Shri Chandresh Nanubhai Savalia, Ahmedabad V. The Dy.CIT, Central Circle-2(1), Ahmedabad

ITA 2646/AHD/2013

AI Insights

The case involves cross-appeals by the Assessee, Chandresh Nanubhai Savalia, and the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), Ahmedabad, concerning the assessment for the year 2011-2012. The primary issues revolved around the addition of unexplained investments in land and the source of cash found during a search operation. The Assessee argued that the investments were made from disclosed incomes of a partnership firm, M/s Om Corporation, which had already been taxed. The Revenue contended that the Assessee, not being a partner in the firm, could not claim the benefits of the firm's disclosures. The tribunal found merit in the Assessee's arguments regarding the land investments but partly upheld the addition related to the unexplained cash found during the search.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135994 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 02-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 11-11-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEETOMAKETHE
• Assessee Lawyers: SHRIMEHULK.PATEL

Judgement Text

आयकरअपीलीयअधिकरण,अहमदाबादनायपीप INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’B’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And Ms.MADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं./ITANo.2646/AHD/2013 धििाधरणवरध/ Asstt.Year:2011-2012 ChandreshNanubhaiSavalia, 147/3/1Mohannagar-1, Nr.RouteNo.137, BusStop,Bapunagar, Ahmedabad-380024. PAN:AMKPS3011P Vs. D.C.I.T, CentralCircle-2(1), Ahmedabad. And आयकरअपीलसं ./ITANo.2917/AHD/2013 धििाधरणवरध/Asstt.Year:2011-2012 D.C.I.T., CentralCircle-2(1), Ahmedabad. Vs. ChandreshNanubhaiSavalia, 147/3/1Mohannagar-1, Nr.RouteNo.137, BusStop,Bapunagar, Ahmedabad-380024. PAN:AMKPS3011P (Applicant)(Respondent) Assesseeby:ShriMehulK.Patel,A.R Revenueby:ShriSudhenduDas,CIT.D.R सुनवाईकीतारीख /DateofHearing:03/08/2023 घोषणाकीतारीख /DateofPronouncement:30/08/2023 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedcrossappealshavebeenfiledattheinstanceoftheAssessee andtheRevenueagainsttheorderoftheLearnedCommissionerofIncomeTax (Appeals),Ahmedabad,dated23/08/2013arisinginthematterofassessment ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 2 orderpassedunders.143(3)oftheIncomeTaxAct,1961(here-in-afterreferred toas"theAct")relevanttotheAssessmentYear2011-2012. 2.First,wetakeupRevenue’sappealbearingITANo.2917/Ahd/2013forthe purposeofadjudication.TheRevenuehasraisedthefollowinggroundsofappeal: 1.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A),haserredinlawandon factsindeleitingtheadditionmadeonaccountofunexplainedinvestmentof Rs.1,60,37,000/-forpurchaseofland 2.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)haserredinlawandon factsinfixingtheonusonA.Othathehadnotbroughtanymaterialonrecordtoindicate thatundisclosedincomeearnedinthecaseofM/s.OmCorporationwasutilizedsomewhere elseandonthatbasisdeletedtheadditionasaboveinground(1). 3.TheLd.CIT(A)erredindeletingtheadditionmadebytheAOforRs. 1,60,37,000/-representingunexplainedinvestmentinthepurchaseofland. 4.Thefactsinbriefarethattheassesseeinthepresentcaseisanindividual andpartofSavaliaGroup.Therewasasearchandseizureoperationu/s132of theAct,inthegroupcasesofSavaliaincludingresidentialpremisesofthe assesseeason06/01/2011.Theassesseeduringsearchhasmadeadisclosureof Rs.13,63,000/-asundisclosedincomeintheyearunderconsideration.The assesseealsoclaimedtohavemadeinvestmentincashinthelandlocatedat GatradbearingsurveyNo.765and760intheAYs2010-11and2011-12.The investmentincashintheyearunderconsiderationwasofRs.1,74,50,000/-only. OnquestionbytheAOaboutthesourceofcashpaymentintheimpugnedland,it wassubmittedbytheassesseethattheinvestmentintheimpugnedland representstheapplicationofincomedisclosedbythefirmnamelyM/sOm CorporationinitsdifferentassessmentyearsamountingtoRs.4,20,18,620/-only. TheamountofdisclosurebythefirmintheyearunderconsiderationwasatRs. 2,12,54,802/-only. ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 3 4.1However,theAOfoundthattheassesseeisnotapartnerinthepartnership firmnamelyOmCorporationandthereforehewasoftheviewthattheassessee cannottakethebenefitofthedisclosuremadebythepartnershipfirm.According totheAO,thedisclosuremadebythefirmdoesnotbelongtotheassessee. However,theAOhasgivenbenefitofthedisclosuremadeofRs.13,63,000/- againsttheundisclosedinvestmentofRs.1,74,00,000/-onlyintheyearunder consideration.AspertheAO,effectively,thesumofRs.1,60,37,000/-represents theundisclosedinvestmentoftheassessee.Accordingly,theAOaddedthesame tothetotalincomeoftheassessee. 5.AggrievedassesseepreferredanappealtotheLd.CIT(A). 6.TheassesseebeforetheLd.CIT(A)submittedthatallthefinancial transactionsofthepartnershipfirmnamelyOmCorporationaremanagedbyhim whichisevidentfromtheseizedmaterialsbeingcashbookofthefirmwrittenby himself.Theassesseealsosubmittedthatthecashbelongingtothefirmwasalso foundfromhispossession.Accordingly,theassesseecontendedthatthe investmenthasbeenmadebyhimoutofthedisclosuremadebythepartnership firmwhichhasalreadysufferedtotax. 7.TheLd.CIT(A),afterconsideringtheAssessmentOrderandsubmissionof theassesseedeletedtheadditionmadebytheAObyobservingasunder: 10.Themainargumentoftheappellantisthatdisclosureofadditionalincomewasmade in.thecaseofM/s.OmCorporationandtheamountspentbyhimonpurchaseoflandis applicationofthesameincome.AOrejectedthisclaimofappellantonthegroundthat appellantisnotapartnerinM/s.OmCorporation.Fromperusalofrecordsitisfoundthat duringthecourseofsearchitselfitwasstatedbyShriJagdishSavaliawhoisbrotherof appellantandapartnerinthefirmM/s.OmCorporationthattheday-to-dayaffairsofthe firmwerebeinghandledbytheappellant.TheappellantandShriJagdish Savaliavidetheirsubmissiondated2/2/2011declaredanamountofRs.5croreas undisclosedincome.Subsequentlyvideletterdated1/4/2011theyalsofurnished bifurcationoftheundisclosedincome. 11.FromtheperusalofrecordsitisalsofoundthatinthecaseoffirmM/s.Om Corporationreturnswerefileddeclaringincomeforvariousyearsasfollows.Assessment wasalsocompletedbyAOforallthethreeyearsinthecaseoffirmbyassessingthe incomedeclared. M/s.OmCorporation ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 4 A.Y. 2009-10 2010-11 2011-12 Returnedincome Rs.8,38,000/- Rs.1,99,25,800/- Rs.2.12.54,8207- Rs.4,20,18,620/- AssessedIncome Rs.8,38,000/-Rs. 1,99,25,8007- Rs.2,12,54,820/- AOhasnotbroughtanymaterialonrecordwhichindicatesthatundisclosedincomeearned inthecaseofM/s.OmCorporationwasutilisedformakinganyotherinvestmentorwas spentforanyotherpurpose.InsuchasituationAOisnotjustifiedinrejectingtheclaimof appellantthatamountinvestedinGatradlandbyappellantis_applicationoftheincomeof thefirm. t Asmentionedearlier,ShriJagdishSavaliawhoisbrotherofappellant,isa partnerinM/s.OmCorporationandtheday-to-dayaffairsofthefirmwerebeinglooked afterbytheappellant.Thisisalsoprovedbythefactthatduringthecourseofsearchcash ofRs.4,41,000/-belongingtoOMCorporationwasfoundandseizedfromtheresidenceof appellant.ThiscontentionofappellanthasbeenalsoacceptedbyAOintheassessment orderofappellantforA.Y.2011-12.Thereforeitcanbereasonablyheldthat undisclosedincomeearnedinthecaseofthefirmwaspartlyusedformakinginvestment inlandbytheappellant.KeepingallthesefactsinviewIholdthatthereisnojustification foradditionofRs.1,60,37,000/-inthecaseofappellantandsameisdirectedlobe deleted.GroundNo,2oftheappealisthusallowed. 8.BeingaggrievedbytheorderoftheLd.CIT(A),therevenueisinappeal beforeus. 9.TheLd.DRbeforeuscontendedthattheassesseeisnotapartnerinthe partnershipfirmnamelyOmCorporationandthereforethebenefitofthe disclosuremadebythefirmcannotbeextendedtotheassessee.TheLd.DR vehementlysupportedtheorderoftheAO. 10.Onthecontrary,theLd.ARbeforeusfiledapaperbookrunningfrom pages1to73andalsofiledacopyoftheITR,financialstatementandledgercopy oftheassesseeinthebooksofaccountsofOmCorporationonthedirectionofthe Benchtodemonstratethattheincomedisclosedbythepartnershipfirmhasbeen shownasanadvancetotheassesseewhichisevidentfromthebalancesheetof OmCorporationdated31/03/2011.TheLd.ARalsodrawnourattentiononthe disclosuremadebytheassesseeonbehalfofthefirmalongwiththeotherpartner ofthefirmvideletterdated02/04/2011,placedonpages7to10ofthepaper bookwhichwasdulysignedbytheassesseealongwiththeotherpartner.Inthe ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 5 disclosure,theincomewasdisclosedbythefirmfordifferentyearsincludingthe yearunderconsiderationforanamountofRs.2,03,41,000/-only.AspertheLd. AR,therewasnodoubtraisedbytherevenueonthedisclosuremadebythe assesseeonbehalfofthefirmalongwiththeotherpartner.Thedisclosure petitionofthefirmwasdulysignedbytheassesseealongwiththeotherpartners. Accordingly,theLd.ARcontendedthattheinvestmentshownbytheassessee representtheapplicationofincomedisclosedbythefirmwhichhasalreadybeen sufferedtotaxandthereforethesamecannotbemadesubjecttotaxinthe handsoftheassessee.TheLd.ARvehementlysupportedtheorderoftheLd. CIT(A). 11.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Thereisnoambiguitytothefactthatthecashbook belongingtothepartnershipfirmwasrecoveredfromthepossessionofthe assessee.Likewise,thecashbookofthepartnershipwasalsowrittenbythe assesseehimself.Thisfactcanbeverifiedfromthesubmissionmadebythe assesseewhichisreproducedasunder: Yourappellanthasfurthertosubmitthatallthefinancialtransactionofhimself andOmcorporationaremadeandmanagedbyhimwhichisevidentfromtheseized materials.AnnexureA-1Rojmel(cashbook)ofM/s.OMCorporationetc.Writtenbythe appellanthimself.Hence,yourappeallanthadfiledareplydated13.02.2013whichis reproducedasunder:hecopyofletterdatd13.02.2013isenclosedasperAnnexure-3. 11.1TheabovesubmissionoftheassesseewasadmittedbytheLd.CIT(A),and Ld.DRhasnotbroughtanythingcontrarytothesame.Besidestheabove,itis alsoseenthatthebrotheroftheassesseeShriJagdishSavaliaisapartnerinthe firm.ShriJagdishSavaliainhisstatementhasalsosubmittedthattheday-to-day affairsofthefirmwaslookedafterbytheassesseewhichisevidentfromthe findingoftheLd.CIT(A),whichisreproducedabove.Thus,beingaclosenexus betweentheassesseeandthefirm,thecontentionraisedbytheassesseecannot berejectedwithoutanystrongreason.Assuch,theonusshifteduponthe revenuetoprovethatthecontentionoftheassesseeiswrong,andtheincome ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 6 disclosedbythepartnershipfirmhasbeenusedforsomeotherpurposebutwhat wefindthatnosuchdetailisforthcomingfromtheotheroftheauthoritybelow. 11.2Inadditiontotheabove,wealsonotethattheassesseealongwithother partnershasmadedisclosureoftheincomeofthefirminpursuancetothesearch undersection132oftheAct,videletterdated02/04/2011,whichisavailableon pages1to10ofthepaperbook.Hadtherebeennonexusbetweentheassessee andOmCorporation,therewasnooccasionfortheassesseetomakethe disclosurealongwiththeotherpartnerunderhissignatureonbehalfofthefirm. Thus,insuchfactandcircumstancesthecontentionoftheassesseecannotbe rejected. 11.3Itisequallyimportanttonotethattherewasnoinformationavailableon recordabouttheutilizationofthemoneydisclosedbythepartnershipasincome excepttheinvestmentmadebytheassesseewhichisalsoevidentfromthe financialstatementofOmCorporationintheyearending31/03/2011.Assuch,we haveperusedthefinancialstatementofOMCorporationfortheyearendingason 31/03/2011,wenotethattheM/sOmCorporationhasshownanadvanceforthe sumofRs.4,12,70,630/-whichmakesabundantlyclearthatthedisclosuremade bythefirmhasbeenutilizedintheinvestmentoflandasdiscussedabove. Accordingly,wedonotfindanyinfirmityinthefindingoftheLd.CIT(A).Hence, thegroundofappealoftheRevenueisherebydismissed. 11.4Intheresult,theappealoftheRevenueisherebydismissed. ComingtotheITANo.2646/Ahd/2013forAY2011-12,anappealbythe assesses. 12.TheonlyissueraisedbytheassesseeisthattheLd.CIT(A),erredin confirmingadditionofRs.5,20,351/-onaccountofcashfoundduringthesearch operation. ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 7 13.TheAOduringtheassessmentproceedingsfoundthattherewascash foundofRs.5.20lacsasonthedateofsearch,thesourceofwhichwasexplained bytheassesseeoutoftheagriculture.Theassesseehasalsosubmittedthe agriculturebillsinsupportofhisclaim.However,theAOfoundthattheagriculture billswerenotpertainingtotheperiodindisputeandthereforehetreatedthe sameasundisclosedincomeoftheassessee. 14.Onappeal,theLd.CIT(A)alsoconfirmedtheorderoftheAObyobserving asunder: AppellanthadmadeonlyageneralclaimthatsumofRs.5,20,000/-representshis agriculturalincome.However,noevidenceinsupportofthisclaimhasbeenfiledeither beforeAOoftheundersigned.Certainbillsforsaleofagriculturalproductswerefiled beforeAO,butasmentionedbytheAOintheassessmentorder,theypertaintothe subsequentperiod.Itherefore,holdthatappellanthasfailedtosatisfactorilyexplain sourceofcashofRs.5,20,351/-AdditionofRs.5,20,351/-isjustifiedinsuchasituationand thesameisconfirmed.Groundno.1oftheappealisthusdismissed. 15.BeingaggrievedbytheorderoftheLd.CIT(A),theassesseeisinappeal beforeus. 16.TheLd.ARbeforeuscontendedthattheassesseehasbeenshowing incomefromtheagricultureactivitiesforthelastmanyyears.TheLd.ARhasalso filedthecopyofthecomputationofincomefortheAY2010-11,whereinthe incomefromagriculturalactivitiesforRs.1,24,800/-wasdisclosed.Accordingly, theLd.ARcontendedthatnoadditioniswarrantedonaccountofcashfound duringthesearchproceedings. 17.Onotherhand,theLd.DRvehementlysupportedtheorderofthe authoritiesbelow. 18.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,itistheonusupontheassesseeto ITAnos.2646&2917/AHD/2013 Asstt.Year2011-12 8 justifyhisstandbasedonthedocumentaryevidencethathehasearned agricultureincomeintheyearunderconsideration.Indeed,theassesseefailedto dischargetheonuscastuponhimbasedonthedocuments.However,becausethe assesseeintheearlierAYhasdisclosedtheagriculturalincome,thepossibilityof havingagricultureincomeintheyearunderconsiderationcannotberuledout. Therefore,intheinterestofjusticeandfairplayandtoputanendtotheongoing dispute,weareoftheviewthatjusticewillbeservedtotheassesseeandthe revenueif50%oftheallegeagricultureincomeistreatedasincomefromthe agricultureactivity.Accordingly,wedirecttheAOtorestricttheadditiontoRs. 2,60,000/-being50%ofagricultureasincomefromundisclosedsources.Hence, thegroundofappealoftheassesseeisherebypartlyallowed. 18.1Intheresult,theappealoftheassesseeisherebypartlyallowed. 19.Inthecombinedresults,theappealoftheRevenuebearingITANo. 2917/Ahd/2013forAY2011-12isdismissedwhereastheappealoftheAssessee bearingITANo.2646/Ahd/2013forA.Y.2011-12ispartlyallowed. OrderpronouncedintheCourton30/08/2023atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated30/08/2023 Manish