Income tax Officer, Ward-3, Navsari, Navsari V. Shri Jagdish Gandabhai Shah, Navsari

ITA 4/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1946 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 01-01-2019

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.04/SRT/2019 (Ǔनधा[रणवष[ / Assessment Year: (2014-15) (Physical Court Hearing) The ITO, Ward-3, Navsari. Vs. Shri Jagdish Gandabhai Shah, Besides Avkar Complex, Nr. Station, Maroli Bazar, Navsari-396436. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: APIPS0087A (Appellant)/(Revenue) (Respondent)/(Assessee) Cross Objection No.09/SRT/2021 [Arising in ITA No.04/SRT/2019] (Ǔनधा[रणवष[ / Assessment Year: (2014-15) Shri Jagdish Gandabhai Shah, Besides Avkar Complex, Nr. Station, Maroli Bazar, Navsari-396436. Vs. The ITO, Ward-3, Navsari. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: APIPS0087A (Appellant) (Respondent) Assessee by : Shri Sujesh C. Suratwala, CA Revenue by : Shri Deependra Kumar, Sr. DR Date of Hearing : 28/04/2022 Date of Pronouncement : 28/06/2022 आदेश / O R D E R PER Dr. A. L. SAINI, ACCOUNTANT MEMBER: This captioned appeal filed by the Revenue and Cross-Objection filed by Assessee, pertaining to the Assessment Year (AY) 2014-15, are directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Valsad [in short “the ld. CIT(A)”] in Appeal No. CIT(A)/VLS/589/16-17/1338 dated 03.10.2018, which in turn arise out of an assessment order passed by the Assessing Officer u/s.143(3) of the Income Tax Act, 1961 [hereinafter referred to as the “Act”]. 2. Grounds of appeal raised by the Revenue are as follows: “i) Whether on the fact and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 1,89,65,824/- made on account of: Page | 2 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah (a)On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.99,06,825/- without appreciating the facts of case that the assessee has not offered capital gain for taxation and has also violated provisions of 50C of the IT Act. (b) On the fact and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.11,05,900/- without appreciating the facts of case that the rule 46A of the IT Rule has not been followed by Ld. CIT(A) and section 50C of the IT Act was also violated. (c) On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,83,308/- without appreciating the facts of case that the rule 46A of the IT Rule has not been followed by Ld.CIT(A). (d) On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.4,20,858/- without appreciating the facts of case that the rule 46A of the IT Rule has not been followed by Ld.CIT(A). (e) On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.31,57,433/- without appreciating the facts of case that the rule 46A of the IT Rule has not been followed by Ld.CIT(A). (f) On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.20,02,000/- without appreciating the facts of case that the rule 46A of the IT Rule has not been followed by Ld.CIT(A). (g) On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.21,89,500/- without appreciating the facts of case that the rule 46A of the IT Rule has not been followed by Ld.CIT(A). (ii) On the fact and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. and dismissed the plea of the assessee. (iii) It is therefore, prayed that the order of the Ld. CIT(A) be set-aside and that of A.O. be restored. (iv) The assessee craves leave to add alter or amend any grounds of appeal.” 3. The Grounds of appeal raised by Assessee in CO No.09/SRT/2021, are as follows: “1. Learned CIT(A), Valsad erred in making addition of Rs.3,46,150/- by way of not considering the Legislative Act 1947 and Tenancy Act and Agriculture Land Act 1948 of Mumbai State, prevailing during Financial Year 2010-11 and completely ignore legal opinion by Lawyer given in this regard which is bad in law hence required to be deleted.” 4. Now we shall take Revenue’s appeal in ITA No.04/SRT/2019, for AY.2014- 15. Page | 3 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah 5. Ground No. 1 raised by the Revenue relates to addition on account of sale of immovable property of Rs.99,06,825/-. 6. Brief facts qua the issue are that the assessee filed his return of income on 11-02-2015, declaring total income at Rs.4,64,554/-. The said return of income was processed u/s 143(1) of the Act, accepting the income returned. Later on, assessee`s case was selected through CASS for complete scrutiny and accordingly notice u/s 143(2) was issued on 31.08.2015.In ground No.1 Revenue has disputed the addition of Rs.99,06,825/- pertaining to the HUF- N.A. land at Mahuvar village. The assessing officer made addition of Rs. 99,06,825/- on account of unexplained investment u/s 69 of the Act, pertaining to sale of Mahuvar N.A. land. During the assessment proceedings, the assessing officer observed that assessee`s claim of sale of ancestral land belonging to HUF and the transaction duly shown in the return of income of HUF of Jagdishbhai G. Shah for A.Y. 2014-15 should not be accepted on the following grounds: viz: (a) HUF PAN was allotted on 19.08.2014 i.e. after date of sale of the said property, (b) HUF bank account was opened on 12.09.2014 which again after property sale date, (c) return of income of HUF was filed on 09.05.2016 for A.Y. 2014-15, (d) Advance received as per Satakhat was shown in the individual balance sheet against the property, and in the sale deed, the co-owner was shown as individual and not the Karta(HUF). (e ) The assessee`s claim of stamp duty valuation of the property taken for the year 2010; when Satakhat for sale of land for Rs.1,40,00,000/- was made and payments were received from 2010 onwards till 2013 as per Satakhat, which was not accepted by the assessing officer on the ground that the sale was effected on 13.05.2013 through registration with the sub-registrar. Therefore, assessing officer made addition to the tune of Rs.99,06,825/-. 7. On appeal, ld CIT(A) deleted the addition. Aggrieved, the Revenue is in appeal before us. 8. Learned DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. Page | 4 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah 9. On the other hand, Ld Counsel for the assessee argued that sale of the ancestral property being N.A. land at Mahuvar Village was shown in the hands of HUF of the assessee and capital gain was worked out and return of income of HUF was filed on 09.05.2015 which is prior to date of even scrutiny notice u/s 143(2) dated 31.08.2015. Thus, it was argued that the assessing officer's findings of PAN for HUF, Bank accounts etc. opened after date of sale is meaningless as no malafide or even tax planning or tax avoidance could be linked to scrutiny proceedings in the case of individual capacity. It was also argued that the Satakhat for sale of agreement of the said land was signed jointly by the assessee, his wife Pragna J. Shah, Hansaben Virendra Shah (Widow of Virendra G. Shah - brother of assessee) and Jignesh V. Shah (Son of assessee`s brother late Virendra G. Shah) and the title of the said land was mentioned in the sale deed dated 13.05.2013 as joint family property. The copy of Village sample no.6 indicated that the said land was in the name of assessee`s mother Taraben Gandabhai and the names of assessee, his brother Virendra G. Shah and others were added as direct inheritors in 1984. This way, ld Counsel reiterated the submissions made during the appellate proceedings. 10. We have heard both the parties. We note that return of income of HUF of the assessee as well as HUF of his brother was filed on 09.05.2015 and 15.06.2015 wherein the long term capital gain on the sale of the said land was already shown. In the case of assessee`s own HUF, purchase of residential house property is shown for deduction u/s 54F of the Act. With regard to stamp duty valuation of the said land for the year of sale in 2013, we note that Satakhat dated 24.11.2010 indicating receipt of part payment of Rs. 18.50 lacs by cheques dated 08.09.2010 clearly indicate that reference to sale has to be taken from the year 2010. We note that the capital gain on property duly shown in the HUF return of income cannot be taxed again in the hands of the individual, for this reliance can be placed on the decision of the Hon`ble Gujarat High Court in the case of CWT vs. Harshadlal Manilal - 97 ITR 86 (Guj.).There is no dispute that the Mahuvar land was inherited property jointly owned by assessee`s family and assessee`s brother family. Thus, the capital gain was rightly shown in the HUF capacity of the assessee. The issue of stamp duty valuation cannot be applied in individual case of the assessee when HUF had Page | 5 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah already filed return of income on 09.05.2015 which is prior to scrutiny notice dated 31.08.2015 in the case of assessee. The assessing officer has incorrectly mentioned the date of return of income of HUF as 09.05.2016 in the assessment order. The ld CIT(A) noted that character of HUF property cannot be changed just because of no mention of HUF as co-owner in the sale deed and advance receipts shown in the individual bank account or balance sheet. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A). 11. In the result, ground No.1 raised by the Revenue is dismissed 12. In ground No. 2 Revenue has disputed the addition of Rs.11,05,900/-. This ground pertains to sale of Sagra village land. The assessing officer has observed that the stamp duty valuation of the Sagra Land was Rs.22,05,900/- and after reducing the purchase cost of Rs.11 lacs, the balance of Rs.11,05,900/- was taxable as deemed capital gain as per section 50C of the Act. The assessing officer also noted that the registered sale document of the said land indicated sale value of Rs. 13 lacs only. The assessing officer further noted that the assessee did not furnish any reply on hearing dated 22.12.2016, Therefore, assessing officer made addition Rs.11,05,900/-. (differential value of sale consideration as per stamp duty valuation vis-a-vis sale consideration as per registered documents). 13. On appeal, ld CIT(A) deleted the addition. Aggrieved, the Revenue is in appeal before us. Learned DR for the Revenue submits that assessee did not file any details before the assessing officer. During the appellate proceedings, the assessee submitted details/documents which were not examined by the assessing officer therefore, matter may be remitted back to the file of the assessing officer for fresh adjudication. On the other hand, ld Counsel has referred to the submission dated 19.12.2016 addressed to the assessing officer whereby the issue pertaining to Sagra village land was to be replied on 21.12.2016. The Ld Counsel has stated that the opinion of Sr. Advocate Shri Jayesh B. Patel dated 21.12.2016 was submitted to the assessing officer on 22.12.2016 and the same has been elaborated in the submission Page | 6 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah dated 05.10.2017 whereby it has been stated that the provision of section 50C was not applicable for sale of Sagra land. The assessee contended that the sale was made by him as farmer whereas the purchaser being a non-farmer, had the Collector's speaking order to get this land converted into N.A. within specified period. In such a situation, the stamp duty value to be paid by the purchaser is stamp duty valuation of N.A. land whereas the assessee being farmer, the sale consideration of Rs. 13 lacs was rightly shown as per market value applicable to the agricultural land. 14. We have heard both the parties . We note that assessee has submitted a copy of order of Navsari Collector dated 28.10.2013 wherein the facts of purchase of agriculture land at Sagra by Hima Monti Chaliawala from the assessee is not the reference to Gujarat land rule 1956 [Rule 31(i)(a)] was referred for conversion into NA land by the purchaser within specified period of 6 months. In fact the land registration and sale can be declared null and void if purchaser fails to get the agriculture land converted into non-agriculture. The assessee has also shown from the purchase document of Sagra land that the said agricultural land was purchased in May 2013 for Rs.11 lacs and sold as agriculture land in Nov, 2013 for Rs.13 lacs. Thus, it was claimed that there could not have been any reason for variation in Jantri value of agricultural land in a matter of 6 months to Rs.22,05,000/- and it was emphasized that the difference in stamp duty rate value was due to the purchaser being non-farmer, stamp duty of NA land was applied. Based on these facts we do not find any infirmity in the order of ld CIT(A) in deleting the addition of Rs.11,05,900/-. Thus, ground no. 2 raised by the Revenue is dismissed. 15. Ground nos. 3 and 4 raised by the Revenue are interconnected, which related to addition of Rs.1,83,308/- and Rs.4,20,858/- respectively. During the assessment proceedings, the assessing officer noted that the Mahuvar village property indicated 3 co-owners, viz: Miya Ibrahim, the assessee and Jignesh V. Shah and accordingly, the assessee`s share was taken at 1/3 rd . For the property sold at Chhinam village, there were 4 co-owners - Miya Ibrahim, the assessee, his wife Pragna J. Shah and Jigensh V. Shah and accordingly, the assessee`s share was taken at 1/4th. In the books of account and return of income, the assessee had taken 25% share of sales Page | 7 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah consideration in Mahuvar property and 16.67% share of sales consideration in Chhinam property. Thus, the assessing officer concluded that the assessee has accounted his shares of sale consideration less by Rs.1,83,308/- in case of Mahuvar property and Rs.4,20,850/- less in Chhinam property and therefore these amounts were added to the total income of the assessee. 16. On appeal, ld CIT(A) deleted the addition. Aggrieved, the Revenue is in appeal before us. Learned DR for the Revenue supported the findings of assessing officer, whereas ld Counsel defended the order passed by ld CIT(A). We have heard both the parties and note that Miya Ibrahim had 50% share in both the properties and assessee`s share was 25% only in Mahuvar (another 25% held by Jignesh V. Shah) and 16.67% only in Chhinam property (another 16.67% by Jignesh V. Shah, and another 16.67% by Pragna J. Shah). The assessee has filed assessment order of Jignesh V. Shah for A.Y. 2012-13 wherein the assessing officer had accepted the share of 16.67% in Chhinanr property and 25% in the other property when the issue of source of investment was being examined in that A.Y. Considering these facts, the ld CIT(A) held that assessing officer had no material facts and evidences to deem the assessee`s 1/3 rd share in Mahuvar property and 1/4th share in Chhinam property. Accordingly, ld CIT(A) deleted the addition of Rs.1,83,308/- and Rs.4,20,858/-. We do not find any infirmity in the order of ld CIT(A), hence we approve and confirm the findings of ld CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed. 17. In the result. Ground No.3 and 4 raised by the Revenue are dismissed. 18. Coming to ground no.5 raised by the Revenue, which relates addition to Rs.31,57,443/-. This addition pertains to development expense for NA land at Karankhat village. In the assessment order, the assessing officer noted that bills and vouchers pertaining to development of expense as well as genuineness of expenses was not established by the assessee. The assessing officer noted that the total cash withdrawal from all the bank accounts was Rs. 16.85 lacs only and this could not have explained the development expenses of Rs.31,57,433/-. The assessing officer Page | 8 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah also noted that the expense of Rs.31,57,433/- was not recorded in the books within the meaning of section 69 of the Act. Therefore, assessing officer made addition of Rs.31,57,433/-. 19. On appeal, ld CIT(A) deleted the addition. Aggrieved, the Revenue is in appeal before us. Learned DR for the Revenue submits that assessee did not file any details before the assessing officer. During the appellate proceedings, the assessee submitted details/documents which were not examined by the assessing officer therefore, matter may be remitted back to the file of the assessing officer for fresh adjudication. On the other hand, ld Counsel defended the order passed by ld CIT(A). We have heard both the parties and note that during the assessment stage the assessee did not produce the cash book and relevant vouchers of cash book. Assessee submitted cash flow statement only, therefore, we note that assessee has not submitted the relevant documents to prove the genuineness of the transactions, hence we are of the view that one more opportunity should be given to the assessee to plead this matter before the assessing officer. Therefore we remit this issue back to the file of the assessing officer with the direction to assessee to produce cash book and necessary documents before the assessing officer. The assessing officer is directed to adjudicate this issue after giving sufficient opportunity of being heard to the assessee. 20. In the result, ground No.5 raised by the Revenue is allowed for statistical purposes. 21. Coming to ground no. 6 raised by the Revenue which relates to addition of Rs.20,02,000/-. We have heard both the parties and note that assessee did not furnish cash book and did not explain the discrepancy in the cash therefore assessing officer made addition. On appeal, ld CIT(A) deleted the addition without having examined the cash book and discrepancy in the cash. The assessing officer also noted that assessee has failed to explain the source of such cash. The ld CIT(A) deleted the addition based on cash flow statement, which is not the relevant document to examine the source of the cash received by the assessee. When the Page | 9 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah assessee receives cash, the primary document is the cash book in which assessee does entry of such cash along with necessary vouchers, which have not been produced by the assessee before the assessing officer. Therefore we remit this issue back to the file of the assessing officer with the direction to assessee to produce cash book and necessary documents before the assessing officer. The assessing officer is directed to adjudicate this issue after giving sufficient opportunity of being heard to the assessee. 22. In the result, ground No.6 raised by the Revenue is allowed for statistical purposes. 23. Ground No. 7 raised by the Revenue relates to addition of Rs.21,89,500/-. We have heard both the parties on this issue and note that during the assessment stage assessee did not furnish any details as asked in show cause notices, as mentioned in the assessment order The assessee did not furnish details of Copy of ITR, Confirmation, PAN, and Bank Entries Statements and therefore source of cash credit of Rs.21,89,500/- remained unexplained. On appeal, ld CIT(A) deleted the addition stating that assessing officer did not understand the full facts about “agreement of sale” vis-à-vis “sale deed” pertaining to Priya Lalwani. We note that assessee took fresh stand during the appellate proceedings and failed to produce the basic documents relating to this transaction before the assessing officer. Therefore, we remit this issue back to the file of the assessing officer with the direction to furnish necessary documents before the assessing officer. We also direct the assessing officer to adjudicate this issue after giving sufficient opportunity of being heard to the assessee. 24. In the result, ground No.7 raised by the Revenue is allowed for statistical purposes. 25. Cross Objection No. 09/SRT/2021 for A.Y.2014-15: Now, we shall adjudicate assessee’s Cross Objection No. 09/SRT/2021 for AY. 2014-15 wherein the Ld. Counsel submitted that Ld. CIT(A) was erred in making addition of Rs.3,46,150/- by way of not considering the Legislative Act 1947 and Tenancy Act and Page | 10 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah Agriculture Land Act 1948 of Mumbai State, prevailing during Financial Year 2010-11 and completely ignored legal opinion by lawyer given in this regard, which is bad in law. 26. On the other hand, ld DR for the Revenue relied on the stand taken by ld CIT(A). We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record.We note that Ld. CIT(A) has passed the order on this issue as follows: “The assessee has challenged the addition of Rs.3,46,150/- as unexplained investment pertaining to purchase of Ponsara village property during the year. In this assessment order, the assessing officer noted that the purchase document indicated purchase price of the property at Rs.9 lacs and stamp duty value of Rs.57,500/-. Thus, the assessee`s 50% share worked out to Rs.4,78,750/- whereas in the books of account, the amount shown against this property was Rs.1,32,600/-. Accordingly, Rs.3,46,150/- was treated as payment from unexplained sources after rejecting the assessee`s reply. In the appellate proceedings, the assessee has contended that the said land was purchased in 2010 which was not in accordance with the Tenancy Act and agriculture land Act which ultimately got rejected by registration office. The same land was registered again on 21.12.2012 without any further consideration payment Accordingly, it was claimed that the investment of Rs.1,32,600/- was shown for the purchase as in 2010. This contention of the assessee was not found acceptable as copy of sale deed of Ponsara village property clearly indicated the payments made as per the current purchase deed documents. Accordingly, the assessee`s 50% share of Rs.4,78,750/- should have been duly shown in the book. Thus, I did not find any infirmity in the conclusion of the assessing officer to make addition of Rs.3,46,150/- as unexplained investment in the Ponsara village property. Hence, the addition of Rs.3,46,150/- is hereby confirmed. This ground of appeal no. 5 dismissed.” 27. We have heard both the parties. We have gone through the above findings of ld CIT(A) and do not find any infirmity in the order of ld. CIT(A), therefore we dismiss the Cross Objection filed by assessee. 28. In the result, the appeal filed by the Revenue in ITA No. 04/SRT/2019 is partly allowed for statistical purposes, and Cross Objection filed by the Assessee in CO. No. 09/SRT/2021 is dismissed. Page | 11 ITA.04/SRT/2019 & CO. 09/SRT/2021 Assessment Year. 2014-15 Jagdish G. Shah Registry is directed to place one copy of this order in all appeals folder / case file(s). Order is pronounced in the open court on 28/06/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 28/06/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr.PS/PS ITAT, Surat