Shri Dhanesh P.Soni, Ahmedabad V. The Income tax Officer,Ward-3(2), Ahmedabad

ITA 2754/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8334 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.2754/AHD/2013 / ASSTT. YEAR: 2009-10 DHANESH P. SONI PROP. DEVSATYA CORPORATION 2296/2, MANEK CHOWK AHMEDABAD 380 001. PAN : ADIPS 1555 M ITO, WARD - 3(2) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : SHRI K. MADHUSUDAN, SR.DR / DATE OF HEARING : 12/09/2017 / DATE OF PRONOUNCEMENT: 09/10/2017 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL AGAINST ORDER OF LD.CIT(A)-VI , AHMEDABAD DATED 30.9.2013 PASSED FOR THE ASSTT.YEAR 2009-10. 2. ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL ALONG WITH SUB-GROUNDS. HOWEVER, GROUNDS NO.1 AND 4 INCLUDING SUB-GROUNDS A RE GENERAL GROUNDS OF APPEAL, WHICH DO NOT CALL FOR RECORDING OF ANY SPEC IFIC FINDING, HENCE REJECTED. 3. IN GROUND NO.2, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.11.00 LAKHS WHICH WAS ADD ED BY THE AO WITH THE AID OF SECTION 68 OF THE INCOME TAX ACT, 1961. ITA NO.2754/AHD/2013 2 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AT THE RELEVANT TIME WAS RUNNING PROPRIETORSHIP CONCERN IN THE NAME AND STYL E OF DEV SATYA CORPORATION. HE HAS FILED HIS RETURN OF INCOME ON 20.9.2009 THROUGH ELECTRONIC MEDIA DECLARING TOTAL INCOME AT NIL. TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER S ECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE A CCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS TAKEN CASH LOAN OF RS.11 L AKHS FROM JAYABEN BALKRISHNA OZA. HE DIRECTED THE ASSESSEE TO PROVE GENUINENESS AND CREDIT WORTHINESS OF THE TRANSACTION. THE ASSESSEE FAILED TO PROVE INGREDIENTS OF SECTION 68 OF THE ACT. ACCORDINGLY, THE AO HAS MAD E ADDITION. ON APPEAL, THE LD.CIT(A) HAS CONFIRMED THE ADDITION BY OBSERVI NG AS UNDER: 4.4. HAVING CONSIDERED THE FACTS OF THE ISSUE, I A M NOT INCLINED TO ACCEPT THE CONTENTIONS OF THE APPELLANT. AS SEEN FR OM THE AGREEMENT OF SALE DATED 28.08.2008 APPELLANT WAS SUPPOSED TO HAV E RECEIVED RS.11,00,000/-, BEING PART OF THE SALE CONSIDERATIO N OF RS.18,00,000/-, ON THE SAME DATE IN CASH. THE SAID AMOUNT OF RS.11, 00,000/- WAS FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. AS STATED BY THE A.O IN THE ASSESSMENT ORDER THE CREDITWORTHINESS OF SMT .JAYABEN WAS NOT ESTABLISHED. APPELLANT FAILED TO FURNISH EITHER THE PAN OR THE INCOME- TAX PARTICULARS OF SMT. JAYABEN. HE FAILED TO PRODU CE THE LEGAL HEIR OF SMT. JAYABEN BEFORE THE A.O, IN SPITE OF BEING SPEC IFICALLY ASKED TO. APPARENTLY, THE SALE OF THE PROPERTY AT SHEFALI APP ARTMENT WAS NOT EFFECTED LATER, LEADING TO THE SUSPICION REGARDING THE GENUINENESS OF THE AGREEMENT OF SALE. APPELLANT HAD NOT DEMONSTRATED T HE REPAYMENT OF RS. 11,00,000/- TO SMT. JAYABEN, CONSEQUENT ON THE SALE BEING ABORTED. AS SEEN FROM THE AFFIDAVIT OF SHRI VINODBHAI D. SON I DATED 22.12.2008 (REFERRED TO IN THE WRITTEN SUBMISSION REPRODUCED A BOVE), APPELLANT IN TURN WAS SUPPOSED TO HAVE LENT THE MONEY OF RS.11,0 0,000/- TO SHRI VINODBHAI D. SONI. THE DATE OF LENDING IS NOT MENTI ONED IN THE AFFIDAVIT. HAVING CONSIDERED ALL THESE FACTS, I UPH OLD THE FINDING OF THE A.O. THAT THE APPELLANT FAILED TO ESTABLISH THE CRE DITWORTHINESS OF SMT. JAYABEN AND THE GENUINENESS OF THE TRANSACTION OF S ALE OF IMMOVABLE PROPERTY (AND THE PURSUANT RECEIPT OF CASH OF RS.11 ,00,000/- FROM HER TOWARDS PART OF SALE CONSIDERATION). ITA NO.2754/AHD/2013 3 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESS EE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFERED BY THE A SSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN THE SUM SO CREDITED IN THE ACCOUNTS MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 6. A PERUSAL OF RECORD WOULD SHOW THAT THE ASSESSEE MISERABLY FAILED TO SUBMIT ANY DETAILS WITH RESPECT TO RS.11 LAKHS RECE IVED FROM JAYABEN BALKRISHNA OZA. THE ASSESSEE HAD DEVELOPED A STORY THAT THIS AMOUNT WAS TAKEN AS AN ADVANCE FOR SALE OF FLAT AT SHEFALI APA RTMENT, BUT HE FAILED TO DEMONSTRATE EXECUTION OF ANY SALE DEED TO LEGAL HEI RS OF JAYABEN BALKRISHNA OZA. HE FAILED TO DEMONSTRATE REFUND OF THIS AMOUN T TO L/R OF SMT. JYABABEN BALKRISHNA OZA. THE LD.CIT(A) HAS CONSIDERED ALL T HESE ASPECTS IN THE FINDING EXTRACTED SUPRA. AFTER GOING THROUGH WELL REASONED FINDING OF THE LD.CIT(A) WE DO NOT SEE ANY ERROR IN IT. ACCORDINGLY, THIS G ROUND OF APPEAL IS REJECTED. 7. IN GROUND NO.3, GRIEVANCE OF THE ASSESSEE IS THA T THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION AT RS.62,34,953/ WHICH WAS A DDED BY THE AO ON ACCOUNT SHORT TERM CAPITAL GAIN ACCRUED TO THE ASSE SSEE ON SALE OF A LAND. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S PURCHASED A PLOT COMPRISED IN FINAL PLOT NO.19/1 SITUATED AT VADODRA FROM KIRTI DEVELOPER FOR A CONSIDERATION OF RS.62,35 LAKHS. AN AGREEMENT TO PURCHASE WAS EXECUTED ON 7.5.2008. IT EMERGES OUT FROM THE RECORD THAT T HIS PLOT WAS FINALLY SOLD TO M/S.RAJESHWAR CORPAOTION FOR A CONSIDERATION OF RS. 1,24,70,000/- ON 31.7.2008. THE CASE OF THE AO IS THAT AT THE TIME OF EXECUTION OF AGREEMENT ITA NO.2754/AHD/2013 4 TO PURCHASE, THE ASSESSEE HAS OBTAINED POSSESSION W HICH WAS HANDED OVER TO M/S.RAJESHWAR CORPORATION ON 31.7.2008, WHEN THE AG REEMENT TO SELL WAS EXECUTED. ON THE OTHER HAND, THE CASE OF THE ASSES SEE IS THAT POSSESSION WAS HANDED OVER IN THE SUBSEQUENT ASSESSMENT YEAR. CAP ITAL GAIN WAS ARISEN IN THE ASSTT.YEAR 2010-11 AND THE ASSESSEE HAS DULY OFFERE D THE AMOUNT FOR TAXATION. THE AO REJECTED THIS CONTENTION OF THE ASSESSEE AND ASSESSED SHORT-TERM CAPITAL GAIN IN THE ASSTT.YEAR 2009-10. THE APPEAL TO THE LD.CI(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 9. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT A MEMORANDUM OF UNDERSTANDING WAS EXECUTED BETWEEN RE PRESENTATIVES OF RAJESHWAR CORPORATION AND THE ASSESSEE ON 27.12.200 9. ACCORDING TO THIS MOU PAYMENTS HAVE BEEN MADE TO THE ASSESSEE ON 1.4. 2008, 13.8.2008, 9.6.2009, 25.6.2009 AND 27.9.2009. THE SALE DEED W AS EXECUTED SUBSEQUENTLY. THE ASSESSEE WAS A CONFIRMING PARTY AND POSSESSION WAS HANDED OVER THROUGH MOU. THUS, ACCORDING TO THE AS SESSEE POSSESSION WAS HANDED OVER IN THE ACCOUNTING YEAR RELEVANT TO THE ASSTT.YEAR 2010-11. THE LD.COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSEE OFFERED THE AMOUNT FOR TAXATION IN THE SUBSEQUENT YEAR. 10. ON THE OTHER HAND, THE LD.DR RELIED UPON ORDER OF THE AO. HE POINTED OUT THAT DEAL WAS FINALIZED IN THE ACCOUNTING PERIO D RELEVANT TO THE ASSTT.YEAR 2009-10 AND SHORT TERM CAPITAL GAIN DESERVES TO BE ASSESSED IN THIS ASSESSMENT YEAR. 11. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. AS FAR AS ASSESSMENT OF RS.62.35 LAKHS AS SHORT TERM CAPITAL GAIN IS CONCERNED, THERE IS NO DISPUTE BETWEEN THE PARTIES. THE CAPITAL GAIN HAS ARISEN ITA NO.2754/AHD/2013 5 TO THE ASSESSEE AND IT HAS TO BE ASSESSED IN HIS HA ND. THE DISPUTE IS ABOUT THE YEAR OF TAXABILITY. ACCORDING TO THE ASSESSEE, IT IS TAXABLE IN THE ASSTT.YEAR 2010-11 WHEREAS THE ACCORDING TO THE REVENUE IT IS TAXABLE IN THE ASSTT.YEAR 2009-10. AS FAR AS RATES OF TAXABILITY IS CONCERNE D, THERE IS NO DISPUTE BETWEEN THE PARTIES. THE RATE OF SHORT-TERM CAPITA L GAIN IS BEING ASSESSED AT THE SAME RATE OF TAX IN BOTH THESE YEARS. IT IS AL SO PERTINENT TO OBSERVE THAT NEITHER IN THIS YEAR NOR IN SUBSEQUENT ASSESSMENT Y EARS, THERE IS ANY CAPITAL LOSS AGAINST WHICH THIS GAIN CAN BE SET OFF. AFTER MAKING THIS ANALYSIS WE CONFRONTED THE LD.COUNSEL FOR THE ASSESSEE TO DEMON STRATE HOW THIS GAIN HAS BEEN OFFERED IN THE ASSTT.YEAR 2010-11. THE ASSESS EES PLEA BEFORE THE LD.CIT(A) WAS, THAT HE HAD CONVERTED THIS LAND AS S TOCK-IN-TRADE AND THEREAFTER SOLD IT. THE AMOUNT WAS CREDITED IN THE PROFIT & L OSS ACCOUNT, AND IT HAS BEEN OFFERED AS BUSINESS PROFIT. WE HAVE EXAMINED THE C OMPUTATION OF INCOME SUBMITTED BY THE ASSESSEE FOR THE ASSTT.YEAR 2010-1 1, AND OTHER DETAILS. IT IS PERTINENT TO OBSERVE THAT THE ASSESSEE HAS NOT ACQU IRED ABSOLUTE RIGHT IN THE PROPERTY. HE HAS ACQUIRED ONLY RIGHT TO OBTAIN SA LE DEED, BY VIRTUE OF AGREEMENT DATED 7.5.2008. HE HAS SIGNED SUBSEQUENT SALE DEED IN FAVOUR OF RAJESHWAR CORPORATION AS A CONFIRMING PARTY. ORIGI NAL OWNER HAS SIGNED THE SALE DEED IN THE CAPACITY AS VENDOR. IN THIS SITUA TION, HOW THE ASSESSEE CAN CONVERT THIS RIGHT AS STOCK-IN-TRADE. APART FROM T HE ABOVE, WHEN THIS RIGHT IS TO BE CONVERTED IN STOCK IN TRADE, THEN IN SUCH CON VERSION ANY GAIN ARISEN TO THE ASSESSEE OUGHT TO BE OFFERED AS A CAPITAL GAIN. NO SUCH EXERCISE HAS BEEN DONE BY THE ASSESSEE. HE HAS NOT COMPUTED CONVERSI ON GAIN AND OFFERED FOR IT TAXATION IN THE YEAR 2010-11. WE FURTHER FIND THAT THE ASSESSEE HAS PLAYED A FRAUD ON THE REVENUE BY TAKING A PLEA THAT HE HAS O FFERED THIS AMOUNT FOR TAX IN SUBSEQUENT YEAR. IN FACT, HE HAS ACTUALLY NOT C ONVERTED THE LAND IN STOCK-IN- TRADE, BUT IN THE COMPUTATION OF INCOME, CONSIDERED IT AS A BUSINESS PROFIT. ITA NO.2754/AHD/2013 6 THE ULTIMATE INCOME OFFERED BY THE ASSESSEE IN SUBS EQUENT YEAR IS VERY A NEGLIGIBLE INCOME. COPY OF THE ACKNOWLEDGEMENT FOR THE ASSTT.YEAR 2010-11 IS PLACED ON PAGE NO.199. THE TAX SHOWN AS PAYABLE IS OF RS.1,17,172/- . THE ASSESSEE HAS SHOWN INCOME AT RS.6,63,825/- FROM BUS INESS & PROFESSION. ALL THESE DETAILS WOULD INDICATE THAT THE ASSESSEE HAS NOT GIVEN EFFECT TO THIS TRANSACTION IN TRUE SENSE. WHEN WE CONFRONTED THIS ASPECT TO THE LD.COUNSEL FOR THE ASSESSEE, THEN HE CONCEDED THAT THIS AMOUNT IS TAXABLE IN THE ASSTT.YEAR 2010-11 AND NECESSARY DIRECTION BE ISSUE D AS CONTEMPLATED IN SECTION 153(6) R.W. EXPLANATION 2(A) OF THE INCOME TAX ACT, 1961. IN ORDER TO APPRECIATE THE DETAILS IN MORE SCIENTIFIC WAY, W E DEEM IT APPROPRIATE TO TAKE NOTE OF SUB-SECTION (6) AND EXPLANATION 2(A) OF SECTION 153. THEY READ AS UNDER: SECTION 153 6) NOTHING CONTAINED IN SUB-SECTIONS (1) AND (2) SH ALL APPLY TO THE FOLLOWING CLASSES OF ASSESSMENTS, REASSESSMENTS AND RECOMPUTATION WHICH MAY, SUBJECT TO THE PROVISIONS OF SUB-SECTIONS (3) AND (5), BE COMPLETED (I) WHERE THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION IS MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER UNDER SE CTION 250, SECTION 254, SECTION 260, SECTION 262, SECTION 263, OR SECT ION 264 OR IN AN ORDER OF ANY COURT IN A PROCEEDING OTHERWISE THAN B Y WAY OF APPEAL OR REFERENCE UNDER THIS ACT, ON OR BEFORE T HE EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH SUCH ORDER IS RE CEIVED OR PASSED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER, AS T HE CASE MAY BE; OR (II) WHERE, IN THE CASE OF A FIRM, AN ASSESSMENT IS MADE ON A PARTNER OF THE FIRM IN CON SEQUENCE OF AN ASSESSMENT MADE ON THE FIRM UNDER SE CTION 147, ON OR BEFORE THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE ASSESSMENT ORDER IN THE CASE OF THE FIRM IS PASSED. . ITA NO.2754/AHD/2013 7 . EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, WH ERE, BY AN ORDER REFERRED TO IN CLAUSE (I) OF SUB-SECTION (6), (A) ANY INCOME IS EXCLUDED FROM THE TOTAL INCOME OF THE ASSESSEE FOR AN ASSESSMENT YEAR, THEN, AN ASSESSMENT OF SUCH INC OME FOR ANOTHER ASSESSMENT YEAR SHALL, FOR THE PURPOSES OF SECTION 1 50 AND THIS SECTION, BE DEEMED TO BE ONE MADE IN CONSEQUEN CE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED I N THE SAID ORDER; OR 12. AS OBSERVED EARLIER, THE ASSESSEE DID NOT DISPU TE ABOUT TAXABILITY OF SHORT TERM CAPITAL GAIN. HE HAS DISPUTED THE YEAR OF TAXABILITY. WE FIND THAT THIS AMOUNT OF RS.62.35 LAKHS IS TAXABLE IN THE HAN DS OF THE ASSESSEE. IT IS ALSO PERTINENT TO OBSERVE THAT IT IS TAXABLE IN THE ASST T.YEAR 2010-11. THE ASSESSEE HAS TRIED TO WITHHOLD INFORMATION ABOUT TAXABILITY OF THIS AMOUNT IN THE ASSTT.YEAR 2010-11 BY OFFERING THIS AMOUNT AS BUSIN ESS PROFIT, WHICH IS NOT APPRECIABLE STEP AT THE END OF THE ASSESSEE. CONSI DERING THESE DETAILS AND EXERCISING POWER CONTEMPLATED UNDER SECTION 153(6)( I) R.W. EXPLANATION 2(A) OF THE INCOME TAX ACT, 1961, WE DIRECT THE AO TO AS SESS SHORT TERM CAPITAL GAIN AT RS.62,34,953/- IN THE ASSTT.YEAR 2010-11. WITH THE ABOVE DIRECTIONS, WE REJECT THIS GROUND OF APPEAL OF THE ASSESSEE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH OCTOBER, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 09/10/2017