aforesaid two properties. However, since the Department itself in 263 proceedings have held that Shri Hitendra B Patel has not made any cash payments towards purchase of aforesaid two properties, there is no question of sustaining additions in the hands of the assessee, especially in the light of the facts that no documents/evidence has been found which would indicate that the assessee had made in cash payments towards purchase of the aforesaid two properties. Accordingly, looking into the facts of the instant case, we are of the view that the ld. CIT(A) has not erred in facts in law in deleting the addition, so as to call for any interference. 7. In the result, the appeal of the Department is dismissed. Order pronounced in the open court on 14-07-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated14/07/2023 TRUE COPY I.T.A No. 2365/Ahd/2015 A.Y. 2009-10 Page No. DCIT vs. Shri Ajaybhai Haribhai Patel 8 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद