The Dy. CIT, Circle-3, Surat V. Shri Neel Jagdish Desai, Surat

ITA 2404/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8395 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Section: 133A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH , ACCOUNTANT MEMBER ./ ITA NO. 2404 / AHD/20 1 4 / ASSTT. YEAR: 20 1 0 - 20 11 DCIT, CIR.3 SURAT. VS. SHRI NEEL JAGDISH DESAI 1, JALDARSHAN NR. GATEWAY HOTEL PARLE POINT, SURAT 395 009. PAN : ANAPD 9479 K / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI ASHISH POPHARE, SR.DR ASSESSEE BY : SHRI RASESH SHAH , AR / DATE OF HEARING : 0 6 / 03 /201 7 / DATE OF PRONOUNCEMENT: 09 / 03 /201 7 / O R D E R PER RAJPAL YADAV , JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD.CIT(A) - IV , SURAT DATED 13.6.2014 PASSED FOR THE ASSTT.YEAR 20 1 0 - 11 . ITA NO . 2 404 /AHD/20 14 2 2. TH OUGH THE REVENUE HAS TAKEN THREE G R OUNDS OF APPEAL, BUT IT S GRIEVANCES REVOLVES AROUND A SINGLE ISSUE, WHEREBY, IT HAS CHALLENGED DELETION OF ADD ITION OF RS.5.12 CRORES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME AT RS.6,77,58,589/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143( 2) WAS ISSUED AND SERVED UPON THE ASSESSEE. A SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED O U T AT THE PREMISES ON THE ASSESSEE ON 6.1.2010. DURING THE COURSE OF SURVEY , TWO POCKET DIARIES WERE FOUND AND INVENTORISED AS BF - 1 AND BF - 2. ACCORDING TO THE A O, THESE DIARIES CONTAINED CERTAIN ENTRIES EXHIBITING SALE OF LAND AND COMMISSION IN C OME FOR NEGOTIATING SALE DEED. THE LD.AO WAS OF THE OPINION THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.5.12 CRORES IN CASH ON SALE OF LAND WHICH HAS NOT BEEN OFFERED FOR TAXATION. HE, THEREFORE , ISSUED A SHOW CAUSE NOTICE VIDE LETTER DATED 22.3.2013 WHICH HAS BEEN REPRODUCED AT PAGE NOS.2 TO 6 OF THE ASSESSMENT ORDER. ACCORDING TO THE AO PAGE NO.1 OF BF - 1 CONTAINED THE FOLLOWING ENTRIES: PAGE NO.1 OF BF - 1 ENTRY 1. 3,8 5,50,000/ - ---- CHQ 48 NO. ENTRY 2 3,50,40,000/ - ---- CHQ 47 NO. ENTRY 3 5,12,00,000/ - ---- CASH 12,47,90,000 ITA NO . 2 404 /AHD/20 14 3 WHEN THIS SHOW CAUSE NOTICE WAS RECEIVED BY THE ASSESSEE, HE APPRAISED THE AO THAT ENTRIES REFLECTED IN THE SHOW CAUSE NOTICE ARE NOT THE TRUE PHOTO - COPY OF ACTUAL ENTRIES AVAILABLE IN THE SEIZED MATERIAL. ASSESSEE HAS POINTED OUT THE ACTUAL ENTRIES AVAILABLE ON THE SEIZED MATERIAL AS UNDER: ANNEX U RE BF - 1 TPS NO.7 F.P.NO.47 & 48 NOTING OF SALE (VECHAN NI NONDH) 3,85,50,000/= CHEQUE 48 N O. 3,50,40,000/= CHEQUE 47 NO. 5,12,00,000/= CASH (DALALI COMMISSION) ---------------- 12,47,90,000 ========= 4. ACCORDING TO THE ASSESSEE, ANNEXURE BF - 1 AND BF - 2 CONTAINED TWO SEPARATE TRANSACTIONS I.E. IN BF - 1 DETAILS AMOUNTS RECEIVED THROUGH CHE QUE ON A S A LE TRANSACTION OF THE L AND AND THIRD ENTRY OF RS.5.12 CRORES IS THE AMOUNT EARNED BY HIS FATHER AS A COMMISSION IN THE LAND DEALINGS. DETAILS OF THESE ENTRIES ARE APP E ARING ON ANNEXURE BF - 2. HIS FATHER HAS ALREADY PAID TAXES ON THE ALLEGED COM MISSION IN C OME. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE WAS OF THE VIEW THAT BOTH THESE ENTRIES ARE TO BE TAKEN SEPARATELY, AND ACCORDINGLY, HE MADE AN ADDITION OF RS.5.12 ITA NO . 2 404 /AHD/20 14 4 CRORES. ON APPEAL, THE LD.CIT(A) HAS DELETED THE ADD ITION BY OBSERVING AS UNDER: 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS FILED BY THE APPELLANT INFORM OF PAPER BOOK ALONG WITH RELEVANT COPIES OF IMPOUNDED MATERIAL AND STATEMENT RECORDED ON OATH OF SHRI JAGDISH THAKOREBHAI DESAI, FATHER OF THE APPELLANT WHO HAD MADE DECLARATION AT THE TIME OF SURVEY FOR HIMSELF AN D ON BEHALF OF HIS SON. IT IS SEEN FROM THE DETAILS SUBMITTED THAT THE APPELLANT HAD DEC LARED A SUM OF RS.6,99,64,000/ - TOWARDS PROFIT ON SALE OF LAND BEARING BLOCK NO.47 AND 48. THE SALE CONSIDERATION OF BLOCK NO.47 WAS RS.3,50,40,000/ - AND THAT OF BLOC K NO.48 WAS RS.3,85,50,000/ - . IT IS SEEN FROM THE IMPOUNDED POCKET DIARY ANNEXURISED AT BF - 1, PAGE NO.1 THAT BOTH THESE FIGURES HAVE BEEN MENTIONED ALONG WITH THE NOTING CHEQUE 47 & CHEQUE 48 WHICH SUGGESTS THAT IT WAS A NOTING FOR THE CHEQUE RECEIPTS FOR THE SALE OF STATED LANDS. THERE IS NO DISPUTE REGARDING THIS ENTRY. IT IS THE THIRD ITEM MENTIONED ON THE SAME PAGE I.E. RS.5,12,00,000/ - AGAINST WHICH CASH (DALALI COMMISSION) IS MENTIONED WHICH IS THE BONE OF CONTENTION. THE AO HAS CONCLUDED THAT T HE SAID CASH ENTRY OF RS.5,12,00,000/ - IS FROM THE SALE OF LAND AND CONSIDERED IT AS INCOME OF THE APPELLANT, SHRI NEEL DESAI. THE APPELLANT ON THE OTHER HAND CLAIMS THAT THE ENTRY ON THE IMPOUNDED MATERIAL, BF - 1, PAGE NO.1 AND THE DETAILS OF THE RECEIPT S GIVEN ON BF - 2 PAGE 1&2 ARE THE SAME AND THAT THIS WAS SPECIFICALLY EXPLAINED TO SURVEY OFFICIALS. IT WAS ALSO SUBMITTED THAT THE SAID INCOME FROM DALALI HAS BEEN OFFERED AS ADDITIONAL INCOME IN THE HANDS OF THE FATHER IN STATEMENT RECORDED ON OATH DURIN G SURVEY PROCEEDINGS AND IN THE RETURN OF INCOME. 5.2 I FIND THAT THE AO HAS NOT CONSIDERED THE FULL FACTS. WHILE REPRODUCING THE NOTINGS ON BF - 1/PAGE 1 ON PAGE 3 ITA NO . 2 404 /AHD/20 14 5 OF THE ASSESSMENT ORDER THE AO HAS OMITTED WORDS DALALI COMMISSION AND FAILED TO MAKE COGN IZANCE OF THE SAME EVEN WHEN BROUGHT TO HIS NOTICE BY THE APPELLANT (REFER PAGE 7 OF THE ASSESSMENT ORDER). THE AO ALSO DID NOT CONSIDER THE SPECIFIC CLARIFICATIONS GIVEN IN A STATEMENT DURING THE SURVEY OR DURING THE ASSESSMENT PROCEEDINGS. THE SURVEY O FFICIALS, AT LEAST, PRIMA FACIE, ACCEPTED THE EXPLANATION OF THE APPELLANTS FATHER REGARDING THE FIGURE OF RS.5,12,00,000/ - MENTIONED ON BF - 1/PAGE 1 AND AGAIN ON BF - 2/PAGE 1&2 AS THEY DID NOT QUESTION HIM FURTHER ON THIS ASPECT. SUBSEQUENTLY, IN ASSESS ME NT PROCEEDINGS, NOTHING WAS BROUGHT ON RECORD TO SHOW WHY THE STATEMENT WAS INCORRECT. THERE IS NOTHING TO SUGGEST THAT THERE WERE CASH RECEIPTS INVOLVED IN TH E SALE TRANSACTION FOR PLOT NO.47 & 48. UNLESS THERE IS SOMETHING TO SUGGEST OTHERWISE, A DOCUM ENT HAS TO BE READ AS A WHOLE. IF THE NOTINGS FOR THE SALE OF LAND AND THE EXPLANATIONS GIVEN IN THIS REGARD IS ACCEPTED, THERE IS NO REASON TO NOT ACCEPT THE NOTING AND ITS EXPLANATION WITH REGARD TO THE 3 RD ITEM ON THE SAME IMPOUNDED DOCUMENT. THERE WA S NO REASON FOR THE AO TO HOLD THAT THE FIGURES MENTIONED IN BF - 1/PAGE 1 AND BF - 2/PAGE 1&2 OF RS.5,12,00,000/ - WERE EARNED BY TWO DIFFERENT PERSONS FROM TWO DIFFERENT SOURCES. IT IS THEREFORE HELD THAT AMOUNT MENTIONED IN BF - 1/PAGE 1 AND ON BF - 2/PAGE 1&2 WAS THE DALALI COMMISSION INCOME OF SHRI JAGDISH DESAI. SIN C E THE INCOME ON BF - 1/PAGE 1 HAS BEEN HELD AS DALALI COMMISSION INCOME OF SHRI JAGDISH DESAI, IT FOLLOWS THAT IT CANNOT BE THE INCOME OF THE APPELLANT, SHRI NEEL DESAI, FROM SALE OF LAND. ACCORDI NGLY, THE ADDITION OF RS.5,12,00,000/ - MADE IN THE HANDS OF THE APPELLANT IS DELETED. THIS GROUND IS ALLOWED. 5. THE LD.DR, WHILE IMPUGNING THE ORDER OF THE LD.CIT(A) CONTENDED THAT A PERUSAL OF ENTRIES APPEARING ON ANNEXURE BF - 1 WOULD INDICATE THAT THESE ENTRIES TALKS OF RECEIPT OF ITA NO . 2 404 /AHD/20 14 6 MONEY IN CH E QUE AS WELL AS IN CASH. IT SUGGE S TS THAT THE ASSESSEE HAS SOLD THE LAND FOR A CONSIDERATION OF RS.12,47,90,000/ - , OUT OF WHICH, A SUM OF RS.5.12 CRORES WAS RECEIVED IN CASH. THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION. THE ASSESSEE FAILED TO EXPLAIN THIS ENTRY AND FAI LED TO OFFER THE SUM OF RS.5.12 CRORES FOR TAXATION. ACCORDING TO THE LD.DR, A SUM OF RS.5.12 CRORES AVAILABLE IN BF - 1 AND BF - 2 ARE SEPARATE TRANSACTIONS A ND TWO SEPARATE AMOUNTS. THE ASSESSEE HAS OFFERED THE AMOUNT MENTIONED AT BF - 2 AND NOT THE AMOUNT MENTIONED IN BF - 1. 6 . ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESEE RELIED UPON THE ORDER OF THE LD.CIT(A). HE ALSO TOOK U S THROUGH STATEMENT OF SHRI JAGDISH T. DESAI, THAT IS, FATHER OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY. HE DREW OUR ATTENTION TOWARDS QUESTION AND ANSWER NO.14 OF HIS STATEMENT AND POINTED OUT THAT HE HAS EXPLAINED THE ENTRIES DURING THE COURSE OF SURVEY ITSELF. THE AO DID NOT MENTION THE EXPRESSION DALALI COMMISSION MENTIONED AGAINST ENTRY NO.3 ON BF - 1 WHILE TAKING COGNIZANCE OF THESE ENTRIES IN THE SHOW CAUSE NOTICE. HE DREW OUR ATTENTION TOWARDS COPY OF SEIZED MATERIAL AVAILABLE ON PAGE NOS.23 TO 26 OF THE PAPER B OOK. ON PAGE NO.23 THERE IS A NARRATION AGAINST ENTRY NO.3 I.E. RS.5.12 CRORES. ITA NO . 2 404 /AHD/20 14 7 7 . WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. THE CASE OF THE ASSESSEE IS THAT ENTRY MENTIONED IN BF - 1 CONTAINED THREE INDEPENDENT FIGU RES. THE FIRST TWO FIGURES REPRESENT THE AMOUNTS RECEIVED THROUGH CHEQUE ON ACCOUNT OF SALE OF LAND AND THE THIRD ENTRY REPR E SENTS COMMISSION INCOME EARNED BY SHRI JAGDISH T. DESAI AS A DALALI /COMMISSION INCOME IN THE LAND. THE DETAILS OF SUCH COMMISSION INCOME HAS BEEN NOTICED ON OTHER PAGES OF BF - 2. THESE AMOUNTS HAVE BEEN OFFERED FOR TAXATION BY THE ASSESSEE. ON THE OTHER HAND, THE CASE OF THE AO IS THAT NARRATION AVAILABLE ON BF - 2 EXHIBITS THE COMMISSION INCOME OF RS.5.12 CRORES IN THE HANDS OF SHRI JAGDISH T. DESAI ARE SEPARATE TRANSACTIONS, THEN THE ONE MENTIONED AT SR.NO.3 OF BF - 1. THUS, CONTROVERSY BEFORE US IS WHETHER THESE ARE TWO SEPARATE TRANSA C TIONS OR NOT. ENTRY NO.3 AVAILABLE AT BF - 1 IS A TOTAL OF ALL ENTRIES AND OTHER DETAILS OF BF - 2. THE FIRST EVIDENCE FOR CONSTRUING THE MEANING OF BF - 1 IS TO BE THE EXPLANATION GIVEN BY THEM AT THE TIME OF SURVEY ITSELF. SHRI JAGDISH DESAI WAS CONFRONTED WITH THESE ENTRIES AND HE GAVE FOLLOWING EXPLANATION IN REPLY TO QUESTION NO.14: Q.14. AS ON TOD AY I.E. 06 - 01 - 2010 A POCKET DIARY ANNEXURISED AS BF - 2 IS FOUND DURING SURVEY PROCEEDINGS AT YOUR OFFICE PREMISES. ON PAGE NO.1 THEREOF, CREDIT ENTRY IS WRITTEN HAVING A TOTAL OF RS.5,12,00,000/= (RS.FIVE CRORES TWELVE LACS ONLY) AND ON PAGE NO.2 A DEBIT E NTRY OF RS.86,86,000/= IS WRITTEN. KINDLY CLARIFY BOTH THESE CREDIT AND DEBIT ENTRIES AND EXPLAIN THE SAME IN DETAIL. ITA NO . 2 404 /AHD/20 14 8 A.14 THE CREDIT ENTRY OF RS.5,12,00,000/ - WHICH IS THERE ON PAGE NO.1 OF THIS DIARY (BF - 2) IS THE SAME ENTRY WHICH IS WRITTEN ON PAGE NO .1 OF BF - 1. THIS AMOUNT OF RS.5,12,00,000/= SHOWS THE DETAILS OF MY OWN INCOME EA R NED FROM DALALI, LIASONING WORK AND OTHER INCOME. AND THE DEBIT ENTRY OF RS.86,86,000/= WRITTEN ON PAGE NO.2 OF THE DIARY (BF - 2) IS THE DETAILS OF EXPENSES INCURRED DURING THE COURSE OF EARNING THE INCOME FROM DALALI, LIASONING WORK AND OTHER INCOME. ACCORDINGLY, THE NET PROFIT EARNED BY ME DURING THE CURRENT FINANCIAL YEAR 2009 - 10 FROM DALALI, LIASONING WORK AND OTHER INCOIME IS RS.4,25,14,000/= (RS.5,12,00,000 RS.86,86 ,000). I HAVE NOT PAID TAX ON THIS AMOUNT TILL DATE. 8 . A BARE PERU S AL OF THE ORIGINAL SEIZED MAT E RIAL AVAILABLE ON PAGE NO.23 OF THE PAPER BOOKS WOULD INDICATE THAT AGAINST ENTRY NO.3, EXPRESSION DALALI COMMISSION HAS ALSO BEEN WRITTEN. THE AO DID NOT TAKE COGNIZANCE OF THIS EXPRESSION IN THE SHOW C A USE NOTICE. THUS, IF THE NARRATION OF DALALI COMMISSION IS TO BE UNDERSTOOD/INTERPRETED IN THE LIGHT OF THE REPLY GIVEN BY SHRI JAGDISH DESAI, THEN IT WOULD INDICATE THAT IT WAS A COMMISSION INCOME EARN ED BY SHRI JAGDISH DESAI. CONTRARY TO THIS EXPLANATION, THERE IS NOTHING BROUGHT ON RECORD BY THE AO EXCEPT ASSUMPTION THAT IT IS A CASH COMPONENT RECEIVED BY THE ASSESSEE ON SALE OF LAND. THE LD.AO HAS JUST ASSUMED THAT IT IS THE THIRD NARRATION ON A PA GE ALONG WITH TWO RECEIPTS REC E IVED THROUGH CHEQUE, THEREFORE IT IS T O BE CONSIDERED AS A CASH COMPONENT IN THE LAND DEALINGS. BUT FOR HARBOURING SUCH BELIEF , WHAT IS ITA NO . 2 404 /AHD/20 14 9 CORROBORATIVE MATERIAL WITH THE AO ? TO OUR MIND, EXCEPT RAISING A SUSPICION, THE LD.AO FA ILED TO COLLECT ANY OTHER EVIDENCE TO ARRIVE AT A CONCLUSION THAT IT WAS A CASH AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF LAND. THE ASSESSEE HAS EXPLAINED THE ENTRIES NOT ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT EVEN DURING THE SURVEY PROCEE DINGS ALSO. THE LD.CIT(A) HAS APPRECIATED THESE EVIDENCES AND ONLY THEREAFTER DELETED THE ADDITION. WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 9 T H MARCH, 2017 AT SURAT CAMP . S D / - S D / - ( AMARJIT SINGH ) ACCOUNTANT MEMBER ( RAJPAL YADAV) JUDICIAL MEMBER