Rajesh Daga, Jodhpur V. ITO, Ward-3, Pali, Pali

ITA 572/JODH/2018

AI Insights

The case involves an appeal by Rajesh Daga against the order of the Commissioner of Income-tax (Appeals)-1, Jodhpur, which confirmed the addition of Rs.4,66,660 as undisclosed investment under Section 69 of the Income-tax Act, 1961. The addition was based on a third-party statement following a search and seizure operation in the case of Shri Madan Mohan Gupta. The assessee argued that the plot was allotted to him by the Rajasthan Tehsildar Sewa Parishad (RTSP) and not purchased directly from Shri Madan Mohan Gupta, thus there was no question of paying any 'on-money'. The Tribunal, referencing decisions from coordinate benches and the jurisdictional High Court, found in favor of the assessee, primarily due to the lack of opportunity for cross-examination and the precedent set in similar cases.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122657 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-09-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2018
• Other Referred Cases: Bhur Singh Chiman Singh Rajpurohit vs. ITO, Dhirendra Singh & Ors. Vs. ITO, Mehtab Singh Ujjawal Vs. ITO, PCIT vs. Rajender Kumar Jain
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV MOHAN
• Assessee Lawyers: RAJASTHAN TEHSILDAR SEWA PARISHAD
• Keywords: Unexplained investment; Search and seizure; Opportunity of cross examination; Question of law; Third party statement
• Section: 147; 131; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH :DB (VIRTUAL HEARING AT NEW DELHI) BEFORE SHRI SAKTIJIT DEY, VICE-PRESIDENT & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.572/Jodh/2018 Assessment Year: 2009-10 Rajesh Daga, C/o B Vishal & Co., “Ragukul”, 15, UIT Plots, BG/H Rumanpura Police Station, Jhalawar Road, Kota (Rajasthan) (PAN:AFBPD9709H) Vs. ITO, Ward-3, Pali. (Appellant) (Respondent) Present for: Appellant by : Shri Rajendra Jain, Adv. Respondent by : Shri Rajeev Mohan, JCIT-DR Date of Hearing : 13.09.2023 Date of Pronouncement : 20.09.2023 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of learned Commissioner of Income-tax(Appeals)-1, Jodhpur - Appeal No.374E/2016-2017 dated 10.10.2018 against the order under Section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 28.12.2016 passed by ITO, Ward-3, Pali for the assessment year 2009-10. 2 ITA No.572/Jodh/2018 Rajesh Daga, Jodhpur- AY: 2009-10 2. Ground of appeal raised by the assessee is in respect of addition of Rs.4,66,660 under Section 69 as undisclosed investment in purchase of plot of land by reopening the case based on third party statement and without conducting any independent inquiry. 3. Brief facts of the case are that assessee filed his return of income on 14.07.2009, reporting total income at Rs.1,96,220, deriving income from salary. During the year, assessee made an investment in purchase of plot of land at Plot No.50, in the colony named as ‘Revenue Residency, Village-Peepla Bharat Singh, Jaisingpura, Mahana Road, Bhankrota, Tehsil Sanganer, Jaipur’ measuring 233.33 sq.yds. for Rs.2,71,000. Payment for this was made through bank draft no.903872 dated 16.04.2008 drawn on erstwhile SBBJ Bank. 3.1 A search and seizure action under Section 132(1) was conducted by the department in the case of Shri Madan Mohan Gupta on 23.05.2013 wherein his statement was recorded based on which learned Assessing Officer observed that assessee had made an unexplained investment of Rs.4,66,660 by applying an arbitrary rate of Rs.2000 per sq.yd. over and above the actual sale price of Rs.1150 per sq. yd. Case of the assessee was, thus, reopened by initiating proceedings under Section 148 read with 147 of the Act. 3 ITA No.572/Jodh/2018 Rajesh Daga, Jodhpur- AY: 2009-10 3.2 Assessee furnished his explanation along with supporting documents on the allegations made by the learned Assessing Officer towards unexplained investment. It was submitted that this plot of land was allotted to the assessee by Rajasthan Tehsildar Sewa Parishad (RTSP), since, entire land was purchased by Rajasthan Tehsildar Sewa Parishad from Shri Madan Mohan Gupta vide agreement dated 11.07.2007 for a total amount of Rs.1,29,03,000. Plotting of the entire land was done by RTSP which were allotted to the members of RTSP at agreed price of Rs.1150 per sq. yd. According to the assessee, on allotment of plots, members of RTSP paid the amount to it and not to Shri Madan Mohan Gupta. Thus, there is no question of making any payment to Shri Madan Mohan Gupta. 3.3 Learned Assessing Officer had issued a show-cause-notice on 22.11.2016 wherein extracts of statement made by Shri Madan Mohan Gupta recorded under Section 131 of the Act on 24.02.2016 and 29.02.2016 were reproduced to seek explanation from the assessee on the alleged unexplained investment. In the reply made by the assessee, it is stated that photocopy of the said statements were provided to him on 22.11.2016 but no opportunity of cross-examination of Shri Madan Mohan Gupta was given. It was also submitted that in the said statements, there is no specific comments for Plot No.50 purchased by the assessee on which the alleged unexplained investment has been 4 ITA No.572/Jodh/2018 Rajesh Daga, Jodhpur- AY: 2009-10 made. Learned Assessing Officer did not find the submission made by the assessee as acceptable and completed the assessment by making the addition. Aggrieved, assessee went in appeal before the learned Commissioner of Income-Tax(Appeals) who confirmed the addition made by the learned Assessing Officer. Aggrieved, assessee is in appeal before the Tribunal. 3.4 Before us, learned counsel for the assessee reiterated the facts stated above which are not repeated for the sake of brevity. Learned counsel submitted that this issue has been dealt by the coordinate Benches of ITAT, Jodhpur and Jaipur on identical set of facts relating to other similar buyers of plot of land in the same colony, deleting the addition made by the learned Assessing Officer. To name a few of them, he referred to the decision of Bhur Singh Chiman Singh Rajpurohit vs. ITO in ITA Nos.276 & others/Jodh/2018 dated 09.05.2019, decision of Dhirendra Singh & Ors. In ITA No.1273/JP/2018 dated 25.03.2019, decision of Mehtab Singh Ujjawal Vs. ITO in ITA No.271/Jodh/2018 dated 18.01.2019. He also placed reliance on the decision of Hon’ble jurisdictional High Court of Rajasthan in the case of PCIT vs. Rajender Kumar Jain in Appeal No. D.B. Income-tax Appeal No.299/2018 dated 27.08.2019 wherein on the similar issue, finding of coordinate Bench of ITAT deleting the addition was affirmed and appeal of the department 5 ITA No.572/Jodh/2018 Rajesh Daga, Jodhpur- AY: 2009-10 was dismissed by holding that no substantial question of law arises in the said appeal. 4. Per contra, learned Sr.DR placed reliance on the orders of the authorities below. 5. We have heard the rival contention and perused the material on record. We note that present assessment proceedings were initiated by the learned Assessing Officer based on statement recorded in the case of Shri Madan Mohan Gupta in the course of his search. From the perusal of the assessment order, we take note of facts observed by the learned Assessing Officer at page 11 according to which plots were allotted to the members of RTSP @ Rs.3150 per sq. yd. and for the purchase of plots, all the members of RTSP had given unaccounted money @ Rs.2000 per sq. yd. over and above the recorded sales price of Rs.1150 per sq. yd to RTSP who in turn has given money to Shri Madan Mohan Gupta and Shri Madan Mohan Gupta had further paid this amount to farmers from whom agricultural land was purchased. 5.1 In this respect, we note that learned Assessing Officer has extracted the statement of Shri Madan Mohan Gupta in the impugned assessment order and from point no.5 at page 3, it is evident that Shri Madan Mohan Gupta has stated that the land was given by him to RTSP for which agreement had already been entered on 11.07.2007, copy of 6 ITA No.572/Jodh/2018 Rajesh Daga, Jodhpur- AY: 2009-10 which was furnished before the officer recording the statement. Thus, the aforesaid observation made by the learned Assessing Officer is not in consonance with the averment made by Shri Madan Mohan Gupta in his statement. Further, assessee has asked for cross-examination of Shri Madan Mohan Gupta on the averments made by him in his statements based on which adverse view had been taken against him. However, no such opportunity was made available to the assessee. 5.2 From the reading of the statement of Shri Madan Mohan Gupta as extracted in the impugned assessment order, it is evident that there is nothing to suggest allottees of the plot have paid any on money on purchase of the plots. In fact, assessee has not purchased the plot from Shri Madan Mohan Gupta rather he was allotted the plots by RTSP and, thus, there is no privity of contract between the assessee and Shri Madan Mohan Gupta. Therefore, no question of payment of alleged on- money by the assessee to Shri Madan Mohan Gupta arises in the present case. Further, opportunity to cross-examine Shri Madan Mohan Gupta was not provided to the assessee even when specifically asked for in the course of assessment itself. We also take note of the fact that this issue on similar set of facts has arisen in several cases which have reached before the coordinate benches of the ITAT and have been held in favour of the assessee by deleting such additions, as already stated above. 7 ITA No.572/Jodh/2018 Rajesh Daga, Jodhpur- AY: 2009-10 5.3 Considering the facts on record and the judicial precedents of the coordinate benches of the ITAT referred above as well as decision of Hon’ble jurisdictional High Court of Rajasthan in the case of Rajendra Kumar Jain, supra and in absence of opportunity not granted for cross- examination, the impugned addition of Rs.4,66,660 is deleted. Accordingly grounds taken by the assessee are allowed. 6. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 20.09.2023. Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice-President Accountant Member Dated: 20 September, 2023 *Mohan Lal* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR: ITAT By Order Assistant Registrar ITAT, Delhi Benches, New Delhi