The Assistant Commr. of Income Tax, Cen. Circle-2, RAJKOT-GUJARAT V. Shri Pravinbhai Ramjibhai Surani, JUNAGADH

ITA 433/RJT/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4245 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-03-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 22-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Unexplained investment; Retrospective amendment; Tax effect

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA.NO.433/RJT/2015 WITH CO NO.60/RJT/2015 / ASSTT. YEAR: 2006-2007 ACIT, CENT.CIR.2 RAJKOT. VS SHRI PRAVINBHAI RAMJIBHAI SURANI KHODIYAR KRUPA TALAO GATE STREET NO.2 JUNAGADH. ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI PRAVEEN VERMA, SR.DR ASSESSEE BY : SHRI M.J. RANPURA, AR / DATE OF HEARING : 25/10/2018 / DATE OF PRONOUNCEMENT: 01 /11/2018 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF LD.CIT(A)-11 AHMEDABAD DATED 29.6.2015 PASSED FOR THE ASSTT.YEAR 2006-07. ON RECEIPT OF NOTICE ON THE REVENUES APPEAL, ASSESSEE HAS FIL ED CROSS OBJECTION BEARING NO.60/RJT/2015. BOTH ARE DISPOSED OF BY THIS COMMON ORDER. 2. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE H AS RAISED A PRELIMINARY OBJECTION AS TO THE MAINTAINABILITY OF REVENUES AP PEAL BEFORE THE TRIBUNAL, IN VIEW OF RECENT CBDT DIRECTION RESTRICTING THE REVEN UE NOT TO FILE APPEAL BEFORE THE TRIBUNAL WHERE TAX EFFECT IS BELOW RS.20 LAKHS. THEREFORE, SINCE AGGREGATE OF DISPUTED ADDITIONS INVOLVED IN THE PRE SENT APPEAL IS OF ITA NO.433/RJT/2015 WITH CO 2 RS.54,90,498/- TAX EFFECT THEREON WOULD BE LESS THA N RS.20 LAKHS, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED IN LIMINE . TO THIS SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE, NO RESISTANCE CAME FRO M THE LD.DR, HOWEVER, AND LEFT THE ISSUE TO THE BENCH TO BE DECIDED IN ACCORD ANCE WITH LAW. 3. ON DUE CONSIDERATION OF THE RECORD AND SUBMISSIO NS OF BOTH THE PARTIES, WE FIND THAT APPEAL OF THE REVENUE IS PRES ENTED ON 22.9.2015. ON 11.7.2018 THE CBDT HAS ISSUED A CIRCULAR NO.3/20 18 PROHIBITING ITS SUBORDINATE AUTHORITIES FROM FILING OF APPEAL TO TH E TRIBUNAL AGAINST ORDER OF THE CIT(A) WHERE THE TAX EFFECT BY VIRTUE OF THE RELIEF GIVEN BY THE CIT(A) IS LESS THAN RS.20 LAKHS. THE INSTRUCTI ONS HAVE BEEN MADE APPLICABLE WITH RETROSPECTIVE EFFECT, MEANING THERE BY, THESE INSTRUCTIONS ARE APPLICABLE ON PENDING APPEALS ALSO. IN THE PRE SENT CASE, THE TAX EFFECT ON THE DISPUTED DELETION OF ADDITIONS DOES NOT EXCE ED RS.20 LAKHS. THE TAX EFFECT AS PER CBDT CIRCULAR IS TAX ON THE TOT AL INCOME ASSESSED MINUS THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD S UCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS FILED, WOULD BE LESS THAN RS.20 LAK HS. THEREFORE, THE PRESENT APPEAL OF THE REVENUE IS HIT BY THE CBDT CI RCULAR AND HENCE NOT MAINTAINABLE. FURTHER, LD.DR HAS NOT POINTED OUT W HETHER THE CASE OF THE REVENUE FALL WITHIN THE AMBIT OF EXCEPTIONS PROVIDE D IN THE CIRCULAR OR NOT. THUS, KEEPING IN VIEW THE ABOVE CBDT CIRCULAR AND PROVISIONS OF SECTION 268A OF THE INCOME TAX ACT, WE ARE OF THE V IEW THAT THE PRESENT APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. IT IS ACCORDINGLY DISMISSED. HOWEVER, IT IS OBSERVED THAT IN CASE ON RE-VERIFICA TION AT THE END OF THE AO IT COMES TO THE NOTICE THAT THE TAX EFFECT I S MORE OR REVENUES ITA NO.433/RJT/2015 WITH CO 3 CASE FALLS WITHIN THE AMBIT OF EXCEPTIONS PROVIDED IN THE CIRCULAR, THEN THE DEPARTMENT WILL BE AT LIBERTY TO APPROACH THE T RIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLICATION SHOULD BE FILED WITHI N THE TIME PERIOD PRESCRIBED IN THE ACT. IN VIEW OF THE ABOVE, THE A PPEAL OF THE REVENUE IS DISMISSED DUE TO LOW TAX EFFECT. 4. SO FAR AS CO OF THE ASSESSEE IS CONCERNED, WE FI ND THAT THE ASSESSEE IS IMPUGNING CONFIRMATION OF ADDITION OF RS.8,81,00 0/- WHICH WAS ADDED BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTM ENT MADE IN PLOT OF LAND SITUATED AT 34 & 35 (PLOT NO.8), DIXANAGAR, ZA NZARDA, DIST. JUNAGADH. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. WHILE CONFIRMING THE ADDITION, THE LD.CIT(A)HAS RECORDED A FINDING. IT READS AS UNDER : ACCORDING TO THE A.O. IN SURVEY NO. 34 AND 35, THE PLOT NO.8 IN DIXA NAGAR ZANZARDA WAS PURCHASED BY THE ASSESSEE OUT OF UNDISCLOSED INVESTMENT. THE ANALYSIS OF THE CONTENTS OF THE ORD ER AND SUBMISSIONS OF THE APPELLANT REVEALS THAT THE ASSESSEE ACTED AS PO WER OF ATTORNEY HOLDER AND SOLD THE PLOT IN THAT CAPACITY TO TAKSHA SHILA GRUH NIRMAN P. LTD. ON BEHALF OF ITS OWNER SHRI JASMATBHAI V. R AKHOLIA. THERE WAS NO DIRECT OR INDIRECT BLOOD RELATIONSHIP BETWEEN TH E OWNER OF THE PROPERTY AND THE APPELLANT. THE PROPERTY WAS SOLD B Y THE APPELLANT AND THE SALE PROCEEDS WERE DEPOSITED IN THE ACCOUNT OF THE OWNER OF THE PROPERTY. HOWEVER, THE APPELLANT WAS NOT ABLE TO GI VE ANY JUSTIFIABLE REASON FOR HAVING POWER OF ATTORNEY FROM THE OWNER OF THE PROPERTY. AS A COMMON PRACTICE PREVAILING IN THE MARKET, ANYBODY CAN BE A WITNESS IN THE SALE DEED IF HE KNOWS ANY ONE OF THE PARTIES INVOLVED IN THE TRANSACTION. THEREFORE, THE DEEDS WHEREIN THE APPEL LANT ACTED AS A WITNESS WAS UNDERSTANDABLE BUT IT WAS DIFFICULT TO ACCEPT THE EXPLANATION OF THE ASSESSEE THAT THE OWNER OF THE S AID PROPERTY GAVE POWER OF ATTORNEY TO THE ASSESSEE FOR HIS CONVENIEN CE. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED OPINION, THE PROPERTY WAS BOUGHT BY THE ASSESSEE AND THE ITA NO.433/RJT/2015 WITH CO 4 POWER OF ATTORNEY WAS ACCORDED TO HIM BY THE SELLER OF THE PROPERTY TO SAFE GUARD THE INTEREST OF THE BUYER OF THE PROPERT Y I.E. THE ASSESSEE. THEREFORE, THE FINDING OF THE A.O. DID NOT WARRANT ANY INTERFERENCE. ACCORDINGLY, THIS GROUND OF APPEAL IS REJECTED. 6. IT IS PERTINENT TO OBSERVE THAT DURING THE COURS E OF SEARCH A DOCUMENT WAS FOUND WITH AN ADVOCATE EXHIBITING TRAN SACTION WITH RESPECT TO THE ABOVE LAND. THE CASE OF THE ASSESSE E IS THAT HE WAS POWER OF ATTORNEY HOLDER OF SHRI JASMATBHAI V. RAKHOLIA. COPY OF THE POWER OF ATTORNEY HAS BEEN PLACED ON RECORD ON PAGE NOS.67 T O 72 OF THE PAPER BOOK. ACCORDING TO THE ASSESSEE, HE HAS JUST ACTED ON BEHALF OF ACTUAL OWNER AND INDIVIDUALLY NO LIABILITY CAN BE FASTENED UPON HIM. THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORI TIES. 7. ON DUE CONSIDERATIONS OF THE ABOVE FINDING OF TH E LD.CIT(A) WOULD REVEAL THAT THE LD.CIT(A) HAS TREATED THE ASSESSEE IN THE CAPACITY OF POWER OF ATTORNEY HOLDER AS AN OWNER. HE FAILED TO APPRECIATE THAT POWER OF ATTORNEY ACTS ON BEHALF OF THE ORIGINAL OWNER. HIS EVERY ACT AND CONDUCT UNDER THE POWER OF ATTORNEY IS TO BE CONSTR UED ON BEHALF OF THE OWNER, AND HE PERSONALLY CANNOT BE HELD LIABLE FOR THOSE TRANSACTIONS. IF MANNER IN WHICH THE LD.CIT(A) HAS APPRECIATED THIS CONTROVERSY IS BEING ACCEPTED, THEN THE VERY CONCEPT OF POWER OF ATTORNE Y WOULD BECOME REDUNDANT. THERE IS NO OTHER EVIDENCE WITH THE DEP ARTMENT WHICH CAN SUGGEST THAT THE LAND WAS ACTUALLY PURCHASED BY THE ASSESSEE OR IN HIS NAME. THE LD.AO COULD CALL FOR AN INFORMATION FROM THE REVENUE AUTHORITIES OF THE STATE GOVERNMENT SHOWING THE OWN ERSHIP IN THE LAND RECORD MAINTAINED BY THE STATE REVENUE AUTHORITIES UNDER THE GUJARAT LAND REVENUE ACT. THE ASSESSEE HAS FILED COPY OF S ALE DEED AND OTHER DOCUMENTS SHOWING THAT HE HAS NEVER OWNED THIS PLOT . MERELY BEING A ITA NO.433/RJT/2015 WITH CO 5 POWER OF ATTORNEY HOLDER, HE COULD NOT CONSTRUE AS AN OWNER AND ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT COULD BE MADE IN HIS HAND. THEREFORE, WE ALLOW THE CO FILED BY THE ASSESSEE, A ND DELETE THE ADDITION OF RS.8,81,000/-. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED, WHEREAS THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST NOVEMBER, 2018 AT AHMEDABAD. SD/- SD/- ( WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER