Ghatge Patil Automobiles Ltd., Kolhapur V. Deputy Commissioner of Income-tax,

ITA 437/PUN/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7743 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVDESH KUMAR
• Keywords: Sale consideration of property below Jantri Value; Business income; Loose papers; Document seized
• Section: 50C; 153A; 132

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.437/PUN/2014 / ASSESSMENT YEAR : 2008-09 GHATGE PATIL AUTOMOBILES LTD., 517E, OLD P.B. ROAD, KOLHAPUR 416 001. PAN : AAACG6596N. . / APPELLANT V/S THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLHAPUR. . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI. REVENUE BY : SHRI AVDESH KUMAR / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) KOLHAPUR, DT.20.12.2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BU SINESS OF AUTOMOBILES, TRADING OF CUMMINS PARTS ETC. ASSESSEE ELECTRONICALLY FILED RETURN OF INCOME FOR A.Y. 2008-09 ON 10.10 .2008 DECLARING TOTAL INCOME OF RS.2,85,97,458/-. A SEARCH & SEIZURE / DATE OF HEARING : 15.10.2018 / DATE OF PRONOUNCEMENT: 11.01.2019 2 ITA NO.437/PUN/2014 ACTION U/S 132 OF THE ACT WAS CONDUCTED IN NITIN JAYAKUM AR PATIL GROUP ON 11.09.2008. ASSESSEE BEING PART OF THE GROUP WAS ALSO COVERED UNDER THE SEARCH OPERATION. CONSEQUENTLY, NOTIC E U/S 153A OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE AND IN RESPONSE TO WHICH ASSESSEE SUBMITTED THAT THE RETURN OF INCOME FILED BY IT ON 10.10.2008 BE CONSIDERED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS FRAMED UNDER SEC.143(3) RWS 153 OF THE ACT VIDE ORDER DATED 28.12.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 4,83,61,223/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 20.12.2013 (IN APPEAL NO.KOP/431/10-11) DISMISSED THE APPEAL OF THE ASSES SEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ), KOLHAPUR ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITIO NS OF RS.1,59,62,325/- UNDER THE HEAD CAPITAL GAINS WITHO UT APPRECIATING PROPERLY THAT THE ASSESSEE COMPANY HAS NOT RECEIVED THE SALE CONSIDERATION AT ALL AND THAT THE ASSESSEE HAS PRODUCED PROPER EVIDENCE IN SUPPORT OF ITS CONTENTI ON. THE LEARNED CIT(A) FAILED TO APPRECIATE CONTENTIONS OF THE ASSESSEE AND ARGUMENTS ADVANCED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , KOLHAPUR ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLO WANCE OF EXPENSES OF RS.84,299/- WITHOUT APPRECIATING THAT T HE ASSESSEE COMPANY HAS PAID FBT UNDER THE PROVISIONS OF THE IN COME TAX ACT, 1961. 3. BEFORE US, AT THE OUTSET, LD AR SUBMITTED THAT ASSES SEE DOES NOT WISH TO PRESS GROUND NO 2. IN VIEW OF THE SUBMISSION OF LD AR, THE GROUND NO.2 IS DISMISSED AS NOT PRESSED. 4. GROUND NO.1 IS WITH RESPECT TO ADDITION OF RS. 1.59 CRORE. 3 ITA NO.437/PUN/2014 4.1. IT WAS NOTICED THAT ASSESSEE WAS HOLDING A PLOT OF LA ND BEARING CITY SURVEY NO.E517/A/1 ADMEASURING 321981 SQ M TRS. OUT OF THE AFORESAID LAND, ASSESSEE HAD SOLD 8141.67 SQ MT RS TO TOPAZ INVESTMENTS P. LTD FOR WHICH THE SALE DEED WAS E XECUTED ON 31.12.2007 AND THE SALE CONSIDERATION AS PER THE AGREEME NT WAS RS.4.11 CRORE. DURING THE COURSE OF SEARCH, CERTAIN LOOSE PAPERS WERE FOUND. IN ONE OF THE LOOSE PAPERS THAT WERE FOUND, T HERE WAS COMPLETE WORKING OF CAPITAL GAINS, WHEREIN THE ASSESSEE HAD COMPUTED CAPITAL GAINS AFTER CONSIDERING THE TOTAL SALES CONSIDERATION AT RS. 6,80,68,308/-, MAT CREDIT WITH THE CO MPANY FOR A.YS. 06-07 & 07-08, ADVANCE TAX PAID ON 15.03.2008 A ND THE AMOUNT OF REFUND CLAIMED. THE STATEMENT OF SHRI NITIN PATIL, MANAGING DIRECTOR OF THE COMPANY WAS RECORDED U/S 132(4 ) OF THE ACT WHEREIN HE SUBMITTED THAT ASSESSEE HAD RECEIVED SA LE CONSIDERATION OF RS.4.11 CRORE AND HAD NO IDEA OF THE AMO UNT REFLECTED IN THE SEIZED DOCUMENT. THEREAFTER, BEFORE INVEST IGATING OFFICER, THE STATEMENT OF SHRI NITIN PATIL ON 03.10.2008 WAS RECORDED WHEREIN HE SUBMITTED THAT THE WORKING FOUND ON THE SEIZED PAPER WAS DONE IN CONNECTION WITH THE NOTICE OF AC QUISITION RECEIVED FROM KOLHAPUR MUNICIPAL CORPORATION (KMC) AND THE AMOUNT IN THE SEIZED PAPER WAS THE AMOUNT THAT THE CO MPANY WAS SUPPOSED TO RECEIVE FROM KMC. THE SUBMISSIONS OF SHRI NITI N PATIL WAS NOT FOUND ACCEPTABLE TO AO, AS ACCORDING TO HIM, NOTIC E OF KMC WAS A GENERAL NOTICE, IT DID NOT MENTION THE CONSIDERATION PAYABLE EXCEPT STATING THAT THE ACQUISITION MAY BE AFFECTED AT TH E MARKET RATE, THE TRANSACTION OF THE LAND HAD TAKEN PLACE ON 31.12.2007 AND IT DID NOT HAS ANY LINK WITH THE NOTICE OF 2004 ISSUED BY KMC. AO 4 ITA NO.437/PUN/2014 THEREFORE CONCLUDED THAT THE FIGURES MENTIONED IN THE SEIZ ED PAPER WERE NOT IMAGINARY AS THE FIGURE OF CONSIDERATION WAS IN EX ACT FIGURE. AO THEREFORE HELD THAT ASSESSEE HAD RECEIVED RS.6,80,68,308/- AS AGAINST THE AGREEMENT VALUE OF RS. 4,11,00,000/-. AO NOTED THAT SINCE ASSESSEE HAD ALREADY O FFERED CAPITAL GAINS TAKING INTO ACCOUNT THE PROVISION OF SEC.50C OF THE ACT CONSIDERING THE MARKET PRICE OF RS.5,21,05,983/-, HE HELD T HAT ASSESSEE HAD SHOWN LESS CAPITAL GAINS TO THE EXTENT OF RS. 1,59,62,352/- (RS.6,80,68,308/- RS.5,21,05,983/-) AND THUS MADE ADDITION OF RS.1,59,62,325/- AS LONG TERM CAPITAL GAINS. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: 4 . DURING THE A PPELLATE PRO C EEDIN GS S A ME EXPL A NATION H A D B EE N A D VA NCED ON B E H A LF O F TH E APP E LL A NT . I T H A S AL S O FIL E D COP Y O F A LE TT ER DATED 22/03/2004 WRITTEN TO COMMISSIONER , KOLHAPUR MUNICIP A L CORPORATION . ON GOING THROUGH THE ASSESSEE ' S SUBMISSION A ND THE ASSESSMENT ORDER I FIND THAT ON THE GIVEN FACTS THE ASSESSING OFFIC E R WAS JUSTIFIED IN ARRIVING AT THE CONCLUSION THAT AP PELLANT HAS EVADED TAX B Y UNDERSTATING INCOME FROM C A PIT A L GAINS. IN THE STATEMENT RECORDED DURING THE SURVEY UNDER SECTION 132(4) HE HAS EXPRESSED HIS INABILITY T O EXPL A IN THE DIFFERENCE . NO MENTION W A S MADE TO TH E NOTIC E R E C E I V ED FROM KMC OR TO THE LETTER DAT E D 22/03/2004 WRITTEN BY THE COMPAN Y . STATEMENT UNDER SECTION 132(4) HAS EVIDENTIARY VALUE. THE EXPLANATION OF THE ASSESSEE REGARDING RE CEIPT OF NOTICE IS AN AFTERTHOUGHT , A STRATEGY TO EVADE TAXATION. NOTICE OF THE KMC IS A GENERAL NOTICE AND IT DOES NOT MENTION ANY RATE FOR WHICH THE LAND WILL BE ACQUIRED. FURTHER , TH E FIGURES USED IN THE COMPUTATION OF CAPITAL GAIN IN THE SEIZED PAGES ARE NOT ROUNDED FI GURES BUT ARE IN EXACT DIGITS. ALL THESE FACTS SHOW THAT THE WORKING S ARE THE ACTUAL WORKING ON THE AMOUNT OF SALE PROCEEDS RECEIVED BY THE APPELLANT. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN M AKING ADDITION OF RS.1,59,62,325/- AS ADDITIONAL CAPITAL GAINS NOT OF FERED BY THE APPELLANT. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BEFO RE LOWER AUTHORITIES AND FURTHER SUBMITTED THE SAID PLOT OF LA ND WAS 5 ITA NO.437/PUN/2014 SUBJECT MATTER OF ACQUISITION BY KMC AND THE PROCEEDING S FOR ACQUISITION WERE GOING ON SINCE 2003-04. A LOT OF CORRESPO NDENCE HAD TAKEN PLACE DURING THE INTERVENING PERIOD REGARDING T HE PRICE AT WHICH THE ACQUISITION WAS TO TAKE PLACE. THE ASSESSEE HA D WRITTEN A LETTER TO KMC IN WHICH IT HAD STATED THAT THE ACQUISITION SHOULD BE AT A PRICE OF 30% OVER THE RULING MARKET PRICE. HE SUBMITT ED THAT THE FIGURE OF RS.6.80 CRORE WAS ARRIVED AFTER ADDITION OF 3 0% SOLATRIUM AS DEMANDED BY THE ASSESSEE (WHICH WORKS OUT TO RS. 179/SQ.FT TO THE MARKET PRICE OF RS.595/SQ FT (WHICH WAS A LREADY MENTIONED IN THE SEIZED COMPUTATION OF TOTAL INCOME). HE SU BMITTED THAT AS AGAINST THE AGGREGATE OF RS.774/SQ FT WORKED OU T, ASSESSEE HAD DEMANDED RS.777 PER SQ.FT AND THUS FOR THE TOTAL AREA OF 87604 SQ FT, THE TOTAL CONSIDERATION WAS RS.6,80,68,308/-. LD AR FURTHER SUBMITTED THAT APART FROM THE SEIZED DOCUMENT, THERE WA S NO EVIDENCE WITH THE REVENUE DEPARTMENT TO SHOW THAT ASS ESSEE HAD RECEIVED CONSIDERATION IN EXCESS OF RS. 4.11 CRORE. HE THER EFORE SUBMITTED THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY CIT(A) BE DELETED. LD DR ON THE OTHER HAND TOOK US THRO UGH THE FINDINGS OF AO AND SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITION OF RS. 1.59 CRORE. IT IS REVENUES CONTENTION TH AT ASSESSEE HAS RECEIVED RS. 6.80 CRORE (ROUNDED OFF) AS AGAINST THE ASSESSEES CONTENTION OF HAVING RECEIVED RS. 4.11 CRORE (ROUNDED OFF) AN D HAD CONSIDERED RS.5.21 CRORE U/S 50C OF THE ACT. THE BASIS FOR CONSIDERING THE FIGURE OF RS.6.80 CRORE BY REVENUE WAS T HE DOCUMENT SEIZED DURING THE COURSE OF SEARCH. WE FIND THAT DURING 6 ITA NO.437/PUN/2014 THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 13 2(4) OF THE ACT, SHRI NITIN PATIL, THE M.D. OF THE COMPANY HAD CATEGORICA LLY STATED THAT THE LAND HAS BEEN SOLD FOR A CONSIDERATION O F RS. 4.11 CRORE AND IT HAS RECEIVED THE CONSIDERATION OF RS. 4.11 CR ORE. BEFORE US, LD AR SUBMITTED THAT THE CONSIDERATION OF RS. 6.80 CRO RE WAS FOR THE PURPOSE OF NEGOTIATION AND HAD ALSO DEMONSTRATE D ITS WORKING. THE AFORESAID WORKING FURNISHED BY THE LD.A.R. HAS NOT BEEN DEMONSTRATED BY THE REVENUE TO BE FALSE. WE FURTHE R FIND THAT APART FROM THE SEIZED DOCUMENT, WHICH HAS BEEN RELIED UPO N BY THE REVENUE TO MAKE ADDITION, NO OTHER EVIDENCE HAS BEEN FOU ND BY THE REVENUE WHICH COULD DEMONSTRATE THAT ASSESSEE HAS REC EIVED CONSIDERATION IN EXCESS OF RS. 4.11 CRORE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT AO HAS ERR ED IN MAKING THE ADDITION. WE THEREFORE DIRECT ITS DELETION. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON 11 TH DAY OF JANUARY, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 11 TH JANUARY, 2019. YAMINI 7 ITA NO.437/PUN/2014 '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A), KOLHAPUR. THE CIT-I/II, KOLHAPUR / CIT(CENTRAL), PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.