V.R. Khemani and others, Nashik V. Asstt. CIT Nasik, Nashik

ITA 466/PUN/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3274 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 04-04-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUKESH DUBEY
• Section: 271(1)(c); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI R.C. SHARMA, AM ITA NO. 466 AND 467/PN/07 A.Y.2002-03 AND 2003-04) V.R. KHEMANI AND OTHERS 3 SARGAM APARTMENT, RACCA COLONY, SHARANPUR ROAD NASIK 422 002 PAN AAABV 0069 L APPELLANT VS. ASSTT. CIT CENT. CIR. 2, NASIK RESPONDENT I.T.A NO. 1175/PN/2007: A.Y. 2004-05 NILAM ANIL KHEMANI, 3 SARGAM APARTMENT, RACCA COLONY, SHARANPUR ROAD NASIK 422 002 PAN AHPK 4960 M APPELLANT VS. ASSTT. CIT CENT. CIR. 2, NASIK RESPONDENT APPELLANTS BY : SHRI PRAMOD SHINGTE RESPONDENT BY : SHRI MUKESH DUBEY ORDER PER SHAILENDRA KUMAR YADAV JM ALL THESE APPEALS PERTAIN TO THE SAME GROUP FOR A. Y. 2002-03, 2003-04 AND 2004-05. FOR THE SAKE OF CONVE NIENCE THESE ARE BEING DISPOSED OFF BY A COMMON ORDER. ITA NO. 466/PN/2007 FOR A.Y. 2002-03 2. THIS IS AN APPEAL BY THE ASSESSEE ON THE ISSUE O F ADDITION OF RS. 3,38,453/-. A SEARCH WAS CONDUCTED ON KHEMA NI GROUP ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 2 (AOP) ON 9-10-2003. DURING THE COURSE OF SEARCH A COPY OF AGREEMENT TO SELL (SATHEKHAT) DATED 24-2-2000 WAS R ECOVERED SHOWING SALE OF PLOTS OF ABOUT 13257 SQ. YARD OF LA ND IN SURVEY NO. 78 TO SMT. HANSA D. KAPADIA BY THE ASSESSEE FOR A CONSIDERATION OF RS. 63,04,103/-. THIS AGREEMENT T O SELL WAS NOT HAVING SIGNATURE. A COPY OF REGISTERED SALE DE ED DATED 30- 5-2001 FOR SALE OF SAME LANDS IN SURVEY NO. 78 WAS FOUND SHOWING TOTAL CONSIDERATION OF RS. 59,65,650/-. TH US DIFFERENCE OF RS. 3,38,453/- WAS FOUND BY THE A.O I N THIS REGARD. THE ASSESSEE ON INQUIRY FROM THE A.O ON THI S ISSUE, SUBMITTED THAT THE ASSESSEE HAS RECEIVED ONLY RS. 5 9,65,650/- . THE SEARCH PARTY EXAMINED SHRI ANIL KHEMANI (SON OF SHRI V.R. KHEMANI, ONE OF THE MEMBERS OF AOP) ON THIS IS SUE. THE A.O REJECTING THE CONTENTION OF THE ASSESSEE MADE A N ADDITION OF RS. 3,38,453/-, WHICH WAS CONFIRMED BY THE CIT(A ). SAME HAS BEEN AGITATED BEFORE US. 3. THE STAND OF THE ASSESSEE IS THAT HE HAS RECEIVE D ONLY RS. 59,65,650/- AND HE HAS ALSO INCURRED EXPENDITURE OV ER AND ABOVE THE SAME. SO ADDITION IN QUESTION IS NOT JUS TIFIED. ON THE OTHER HAND LEARNED DR SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDINGS OF THE CIT(A) BECAUSE THE AGREEMENT TO SELL DATED 24-2 -2000 ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 3 INDICATE THE CONSIDERATION OF RS. 63,04,103/- WHILE IN THE SALE DEED THE CONSIDERATION HAS BEEN MENTIONED AT RS. 59 ,65,650/. THE ASSESSEE HAS NOT SUBSTANTIATED ITS CLAIM THAT H E HAS NOT RECEIVED RS. 63,04,103/- AS PER AGREEMENT IN QUESTI ON. SO, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE SAME IS ACCORDINGLY UPHELD ON THIS ISSUE. ITA NO. 467/PN/2007 FOR A.Y. 2003-04 5. IN THIS APPEAL, THE ASSESSEE HAS OPPOSED THE ADD ITION OF RS. 36,50,000/-. AS DISCUSSED ABOVE, THE ASSESSEE S PREMISES WERE SEARCHED ON 9-10-2003. SOME DOCUMENTS VIDE AN NEXURE A/2 (PAGES 11 TO 14) WERE SEIZED FROM THE RESIDENTI AL PREMISES OF SHRI VASUDEO RADHAKISAN KHEMANI. THIS CONTAINED THE EARNEST MONEY RECEIPT OF RS. 10,00,000/- BY M/S. RU SHABH MOTORS (P) LTD. TO THE ASSESSEE. THIS WAS THE PAYM ENT RECEIVED FROM RUSHABH MOTORS (P) LTD. BY THE ASSESSEE. AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND SAID PURCHASER, THE SALE OF PROPERTY BEARING SURVEY NO. 294((P) WAS FIXED F OR TOTAL CONSIDERATION OF RS. 1,35,00,000/- AND OUT OF THIS RS. 10,00,000/- WAS RECEIVED AS AN EARNEST MONEY. THE SAID PROPERTY ADMEASURED 5200 SQ.MT AS PER ULC RECORD AN D 6000 SQ. MTS. AS PER 7/12 EXTRACT. THE PROPERTY WAS SIT UATED AT VILLAGE PATHARDI. THE ONLY ISSUE IN THE APPEAL IS WITH REGARDS TO THE ADDITION OF RS. 36,50,000/-. AS DISCUSSED AB OVE, ASSESSEES PREMISES WERE SEARCH BY INCOME-TAX DEPAR TMENT ON 9-10-2003. SOME DOCUMENTS VIDE ANNEXURE A/2 WERE S EIZED ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 4 FROM RESIDENTIAL PREMISES OF SHRI VASUDEO RADHAKRIS AN KHEMANI. THIS CONTAINED THE EARNEST MONEY RECEIPT DATED 22- 7-2002 ON STAMP PAPER OF RS. 100/-. THIS WAS FOR T HE PAYMENT OF RS. 10,00,000/- BY M/S. RUSHABH MOTORS ( P) LTD. TO THE ASSESSEE. AS PER THE AGREEMENT BETWEEN SHRI VASUDEO RADHAKRISAN KHEMANI, SMT. ISHARIBAI RADHAKISAN KHEM ANI AND SMT. KAMLABAI BHAGWANDAS DHIRWANI AS VENDORS AN D M/S. RISHABH MOTORS (P) LTD. AS PURCHASERS THE SALE OF PROPERTY BEARING SURVEY NO. 294(P) WAS FIXED FOR TO TAL CONSIDERATION OF RS. 1,35,00,000/- AND OUT OF THIS RS. 10,00,000/.- WAS RECEIVED AS AN EARNEST MONEY. THE SAID PROPERTY WAS ADMEASURING 5200 SQ. MTRS AS PER ULC R ECORDS AND 6000 SQ. MTRS AS PER 7/12 EXTRACTS SITUATED AT VILLAGE PATHARDI. THE AFORESAID EARNEST MONEY RECEIPT WAS DULY REGISTERED WITH THE EXECUTIVE MAGISTRATE, NASIK. H OWEVER, THE REGISTERED SALE DEED IN RESPECT OF PROPORTIONATE PR OPERTY WAS SUBSEQUENTLY EXECUTED ON 11-11-2000 FOR A CONSIDERA TION OF RS. 98,50,000/- ONLY. THUS, THE DIFFERENCE OF RS. 36,50,000- WAS FOUND BY THE A.O AND AFTER REJECTING THE CONTEN TION RAISED ON BEHALF OF THE ASSESSEE, THE A.O MADE ADDITION TH EREOF. THE SAME WAS CONFIRMED BY THE CIT(A). 6. THE STAND OF THE ASSESSEE IS THAT SHRI ANIL KHE MANI SON OF SHRI VASUDEO R. KHEMANI, IN ANSWER TO QUESTION N O. 11 OF STATEMENT RECORDED ON 12-11-2003 STATED THAT THE DI FFERENCE IS ON ACCOUNT OF THE FACT THAT THE CONSIDERATION OF RS . ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 5 1,35,00,000/- WAS DECIDED FOR LAND ADMEASURING 6000 SQ.MTRS AS PER 7/12 EXTRACT AND WITH AN UNDERSTANDING THAT THE SAME FELL IN COMMERCIAL ZONE. THOUGH AS PER ULC RECORDS , THE AREA OF THE LAND WAS 5200 SQ. MTRS BUT WITHIN A SPAN OF 15 DAYS OF EARNEST MONEY RECEIPT DATED 22-7-2002 M/S. RUSHABH MOTORS (P) LD. MADE INQUIRIES AND FOUND OUT THAT THE SAID LAND THOUGH AS PER 7/12 EXTRACT IS 6000 SQ. MTRS BUT ACTUALLY I T IS ONLY 5200 SQ. MTRS AND IS LOCATED IN INDUSTRIAL ZONE AND IS NOT HAVING COMMERCIAL USE. IT WAS ALSO FOUND THAT PRIM E FRONT PORTION OF THE SAID LAND OF ABOUT 800 SQ. MTRS HAS BEEN ACQUIRED BY NASIK MUNICIPAL CORPORATION FOR DEVELOP MENT OF ROAD. M/S. RISHABH MOTORS (P) LTD. ISSUED A LETTER DATED 10-8- 2002 AND INFORMED THE CONCERNED PARTY THE ACTUAL SI TUATION AND STATUS OF THE LAND. COPY OF THE SAID LETTER WAS ALSO BROUGHT TO THE NOTICE OF SEARCH PARTY ON THE DATE O F SEARCH ACTION. HENCE IT WAS CLAIMED AND EXPLAINED ON BEH ALF OF THE ASSESSEE THAT AS PER LETTER OF M/S. RUSHABH MOTORS (P) LTD. DATED 10-8-2002 ANOTHER AGREEMENT WAS MADE FOR CONSIDERATION OF RS. 98,50,000/- WHICH WAS ACTED UP ON. IT WAS ALSO BROUGHT TO OUR KNOWLEDGE THE AFFIDAVIT OF MR. ANIL VASUDEO KHEMANI EXECUTED ON 10-11-2005 FILED ON BEH ALF OF M/S. RUSHABH MOTORS (P) LTD. AT THE RELEVANT POINT OF TIME. WE FIND THAT THE ASSESSEE HAS CATEGORICALLY STATED AT THE TIME OF SEARCH THAT RECEIPT OF EARNEST MONEY FOUND AT TH E TIME OF SEARCH WAS NOT ACTED UPON FOR THE REASONS DISCUSSED ABOVE. MOREOVER, THIS THING HAS BEEN RE-AFFIRMED BY THE PU RCHASER ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 6 VIDE LETTER AS WELL AS AFFIDAVIT. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS ACTED UPON THE AGREEM ENT DATED 22-7-2002. IT IS ALSO NOT IN DISPUTE THAT ACTUAL S IZE OF THE PLOT WAS 5200 SQ. MTRS AS MENTIONED IN ULC AGREEMENT AND NOT 6000 SQ. MTRS AS MENTIONED IN 7/12 EXTRACT SITUATED AT VILLAGE PATHARDI. IN THIS BACKGROUND, THE REVENUE AUTHORIT IES WERE NOT JUSTIFIED IN MAKING THE ADDITION IN QUESTION FO R THE AMOUNTS MENTIONED IN THE AGREEMENT AND NOT ACTED UP ON BY WAY OF SALE DEED. THE SALE DEED MENTIONED ONLY THE AMOUNT OF RS. 98,50,000/-. THERE IS NOTHING ON RECORD TO SUG GEST THAT THE AMOUNT IN QUESTION HAS BEEN RECEIVED BY THE ASS ESSEE IN ANY MANNER. THE REVENUE AUTHORITIES HAVE ALSO NOT H AS NOT FALSIFIED THE STAND OF THE ASSESSEE TAKEN ON THE DA TE OF SEARCH ITSELF COUPLED WITH CONFIRMATION OF SAME BY PURCHAS ING PARTY. IN VIEW OF THE ABOVE, THE ADDITION IN QUESTION IS N OT JUSTIFIED AND THE SAME IS DIRECTED TO BE DELETED. ITA NO. 1175/PN/2007 FOR A.Y. 2004-05 7. THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF THE CIT(A) ON THE POINT OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE IS AN INDIVIDUAL AND A MEMBER OF KHEMANI GROUP WHER E ACTION U/S 132 WAS CARRIED OUT ON 9-10-2003. DURING THE C OURSE OF SEARCH CERTAIN GOLD/DIAMOND JEWELLERY WAS RECOVERED FROM THE BED ROOM OF THE ASSESSEE. THE EXPLANATION OF THE A SSESSEE WAS THAT THESE ORNAMENTS WERE RECEIVED ON VARIOUS FAMI LY FUNCTIONS AND OCCASIONS. HOWEVER, IN THE ABSENCE O F ANY ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 7 DOCUMENTARY EVIDENCE AND AFTER GIVING SET OFF FOR T HE STREEDHAN OF THREE LADY MEMBERS OF THE FAMILY TOTAL WORTH OF UNDISCLOSED JEWELLERY WAS WORKED OUT AT RS. 3,28,92 8/-. THE SAME AMOUNT WAS ASSESSED FOR A.Y. 2004-05 WHEREAS T HE ASSESSEE HAD FILED RETURN SHOWING NIL INCOME. THE PENALTY WAS LEVIED FOR THE SAME WHICH WAS CONFIRMED BY THE CIT(A). 8. THE STAND OF THE ASSESSEE BEFORE US IS THAT THE PENALTY IN QUESTION IS NOT JUSTIFIED WHEN THE JEWELLERY WAS RE CEIVED ON VARIOUS OCCASIONS LIKE FESTIVALS AND FUNCTIONS AND WAS NOT PROVED TO HAVE BEEN ACQUIRED OUT OF UNDISCLOSED SOU RCES OF THE ASSESSEE. THE OWNERSHIP OF JEWELLERY WAS ALSO NOT ESTABLISHED BY THE REVENUE AUTHORITIES. IT WAS ALSO SUBMITTED THAT THE OWNERSHIP OF THE JEWELLERY HOLDING ESTABLISHED BY T HE REVENUE AUTHORITIES AT THE STRENGTH F SEARCH ONLY WHICH IS NOT JUSTIFIED. AND THE REVENUE AUTHORITIES HAVE NOT APPRECIATED TH AT THE ENTIRE JEWELLERY WAS DULY EXPLAINED AND WAS ASSESSE D IN THE HANDS OF THE ASSESSEE ON ESTIMATE BASIS. SO THE PE NALTY BE DELETED. ON THE OTHER HAND, THE LEARNED DR SUPPORT ED THE ORDERS OF LOWER AUTHORITIES. 9. WE FIND THAT THE ADDITION HAS BEEN MADE ON THE B ASIS OF SEIZED ORNAMENTS AFTER GIVING BENEFIT OF STREEDHAN. THE STAND OF THE ASSESSEE HAS BEEN THAT LADIES USED TO RECEIV E ORNAMENTS IN QUESTION ON DIFFERENT OCCASIONS WHICH IS NORMAL PROCEDURE. SO, IT COULD NOT BE ESTABLISHED BEYOND DOUBT THAT I NVESTMENT ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 8 IN ORNAMENTS OVER AND ABOVE THE STREEDHAN ACCEPTED BY THE REVENUE AUTHORITIES WAS MADE OUT OF UNDISCLOSED INC OME OF THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE, THE ORNAMENTS HAVE BEEN VALUED ON ESTIMATED BASIS. SO THE ADDITI ON WHICH IS THE BASIS FOR PENALTY HAS ELEMENT OF ESTIMATION. WH ILE TAKING THE OVERALL VIEW, ACCORDING TO US, IT IS NOT A FIT CASE FOR LEVY OF PENALTY BECAUSE RECEIVING OF ORNAMENTS ON DIFFERENT OCCASIONS CANNOT BE RULED OUT AS SUCH. MOREOVER, THE VALUATI ON OF ORNAMENTS BY WAY OF ESTIMATION AND MAKING ADDITION CANNOT BE SOUND THE BASIS FOR LEVYING THE PENALTY. ACCORD INGLY, THE PENALTY IN QUESTION IS DIRECTED TO BE DELETED. 10. IN THE RESULT, THE APPEAL IN ITA NO. 466/PN/200 7 IS DISMISSED, APPEAL IN ITA NO. 467/PN/2007 AND 1175/PN/2007 ARE ALLOWED ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER 2010 SD/- SD/- (R.C. SHARMA) ( SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 24 TH SEPTEMBER 2010 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I NAGPUR , 4. CIT (CENTRAL) NAGPUR 5. D.R. ITAT B BENCH BY ORDER ASSTT. REGISTRAR ITA 466 , 467 AND 1175//PN/07 KHEMANI GROUP A.Y. 2003-04 AND 2004-05 9 I.T.A.T PUNE