Akshar Infrastructure Pvt.Ltd., Surat V. The Jt.CIT.,Range-1, Surat

ITA 3230/AHD/2009

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0866 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 02-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SETH
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Valuation report
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 3230/AHD/2009 (ASSESSMENT YEAR: 2005-06) M/S. AKSHAR INFRASTRUCTURE PVT. LTD. ASHWIN PAREKH & CO. 410, KASHI PLAZZA, MAJURA GDATE, SURAT V/S THE JT. CIT, RANGE-1, SURAT (APPELLANT) (RESPONDENT) PAN: AAECA7435J APPELLANT BY : SHRI SAPNESH SETH, AR RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 13 -07-201 6 DATE OF PRONOUNCEMENT : 19 -07-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, SURAT DATED 17.11.2009 PERTAINING TO A.Y. 2005-06. 2. THE GRIEVANCE OF THE ASSESSEE READ AS UNDER:- ITA NO. 3230 /AHD/2009 . A.Y. 2005-06 2 1. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 35,00,000/- U/S. 69B OF THE ACT FOR COST OF PURCHASE OF PROPERTY ON THE BASIS OF REPORT OF DVO AND VALUATIO N BY STAMP DUTY VALUATION AUTHORITY WITHOUT APPRECIATING THE FACTS OF RS. 35, 00,000/- PAID FOR TERMINATION OF TENANCY RIGHTS TO TENANTS CAPITALIZED AS COST OF PROPERTY A ND NOT CLAIMED AS EXPENDITURE. THE ADDITION OF RS. 35,00,000/-SHOULD BE DELETED. 2. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN RELATING ON REPORT OF DVO U/S. 142A OF THE ACT REFERRED BY CIT(A) AND ASSESSING OFFICER WITHOUT REJECTING THE BOOKS OF ACCOUNTS U/S. 145(3) OF THE ACT. THE REPORT OF DVO BE HELD AS INVALID AND AB-INITIO VOID. 3. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 23,11,962/- MADE BY ASSESSING OFFIC ER U/S. 68 OF THE ACT DISREGARDING THE EVIDENCES OF IDENTITY OF DEPOSITOR S, GENUINENESS OF TRANSACTIONS AND CAPACITY OF 3 DIRECTORS TO ADVANCE LOAN TO APPE LLANT COMPANY OUT OF WITHDRAWALS FROM FIRM IN WHICH 3 DIRECTORS ARE PART NERS. THE ADDITION OF RS. 23,11,962/-SHOULD BE DELETED. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS PURCHASED A PIECE OF LAND MEASURING 4406.14 SQ. MT. IN KATARGAM AREA OF SURAT CITY FOR RS. 78 LACS. THE A.O. FURTHER FOUND THAT THE ASSESSEE HAS CLAIMED PA YMENT FOR VACATING OF TENANCY RIGHT OF RS. 35 LACS. THE A.O. MADE AN I NQUIRY FROM THE OFFICE OF THE ADDITIONAL STAMP COLLECTOR, NANPURA, SURAT AND FROM THE DY. COLLECTOR, STAMP DUTY VALUATION OFFICER, SURAT WHO INFORMED THAT THE VALUATION OF LAND WAS MADE BY HIS OFFICE FOR RS . 1,85,05,800/-. TAKING A LEAF OUT OF THIS THE A.O. MADE AN ADDITION OF RS. 1,07,05,800. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) DELET ED THE ADDITION OF RS. 1,07,05,800/-. DRAWING SUPPORT FROM THE DECISIO N OF THE TRIBUNAL ITA NO. 3230 /AHD/2009 . A.Y. 2005-06 3 GIVEN IN THE CASE OF SHRI BHARATKUMAR N. PATEL IN I TA NO. 1749/AHD/2008 AND SHRI BALKISHAN PODDAR, IN ITA NOS . 3412, 3413 & 3414/AHD/2008 WHEREIN THE CO-ORDINATE BENCH HAS HEL D THAT NO ADDITION CAN BE SUSTAINED BASED ON EITHER STAMP DUT Y VALUATION OR THE VALUATION REPORT OF THE DVO. HOWEVER, THE LD. CIT(A ) MADE AN ADDITION OF RS. 35 LACS WHICH WAS PAID BY THE ASSESSEE FOR V ACATING THE TENANCY RIGHTS. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HA S BEEN STATED BEFORE THE LOWER AUTHORITIES, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. AND THE ADDITION MADE BY THE L D. CIT(A). 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. THE UNDISPUTED FACT IS THAT THE ASSESSEE PURCHASED THE IMPUGNED LAND FOR A CONSIDERATION OF RS. 78 LACS. IT IS ALSO AN UNDIS PUTED FACT THAT THE SAID PIECE OF LAND WAS VALUED BY THE STAMP COLLECTI NG AUTHORITIES AT RS. 1,85,05,800/- EXCEPT FOR THIS, THERE IS NO CORR OBORATING EVIDENCE BROUGHT ON RECORD WHICH COULD SUGGEST THAT THE ASSE SSEE HAS MADE PAYMENTS OVER AND ABOVE RS. 78 LAKS. THE ONLY BASIS OF THE ADDITION MADE BY THE A.O IS THE DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND THE ACTUAL CONSIDERATION PAID BY THE ASSESSEE. SINC E, NO COGENT MATERIAL EVIDENCES OTHER THAN THE STAMP DUTY VALUAT ION IS BROUGHT ON RECORD BY THE A.O AND SINCE THE CO-ORDINATE BENCHES OF THE TRIBUNAL (SUPRA) HAS DECIDED SUCH ISSUES IN FAVOUR OF THE AS SESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE SAME, WE CO NFIRM THE FINDINGS OF THE LD. CIT(A). ITA NO. 3230 /AHD/2009 . A.Y. 2005-06 4 8. INSOFAR AS THE ADDITION MADE BY THE LD. CIT(A) AMOU NTING TO RS. 35 LAKS IS CONCERNED, WE FIND THAT IT IS A CASE OF ENH ANCEMENT OF THE ASSESSMENT. THERE IS NO DISPUTE THAT THE POWERS OF THE FIRST APPELLATE AUTHORITY ARE CO-TERMINUS TO THAT OF THE A.O. AND THE FIRST APPELLATE AUTHORITY HAS ALSO THE POWERS OF ENHANCEMENT BUT NO ENHANCEMENT CAN BE MADE BY THE LD. CIT(A) WITHOUT NOTICE. A PER USAL OF THE ORDER OF THE FIRST APPELLATE AUTHORITY SHOWS THAT THE ENHANC EMENT HAS BEEN MADE WITHOUT NOTICE, THIS IS IN GROSS VIOLATION OF THE PROVISIONS OF SECTION 251(2) OF THE ACT THEREBY FLAUNTING THE PRI NCIPLES OF NATURAL JUSTICE. SINCE, THE ADDITION MADE BY THE LD. CIT(A) IS IN VIOLATION TO THE PROVISIONS OF THE ACT AND THE PRINCIPLES OF NATURAL JUSTICE, SUCH ADDITION CANNOT BE SUSTAINED. WE, ACCORDINGLY, DIRECT THE A. O. TO DELETE THE ADDITION OF RS. 35 LACS MADE BY THE LD. CIT(A); GRO UND NOS. 1 & 2 ARE ACCORDINGLY ALLOWED. 9. THE SECOND GRIEVANCE RELATES TO THE ADDITION OF RS. 23,11,962/- MADE BY THE A.O. U/S. 68 OF THE ACT. 10. WHILE SCRUTINIZING THE BALANCE SHEET OF THE ASSESSE E, THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN UNSECURED LOANS IN THE NAME OF FOLLOWING PERSONS. (I ) SHRI BHARATBHAI D. PATEL RS. 85,15,000/- (II) SHRI NITINBHAI D. PATEL RS. 19,68,000/- (III) SHRI DAYAWRAMBHAI K. PATEL RS. 15,24,000/- 11. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE TRANSACTION IN THE LIGHT OF THE PROVISIONS OF SECTI ON 68 OF THE ACT. ASSESSEE FILED A DETAILED REPLY ALONG WITH DOCUMENT ARY EVIDENCES IN THE FORM OF RETURNS, COPY OF BALANCE SHEET, COPY OF BANK STATEMENTS AS ITA NO. 3230 /AHD/2009 . A.Y. 2005-06 5 WELL AS CONFIRMATIONS OF THE IMPUGNED PARTIES. THE DETAILED SUBMISSION ALONG WITH THE DOCUMENTARY EVIDENCES WAS RUBBISHED BY THE A.O WHO WAS OF THE OPINION THAT THE ASSESSEE FA ILED TO PROVE THE CREDITWORTHINESS OF THE PAYER. 12. OUT OF THE TOTAL BORROWINGS OF RS. 85,15,000/- FRO M SHRI BHARATBHAI D. PATEL, THE A.O. DOUBTED THE CREDITWOR THINESS TO THE EXTENT OF RS. 34,59,900/-. IN RESPECT OF BORROWINGS FROM SHRI NITINBHAI K. PATEL OUT OF RS. 19,68,000/-, THE A.O. MADE AN A DDITION OF RS. 4,68,000/- AND ON ACCOUNT OF SHRI DAYARAMBHAI D. PA TEL, THE A.O. MADE AN ADDITION OF RS. 11,84,062/- OUT OF THE TOTA L BORROWINGS OF RS. 15,24,000/- AND COMPLETED THE ASSESSMENT BY MAKING AN ADDITION OF RS. 51,11,962/- U/S. 68 OF THE ACT. 13. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 14. BEFORE US, THE LD. COUNSEL POINTED OUT THAT THE A.O . HAS ACCEPTED THE LOAN AMOUNTS WHICH WERE TAKEN DIRECTLY BY CHEQU E FROM THE IMPUGNED PARTIES. HOWEVER, THE A.O. HAS MADE THE AD DITIONS IN RESPECT OF THOSE AMOUNTS WHICH WERE INITIALLY DEPOS ITED BY THESE PERSONS IN M/S. AKSHAR GEMS WHERE THEY WERE PARTNER S AND DISBELIEVE THE WITHDRAWAL FROM THE SAID FIRM M/S. AKSHAR GEMS. IT IS THE SAY OF THE LD. COUNSEL THAT THE A.O. HAS DOUBTED THE SOURC E OF THE SOURCE; THEREFORE, THE ADDITIONS ARE UNJUSTIFIED. 15. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE LOWER AUTHORITIES. ITA NO. 3230 /AHD/2009 . A.Y. 2005-06 6 16. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FA CTUAL MATRIX EMANATING THE ORDERS OF THE AUTHORITIES BELOW. WE F IND THAT THE DISALLOWANCES MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) ARE ON ACCOUNT OF THE DEPOSITS MADE BY THE IMPUGNED THREE PARTIES IN THE FIRM M/S. AKSHAR GEM FROM WHERE THEY WITHDREW THE A MOUNT AND LENDED TO THE ASSESSEE. NECESSARY DETAILS ARE ON RE CORD. SINCE, THE INITIAL ONUS IS UPON THE ASSESSEE TO EXPLAIN THE CA SH CREDITS IN ITS BOOKS OF ACCOUNTS, IN OUR CONSIDERED OPINION; THE ASSESSE E HAS SUCCESSFULLY ESTABLISHED THE IDENTITY, GENUINENESS OF THE TRANSA CTION AND THE CAPACITY OF THE LENDER WITH CORROBORATIVE DOCUMENTA RY EVIDENCES. WE DO NOT FIND ANY JUSTIFICATION IN THE ADDITIONS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) IN THE LIGHT OF THE AFO REMENTIONED FACTS. 17. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITIONS MADE U/S. 6 8 OF THE ACT. GROUND NO. 3 IS ACCORDINGLY ALLOWED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19- 07 - 20 16. SD/- SD/- (S.K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.