Shri Lalitbhai C .Ranka, Surat V. The ACIT., Cent.Circle-3, Surat

ITSSA 103/AHD/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8766 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-12-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-12-2010
• Assessment Year: misc
• Appeal Filed On: 06-04-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN VARMA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Unexplained expenditure; Gift; Business income; Business expenditure; Peak credit; Block assessment
• Section: 50C

Judgement Text

IT(SS)A NOS.103 &122/AHD/2005 & C.O. N O. 161/AHD/2005 [IN IT(SS)A. 122/AHD/2005] 1 IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON' BLE SHRI A.N. PAHUJA, A.M. ) I.T (SS).A. NO. 103/AHD./2005 ASSESSMENT YEAR : BLOCK PERIOD 1-4-96 TO 4-10-2002 SHRI LALITKUMAR C.RANKA, VS- ASSISTANT COMMISSIONER OF 302, LUXAR PALACE, INCOME TAX, CENTRAL CIRCLE-3, TIMLIYAWAD, SURAT ROOM NO.507, AAYAKAR BHA VAN, (PAN : AAXPR 7174 B ) MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) & I.T.(SS) A. NO. 122/AHD/2005 ASSESSMENT YEAR : BLOCK PERIOD 1997-98 TO 4-10-2 002 ASSISTANT COMMISSIONER OF INCOME TAX, -VS.- SHRI LALITKUMAR C. RANKA, SURAT CENTRAL CIRCLE-3, SURAT (APPELLANT) (RESPONDENT) AND C.O. NO. 161/AHD/2005 (ARISING OUT OF IT (SS)A. NO.1 22/AHD/2005) ASSESSMENT YEAR : BLOCK PERIOD 19 97-98 TO 4-10-2002 SHRI LALITKUMAR C.RANKA, VS- ASSISTANT C OMMISSIONER OF 302, LUXAR PALACE, INCOME TAX, CEN TRAL CIRCLE-3, TIMLIYAWAD, SURAT ROOM NO.507, AAYAKAR BHAVAN , MAJURA GATE, SURAT (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL. DEPARTMENT BY : SHRI PRAVEEN VARMA, CIT (D.R.) O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THESE CROSS APPEALS ALONG WITH CROSS OBJECTION OF THE ASSESSEE WERE HEARD ON THE SAME DAY AND ARGUED BY THE AUTHORISED REPRESENTATIVE THE REFORE, THESE ARE DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NOS.103 &122/AHD/2005 & C.O. N O. 161/AHD/2005 [IN IT(SS)A. 122/AHD/2005] 2 2. WE FIRST TAKE THE APPEAL OF THE ASSESSEE, I.E. I T (SS) A.NO.103/AHD/2005. VARIOUS GROUNDS RAISED BY THE ASSESSEE IN HIS APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A)-II AHMEDABAD HAS ERRED IN SUSTAINING THE ADD ITION OF RS.36,260/- FOR THE SILVER ARTICLES MADE BY THE ASSESSING OFFICER WHERE IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT THE SAID ARTICLES HAS BEEN RECEIVED A S GIFT AND SOME OF IT HAS BEEN INHERITED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) II, AHMEDABAD HAS ERRED IN SUSTAINING THE ADDI TION OF RS.31,245/- UNACCOUNTED EXPENDITURE BY STATING THAT THE DECLARE D UNDISCLOSED INCOME ON THE BASIS OF TURNOVER ETC., OF THE WHOLE GROUP IMPLIES SET OFF OF EXPENDITURE ACCORDINGLY AND THIS AMOUNT CANNOT BE WITH THE SAME . WHEREAS THE ASSESSEE HAS INCURRED THE UNACCOUNTED BUSINESS EXPENDITURE AGAIN ST GROSS UNDISCLOSED BUSINESS INCOME AND HAS MADE A DISCLOSURE OF NET UN DISCLOSED INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ADDITION STATED ABOVE DESERVES TO BE DELETED, HENCE, IT IS P RAYED TO YOUR HONOUR TO DELETE THE ADDITION AND DO THE JUSTICE. 3. AT THE TIME OF HEARING SHRI M. K. PATEL APPEARED ON BEHALF OF THE ASSESSEE POINTED OUT THAT FOR THE BLOCK PERIOD 1-4-1996 TO 4-10-2002, TH E ASSESSEE HAS FILED THE RETURN OF INCOME DECLARING UNDISCLOSED INCOME OF RS.15 LACS AND THE ADDITIONS SUSTAINED BY LD. C.I.T.(A) AMOUNTING TO RS.36,260/- AND RS.31,245/- IS COVERED BY UNDISCLOSED INCOME DECLARED . HE SUGGESTED THAT FOR THIS PURPOSE THE MATTER BE RESTO RED TO THE FILE OF THE ASSESSING OFFICER. SHRI PRAVEEN VERMA, CIT (DR) APPEARED ON BEHALF OF THE R EVENUE OBJECTED TO THE PRAYER OF THE ASSESSEE ON THE GROUND THAT TOTAL UNDISCLOSED INCOM E DECLARED IS ONLY RS.15 LACS AND TOTAL UNDISCLOSED INCOME COMPUTED BY THE A.O. IN THE ASSE SSMENT ORDER IS RS.28,21,997/-. AFTER GIVING THE BENEFIT OF RS.15 LACS AS UNDISCLOSED INC OME RETURNED BY THE ASSESSEE, THERE IS BALANCE UNDISCLOSED INCOME OF RS.13,22,000/-. HE ACCORDINGL Y POINTED OUT THAT UNLESS THE ASSESSEE FURNISH THE DETAILS OF UNDISCLOSED INCOME OF RS.15 LACS DECLARED, THE MATTER CANNOT BE REMANDED TO A.O. FOR VERIFICATION. 4. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT NEITHER BEFORE LD. C.I.T.(A) NOR BEFORE US THE ASSESSEE HAS FURNISHED THE DETAILS INDICATING HOW THE ADDITION T O THE EXTENT OF RS.36,260/- AND RS.31,245/- IT(SS)A NOS.103 &122/AHD/2005 & C.O. N O. 161/AHD/2005 [IN IT(SS)A. 122/AHD/2005] 3 SUSTAINED BY THE LD. C.I.T.(A) IN THE IMPUGNED ORDE R IS COVERED BY UNDISCLOSED INCOME AMOUNTING TO RS.15 LACS DECLARED BY THE ASSESSEE OR THE BLOCK PERIOD. IN THESE CIRCUMSTANCES, IN OUR OPINION, THE MATTER CANNOT BE REMANDED TO A.O. CONSEQUENTLY BOTH THE GROUNDS OF ASSESSEES APPEALS ARE DISMISSED. 5. NOW WE TAKE UP THE APPEAL OF THE REVENUE, I.E. I T(SS) A.NO.122/AHD/2005. GROUND NO.1 RAISED BY THE REVENUE IN ITS APPEAL IS AS UNDER :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE ADDITION OF RS. 10,12,836/- MADE ON ACCOUNT OF PEAK BALANCE OF THE DEPOSITS IN THE UNDISCLOSED BANK ACCOUNT AND UNACCOUNTED INVESTMENT IN FIXED DEPOSITS. 6. THE BRIEF FACTS RELATING TO CONTROVERSY IN THE A FORESAID GROUND OF APPEAL IS THAT IN THE BLOCK ASSESSMENT ORDER, THE A.O. MADE ADDITION OF R S.10,12,836/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN FDR. THIS ADDITION WAS MADE BY REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE GROUP HAD DISCLOSED RS.64 LACS TILL 31-3-2 001 WHICH IS MUCH HIGHER THAN THE PEAK CREDIT OF THE BANK ACCOUNT AS MENTIONED IN PARA 10.7 OF TH E ASSESSMENT ORDER. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) MERELY REPRODUCED THE SUBMISSION OF THE ASSESSEE AND THEREAFTER DELETED T HE ADDITION OF RS.10,12,836/- WITHOUT ANY DISCUSSION/ SPEAKING ORDER. AGGRIEVED WITH THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL. 7. AT THE TIME OF HEARING THE LD. D.R. POINTED OUT THAT ORDER OF LD. C.I.T. (A) IN THIS REGARD IS NON SPEAKING. HE HAS MERELY REPRODUCED THE SUBMI SSIONS MADE BY THE ASSESSEE. THESE CONTENTIONS WERE NOT DISCUSSED ON MERIT IN THE ASSE SSMENT ORDER. THE LD. D.R. RELYING ON THE REASONING GIVEN BY THE A.O. IN THE ASSESSMENT ORDER CONTENDED THAT ASSESSEE HAS NO EXPLANATION, THEREFORE, THE ADDITION OF RS.10,12,836/- DELETED B Y THE C.I.T.(A) BE RESTORED. ON THE OTHER HAND, COUNSEL OF THE ASSESSEE POINTED OUT THAT ADDITION O F RS.10,12,836/- IS COVERED BY DISCLOSURE MADE BY THE GROUP AMOUNTING TO RS.65.5 LACS TILL 31-3-20 01.TO A QUERY FROM THE BENCH HOW THE GROUP DISCLOSURE MADE IS ALLOCATED TO THE VARIOUS ASSESSE E AND ADDITIONS MADE IN THE RESPECTIVE HANDS, BENEFIT OF DISCLOSURE ALLOWED, HE SUBMITTED THAT TH ESE ARE NOT AVAILABLE. FINALLY, COUNSEL OF THE IT(SS)A NOS.103 &122/AHD/2005 & C.O. N O. 161/AHD/2005 [IN IT(SS)A. 122/AHD/2005] 4 ASSESSEE STATED THAT HE HAS NO OBJECTION, IF THIS I SSUE IS RESTORED TO THE FILE OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR PASSING A SPEAKING ORDER. 8. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE IS CRYPTIC AND NON-SPEAKING. AT THE TIME OF HEARING, LD. COUNSEL O F THE ASSESSEE FAIRLY ADMITTED THAT THIS ISSUE REQUIRED TO BE REMANDED TO THE FILE OF LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) BECAUSE HIS ORDER IS NON-SPEAKING. WE THEREFORE, SET ASIDE THE ORDER OF THE LD. C.I.T.(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION THAT HE WILL F ORWARD THE EXPLANATION/ EVIDENCES SUBMITTED BY THE ASSESSEE TO THE ASSESSING OFFICER, WHO WILL VER IFY THE SAME AND SUBMIT THE REMAND REPORT. AFTER CONSIDERING THE REMAND REPORT, HE WILL RE-ADJ UDICATE THE ADDITION OF RS.10,12,836/- AFRESH IN ACCORDANCE WITH LAW. RESULTANTLY, FOR STATISTICA L PURPOSES, THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 9. THE ONLY OTHER GROUND OF APPEAL IS AS UNDER :- THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DIREC TING TO DELETE THE ADDITION OF RS.1,16,876/- MADE ON ACCOUNT OF UNACCOUNTED INVEST MENT IN PURCHASE OF LAND. 10. THE BRIEF FACTS RELATING TO CONTROVERSY INVOLVE D IN THE AFORESAID GROUND OF APPEAL IS THAT ASSESSEE PURCHASED TWO PLOTS OF LAND IN THE YEAR 19 96-97 FOR RS.2,88,750/-.THEREAFTER, THE ASSESSEE RECEIVED NOTICE FROM STAMP DUTY VALUATION AUTHORITY. ACCORDING TO WHICH THE VALUE OF THE PLOT COMES TO RS.4,05,636/-. BEFORE THE A.O. AS SESSEE CLARIFIED THAT ADDITIONAL STAMP DUTY PAYMENT WAS PAID TO HAVE PEACE OF MIND AND AVOID LI TIGATION. IT WAS ALSO CLARIFIED THAT ASSESSEE HAS NOT PAID ANY ON MONEY FOR BOTH THE PLOTS. NO T SATISFIED WITH THE EXPLANATION, A.O. INVOKED THE PROVISIONS CONTAINED IN SECTION 50C OF INCOME TAX ACT AND MADE ADDITION OF RS.1,16,876/- ON ACCOUNT OF DIFFERENCE IN VALUATION . 11. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. C.I.T .(A) DELETED THE ADDITION FOLLOWING THE DECISION OF ITAT IN ORDER DATED 22-6-2004 IN THE CA SE OF SHRI GHANSHYAM BHAIYA VS. A.C.I.T.,CIRCLE-3, SURAT WHEREIN IT IS HELD AS UNDE R :- IT(SS)A NOS.103 &122/AHD/2005 & C.O. N O. 161/AHD/2005 [IN IT(SS)A. 122/AHD/2005] 5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS EVIDENT FROM THE RECORD THAT NO DOCUM ENT WAS FOUND DURING THE COURSE OF SEARCH TO SUGGEST THAT THE APPELLANT PAID ANY ON MONEY TO THE VENDOR OF THE PROPERTY. THE SOLE EVIDENCE IN POSSES SION OF DEPARTMENT IS PAYMENT OF ADDITIONAL STAMP DUTY WHICH REPRESENTS D IFFERENCE BETWEEN THE VALUATION OF PROPERTY FROM STAMP DUTY PAYMENT AND I S IN FACT AN OPINION ABOUT PAYMENT OF STAMP DUTY. THE SAME CANNOT BE CAL LED UNDISCLOSED INCOME TO BE TAXED AS SUCH. THE ADDITION IS THEREFO RE, DELETED. AGGRIEVED WITH THE ORDER OF THE LD. C.I.T.(A), ON T HIS ISSUE, REVENUE IS IN APPEAL. 12. WE HAVE HEARD BOTH THE SIDES. IT IS PERTINENT T O NOTE THAT SECTION 50C OF THE INCOME TAX ACT IS NOT APPLICABLE IN THE CASE OF BUYER. THIS IS SUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, B BENCH, AHMEDABAD IN TH E CASE OF ITO VS.- VENU PROTEINS INDUSTRIES REPORTED IN [2010] 4 ITR (TRIB.) 602 (AH MEDABAD), WHEREIN THE HON'BLE TRIBUNAL HELD THAT APPLICABILITY OF SECTION 50C WAS PRIMA FACIE I NCORRECT AS IT PERTAINED TO CHARGING OF CAPITAL GAINS, WHICH WAS TO BE CONSIDERED IN THE HANDS OF T HE SELLER. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX (APPEALS). RESULTANTLY, THIS GROUND OF APPEAL IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. 14. THE GROUNDS RAISED IN THE C.O. ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (A)-II, AHMEDABAD HAS RIGHTLY DELETED THE ADDIT ION OF RS.10,12,836/- MADE ON THE POINT OF PEAK INVESTMENT IN THE UNACCOU NTED BANK ACCOUNT BECAUSE THE DISCLOSURE OF THE ASSESSEE GROUP TILL 3 1-3-2001 WAS RS.64.5 LACS WHICH WAS MUCH HIGHER THAN THE PEAK BALANCE OF RS.2 7,12,836/- IN THE UNACCOUNTED BANK ACCOUNT BELONGING TO THE ASSESSEE GROUP. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A)-II, AHMEDABAD HAS RIGHTLY DELETED THE ADDIT ION OF RS.1,16,876/- ON THE POINT OF STAMP DUTY BECAUSE THE ADDITION WAS NO T BASED O ANY EVIDENCE AND IT WAS MADE ON PRESUMPTION BASIS. ADDITION ON T HE BASE OF PRESUMPTION HAS NO PLACE IN SEARCH AND THEREFORE, THE ADDITION HAS BEEN RIGHTLY DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ORDER OF THE A.O., IS NOT ENTITLED TO BE RESTORED. IT(SS)A NOS.103 &122/AHD/2005 & C.O. N O. 161/AHD/2005 [IN IT(SS)A. 122/AHD/2005] 6 15. BOTH THE GROUNDS OF CROSS OBJECTION ARE RENDERE D INFRUCTUOUS IN VIEW OF OUR DECISION IN REVENUES APPEAL ON BOTH THE ISSUES ABOVE. 16. IN THE RESULT, APPEAL OF THE ASSESSEE AND CROSS OBJECTION ARE DISMISSED AND FOR STATISTICAL PURPOSES, THE APPEAL OF THE REVENUE IS TREATED AS P ARTLY ALLOWED. THE ORDER SIGNED AND PRONOUNCED IN THE COURT ON 24 .12.2010. SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 / 12 / 2010 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD. LAHA/SR. P.S.