Late Bhavanisinh D. Vala, L/H Smt.Beenakumari B. Gohil, JAMNAGAR V. The Assistant Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITA 355/RJT/2015

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0783 (ITAT-RAJKOT)
• Duration Of Justice: 7 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value
• Section: 139; 153A; 143(2); 113; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) Before: Ms. Annapurna Gupta, Accountant Member And Shri TR Senthil Kumar, Judicial Member Late Bhavinsin h D Vala Legal Heir Smt. Beenaku mari B Gohil Shri ra m K ru pa, Saat Rasta Circle, Summair Clu b Ro ad, Jamn agar PAN No. AKIPV7 043 E ACIT. Central Circle-1, Rajkot (Appellant) Vs Vs ACIT. Central Circle-1, Rajkot (Resp ondent) Late Bhavinsinh D Vala Legal Heir Smt. Been aku mari B Goh il Shri ram Krupa, Saat Rasta Circle, Summair Club Road, Jamnag ar PAN No. AKIPV7 0 43E Appellant by : Shri Sa gar Sh ah, A. R. Responden t by : Shri Anshu Praka sh, CIT /D. R. Date of hearing : 23-06 -2 022 Date of pronouncement : 03-08 -2 022 आदेश/ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present cross appeals filed by the Assessee and the Revenue are against order passed by the Ld. Commissioner of Income Tax (Appeals)-11, Rajkot, (in short referred to as CIT(A)), dated 14-05-2015, u/s. 250(6) of the ITA No. 355 & 365/Rjt/2015 Assessment Year 2012-13 I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 2 Income Tax Act, 1961(hereinafter referred to as the “Act”) pertaining to Assessment Year (A.Y) 2012-13. 2. Brief facts of the case are that the assessee was a retired person who died on 20.8.2011. After his death, his daughter, Smt Beenakumari Gohil (legal heir) filed an FIR on 22-08-2011 with the Jamnagar Police regarding murder of her father, Sh. Bhavanisinh D. Vala and theft of cash and jewellery from his house. The Jamnagar Police, consequent to the complaint, arrested the culprits along with the cash and gold biscuits. The cash seized was to the tune of Rs 2.01 crores and there were 40 gold biscuits valued at Rs 1.19 crores. Accordingly, a warrant of authorization u/s. 132A was issued on 22-09-2011 to requisition the seizure made by the Police. But, the same could not be requisitioned then as proceedings were pending before the Court at Jamnagar. However, enquiries were made by the ADIT(Inv.), Jamnagar from the concerned persons. Later on, the Court vide its order dated 30-03-2013 allowed the Income-tax Department to seize the assets and directed the Department to complete the assessment within two months from the seizure. The department went in appeal to the High Court against the decision of lower court to complete the assessment in two months. The Hon'ble Gujarat High Court directed the Department to complete the assessment on or before 31-07-2014 vide their order dated 20-03-2014. The assessment proceedings were accordingly taken up immediately so as to complete it within the time frame directed by the Hon'ble High Court although the time barring date to complete the assessment as per section 153A of the Act was 31-03-2016. As requisition u/s. 132A of the Act was made in the case of the assessee from the Jamnagar Police on 11.4.2013. Consequently, proceedings u/s. 153A of the Act were initiated by issuing notice dated 18.2.2014 which was duly served I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 3 upon the legal heir of the assessee. The assessee was required to file return of income within 30 days of the receipt of the notice. In response to notice, the return of income showing total income of Rs 4,27,81,803/- was filed by the legal heir of the assessee on 12-03-2014 which was the same as declared in the return of income filed under section 139 of the Act. A notice u/s. 143(2) of the Act was issued on 18.3.2014 which was served upon the legal heir of the assessee. Further detailed questionnaire was issued on 2.4.2014 alongwith a notice u/s. 142(1) of the Act. 3. During the year under consideration, the AO noted, the assessee was having interest income and capital gain on sale of land. In the course of enquiries conducted by the ADIT, statements under section 131(1A) of Miss. Ritaben Patel (Care taker of the assessee at the relevant time), purchasers of the land and other connected persons were recorded. As per information gathered from the said enquiries, it was revealed that the assessee had sold a piece of land situated at T.P. Scheme No. 1, P.P. No 31, in Jamnagar to 9 different persons of Jamnagar during the month of July 2011 by way of two separate sale deeds, for a consideration of Rs 1,26,82,000/- and Rs 1,35,00,000/- totaling to Rs 2,61,82,000/-. It was further gathered that, in addition to the above mentioned documented price, cash consideration by way of on money was also received in these land deals. In the return of income the assessee had offered capital gain by taking the total sale consideration of Rs 6,53,62,045/- (both cheque and on money). While taking the total sale consideration, the assessee had aggregated the entire cash and value of gold biscuits seized by the Police and other cash deposits into bank accounts and also cash deposits of Rs. 12.00 lacs in the bank account of assessee's care-taker, Smt. Ritaben Patel and expenses of Rs. 24.00 lacs incurred in cash as stated by Smt. Ritaben in her statement. The capital gain I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 4 so offered was Rs. 4,16,51, 075/- computation of which was filed to the Ld.CIT(A) in the submissions made before him and placed before us at P.B 19 as under: Computation of Long Term Capital Gain : Particulars Amount Amount Sale Consideration (A) 65,362,045 Total Sale Consideration (B) 65,362,045 (-)Purchase cost of land 2,472,735 indexed cost of acquisition (C) 2472735*785 100 19,410,970 Expense for sale (D) 4,300,000 Total Purchase cost (E=C-D) 23,710,970 Net Capital gain chargeable to tax (F=B-E) 41,651,075 4. On verification of the details of capital gain given in the computation of income, it was noticed that the assessee had taken the cost of acquisition of Rs. 24,72,735 as on 1-04-1981 and arrived at the indexed cost of acquisition at Rs. 1, 94,10, 970/- by applying cost index of the year 1981-82 and 2011-12. After claiming further deduction of Rs. 43,00,000/- as expenses, net long term capital gain was shown at Rs. 4,16,51, 075/-. On verification of the copy of sale deed furnished by the assessee, it was also noticed that the assessee had inherited the impugned land from his brother, Late Shri Prabhatsinh Vala in the year 2008-09, who was in possession of this land since 1966. Therefore, the assessee was asked to explain the basis for taking the cost of acquisition as on 1.4.1981 at Rs 24,72,735/-. The assessee was also asked to explain as to why the cost index for the year 2008-09, when the property in question was first held by I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 5 it, should not be taken to arrive at the indexed cost of acquisition, as against cost index for 1981-82 taken by it as per explanation (iii) to section 48. After considering the reply filed by the assessee assessment was framed making the following adjustments to the computation of capital gain: (i) The fair market value adopted by the assessee of the assets sold as on 01.04.1981 based on the Valuation Report furnished by registered valuer was substituted with that determined by the DVO. While the assessee had taken the cost of acquisition as on 01.04.1981 at 24,72,735/- as per the registered valuer’r report , the A.O. substituted the same with the valuation of the DVO done at Rs. 22,69,100/-. (ii) The A.O. applied the cost inflation index for the year 2008-09 that is the year in which the asset was first held by the assessee for arriving at the indexed cost of acquisition as opposed to the assessee adopting the cost inflation index of 1981. Thus, while the assessee adopted the indexed cost of acquisition at Rs. 1,94,10,970/-,the A.O. adopted the same at Rs. 30,60,555/-. (iii) the A.O. denied the assessee’s claim of expenditure incurred for the sale of land of Rs. 43 lakhs. (iv) He further made addition of an amount of Rs. 5 crore on the basis of statement of Ms. Ritaben.L.Talati ,the care taker of the assessee recorded during search proceedings by the ADIT, Jamnagar in which she had stated that the buyer had paid this amount to one Shri Iqbal Ansari, for an out of court settlement of some dispute in respect of one of the lands sold at survey no. 31, Jamnagar. (v) He added an amount of Rs. 5 lakh to the sale consideration noting that the assessee had not completely declared all the cash deposited in the bank as sale consideration and noting the short fall to this extent, he made addition of the same to the sale consideration returned by the assessee. vi) Assessees claim of expenses of Rs.43 lacs on account of Brokerage,legal fees and other expenses was denied for want of evidence I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 6 vii) Assessees was allowed claim of expenses of Rs.8 Lacs being amount of advance received from Mr.Iqbal Arandia refunded on account of an earlier agreement to sell entered into with him being canceled. Accordingly the capital gain of the assessee was recomputed by the A.O. to Rs. 11,20,01,490/-, as opposed to Rs. 4,16,51,075/- declared by the assessee, after making the above adjustments as under: Sale consideration as shown by the assessee Rs 6,53,62,045 Add:- Additional consideration (as discussed in para 7.2 above) Rs 5,00,00,000 Add:- Cash consideration received (para 8.2) Rs 5,00,000 Total full value of sale consideration Rs 11,58,62,045 Less:- Cost of acquisition (para 5.5) Rs 22,69,1007- Indexed cost of acquisition (para 5.7) 22,69,100 x 785 / 583 Rs 30,60,555/- Less: Expenditure incurred (para 7.4) Rs 8,00,000/- Long term capital gain Rs 11,20,01,490/- 5. Aggrieved by the same, the assessee went in appeal before the ld. CIT(A). who deleted the following: (i) additional consideration of Rs. 5 Crores. (ii) substitution of cost of acquisition on the basis of valuation determined by the DVO (iii) The indexation of cost of acquisition on the basis of cost inflation index for 2008-09. While he upheld the adjustment made on account of the following: (i) denying the claim of expenditure of Rs. 43 lakhs. (ii) addition made to the sale consideration on account of cash deposits in bank to the extent of Rs. 5 lacs not fully included by the assessee in the same. I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 7 6. Aggrieved by the above both the assessee and the Revenue have come up in appeal before us. 7. We shall first be dealing with the appeal of the assessee in ITA No. 355/Rjt/2015. 8. The grounds raised by the assessee read as under: 1. The order passed by the learned Assistant Commissioner of Income Tax as well as the Commissioner of Income Tax (Appeals) -11, Ahmedabad is bad in law as well as on facts. 2. The learned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad has erred in law as well as on facts while making/confirming the addition of expenditure of Rs. 43, Lacs which is claimed on the basis of details available on record 3. The learned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) -11, Ahmedabad has erred in law as well as on facts while not considering the fact that the appellant have offered the income in respect of expenses claimed and thus if the expenditure incurred is disbelieved then the income offered is also required to be reduced to that extent. 4. The learned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad has erred in law as well as on facts while making/confirming the addition of Rs. 5 Lacs being the net cash deposited into bank account deposited which was actually deposited from the earlier withdrawal made from the same Bank account. 5. The learned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) -11, Ahmedabad has erred in law as well as on facts while not considering the fact that the appellant has made withdrawal in cash of Rs. 2 Lacs out of balance available ,in bank account on various dates & deposited thereafter Rs. 12 Lacs cash in his Saving Bank account of Canara Bank on 23/06/2011 and thus offered Net cash deposited as income of Rs. 10 Lacs. Similarly, the appellant has made withdrawal of Rs. 3 Lacs from Canara saving bank account in cash on 24/06/2011 out of fund available with him & thereafter made deposit of Rs. 5 Lacs in cash his HDFC saving bank account on 07/07/2011. Thus, the net deposit of Rs. 2 Lacs is offered as income. Thus, while assessing the income, the 'earned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 8 learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad has erred in law as well as on facts in not considering the netting off effect of cash deposited as Income of the assessee. 6. The learned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad has erred in law as well as on facts while not appreciating the submission that there has been a search conducted and all the cash & gold found has already been taxed even if this cash is available with the assessee, it has been taxed as cash found and credit of cash withdrawal made should be granted against cash seized. 9. Ground no. 1 it was stated is general in nature and the same therefore is not being adjudicated upon by us. 10. Ground no. 6 was not pressed before us and is therefore dismissed as not pressed. 11. Ground no. 2 & 3 ,it was common ground ,related to the issue of confirmation of disallowance of claim of expenses of Rs. 43 lakhs allegedly incurred for the purposes of selling the land. 12. Brief facts relating to the issue, are that the assessee had claimed expenses of Rs. 43 lakhs while computing the capital gains , as being brokerage and other expenses, on the basis of the statement of the care taker of the assessee, Ms. Ritaben ,recorded by the Jamnagar Police. The A.O. rejected the claim of the assessee stating that the onus was upon the assessee to establish the claim,while the assessee itself had stated there was no evidence to substantiate the genuineness of the expenses. The assessee had also contended before the A.O. that the expenditure incurred and claimed on the basis of the statement of the care taker was already added in the sale consideration of the land. This contention of the assessee was also rejected by I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 9 the A.O. noting that the analysis of the details of the sale consideration did not show any such sum included therein. Accordingly the entire claim of expenditure was denied by the A.O. The CIT(A) also upheld the disallowance in the absence of any material evidence regarding the claim of expenditure. 13. Before us the solitary contention of the ld. Counsel for the assessee was that the assessee had already reflected an amount of Rs. 24 lakhs out of the expenses of Rs.43 lakhs claimed, as part of sale consideration. He therefore pleaded that the disallowance therefore ought to be restricted to the extent of the balance amount only of Rs. 19 lakhs ,alternately the assessee be allowed claim of expenditure to the extent of Rs.24 lacs. 14. In this regard, he drew our attention to paper book page no. 7 giving the break up the sale consideration returned by the asessee, of Rs.6,53,62,045/- , as under: Sr. No. Particulars Amount 1. Sale of land situated at T.P. Scheme No. 1, P.P. No. 31, Jamnagar 1,26,82,000/- 1,35,00,000/- 2. Cash Deposits into Bank Accounts on various dates 34,33,000/- 3. Cash Deposit into Ritaben Patel Account 12,00,000/- 4. Cash seized during search conducted 2,01,47,045/- 5. Value of Gold Biscuits seized during search 1,20,00,000/- 6. Expenses incurred in connection with the transfer of Asset offered for income 24,00,000/- Total Full Value of Consideration as per Return of Income 6,53,62,045/- I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 10 15. Referring to the above, he drew our attention to point no. 6 which related to expenses incurred in connection with transfer of asset offered for income for Rs. 24 lakhs. He also drew our attention to the assessment order at para 4 acknowledging this fact of 24 lakhs included in the sale consideration as representing expenses incurred by the assessee on sale. Para 4 is reproduced hereunder: “4. During the course of enquiries by the ADIT, statements under section 131(1A) of Miss. Ritaben Patel(Care taker of the assessee at the relevant time), purchasers of the land and other connected persons were recorded. As per information gathered from said enquiries, assessee had sold a piece of land situated at T.P. Scheme No. 1, P.P. No 31, in Jamnagar to 9 different persons of Jamnagar during the month of July 2011 by way of two separate sale deeds, for a consideration of Rs 1,26,82,000/- and Rs 1,35,00,000/- totaling to Rs 2,61,82,000/- It was further gathered that, in addition to the above mentioned documented price, cash consideration by way of on money was also received in these land deals. In the return of income the assessee had offered capital gain by taking the total sale consideration a/Rs 6,53,62,045/- (both cheque and on money). While taking the total sale consideration, the assessee had aggregated the entire cash and value of gold biscuits seized by the Police and other cash deposits into bank accounts and also cash deposits of Rs. 12.00 lacs in the bank account of assessee's care-taker, Smt. Ritaben Patel and expenses of Rs. 24.00 lacs incurred in cash as stated by Smt.Ritaben in her statement. Such capital gain has been offered at Rs 4,16,51,075/- on which due tax has been paid.” The limited plea of the Ld. counsel for the assesse therefore was that disallowance be restricted to the extent of expenses not included in the sales consideration. 16. The ld. D.R. was unable to controvert the factual submission of the assessee that out of total expenses claimed as incurred for sale of land amounting to Rs.43 lacs, expenses of Rs.24 lacs had been included in sales consideration and accepted by the Revenue also. I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 11 17. We have heard both the parties. It is an undisputed and admitted fact on record that the sales consideration offered by the assessee reflected 24 lakhs of expenses incurred on sales. In the computation of capital gain by the A.O., we have noted that the sales consideration has been taken at Rs. 6,53,62,045/- which as per the A.O. himself includes 24 lakhs of the expenses claimed by the Assessee. Thus the inclusion of the assessee of Rs.24 lakhs of expenses ,as part of sales consideration is admission of the fact of having incurred such expenses out of undisclosed sources, and the sale consideration, including these expenses, being accepted by the Revenue, the fact of incurring expenses also stands accepted. The Revenue is therefore precluded from denying the claim of expenses for want of substantiation. We hold therefore that to the extent of expenses incurred which are included as part of sale consideration and which is accepted by the Revenue also, amounting to Rs.24 lacs, the assesses claim of expenses is to be allowed. Since the assessee has claimed expenses of Rs.43 lacs, the balance ,i.e Rs.19 lacs is only liable to be disallowed for want of substantiation. The disallowance of expenses accordingly is directed to be restricted to the extent of Rs.19 lacs.. 18. This ground of appeal of the assessee is therefore partly allowed. 19. Ground no. 4 & 5 it was common ground related to the addition of Rs. 5 lacs made to the sale consideration on account of deposits in the bank account of the assessee not included as part of sale consideration to this extent. 20. The order of the A.O. while making the impugned addition at para 8 -8.2 is as under: “8. On verification of the bank statements, it is noticed that the assessee had made various cash deposits during the year. He had I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 12 claimed the source of such cash being the sale proceeds of the land received in cash. He accordingly, computed the sale proceeds by taking the total of such cash deposits. However, on closer verification, it was noticed that, he had deposited Rs12.00 lacs into his Canara bank account on 23.6.2011 and Rs 5.00 lac into his HDFC Bank account on 7.7.2011. However, while computing the sale proceeds, he had considered only Rs 10.00 lac and Rs 2.00 lac out of the cash deposits made into Canara Bank account and HDFC Bank account respectively. The assessee was therefore asked to explain as to why the actual cash deposited should not be included in the total sale consideration of the land. 8.1 In reply the query, the AR and LH of the assessee submitted that, the assessee had made withdrawals earlier and such cash was available with him. Therefore, no separate addition out of unexplained cash should be made. 8.2 The reply of the assessee is not acceptable. On verification of the bank statement of Canara Bank, it is noticed that the cash has been withdrawn by virtue of self cheques issued in the name of Ritaben Lamanbhai Vaishnav of Rs 50,000 each on four occasions on 2-05-2011, 23-05-2011, 8-06-2011 and 16-06-2011. So there is no evidence to prove that the assessee had retained with him the cash so withdrawn to be posited on later date. Similarly, the AR submits that, the cash withdrawn of Rs 3.00 lac from the assessee's Canara Bank account on 24- 06-2011 was available with him at the time of cash deposit of Rs. 5.00 lacs in HDFC Bank on 7-07-2011. However, as discussed above, in the absence of any proof to show that the cash was available with the assessee, this contention is not acceptable. Further, it has been noticed that an amount of Rs. 50,000/- was in bank account of Smt. Ritaben on 25-06-2011 which the assessee had not taken into sale consideration. It is quite possible that the amount of would have been deposited out of Rs. 3.00 lacs withdrawn on 24-06-2011. In view of these facts and circumstances, deposits to the extent of Rs 2.00 lac into Canara Bank and Rs 3.00 lac into HDFC bank is treated as unexplained cash and added to the assessee's total income. Since the source of cash is the sale proceeds of land, the amount of Rs 5.00 is treated as sale consideration and the same is added to the capital gain. As the assesses has concealed the particulars of its income of Rs. 5,00,000/-, penalty proceedings under section 271(l)(c) are being initiated for concealment of particulars of income.” 21. The same was confirmed by the ld. CIT(A). I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 13 22. We have heard both the parties. A perusal of the contents of the total sale consideration shown by the assessee of Rs. 6.53 crores, as reproduced above, reveals that the assessee had disclosed an amount of Rs. 34,33,000/- as attributable to cash deposit in bank on various dates. The findings of the AO while making addition of Rs.5 lacs on account of unexplained cash deposits, we find, are very vague and general. We find that he has given no specifics as to how he arrived at the findings of the impugned cash deposit in bank not accounted for in sales consideration. What he only states is that the cash deposit not reflected in consideration amounted to Rs. 8 lakhs, out of which Rs 5 lakhs pertained to cash deposit in HDFC bank account and Rs.3 lakhs pertained to deposit in his Canara Bank account. It is not clear as to how he noted that out of 12 lakhs deposited in his Canara Bank account, the assessee had considered only Rs10 lakhs as part of sale consideration and out of Rs. 5 lakhs deposited in the HDFC Bank account the assessee had taken only 2 lakhs as part of sale consideration. Though he mentions specific deposits as not being included in the consideration ,nothing was brought before us as to how he found these specific deposits not included in the disclosure of sale consideration. The Ld. D.R. was unable to assist us in this matter. 23. Further taking note of the entire facts and circumstances of the case and also the fact that the assessee had himself included Rs.33,33,000/- cash deposits in his bank account as part of sale consideration ,We are not inclined to uphold addition on account of unexplained cash deposit of Rs. 5 lakhs to the sale consideration of the assessee. As is evident from the facts of the case as narrated above, the assessee had expired ,suspected to be murdered by his family and his daughter was his only legal heir. The daughter claimed to be totally unaware of the financial transactions of her father ,the assessee , and it was only I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 14 his caretaker, Ms.Ritaben, who was constantly with him and claimed to be in know of the facts of the transaction. The Revenue has at no point controverted or disputed these facts. Also it was on the basis of the caretakers admissions that the sale consideration received for the sale of impugned two lands was increased from the registered value of Rs.2,61,82,000/-(Rs.1,26,82,000/- + Rs.1,35,00,000/-) to Rs. 6,53,62,045/-,including therein all cash deposits in bank , both of the assessee and the caretaker ,attributable to this transaction ,gold biscuits and expenses incurred on the transaction allegedly out of this consideration . 24. The legal heir of the assessee, i.e his daughter having fairly included all possible modes in which consideration was received, as confessed by her fathers caretaker ,and she admittedly being totally unaware of this transaction, the legal heir has surely come clean with all the facts. The onus on the legal heir cannot be equated with that on the assessee so as to burden with the onus of evidencing transactions which she was totally unaware of. Moreover considering the fact that the amount sought to be added by the Revenue on account of unexplained cash deposit of Rs.5 lacs ,is too paltry a sum in comparison to the total sale consideration shown by the assessee of Rs.6.53 crores,in our view no addition of the said unexplained cash deposit of Rs.5 lacs is warranted on account of non substantiation .The addition of Rs.5 Lacs is accordingly directed to be deleted. 25. In view of the above, ground of appeal no. 4 & 5 is allowed. 26. In effect, appeal of the assessee is partly allowed in above terms. ITA No. 365/Rjt/2015- Revenue’s appeal. 27. Ground no. 1 reads as under: I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 15 1) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.5 crore solely relying on the statement of Ms. Reetaben Vaishnav." 28. Ground no. 1 raised by the Revenue is in relation to the deletion of addition of Rs. 5 crore made to the sale consideration received by the assessee which addition was made on account of the said amount stated to have been paid by the purchaser of the land sold by the assessee, to two persons in lieu of an out of court settlement with them with respect to a dispute of one of the land sold. 29. The ld. CIT(A) dealt with the facts relating to the issue at para 4.2 to 5.1 of the order as under: 4.2 The AO made addition of Rs.5.00 crores in the sale consideration of land on the basis of statement of Miss Ritaben L. Patel (caretaker of the assessee). In her statement, she stated that there was some dispute in respect of the land bearing survey No.31 in Jamnagar between the assessee and Shri Iqbal Arandia and Shri V.P. Mehta and the matter was pending in the court. However, an out of court settlement was concluded between the assessee and Shri Iqbal Arandia and Shri V.P. Mehta and an amount of Rs.5.00 crores was paid to these persons by the assessee. This money was stated to have been paid by Shri Bhimjibhai, the purchaser of the said land, directly to Shri Iqbal Arandia and Shri V.P. Mehta. The AO further mentioned that in the statement Shri Iqbal Arandia confirmed the fact that there was dispute with the assessee in respect of the land under consideration and out of court settlement was arrived between them, however he denied the fact that he had received any amount for such settlement from the assessee. He admitted to have received Rs. 8.00 lacs which he had paid to the assessee as an advance for purchase of the land because the assessee cancelled the proposed transaction. 5. The AO further mentioned that Miss Ritaben Patei in her statement recorded u/s.131(1) of the I.T. Act on 26.06.2014 admitted that an out of court settlement was reached for which an amount of Rs.5.00 crore was paid. Accordingly, he held that the actual consideration of the land was not only the consideration disclosed by the assesses In the return of I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 16 income but also the amount paid out of court settlement. He mentioned that since the sale of the land was stayed by the court, it was the need of the assessee and the purchaser of the land to get the stay vacated. Shri Iqbal Arandia was entitled to receive the advance which he had given to the assessee against the land even without going to court. Thus, he arrived at a conclusion that because of all these probabilities Shri Iqbal Arandia would have agreed for out of court settlement for a larger sum. 5.1 In the assessment order, in para 7.2, the AO gave a finding that there was no record of the quantum of the money paid by the assessee out of court settlement except the statement of Miss Ritaben Patel who was handling the affairs of the assessee. She confirmed in her statements that the sum of Rs.5.00 crore was paid for settlement of the case. Therefore, he held that this payment also represented unaccounted portion of the sale consideration of the land over and above the consideration disclosed by the assessee. 30. The Ld.CIT(A) deleted the addition holding at Para 6.6 of his order as under: 6.6 The findings of the A.O. for making addition on the ground of payment made for out of court settlement and the material he relied upon to justify his action were carefully examined. The contents of the statements of Ritaben Patel recorded by the Police Department, by the Officer of the Investigation of the Department during the course of search and by the Assessing Officer were factually self-contradictory. Admittedly, the payment was not made in her presence and she did not know the persons involved in the transactions in issue. The Police did not seize the diary which Ritaben Patel stated in her statement before the A.O. Her statement that the transactions related to the said land land were recorded in the diary seized by the Police was not correct as there was no such diary as per panchnama of the police. The A.O. also did not make any reference of the diary for making the addition. The A.O. did not have any material evidence on record which could establish any veracity of the statements of Ritaben Patel. The assessee, requested the A.O., during assessment proceedings, to confirm whether such diary, if seized by the Police, was examined by him, however, the AO did not respond to the request of the assessee. This fact was emphasized by the assessee in his submission on Page No. 14 & 15 of the paper book. In para 7.2 of the I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 17 assessment order, the AO himself clearly mentioned that there was no other evidence except the statement of Rita Patel about payment of Rs.5.00 crore for out of court settlement. The relevant extract is reproduced that " Now except the statement of Ms. Rita Patel who was the caretaker of the assessee and key witness to the events, who was handling the affairs of the assessee, there is no record of quantum of out of court settlement and she has confirmed on both the occasions that the quantum of out of court settlement was Rs.5.00 crore." After having regard to the facts and circumstances of the case, submissions of the appellant, contents of the assessment order and the position of law on the issue, in my considered opinion, the A.O. was not justified in making addition purely on the basis of the self-contradictory statements of Ritaben Patel. Accordingly, the appeal on this ground is allowed. 31. We have gone through the order of the ld. CIT(A) and we have noted that he has found no material basis for making the addition, allegedly on account of money paid for settlement of dispute vis a vis the land sold amounting to Rs.5 crores. The Ld.CIT(A) went through all evidences relating to the issue before him while arriving at the said conclusion. 32. The addition of Rs.5 crore was made allegedly on account of on-money paid to settle a dispute with one Sh.Iqbal Arandia , relating to the lands sold by the assessee, so as to facilitate clear transfer of property and the said amount was allegedly paid by the purchaser of the property. Undoubtedly it was the statement of the caretaker of the assessee, Ms.Rita Ben, which was the sole basis of the addition. The Ld.CIT(A) has noted facts to the effect that her statement in this regard was not reliable. He noted that the payment was neither made in her presence nor was she aware of the parties involved in it. Her statement that the transaction was recorded in a diary maintained by her and which diary was seized by the Police was found to be false as there was no mention of any diary in the panchnama of the Police. Ld.CIT(A) also noted that even the AO did not refer to any diary while making the addition and that in fact when the assessee asked the I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 18 AO to confirm whether he had examined any such diary seized by the Police, the AO did not respond. 33. These factual findings of the Ld.CIT(A) have not been controverted by the ld. D.R. before us. 34. We have also noted that Mr.Adjania who was the alleged recipient of the settlement amount as per the caretaker, denied receiving any such amount though he admitted to the existence of the dispute and stated that he had only been refunded his advance of Rs.8 lacs, given to the assessee for purchasing the land. 35. The Ld.CIT(A) , we hold has rightly held that except for the statement of the caretaker there was no other evidence with the AO to corroborate the payment of Rs.5 crores for settlement of dispute . And the statement being contradictory and unreliable, the addition, we hold, has been rightly held by the Ld.CIT(A) to be not sustainable. 36. In view of the above, ground no. 1 is dismissed. 37. Ground no. 2 reads as under: 2) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in taking the date of indexed cost of acquisition as 81-82 instead of 08-09 on which indexation has been worked out." 38. The issue relates to the indexation of the cost of acquisition being taken from F.Y 1981-82 as done by the assessee as opposed to from 08-09 taken by the A.O. I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 19 39. The facts relating to the issue being that the land sold by the assessee was acquired by him on succession from his elder brother in 2008-09 ,which his brother owned since 1966.The assessee , relying upon section 49(1) of the Act ,which deems cost of acquisition of the asset acquired in certain modes to be that of the previous owner, took the valuation date as on 01-04-1981 and arrived at the indexed cost of acquisition basis FY 81-82. The AO however held that indexation would be allowed only from 2008-09 when the assessee became the owner of the asset. 40. The Ld. CIT(A) dealt with the issue at Para 7 to 7.2 of his order while deleting the addition, as under: 7. The next ground of the appeal was related to the valuation of the land for computation of capital gains. The assessee claimed fair market value of the land at Rs.24,72,735/- as on 01.04.1981 and arrived at the indexed cost of acquisition at Rs.1,94,10,9707-. The A.O. rejected the claim of the assessee and allowed indexation of cost from 2008-09 only on the ground that the assessee became owner of the property after transferring the same in his name in 2008-09. However, the AO was in agreement with the assessee on the fact that his late brother was having ownership of the land since 1966. The appellant submitted before the AO that the provisions of section 49(1) of the I.T. Act were very clear on this issue that the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or by the assessee as the case may be. The assessee acquired the said land in succession from his late brother who was the owner of the land since 1966. 7.1 The appellant submitted that the land was received by the assessee from his elder brother in succession. His late brother owned this land since 1966 which was evident from the sale deed. He furnished copy of the sale deed from Page 113 to 170 in the paper book. As per provisions of section 49 of the Act, the cost with reference to certain modes of acquisition of assets shall be deemed to be the cost for which the previous owner of the property acquired it as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee as the case may be. The appellant relied upon the decisions of Gautam Manubhai Amin, 218,Taxman 319(Guj.),Rajesh Vitthalbhai Patel I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 20 218 Taxman 301 (Guj.) and scores of other decisions in support of his claim. 7.2 The A.O., it appears from his findings, did not consider the relevant provisions of the Act on the issue and also ignored the ratio of the decisions relied by the assessee. Admittedly, the assessee inherited the land from his late brother Shri Prabhat Sinh who was the owner of the land since 1966,. The A.O. did not dispute these facts. On perusal of the judgement in the case of Rajesh Vitthalbhai Patel (supra), it was observed that the ratio of this case was directly applicable to the facts of the case of the assessee. After considering the facts of the case and position of the law on the issue the appeal is allowed. 41. The ld. D.R. was unable to controvert the factual findings of the ld. CIT(A) that the assessee had acquired the land from his late brother on succession, who in turn had owned it since 1966. This fact has not been disputed by the A.O. also. We have noted that the Ld.CIT(A) has relied upon the decision of the jurisdictional High Court in the case of Rajesh Vithalbhai Patel (supra) for the proposition that on succession ,as per law ,the cost of acquisition is to be taken as that to the previous owner and holding of the property also accordingly to be taken from the date when held by the previous owner.The Ld.DR was unable to distinguish the said decision before us nor did he point out any contrary decision of the Hon’ble jurisdictional High Court or the Hon’ble apex court on the issue. 42. In view of the above, we see no reason to interfere in the order of the ld. CIT(A) allowing indexation of cost of acquisition from 1981-82. Ground of appeal no. 2 is dismissed. 43. Ground no. 3 reads as under: 3) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in not considering the fair market value of the land in question as computed by the D.V.O." I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 21 44. The above grounds relates to the issue of determination of the cost of acquisition of the asset sold which the assessee had taken as per value determined by the registered valuer ,while the AO relied upon valuation done by the DVO. The relevant findings of the ld.CIT(A) while allowing the claim of the assessee in this regard at para 8 to 8.1 is as under: 8. The next ground of appeal was related to the quantum of fair market value as on 01 .04.1981 of land. The fair market value of the land as per valuation report of the / valuer of the assessee was at Rs.24,72,735/- whereas the DVO determined value of the land at Rs.22,69,100/-. The A.O. gave a finding that the value determined by the DVO was based on scientific, pragmatic and comparable sale instances, therefore he rejected the valuation of the valuer of the assessee. The A.R. of the assessee contented that the difference in the valuation determined by- the valuers was only of 8.24% which was very negligible as both the valuations were based on estimate only. 8.1 After considering the fact that there was no substantial difference in the valuation arrived at by the valuer of the appellant and that of the DVO, in my consider opinion, the assessee should be given the benefit of quantum of difference which was less than 10% with that of the DVO. Accordingly, the A.O. is directed to adopt the value of the land as determined by the valuer of the appellant. Thus, appeal on this ground is allowed. 45. We have perused the contents of the ld. CIT(A) and have noted that he affirmed the claim of the assessee noting that the difference in the two valuations ,one by the Registered valuer and the other by the DVO ,was only 8% of the cost . The ld. CIT(A) therefore noted that the same was immaterial so as require any substitution of the valuation of the Registered valuer with that by the DVO. We do not find any infirmity in the order of the L.d CIT(A). Valuation undeniably is only a fair estimation of the value of land as on a particular date. And the same is determined by various different methods ,considering value at which comparable lands were sold on that date, or considering municipal rates of lands on such dates. It involves a lot of assumptions and estimations. I.T.A No. 355 & 365/Rajkot/2015 A.Y. 2012-13 Page No Sh. Vhavanisinh D Vala vs. ACIT 22 Therefore there is bound to be difference in valuation between two different valuers, which could be for many reasons and a difference of 8% is surely immaterial to cast doubts on the veracity of any particular valuation. This difference can safely be attributed to different methodologies ,assumptions and estimations resorted to and in such cases the difference can be safely ignored and it can be said that both the valuations arrive at the same cost of acquisition. We therefore uphold the order of the Ld.CIT(A) rejecting the valuation of cost of acquisition of the lands sold on the basis of valuation by the DVO. Ground of appeal no. 3 is dismissed. 46. The appeal filed by the Revenue is dismissed. 47. In effect the appeal of the assessee is partly allowed; and the appeal of the Revenue is dismissed. Order pronounced in the open court on 03-08-2022 Sd/- Sd/- (TR SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER