Shri Murlilal Ratanlal Agarwal, Surat V. The ACIT.,Cent.Circle-2, Surat

ITA 3384/AHD/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0516 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-02-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 23-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Opportunity of being heard; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3384/AHD/2009 ASSESSMENT YEAR :2004-05 MURARILAL RATANLAL AGARWAL BRIJVILLA BUNGLOW, BRIJWASI ESTATE, B/H GOKUL ROW HOUSE, PARLE POINT, SURAT 395007, V/S . DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, SURAT. PAN NO. A BKPA5609G (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI S.N. SOPARKAR, SR. ADV. WITH MS. URVASHI SHODHAN /BY RESPONDENT SHRI O.P. VAISHNAV, CIT D.R. /DATE OF HEARING 06.02.2013 /DATE OF PRONOUNCEMENT 15.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A)-II, AHMEDABAD, DATED 06.10 .2009 FOR A.Y. 2004-05. THE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS.60,00,000/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND. 2. THERE WAS A SEARCH AND SEIZURE OPERATION DURING THE COURSE OF SEARCH A KABJA RASID DATED 16.12.2003 FOR TPS NO. 5, F.P. NO. 62,63,64,66 & 67 WAS SEIZED AS PAGE NO. 31 TO 35 OF ANNEXURE BS-1. THE KABJA RASID IS BETWEEN MURARILAL &OTHERS AND TRI STAR HOUSING SOCIETY. TH E LD. A.O. OBSERVED THAT IN KABJA RASID, IT IS MENTIONED THAT MURARILAL & OTHER S HAD PAID RS.60 LACS TO TRI STAR CO-OPERATIVE HOUSING SOCIETY FOR ABOVE MENTION ED LAND PROPERTIES AND IN ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 2 TURN THEY HAD GOT THE POSSESSION OF THE PROPERTY. THE A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE TO EXPLAIN THE SOURCE OF PAYMENT IN QUESTION AND CLARIFIED WHETHER THE SAME WAS REFLECTED IN THE BOOKS OF ACCOUNT. THE ASSESSEE RESPONDED AND CLAIMED THA T THIS KABJA RASID WAS MADE FOR THE PURPOSE OF MAKING AN APPLICATION FOR L OAN TO CO-OPERATIVE BANK. THE BANK HAD ASKED FOR AN AGREEMENT THAT HE WAS HAV ING LAND AND THEN ONLY LOAN APPLICATION WOULD BE ENTERTAINED, OTHERWISE TH E BANK WOULD NOT ENTERTAIN THE APPLICATION. SINCE, THE BANK HAD SAID THAT IT WOULD NOT ENTERTAIN THE APPLICATION, THE ASSESSEE HAD NO OPTION BUT TO MAKE AGREEMENT AND TO SAY THAT HE HAS PURCHASED THE LAND. NOT ONLY THIS, THE ASSESSEE HAD ALSO TAKEN VALUATION REPORT OF THE SAID LAND FOR BANK PURPOSE. HENCE, THE RECEIPT WAS MADE OF RS.60 LACS, WHEREAS NO ACTUAL TRANSACTION W AS ENTERED INTO. THE PAYMENTS HAD ALSO NOT BEEN MADE FROM ASSESSEE TO TR I STAR APARTMENT CO- OPERATIVE HOUSING SOCIETY LIMITED. THERE WAS NO EV IDENCE THAT HE HAD MADE PAYMENT TO SOCIETY. NEITHER THERE WAS EVIDENCE IN HIS BOOKS AND NOR IN THE BOOKS OF TRI STAR APARTMENT CO-OPERATIVE HOUSING SO CIETY LIMITED. THIS WAS JUST AN AGREEMENT MADE FOR THE PURPOSE OF AVAILING BANK LOAN, WHICH UNFORTUNATELY COULD NOT BE PRECEDED AND COMPLETED. THERE IS NO EVIDENCE ON RECORD FOR PAYMENT BY SHRI MURARILAL AGARWAL TO TRI STAR APARTMENT CO- OPERATIVE HOUSING SOCIETY LIMITED. FURTHER, NOT EV EN A SINGLE PAYMENT HAD BEEN MADE BY HIM TO SOCIETY NEITHER IN BOOKS OF SHI R MURARILAL AGARWAL NOR IN BOOKS OF SOCIETY, THE SAME CAN BE VERIFIED WITH BAL ANCE SHEET OF CO-OPERATIVE SOCIETY. THESE WERE LOOSE PAPER ONLY AND WHERE THE RE WAS NO EVIDENCE THAT ACTUAL TRANSACTIONS ARE THERE, NO ADDITION CAN BE M ADE. THE ASSESSEE ALSO ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 3 RELIED UPON IN CASE OF 272 ITR 142. THE LD. A.O. H AD NOT FOUND THE APPELLANTS REPLY SATISFACTORY AND CONCLUDED IT IS AFTER THOUGH T BECAUSE THE APPELLANT DID NOT GIVE ANY NAME AND ADDRESS OF THE BANK, DETAILS OF LOAN. THE LAND PURCHASED IN THE JOINT NAME OF THE FAMILY MEMBERS, DOCUMENTS PREPARED ON STAMP PAPERS AND SIGNED BY THE APPELLANT AND DETAIL S OF PAYMENT CLEARLY MENTIONED IN THE AGREEMENT. FURTHER, IT WAS OBSERV ED THAT HE HAS TAKEN POSSESSION OF THE LAND SINCE THE BUNGALOW OF THE AS SESSEE IN WHICH THE ASSESSEE RESIDED AT THAT TIME WITH HIS FAMILY WAS C ONSTRUCTED ON THE SURVEY NUMBER ONLY. IF ASSESSEE HAD NOT PURCHASED THE LAN D AND HAD NOT OBTAINED THE POSSESSION THEN HOW COME ASSESSEE HAD CONSTRUCT ED BUNGALOW ON THE SAID LAND AND WAS LIVING THERE? THE LD. A.O. FINAL LY CONCLUDED THAT THE ASSESSEE HAD PURCHASED THE SAID LAND AND PAID RS.60 LACS FROM UNACCOUNTED INCOME. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A), WHO HAD CONFIRMED THE ADDITIO N BY OBSERVING AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS AND THE SUBMISSION S. FROM THE FACTS BROUGHT OUT BY THE ASSESSING OFFICER IN HIS R EMAND REPORT, IT IS EVIDENT THAT THE APPELLANT HAS TAKEN THE POSSESSION OF THE PROPERTY FROM TRI STAR CO-OPERATIVE SOCIETY AFTER PAYMENT OF RS.60,00,000/- AS PER KABJA RASID. AS PER SURAT MUNICIPAL CORPORA TIONS LETTER NO.SW/ZONE/OUT 2651 DATED 05/07/2004, THE PERMISSIO N WAS GRANTED FOR USE OF THE RESIDENTIAL BUNGALOW AS PER APPLICATION DATED 03/05/2004. IT IS ALSO MENTIONED IN THAT LETTER TH AT DATE OF APPLICATION FOR BUILDING POSSESSION IS 01/03/2002, DATE OF BUIL DING PERMISSION IS ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 4 TDO NO.A.NO.203 DATED 02/11/2002 AND DATE OF CONSTR UCTION IS 30/04/2004. THEREFORE, THE APPELLANTS SUBMISSION THAT HE GOT THE LAND ONLY BY DEED DATED 22/06/2005 IS FALSE. THE S EIZED PAPER FOUND DURING THE SEARCH CLEARLY ESTABLISHES THAT TH E APPELLANT HAS MADE THE PAYMENT OF RS.60,00,000/- FOR WHICH HE HAS NOT EXPLAINED THE SOURCE OF THE PAYMENT HENCE THE ASSESSING OFFIC ER WAS JUSTIFIED IN MAKING THE ADDITION. ACCORDINGLY, THE ADDITION IS CONFIRMED AND THE GROUND IS REJECTED. 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT SUBMITTED THAT THIS KABJA RASID WAS MADE FOR THE PURPOSE OF M AKING AN APPLICATION FOR LOAN TO CO-OPERATIVE BANK BUT ACTUALLY THERE WAS NO TRANSACTION BETWEEN THE APPELLANT AND SOCIETY. NO PAYMENTS HAVE BEEN MADE BY THE APPELLANT TO THE SOCIETY WHICH CAN BE VERIFIED FROM THE BOOKS OF ACC OUNT OF BOTH THE PARTIES. BEFORE US, HE FILED COPY OF ORIGINAL AGREEMENT IN G UJARATI AS WELL AS TRANSLATE COPY OF THIS AGREEMENT IN ENGLISH (PAGE NOS. 48 TO 52 OF THE PAPER BOOK), WHICH SHOWS THAT THERE WAS A POSSESSION RECEIPT BET WEEN THE ASSESSEE AND HIS FAMILY MEMBERS AS FIRST PARTY AND TRI STAR APAR TMENT CO-OPERATIVE HOUSING SOCIETY LIMITED THROUGH PRESIDENT AS SECOND PARTY. THE SOCIETY OWNED THE LAND REGISTERED AT UMRA, TOWN PLANNING SCHEME NO.5 (UMRA-NORTH) WHICH HAS BEEN ALLOTTED FINAL PLOT NO. 62 TO 64, 65,67 ADM. L AND 1400 SQ.YD. I.E. 11000 SQ.FT. OF SURAT DISTRICT, SUB-DISTRICT AND TALUKA C HORYASI OF SURAT CITY. THE TERMS AND CONDITIONS OF THIS POSSESSION RECEIPTS WA S AS UNDER: (2).THE LAND WHICH IS MENTIONED IN PARA NO.1 WERE USELESS AND IT WAS NON USING TO US THE PARTY OF THE SECOND PART . WE THE PARTY OF THE SECOND PART AND YOU THE PARTY OF THE F IRST PART MADE ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 5 CONVERSATION ABOUT THAT AND YOU THE PARTY OF THE FI RST PART DECIDED TO PURCHASE THE SAID LAND SO WE THE PARTY OF THE SECON D PART SELL THE LAND TO YOU. THE SALE CONSIDERATION AMOUNT OF RS.6 0,00,000/- (IN WORDS SIXTY THOUSAND ONLY) HAS BEEN PAID BY PARTY O F THE FIRST PART TO US. THE APPELLANT ALSO FILED A COPY OF SALE DEED DATED 22.06.2005 BETWEEN THE APPELLANT AND HIS THREE FAMILY MEMBERS AS THE FIRST PARTY AND TRI STAR APARTMENT CO-OPERATIVE HOUSING SOCIETY LIMITED THRO UGH PRESIDENT AS SECOND PARTY. THE TERMS AND CONDITIONS IN CLAUSE 1 SHOWS THAT ORIGINALLY, TOTAL AREA OF THIS LAND WAS 4249 SQ.MTRS., WHICH WAS ALLOTTED FIN AL PLOT NO. 62 TO 67 AS PER DRAFT TOWN PLANNING SCHEME NO.5 (UMRA-NORTH) ON WHI CH URBAN LAND (CEILING & REGULATION) ACT, 1976 WAS APPLICABLE. THE SOCIET Y MADE AN APPLICATION BEFORE THE REVENUE DEPARTMENT, GANDHINAGAR TO SELL THE LAND. THE REVENUE DEPARTMENT, GANDHINAGAR, HAD PASSED HIS ORDER NO. U LC/2090/5569/V-1, DATED 4-11-1991 BY VIRTUE OF THE SAID ORDER AND CON DITION, THE ABOVE SAID LAND OWNER CHHAYABEN JAYANTIBHAI HAD SOLD THE LAND BEARI NG FINAL PLOT NO. 62 TO SAID SOCIETY BY SALE DEED DATED 12.03.1993. IN THI S MANNER, THE SOCIETY HAD BECOME OWNER ADMEASURING 328 SQ.MTRS. (IN AGREEMENT IT SHOULD BE 3280) OF FINAL PLOT NO.62. THEREAFTER, THIS LANDS USE WAS CONVERTED FOR NON AGRICULTURAL AND IT WAS PLAN TO CONSTRUCT TWO HIGH-RISE BUILDING ON LAND OF FINAL PLOT NO.62 ADMEASURING 3280 SQ. MTRS. LAND BY CONSTRUCTION PER MISSION T.D.O. NO. 203 DATED 2-11-2002 OF SURAT MUNICIPAL CORPORATION, SUR AT AND THE SOCIETY HAS DECIDED TO SELL THE 1480 SQ.YDS I.E. 1237.46 SQ.MTR ., OPEN LAND. THE RESOLUTION PASSED BY THE GENERAL MEETING OF THE SAID SOCIETY O N DATED 16.08.2004 TO GIVE THE POWER TO PRESIDENT TO MAKE SALE DEED IN FA VOUR OF THE APPELLANT. ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 6 ACCORDINGLY, THE SALE DEED DATED 22.06.2005 WAS EXE CUTED FOR THE CONSIDERATION OF RS. 18.26 LACS FOR THE OPEN LAND A DMEASURING 1237.46 SQ.MTRS. OUT OF TOTAL AREA OF 3280 SQ.MTRS. THE AP PELLANT ALSO GAVE THE DETAIL OF PAYMENTS MADE TO THE SOCIETY THROUGH CHEQUE FOR WHICH STAMP DUTY OF RS.3,63,821/- HAD BEEN PAID TO DEPUTY COLLECTOR (I) , STAMP DUTY VALUATION ORGANISATION, SURAT, ON 20.10.2005 AT MARKET VALUE AT RS.43,31,200/- WHEREAS MARKET VALUE SHOWN AT RS. 18,21,000/- IN THE AGREEM ENT TO SALE. IT WAS CONTENDED THAT THE ACTUAL TRANSACTION ON PARTIAL OP EN LAND WAS MADE IN 2005 NOT IN 2003 AS PER KABJA RASID. THE APPELLANT ALSO FILED THE COPY OF AUDIT REPORT OF THE SOCIETY FROM 01.04.1999 TO 31.03.2006 ALONGWITH AUDIT CERTIFICATE AND VARIOUS ENCLOSURES. THE ASSESSEE FILED A COPY OF LETTER DATED 30.12.2003 ADDRESSED BY THE BANK OF BARODA, SUFI BAUG BRANCH, OPP. RLY. STATION, SURAT, TO SHRI MURARILAL R. AGARWAL, WHICH SHOWS THAT THE LOAN PROPOSAL WAS PENDING BEFORE THE BANK AUTHORITY. THE APPELLANT ALSO FILE D A COPY OF THE BANK ACCOUNT OF SOCIETY FROM THE DURING 24.01.2003 TO 06.02.2011 . THE COPY OF SOCIETY CASH BOOK FOR THE PERIOD 01.04.2002 TO 31.03.2003, COPY OF CASH BOOK FROM 01.04.2002 TO 31.03.2003 & 01.04.2003 TO 31.03.2004 , COPY OF BALANCE SHEET AS ON 31.03.2003, COPY OF TARIJ FROM 01.04.2002 TO 31.03.2003 AND 01.04.2003 TO 31.03.2004 TO PROVE THAT THERE WAS NO DEALING BE TWEEN THE SOCIETY AND THE APPELLANT. THUS, HE REQUESTED TO DELETE THE ADDITI ON. AT THE OUTSET, LD. CIT D.R. VEHEMENTLY RELIED UPON THE ORDERS OF THE CIT(A ) AND A.O. AND ARGUED THAT THIS AGREEMENT WAS MADE ON STAMP PAPER AND FOR THE PURCHASE OF LAND IN WHICH CONSIDERATION AMOUNT OF RS.60 LACS HAD BEEN F IXED. THUS, HE REQUESTED TO CONFIRM THE ADDITION. ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 7 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE PAPER BOOK SUBMITTED BY THE APPELLANT. IT IS UNDISPUTED THAT THERE WAS A KABJA RASID, FOUND DURING THE COURSE OF SEARCH, WHICH SHOWS THE AREA OF LAND 1400 SQ.YARD OF FINAL PLOT NO.62 TO 64, 65 & 67, WHEREAS THE PUR CHASE AGREEMENT DATED 22.06.2005 SHOWS THAT THE AREA OF 1480 SQ.YARD I.E. 1237.46 SQ.MTR. THE OPEN LAND OF FINAL PLOT NO.62 HAVING TOTAL AREA OF 3280 SQ.MTR. THE PLOT NO. IN THE KABJA RASID WAS MENTIONED IN ADDITION TO PLOT NO.62 , 63 TO 64, 65 & 67, THE AREA WAS ALSO DIFFERENT, BUT IT WAS FOR SAME LAND. IT IS ALSO REVEALED THAT THE SOCIETY HAD MADE AN APPLICATION BUILDING PERMISSION ON 01.03.2002 WHICH WAS GIVEN ON 02.11.2002 AND COMPLETION OF THIS BUIL DING WAS MADE ON 30.04.2004. FOR TP SCHEME NO. 5 (UMRA-NORTH) FP NO . 62 TO 64, 66 & 67 WHEN PERMISSION WAS GIVEN IN THE NAME OF THE SOCIET Y FOR CONSTRUCTION OF THE BUILDING WHICH WAS COMPLETED ON 30.04.2004. AS PER THE SURAT MUNICIPAL CORPORATION CERTIFICATE DATED 05.07.2004 WHEREAS TH E ASSESSEE HAD PURCHASED OPEN LAND 1237.46 SQ.MTRS. OUT OF 3240 SQ . MTRS. IN KABJA RASID, PLOT NO.65 IS MENTIONED WHEREAS IN SURAT MUNICIPAL CORPORATION, THE PLOT NO.66 MENTIONED. REMAINING PLOT NOS. ARE SAME IN T HE BOTH AGREEMENTS. FURTHER ASSESSEES PURCHASE DID NOT SHOW FINAL PLOT NO. 62 TO 67. THE LD. A.O. HAD NOT BROUGHT ON RECORD ANY EVIDENCE THAT WHAT WA S THE REAL POSITION AS PER THE PHYSICAL VERIFICATION OF THE PLOT AT THE TIME O F SEARCH, NO STATEMENT HAD BEEN RECORDED BY THE AUTHORIZED OFFICER ON THIS ISS UE, EVEN THEN, AFTER COMPLETING THE SEARCH, NO INQUIRY HAD BEEN MADE BY THE A.O. BEFORE COMPLETING THE SEARCH ASSESSMENT FROM THE OFFICE OF THE SOCIETY, FROM THE OFFICE OF SURAT MUNICIPAL CORPORATION, WHETHER WHIC H PART OF THE LAND WAS ITA NO. 3384/AHD/09 A.Y. 04-05 PAGE 8 CONSTRUCTED BY THE SOCIETY AND WHO HAD POSSESSION O N IT. HE HAD NOT VERIFIED THE MUNICIPAL RECORD AS WELL AS ELECTRICITY DEPARTM ENT AND OTHER AUTHORITY TO ESTABLISH THE TRANSACTION IS GENUINE. THUS, IN ABS ENCE OF ANY CONCLUSIVE EVIDENCE, WE REVERSE THE ORDER OF CIT(A). ACCORDIN GLY, THE ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 15.03.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;