Shri Deepak Manilal Patel, Ahmedabad V. The ACIT, Central Circle-2(1), Ahmedabad

ITA 2411/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9737 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR SI NHA
• Keywords: Unexplained investment; Principle of natural justice; Opportunity of cross examination; Cost of acquisition
• Section: 133A; 153A; 131; 69; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. AND ASSTT.YEAR APPELLANT VS RESPONDENT 2410/AHD/2011 A.Y.2007-08 SHRI JAYESH KANTILAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : ACDPP 8627 R THE ACIT, CENT.CIR.2(1) AHMEDABAD. 2411/AHD/2011 A.Y.2007-08 SHRI DEEPAK MANILAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : AAQPP 3324 H VS THE ACIT, CENT.CIR.2(1) AHMEDABAD. 2412/AHD/2011 A.Y.2007-08 SHRI PRAKASH CHANDULAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : ACMPP 1947 K VS THE ACIT, CENT.CIR.2(1) AHMEDABAD. 2413/AHD/2011 A.Y.2007-08 SHRI PRANAY KANTILAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : ACDPP 8720 B VS THE ACIT, CENT.CIR.2(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI DHIREN SHAH, AR REVENUE BY : SHRI RAJESH KUMAR SI NHA, CIT-DR / DATE OF HEARING : 19/10/2016 ITA NO.2411/AHD/2011 & 3 OTHERS 2 / DATE OF PRONOUNCEMENT: 06/12/2016 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER: PRESENT FOUR APPEALS ARE DIRECTED AT THE INSTANCE O F ASSESSEES AGAINST SEPARATE ORDERS OF LD.CIT(A)-III, AHMEDABAD DATED 2 .8.2011 PASSED ON THE RESPECTIVE APPEALS OF THE ASSESSEES FOR ASSTT.YEARS 2003-04 TO 2009-10. THE DISPUTE PERTAINING TO THESE PRESENT APPEALS RELATES TO ASSTT.YEAR 2007-08 ONLY. 2. SOLE GRIEVANCE OF EACH ASSESSEE IS THAT THE LD.C IT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.3,18,750/- IN THE HANDS O F EACH ASSESSEE. THE FACTS AND CIRCUMSTANCES ON ALL VITAL POINTS ARE COMMON. FOR THE FACILITY OF REFERENCE, THE LD.REPRESENTATIVES HAVE REFERRED FAC TS FROM THE APPEAL OF SHRI DEEPAK MANILAL PATEL, THEREFORE, WE ALSO TAKE THE F ACTS FROM THIS CASE. 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH UNDER SE CTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 23.5.2008 IN THE A VIRAT ADI GROUP. SURVEY UNDER SECTION 133A WAS CARRIED OUT AT THE PR EMISES OF THE ASSESSEES. DURING THE COURSE OF OPERATION VARIOUS DOCUMENTS RE GARDING INVESTMENTS IN LANDS WERE SEIZED. ON VERIFICATION OF THE SAME, IT WAS FOUND THAT THESE ASSESSEES ALONG WITH OTHER MEMBERS OF GROUP HAVE PU RCHASED LAND, AND THEREFORE, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED UPON THE ASSESSEES ON 13.11.2009 REQUESTING THEM TO FILE RETURNS. IN RESPONSE TO THE NOTICE, ASSESSEES HAVE FILED THEIR RETURN ON 31.12.2010. S HORT CONTROVERSY IN THESE APPEALS IS TO THE EFFECT THAT ALL THESE APPELLANTS HAVE PURCHASED LAND IN VILLAGE KERALA, TAL-BAVLA. ACCORDING TO THE AO, STATEMENT OF SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR, ALLEGED VEND ORS OF THE LAND AT VILLAGE KERALA WERE RECORDED UNDER SECTION 131 OF THE INCOME TAX ACT. THEY HAVE ITA NO.2411/AHD/2011 & 3 OTHERS 3 DISCLOSED THAT 21 BIGHAS OF LAND SITUATED AT VILLAGE KERALA WAS SOLD AT THE RATE OF RS.1,50,000/- PER BIGHA , WHEREAS IN THE SALE DEED THIS RATE WAS NOT DISCLOSED. ACCORDINGLY, THE LD.AO FORMED AN OPINIO N THAT ASSESSEES HAVE PURCHASED THE LAND BY MAKING CASH PAYMENTS OVER AND ABOVE AMOUNTS STATED IN THE SALE DEED. THE LD.AO HAS ISSUED A SHOW CA USE NOTICE DATED 8.12.2010 WHICH HAS BEEN REPRODUCED AT PAGE NO.8 OF THE ASSES SMENT ORDER. THIS READS AS UNDER: ' VIDE POINT NO. 3 OF THIS OFFICE LETTER DATED 24/11/ 2010, YOU WERE INFORMED THAT DURING THE COURSE OF SEARCH OPERATION CERTAIN DOCUMENTS WERE FOUND AND SEIZED WHICH SHOWS THAT YOU ALONGWIT H FOUR OTHERS HAVE PURCHASED 113.07 VIGHAS OF LAND OF VARIOUS SURVEY N UMBERS SITUATED AT VILLAGE- BHAYALA AND KERALA, TALUKA- BAVLA, DIST- A HMEDABAD. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , FOR THE A.Y.- 2007-08, IN YOUR GROUP CASES I.E IN THE CASE OF M/S ADVANCE WAREHOUSE PROJECTS, WHEREIN YOU ARE A PARTNER, IT I S SEEN THAT YOU ALONG WITH OTHER FOUR MEMBERS HAD PURCHASED TOTAL 1 33.2824 VIGHAS OF LAND AT VILLAGE- KERALA AND BHAYLA OF TALUKA- BAVLA DURING THE PERIOD 1/4/2006 TO 31/3/2007.I.E DURING THE PERIOD RELEVAN T TO A. Y. -2007-08. THE DETAILS OF SUCH LAND PURCHASED WAS INTIMATED TO YOU VIDE THIS OFFICE LETTER DATED 24/11/2010. PURIFIER, YOU WERE INTIMAT ED THAT DURING THE POST SEARCH INVESTIGATION, STATEMENTS OF SHRI BHAGA JI M. THAKOR AND SHRI BUDHAJI M. THAKOR OF L VILLAGE-KERALA, TALUKA - BAVLA WERE RECORDED U/S. 131 OF THE I. T. ACT ON I 18/06/2008. THESE TWO PERSONS HAS SOLD 21 VIGHA OF LAND SITUATED AT KERALA, TALUK A- BAVLA (SURVEY/BLOCK NO. 195 PAIKI, 196 AND 199 PAIKI). IN THEIR STATEMENTS THEY HAD STATED ON OATH THAT THEY HAVE SOLD THE LAN D @ 1,50,000/- PER VIGHA. COPY OF THE STATEMENTS OF ABOVE MENTIONED TW O FARMERS ARE ENCLOSED HEREWITH FOR YOUR REFERENCE. FROM THIS FAC T IT IS CLEAR THAT YOU HAD PURCHASED THE ABOVE MENTIONED LAND @ RS. 1,50,0 00/- PER VIGHA WHEREAS THE PURCHASE PRICE SHOWN IN THE RESPECTIVE PURCHASE DEED IS LESS THAN THE ACTUAL PURCHASE PRICE. TO BE VERY SPE CIFIC YOU HAD SHOWN THE COST OF LAND AT RS. 58,06,500/- IN THE RETURN O F INCOME FILED FOR YOUR PARTNERSHIP FIRM M/S ADVANCE WAREHOUSE PROJECTS FOR PURCHASE OF 133.2824 BIGHAS. AS SUCH, YOU WERE REQUIRED TO SUBM IT YOUR EXPLANATION, BY 06/12/2010, AS TO WHY THE UNDER STA TEMENT OF COST OF PURCHASE OF SHOULD NOT BE ADDED TO YOUR TOTAL INCOM E AS YOUR UNEXPLAINED INVESTMENT IN LAND. HOWEVER, NO REPLY H AS BEEN RECEIVED ITA NO.2411/AHD/2011 & 3 OTHERS 4 SO FAR. YOU ARE ONCE AGAIN REQUEST TO FURNISH YOUR EXPLANATION AS TO WHY THE BELOW MENTIONED UNDER STATEMENT OF COST OF PURCHASE OF LAND SHOULD NOT BE ADDED TO YOUR TOTAL U/S 69 OF THE I.T ACT, 1961 ON OR BEFORE 17/12/2010, FAILING WHICH THE PROPORTIONATE AMOUNT OF RS. 1 ,41,86,227/- WILL BE ADDED TO YOUR TOTAL INCOME U/S . 69 OF THE I. T. ACT, 1961. I LAND PURCHASED DURING F. Y.2006-07 AT BHAYLA AND KERALA VILLAGE 3,17,018 SQ. MT. (317018/2378.5) I.E 133.2848 VIGHAS II PURCHASE PRICE AS PER THE FARMERS FROM WHOM THE SAID LAND WAS PURCHASED RS. 1,50,000/PER VIGHA III TOTAL PURCHASE COST/INVESTMENT IN LAND RS. 1,99,92,727/- IV COST PRICE SHOWN IN THE BOOKS RS. 58,06,500/- V UNACCOUNTED INVESTMENT IN LAND RS. 1,41,86,227/- 4. ASSESSES HAVE GIVEN REPLY TO THE SHOW CAUSE NOTI CE WHICH IS IDENTICAL IN ALL CASES AND REPLY GIVEN IN THE CASE OF DEEPAK M. PATEL HAS BEEN REPRODUCED IN PAGE NO.10 OF THE ASSESSMENT ORDER. IT READS AS UNDER: 4.1.4 THE ASSESSEE VIDE REPLY DATED 19/12/2010 FURN ISHED HIS SUBMISSION IN RESPECT OF POINTS RAISED AS PER PARA 2(I) AND PARA 2(II) OF THIS OFFICE FINAL SHOW CAUSE LETTER DATED 08/12/201 0. THE ASSESSEE ALSO FILED A SUPPLEMENTARY SUBMISSION SHOWING THEREIN CO MPARATITIVE SALES INSTANCES OF SALE OF LAND AT VILLAGE- BHAYLA, KERAL A. THE GIST OF THE ASSESSEE'S SUBMISSION IS REPRODUCED AS UNDER: 1. (SR.L(I)). IN PARA L(I), YOUR HONOUR HAS GIVEN T HE SHOW CASE AS TO WHY THE PROPORTIONATE AMOUNT OF RS. 1,41,86,227/- UNDER STATEMENT OF COST OF PURCHASE OF LAND SHOULD NOT BE ADDED TO THE TOTA L INCOME U/S. 69 OF THE I.T. ACT. IN THIS REGARD, THE ASSESSEE HAS TO S UBMIT HIS REBUTTAL AS UNDER :- A) THAT THERE WAS NO SEARCH IN THE CASE OF THE ASSE SSEE AS WELL AS NO SURVEY PROCEEDINGS IN THE INDIVIDUAL CASE OF THE AS SESSEE. THE PROCEEDINGS IN ASSESSEE'S CASE HAS BEEN INITIATED U /S. 153C OF THE ACT WHICH HAS ALREADY BEEN CHALLENGED BY THE ASSESSEE A S THERE WAS NO INCRIMINATING MATERIAL AND/OR SEIZED MATERIAL HAS B EEN BROUGHT ON ITA NO.2411/AHD/2011 & 3 OTHERS 5 RECORD BY YOUR HONOUR FOR THE INITIATION OF PROCEED INGS U/S. 153C OF THE ACT. B) THAT THE SURVEY PROCEEDINGS U/S. 133A HAS BEEN C ARRIED OUT AT THE BUSINESS PREMISES SITUATED AT 301/1, PARSHWA TOWER, OPP: RAJPATH CLUB, S.G. HIGHWAY, AHMEDABAD AND DURING THE COURSE OF SURVEY PROCEEDINGS, NO INCRIMINATING MATERIAL IS BEEN FOUN D AND IMPOUNDED BY THE SURVEY OFFICER IN RESPECT OF PURCHASE OF LAN D OF IS SURVEY NUMBERS SITUATED AT BHAYALA AND KERALA, TALUKA BAVL A, DIST. AHMEDABAD, HAS BEEN PURCHASED BY ME IN THE CAPACITY OF PARTNER OF M/S. ADVANCE WAREHOUSE PROJECT FOR AND ON BEHALF OF THE FIRM AS PER THE TERMS AND CONDITIONS OF THE ENTERED IN TO BETWE EN PARTNERS AND THE FIRM M/S. ADVANCE WAREHOUSE PROJECT AND EVEN THE FU NDS FOR THE PURCHASE OF LAND HAS ALSO BEEN PROVIDED BY THE PART NERSHIP FIRM M/S. ADVANCE WAREHOUSE PROJECT. THE LAND HAS ALSO BEEN T REATED AS ASSETS IN THE BOOKS OF ACCOUNTS OF THE PARTNERSHIP FIRM M/ S. ADVANCE WAREHOUSE PROJECT AND THE SAME HAS BEEN DULY REFLEC TED IN THE BALANCE SHEET OF THE FIRM. FURTHER, IT IS ALSO TO BE TAKEN NOTE OF THAT DURING THE COURSE OF SURVEY PROCEEDINGS AT THE BUSINESS PREMISES SITUATED AT 30 1/1, PARSHWA TOWER, OPP: RAJPATH CLUB, S.G. HIGHWAY, AHMEDABAD, IN THE STATEMENT RECORDED OF SHRI PRANAY K. PATEL U/S. 131 OF THE ACT, THE SURVEY OFFICER HAS ALSO NOT PUT ANY QUESTION IN RES PECT OF THE PURCHASE OF THE AFORESAID LAND OF VARIOUS SURVEY NUMBERS SIT UATED AT BHAYALA AND KERALA, TALUKA BAVLA. DIST. AHMEDABAD IN RESPEC T OF THE ALLEGED CASH TRANSACTIONS OBSERVED IN YOUR SHOW-CAUSE LETTE R DATED 8-12-2010. IN THE STATEMENT RECORDED U/S. 131 OF THE ACT OF SH RI PRANAY K. PATEL AT THE TIME OF SURVEY PROCEEDINGS U/S. 133A OF THE ACT , THE SURVEY OFFICER HAS ALSO NOT MADE ANY ALLEGATION AS REGARDS TO ANY UNACCOUNTED CASH PAYMENT IN RESPECT OF PURCHASE OF THE AFORESAID DIF FERENT SURVEY NUMBERS LAND AT BHAYALA AND KERALA, TALUKA BAVLA, D IST. AHMEDABAD IN THE QUESTIONS / ANSWERS RECORDED IN THE STATEMEN T. C) IN YOUR SHOW CAUSE LETTER DATED 8-12-2010, YOUR HONOUR HAS RELIED UPON THE STATEMENT OF SHRI BHAGAJI M. THAKOR AND SH RI BUDHAJI M. THAKOR OF VILLAGE KERALA, TALUKA BAVALA WHICH WERE RECEDED U/S. 131 OF THE ACT ON 18/6/2008 DURING THE POST SEARCH INVE STIGATION AND THE COPY OF WHICH HAS ALSO BEEN PROVIDED TO THE ASSESSE E ALONGWITH SHOW CAUSE LETTER DATED 8-12-2010. THE ASSESSEE HAS TO S UBMIT THAT THE ITA NO.2411/AHD/2011 & 3 OTHERS 6 STATEMENTS OF AFORESAID TWO FARMERS RECORDED ON 18- 6-2008 WERE NOT CONFRONTED TO THE ASSESSEE BY THE INVESTIGATION DEP ARTMENT OFFICERS. D) ANALYSIS OF STATEMENT OF SHRI BHAAAII M. THAKOR AND SHRI BUDHAII M. THAKOR, DEPARTMENTAL WITNESSES RECORDED U/S. 131 OF THE ACT ON 18- 06-2008. I) THAT FROM VERIFICATION OF THE STATEMENTS, IT REV EALS THE FACT THAT THEY HAVE NOT STATED/ MENTIONED THE NAME OF THE ASSESSEE SHRI JAYESH K. PATEL AND OTHER SIX CO-OWNERS NAMELY SHRI (I) PRAKA SH CHANDULAL PATEL, (II) DEEPAKBHAI M. PATEL, (III) PRANAY K. PA TEL, (IV) ANIL SAKARBHAI PATEL, (V) KANUBHAI MAGANLAL PATEL AND (V I) RAJESH KANTILAL PATEL. II) THAT THE FARMER SHRI BHAGAJI M. THAKOR AND SHRI BUDHAJI M. THAKOR, DEPARTMENTAL WITNESS IN THEIR STATEMENTS RE FERRED THE NAMES OF TWO BROKERS. THE ASSESSEE HAS TO LOT AS YOUR HONOUR HAS NOT PROVIDED THE STATEMENTS OF TWO BROKERS WHOSE NAMES BEEN MENT IONED BY SHRI BHAGAJI M. THAKOR AND SHRI BUDHAJI M. THAKOR IN THE IR STATEMENTS, ONE CAN SAY THAT THE OFFICER OF THE INVESTIGATION DEPAR TMENT HAS NOT CARRIED OUT A PROPER ENQUIRY AND INVESTIGATION IN THE MATTE R BY EXAMINING THE BROKERS WHOSE NAMES HAVE BEEN STATED BY THE FARMER SHRI BHAGAJI M. THAKOR AND SHRI BUDHAJI M. THAKOR IN THEIR STATEMEN TS. UNDER THE CIRCUMSTANCES, YOUR HONOUR IS REQUESTED TO EXAMINE THE TWO BROKERS WHOSE NAMES HAVE BEEN MENTIONED BY THE FARMERS IN T HEIR STATEMENTS. III) THAT AFTER EXAMINATION BY YOUR HONOUR OF THE T WO BROKERS WHOSE NAMES HAVE BEEN MENTIONED BY THE FARMERS SHRI BHAGA JI M. THAKOR AND SHRI BUDHAJI M. THAKOR IN THEIR STATEMENTS, YOU R HONOUR IS REQUESTED TO PROVIDE THE STATEMENT OF BOTH BROKERS AND ALSO THE OPPORTUNITY OF CROSS EXAMINATION OF BOTH BROKERS. IV) FROM THE VERIFICATION OF THE STATEMENTS, IT REV EALS THE FACT THAT THERE ARE NO WITNESS AT THE TIME OF RECORDING OF STATEMEN T OF THE FARMERS SHRI BHAGAJI M. THAKOR AND SHRI BUDHAJI M. THAKOR, DEPAR TMENTAL WITNESSES AND THEREFORE, THE SAID STATEMENTS DO NOT HAVE ANY VALIDITY AS PER THE PROVISIONS OF THE INCOME TAX ACT. (V) THE ASSESSEE HAS TO REQUEST YOUR HONOUR TO GRAN T THE OPPORTUNITY OF CROSS EXAMINATION OF SHRI BHAGAJI M. THAKOR AND SHR I BUDHAJI M. THAKOR, THE DEPARTMENTAL WITNESSES AND IT IS CONTEN DED THAT WITHOUT ITA NO.2411/AHD/2011 & 3 OTHERS 7 GRANTING THE OPPORTUNITY OF CROSS EXAMINATION OF SH RI BHAGAJI M. THAKOR AND SHRI BUDHAJI M. THAKOR, THEIR STATEMENT CANNOT BE USED AGAINST THE ASSESSEE AS PER THE VARIOUS JUDICIAL PR ONOUNCEMENTS. VI) IT IS SUBMITTED THAT THE ALLEGATION AS REGARDS CONSIDERATION STATED IN THE CONVEYANCE DEED HAS BEEN UNDERSTATED HAS TO BE ESTABLISHED BY YOUR HONOUR WHILE BRINGING ON RECORD COGENT MATERIA L/EVIDENCES AS WELL AS BY INDEPENDENT CLINCHING EVIDENCES THAT THE ASSESSEE HAS IN FACT PAID ACTUAL AMOUNT OVER AND ABOVE THE SALES CONSIDE RATION STATED IN THE