Shri Upendra N.Patel, Baroda V. The ACIT.,Cent.Circle-1, Baroda

ITA 2397/AHD/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8992 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-08-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 25-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S GEHLOT
• Assessee Lawyers: M G PATEL
• Keywords: Salary income; Onus to prove
• Section: 142(1); 143(2); 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' [BEFORE SHRI R V EASWAR VICE-PRESIDENT] [AND SHRI P K BANSAL ACCOUNTANT MEMBER) ITA NO.2397/AHD/2008 (ASSESSMENT YEAR: 2003-04) SHRI UPENDRA N PATEL, 3, UTTAKANTH SOCIETY, B/H ALKAPURI CLUB, OPP. EXPRESS HOTEL, BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1, BARODA [APPELLANT] [RESPONDENT] PAN NO.: ACWPP 0823 G APPELLANT BY :- SHRI M G PATEL RESPONDENT BY:- SHRI B S GEHLOT, CIT DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 13 TH FEBRUARY, 2008, BY TAKING THE FOLLOWING EFFECTIVE G ROUND OF APPEAL:- 1 THE LEARNED CIT(A)-IV, AHMEDABAD HAS ERRED IN LA W AS WELL AS ON FACTS OF THE CASE BY CONFIRMING THE ADDITION OF RS.2,50,00,000/- AS UNDISCLOSED INCOME MADE BY THE AO. 2 WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A)-IV, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION OF UNDISCLOSED INCOME OF RS.2,50,00,000/- MADE BY T HE AO EVEN WHEN THE TRANSACTION WAS HELD TO BE SHAM AND NO SAL E BEING EFFECTED BY THE APPELLANT. 2 3 THE APPELLANT PRAYS TO DELETE THE ADDITION OF RS.2, 50,00,000/- IN RESPECT OF UNDISCLOSED INCOME. 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, HAVING INCOME FROM SALARY, OTHER SOURCE S, AGRICULTURE ETC. RETURN OF INCOME WAS FILED ON 30 TH SEPTEMBER, 2003, SHOWING TOTAL INCOME AT RS.79,300/- AND AGRICULTURA L INCOME OF RS.2,50,00,000/-. THE AO ON THE BASIS OF INTIMATION RECEIVED FROM THE AO OF M/S J UPENDRA CONSTRUCTION PVT. LTD. , WHEREIN THE APPELLANT IS A DIRECTOR, ISSUED NOTICE U/S 148 ON 29-05-2006 ALONG WITH REASONS FOR REOPENING OF THE ASSESSMENT. THEREAFTER, NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND THE D ETAILS ASKED BY THE AO HAVE BEEN FURNISHED. THE ASSESSEE EXPLAIN ED THAT AGRICULTURAL INCOME OF RS.2.5 CRORE HAS BEEN EARNED BY SELLING TEAK TREES. THE ASSESSEE ALSO PRODUCED DETAILS OF C ONSIDERATION RECEIVED FROM M/S J UPENDRA CONSTRUCTION PVT. LTD. TOWARDS SALE OF TEAK TREES AND REQUESTED THE AO THAT THE INCOME OF RS.2.5 CRORE SHOWN AS AGRICULTURAL INCOME MAY KINDLY BE AC CEPTED. THE AO RELYING ON THE INFORMATION RECEIVED FROM THE AO OF M/S J UPENDRA CONSTRUCTION PVT. LTD., WHEREIN IT HAS BEEN STATED THAT THE TRANSACTION IN QUESTION IS SHAM TRANSACTION AND NO SUCH SALE HAS TAKEN PLACE AND HAS ACCORDINGLY TREATED RS.2.5 CRORE AS UNDISCLOSED INCOME OF THE ASSESSEE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ADDITION. 3 THE LEARNED AR BEFORE US VEHEMENTLY CONTENDED TH AT THE ASSESSMENT HAS BEEN REOPENED BY ISSUING NOTICE U/S 148 ON THE BASIS THAT M/S J UPENDRA CONSTRUCTION PVT. LTD. HAS 3 PURCHASED TEAK PLANTANTIONS FROM THE DIRECTOR WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS EXEMPT BEING AGRICULTURA L INCOME. THE AO OBSERVED THAT IN THE REASONS ITSELF THE AO FOUND ON INQUIRY THAT THE AGRICULTURAL LAND WAS SOLD BY THE ASSESSEE ON 10-6-2005 AND THEREFORE HE TREATED THE SALE AND PURCHASE OF W OOD AS A SHAM TRANSACTION. THE AO WAS OF THE OPINION THAT THE ASS ESSEE HAS SOLD THE LAND ALONG WITH THE TREES. REFERRING TO PAGE-21 IT WAS POINTED OUT THAT NO DOUBT THE AGRICULTURAL LAND WAS SOLD ON 10-6-2005 TO ONE SHRI BHARATSINH JADEJA WITH THE CLEAR UNDERSTAN DING THAT THE TREE IS STANDING ON THE LAND BELONGING TO M/S J UPE NDRA CONSTRUCTION PVT. LTD., TO WHOM THE ASSESSEE HAS SO LD THE TREES FOR RS.2,50,00,000/-. SUBSEQUENTLY, SHRI BHARATSINH JADEJA SOLD BACK THE SAID LAND TO THE ASSESSEE ON 7-3-2006 AS F OR HIM IT WAS NOT SUITABLE TO CARRY OUT AGRICULTURAL OPERATIONS. OUR ATTENTION WAS ALSO DRAWN TO THE COPY OF THE SALE DEED, COPY O F PATWARIS RECORD SHOWING THAT THERE WERE TREES ON THE LAND OW NED BY THE ASSESSEE. IT WAS ALSO POINTED OUT THAT THIS IS A FA CT THAT THE MONEY HAS COME FROM THE PRIVATE LIMITED COMPANY. ALL THE AMOUNTS HAVE BEEN RECEIVED BY THE ASSESSEE THROUGH CHEQUES OVER THE YEARS FOR WHICH OUR ATTENTION WAS DRAWN TOWARDS THE COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF PRIVATE LIM ITED COMPANY. STILL UP TO 31-3-2007 THE BALANCE OF RS.1,11,05,000 /- WAS OUTSTANDING TO BE RECEIVED BY THE ASSESSEE FROM THE SAID COMPANY. THE TREES WERE SOLD AT THE RATE OF RS.1000 /- PER TREE AND WERE 8 TO 10 YEARS OLD IN AGE. ALTERNATIVELY IT WAS CONTENDED THAT EVEN IF THE AO DID NOT TREAT THE INCOME TO BE THE AGRICULTURAL INCOME OF THE ASSESSEE, NO ADDITION CAN BE MADE BY THE AO TREATING IT TO BE THE INCOME OF THE ASSESSEE. THIS IS AN ADMITTED 4 FACT THAT THE ASSESSEE HAS RECEIVED THE MONEY FROM J UPENDRA CONSTRUCTION PVT. LTD. TO THE EXTENT OF RS.30,70,00 0/- DURING THE YEAR THROUGH VARIOUS CHEQUES ON CITY BANK AND AS ON 31-3-2003 A BALANCE OF RS.2,19,30,000/- WAS STILL DUE TO BE REC EIVED BY THE ASSESSEE FROM THE COMPANY. THE IDENTITY OF THE COMP ANY, SOURCE OF THE AMOUNT AND CREDITWORTHINESS OF THE COMPANY I S PROVED. EVEN NO ADDITION CAN BE MADE U/S 68 OF THE ACT. 4 THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AO AND CONTENDED THAT THE ASSESSEE HAS BROUG HT THE MONEY FROM SHRI BHARATSINH JADEJA IN THE FORM OF SALE OF LAND. THE ASSESSEE IS BOUND TO EXPLAIN THE SOURCE OF INCOME W HICH THE ASSESSEE COULD NOT PROVE. THE TRANSACTION SHOWN BY THE ASSESSEE IS A SHAM TRANSACTION. 5 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD. WE HAVE GONE T HROUGH THE ORDER OF THE TAX AUTHORITIES BELOW. THE AO IN THIS CASE HAS MADE THE ADDITION OF RS.2,50,00,000/- AS UNDISCLOSED INC OME OF THE ASSESSEE, WHICH WAS RETURNED AS AGRICULTURAL INCOME . THE ASSESSEE WAS OWNING THE AGRICULTURAL LAND WHICH FAC T IS PROVED FROM THE RECORD OF THE PATWARI FOR AGRICULTURAL LAN D. TREE PLANTATION WAS THERE ON THE AGRICULTURAL LAND. THE ASSESSEE WAS ALSO HAVING TREE PLANTATION. THIS FACT IS ALSO PROV ED FROM THE COPY OF PATWARI RECORD, COPY OF WHICH IS FILED BEFO RE US IN THE PAPER BOOK. THE ASSESSEE HAS SOLD THE TREE PLANTATI ON TO A COMPANY IN WHICH THE ASSESSEE IS A DIRECTOR. THE PA RT OF THE PAYMENT TO THE EXTENT OF RS.30,70,000/- HAS BEEN RE CEIVED BY THE ASSESSEE DURING THE YEAR FROM THE SAID PRIVATE LIMI TED COMPANY 5 THROUGH HUF THROUGH CHEQUE. SO FAR AS THE RECEIPT O F AMOUNT OF RS.30,70,000/- IS CONCERNED, THERE IS NO DOUBT ON T HE IDENTITY OF THE PRIVATE LIMITED COMPANY, SOURCE OF THE AMOUNT A ND THE TRANSACTION THAT THE MONEY HAS BEEN GIVEN BY THE PR IVATE LIMITED COMPANY. THE AO HAS TREATED THE TRANSACTION FOR THE SALE OF TREE PLANTATION TO BE A NON-GENUINE TRANSACTION. ALL THE ALLEGATION OF THE AO IS THAT THERE IS NO PROOF THAT THE MONEY REC EIVED BY SHRI U N PATEL HUF IS THE SALE CONSIDERATION FOR TREES OR IT IS ANY OTHER TRANSACTION. THIS IS THE SETTLED LAW IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL (1973) 87 ITR 349 (SC) , IN WHICH IT WAS HELD THAT APPARENT IS REAL. ONUS IS ON THE PERSON WHO STATES THAT APPARENT IS NOT REAL. THE LAND HAS BEEN SOLD BY THE ASSESSEE ON 10/6/2005 TO ONE SHRI BHARATSINH JADEJA I.E. SUBSEQUENT TO THE A SSESSMENT YEAR UNDER CONSIDERATION. THE LAND HAS NOT BEEN SOLD DUR ING THE YEAR UNDER CONSIDERATION. SUBSEQUENT SALE OF THE LAND BY THE ASSESSEE TO SHRI BHARATSINH JADEJA, IN OUR OPINION, CANNOT B E REGARDED TO BE THE CONCLUSIVE EVIDENCE THAT THERE WAS NO TREE P LANTATION ON THE LAND DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION. THERE ARE EVIDENCES ON RECORD (PATWARI RECORD) WHICH PROV E THAT THERE WERE TREE PLANTATIONS ON THE LAND DURING THE YEAR U NDER CONSIDERATION. THIS IS NOT THE ALLEGATION OF THE RE VENUE THAT THE ASSESSEE WAS NOT OWNING THE AGRICULTURAL LAND DURIN G THE YEAR UNDER CONSIDERATION. THE BURDEN OF PROOF THAT THE A SSESSEE HAS EARNED THE UNDISCLOSED INCOME AT THE GARB OF AGRICU LTURAL LAND, IS ON THE REVENUE. THE REVENUE SHOULD PROVE THAT THE A SSESSEE HAS EARNED THE UNDISCLOSED INCOME BY SHOWING IT AS AGRI CULTURAL LAND. IT IS NOT A CASE WHERE THE FUNDS HAVE BEEN RECEIVED IN CASH AND 6 IDENTITY OF THE PERSON FROM WHOM THE FUNDS TOWARDS THE SALE OF THE TREES WERE RECEIVED IS EXISTING. THE IDENTITY O F THE PERSON IS NOT DOUBTED BY THE REVENUE. THE FUNDS HAVE COME FRO M THE PRIVATE LIMITED COMPANY IN WHICH THE ASSESSEE IS AL SO A DIRECTOR. THE REVENUE HAS NOT BROUGHT ANY EVIDENCE ON RECORD BY WHICH IT CAN BE SAID THAT THE REVENUE HAS DISCHARGED ITS ONU S. THE AO HAS MERELY RELIED ON THE INQUIRIES CARRIED OUT BY THE I NSPECTOR AFTER THE SALE OF THE LAND BY THE ASSESSEE. THE FUNDS HAV E BEEN RECEIVED BY THE ASSESSEE THROUGH CHEQUES. EVEN NO E VIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE WHICH MAY PRO VE THAT THE EVIDENCE SUBMITTED BY THE ASSESSEE BY WAY OF PATWAR I RECORD ARE INCORRECT. WE DO NOT FIND ANY COGENT MATERIAL OR EV IDENCE ON RECORD WHICH MAY PROVE THAT THERE WAS NO TREE PLANT ATION ON THE AGRICULTURAL LAND OWNED BY THE ASSESSEE DURING THE YEAR. THE ADDITION HAS BEEN MADE MERELY ON ASSUMPTION AND PRE SUMPTION. THIS IS THE SETTLED LAW THAT NO ADDITION CAN BE SUS TAINED ON SUSPICION HOWSOEVER STRONG IT MAY BE. WE ACCORDINGL Y DELETE THE ADDITION. 6 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 18-09-2 009 SD/- SD/- (R V EASWAR) VICE-PRESIDENT (P K BANSAL) ACCOUNTANT MEMBER DATE : 18-09-2009 COPY OF THE ORDER FORWARDED TO : 7 1. SHRI UPENDRA N PATEL, 3, UTTAKANTH SOCIETY, B/H ALKAPURI CLUB, OPP. EXPRESS HOTEL, BARODA 2. THE ACIT, CENTRAL CIRCLE-1, BARODA 3. CIT CONCERNED 4. CIT(A)-IV, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA