SARITA N KALE, MUMBAI V. ASST CIT CEN CIR 32, MUMBAI

ITA 3986/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62378 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2002-2003
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANDEEP MAHESHWARI; R C JAIN AW MR AJAY DAGA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Additional evidence
• Section: 37; 132; 144; 50C; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA NO. 3986, 3987, 3988, 3989, 3990, 3991/MUM./201 1 (A.YS : 2002-03, 2003-04, 2005-06, 2006-07, 2007-0 8, 2008-09 ) MRS. SARITA N. KALE 8, NANDDEEP, KAILASHPURI GOVIND NAGAR, MALAD (EAST) MUMBAI 400 097 PAN AAQPK8908B .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE32, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. R.C. JAIN A/W MR. AJAY DAGA & MR. SANDEEP MAHESHWARI REVENUE BY : MR. PRAVIN VERMA DATE OF HEARING 19.03.2012 DATE OF ORDER 09.05.2012 O R D E R PER BENCH THESE APPEALS PREFERRED BY THE ASSESSEE, ARE DIRECT ED AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE 10 TH MARCH 2011, PASSED BY THE COMMISSIONER (APPEALS)XXXXI, MUMBAI, FOR ASSESSMENT YEARS 2002- 03, 2003-04, 2005- 06, 2006-07, 2007-08 AND 2008-09 RESPECTIVELY. 2. IN THIS CASE, THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME UNDER THE HEADS INCOME FROM OTHER SOURCES . ON 26 TH NOVEMBER 2007, A SEARCH AND MRS. SARITA N. KALE 2 SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT ) WAS CONDUCTED IN KALE GROUP OF ENTITIES, WHICH IN CLUDES THE ASSESSEE. SUBSEQUENTLY, THE ASSESSEE WAS ISSUED NOT ICE UNDER SECTION 153A OF THE ACT, AND THE ASSESSMENT WAS COMPLETED EX-PAR TE UNDER SECTION 144 R/W 153A OF THE ACT, MAKING CERTAIN ADDITIONS. ALL THE APPEALS ARE CONNECTED WITH THE ASSESSMENT ORDERS AND APPELLATE ORDERS WHI CH WERE PASSED CONSEQUENT TO THE SEARCH CONDUCTED. 3. WE HAVE HEARD THE LEARNED COUNSEL, MR. R.C. JAIN, A /W MR. AJAY DAGA, AND MR. SANDEEP MAHESHWARI, REPRESENTING THE ASSESS EE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE, MR. PRAVIN VERMA, REPR ESENTING THE REVENUE. 4. WE FIRST TAKE UP APPEAL IN ITA NO.3986/MUM./2011, F OR ASSESSMENT YEAR 2002-03. 5. GROUND NO.1, IS ON THE ADDITION OF ` 40,000, BEING CASH DEPOSITED IN THE BANK ON 31 ST AUGUST 2011, FOR WHICH THE ASSESSEE HAS NOT PRODUC ED ANY EVIDENCE OF SOURCE. THE ASSESSEE EXPLAINED THAT SHE WITHDREW ` 25,000, ON 2 ND JULY 2011, AND ALONG WITH THE OPENING BALANCE OF C ASH IN HAND, SHE MADE THIS DEPOSIT. 6. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE CONSI DERED OPINION THAT THIS IS A POSSIBLE EXPLANATION OF SOURCE OF DEPOSIT AND THE ASSESSING OFFICER HAS NO EVIDENCE TO CONTRADICT THE SAME. WHEN THE AS SESSEE HAS FURNISHED AN EXPLANATION AND WHEN THE WITHDRAWAL OF MONEY FROM B ANK IS NOT CONTROVERTED AND WHEN THERE IS NO EVIDENCE TO PROVE THE EXPLANATION AS FALSE, WE DELETE THE ADDITION AND ALLOW THE GROUND. 7. GROUND NO.2, IS AN ADDITION OF ` 4,20,000, AS UNEXPLAINED INVESTMENT BASED ON SEIZED PAPER MARKED AS ANNEXURE A-6/PAGE-7 8. 8. THE ASSESSING OFFICER DREW AN INFERENCE THAT THE AS SESSEE MADE INVESTMENT IN M/S M.S. ENTERPRISES. THE ASSESSEE SU BMITTED THAT THIS IS A MRS. SARITA N. KALE 3 DUMB PAPER AND HAS NO EVIDENCIARY VALUE. IT WAS ARG UED THAT THIS PIECE OF PAPER DOES NOT BELONG TO THE ASSESSEE. 9. WE HAVE HEARD BOTH THE PARTIES AND HAVE EXAMINED TH E SEIZED PAPER IN QUESTION. AN AMOUNT OF ` 10,00,000, IS REFLECTED AS PERTAINING TO THE PREVIOUS YEAR 2000-01 AND NOT TO THE CURRENT YEAR. THE ASSESSEES CONTENTION THAT THE NOTING IN THE SEIZED PAPERS ARE AMOUNTS RECEIVABLE BY M/S. K.K. ENTERPRISES, AND M/S. K.K. CONSTRUCTION C O., IS NOT CONTRADICTED BY THE REVENUE WITH EVIDENCE. THE ASSESSEE CONTENDS TH AT THESE TRANSACTIONS HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT OF M/S. K.K. ENTERPRISES AND M/.S K.K. CONSTRUCTIONS. BALANCE SHEET OF THESE CON CERNS WAS FILED. THE ASSESSEE FURTHER SUBMITS THAT THE ABOVE TRANSACTION S WERE ACCOUNTED FOR ON COMPLETION OF CONTRACTS BY M/S. K.K. ENTERPRISES AN D M/S. K.K. CONSTRUCTION CO. IN THE ASSESSMENT YEAR 2002-03 AND THAT THE INC OME ON THESE AMOUNTS WERE BOOKED IN THE SAID ASSESSMENT YEAR. EVIDENCE O F THE SAME IS PRODUCED BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS NOT ABLE TO CONTRADICT THE SAME. ON THESE FACTS, THE ADDITION M ADE BY THE ASSESSING OFFICER TO THE EXTENT CONFIRMED BY THE COMMISSIONER (APPEALS) IS HEREBY DELETED. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 11. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.3987/MUM ./2011, FOR ASSESSMENT YEAR 2003-04. 12. THE SOLE GROUND RAISED IN THIS APPEAL IS ON THE ADD ITION OF ` 10,00,000, AS UNEXPLAINED INVESTMENT. 13. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE COM MISSIONER (APPEALS) CALLED FOR THE REMAND REPORT, WHEREIN THE ASSESSING OFFICER MADE A COMMENT THAT THE ASSESSEE HAS BROUGHT NOTHING ON RE CORD TO PROVE THAT THE SAME IS A DUMB PAPER. HENCE, THE COMMISSIONER (APPE ALS) CONFIRMED THE ADDITION BASED ON THE REMAND REPORT. MRS. SARITA N. KALE 4 14. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE SE IZED PAPER IS ONLY A DUMB DOCUMENT ON WHICH THE NAME OF THE ASSESSEE OR ANY OTHER PERSON IS APPEARING. NO ADDITION CAN BE MADE IN RESPECT OF ` 10,00,000, AS THE SAME DOES NOT PERTAIN TO A.Y. 2003-04. BOTH THE AUTHORIT IES BELOW FAILED TO APPRECIATE THAT NOTING ON THE SAID SEIZED PAPER REL ATES TO THE DUES RECEIVABLE BY M/S. K.K. DEVELOPERS AND M/S. K.K. CONSTRUCTION, AGAINST BILLS RAISED BY THEM ON M/S. M.S. ENTERPRISES. THESE FACTS WERE DUL Y RECORDED IN THEIR BOOKS OF ACCOUNT OF THESE CONCERNS AND THE ASSESSEE HAS N OTHING TO DO WITH THE SAME. THE ASSESSEE HAS PRODUCED EVIDENCE FOR THE SA ME AND THE REVENUE COULD NOT CONTRADICT THE SAME WITH EVIDENCE. CONSEQ UENTLY, THE ADDITION IS HEREBY DELETED AND THE GROUND RAISED BY THE ASSESSE E IS ALLOWED. 15. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.3988/MUM ./2011, FOR ASSESSMENT YEAR 2005-06. 16. GROUND NO.1, RELATES TO THE ADDITION OF ` 2,50,000, MADE ON THE GROUND THAT THE ASSESSEE HAS UNEXPLAINED RECEIPTS F ROM M/S. SADGURU DEVELOPERS. 17. IN RESPONSE TO THE EXPLANATION SOUGHT BY THE ASSESS ING OFFICER ON THE CREDIT OF ` 2,50,000 IN THE BANK ACCOUNT RECEIVED FROM M/S. SA DGURU DEVELOPERS, THE ASSESSEE NEITHER SUBMITTED ANY EXPL ANATION NOR FURNISHED ANY EVIDENCE. THEREFORE, THE ASSESSING OFFICER MADE THIS ADDITION. 18. ON APPEAL, THE COMMISSIONER (APPEALS) CONFIRMED THE ADDITION BASED ON THE REMAND REPORT CALLED FOR FROM THE ASSESSING OFFICER WHEREIN THE ASSESSING OFFICER AGAIN STATED THAT THE ASSESSEE DI D NOT SUBMIT ANY EXPLANATION AND FAILED TO PRODUCE ANY EVIDENCE. 19. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE AS SESSEE HAD ADVANCED ` 2,50,000, TO M/S. SADGUR DEVELOPERS, IN EARLIER YE ARS AND THE SAME FORMED PART OF LOANS AND ADVANCES WHICH WAS APPEARING IN T HE BALANCE SHEET OF THE MRS. SARITA N. KALE 5 ASSESSEE RIGHT FROM THE YEAR 2000-01 UPTO 31 ST MARCH 2004. IN OUR CONSIDERED OPINION, THE ADDITION COULD NOT HAVE BEE N MADE AS IT WOULD RESULT IN DOUBLE ADDITION FIRST IN ASSESSMENT YEAR 2001-02 BASED ON THE ADVANCE APPEARING IN THE OPENING BALANCE SHEET AS AT 31 ST MARCH 2000 AND SECOND IN THE ASSESSMENT YEAR UNDER APPEAL. IN ANY EVENT, THI S IS JUST A REPAYMENT OF ADVANCE BY M/S. SADGURU DEVELOPERS AND NOT INCOME O F THE ASSESSEE. ACCORDINGLY, THE ADDITION MADE IS HEREBY DELETED AN D THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 20. GROUND NO.2, IS ON THE ADDITION OF ` 4,83,444, ON ACCOUNT OF UNDISCLOSED RECEIPT. 21. THE ASSESSING OFFICER ON THE BASIS OF SEIZED ANNEXU RE A-1/PAGE-1, HELD THAT THE ASSESSEE MADE AN INVESTMENT OF ` 4,83,444. S INCE THE ASSESSEE NEITHER FURNISHED ANY EXPLANATIONS, NOR PRODUCED AN Y EVIDENCE, THE ASSESSING OFFICER MADE THE ADDITION. 22. ON APPEAL, THE COMMISSIONER (APPEALS), BASED ON THE REMAND REPORT WHEREIN THE ASSESSING OFFICER MADE HIS COMMENT THAT THE ASS ESSEE HAS BROUGHT NOTHING ON RECORD TO PROVE THE SOURCE OF RECEIPT, CONFIRMED TH E ADDITION. 23. AFTER HEARING BOTH THE PARTIES, WE FIND THAT BOTH T HE AUTHORITIES BELOW HAVE NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE THAT THE SEIZED PAPER PERTAINS TO M/S. GENESIS MOTELS P. LTD. THE NATURE OF ENTRIES ITSELF SUGGEST THAT THE EXPENSES RECORDED ARE TOWARDS REPAIRS EXPE NSES OF A HOTEL RUN BY M/S. GENESIS MOTELS P. LTD. IN THE ASSESSMENT OF M/ S. GENESIS MOTELS P. LTD., FOR THE YEAR UNDER APPEAL, ADDITION OF ` 13,59,299, HAS BEEN MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BUILDING, BASE D ON NOTING IN ANNEXURE A-2 / PAGE-39, WHICH RECORDS TOTAL EXPENDITURE OF ` 27,50,418 TOWARDS CONSTRUCTION / REPAIR EXPENSES ON BUILDING ACCOUNT. FROM THIS FACT, WE CAN CONCLUDE THAT THIS AMOUNT OF ` 4,83,444, IS COVERED UNDER THE ADDITION MADE IN THE HANDS OF M/S. GENESIS MOTEL P. LTD. HENCE, T HERE IS A DOUBLE ADDITION TO THE EXTENT OF ` 4,83,444 FIRST IN THE HANDS OF THE ASSESSEE AND SE CONDLY IN MRS. SARITA N. KALE 6 THE HANDS OF M/S. GENESIS MOTEL P. LTD. CONSEQUENTL Y, THE ADDITION MADE IS HEREBY DELETED AND THE GROUND RAISED BY THE ASSESSE E IS ALLOWED. 24. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.3989/MUM ./2011, FOR ASSESSMENT YEAR 2006-07. 25. THE ONLY GROUND RAISED BY THE ASSESSEE IS ON THE AD DITION OF ` 29,78,500, ON ACCOUNT OF UNDISCLOSED SHORT TERM CAP ITAL GAIN. 26. IN THIS CASE, THE ASSESSEE DECLARED SHORT TERM CAPI TAL GAIN ON TRANSFER OF DEVELOPMENT RIGHTS WHICH WERE ACQUIRED UNDER DEV ELOPMENT AGREEMENT DATED 21 ST JULY 2003 AND TRANSFERRED UNDER DEVELOPMENT AGREEM ENT DATED 17 TH DECEMBER 2005. 27. THE ASSESSING OFFICER MADE THE ADDITION, AS, ACCORD ING TO HIM, DESPITE SERVICE OF NOTICE, THE ASSESSEE NEITHER SUBMITTED A NY DETAILS NOR APPEARED BEFORE THE ASSESSING OFFICER. HE HELD THAT PROVISIO NS OF SECTION 50C OF THE ACT, WAS APPLICABLE ON SUCH TRANSACTIONS AND ACCORD INGLY HE SUBSTITUTED THE TRANSFER PRICE BY VALUE ADOPTED BY THE REGISTERING AUTHORITY AND RECOMPUTED THE CAPITAL GAINS. THIS RESULTED IN THIS ADDITION. 28. ON APPEAL, THE COMMISSIONER (APPEALS) PARTLY ALLOWE D THE CLAIM OF THE ASSESSEE BY OBSERVING AS FOLLOWS:- 1.5 FROM THE PERUSAL OF THE REMAND REPORT, THE AO H AS MENTIONED THAT THE ASSESSEE HAS RAISED OBJECTION ON APPLICABI LITY OF SECTION 50C. ON THE OTHER HAND, THE A.R. OF THE APPELLANT HAS SU BMITTED THAT THE PROPERTY WAS PURCHASED BY THE APPELLANT ALONG WITH SHRI SAMEER KALE FOR DEVELOPMENT PURPOSE WHICH WAS SOLD IN THE YEAR UNDER CONSIDERATION AND THE VALUATION U/S. 50C WILL NOT B E APPLICABLE TO THIS CASE. THE A.R. HAS FURTHER SUBMITTED THAT IF THE AC TUAL SALE VALUE WAS CONSIDERED AT RS. 61,25,000/- AND THE CAPITAL GAIN WILL BE OF RS. 14,68,490/-. OUT OF THIS AMOUNT THE ASSESSEE HAS AL READY SHOWN THE SHORT TERM CAPITAL GAIN OF RS. 29,97,990/- THE BALA NCE AMOUNT OF RS. 29,78,500/- CAN BE ADDED BACK. IN THE REMAND REPORT , THE AO HAS CONFIRMED THAT THE ASSESSEE HAS DECLARED THE SHORT TERM CAPITAL GAIN OF RS. 29,97,990/- IN THE RETURN WHICH SHOULD BE REDUC ED FOR MAKING THE ADDITION. KEEPING IN VIEW THE FACTS AND CIRCUMSTANC ES AND PROVISION OF MRS. SARITA N. KALE 7 SECTION 50C, IT IS CLEAR THAT IT IS A SPECIAL PROVI SION FOR FULL VALUE OF CONSIDERATION INSERTED BY THE FINANCE ACT 2002 W.E. F. 1.4.2003. THE PLAIN READING OF THIS SECTION CLEARLY STATES THAT C ONSIDERATION RECEIVED AS A RESULT OF TRANSFER OF ANY CAPITAL ASSET, THE V ALUE ADOPTED WILL BE THE STAMP DUTY VALUATION MADE BY THE SAID AUTHORITY . KEEPING IN VIEW THE FACTS OF THE PRESENT CASE, IT IS HELD THAT THE PROVISION OF SECTION 50C IS APPLICABLE TO THE FACTS OF THIS CASE. THEREF ORE, THE VALUATION AS PER SEC, SOC IS TO BE ADOPTED AND THE SHORT TERM CA PITAL GAIN AS PER MARKET VALUE COMES TO RS 59,76,490/- OUT OF WHICH R S. 29,97,990/- WAS ALREADY SHOWN BY THE ASSESSEE WHICH IS CONFIRME D BY THE AO IN THE REMAND REPORT. THUS THE ADDITION IS RESTRICTED TO RS. 29,78,500/- IN PLACE OF RS. 67,76,670/- MADE BY THE A.O. THUS THE GROUND OF APPEAL IS PARTLY ALLOWED . 29. THE UNDISPUTED FACT IN THIS CASE IS WHAT WAS ACQUIR ED BY THE ASSESSEE IS DEVELOPMENT RIGHTS FROM NIRMALADEVI DUBE ON 21 ST JULY 2003. THESE DEVELOPMENT RIGHTS WERE ACQUIRED ALONG WITH MR. SAM EER N. KALE. IN THE AGREEMENT, BOTH THESE PARTIES ARE REFERRED TO AS DE VELOPERS. THEREAFTER, VIDE AGREEMENT DATED 17 TH AUGUST 2005, THE ASSESSEE SOLD THE DEVELOPMENT RIGHTS TO MAN-NIKETAN ASSOCIATES (AOP). WHAT WAS PU RCHASED WAS DEVELOPMENT RIGHTS AND WHAT WAS SOLD WAS ALSO DEVEL OPMENT RIGHTS. IN THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND MAN-NIKE TAN ASSOCIATE, AT PAGE-13, REFERENCES ARE MADE TO DISPUTE WITH M/S. B UDDHA BUILDER AND MR. P.P. KENI. 30. ON THESE FACTS, WE EXAMINE THE LEGAL POSITION. THE ISSUE WHETHER THE PROVISIONS OF SECTION 50C, IS APPLICATION TO TRANSF ER OF DEVELOPMENT RIGHT IS NO MORE RES INTEGRA. THE MUMBAI A BENCH OF THE TR IBUNAL IN ITA NO.3051/ MUM./2010, IN SHRI ATUL G. PURANIK, ORDER DATED 13 TH MAY 2011, AT PARA- 11.4, HELD AS FOLLOWS:- 11.4 IN VIEW OF THE AFORENOTED JUDGMENTS RENDERED BY THE HONBLE APEX COURT AND THAT OF THE HONBLE JURISDICTIONAL H IGH COURT, IT IS CLEAR THAT A DEEMING PROVISION CAN BE APPLIED ONLY IN RES PECT OF THE SITUATION SPECIFICALLY GIVEN AND HENCE CANNOT GO BEYOND THE E XPLICIT MANDATE OF THE SECTION. TURNING TO SEC. 50C, IT IS SEEN THAT T HE DEEMING FICTION OF SUBSTITUTING ADOPTED OR ASSESSED OR ASSESSABLE VALU E BY THE STAMP VALUATION AUTHORITY AS FULL VALUE OF CONSIDERATION IS APPLICABLE ONLY IN RESPECT OF LAND OR BUILDING OR BOTH. IF THE CAPITA L ASSET UNDER TRANSFER CANNOT BE DESCRIBED AS `LAND OR BUILDING OR BOTH, THEN SEC. 50C WILL CEASE TO APPLY. FROM THE FACTS OF THIS CASE NARRATE D ABOVE, IT IS SEEN THAT THE ASSESSEE WAS ALLOTTED LEASE RIGHT IN THE P LOT FOR A PERIOD OF MRS. SARITA N. KALE 8 SIXTY YEARS, WHICH RIGHT WAS FURTHER ASSIGNED TO M/ S. PATHIK CONSTRUCTION IN THE YEAR IN QUESTION. IT IS AXIOMAT IC THAT THE LEASE RIGHT IN A PLOT OF LAND ARE NEITHER `LAND OR BUILDING OR BOTH AS SUCH NOR CAN BE INCLUDED WITHIN THE SCOPE OF `LAND OR BUILDING O R BOTH. THE DISTINCTION BETWEEN A CAPITAL ASSET BEING `LAND OR BUILDING OR BOTH AND ANY `RIGHT IN LAND OR BUILDING OR BOTH IS WELL RECOGNIZED UNDER THE I.T. ACT. SEC. 54D DEALS WITH CERTAIN CASES IN WHIC H CAPITAL GAIN ON COMPULSORY ACQUISITION OF LAND AND BUILDING IS CHAR GED. SUB-SEC.(1) OF SEC. 54D OPENS WITH : SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW OF A CAPITAL ASSET, BEING LAND OR BUILDING OR ANY RIGHT IN LAND OR BUILDING, FORMING PART OF AN I NDUSTRIAL UNDERTAKING... IT IS PALPABLE FROM SEC. 54D THAT `LAND OR BUILDING IS DISTINCT FROM `ANY RIGHT IN LAND OR BUILDING. SIMI LAR POSITION PREVAILS UNDER THE W.T. ACT, 1957 ALSO. SECTION 5(1) AT THE MATERIAL TIME PROVIDED FOR EXEMPTION IN RESPECT OF CERTAIN ASSETS . CLAUSE (XXXII) OF SEC. 5(1) PROVIDED THAT THE VALUE, AS DETERMINED I N THE PRESCRIBED MANNER, OF THE INTEREST OF THE ASSESSEE IN THE ASSE TS (NOT BEING ANY LAND OR BUILDING OR ANY RIGHTS IN LAND OR BUILDING OR ANY ASSET REFERRED TO IN ANY OTHER CLAUSES OF THIS SUB-SECTION) FORMIN G PART OF AN INDUSTRIAL UNDERTAKING SHALL BE EXEMPT FROM TAX. H ERE ALSO IT IS WORTH NOTING THAT A DISTINCTION HAS BEEN DRAWN BETWEEN `L AND OR BUILDING ON ONE HAND AND `OR ANY RIGHTS IN LAND OR BUILDING ON THE OTHER. CONSIDERING THE FACT THAT WE ARE DEALING WITH SPECI AL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES U/S.50C, WH ICH IS A DEEMING PROVISION, THE FICTION CREATED IN THIS SECTION CANN OT BE EXTENDED TO ANY ASSET OTHER THAN THOSE SPECIFICALLY PROVIDED THEREI N. AS SEC. 50C APPLIES ONLY TO A CAPITAL ASST, BEING LAND OR BUILD ING OR BOTH, IT CANNOT BE MADE APPLICABLE TO LEASE RIGHTS IN A LAND. AS TH E ASSESSEE TRANSFERRED LEASE RIGHT FOR SIXTY YEARS IN THE PLOT AND NOT LAND ITSELF, THE PROVISIONS OF SEC.50C CANNOT BE INVOKED. WE, TH EREFORE, HOLD THAT THE FULL VALUE OF CONSIDERATION IN THE INSTANT CASE BE TAKEN AS RS.2.50 CRORES. 31. APPLYING THE PROPOSITION LAID DOWN IN THIS CASE LAW TO THE FACTS OF THE PRESENT CASE AND AS THE ASSESSEE WAS NEVER THE OWNE R OF THE PROPERTY AND AS THE ASSESSEE ACQUIRED CERTAIN DEVELOPMENT RIGHTS BY VIRTUE OF THE AGREEMENT DATED 21 ST JULY 2003, AND AS THE ASSESSEE SOLD THESE RIGHTS T O ANOTHER PARTY, VIDE AGREEMENT DATED 17 TH DECEMBER 2005, WHAT WAS SOLD IS NOT LAND OR BUILDING BUT WAS ONLY RIGHTS IN A LAND AND BUILDING, PROVISIONS OF SECTION 50C, HAS NO APPLICATION. 32. COMING TO THE DECISION IN MRS. ARLETTE RODRIGUES V/ S ITO, [2011] 46 SOT 199 (MUM.), RELIED UPON BY THE LEARNED DEPARTME NTAL REPRESENTATIVE, WE FIND THAT IT WAS A CASE WHERE THE ASSESSEES WERE THE OWNER OF THE LAND. MRS. SARITA N. KALE 9 THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE A S THE ASSESSEES WERE NEVER THE OWNER OF THE LAND. 33. REGARDING THE DISPUTE ON COMPUTATION OF THE QUANTUM OF CAPITAL GAIN, THE ASSESSEE SUBMITTED THAT COST OF IMPROVEMENT CLA IMED BY THEM WAS NOT CONSIDERED EITHER BY THE ASSESSING OFFICER OR BY TH E COMMISSIONER (APPEALS). THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT DIS PUTE THE SAME. AS THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF COST INCURRED BY THEM FOR IMPROVEMENT, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATI ON AFRESH IN ACCORDANCE WITH LAW. CONSEQUENTLY, THIS GROUND OF THE ASSESSEE IS A LLOWED IN PART. 34. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.3990/MUM ./2011, FOR ASSESSMENT YEAR 2007-08. 35. GROUNDS NO.1 AND 2, ARE ON THE ADDITIONS ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF ` 7,47,200 AND ON ACCOUNT OF UNEXPLAINED RECEIPT OF ` 8,00,000. 36. THE ASSESSING OFFICER BASED ON THE SEIZED PAPER MAR KED AS ANNEXURE A-8/PAGE-17, SOUGHT EXPLANATION FROM THE ASSESSEE A S TO WHY THESE ADDITIONS SHOULD NOT BE MADE IN RESPECT OF A SELF C HEQUE AND ALSO IN RESPECT OF A CHEQUE IN THE NAME OF M/S. K.K. DEVELOPERS, AS MENTIONED IN THE SAID NOTING. IN THE ABSENCE OF ANY EXPLANATION BY THE AS SESSEE, THE ASSESSING OFFICER MADE ADDITIONS. THIS IS ALSO AN EX-PARTE AS SESSMENT. 37. THE MATTER WAS CARRIED IN APPEAL, WHEREIN BEFORE TH E COMMISSIONER (APPEALS), THE ASSESSEE, IN RESPONSE TO THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER, SUBMITTED THAT THE SELF-CHEQUES TOTALLING TO ` 5,47,200 IS IN RESPECT OF VARIOUS EXPENSES INCURRED ON BEHALF O F A COLLEGE WHOSE AFFAIRS ARE MANAGED BY THE ASSESSEE AND THAT THE SAID EXPEN SES ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE COLLEGE / TRUST AND THE NOTING IS SIMPLY A MRS. SARITA N. KALE 10 MEMORANDUM OF AMOUNT RECEIVED / DISBURSED BY THE AS SESSEE AS CHAIRPERSON OF THE INSTITUTIONS. THIS EXPLANATION A ND EVIDENCE WAS NOT CONSIDERED BY THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPEALS). THE ASSESSEE IS BEFORE US. 38. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE CONSI DERED OPINION THAT THE COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN CON FIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER, AS IT IS CLEARLY EVI DENT FROM THE EXAMINATION OF THE DOCUMENTS THAT THE EXPENDITURE INCURRED AND THE AMOUNT RECEIVED PERTAINS TO THE COLLEGE I.E., AN EDUCATIONAL INSTIT UTION OF WHICH THE ASSESSEE IS A CHAIRPERSON. NO CONTRARY EVIDENCE WAS FOUND BY THE REVENUE. CONSEQUENTLY, THE ADDITIONS CONFIRMED BY THE COMMIS SIONER (APPEALS) ARE HEREBY DELETED AND THE GROUNDS RAISED BY THE ASSESS EE ARE ALLOWED. 39. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 40. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.3991/MUM ./2011, FOR ASSESSMENT YEAR 2008-09. 41. GROUND NO.1, IS ON THE ADDITION OF ` 2,04,683, AS ESTIMATED INCOME OF THE ASSESSEE. 42. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT WISH TO PRESS THIS GROUND. THE LEARNED DEPARTMENTAL REPRESENTATIV E DID NOT OBJECT TO THE SUBMISSIONS MADE BY THE LEARNED COUNSEL. CONSEQUENT LY, THIS GROUND IS DISMISSED AS NOT PRESSED . 43. GROUND NO.2, IS AN ADDITION OF ` 56,15,550, ON ACCOUNT OF UNEXPLAINED INVESTMENT JEWELLERY FOUND AND SEIZED DURING THE SE ARCH OPERATION. 44. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER NOTE D THAT DURING THE COURSE OF SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT, GOLD JEWELLERY WORTH ` 39,00,850, WAS FOUND FROM THE BANK LOCKER NO.310, NEW INDIA CO- OPERATIVE BANK AND THAT OUT OF THE SAME, GOLD JEWEL LERY WORTH ` 36,81,260, MRS. SARITA N. KALE 11 WAS SEIZED. HE FURTHER NOTED THAT GOLD JEWELLERY WO RTH ` 34,94,265, WAS FOUND FROM THE BED ROOM OF THE ASSESSEE. IN BOTH TH E CASES, VALUATION WAS DONE BY THE GOVERNMENT APPROVED VALUER. OUT OF THE GOLD JEWELLERY FOUND AT THE RESIDENCE, JEWELLERY AMOUNTING TO ` 27,34,570 WAS SEIZED, VIDE PANCHANAMA ANNEXURE-5. ON THE GROUND THAT THE ASSES SEE NEITHER FURNISHED ANY EXPLANATION NOR PRODUCED ANY EVIDENCE AND THE A DDITION HAS BEEN MADE IN AN EX-PARTE ORDER PASSED UNDER SECTION 144 OF TH E ACT. 45. THE COMMISSIONER (APPEALS) OBSERVED AT PARA-2.4 OF HIS ORDER THAT THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCE AND THE SAME WERE ADMITTED BY HIS PREDECESSOR-IN-OFFICE AND SENT BACK TO THE ASSESSIN G OFFICER FOR RE- EXAMINATION. THE ASSESSING OFFICER REPLIED THAT THE JEWELLERY WAS SEIZED ONLY AFTER THE SOURCES WERE NOT EXPLAINED AND THAT THE A SSESSEE WAS WRONGLY RELYING ON THE CBDT CIRCULAR. THE COMMISSIONER (APP EALS) CONSIDERED THE VDIS CERTIFICATES, COPY OF INVOICES EVIDENCING PURC HASE OF JEWELLERY AND GAVE CREDIT OF ` 5,30,740, AND TREATED THE BALANCE AS UNEXPLAINED. 46. BEFORE US, THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS EXPLAINED GOLD JEWELLERY TO THE EXTENT OF ` 9270.410 GMS. OUT OF 9532.380 GMS., LEAVING A BALANCE OF 261.970 GMS. OF GOLD AND THAT THE ASSESSEE HAS EXPLAINED 100.04 CARAT DIAMOND OUT OF 100.07 CARAT DIAMOND SEIZED AND THAT THE BALANCE OF 0.3 CARAT DIAMOND AS WELL AS BA LANCE OF 261.970 GMS. GOLD SHOULD NOT HAVE BEEN ADDED IN VIEW OF THE BOAR D CIRCULAR. IT IS SUBMITTED THAT THE ASSESSING OFFICER DID NOT CONSID ER ANY OF THE SUBMISSIONS OF THE ASSESSEE DURING THE REMAND PROCEEDINGS. HE P OINTED OUT THAT A TYPOGRAPHICAL ERROR HAS CREPT IN GROUND NO.2, AND T HE AMOUNT OF ADDITION SUSTAINED BY THE COMMISSIONER (APPEALS) WAS ` 61,46,290, AND NOT ` 56,15,550. HE VEHEMENTLY CONTENDED THAT THE VDIS DE CLARATIONS AND THE JEWELLERY FOUND WERE NOT RECONCILED IN TERMS OF WEI GHT AND CARAT, BUT WERE WRONGLY RECONCILED. HE SUBMITTED THAT THE CALCULATI ON AND ARGUED THAT THE SAME MAY BE CONSIDERED. MRS. SARITA N. KALE 12 47. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SUBSTANTIAL RELIEF HAS BEEN GIVEN AND AS THE ASSESSEE WAS NOT ABLE TO EXPLAIN, THE ADDITION WAS RIGHTLY MADE. REFERRING TO THE BOARD CIRCULAR, HE SUBMITTED THAT THIS IS NOT OVER AND ABOVE THE JEWELLERY EXPLAINED BY THE ASSESSEE. HE A RGUED THAT IN THE CASE OF MRS. SONIA KALE, 288.400 GMS. OF GOLD WAS TREATED A S UNEXPLAINED AND THE VALUE OF WHICH WAS ADDED AS HER INCOME AND THERE IS NO DISPUTE ON THE SAME. HE PRAYED THAT THE ADDITION BE UPHELD. 48. THE UNDISPUTED FACTS IN THIS CASE ARE THAT THE ASSE SSEE LIVES IN A JOINT FAMILY ALONG WITH MR. NANDKUMAR D. KALE, MRS. RASHM I R. KALE AND OTHERS. THE GOLD BELONGING TO ALL THE FAMILY MEMBERS HAS BE EN AGGREGATED AND RECORDED DURING THE COURSE OF SEARCH. WE FIND THAT THE CONTENTIONS OF THE ASSESSEE HAVE NOT BEEN PROPERLY CONSIDERED BY THE A UTHORITIES BELOW. AN EXAMPLE IS THAT, WHEN THE GOLDEN JEWELLERY FOUND DU RING THE COURSE OF SEARCH IS QUANTIFIED IN GRAMS AND CARATS AND THEN VALUED A T THE CURRENT RATE, GOLDEN JEWELLERY AND DIAMONDS DECLARED UNDER THE VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997, CLAIM IS NOT CONSIDERED BASED ON WEIG HT IN GRAMS AND IN CARATS. THE VALUE OF OLD RATES OF 1997 WAS GIVEN AS CREDIT. ANOTHER IMPORTANT FACTOR IS THAT IT IS CUSTOMARY FOR EVERY HINDU LADY DEPENDING ON THE STATUS OF THE FAMILY TO HAVE SOME GOLDEN JEWELLERY. SUCH JEWE LLERY BROUGHT BY THE LADY AFTER MARRIAGE, IS TO BE CONSIDERED AS EXPLAINED JE WELLERY KEEPING IN VIEW THE NORMS SPECIFIED BY THE CBDT IN ITS CIRCULAR. WHEN A PARTICULAR QUANTUM OF GOLDEN JEWELLERY WHICH IS IN POSSESSION OF A MARRIE D LADY OR IN THE POSSESSION OF AN UNMARRIED LADY IS CONSIDERED AS EXPLAINED JEW ELLERY TO THE EXTENT OF 500 GMS. AND 250 GMS. RESPECTIVELY BY THE CBDT CIRC ULAR, THEN THE QUESTION OF DECLARING THE SAME AS UNACCOUNTED GOLDEN JEWELLE RY UNDER VDIS 1997, DOES NOT ARISE. WHEN THE CBDT IN ITS CIRCULAR STATE D THAT A MARRIED WOMAN HAS CERTAIN GOLD AND GOLD TO THE EXTENT OF 500 GMS. CAN BE CONSIDERED AS EXPLAINED, THEN WHAT IS DECLARED IN VDIS IS TO BE C ONSIDERED AS GOLD JEWELLERY POSSESSED BY THE LADY IN EXCESS OF 500 GM S. SIMILARLY, WE FIND THAT GOLD AND JEWELLERY PURCHASED BY THESE ASSESSEES BET WEEN THE YEAR 2001 MRS. SARITA N. KALE 13 AND 2007 AND WHICH HAS BEEN RECORDED BY THEM AND DE CLARED IN THE RETURN OF INCOME, HAS TO BE CONSIDERED AS EXPLAINED JEWELL ERY. THUS, IN OUR CONSIDERED OPINION, THE ADDITION MADE IS ARBITRARY. 49. LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT DUR ING THE COURSE OF SEARCH, GOLDEN JEWELLERY FOUND WAS NOT SEIZED TO TH E EXTENT OF THE CBDT CIRCULAR AND, HENCE, NO SEPARATE DEDUCTION SHOULD B E GIVEN. WE PROPOSE TO COMPUTE THE UNEXPLAINED GOLDEN JEWELLERY WITH REGAR D TO THE GOLDEN JEWELLERY FOUND AND NOT WITH REGARD TO THE GOLDEN J EWELLERY SEIZED. HENCE, THERE IS NO QUESTION OF GIVING DOUBLE BENEFIT TO TH E ASSESSEE. 50. FROM PAGE-88 OF THE ASSESSEES PAPER BOOK, WE RECON CILE THE GOLD JEWELLERY AS FOLLOWS:- GOLD JEWELERY FOUND DURING THE SEARCH SR. NO. NAME DIAMOND (CTS.) GOLD (GMS.) 1. SMT. SARITA N. KALE FROM RESIDENCE FROM LOCKER 93.55 3.19 2156.50 4411.88 2. SMT. SONIYA S. KALE 3.33 850.50 3. SMT. RASHMI R. KALE FROM RESIDENCE FROM LOCKER - - - - 1409.10 704.40 100.07 9532.38 LESS :- SOURCE OF JEWELLERY 1. CREDIT AS PER CBDT CIRCULAR FOR EXPLAINED JEWELLERY - - 1,800 2. DECLARED IN VDIS-97 52.86 5210.94 3. PURCHASED BETWEEN 2001 & 2007, WHICH ARE DECLARED IN RETURN OF INCOME. 43.75 816.76 4. MRS. SONIA KALY A.Y. 208-09. 0.58 288.40 97.19 8116.10 MRS. SARITA N. KALE 14 CREDIT OF CUSTOMARY JEWELLERY AS PER CBDT CIRC ULAR FAMILY MEMBERS NAME MALE / FEMALE AGE ON THE DATE OF SEARCH ALLOWABLE JEWELLERY AS PER CBDT CIRCULAR (GMS.) NANDKUMAR D. KALE MALE 69 100 SARITA N. KALE FEMALE 65 500 RAJENDRA N. KALE MALE 41 100 RASHMI R. KALE MALE 37 500 SAMEER S. KALE MALE 38 500 SONIA R. KALE FEMALE 35 100 TOTAL:- 1,800 51. IN VIEW OF THIS RECONCILIATION, WE SUSTAIN THE ADDI TION ON ACCOUNT OF UN- RECONCILED JEWELLERY TO THE TUNE OF ` 12,74,652, I.E., 1416.288 G,S @ 900 PER GRM. AS THE ADDITION IS MADE IN THE CASE OF ASS ESSEE, AS REGARDS GOLD AND JEWELLERY BELONGING TO MRS. RASHMI R. KALE, ALS O NO SEPARATE ADDITION CAN BE SUSTAINED IN THAT CASE. THIS GROUND OF THE A SSESSEE IS, THUS, ALLOWED IN PART. 52. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. 53. TO SUM UP, ASSESSEES APPEAL IN ITA NO.3986 TO 3998 /MUM./2011, ARE ALLOWED AND ITA NO.3991/MUM./2011, IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAY 2012 SD/- SATBEER SINGH GODARA JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 9 TH MAY 2012 MRS. SARITA N. KALE 15 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, G BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI SELF DRAFTED DATE INITIAL 1. DRAFT DICTATED ON 17.4.2012 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18.4.2012- 4.5.2012 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4.5.2012 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 4.5.2012 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 4.5.2012 SR.PS 6. DATE OF PRONOUNCEMENT 9.5.2012 SR.PS 7. FILE SENT TO THE BENCH CLERK 9.5.2012 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER