The ITO, Ward-2(3), RAJKOT-GUJARAT V. Ramesh Gordhanbhai Hirani, RAJKOT-GUJARAT

ITA 574/RJT/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76375 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 19-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI
• Keywords: Unexplained investment; Retraction
• Section: 147; 131; 69; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NO. 574/RJT/2012 / ASSESSMENT YEAR 2005-06. THE I.T.O. WARD 2(3), RAJKOT. ( / APPELLANT V/S RAMESHBHAI GORDHANBHAI HIRANI, MATRU CHHAYA 10, BHAGIRATH SOCIETY, OPP. KHODIYAR MILLS, MATRU CHHAYA, RAJKOT. PAN- ABQPH7476N / RESPONDENT ! '# / REVENUE BY DR. J.B. JHAVERI, D.R. $% ! '# / ASSESSEE BY NONE (WRITTEN SUBMISSION) ' & ' %( / DATE OF HEARING 01/01/2014 ) %( / DATE OF PRONOUNCEMENT 10/01/2014 / ORDER PER B. R. JAIN, A. M. : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 31/08/2012 OF SHRI YOGESH PANDE, THE LEARNED CIT(A)-III, RAJKOT R AISES THE FOLLOWING GROUNDS AS UNDER:- (I) THE LD. CIT(A)-III HAS ERRED IN LAW AND ON FAC T IN DELETING THE ADDITION OF RS. 7,50,00,000/- MADE ON ACCOUNT OF UN EXPLAINED INVESTMENT IN PLOT OF LAND. (II) ON THE FACTS OF THE CASE, THE LD. CIT(A)-III, RAJKOT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (III) IT IS, THEREFORE, PRAYED THAT THE ORDER OF TH E LD. CIT(A)-III, RAJKOT MAY BE SET ASIDE AND THAT OF THE ORDER OF TH E A.O. MAY KINDLY BE RESTORED BACK. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE FILED RE TURN OF INCOME ON 2 ND JUNE, 2005 DECLARING INCOME OF RS. 95,310/-. THIS R ETURN STOOD PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 (HEREINAFTER REFER RED AS THE ACT). A NOTICE ITA574/RJT/2012 2 U/S 148 OF THE ACT WAS ISSUED ON 12/3/2010. THE SAM E STOOD SERVED ON 19/3/2010 TO THE ASSESSEE. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ARE AS UNDER:- IN THIS CASE, THE ACIT, CENTRAL CIRCLE-2, RAJKOT V IDE HIS LETTER NO. ACIT/CC-2/TRANSFER/09-10 DATED 14-7-2009 HAS FORWA RDED RETENTION FOLDER OF SHRI RAMESH GORDHANBHAI HIRANI. IN HIS ST ATEMENT RECORDED U/S 131 DATED 28/7/2006 BY ADIT (INV.)-1, RAJKOT SH RI SURESH G. HIRANI HAS STAED ON OATH THAT HE HAD MADE INVESTMEN T IN 100 LAND PLOT LOCATED IN RAJKOT AT GURUDEV PARK, KUVADVA RO AD IN FY 2004- 05 AND HE HAS ALSO SOLD 50 PLOTS (OUT OF PLOTS PURC HASED IN FY 2004- 05) IN FY 2005-06 WHICH REQUIRES EXAMINATION AND HE NCE THIS CASE, NEEDS TO BE REOPENED FOR FY 2004-05 AND 2005-06 REL EVANT TO AY 2005-06 AND 2006-07. IN THE RETURN OF INCOME FILED BY HIM FOR AY 2005-06 AND 2006-07, HE HAS SHOWN CONSTRUCTION LABO UR INCOME OF RS. 95,310/- AND RS. 1,14,630/- RESPECTIVELY. HENCE , IT SEEMS THERE IS AN UNDERSTATEMENT OF INCOME IN RETURN OF INCOME AND HENCE ACTION U/S 147 OF THE IT ACT IS REQUIRED. I AM SATISFIED T HAT ACTION U/S 147 IS REQUIRED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE OUTRIGHTLY RETRACTED THE ADMISSION MADE IN THE STATEMENT. THE ASSESSEE ALSO FILED AN AFFIDAVIT DATED 22/11/2010 ALONGWITH WRITTEN SUBMIS SIONS ON 25/11/2010. AS THE RETRACTION CAME AFTER MORE THAN FOUR YEARS, THE ASSESSING OFFICER DID NOT ACCEPT THE RETRACTION TO BE A VALID RETRACT ION. GOING BY THE ASSESSEES STATEMENT, THE ASSESSING OFFICER PROCEED ED TO MAKE ADDITION FOR UNEXPLAINED INVESTMENT IN PLOTS AT GURUDEV PARK FOR RS. 5 CRORES AND IN JAIGURUDEV PARK FOR RS. 2.50 CRORES. THE TOTAL ADDI TION, THUS STOOD MADE AS UNEXPLAINED INVESTMENT AT RS. 7.50 CRORES. 3. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE MA DE AN ELABORATE SUBMISSIONS AND ALSO COPIES OF AFFIDAVIT AND DOCUME NTS, THAT WERE LAID BEFORE THE ASSESSING OFFICER, WERE ALSO PROVIDED TO THE LD. CIT(A). IT HAS ALSO BEEN CLAIMED THAT IN HIS STATEMENT RECORDED BY ADIT ON 26/7/2006, THE ASSESSEE NOWHERE STATED THAT HE HIMSELF HAS SOL D AND PURCHASED THE PLOTS OF LAND. THE ADMITTED SALE AND PURCHASE WAS D ONE ONLY ON COMMISSION BASIS AS IS ALSO AFFIRMED AT PARA 7 OF H IS AFFIDAVIT DATED 25/11/2010. THE LD. CIT(A) SOUGHT COMMENTS OF THE A SSESSING OFFICER ON ITA574/RJT/2012 3 THE ASSESSEES SUBMISSIONS DATED 19/10/2011. THE RE PLY RECEIVED AS REPRODUCED IN THE ORDER OF THE LD. CIT(A) IS AS UND ER:- 2. AS DIRECTED BY YOUR HONOUR A COPY OF DIARY SEIZ ED IS SUBMITTED HEREWITH FOR YOUR KIND PERUSAL AND THE COPY OF THE SAME HAS BEEN GIVEN TO THE ASSESSEE. AS PER LETTER OF THE ASSESSE E DATED 25/11/2010 AND AFFIDAVIT DATED 25/11/2010, THE ASSE SSEE HAS STATED THAT THE LAND BELONGS TO SHRI HIRENBHAI CHANDUBHAI KAPADIA. A SUMMON HAS BEEN ISSUED TO SHRI HIRENBHAI CHANDUBHAI KAPADIA ON 17/1/2012 TO ATTEND THE OFFICE ON 23/1/2012 BUT ON THE GIVEN DATE NOBODY APPEARED. ANOTHER SUMMONS WAS ISSUED TO SHR I HIRENBHAI CHANDUBHAI KAPADIA ON 15/2/2012 AND 12/4/2012 TO AT TEND THE OFFICE ON 23/1/2012 AND 23/4/2012 RESPECTIVELY BUT ON THE GIVEN DATE NO BODY APPEARED. HENCE A SUMMON HAS BEEN ISSUED TO THE ASSESSEE ON 12/4/2012 TO ATTEND THE OFFICE ON 23/4/ 2012 ALONGWITH SHRI HIRENBHAI CHANDUBHAI KAPADIA BUT ON THE GIVEN DATE THE ASSESSEE HAS NOT APPEARED. 3. FURTHER INSPECTOR WAS DEPUTED TO CONDUCT INQUIRI ES REGARDING BY WHOM THE PLOTS WERE SOLD AND PURCHASED IN ACCORD ANCE WITH THE NAME OF THE PERSON APPEARING IN THE DIARY SEIZED DU RING THE COURSE OF SURVEY PROCEEDINGS WITH REGARD TO THE SALE OF PL OT. AS REPORTED BY THE INSPECTOR, NO SUCH PERSONS WERE FOUND AT THE GI VEN ADDRESS HENCE IT IS NOT POSSIBLE TO MAKE FURTHER INQUIRIES. 4. IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE A ND INQUIRIES CONDUCTED IT IS CRYSTAL CLEAR THAT THE ASSESSEE IS TOTALLY NON- COOPERATIVE. FURTHER ON VERIFICATION OF STATEMENT O F SHRI RAMESH GORDHAN HIRANI IT IS SEEN THAT THE STATEMENT IS OF 20 PAGES AND THE ASSESSEE HAS BEEN ASKED CATEGORICALLY REGARDING EAC H ENTRIES APPEARING IN THE DIARY AND HAS ADMITTED THE TRANSAC TIONS BELONGING TO HIM AND HAS AGREED TO PAY TAX THEREON. THE COPIE S OF SUMMONS ISSUED, COPY OF DIARY SEIZED, COPY OF STATEMENT OF RAMESHBHAI G. HIRANI & SURESHBHAI G HIRANI IS SUBMITTED HEREWITH FOR YOUR HONOURS KIND PERUSAL. 4. THE LD. CIT(A) ACCEPTED THE ASSESSEES SUBMISSIO N THAT THE STATEMENT RECORDED BY ADIT HAS NO EVIDENTIARY VALUE AND THE ASSESSING OFFICER HAS TO BRING COGENT MATERIAL TO SUPPORT HIS ACTION, WHICH THE ASSESSING OFFICER HAS NOT DONE. RELIANCE HAS BEEN P LACED ON THE DECISIONS IN THE CASE OF DHINGRA METAL WORKS 328 IT R 384 (DELHI.), S. KHADER KHAN SON 300 ITR 157 (MADRAS), PAUL MATHEWS & SONS 263 ITR 101 (KERELA), 18 SOT 335, M/S NIRAV PRECISION PVT. LTD. (ITA NO. 351/RJT./2011)(ITAT RAJKOT). SINCE A DIARY WAS SEIZ ED/IMPOUNDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE REQUIRED T HE ASSESSING OFFICER ITA574/RJT/2012 4 TO VERIFY THE SUBMISSIONS OF THE APPELLANT AND CARR YOUT THE EXAMINATION THEREOF FROM THE DIARY SEIZED AND VERIFY THE PERSON S TO WHOM THE APPELLANT HAD NAMED IN HIS AFFIDAVIT, WHO OWNED THE LAND IN RESPECT OF WHICH THE ASSESSING OFFICER HAS MADE ADDITIONS. THE ASSESSING OFFICER PROVIDED THE COPY OF DIARY SEIZED AND STATED THAT A COPY OF THE SAME HAS ALSO BEEN GIVEN TO THE ASSESSEE. THE ASSESSING OFFICER STATED THAT THE LAND BELONGS TO SHRI HIRENBHAI CHANDUBHAI KAPADIA. THE SUMMONS I SSUED TO SHRI HIRENBHAI CHANDUBHAI KAPADIA ON VARIOUS DATES, REMA INED UNCOMPLIED WITH. THE ASSESSING OFFICER ALSO ISSUED SUMMONS TO THE ASSESSEE ON 12/4/2012 AND REQUIRED HIM TO APPEAR BEFORE HIM ALO NGWITH SHRI HIRENBHAI CHANDUBHAI KAPADIA BUT ON THE GIVEN DATE ON 23/4/20 12, NONE APPEARED IN RESPONSE TO THE SUMMONS. THE ASSESSING OFFICER H AD ALSO DEPUTED INSPECTOR TO CONDUCT ENQUIRIES FROM THE PERSONS, WH OSE NAMES WERE APPEARING IN THE DIARY FOUND AND IMPOUNDED DURING T HE COURSE OF SURVEY. THE INSPECTOR, HOWEVER, REPORTED THAT NO SUCH PERSO NS WERE FOUND AT THE GIVEN ADDRESSES. THE ASSESSING OFFICER, THEREFORE, STATED THAT IT WAS NOT POSSIBLE FOR HIM TO MAKE FURTHER ENQUIRY AND SUBMIT TED THE REPORT ACCORDINGLY. HE PLACED RELIANCE ON THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SURVEY. AFTER TAKING REPLY FROM THE ASSESSEE, THE LD. CIT(A) RECORDED A FINDING THAT THERE IS NO EVIDENCE OF INV ESTMENT OF RS. 7.50 CRORES IN CASH IN THE DIARY SEIZED DURING THE SURVE Y IN FINANCIAL YEAR 2004- 05 IN 100 PLOTS OF GURUDEV PARK AND 50 PLOTS OF JAI GURUDEV PARK. MOREOVER, IN THE STATEMENT ON OATH, THERE IS NO DIR ECT QUESTION OF INVESTMENT OF RS. 7.5 CRORE IN CASH BY APPELLANT IN 100 PLOTS OF GURUDEV PARK AND 50 PLOTS OF JAI GURUDEV PARK OUT OF HIS U NEXPLAINED INCOME. THE FIGURE OF UNACCOUNTED INVESTMENT OF RS. 7.5 CRORE I N CASH IS AN EXTRAPOLATION BY THE ASSESSING OFFICER HIMSELF. MOR EOVER, FOR SUCH INFERENCE THE ASSESSING OFFICER HAS IGNORED THE EVI DENCES AVAILABLE IN THE SEIZED DIARY, WHICH SHOWED THAT APPELLANT HAD COLLE CTED THE ADVANCES FROM ITA574/RJT/2012 5 PROSPECTIVE BUYERS AND THEN PAID THE CASH TO THE LA ND OWNERS. THEREFORE, THE OUTRIGHT REJECTION BY ASSESSING OFFICER OF THE RETRACTION OF THE ANSWER TO QUESTION NO. 6 IS NOT LOGICAL. THE COPY OF DIARY FO RWARDED BY THE ASSESSING OFFICER DURING THE APPELLATE PROCEEDINGS DOES NOT S UPPORT ANY INVESTMENT IN CASH IN FINANCIAL YEAR 2004-05 BY THE APPELLANT IN ANY PURCHASE OF LAND. IN FACT, THERE IS NO TRANSACTION OF ANY PURCHASE OR SALE OR ANY OTHER TRANSACTION WHICH PERTAINS TO THE FINANCIAL YEAR 20 04-05 AND WHICH IS MENTIONED IN THE SEIZED DIARY. THERE ARE A FEW PAYM ENTS TO LAND OWNER AND ALSO TO SHRI MANOHAR SINGH JADEJA WHICH ARE APP EARING IN THE DIARY BUT ALL SUCH PAYMENTS HAVE BEEN MADE AFTER RECEIVIN G THE SALE PROCEEDS FROM THE SALE OF PLOTS OF LAND IN THE PERIOD NOVEMB ER, 2005 TO JULY, 2006. HE, THEREFORE, ENTERTAINED THE VIEW THAT FROM THE E VIDENCE AVAILABLE IN THE SEIZED DIARY, NO ADDITION CAN BE MADE FROM THE SALE AND PURCHASE OF PLOTS OF LAND DURING THE FINANCIAL YEAR 2004-05 AND THE E NTRIES IN THE DIARY SUPPORT THE RETRACTION OF THE ANSWER NO. 6 OF THE S TATEMENT OF THE APPELLANT AND HIS BROTHER. HE, THEREFORE, DIRECTED THE ASSESS ING OFFICER TO DELETE THE ENTIRE ADDITION OF RS. 7.50 CRORES MADE BY HIM ON A CCOUNT OF UNSUPPORTED EVIDENCE AND RETRACTED THE STATEMENT OF THE APPELLA NT. 5. IN APPEAL, THE LD. D.R. CONTENDS THAT THE ASSES SEE HAS ADMITTED OF INVESTMENT IN PLOTS. THE SAME WERE NOT DECLARED IN THE RETURN AS THE ADMITTED INVESTMENT HAS NOT BEEN DECLARED. THE ASSE SSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION BUT THE LD. CIT(A) HAS ERRONEOUSLY DELETED THE SAME. IT, THEREFORE, HAS BEEN CONTENDED THAT TH E ORDER OF LD. CIT(A) NEEDS TO BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 6. ON BEHALF OF THE ASSESSEE, NONE ATTENDS AT THE T IME OF HEARING. HOWEVER, A WRITTEN REPRESENTATION DATED 01/1/20014 MADE BY HIM, HAS BEEN LAID ON RECORD, IN WHICH, THE ASSESSEE HAS CLE ARLY STATED THAT HONBLE CIT(A) HAS COVERED EACH AND EVERY ISSUE BEFORE DECI DING HIS APPEAL. HE, ITA574/RJT/2012 6 THEREFORE, PLACED STRONG RELIANCE ON THE ORDER OF T HE LD. CIT(A) FOR DELETING THE ADDITION OF RS. 7.50 CRORES IN THE IMPUGNED YEA R. 7. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE LD. CIT(A) FOUND THAT THE ASSESSEE WAS PROVIDED WITH COPY OF S TATEMENT ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREFORE, HE HAD NO EARLIER OPPORTUNITY TO RETRACT HIS STATEMENT AND DID NOT KN OW AS HOW THE STATEMENT WAS TO BE USED AGAINST HIM ON ANY EARLIER OCCASION. HE, THEREFORE, FOUND NO FAULT IN THE TIMING OF RETRACTION OF STATEMENT B Y THE RESPONDENT- ASSESSEE. THE ISSUE OF RETRACTION OF STATEMENT IS N OT ASSAILED BY THE REVENUE IN APPEAL. THE LD. CIT(A) HAS ALSO FOUND TH AT THERE IS NO EVIDENCE OF INVESTMENT DURING THE YEAR UNDER CONSID ERATION OF RS. 7.50 CRORES IN CASH IN THE DIARY SEIZED DURING THE SURVE Y. HE, THEREFORE, HELD THAT THERE BEING NO INVESTMENT MADE DURING THE YEAR UNDER CONSIDERATION, THE ADDITION STOOD DELETED. THIS FINDING OF THE LD. CIT(A) IS NOT SHOWN TO BE PERVERSE ON FACTS. THE DEPARTMENT ALSO DID NOT DISC HARGE ITS BURDEN THAT LAY UPON IT TO PROVE THAT THERE IS INVESTMENT BY TH E ASSESSEE IN THE YEAR UNDER CONSIDERATION, THAT REMAINED UNEXPLAINED FOR ATTRACTING THE PROVISIONS OF SECTION 69 OF THE ACT. THIS VIEW FIND S SUPPORT FROM THE JUDGMENT RENDERED BY THE HONBLE ALLAHABAD HIGH COU RT IN THE CASE OF CIT VS. DAYACHAND JAIN VAIDYA (1975) 98 ITR 280 (ALL). IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY MERIT IN THE GROUNDS RAI SED IN APPEAL BY THE REVENUE.THE SAME STANDS REJECTED. 8. IN THE RESULT, APPEAL BY REVENUE STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 10/01/2014 SD/- SD/- ( T. K. SHARMA ) ( B. R. JAIN ) '* /JUDICIAL MEMBER #( '* / ACCOUNTANT MEMBER *#+ ,*-/ ORDER DATE 10/01/2014 /RAJKOT *RANJAN ITA574/RJT/2012 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- THE I.T.O., WARD 2(3), RAJKOT. 2. /RESPONDENT- RAMESH GORDHANBHAI HIRANI, RAJKOT. 3. '-2- % & 3% / CIT-I, RAJKOT. 4. & 3%- / CIT (A)-III, RAJKOT. 5. 789 % , , / DR, ITAT, RAJKOT 6. 9; <= / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.