CONVEYANCE DEED. AS PER THE PROVISIONS OF LAW THE B URDEN IS ON THE DEPARTMENT. THE BURDEN OF PROVING THAT CERTAIN SALE S WERE EFFECTED WHILE STATING UNDERSTATEMENT OF SALES CONSIDERATION IN CONVEYANCE DEED IS ON THE DEPARTMENT. IT IS NOT ENOUGH IF THE EXPLA NATION OFFERED BY THE ASSESSEE WAS NOT ACCEPTABLE. IN OTHER WORDS UNLESS THERE IS EVIDENCE/PROOF THAT MORE THAN WHAT WAS STATED IN TH E CONVEYANCE DEED WAS PAID, NO HIGHER PRICE CAN BE TAKEN TO BE THE BA SIS FOR COMPUTATION OF INCOME. THE ONUS IS ON THE REVENUE, THE INFERENC ES MIGHT BE DRAWN IN CERTAIN CASES BUT TO COME TO THE CONCLUSIONS THAT A PARTICULAR HIGHER AMOUNT, WAS IN FACT, PAID MUST BE BASED ON SUCH MAT ERIAL FROM WHICH SUCH AN IRRESISTIBLE CONCLUSION FOLLOWS. IT IS TO B E TAKEN NOTE OF THAT THE PROVISIONS OF SECTION 52 WHICH HAS BEEN NOW DELETED FROM THE I.T. ACT 1961 THE OBJECT OF THE SECTION 52 WAS NOT TO LEVY T AX ON PERFECTLY BONAFIDE TRANSACTION WHERE FULL CONSIDERATION ON TH E TRANSFER HAS BEEN CORRECTLY DISCLOSED IN THE CONVEYANCE DEED. IN SU PPORT OF THE AFORESAID SUBMISSION, THE ASSESSEE RELIES ON THE DECISION OF THE HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS AS UNDER : VII) YOUR HONOUR HAS OBSERVED THAT DURING THE PERIO D 1/4/06 TO 31/3/07, TOTAL 133.2824 VIGHAS OF LAND AT VILLAGE KERALA & B HAYLA PURCHASED AND YOUR HONOUR HAS WORKED OUT INVEST IN THE LAND @ 1 50000 PER VIGHA ON THE BASIS OF STATEMENT OF AFORESAID TWO FA RMERS RECORDED U/S.131 OF THE ACT. YOUR HONOUR HAS ALSO OBSERVED T HAT THE AFORESAID TWO FARMERS HAVE SOLD 21 VIGHAS OF LAND AT KERALA ( SURVEY NO./ BLOCK NO. 195 PAIKI, 196 & 199 PAIKI). FOR OTHER SURVEY N O./BLOCK NO. OF THE LAND AT KERALA & BHAYLA, YOUR HONOUR HAS ESTIMATED VALUE OF INVESTMENT BY TAKING RATE OF RS.150000/- PER VIGHA ON THE BASIS OF STATEMENT OF AFORESAID TWO FARMERS WHICH TANTAMOUNT TO PROPOSED ADDITION ON AN ESTIMATION BASIS AND WITHOUT BRINGIN G ON RECORD ANY COGENT MATERIAL / EVIDENCES WHICH IS AGAINST THE PR INCIPLE OF LAW AND PROVISION OF I.T.ACT. THE ASSESSEE HAS TO SUBMIT TH AT IN RESPECT OF AREA OF LAND OF 112.28 VIGHAS OF LAND PURCHASED BY ASSES SEE IN THE CAPACITY ITA NO.2411/AHD/2011 & 3 OTHERS 8 OF PARTNER OF M/S.ADVANCE WAREHOUSE PROJECT IN THE CO-OWNERSHIP ALONG WITH OTHER PARTNERS OF THE FIRM FROM OTHER VE NDERS OTHER THAN AFORESAID TWO FARMERS, NO ADVERSE INFERENCE CAN BE DRAWN ON THE BASIS OF AFORESAID TWO FARMERS' STATEMENTS AS INVESTIGATI ON DEPARTMENT AND YOUR HONOUR HAS NOT RECORDED THE STATEMENT OF OTHER VENDORS / FARMERS AND YOUR HONOUR AND INVESTIGATION DEPARTMENT HAS AL SO NOT BROUGHT ON RECORD ANY COMPARATIVE SALES INSTANCES FROM THE LAN D REVENUE RECORDS AND/OR FROM GOVERNMENT RECORDS IN SUPPORT OF THE AL LEGATION MADE BY YOUR HONOUR.' 5. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE ACCORDINGLY MADE ADDITION OF RS.17,73,278/- IN THE HANDS OF EACH ASSESSEES. CONCLUSION DRAWN BY THE AO IN PARA 4.1.18 IS WORTH TO NOTE AS UNDER: 4.1.8. CONCLUSION FROM THE ABOVE NARRATED FACTS, CONSIDERING THE FACT UAL ASPECT AS WELL AS THE LEGAL ASPECT; THE FOLLOWING TWO ISSUES ARE V ERY CLEAR. (1) THE LANDS WERE PURCHASED BY THE ASSESSEE AN D ALONGWITH SIX OTHERS. (2) THE ASSESSEE HAD PAID IN CASH HIS SHARE OF COST OF PURCHASE OVER AND ABOVE THE DOCUMENT COST AS REFLECTED IN THE BOO KS OF ACCOUNT OF THE FIRM. THE TOTAL AREA OF LAND PURCHASED BY THE ASSESSEE AL ONGWITH SIX OTHERS IS 317018 SQ. MT. I.E. 133.2848 BIGHAS, THE TOTAL PRIC E OF SUCH PURCHASES WORKS OUT TO RS. 1,99,92,720/- [133.2848 X 150000]. THE ASSESSEE HAS SHOWN THE PURCHASE PRICE OF 133.2848 BIGHAS OF LAND AT RS. 58,06,500/- . THEREFORE, THE UNEXPLAINED INVESTMENT MADE IN LAN D WORKS OUT TO RS. 1,41,86,227/- [19992720 - 5806500] TOWARDS THE IRCH ASE OF LAND ASSESSEE ALONGWITH SIX OTHERS. AS PER THE PURCHASE DEED THE ASSESSEE IS HAVING SHARE IN THE LAND @ 12.50% I.E. FIRST 1 TO 4 OF THE PURCHASERS MENTIONED IN THE DEED HAVING 50% SHARES. IN OTHER W ORDS THE FIRST FOUR PURCHASERS ARE (1) DEEPAK M. PATEL, (2) PRAKASH C. PATEL, (3) JAYESH K. PATEL AND (4) PRANAY K. PATEL AND THUS THEIR SHA RE IS IN LAND IS 12.50% EACH. THEREFORE, THE ASSASSEE'S 12.50% SHARE OF UNEXPLAINED INVESTMENT IN LAND WORKS OUT TO RS. 17,73,278/- WHI CH IS ADDED TO THE INCOME OF THE ASSESSEE U/S. 69B OF THE I. T. ACT, 1 961. THE PENALTY PROCEEDINGS U/S. 271(1)( C) OF THE I.T. ACT IS INIT IATED FOR CONCEALMENT OF INCOME. ITA NO.2411/AHD/2011 & 3 OTHERS 9 (UNEXPLAINED INVESTMENT IN LAND U/S. 69B OF RS. 17, 73,278/-) 6. ON APPEAL, THE LD.CIT(A) HAS RE-APPRECIATED THE FACTS. ACCORDING TO THE LD.CIT(A), THE TOTAL LAND PURCHASED BY THESE PERSON S IN THESE TWO VILLAGES WAS 133.2848 BIGHAS . OUT OF THIS LAND, TOTAL LAND PURCHASED FROM TWO PERSONS VIZ. SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR WAS 21 BIGHAS ONLY. THE AO HAS DRAWN INFERENCE OF ON-MONEY PAYME NTS QUA TOTAL LAND ON THE BASIS OF STATEMENT OF THESE TWO PERSONS. ACCOR DING TO THE LD.CIT(A), THE AO WAS NOT POSSESSING ANY EVIDENCE EXHIBITING THE F ACT THAT THE ASSESSEES HAVE PAID CASH OVER AND ABOVE THE AMOUNTS STATED IN THE SALE DEED. ACCORDINGLY, THE LD.CIT(A) HAS DELETED THE ADDITION S MADE QUA THE LAND ADMEASURING 112.2848 BIGHAS. SIMILARLY, IN OTHER A SSESSMENT YEARS I.E. ASSTT.YEAR 2008-09 AND 2009-10, THE AO HAS MADE ADD ITIONS QUA THE LANDS PURCHASED FROM OTHER FARMERS IN THESE YEARS. THUS, THE ADDITIONS HAVE ALSO BEEN DELETED. THE REVENUE HAS NOT CHALLENGED THE O RDER OF THE LD.CIT(A). IN THIS WAY, LD.CIT(A) HAS SCALED DOWN THE ADDITION TO RS.3,18,750/- AS AGAINST RS.17,73,278/- MADE BY THE AO. 7. WHILE IMPUGNING ORDERS OF THE LD.CIT(A), THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE STATEMENT OF SHRI BHUDA JI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR WAS RECORDED BY INVESTIGATION TEAM BEHIND BACK OF THE ASSESSEE. THE ASSESSEE HAS SPECIFICALLY REQUESTED FOR PROVIDING AN OPPORTUNITY TO CROSS-EXAMINE. THIS REQUEST WAS NOT ACCEPTED AND BOTH THESE PERSONS WERE NOT PUT TO CROSS-EXAMINATION. IN ORD ER TO SUBSTANTIATE THEIR STATEMENTS, THE LD.AO HAS OBSERVED THAT CASH COMPON ENTS RECEIVED BY THESE WERE PERSONS WERE USED BY THEM IN DEPOSITING IN THE IR RESPECTIVE BANK ACCOUNT WITH PUNJAB NATIONAL BANK BRANCH, PURCHASE OF HERO HONDA MOTOR BIKE, LIC INVESTMENTS AND RENOVATION OF WADI AND CONSTRUCTION OF HOUSE. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, THE A O HAS ALLEGED THAT SHRI ITA NO.2411/AHD/2011 & 3 OTHERS 10 BHUDAJI MOTIJI THAKOR HAS STATED IN HIS STATEMENT T HAT HE HAS DEPOSITED RS.5 LAKHS IN HIS BANK ACCOUNT WITH PNB. THE ACCOUNT NU MBER IS 0070000100117762. A PERUSAL OF THIS ACCOUNT WOULD SHOW THAT ONLY A SUM OF RS.50,000/- WAS DEPOSITED ON 11.6.2007, WHEREAS MOT IJI THAKOR HAS DEPOSITED CASH IN HIS BANK ACCOUNT AFTER SEVEN-HALF-MONTHS FR OM THE SALE DATE. THESE TWO REFERENCES IN THEIR STATEMENTS WERE FACTUALLY I NCORRECT. HAD THE ASSESSEE BEEN GIVEN AN OPPORTUNITY TO CROSS-EXAMINE, THESE F ACTS WOULD HAVE COME OUT. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT DURI NG THE COURSE OF SEARCH/SURVEY, THE ASSESSEES WERE NOT PUT ANY SUCH SUGGESTION. BOTH FARMERS HAVE GIVEN THEIR AFFIDAVITS RETRACTING THEIR STATEM ENTS GIVEN BEFORE THE INCOME- TAX AUTHORITIES. THUS, ON THE BASIS OF THEIR STATE MENT ADDITION COULD NOT BE MADE. HE FURTHER RELIED UPON THE JUDGMENT OF THE H ONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMM. OF CENTRAL EXCISE, (2015) 62 TAXMANN.COM 3 (SC) WHEREIN THE HONBLE SUPREME C OURT HAS OBSERVED THAT IF AN OPPORTUNITY TO CROSS-EXAMINE WAS NOT GIV EN THEN THOSE STATEMENTS CANNOT BE USED AS AN EVIDENCE AGAINST THE ASSESSEE. ON THE STRENGTH OF THIS JUDGMENT, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT STATEMENT OF BOTH PERSONS, SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJ I MOTIJI THAKOR OUGHT TO BE EXCLUDED. HE FURTHER RELIED UPON THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RAMANBHAI B. PATE L RENDERED IN ITA NO.207/2008 AND OTHER APPEALS FOR BUTTRESSING HIS C ONTENTION. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE REVEN UE AUTHORITIES. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE AO FORMED AN OPINION THAT ASSESSEES HAVE PAID MONEY IN CASH TO VENDORS FOR THE PURCHASE OF LAND. ACCORDING TO HIM, THE ASSESSEES HAVE PURCHASED THE LAND BY MAKING PAYMENT IN CASH OVER A ND ABOVE THE AMOUNTS STATED IN THE SALE DEED. FOR BUTTRESSING THIS PLEA , HE HAS BEEN HARPING UPON THE ITA NO.2411/AHD/2011 & 3 OTHERS 11 STATEMENT OF TWO VENDORS VIZ. , SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR. IT HAS BEEN ALLEGED THAT FROM THESE TWO FARMERS 21 BIGHAS OF LAND WAS PURCHASED BY THE APPELLANTS. APART FROM T HEIR STATEMENTS, HE MADE REFERENCE TO OTHER CIRCUMSTANTIAL EVIDENCE EXHIBITI NG EXPENDITURE INCURRED BY THE VENDORS. ACCORDING TO THE AO, HAD THEY NOT REC EIVED CASH, THEY WOULD NOT BE IN A POSITION TO MEET THIS EXPENDITURE. HE NARRATED SIX HEADS OF EXPENDITURE VIZ. DEPOSITS IN BANK ACCOUNTS, FIXED D EPOSITS WITH PNB, PURCHASE OF HERO HONDA BIKE, EXPENDITURE IN MARRIAGE OF DAUG HTER, INVESTMENT IN LIC AND RENOVATION OF CONSTRUCTION OF HOUSE. THE INVES TMENT IN LIC IS OF ONLY RS.1 LAKHS. THERE IS NO QUANTIFICATION OF EXPENDIT URE IN THE MARRIAGE OF DAUGHTER. IT IS A VAGUE TERM. SIMILARLY, THE ASSE SSEE HAS POINTED OUT THAT DEPOSITS IN THE BANK ARE NOT TO THE EXTENT AS MENTI ONED BY THE AO. SIMILARLY, IN THE ACCOUNTS OF SHRI BHUDAJI M. THAKOR A SUM OF RS.50,000/- ONLY DEPOSITED. SHRI BHAGAJI M. THAKOR HAS STATED IN HI S STATEMENT THAT HE HAS DEPOSITED RS.5.00 LAKHS IN THE BANK ACCOUNT WITH PN B WHEREAS FROM THE BANK STATEMENT OF SHRI BHAGAJI M. THAKORE WITH PNB REPRO DUCED BY THE AO ON PAGE NOS.27 AND 8 OF THE ASSESSMENT ORDER, THERE IS NO DEPOSITS OF RS.5.00 LAKHS. APART FROM THE ABOVE, CIRCUMSTANTIAL EVIDEN CE FOR BUTTRESSING THE MAIN PLEA COULD BE USED IF THE MAIN PLEA IS AN ADMISSIBL E EVIDENCE. HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES (SUPRA) HAS OBSERVED THAT IF WITNESS WAS NOT PUT TO CROSS-EXAMI NE THEN HIS STATEMENT CANNOT BE USED AGAINST AFFECTED PARTY. IN THE PRES ENT CASE ALSO, THE ASSESEES HAVE SPECIFICALLY REQUESTED THE AO FOR PROVIDING AN OPPORTUNITY TO CROSS- EXAMINATION, WHICH HAS BEEN DECLINED. THE FINDING OF THE HONBLE SUPREME COURT IN THIS CONNECTION IS WORTH TO NOTE. IT READ S AS UNDER: 5. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. ITA NO.2411/AHD/2011 & 3 OTHERS 12 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNT ED 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 GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUD ICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUN ITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRAN TED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJE CTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED T HAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE AP PELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESSWORK AS TO FOR WHAT PURPO SES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTR ACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS- EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE-LIST AS MAINTAINED AT THE DEPOT TO DETERM INE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS W ERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS ME NTIONED IN THE PRICE- LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EX AMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOS E AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN E ARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL O N MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. . ITA NO.2411/AHD/2011 & 3 OTHERS 13 8. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUI NG THE SHOW-CAUSE NOTICE. 9. THE FACTS IN HAND ARE IDENTICAL. DEPARTMENT HAS RECORDED STATEMENT OF TWO PERSONS BEHIND THE BACK OF THE ASSESSEES AND HE DID NOT PROVIDE THEM AN OPPORTUNITY OF CROSS-EXAMINATION. HENCE STATEMENT OF THESE TWO PERSONS ARE EXCLUDED, AND IF THE STATEMENTS ARE EXCLUDED THEN N OTHING WOULD REMAIN WITH THE AO FOR BRINGING THE POINT AT HOME THAT THE ASSE SSEES HAVE PAID CASH OVER AND ABOVE THE ONE AS STATED IN THE SALE DEED FOR MA KING UNEXPLAINED INVESTMENT. THEREFORE, WE ALLOW ALL APPEALS AND DE LETE ADDITIONS CONFIRMED BY THE LD.CIT(A). 10. IN THE RESULT, ALL APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 6 TH DECEMBER, 2016 AT AHMEDABAD. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER ITA NO.2411/AHD/2011 & 3 OTHERS 14 AHMEDABAD; DATED 06/12/2016 !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. $%& '' , / DR, ITAT, 6. &)* + / GUARD FILE. % & ' / BY ORDER, (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- 05-12-2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06.12.2016 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. : 6/12/2016 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. DATE OF DESPATCH OF THE ORDER