Lakhamsibhai Hansrajbhai Patel, Petlad V. The ITO, Ward-1(3)(1), Petlad

ITA 253/AHD/2023

AI Insights

The case involves Lakhamsibhai Hansrajbhai Patel, the appellant, who contested the additions made to his income by the Income Tax Officer, which were upheld by the CIT(A). The additions included Rs.45,12,544 as unexplained cash credits and Rs.2,95,000 as a difference in stamp duty valuation. The appellant argued that the additions were unjustified and violated principles of natural justice, as the evidence provided was not adequately considered. The Tribunal examined the evidence, including ITRs, PANs, bank statements, and sale deeds, and found that the Assessing Officer and CIT(A) had overlooked substantial evidence supporting the appellant's claims.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129323 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 18-04-2023
• Other Referred Cases: C. B. Gautam vs. UOI, 199 ITR 530 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMIR M. VORA
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Rectification of order; Principle of natural justice; Bogus
• Section: 56(2)

Judgement Text

ITA No.253/Ahd/2023 Assessment Year: 2016-17 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.253/Ahd/2023 Assessment Year: 2016-17 Lakhamsibhai Hansrajbhai Patel, 1, Gayatri Park Society, Sanitory Road, Near Sanskrit Pathshala, Petlad – 388 450. [PAN – AAEHP 7309 D] Vs. The Income Tax Officer, Ward – 1(3)(1), Petlad. (Appellant) (Respondent) Assessee by Shri S.N. Divatia, Advocate & Shri Samir M. Vora, Advocate Revenue by Shri Urjit Shah, Sr. DR Da te o f He a r in g 13.09.2023 Da te o f P ro n o u n ce m e n t 18.10.2023 O R D E R This appeal is filed by the Assessee against order dated 24.02.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2016-17. 2. The Assessee has raised the following grounds of appeal :- “1.1 The order passed by u/s.250 on 24.02.2022 by NFAC (CIT(A) Delhi (for short “NFAC (CIT(A)” upholding the additions of Rs.45,12,544/- towards cash credits from friends, relatives etc. and difference in stamp duty valuation of Rs.2,95,000/- is wholly illegal, unlawful and against the principles of natural justice. 1.2 The ld. NFAC (CIT(A) has grievously erred in law and or on facts in not appreciating the explanation/evidence/details failed by the appellant in respect of cash credits & valuation difference so that there was gross violation of principles of natural justice. The NFAC (CIT(A) ought to have passed a speaking & reasoned order. 2.1 The ld. NFAC (CIT(A) has grievously erred in law and or on facts in confirming the additions of Rs.45,12,544/- towards cash credits from friends, relatives etc. and difference in stamp duty valuation of Rs.2,95,000/-. 2.2 That in the facts and circumstances of the ld. NFAC (CIT(A) ought not to have upheld the addition of Rs.45,12,544/-towards cash credits from friends, relatives etc. and difference in stamp duty valuation of Rs.2,95,-000/-. ITA No.253/Ahd/2023 Assessment Year: 2016-17 Page 2 of 4 It is therefore prayed that the additions upheld by the NFAC CIT(A) may kindly be deleted.” 3. The assessee is an individual and derives income from other sources and agricultural income. The assessee filed return of income for A.Y. 2016-17 on 01.03.2017 declaring total income of Rs.1,05,090/-. The case was selected for limited scrutiny on the issue of “large cash deposited in bank account and transfer of properties”. The Assessing Officer observed that the source of investment in properties was loans taken from the family members/relatives aggregating to Rs.45,00,000/-. The Assessing Officer further observed that the assessee purchased two properties for Rs.40,00,000/- and Rs.6,00,000/- whereas its stamp duty valuation were Rs.46,84,494/- and Rs.7,65,300/-, thus, there is difference of Rs.8,49,994/-. The regular assessment was completed u/s.143(3) on 17.12.2018 on the income of Rs.55,12,630/- after making addition of Rs.45,12,544/- as unexplained cash credits and stamp duty difference of Rs.8,94,994/- u/s.56(2)(vii) of the Act. Thereafter, the Assessing Officer passed rectification order u/s.154 of the Act on 01.01.2019 for the reason that the DVO on reference for valuation u/s. 50C r.w.s. 56(2) determined the valuation of the said properties at Rs.41,93,000/- and Rs.7,02,000/- as against Rs.46,84,694/- and Rs. 7,65,300/- so the aggregate difference in valuation came to Rs.2,95,000/- instead of Rs.8,94,994/-. The assessed income was determined at Rs.49,12,640/-. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that as relates to addition of Rs.45,12,544/-, the assessee has given the details of the advances taken from the relatives and the Firm was given before the Assessing Officer which includes the acknowledgment of respective parties’ ITR, confirmation of each party, PAN Card of all the parties, Bank statements of all the parties and therefore, the onus was established as relates to identity, genuineness, creditworthiness of the advances taken from these parties. Most of them are relatives, therefore, the advances were interest free. Besides this, the sale deed with Mr. Arifbhai Vohra, and the amount of Rs.15,00,000/- is also explained as the same is given by him to Karta of HUF and therefore, the same cannot be treated as cash credit u/s.68 of the Act. As relates to addition of Rs.2,95,000/- in respect of valuation of property as per DVO, the Ld. AR submitted that the difference is less than 15% and as per the decision of ITA No.253/Ahd/2023 Assessment Year: 2016-17 Page 3 of 4 Hon’ble Supreme Court in case of C. B. Gautam vs. UOI, 199 ITR 530 (SC), the same should not be taxed. 6. The Ld. DR submitted that the assessee has not proved the creditworthiness and genuineness of the advances taken by the assessee of the parties. Thus, the CIT(A) has rightly confirmed the addition u/s.68 of the Act. As relates to second issue, the difference in stamp duty was validly taken into account by the Assessing Officer vide passing rectification order under Section 154 of the Act. The Ld. DR relied upon the order of the CIT(A), Assessment Order and the Rectification Order. 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has filed the details of ITR, PAN, Bank statement of all the relatives including the confirmation from those parties before the Assessing Officer. From the perusal of records, it can be seen that the creditworthiness, genuineness and identity of all the parties were established by the assessee. The Assessing Officer totally ignored these evidences and the CIT(A) has also not dealt with the same. As regards to advances from Arifbhai Vohra, the Bank trail from the Bank Statement was clearly establishing that but through banking channel and the sale deed also is self explanatory to that effect. These documents were totally ignored by the Assessing Officer as well as the CIT(A). Further no notice u/s.133(6) of the Act was issued by the Assessing Officer to these parties to establish that those parties are bogus. Thus, the addition of Rs.45,12,144/- is not justifiable. As regards to difference in stamp duty valuation that of Rs.2,95,000/-, the same is less than 15 percent, therefore, the contention of the Ld. AR that the same should not be taxed appears to be genuine. Thus, on both the issues, the appeal of the assessee is allowed. 8. In result, appeal of the assessee is allowed. Order pronounced in the open Court on this 18 th October, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 18 th October, 2023 PBN/* ITA No.253/Ahd/2023 Assessment Year: 2016-17 Page 4 of 4 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad