Ghanshyam Infrastructure, Ahmedabad V. The DCIT, Cental Circle-1(1), Ahmedabad

ITA 62/AHD/2022

AI Insights

The case involves Ghanshyam Infrastructure, a partnership firm engaged in the real estate business, appealing against the additions made by the Assessing Officer (AO) and upheld by the CIT(Appeals)-11, Ahmedabad. The additions included unaccounted income from the sale of flats, unexplained cash found during a survey, and disallowances related to meter boxes installation expenses. The Tribunal examined the evidence presented, including agreements, bank entries, and cash books, and found discrepancies in the AO's and CIT(A)'s conclusions regarding the sale price of the flats and the nature of the cash found. The Tribunal's decision was based on the substantiation provided by the assessee through various documents and explanations.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299991 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 01-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-03-2022
• Other Referred Cases: DCIT vs. Rajat Agarwal (2012) (27 taxmann.com 166)(Jaipur), Arvik Properties & Investments (P) Ltd. vs. DCIT (2017) (88 taxmann.com 652) (Mum.)
• Laws Referred To: Section 139(1), Section 143(2), Section 250, Section 133A
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 133A; 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .6 2/ A h d / 2 02 2 ( A s se ss m e nt Y e a r : 20 17- 18 ) Gh an sh ya m I nf r a s tr uc t ur e 12 A , A j an ta C o m m e r c ia l C en tr e , Nr . I n c o m e Ta x C r os s R oa d , As hr a m R oa d , A h m ed a b a d V s . D C I T C e n tr a l Win g C e nt. C ir c l e- 1( 1 ) , A h me da ba d [P AN N o.A A LF G1 84 8 H] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divatia, A.R. & Shri Samir Vora, A.R. Respondent by: Shri Sanjay Jain, Sr. D.R. D a t e of H ea r i ng 02.03.2023 D a t e of P r o no u n ce me nt 17.03.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals)-11, Ahmedabad on 30.12.2021 for A.Y. 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1.1 The order passed u/s. 250 on 30.12.2021 by CIT(A)-11, Abad for A.Y. 2017- 18 upholding the additions aggregating to Rs.25,66,563/- made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition. The observations made and conclusion reached by CIT(A) to the extent, the same are contrary to record are denied. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming following additions/disallowances: i) Addition towards alleged underreported sale price of flats Rs.20,00,000/- ii) Addition towards cash found during survey Rs.66,563/- iii) Addition towards meter boxes installation expenses Rs.5,00,000/- ITA No. 62/Ahd/2022 Ghanshyam Infrastructure vs. DCIT Asst.Year–2017-18 - 2 - 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the above said additions/disallowances. 3.1 The Ld.CIT(A) has erred in upholding that the income declared of Rs.50 lakhs was not business income but headless income. The observations made by CIT(A) in this regard are not admitted and contrary to the facts of the case as well as law. It is, therefore, prayed that the additions aggregating to Rs.25,66,563/- upheld by the CIT(A) my kindly be deleted.” 3. Return of income was filed under Section 139(1) on 31.10.2017 declaring total income of Rs. 7,78,320/-. Accordingly, notice under Section 143(2) was issued on 27.09.2018 and was sent to the assessee. During the year under consideration the assessee was engaged in the construction industry as builders. The Assessing Officer observed that during the course of survey proceedings Annexure BI-3 was impounded wherein the assessee was found that there was agreement to sale for Flat No. 102 for an amount of 75,11,111/-. The declared sales consideration was Rs. 55,11,111/- which is less than sale agreement. The show-cause notice was issued to the assessee for which the assessee replied the same. After considering the assessee’s reply the Assessing Officer made addition of Rs. 20 lakh as unaccounted income. The Assessing Officer also made disallowance of Rs. 20,367/- on account of debit of interest to the Profit & Loss Account, addition of Rs. 66,563/- as unexplained cash and disallowance of Rs. 5,00,000/- towards meter expenses. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. There is a delay of 1 day in filing the present appeal which has been explained by the assessee. The delay appears to be genuine hence the delay is condoned. ITA No. 62/Ahd/2022 Ghanshyam Infrastructure vs. DCIT Asst.Year–2017-18 - 3 - 6. The Ld. A.R. submitted that addition towards allege under reported sale price of flats, the assessee is a partnership firm and engaged in the business of Real Estate as developer / builders. During the year under consideration the assessee has undertaken the project called Park View consisting of 12 residential flats. A survey under Section 133A was carried out on 29.11.2016 wherein statement of Shri Nilesh K Patel, partner was recorded and several loose papers were impounded. The Ld. A.R. further submitted that the assessee furnished reply dated 05.12.2019 and 16.12.2019. The assessee also furnished the explanation related to cash of Rs. 66,563/- which was found at the present premises during course of survey which belong to father of the assessee. The Ld. A.R. submitted that the copy of agreement dated 12.04.2016 which was found is unregistered document and does not evidentiary value. The Ld. A.R. submitted that it was submitted by the witness Jayesh S Patel and no other party or witness had signed it. Therefore, it was a dumb document. Since the entire transaction of sale of flat was not cancelled by the purchaser but only the sale price was varied, there could not be any cancellation agreement. The fall in real estate and it cannot be correlated in any time frame or percentage. The Ld. A.R. further submitted that the sale price of two flats cannot be compared for various reasons such as size, shape, location, view gallery, personal preferences / choice etc. The transaction was completed in single payment by Anilaben K Patel & Janak A Patel. Whereas the assessee had paid the sale price in piece meal. The Ld. A.R. further submitted that the confirmation letter from the purchaser Smt. Ushaben S Patel filed wherein she has categorically confirmed to have purchased the said flat for Rs. 55,11,111/- and not for Rs. 75,11,111/-. The Ld. A.R. relied upon the decision of the Tribunal DCIT vs. Rajat Agarwal (2012) (27 taxmann.com 166)(Jaipur). The Ld. A.R. further submitted that the agreement to sale dated 12.04.2016 which ITA No. 62/Ahd/2022 Ghanshyam Infrastructure vs. DCIT Asst.Year–2017-18 - 4 - was found was not signed and was not registered document and does not have evidentiary value. The Ld. A.R. relied upon the decision of Arvik Properties & Investments (P) Ltd. vs. DCIT (2017) (88 taxmann.com 652) (Mum.). 7. The Ld. D.R. submitted that the CIT(A) has categorically mentioned that it is an unaccounted amount which was already mentioned in agreement for sale dated 12.04.2016. Therefore, the Assessing Officer has rightly made addition to that extent. 8. Heard both the parties and perused all the relevant material available on record. The document found during the survey was unsigned and was not registered. The price which was mentioned by the assessee was not only confirmed by the purchaser but also through the various document such as bank entries the cash entries received during the course of purchase of the sale of flats. Thus, the assessee has proved that there was no installment of sale price but the actual price received was Rs. 55,11,111/- and therefore, the addition of Rs. 20,00,000/- made by the Assessing Officer is not justifiable. Thus, Ground No. 2.1(i) is allowed. 9. As regards Ground No. 2.1(ii) the Ld. A.R. submitted that the cash belong to deceased father of Shri Nilesh Patel which was confirmed, therefore, the addition to that extent was not justifiable. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 10. Heard both the parties and perused all the relevant material available on record. The cash found during survey was properly explained by the assessee during the course of survey as well as at the time of assessment proceedings through cash books where the said amount was included. The books was not ITA No. 62/Ahd/2022 Ghanshyam Infrastructure vs. DCIT Asst.Year–2017-18 - 5 - rejected by the Assessing Officer and hence, the addition made by the Assessing Officer does not sustain. Hence, Ground No. 2.1(ii) is allowed. 11. As regards addition towards meter boxes installation expenses the same has been allowed by the CIT(A) hence does not survive. 12. As regards, Ground No. 1.1 & 1.2 the same are general in nature hence dismissed. As regards, Ground No. 2.2 and 3.1 the same does not require adjudication as the relief was granted in respect of Ground No. 3.1 & 2.1(iii) by the CIT(A). 13. In result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 17/03/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 17/03/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/ Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 15.03.2023 2. Date on which the type draft is placed before the Dictating Member 15.03.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 16.03.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .03.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 17 .03.2023 7. Date on which the file goes to the Bench Clerk 17 .03.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................