Amol Dadu Chougule, Kolhapur V. Income-tax Officer, Ward - 1(4), Kolhapur

ITA 2441/PUN/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5534 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Unexplained investment; Capital asset; Business income; Cost of acquisition; Capital Gains

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणे मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.2441/PUN/2017 िनधाᭅरणवषᭅ / Assessment Year : 2012-13 Amol Dadu Chougule, 170/1/2/3, B-Ward, Mangalwar Peth, Kolhapur. PAN: ANVPC 4723 A Vs The Income Tax Officer, Ward-1(4), Kolhapur. Appellant/ Assessee Respondent/ Revenue Assessee by None. Revenue by Shri S P Walimbe - DR Date of hearing 20/04/2022 Date of pronouncement 20/06/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-2, Kolhapur dated 01.08.2017 for the Assessment Year 2012-13. The Assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law the Learned CIT(A) erred in confirming the addition of Rs.11,68,310/- under the head unexplained investment in ujwalwadi plot by disregarding appellants contention. 2. On the facts and in the circumstances of the case and in law the Learned CIT(A) erred in confirming the addition of Rs.10,20,240/- being alleged unexplained investment in Balinga plot by disregarding appellant contention. 3. On the facts and in the circumstances of the case and in law the ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 2 Learned Assessing Officer erred is making an addition of Rs. 15,00,000/- being capital gain on account of sale of agriculture land by disregarding appellant contention. 4. On the facts and in the circumstances of the case and in law the Learned CIT(A) erred in confirming the addition of Rs.4,43,300/- being cash deposit in the bank account by disregarding appellant contention. 5. On the facts and in the circumstances of the case and in law the Learned Assessing Officer erred is making an addition of Rs. 1,00,000/- on account of low cash withdrawals by disregarding appellant contention.” 2. In this case hearings were fixed on following dates Dates of hearings Attendance by AR or assessee 08.12.20 None 04.02.21 None 26.03.21 None 18.05.21 None 05.07.21 None 17.08.21 None 04.10.21 None 23.12.21 None 16.02.22 None 11.03.22 None 20.04.22 None 2.1 Thus, it can be seen that, in last two years 11 opportunities have been provided to the appellant assessee. But neither the assessee/AR appeared nor any written submission filed. In this background we have no option but to decide the case on merit based on the record. 3. Brief facts of the case are that the assessee is in the business of supplying material and labour for construction business. ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 3 4. Ground No.1 of the assessee is regarding Unexplained investment in Ujwalwadi Plot of Rs.11,68,310/-. During the assessment proceedings the Assessing Officer(AO) observed that Assessee along with his brother had purchased a plot of land at Ujlaiwadi from Balwant Dhangar. The AO obtained copy of Registered Sale Deed from the office of the Sub registrar. As per the said registered sale deed assessee along with his brother had purchased the said plot for Rs.42,36,560/-. Out of this Rs.21,18,310/- were paid by his brother, therefore, the assessee was asked to explain the source of remaining Rs.21,18,310/-. The assessee explained that these amounts were paid in cash between 2001-2011. The AO rejected the explanation and made addition. Before the ld.CIT(A), the assessee claimed that his father had entered into Agreement with Mr. Balwant Dhangar on 26/02/2001.Assessee filed copy of unregistered agreement. The relevant portion of the ld.CIT(A)’s order is reproduced here as under : “5.3 Ground 5: The appellant is challenging the addition of Rs.21,18,310 as unexplained investment in Ujlaiwadi plot. In his written submissions, the appellant states that the purchase of this plot is ongoing from 1997 and was originally proposed to be purchased by his father. He has produced a copy of the agreement dated 26/02/2001 entered into by his father with the seller of the plot. I have perused the unregistered agreement titled as ‘Kararpatra’ entered into by the father of the appellant with one Balwant Dhangar. I find from the same that the father of the appellant has paid a sum of Rs.13,00,000 in instalments from April 2000 to Feb 2001. The appellant has also enclosed four receipts dried 11/06/1997 for Rs.3,00,000, 21/01/1995 for Rs.2,00,000, 28/07/1997 for Rs.50,000 & 28/12/1997 for Rs.50,000. On the basis of this evidence, the appellant claims that part payment has been made by his father from 1995 onwards till 2001 and ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 4 therefore cannot be taxed in his hands. I find that the total of these payments, made by his father and evidenced by receipts and agreement for Plot no 85 Ujlaiwadi, is Rs.19,00,000. Thus out of the total consideration of Rs.42,36,620 made by the appellant and his brother,- Rs.19,00,000 has been made by their father in earlier years and therefore the same cannot be taxed in the hands of the appellant. However as regards the balance of Rs.23,36,620 (appellants share Rs.11,68,310), it has been stated before me that the land was being developed into plots and these plots were sold. The payment made by the appellant has been financed out of the advances received towards this sale. This is a mere averment on part of the appellant as there is no evidence whatsoever to indicate that the plot was indeed being developed let alone being sold. There is also no evidence of buyers of the plots on this land and also no evidence to show any payment received either in cash or cheque by the appellant. The other defence is that the appellant has sold a plot of land for Rs.30,00,000 leading to capital gains which has been taxed by the AO. He should therefore be given credit for the sale consideration received. This argument of the appellant is fallacious for the simple reason that the payment for the Ujlaiwadi plot has been made in April 2011 while the sale of the other land for Rs.30,00,000 is in Feb 2012. The appellant would have me believe that he should be given credit for a later transaction. Apart from this, the appellant has taken two completely different stands as regards his share of investment (both without any evidence). On one hand he says that he has received advances on plotting of the Ujlaiwadi plot, while on the other he says that he has invested the sale proceeds of Rs.30,00,000 into the Ujlaiwadi land. Now only one of this could be true. However as both these statements are bereft of any evidence, I am not inclined to accept this explanation of the appellant. I therefore hold that the investment of the appellant to the extent of Rs.11,68,310 in the Ujlaiwadi plot is unexplained and therefore deserves to be taxed as unexplained investment. The addition made by the AO is upheld to the extent of Rs.11,68,310. Ground 5 is partly allowed.” ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 5 4.1 The ld.CIT(A) has accepted the assessee’s explanation for Rs.19,00,000/- . However, the assessee could not explain source of remaining Rs.11,68,310/- with evidence. Hence the ld.CIT(A) has confirmed the addition to that extent. No evidence has been filed by the assessee before us to substantiate his claim. Therefore, on the facts of the case we uphold the order of the ld.CIT(A) confirming addition of Rs.11,68,310/-, therefore, the Ground No.1 of the assessee is dismissed. 5. Ground No.2 is related to unexplained investment of Rs.1020240/- in Balinga Plot. 5.1 The relevant part of the ld.CIT(A)’s order is reproduced as under : “5.4 Ground 6: The appellant has purchased a plot at Balinga alongwith his brother for a total consideration of Rs.90,40,480 including stamp duty and registration. The AO gave credit for a sum of Rs.35,00,000 received by the appellant as a hand loan from his father. The AO held that the appellant could not explain the source of the balance Rs.10,20,240 and therefore the same was added as unexplained investment. Before me the appellant repeated the arguments as made in para 5.3 above that the appellant’s share of investment is sourced out of the sale of land for Rs.30,00,000 and also from the advances received from customers for the plots being developed on the Ujlaiwadi plot. It is noted that the Balinga plot was purchased in Aug 2011 which is prior to the sale of plot for Rs.30,00,000. The arguments of the appellant fail for the same identical reasons as mentioned in Para 5.3 above. I am therefore of the opinion that the appellant cannot explain the source of his investment of Rs.10,20,240 in the Balinga plot and I therefore uphold the action of the AO in taxing the same as unexplained investment. Ground 6 is dismissed.” ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 6 5.2 No evidence has been filed before us to explain the source of investment. Therefore, we uphold the order of ld.CIT(A) regarding Rs.10,20,240/-, therefore, the Ground No.2 of the Assessee is Dismissed. 6. Ground No.3 is regarding claim of Sale of Agricultural Land. 6.1 The relevant part of the ld.CIT(A)’s order is reproduced here under: “5.5 Ground 7: This is against the action of the AO in taxing capital gain from sale of agricultural land at Vadanage. The AO obtained the sale deed from the sub registrar which revealed that the appellant has sold land at Vadange along with his brother for a consideration of Rs.30,00,000 (1/2 share each). However no capital gains has been declared on the same. The appellant did not even furnish a copy of the purchase deed of this land. The appellant claimed that the said land was agricultural and therefore not a capital asset as per the Act. The appellant further claimed that the sale consideration has been invested in purchase of other agricultural land. The AO however did not accept this claim of the appellant as there was no evidence whatsoever forthcoming from the appellant. On the other hand, the AO made enquiries with the head of the grampanchayat and noted that as per the certificate issues, the land is situated within 3 kms of Kolhapur city and has a population of more than 11,000. The AG therefore held that the land qualifies to be a capital asset and its sale would result in capital gains. As the appellant did not furnish evidence towards purchase cost, the AO assessed Rs.15,00,000 being the share of the appellant as capital gains. Before me, the same arguments were repeated once again without any evidence. The appellant stated that he has purchased the land for Rs.10,00,000 in April 2008. However no evidence for the same was submitted. The appellant further stated that the sale proceeds have been utilised for purchase of other agricultural lands and therefore he is entitled for deduction u/s 54B. Once again no details were provided. In fact I find ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 7 that the appellant has not even declared capital gains in his return leave alone claiming a deduction u/s 54B. It is also to be noted that the other lands purchased and subject matter of this appeal are purchased prior to the sale of the land at Vandage and therefore it cannot be said that the sale proceeds have been invested there. As regards the claim of the appellant that this is agricultural land as agricultural operations have been carried out thereon, it is to be noted that firstly there is no evidence to show any agricultural operations, and secondly, the land is within 3 kms from Kolhapur and the village also has a population of more than 10,000. The land therefore qualifies to be a capital asset within the meaning assigned in the Act. In any case, as no details are forthcoming from the appellant, 1 am constrained to agree with the AO in principle. However for computation of capital gains, I find that the AO has not deducted the indexed cost of acquisition. The AO is therefore directed to call for the purchase deed either from the appellant or the sub registrar office and determine the appellant’s share of purchase cost and accordingly compute the capital gains from sale of this land at Vadange after deducting the indexed cost of acquisition.” 6.2. The appellant has not filed any evidence to substantiate his claim. We uphold the order of ld.CIT(A), accordingly the Ground No.3 of the assessee is dismissed. 7. The Ground No.4 is regarding cash deposits of Rs.4,43,300/-. The relevant part of the ld.CIT(A)’s order is reproduced here as under : “5.6 Ground 8: This is against the addition of Rs.6,68,300 made on account of cash deposit in the Mahalakshmi Coop bank Account of the appellant. The AO found that the appellant has made a total cash deposit of Rs.17,01,600. The AO also found that a single deposit of Rs.10,33,000 has been used to purchase land at Balinga and subject matter of ground 6 above. As the same has been taxed, the AO did not tax this cash deposit again and taxed the balance of Rs.6,68,300. Before the AO, the appellant has stated that the cash deposits are out of his agricultural income and ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 8 winnings of wrestling competitions etc. The AO did not believe this statement of the appellant for lack of evidence. Before me, the appellant stated that as he has business income declared u/ s 44AD, telescoping of the cash deposits should be given against business receipts. The appellant states that “it is quite possible that the cash deposits are from the turnover...”. I am unable to accept this statement of the appellant as there is no causal link between the two. However I am inclined to grant telescoping of the agricultural income declared of Rs.2,25,000. The addition made by the AO is therefore restricted to Rs.4,43,300 and ground 8 partly allowed.” 7.1 No evidence has been filed before us. Therefore, on the facts of the case we uphold the ld.CIT(A)’s order on this issue, hence, the Ground No.4 is dismissed. 8. Ground No.5 is regarding addition of Rs.1,00,000/- on account of inadequate withdrawal. The AO noted that there were withdrawals of only Rs.1,00,000/- . The ld.CIT(A) upheld it. 8.1 It is observed that the appellant claimed that during the relevant year he was unmarried and was living in joint family. Also there were agricultural produce which were used for household consumption. We find that this addition of the AO is merely based on assumption. AO has not explained the lifestyle of the assessee to explain how the withdrawals were low. Therefore, we are of the opinion that this addition is unsustainable, and hence the Assessing Officer is directed to delete it. ITA No.2441/PUN/2017 for A.Y. 2012-13 Amul Dadu Chogule (A) 9 8.2 Thus, Ground No.5 of the assessee regarding low withdrawal is Allowed. 9. Thus, the Appeal of the Assessee is Partly Allowed. Order pronounced in the open Court on 20 th June, 2022. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 20 th June, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), Pune concerned. 4. The Pr. CIT, Pune concerned. 5. िवभागीयᮧितिनिध, आयकरअपीलीयअिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT, Pune.