M D Infrastructure , Ahmedabad V. The ACIT, Circle-7(2), Ahmedabad

ITA 3325/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9092 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-03-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: P D SHAH
• Keywords: Capital asset; Cost of acquisition
• Section: 142(1); 131; 68

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.3325/AHD/2015 / ASSTT. YEAR: 2012-2013 M D INFRASTRUCTURE C/O. MEHTA LODHA & CO. CHARTERED ACCOUNTANTS 105, SAKAR-I, ASHRAM ROAD, AHMEDABAD 380 009. VS ACIT, CIR.7(2) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI P.D. SHAH, AR REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 16/03/2016 / DATE OF PRONOUNCEMENT: 28/03/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A)-7, AHMEDABAD DATED 16.10.2015 PASSED FOR THE ASSTT.YEAR 2012-13. 2. IN GROUND NO.1, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.76,64,495/-. ITA NO.3325/AHD/2015 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF REAL-ESTATE. IT HAS FIL ED ITS RETURN OF INCOME ON 31.3.2013 DECLARING TOTAL INCOME AT RS.1,58,35,5 60/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE ON 1 0.8.2013. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T THE ASSESSEE HAD PURCHASED A LAND BEARING BLOCK NO.193, T.P. SCHEME NO.99 AND F.P. NO.85/2/1 ADMEASURING 6181 SQ.METERS. THE LAND WAS PURCHASED FOR A CONSIDERATION OF RS.45.00 LAKHS VIDE SALE DEED REGI STERED ON 24.8.2011. OUT OF THIS LAND, THE ASSESSEE HAS SOLD 4181 SQ.MET ERS VIDE SALE DEED BEARING NO.11460/2011 DATED 18.10.2011 FOR A CONSID ERATION OF RS.3,03,50,000/-. THE ASSESSEE HAS OFFERED SHORT T ERM CAPITAL GAIN ON TRANSFER OF THIS CAPITAL ASSET. IT HAS COMPUTED SH ORT TERM CAPITAL GAIN AT RS.1,56,55,358/-. THE ASSESSEE HAS DEBITED COST OF IMPROVEMENT OF RS.76,64,495/- CONSISTING OF MATERIAL FOR EARTH FIL LING AND COMPOUND WALL OF RS.20,00,685/-, LABOUR CHARGES OF RS.56,63, 810/-. THE LD.AO ON AN ANALYSIS OF THE CLAIM OF THE ASSESSEE, HARBOURED A BELIEF THAT THE LAND WAS PURCHASED ON 24.8.2011 AND IT WAS SOLD ON 18.10 .2011. THE ASSESSEE MIGHT HAVE NOT INCURRED ANY EXPENDITURE. THUS, IN ORDER TO VERIFY GENUINENESS OF THE CLAIM, HE DIRECTED THE AS SESSEE TO SUBMIT DETAILS OF EXPENDITURE. APART FROM THE ABOVE, THE LD.AO HAS CALLED FOR SHRI MOHANBHAI B. AGARWAL, MD OF M/S.AASTRAY INFRAS TRUCTURE PVT. LTD., THE COMPANY WHICH HAS PURCHASED THIS PIECE OF LAND. THE STATEMENT OF SHRI MOHAN B. AGARWAL WAS RECORDED ON OATH UNDER SECTION 131 OF THE INCOME TAX ACT ON 3.3.2015 AT 11:30AM. THE STATEMENT HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. AS PER TH E CASE OF THE ITA NO.3325/AHD/2015 3 ASSESSEE, IT HAS GOT THE WORK DONE THROUGH THREE EN TITIES VIZ. M/S.RIYA ENTERPRISE, M/S.BHAVI TRADING CO., AND M/S.SHYAM EN TERPRISE. FROM THESE THREE CONCERNS, THE ASSESSEE HAS PURCHASED BR ICKS, SAND, CEMENT ETC. THE ASSESSEE HAS PRODUCED BILLS, DETAILS OF T OTAL AMOUNT PAID BY IT, AND THE QUANTITY OF THE MATERIAL PROCURED FROM THES E CONCERNS. ACCORDING TO THE AO, HE DEPUTED AN INSPECTOR TO VER IFY THE STATUS OF THESE PARTIES. THE INSPECTOR HAS GIVEN A REPORT TH AT THESE PARTIES WERE NOT IN EXISTENCE AT THE ADDRESS GIVEN BY THE ASSESSEE. ARMED WITH THESE TWO SET OF EVIDENCE, THE LD.AO HAS REJECTED THE CLAIM O F THE ASSESSEE AND MADE AN ADDITION OF RS.76,64,495/- IN THE TOTAL INC OME OF THE ASSESSEE. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE IN COME TAX ACT PROVIDES MODE OF COMPUTATION OF CAPITAL GAIN. THIS SECTION CONTEMPLATES THAT THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SH ALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF TRANSFER OF CAPITAL ASSETS, FOLLOWING A MOUNTS VIZ. (A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER, AND (B) THE COST OF ACQUISITION OF THE AS SETS AND COST OF ANY IMPROVEMENT THEREOF. IN THE PRESENT CASE, THE ASSE SSEE HAS DEBITED THE COST OF IMPROVEMENT FROM THE TOTAL SALE CONSIDERATI ON A SUM OF RS.76,64,495/-. THE LD.AO DISBELIEVED THIS CLAIM. HE HAS BASICALLY TWO REASONS. IN HIS FIRST FOLD OF REASONING, HE OBSERV ED THAT SHRI MOHAN AGRAWAL IS A CIVIL ENGINEER, HE IS MD OF AATRY INFR ASTRUCTURE P.LTD., A COMPANY WHICH HAS PURCHASED THIS PIECE OF LAND. M/ S. ASTREY ITA NO.3325/AHD/2015 4 INFRASTRUCTURE IS ALSO ENGAGED IN THE CONSTRUCTION OF BUILDING, AND THEREFORE, HE WAS WELL AWARE ABOUT THE CONDITIONS O F SOIL ETC. ACCORDING TO THE AO, SHRI MOHANBHAI AGRAWAL, HAS CATEGORICALL Y DENIED ABOUT THE EXISTENCE OF ANY BOUNDARY WALL WHEN THE COMPANY PUR CHASED THE PIECE OF LAND. HE ALSO DENIED THAT ANY LAND FILLING WORK WAS BEING DONE BY THE VENDOR. THIS STATEMENT OF SHRI MOHANBHAI AGRAWAL W AS RECORDED FROM THE BACK OF THE ASSESSEE. THE LD.AO DID NOT PROVID E ANY OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI MOHANBHAI AGRAWA L. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDERS OF THE REVENUE AUTHORITIES BROUGHT TO OUR NOTICE THAT THE AO HAS SERIOUSLY TAK EN UP THE ASSESSMENT PROCEEDINGS FROM DECEMBER, 2014. WHEN HE HAD ISSUE D NOTICE UNDER SECTION 142(1) OF THE ACT, HE RECORDED THE STATEMEN T OF SHRI MOHANBHAI AGRAWAL ON 3.3.2015 AND PASSED THE ASSESSMENT ORDER ON 31.3.2015. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, THIS STATEMENT WAS CONFRONTED TO THE ASSESSEE, BUT OPPORTUNITY TO CROS S-EXAMINE WAS NOT GIVEN. THE ASSESSEE HAS SPECIFICALLY ASKED FOR CRO SS EXAMINATION AND THE AO HAS DEALT WITH THIS ISSUE IN PARA 4.22 OF THE IM PUGNED ORDER. WHEN THIS ASPECT WAS BROUGHT TO THE NOTICE OF THE LD.DR, HE CONTENDED THAT THE AO WAS CONSCIOUS OF THE FACT THAT OPPORTUNITY TO CR OSS-EXAMINE WAS NOT GIVEN TO THE ASSESSEE. THE AO WAS OF THE VIEW THAT IT IS THE ASSESSEE WHO HAS TO FIRST BRING DEMONSTRATIVE EVIDENCE IN SU PPORT OF ITS CASE THAT IT HAS INCURRED EXPENDITURE FOR IMPROVEMENT OF THE LAND. AS FAR AS OPPORTUNITY TO CROSS-EXAMINE IS CONCERNED, THE STAT EMENT OF THE VENDEE WAS DULY BROUGHT TO THE NOTICE OF THE ASSESSEE, AND HE REQUESTED THE ASSESSEE TO POINT OUT ON WHICH ISSUE, THE ASSESSEE WANTS TO CROSS- EXAMINE SHRI MOHANBHAI AGRAWAL. ACCORDING TO THE L D.DR, THERE WAS ITA NO.3325/AHD/2015 5 NO NECESSITY IN THIS CASE TO GRANT AN OPPORTUNITY O F THE CROSS- EXAMINATION. HE FURTHER BROUGHT TO OUR NOTICE ABOU T THE STATUS OF THE INQUIRY CONDUCTED BY THE AO WITH REGARD TO THE PURC HASE OF MATERIAL FOR CARRYING OUT IMPROVEMENT WORK. HE DREW OUR ATTENTI ON TOWARDS PARA-4.9 AND 4.10 OF THE ASSESSMENT ORDER. ACCORDING TO THE LD.DR, THE ASSESSEE HAS PRODUCED SINGLE DELIVERY CHALLAN FOR 16 TRUCKS OF SAND ALLEGED TO HAVE BEEN PROCURED FROM RIA ENTERPRISE. THIS CONCE RN WAS NOT FOUND TO BE IN EXISTENCE AT THE GIVEN ADDRESS. THUS, CUMULA TIVE SETTING OF ALL THESE PIECES OF EVIDENCE INDICATES THAT NO IMPROVEM ENT WAS CARRIED OUT. ON DUE CONSIDERATIONS OF THE FACTS AND CIRCUMSTANCE S, WE DEEM IT PERTINENT TO TAKE NOTE OF THE OBSERVATION OF THE LD .AO IN PARA 4.22 OF THE ASSESSMENT ORDER. IT READS AS UNDER: 4.22 VIDE REPLY DATED 25.03.2015, THE ASSESSEE HAS SUBMITTED THAT THEY REQUIRED CROSS EXAMINATION OF SHIR MOHANB HAI B. AGARWAL IN RESPECT OF SALE OF LAND AND COST OF IMPR OVEMENT AS CLAIMED. DURING COURSE OF HEARING, THE AR OF THE AS SESSEE AND THE MANAGING PARTNER OF THE FIRM WERE SPECIFICALLY ASKED ABOUT THE ISSUES ON WHICH THEY REQUIRED CROSS EXAMINATION OF THE PURCHASER. HOWEVER, THEY HAVE FAILED TO SPECIFY ANY ISSUE / DOCUMENT SUBMITTED BY SHRI MOHABHAI AGARWAL ON WHIC H THEY REQUIRES CROSS EXAMINATION. FURTHER, THEY HAVE ALSO REQUESTED THAT, IF, IT IS REQUIRED TO THE DEPARTMENT THEN CRO SS EXAMINATION MAY BE ALLOWED. HOWEVER, IN THE GIVEN CIRCUMSTANCES THE UNDERSIGNED FEELS NO NECESSITY TO PROVIDE OPPORTUNI TY FOR CROSS EXAMINATION TO THE ASSESSEE. SINCE, THE ASSESSEE HA S FAILED TO PUT FORTH ANY POINT / ISSUE ON WHICH HE WANTS FURTHER C LARIFICATION FROM THE PURCHASER, THEREFORE, THE ASSESSEE'S REQUE ST IS NOT ACCEPTED AND THE SAID FACTS WERE APPRISED TO THE AS SESSEE ON THE HEARING ON 25.03.2015. 6. IN THE CASE OF KISHAN CHAND CHELLARAM VS. CIT, 1 25 ITR 713, THE HONBLE SUPREME COURT HAS OBSERVED THAT IF THE OPPO RTUNITY TO CROSS- ITA NO.3325/AHD/2015 6 EXAMINE WITNESS UPON WHOSE STATEMENT RELIANCE IS BE ING PLACED WAS NOT GRANTED, THEN, THAT STATEMENT RECORDED FROM THE BAC K OF THE ASSESSEE CANNOT BE USED IN EVIDENCE. IN THE PRESENT CASE AL SO, THE ASSESSEE HAS SPECIFICALLY MADE A REQUEST FOR CROSS-EXAMINATION O F MD OF THE VENDEE. IT IS PERTINENT TO OBSERVE THAT SHRI MOHANBHAI AGRA WAL HAS GIVEN HIS STATEMENT TO THE AO ON OATH. THE LD.AO WAS OF THE OPINION THAT ONCE THIS STATEMENT WAS SERVED UPON THE ASSESSEE, THEN, IT IS THE ASSESSEE, WHO SHOULD GET CLARIFICATION FROM MOHANBHAI AGRAWAL AND SUBMIT THAT EVIDENCE. TO OUR MIND SUCH AN INFERENCE OF LAW OF EVIDENCE IS TOTALLY ILL-FOUNDED, BECAUSE ONCE A PERSON HAS GIVEN A STAT EMENT ON OATH, THEN HE WOULD NOT RESILE FROM HIS STATEMENT UNLESS IT IS DEMONSTRATED BY THE DEPOSER THAT SUCH STATEMENT WAS GIVEN UNDER MISTAKE N OR MISREPRESENTATION OF THE FACTS. VERACITY OF THE S TATEMENT CAN BE TESTED BY CROSS-EXAMINING THE WITNESSES AND IN THAT PROCEE DINGS THE ELEMENT OF SURPRISES WOULD BE INVOLVED, BECAUSE, CROSS-EXAMINE R COULD CONFRONT SHRI MOHANBHAI AGRWAWAL WITH CERTAIN FRESH MATERIAL , WHICH WAS IN THE KNOWLEDGE OF THE ASSESSEE. SUCH STEP CAN BE TAKEN ON THE SPOT ONLY WHEN THE CROSS-EXAMINATION WAS UNDER PROGRESS. THE OBSERVATIONS MADE BY THE AO IN PARA 4.22 ARE NOT SUFFICIENT TO DENUDE THE ASSESSEE FROM ITS CLAIM FOR CROSS-EXAMINATION. THEREFORE, WITHOUT GO ING INTO THE MERITS OF THE CONTROVERSY AND OTHER EVIDENCES AT THIS STAGE, WE DEEM IT PERTINENT TO SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR FRES H ADJUDICATION, IF THE AO WANTS TO RELY UPON THE STATEMENT OF SHRI MOHANBHAI AGRAWAL, THEN, HE SHALL PROVIDE AN OPPORTUNITY TO CROSS-EXAMINE TO TH E ASSESSEE, OTHERWISE, THIS STATEMENT WOULD BE EXCLUDED FROM THE EVIDENCES . IT IS FURTHER OBSERVED THAT THE ASSESSEE WILL NOT ADOPT A DILATOR Y STRATEGY TO CROSS- ITA NO.3325/AHD/2015 7 EXAMINE SHRI MOHANBHAI AGRAWAL. THIS GROUND OF APP EAL IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE A SSESSEE IS THAT LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF R S.6,50,000/-. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S TAKE A LOAN OF RS.5.00 LAKHS FROM REKHA KISHANCHAND SATWANI AND RS .1.50 LAKHS FROM SHARADHA JAGDISH. THE ASSESSEE HAS FILED DOCUMENTA RY EVIDENCE CONTAINING CONFIRMATION, COPY OF PAN CARD ETC. THE LD.AO WAS NOT SATISFIED WITH THE QUALITY OF EVIDENCE ON THE GROUN D THAT THOUGH THESE PERSONS WERE HAVING PAN NUMBERS, BUT THEY HAVE NOT FILED RETURN OF INCOME. HE, THEREFORE, DOUBTED THE GENUINENESS AND CREDIT-WORTHINESS OF THE DEPOSITORS. IN THIS WAY, THE AO HAS MADE ADDIT ION OF RS.6.50 LAKHS TO THE INCOME OF THE ASSESSEE WITH THE AID OF SECTI ON 68 OF THE INCOME TAX ACT. 9. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 10. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED ITS PRIMARY O NUS BY SUBMITTING CONFIRMATION FROM THE DEPOSITORS. THE ASSESSEE HAS FILED THEIR PAN WITH THE INCOME TAX DEPARTMENT AND DEMONSTRATED THAT THE Y ARE CREDIT- WORTHY PERSONS. THE LD.AO WITHOUT CONDUCTING ANY I NQUIRY HAS DISBELIEVED THIS EVIDENCE. IN OUR OPINION, SINCE, WE HAVE SET ASIDE ONE OF THE ISSUES TO THE FILE OF THE AO FOR FRESH ADJUD ICATION, WE DEEM IT APPROPRIATE THAT THIS ISSUE ALSO DESERVES TO BE RES TORED TO THE FILE OF THE AO SO THAT HE CAN MAKE AN APPROPRIATE INQUIRY ABOUT THE GENUINENESS, ITA NO.3325/AHD/2015 8 CREDIT-WORTHINESS AND IDENTITY OF THE DEPOSITORS. THEREFORE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE AND THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION. 11. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFE NCE/EXPLANATION OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 28 TH MARCH, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER