Shri Dharmesh Chandulal Patel, Surat V. The Dy.CIT.,Circle-3, Surat

ITA 803/AHD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63283 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 03-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Business income; Principle of natural justice; Additional evidence; Valuation report
• Section: 69C; 143(3); 50C; 234B; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.803/AHD/2008 A. Y. 2004-05 WITH I.T.A. NO.1224/AHD/2010 A. Y. 2004-05 DHARMESH CHANDUBHAI PATEL, B-1, MANIRATNA ROW HOUSE, ADAJAN, SURAT (ASSESSEE) VS. THE D.C.I.T., CIRCLE-1, SURAT (DEPARTMENT) DEPARTMENT BY : SHRI D.P. GUPTA, CIT- D.R. ASSESSEE BY : SHRI S.N. SOPARKAR, SR. ADVOCATE DATE OF HEARING : 27.11.2012 DATE OF PRONOUNCEMENT 28.12.2012 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF CIT(A)- II, SURAT DATED 31.12.2007 AND 12.02.2010. 2. THE FACTS IN BRIEF AS CULLED OUT FROM THE ORDER ARE AS UNDER:- THE ASSESSEE IS PROPRIETOR OF CITY DEVELOPERS AND IS ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT, PLOTTING AND SELLING. THE ASSESSEE ALSO HAS INCOME FROM COMMISSION AND INCOME FORM OTHER SOURCE S. HE FILED RETURN OF INCOME ON 01.11.2004 DECLARING TOTAL INCOME OF RS.6 ,40,440/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 28.12.2006 AND THE TOTAL INCOME WAS DET ERMINED AT RS.3,12,55,946/- AFTER MAKING VARIOUS ADDITIONS. I . T.A. NO.803/AHD/2008, A. Y. 2004-05 WITH I .T.A. NO.1224/AHD/2010, A. Y. 2004-05 2 3. AGGRIEVED BY THE ADDITION MADE BY THE A.O. THE A SSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ITS ORDER DATED 31.12.2007 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS:- I) UNEXPLAINED EXPENDITURE (RS.64,00,051) CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION MADE BY AO OF RS.64,00,051/- ON ACCOUNT OF UNEXPLAINED E XPENDITURE U/S 69C OF THE ACT IN THE ACTIVITY OF LAND DEVELOPMENT, PLOTTING AND SELLING. BOTH THE LOWER AUTHORITIES HAS CONFIRMED THE ADDITI ON WITHOUT CONSIDERING THE SUBMISSIONS, EVIDENCES OF THE ASSES SEE THAT IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. LD. CIT(A) OUGH T TO HAVE DELETED THE ADDITION IN TOTO AND HAS FURTHER MISCONSTRUED THAT THERE ARE THREE DEVELOPMENT AGREEMENT. II) SUPPRESSION OF SALES CONSIDERATION (RS.1,13,43, 673) CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION MADE BY AO OF RS.1,13,43,673/- ON ACCOUNT OF SUPPRESSION OF SALE CONSIDERATION IN THE ACTIVITY OF SELLING PLOTS. BO TH THE LOWER AUTHORITIES HAS CONFIRMED THE ADDITION BY TAKING JANTRI RATES W HICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION IN TOTO AND HAS FURTHER MISCONSTRUED BY DU PLICATING THE AREA OF LAND. III) ENHANCEMENT OF SO CALLED PROFIT ON RESALE OF P LOT (RS.21,08,04,000) CIT(A) HAS ERRED IN LAW AND ON FACTS IN ENHANCING I NCOME BY RS.21,08,04,000/- ON ACCOUNT OF SUPPRESSED CONSIDER ATION ON REBOOKING OF CANCELLED PLOTS. CIT(A) HAS FURTHER E RRED IN NOT CONSIDERING THE STATEMENT RECORDED U/S 131 AND ALSO TAKING THE AREA OF PLOT. IV) PROFIT ON SALE OF LAND IN JOINT VENTURE (RS.21, 782) CIT(A) HAS ERRED IN LAW AND ON FACTS IN TAKING PROF IT ON SALE OF LAND BY APPLYING PROVISIONS OF SECTION 50C. BOTH THE LOWER AUTHORITIES HAS CONFIRMED THE ADDITION BY TAKING JANTRI RATES WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION IN TOTO. V) ENHANCING RS.2,00,000 AS SMC TAX CIT(A) HAS ERRED IN LAW AND ON FACTS IN ENHANCING R S.2 LACS AS SMC TAX WITHOUT GIVING SHOW CAUSE NOTICE FOR THE SAME. I . T.A. NO.803/AHD/2008, A. Y. 2004-05 WITH I .T.A. NO.1224/AHD/2010, A. Y. 2004-05 3 VI) MISCELLANEOUS I) THE LD. CIT(A) ERRED IN CONFIRMING INTEREST CHAR GED U/S 234B OF THE ACT. II) THE LD. CIT(A) ERRED IN CONFIRMING INTEREST U/S 234D OF THE ACT. III) THE LD. CIT(A) ERRED IN CONFIRMING INTEREST CH ARGED U/S 234B AND 234D WHEN IT IS NOT MENTIONED IN THE BODY OF ORDER. 13. BEFORE US LD. D.R. SUBMITTED THE PAPER BOOK CON TAINING THE VALUATION REPORT MADE BY THE VALUATION OFFICER DATED 18.09.20 12. LD. D.R. SUBMITTED THAT THIS IS AN ADDITIONAL EVIDENCE WHICH THE REVENUE WO ULD LIKE TO RELY UPON AND THIS NEW EVIDENCE COULD NOT BE FURNISHED BEFORE CIT(A). HE THEREFORE SOUGHT LEAVE AND URGED THAT THE SAME BE TAKEN ON RECORD AND CONS IDERED WHILE DECIDING THE APPEAL. ON THE OTHER HAND, LD. A.R. OPPOSED THE PR AYER OF LD. D.R. TO TAKE ADDITIONAL EVIDENCE ON RECORD. IN THE ALTERNATE HE SUBMITTED THAT THE ADDITIONAL EVIDENCE WHICH IS BEING PLACED BY REVENUE BEFORE TH E ITAT WAS NOT AVAILABLE BEFORE CIT(A) AND THE A.O. HE THEREFORE SUBMITTED T HAT IF THE VALUATION REPORT IS TAKEN ON RECORD THEN THE MATTER SHOULD BE REMITTED BACK TO THE FILE OF THE A.O. WITH NECESSARY INSTRUCTIONS. HE FURTHER SUBMITTED T HAT CIT(A), HES MADE ADDITIONS BY APPLYING THE PROVISION OF SECTION 50C. IT WAS HIS SUBMISSION THAT SINCE ASSESSEE IS IN THE BUSINESS OF PURCHASE AND S ALE OF LAND AND HAS BEEN CONSIDERING THE INCOME FROM SALE OF LAND AS BUSINES S INCOME, PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. HE FURTHER SUBMITT ED THAT THE A.O. HAS NOT GIVEN ANY FINDING AS TO WHETHER THE INCOME FROM THE SALE OF LAND IS THE BUSINESS INCOME OR CAPITAL GAIN. HE FURTHER SUBMITTED TH AT THE ASSESSEE WAS NOT ALLOWED CROSS-EXAMINATION OF MR. MORAR WHOSE STATEM ENT WAS RECORDED U/S 131. HE, THEREFORE, URGED THAT IN VIEW OF THE AFORESAID FACTS, IN CASE THE MATTER IS I . T.A. NO.803/AHD/2008, A. Y. 2004-05 WITH I .T.A. NO.1224/AHD/2010, A. Y. 2004-05 4 REMITTED BACK TO THE FILE OF THE A.O., THE A.O. BE DIRECTED TO GIVE A FINDING ON EACH OF THE ISSUES. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE ORDER OF CIT(A) WE FIND THAT CIT(A) HAS EN HANCED THE INCOME BY INVOKING THE PROVISIONS OF SECTION 50C. WE FURTHER FIND THAT THE A.O. HAS NOT RECORDED ANY FINDING AS TO WHETHER THE INCOME FROM SALE OF LAND IS BUSINESS INCOME OR CAPITAL GAIN. FROM THE RECORDS WE ALS O FIND THAT MR. MORARS STATEMENT WAS RECORDED U/S 131 BY THE A.O. BUT THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE MR. MORAR. FURTHER, D URING THE COURSE OF HEARING BEFORE US LD. D.R. HAS SUBMITTED A COPY OF THE VALU ATION REPORT OF THE VALUATION OFFICER AS ADDITIONAL EVIDENCE. THIS ADDITIONAL EV IDENCE WAS NOT AVAILABLE BEFORE THE A.O. OR CIT(A). 15. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE CONSI DERED OPINION THAT IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY THE MATTE R BE REMITTED TO THE FILE OF A.O. WE, THEREFORE, REMIT THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO HIM TO GIVE A CATEGORICAL FINDING AS TO WHETHER THE INCOME FROM SALE OF LAND IS BUSINESS INCOME OR CAPITAL GAIN. HE IS ALSO DIRECTED TO V ERIFY THE SIZE OF PLOTS SOLD AND RECORD A CATEGORICAL FINDING ON THE SAME. FURTHER, THE A.O. IS ALSO DIRECTED TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMIN E MR. MORAR WHOSE STATEMENT WAS RECORDED U/S 131 OF THE ACT. THE A.O. SHALL PA SS ORDER AFTER CONSIDERING THE AFORESAID FACTS AND AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. THUS, WE DO NOT ADJUDICATE ANY OF THE GRO UNDS ON MERIT AND REMIT ALL THE GROUNDS TO THE FILE OF THE A.O. FOR HIM TO DECI DE AFRESH. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. I.T.A. NO.1224/AHD/2010 I . T.A. NO.803/AHD/2008, A. Y. 2004-05 WITH I .T.A. NO.1224/AHD/2010, A. Y. 2004-05 5 17. THIS APPEAL IS WITH RESPECT TO PENALTY LEVIED U /S 271(1)(C ) ON THE ADDITIONS MADE WHILE FINALIZING THE ASSESSMENT U/S 143(3). 18. SINCE THE QUANTUM APPEAL OF THE ASSESSEE HAS BE EN REMITTED TO THE FILE OF A.O. (IN ITA NO.803/AHD/2008) BY AN ORDER HEREINABO VE, THE PENALTY LEVIED ON THE ADDITIONS MADE DOES NOT SURVIVE AND WE THEREFOR E DIRECT FOR ITS CANCELLATION. HOWEVER, THE A.O. MAY REINSTATE THE PENALTY PROCEED INGS AT THE TIME OF FRAMING FRESH ASSESSMENT IF SO WARRANTED BY LAW. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 20. IN THE COMBINED RESULT, THE APPEAL OF THE ASSES SEE IN ITA NO.803/AHD/2008 IS ALLOWED FOR STATISTICAL PURPOSE AND APPEAL IN IT A NO.1224/AHD/2010 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28.12.201 2 SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# *