Shri Maganbhai Harjibhai Bhakhar, Ahmedabad V. The Dy.CIT, Central Circle-2(1), Ahmedabad

ITSSA 169/AHD/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2494 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Capital asset; Income from undisclosed sources; Document seized; Benefit of exemption; Documents seized
• Section: 54F; 142(1); 153A; 54; 6; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./() IT(SS)A NOS. 169 & 170/AHD/2015 / ASSESSMENT YEAR : 2005-06 & 2007-08 MAGANBHAI HARJIBHAI BHAKHAR, 86/1, H COLONY, NEHRUNAGAR CHAR RASTA, AMBAWADI, AHMEDABAD-380015 PAN : AARPB 8270 G VS DCIT, CENTRAL CIRCLE-2(1), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VIJAY RANJAN, AR REVENUE BY : SHRI R.I. PATEL, CIT-DR / DATE OF HEARING : 16/08/2016 / DATE OF PRONOUNCEMENT: 27/10/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST A COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1 2, AHMEDABAD DATED 27.03.2015, PASSED FOR ASSESSMENT YEARS 2005-06 & 2 007-08. 2. THE COMMON GROUND RAISED IN BOTH THE YEARS IS A S UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.96,50,000 (AY 2005-06) AND RS.1,03,03,020/- (AY 2007-08) MADE BY THE ASSESSING OFFICER AS UNDIS CLOSED PROFIT ON SALE OF LAND. 3. THE REMAINING GROUND RAISED IN AY 2005-06 READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF THE APPELLANTS CLAIM FOR DEDUCTION OF LONG TERM CAPITAL GAIN OF RS.13,36,738/- U/S 54F OF THE I.T. ACT. 4. BRIEF FACTS ARE THAT A SEARCH U/S. 132 OF THE I. T. ACT WAS CARRIED OUT BY IT DEPARTMENT IN THE CASES OF ONE SAVALIA GROUP ALO NG WITH SEARCH ON IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 2 6.1.2011 THE ASSESSEES RESIDENTIAL PREMISES AT 86/ 1, H COLONY, NEHRUNAGAR CHAR RASTA, AMBAWADI, AHMEDABAD. DURING THE COURSE OF SEARCH, INCRIMINATING MATERIAL WAS FOUND PARTICULARLY A SEI ZED PAPER BEING PAGE NO. 64 OF ANNEXURE-A/1; SCANNED COPY THEREOF IS REP RODUCED AT PAGE-2 OF THE ASSESSMENT ORDER AND AT PAGE 3 OF THE ORDER OF THE LEARNED CIT (APPEALS). THESE NOTINGS AND ASSESSEES STATEMENT INDICATED THAT A PIECE OF LAND ADMEASURING 12926 SQ. YD. WAS ORIGINALLY PURCH ASED ALONG WITH POSSESSION THEREOF BY THE ASSESSEE FOR A CONSIDERAT ION OF RS.6,30,91,806/- FROM ONE SHRI HARESHBHAI J. PATEL BY AN UNREGISTERE D TRANSACTION ON 1-7- 2003. CASH PAYMENT OF RS.2,50,00,000/- WAS MADE TO SHRI HARESHBHAI AND THE BALANCE AMOUNT OF RS. 3,80,91,806/- WAS SHOWN A S OUTSTANDING. 4.1 THE SAME LAND WAS SUBSEQUENTLY RESOLD TO ONE SH RI BHUSHANBHAI VYAS (DIRECTOR OF PUSHPAKA CONSTRUCTION FOR A TOTAL CONSIDERATION OF RS. 8,30,44,826 WHICH TRANSACTION WAS ALSO NOT REGISTER ED. THE OUTSTANDING AMOUNT OF RS.3,80,91,806/- PAYABLE BY ASSESSEE TO S HRI HARESHBHAI WAS PAYABLE NOW BY SHRI BHUSHANBHAI TO THE FIRST VENDOR SHRI HARESHBHAI, TO BE ADJUSTED AGAINST THE CONSIDERATION OF SECOND SALE R ECEIVABLE BY THE APPELLANT. THUS THE BALANCE OUTSTANDING AMOUNT OF R S.4,49,53,020 (I.E. RS.8,30,44,826/- RS. 3,80,91,806/- PAYABLE TO HAR ESHBHAI) WAS TO BE RECEIVED BY THE APPELLANT FROM SHRI BHUSHANBHAI. O N THE SAME SEIZED PAPER A CHAIN OF PAYMENTS TO ASSESSEE BY SHRI BHUSH ANBHAI ARE MENTIONED STARTING FROM 26.1.2004 ON WHICH DATE IT IS CLAIME D BY THE ASSESSE THAT THE POSSESSION OF LAND WAS HANDED OVER TO SHRI BHUSHAN BHAI. ASSESSEE CLAIMED THAT THE TRANSACTION OF CAPITAL GAINS IN TERMS OF S EC 45(1) WAS COMPLETED ON 26-1-04 AS THE POSSESSION OF LAND AND PART CONSIDER ATION WAS TRANSACTED ON THIS DATE. THUS THE CAPITAL GAIN TRANSACTION LIABLE FOR TAX WAS COMPLETED IN FY 2003-04 I.E. AY 2004-05. IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 3 4.2 PURSUANT TO SEARCH, RELEVANT NOTICES U/S. 153A FOR 6 YEARS PRIOR TO THE YEAR OF SEARCH WERE ISSUED, IN RESPONSE TO WHICH TH E RELEVANT RETURNS OF INCOME WERE FILED ON 2 ND DECEMBER, 2011. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, NOTICES U/S. 142(1) AND U/S . 143(2) WERE ISSUED WHICH ARE COMPLIED WITH BY THE APPELLANT BY FURNISH ING ALL DETAILS / EXPLANATIONS / DOCUMENTS. 4.3 THE MAIN CONTROVERSY IN THESE APPEALS PERTAIN T O YEAR OF TAXABILITY AND APPLICABILITY OF SEC. 45(1) AND YEAR OF TRANSAC TION OF SALE OF IMPUGNED LAND BY ASSESSEE TO SHRI BHUSHANBHAI. ACCORDING TO ASSESSEE BASED ON THE AFORESAID SEIZED PAPER BEING PAGE NO. 64 OF ANNEXUR E-A/1, ASSESSEES STATEMENT RECORDED U/S 132(4), CONFIRMATION OF ORIG INAL VENDOR SHRI HARESH BHAI PATEL AND SECOND PURCHASER SHRI BHUSHANBHAI, T HE LAND IS QUESTION STOOD TRANSFERRED WITH POSSESSION TO SHRI BHUSHANBH AI ON 26-1-04; THEREFORE THE CAPITAL GAINS WERE CHARGEABLE TO TAX IN FY 2003 -04 I.E. AY 2004-05 IN TERMS OF SEC 45(1). SECTION 45 OF THE I.T. ACT, RE ADS AS UNDER:- 45. [(1)] ANY PROFITS OR GAINS ARISING FROM THE TR ANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERW ISE PROVIDED IN SECTIONS 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G AND 54H, BE CHA RGEABLE TO INCOME- TAX UNDER THE HEAD 'CAPITAL GAINS', AND SHALL BE DE EMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. 4.4 THE MEANING OF THE TERM TRANSFER IN RELATION TO A CAPITAL ASSET IS FURTHER DEFINED AND AMPLIFIED BY SEC. 2(47)(V) READ AS UNDER:- 2(47) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES,. . (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRA NSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR . 4.5 ASSESSEE RELIED ON VARIOUS EVIDENCE BROUGHT ON RECORD, LEGAL CONTENTIONS AND CASE LAWS TO SUPPORT HIS CLAIM IN T HIS BEHALF. LD. LD. AO ON IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 4 ONE SET OF REASONING AND THOUGH LD. CIT(A) FOUND IT TO BE NOT PROPER, HOWEVER ON OTHER REASONING HELD THAT THE GAINS WERE LIABLE TO BE TAXED IN YEAR OF RECEIPT I.E. AYS 2005-06 AND 2007-08. 4.6 LD. AO OBSERVED THAT IN THE STATEMENT RECORDED U/S. 132(4) OF THE I.T. ACT, VIDE QUESTION NO. 35 THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE AND CONTENTS OF THE AFORESAID SEIZED PAPER, ASSESSEES REPLY IS REPRODUCED AT PAGE-3 OF THE ASSESSMENT ORDER. IT WAS STATED THAT THE SAID PAPER CONTAINS ACCOUNT IN RESPECT OF LAND TRANSACTION OF PUSHPAK H ILL BUNGALOWS AT PRAHLADNAGAR, AHMEDABAD AND EXACT DETAILS COULD NOT BE REMEMBERED. THE DETAILS AND CLARIFICATION WOULD BE GIVEN AFTER VERI FICATION AND CONSULTING OTHER PARTNERS. THEREAFTER ASSESSEE BY WRITTEN SUBM ISSIONS DATED 4TH APRIL, 2011 EXPLAINED THE NATURE OF NOTINGS WHICH ARE ALSO REPRODUCED AT PAGE-3 OF THE ASSESSMENT ORDER THAT:- I. THE RELEVANT PIECE OF LAND WAS PURCHASED BY ASSES SEE ON 1 ST JULY, 2003 FROM SHRI HARESHBHAI J. PATEL AT A PRICE OF R S. 6,30,91,906/- AGAINST WHICH TRANSACTION THE ASSESSEE PAID CASH OF RS. 2,50,00,000/- TO SHRI HARESHBHAI PRIOR TO 26.1.2004. II. ON 26.1.2004 THE SAID LAND WAS SOLD BY THE ASSESSEE TO SHRI BHUSHANBHAI VYAS FOR A CONSIDERATION OF RS. 8,30,44 ,826/-. OUT THIS SALE CONSIDERATION AN AMOUNT OF RS. 3,80,91,806/- (BALANCE PAYABLE BY ASSESSEE TO SHRI HARESHBHAI QUA THE FIRST PURCH ASE) WAS AGREED TO BE PAID BY SHRI BHUSHAN BHAI DIRECTLY TO SHRI H ARESHBHAI, THIS WAS MUTUALLY AGREED AND ACCEPTED. THE FACT ABOUT TH IS TRANSFER OF OUTSTANDING IS CLEARLY REFLECTED IN THE SEIZED PAPE R ITSELF AND FURTHER SUPPORTED BY CONFIRMATIONS IN THIS BEHALF FROM SHRI HARESH BHAI FILED BEFORE THE INVESTIGATING OFFICER DURING POST- SEARCH INQUIRIES AND ALSO BEFORE THE ASSESSING OFFICER. IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 5 III. IN THIS MANNER THE TOTAL PURCHASE CONSIDERATION OF RS.6,30,91,906/- WAS FULLY PAID BY 26.1.2004 TO SHRI HARESH BHAI PAT EL. THE POSSESSION OF THE LAND WAS HANDED OVER TO SHRI BHUS HAN BHAI ON 26.1.2004 ITSELF WHICH IS CONFIRMED BY SHRI HARESH BHAI. IV. THE BALANCE AMOUNT OF RS.4,49,53,020/- RECEIVABLE B Y THE ASSESSEE FROM SHRI BHUSHAN BHAI VYAS WAS PAID IN NEXT YEARS , THE DETAILS THEREOF OF ARE CLEARLY MENTIONED IN THE JOTTINGS ON THE SEIZED PAPER. 5. BEFORE THE LEARNED C.I.T. (APPEALS) DETAILED WRI TTEN SUBMISSIONS WERE FILED, RELEVANT PART THEREOF PERTAINING TO THE POS ITION RELEVANT TO THIS ISSUE WAS SUBMITTED AS UNDER:- 3.4 FROM THE ABOVE, IT MAY KINDLY BE NOTED THAT TH E EXPLANATION OR CLARIFICATION GIVEN BY THE ASSESSEE BY AND LARGE CO RROBORATED WITH THE FACTS NOTED BY THE ASSESSING OFFICER FROM THE SEIZED PAPE R. 3.5 AT PARA 3.2 OF THE ASSESSMENT ORDER, THE ASSES SING OFFICER OBSERVED THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION REG ARDING SOURCES OF THE PAYMENT OF RS. 2,50,00,000 MADE TO SHRI HARESHBHAI PATEL AND THAT THERE WAS NO EVIDENCE THAT THE SAID AMOUNT WAS PAID PRIO R TO 26.1.2004. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT NO DOCUMEN TARY EVIDENCE WAS FILED TO ESTABLISH THAT THE ENTIRE PURCHASE PRICE WAS PAI D BY 26.1.2004 BY THE ASSESSEE TO SHRI HARESHBHAI FROM WHOM THE LAND WAS PURCHASED. 3.6 IT IS RESPECTFULLY SUBMITTED THAT THE AFORESAID OBSERVATIONS MADE BY THE ASSESSING OFFICER ARE NEITHER JUSTIFIED NOR REL EVANT FOR THE SIMPLE REASON THAT THE SOLE AND ENTIRE BASIS FOR DRAWING ANY CONC LUSIONS IS THE NOTINGS ON THE SEIZED PIECE OF PAPER. EVEN THE ADDITION ULTIMA TELY MADE BY THE ASSESSING OFFICER IS SOLELY BASED UPON THE AFORESAID SEIZED P APER WITHOUT BRINGING ON RECORD ANY OTHER MATERIAL OR EVIDENCE. IN OTHER WOR DS, BUT FOR THE NOTINGS ON THE SEIZED PAPER THERE IS NO OTHER INFORMATION WITH THE DEPARTMENT WHICH COULD HAVE RESULTED INTO ANY ADVERSE INFERENCE FOR THE PURPOSE OF MAKING ANY ADDITION. IT IS REITERATED THAT THE ASSESSEE HAS AC CEPTED THE NOTINGS ON THE SEIZED PAPER AS TRUE AND CORRECT AND HAS ALSO ADMIT TED THE TRANSACTIONS NOTED ON THE SEIZED PAPER. THEREFORE, FOR DRAWING ANY CON CLUSIONS OR INFERENCES, THE AFORESAID PAPER AND THE NOTINGS THEREON MUST BE GIV EN FULL EFFECT. IN OTHER WORDS, THE SEIZED PAPER HAS TO BE EITHER ACCEPTED A S A WHOLE OR HAS TO BE COMPLETELY REJECTED. IT CANNOT BE CONSIDERED IN PA RT ONLY. THIS LEGAL POSITION IS FULLY SETTLED AND KIND REFERENCE IS INVITED TO T HE HON'BLE DELHI HIGH COURT IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 6 DECISION IN THE CASE OF CIT VS. INDEO AIRWAYS PVT. LTD., 349 ITR 85. THE RELEVANT PART OF THE HEADNOTE IS REPRODUCED BELOW F OR READY REFERENCE:- HELD, DISMISSING THE APPEALS, (I) THAT IF THE REVE NUE WAS OF THE OPINION THAT THE EXPENSES CLAIMED TOWARDS GREEN BOX ES WAS INADMISSIBLE OR WAS EXCESSIVE, OR NOT GENUINE, IN O RDER TO REJECT THE ENTRIES IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS OF THE ASSESSEE SEIZED DURING THE SEARCH, IT OUGHT TO HAVE RELIED O N OTHER MATERIALS. HAVING ONCE DRAWN THE PRESUMPTION THAT THE CONTENTS OF THE DOCUMENTS OF THE ASSESSEE TAKEN INTO POSSESSION DUR ING THE SEARCH WERE TRUE, THE REVENUE COULD NOT, CONSISTENTLY WITH THAT PRESUMPTION, HAVE PROCEEDED TO REQUIRE THE ASSESSEE TO PRODUCE M ATERIALS IN SUPPORT OF THE EXPENDITURE ENTRIES. SUCH AN INCONSISTENT AP PROACH IN RESPECT OF THE CONTENTS OF THE SAME BOOK WAS FOUNDED ONLY ON S USPICION THAT THEY WERE NOT GENUINE. HOWEVER, SUSPICION CANNOT REPLACE PROOF. MOREOVER, THE FULL EFFECT OF THE PRESUMPTION SHOULD BE GIVEN EFFECT, WHENEVER THE STATUTE DIRECTS A PARTICULAR NON-EXIST ENT STATE OF AFFAIRS TO BE ASSUMED. THEREFORE, IN THE ABSENCE OF ANY MAT ERIALS IN THE FORM OF DOCUMENTS, THE REVENUE COULD NOT HAVE DENIED THE BENEFIT OF ANY EXPENSES WHICH WOULD OTHERWISE HAVE ENURED TO THE A SSESSEE, AS AN ALLOWABLE DEDUCTION UNDER SECTION 37(1). THE HON'BLE DELHI HIGH COURT HAS REFERRED TO SEVERA L DECIDED CASES IN SUPPORT OF THE CONCLUSIONS DRAWN BY IT. 3.7 THE LEARNED ASSESSING OFFICER HAS OBSERVED THA T THERE IS NO EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE THAT THE SUM OF RS. 2,50,00,000 WAS PAID TO SHRI HARESHBHAI PRIOR TO 26.1.2004 AND FURT HER THERE IS NO EVIDENCE THAT THE OUTSTANDING HAWALA AMOUNT OF RS. 3,80,91 ,806 WAS ALSO PAID ON OR BEFORE 26.1.2004. IT IS RESPECTFULLY SUBMITTED THAT THESE FACTS ARE EVIDENT FROM THE SEIZED PAPER ITSELF WHICH IS THE SOLE EVIDENCE FOR DRAWING ANY CONCLUSION. PRIMARY FACTS ARE NOT DISPUTED BY THE DEPARTMENT VI Z.- (1) THE RELEVANT PIECE OF LAND WAS PURCHASED BY TH E ASSESSEE FROM SHRI HARESHBHAI FOR A CONSIDERATION OF RS. 6,30,91,806; (2) THE SAID PIECE OF LAND WAS SOLD BY THE ASSESS EE TO SHRI BHUSHANBHAI; (3) ON THE SEIZED PAPER ITSELF CASH PAYMENT OF RS. 2,50,00,000 IS DEDUCTED FROM THE PURCHASE CONSIDERATION AND BALANCE IS SH OWN AT RS.3,80,91,806; (4) THEREAFTER ON THE SAME SEIZED PAPER THE SALE CONSIDERATION TO BE PAID BY SHRI BHUSHANBHAI IS SHOWN AT RS. 8,30,44,826 AND FR OM THIS AMOUNT A IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 7 SUM OF RS.3,80,91,806 HAS BEEN DEDUCTED AND IT IS C LEARLY MENTIONED AGAINST IT THAT THE SAME WAS HAWALA TRANSFER OF ASS ESSEES LIABILITY IN FAVOR OF SHRI HARESHBHAI; (5) THE BALANCE AMOUNT TO BE RECEIVED FROM SHRI BH USHANBHAI IS SHOWN AT RS. 4,49,53,020; (6) FROM THE SAID AMOUNT A SUM OF RS. 2,74,49,500 HAS BEEN DEDUCTED AS RECEIPT FROM SHRI BHUSHANBHAI AS PER NOTINGS ON THE SEIZED PAPER ITSELF AND BALANCE AMOUNT IS CALCULATED AT RS.1,75,03,520. THEREAFTER, ON THE SEIZED PAPER ITSELF IT IS SHOWN THAT INTEREST @ 1.5 % P.M. WOULD BE PAYABLE ON THIS AMOUNT; (7) ON THE RIGHT-SIDE OF THE PAPER DETAILS OF PAYM ENT RECEIVED BY THE ASSESSEE FROM SHRI BHUSHANBHAI ARE GIVEN AND THE FIRST PAYME NT OF RS. 1,25,000 IS SHOWN ON 26.1.2004; (8) FURTHER, DURING THE FINANCIAL YEAR 2003-04 IT SELF AN AGGREGATE SUM OF RS. 75,00,000 WAS FURTHER RECEIVED BY THE ASSESSEE FROM SHRI BHUSHANBHAI TOWARDS SALE CONSIDERATION; (9) DURING THE FINANCIAL YEAR 2004-05 THE TOTA L SUM OF RS. 96,50,000 IS SHOWN TO HAVE BEEN RECEIVED ON DIFFERENT DATES; (10) DURING THE FINANCIAL YEAR 2006-07 A SUM OF RS.1,02,95,000 IS SHOWN TO HAVE BEEN RECEIVED ON DIFFERENT DATES; (11) ALL THESE PAYMENTS TOTALED TO RS. 2,74,49,5 00 SHOWN ON THE LEFT-SIDE OF THE PAPER. 3.8 THERE IS NO DISPUTE THAT FOR MAKING THESE ADDI TIONS LD. ASSESSING OFFICER SOLELY AND ENTIRELY RELIED ON THE NOTINGS REFLECTED BY THE SEIZED PAPER BIFURCATED THE RECEIPTS TO ARRIVE AT THE AFORESAID PROFIT OF RS. 1,99,53,020, BETWEEN TWO FINANCIAL YEARS AS UNDER:- F.Y. 2004-05 RS. 96,50,000 F.Y. 2006-07 RS.1,03,03,020 ACTUALLY, THE CORRECT RECEIPT FOR F.Y. 2006-07 AMO UNTS TO RS. 1,02,95,000, BUT FOR THE PURPOSE OF ARRIVING AT THE PROFIT BEI NG THE DIFFERENCE BETWEEN THE PURCHASE AND SALE CONSIDERATION, THE ASSESSING OF FICER HAS ADOPTED PROFIT OF RS. 1,03,03,020 FOR THE FINANCIAL YEAR 2006-07. ON THIS BASIS, THE ASSESSING OFFICER HAS ADDED PROFIT OF RS. 96,50,000 IN THE ASSESSMENT YEAR 2005-06 AND PROFIT OF RS. 1,03,03,020 FOR THE ASSESSMENT YE AR 2007-08. 5.1 LD. CIT(A) PRINCIPALLY DID NOT AGREE WITH THE F INDINGS OF LD. AO, HOWEVER CONFIRMED THE ACTION OF THE AO ON OTHER REA SONING AND DISMISSED IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 8 ASSESSEES GROUNDS IN THIS BEHALF. ON ASSUMPTIONS I T WAS OBSERVED THAT THE ASSESSEE WAS EVADING TAXES, THEREFORE, THE PROFITS FROM ONE TRANSACTION OF IMMOVABLE PROPERTY LIABLE FOR TAXATION IN AY 2004-0 5 WAS TAXED IN TWO AYS. 2005-06 AND 07-08 ON RECEIPT OF SALE PROCEEDS BY FO LLOWING OBSERVATIONS:- 6. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSION OF THE APPELLANT. 6.1 IT IS OBSERVED THAT A SEARCH U/S. 132 OF THE I .T. ACT WAS CARRIED OUT IN THE CASES OF APPELLANT ON 6.1.2011 AT RESIDENTIAL P REMISES AT 86/1, H COLONY, NEHMNAGAR CHARRASTA, AMBAWADI, AHMEDABAD. 6.2 THE FACTS OF THE APPEAL ARE CRYSTAL CLEAR AND T HERE IS NO DISPUTE BETWEEN THE APPELLANT AND THE AO IN THIS REGARD BUT THE ISS UE INVOLVED IS YEAR OF TAXABILITY OF THE UNDISCLOSED INCOME EARNED OUT OF CASH TRANSACTION COMPLETED OUT OF BOOKS, THE BRIEF FACTS OF THE CASE ARE DISCU SSED TO UNDERSTAND THE ISSUE. IT IS OBSERVED THAT DOCUMENT/ PAPER CONTAINED ALL C ASH TRANSACTION OF TRANSFER OF RIGHT IN THE SOCIETY WERE FOUND DURING THE SEARC H. THESE TRANSACTIONS WERE NEITHER RECORDED IN THE BOOKS OF ACCOUNT AND NOR RE GISTERED AT ALL. AS PER DOCUMENT, RIGHTS WAS PURCHASED BY THE APPELLANT FRO M SHRI HARESHBHAI FOR CASH CONSIDERATION OF RS. 6,30,91,806/- AND CASH OF RS, 2,50,00,000/- WAS PAID AND BALANCE OF RS.3,80,91,806/- REMAINED OUTST ANDING. 6.3. THE SAME PIECE OF LAND WAS SOLD BY THE APPELLA NT TO SHRI BHUSHANBHAI VYAS FOR THE SALE CONSIDERATION OF RS. 8.30,44,826/ -. OUT OF THIS TOTAL SALE CONSIDERATION, A SUM OF RS.3,80,91,806/- WAS DIRECT LY PAID TO SHRI HARESHBHAI, THE ORIGINAL OWNER, THROUGH HAWALA ON B EHALF OF THE APPELLANT BUT PAYMENT DATES WERE NOT REFLECTED. THE BALANCE A MOUNT OF RS.4,49,53,020/- WAS RECEIVED BY THE APPELLANT IN T HE FY 2003-04, 2004-05 AND 2006-07. 6.4 AS PER THE DOCUMENT FOUND, FIRST PAYMENT OF RS. 1,25,000/- WAS RECEIVED BY THE APPELLANT ON 26.1.2004 AND RS.2,74,49,500/- WAS RECEIVED FROM SH. BHUSHANBHAI VYAS STARTING FROM 26.01.2004 TO 09.10. 2006. ACCORDINGLY DURING F.Y. 2003-04 RS.75,00,000/- WAS ACTUALLY REC EIVED BY THE APPELLANT. 6.5 FURTHER IN F.Y. 2004-05 THE PAYMENT IN CASH OF RS.96,50,000/-AND IN F.Y. 2006-07 RS. 1,02,95,000 WAS RECEIVED BY THE AP PELLANT ON DIFFERENT DATES. AS PER NOTING ON THE SEIZED PAPER, AS ON 09. 10.2006 BALANCE AMOUNT RS. 1,75,03,520/- WAS PAYABLE /DUE . THE SEIZED PAP ER ALSO CONTAINED NOTING OF INTEREST DUE @ 1.5% P.M. ON THIS AMOUNT. IT IS U NDISPUTED FACT THAT OUT OF THIS TRANSACTION/DEAL OF ACQUISITION OF RIGHT FOR R S.6,30,91,806/- WHICH WAS IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 9 SUBSEQUENTLY SOLD/TRANSFERRED FOR RS.8,30,44,826/- AND PROFIT OF RS.1,99,53,020/- WAS EARNED BY THE APPELLANT. 7. THE APPELLANT ARGUED THAT IN THE AFORESAID MANNE R THE TOTAL PURCHASE CONSIDERATION OF RS.6,30,91,806/- WAS FULLY PAID TO HARESHBHAI BY 26,1.2004 AFTER ADJUSTING THE HAWALA AMOUNT OF RS.3,80,91,806 /- LEAVING BALANCE OF RS.4,49,53,020/- RECEIVABLE BY THE ASSESSEE FROM SH RI BHUSHANBHAI VYAS AND POSSESSION WAS HANDED OVER BY HARESHBHAI TO BHUSHAN BHAI VYAS. HOWEVER, THE ABOVE CONTENTION IS ALSO NOT SUPPORTED WITH EVI DENCE/DOCUMENT AS THE LETTER OF HARESHBHAI ONLY MENTION THAT THE POSSESSI ON WAS HANDED OVER ON 26.01.2004 BUT NOWHERE IT WAS MENTIONED THAT POSSES SION WAS GIVEN TO SH. BHUSHAN BHAI VYAS. THUS THE LETTER OF HARESH BHAI F ILED IN SUPPORT OF THIS CLAIM IS NOT OF ANY HELP. 7.1 IT IS SEEN THAT ON 26-1-2004 APPELLANT DID NOT RECEIVE FULL PAYMENT FROM SHRI BHUSHANBHAI VYAS. HOWEVER ON THIS DATE FINAL / COMPLETE PAYMENT WAS MADE TO SH. HARESHBHAI WHO IN TURN HANDED OVER T HE POSSESSION. SINCE THE PART PAYMENT WAS STILL DUE FROM SHRI BHUSHANBHAI VY AS THEREFORE THE QUESTION OF POSSESSION OF LAND HANDED OVER BY SHRI HARESHBHAI TO SHRI BHUSHANBHAI VYAS DOES NOT ARISE AT ALL. AT THE MOST THIS LETTER MAY INDICATE THAT THE RIGHTS IN LAND WAS HANDED OVER BY SH. HARE SHBHAI AFTER GETTING FULL AND FINAL PAYMENT TO THE APPELLANT. THESE CRUCIAL F ACTS ARE SUFFICIENT TO DEMONSTRATE THE DUBIOUS METHOD ADOPTED BY THE APPEL LANT TO EVADE THE TAX. 8. IT IS A SETTLED POSITION OF LAW THAT INCOME ARIS ING TO THE PERSON IS TAXABLE EITHER ON ACCRUAL OR RECEIPT BASIS. IT IS ACCEPTED BY THE APPELLANT AND BY THE AO THAT THE APPELLANT HAS NOT OFFERED ANY INCOME OU T OF UNDISCLOSED RECEIPT FOR TAXATION IN THE YEAR OF ACCRUAL. IT IS ALSO A MATTER OF FACT AND ACCEPTED BY THE APPELLANT THAT THE MONEY WAS RECEIVED BY HIM IN CASH AND WAS NOT ACCOUNTED FOR IN ITS REGULAR BOOKS OF ACCOUNT AND N O TAXES WAS PAID ON THE ABOVE. THUS IN NUT SHELF THE APPELLANT ARGUED THAT SINCE HE HAS ESCAPED THE UNDISCLOSED INCOME FROM TAX ON ACCRUAL BASIS THEREF ORE HE SHOULD BE ALLOWED TO EVADE THE TAX ON UNDISPUTED UNACCOUNTED INCOME O N RECEIPT BASIS ALSO AND TAKING THE SHELTER OF THE PROVISION OF THE ACT FOR THIS PURPOSE. THE ABOVE ARGUMENT AND REQUEST OF THE APPELLANT IS AN IRRATIO NAL ARGUMENT THUS CANNOT BE ACCEPTED AS IT IS AGAINST THE SPIRIT OF THE IT A CT. NO DOUBT THE REASONING OFFERED BY THE AO IN BRINGING TO TAX THE AFORESAID INCOME IS NOT SOUND BUT NEVERTHELESS IT DOES NOT GIVE ANY ESCAPE ROUTE TO T HE APPELLANT TO AVOID PAYMENT OF TAXES. 8.1 FURTHER, IT CAN BE CONSTRUED FROM THE FACTS DIS CUSSED ABOVE THAT THE AMOUNT OF MONEY USED FOR THE PURPOSES OF CONTROLLIN G OF LAND WHICH WAS HELD BY THE APPELLANT AS AN ASSET IN THE NAME OF THE SOC IETY AND OVER WHICH THE APPELLANT HAD COMPLETE CONTROL THEREFORE COULD SALE THE SAME TO SH. BHUSHANBHAI VYAS. THE ENTIRE PAYMENT IS RECEIVED FO R THE PURPOSES OF IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 10 ACQUIRING THE RIGHTS IN THE LAND OF THE SOCIETY THO UGH ON DOCUMENTS THE LAND WAS NOT REQUIRED TO BE TRANSFERRED. 8.2 THE APPELLANT FURTHER STATED THAT THERE ARE CON TRADICTORY OBSERVATIONS MADE BY THE AO TO DRAW ADVERSE INFERENCES AGAINST T HE APPELLANT, AS THE FACT THAT AO HAD PROCEEDED ON THE BASIS OF TAXING THE IN COME ARISING FROM TRANSFER OF LAND AND THEREAFTER STATING THAT THE LA ND IS NOT A CAPITAL ASSET. 8.3 THE APPELLANT IN STATEMENT OF FACT CLEARLY MENT IONED THAT HE HAS EARNED UNACCOUNTED PROFIT OUT OF UNDISCLOSED AND UNRECORDE D TRANSACTION BUT THE SAME CANNOT BE TAXED AS IT WAS TAXABLE IN AY 2004-0 5 WHICH IS OUTSIDE THE TAXING PERIOD OF SIX YEARS FROM AY 2005-06 TO AY 20 10-11. THUS IT IS ESTABLISHED BEYOND DOUBT THAT THE APPELLANT HAD REC EIVED THE MONEY BY TRANSFERRING ITS RIGHTS IN THE LAND NOT AS OWNER BU T AS A PERSON CONTROLLING THE ARTIFICIAL JURIDICAL PERSON HAVING VESTED RIGHT S IN THE LAND. THEREFORE THE INCOME IS ASSESSED ON THE BASIS OF RECEIPT AS IS IN DICATED IN THE SEIZED DOCUMENTS. 8.4 THE UNDISPUTED FACT THAT THE ENTIRE CONTROL OF THE SOCIETY WAS TRANSFERRED WITHOUT ANY LEGAL DOCUMENT FROM APPELLANT TO SH. BH USHANBHAI VYAS CLEARLY INDICATE THAT NOT ONLY THE SOCIETY WAS TRANSFERRED BUT ALSO THE UNDERLYING RIGHTS OF THE SOCIETY IN THE LAND GOT TRANSFERRED T O THE APPELLANT. THE SEQUENCE OF TRANSACTIONS AND ARGUMENT OF THE APPELLANT SHOWS THAT HOW THE RULES AND LAW OF THE LAND ARE BEING MISUSED TO EARN BLACK MON EY AND AVOID TAXATION ON UNACCOUNTED INCOME EVEN AFTER CAUGHT BY THE DEPARTM ENT . THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT THROUGH T HE DUBIOUS MODE OF TRANSFER WHICH ARE NORMALLY RESORTED BY THE TRUST/S OCIETY HAS TRANSFERRED THE UNDERLYING ASSET HELD BY THE SOCIETY TO THE PROSPE CTIVE BUYER AND OBTAINED MONEY IN CASH AND EARNED PROFIT OUT OF THE BOOKS. 8.5 THE AO HAS RIGHTLY HELD PROFIT EARNED OUT OF TH E UNACCOUNTED TRANSACTION AND RECEIPT AS THE INCOME OF THE APPELLANT. THEREFO RE, THERE IS NO MERIT IN THE ARGUMENT OF THE APPELLANT THAT THE INCOME CANNOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT AS THE TRANSACTION GOT COMPLETED IN EARLIER YEAR. THERE IS NO LAW UNDER THE SUN WHICH PREVENTS THE INCOME TO BE T AXED ON RECEIPT BASIS IF THE SAME HAS NOT BEEN OFFERED BY THE APPELLANT ON T HE ACCRUAL BASIS. 8.6. I FIND NO INFIRMITY IN THE ORDER OF THE AO THU S ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED PROFIT OF RS.96,50,000/- OUT OF UNACCOUNTED TRANSACTION IN AY 2005-06 IS CONFIRMED AND THE SAME IS ACCORDINGLY UPHELD. THEREFORE, THE GROUNDS OF APPEAL STAND DISMISSED, 9. THE SAME GROUND WAS RAISED IN A.Y.2007-08 AGITAT ING ADDITION OF RS.1,03,03,020/- AS UNDISCLOSED PROFIT ON SALE OF L AND. IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 11 9.1 THE DISCUSSION AND DECISION GIVEN IN A.Y. 2005- 06 IS ALSO COVERED THE ISSUE IN A.Y. 2007-08. HENCE THE ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED PROFIT OF RS.1,03,03,020/- OUT OF UNACC OUNTED TRANSACTION IS CONFIRMED IN A.Y. 2007-08 ALSO AND THE GROUND OF AP PEAL IS DISMISSED. 6. AGGRIEVED, THE ASSESSEE IS BEFORE US. LD. COUNSE L FOR THE ASSESSEE REITERATED THE FACTS AND RELEVANT DETAILS. IT IS VE HEMENTLY CONTENDED THAT LD. CIT(A) WITHOUT DEALING WITH THE MERITS OF THE CRUCI AL FACTUAL AND LEGAL ASPECTS OF THE ISSUES IN QUESTION DISMISSED THE GRO UNDS O ASSUMPTIONS. THE LEGAL IMPACT FOR CHARGEABILITY OF GAINS IN TERMS OF SEC. 45(1) IN THE LIGHT OF GLARING FACTS THAT THE PART PAYMENT OF SALE CONSIDE RATION OF IMPUGNED LAND WAS RECEIVED AND POSSESSION OF THE IMPUGNED WAS DEL IVERED ON 26-1-2004 TO VENDEE SHRI BHUSHAN BHAI VYAS, HAS NOT BEEN ADJUDIC ATED. ON THE CONTRARY BY ASSUMPTIONS AND PRESUMPTIONS AND SUMMARY OBSERVA TIONS IT HAS BEEN HELD THAT ASSESSEE WAS TRYING TO AVOID THE PAYMENT OF TAXES, THEREFORE, DESPITE CLEAR PROVISIONS OF SEC. 45(1) DEFINING THE TIME OF CHARGEABILITY OF GAINS ON PART PERFORMANCE OF TRANSACTION OF CAPITAL GAINS DECIDED THE AGAINST ASSESSEE ON ASSUMPTIONS. IT IS CONTENDED TH AT: I. IN AHMEDABAD LAND DEALINGS IT IS COMMON TRADE PRACT ICE THAT ON RECORD THE LAND MAY REMAIN IN THE NAME OF ORIGINAL VENDOR, HOWEVER IN REAL ESTATE BUSINESS WHICH THRIVES MAINLY ON TRU ST AND BINDING WORDS, THE VENDEES MAKE ONWARD SALE TO OTHER AND TR ANSFER THEIR RIGHTS IN FAVOR OF NEW VENDOR. THE AGREEMENTS BIND THE ORIGINAL VENDOR TO EXECUTE THE FINAL SALE DEED IN FAVOR OF T HE ULTIMATE BUYER. THIS PREVALENT REAL ESTATE TRADE PRACTICE DOES NOT DETRACT THE FACT THE INTERVENING PARTIES BECOME DE FACTO OWNERS BY PAYIN G PART OF SALE CONSIDERATION AND OBTAINING THE POSSESSION OF LAND. THIS PRACTICE IS WIDELY FOLLOWED IN REAL ESTATE COMMERCIAL PARLANCE. II. LD. ASSESSING OFFICER WHILE DEALING WITH ASSESSEES EXPLANATION MADE SOME IRRELEVANT OBSERVATIONS, TO CLARIFY THEM FOLLOWING CLARIFICATIONS WERE MADE BEFORE THE LEARNED C.I.T. (APPEALS): (A) THE OBJECTION ABOUT THE LAND IN FORM NO. 6 WAS IN THE NAME OF SOME CO-OPERATIVE HOUSING SOCIETY IS NOT RE LEVANT AS NEITHER DEPARTMENT NOR ASSESSEE HAVE DISPUTED THE P URCHASE AND SALE OF IMPUGNED LAND AND THE RELEVANT TRANSACT IONS ARE IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 12 NOTED IN THEE SEIZED PAPER. THESE FACTS ARE ADMITTE D IN SEARCH STATEMENT AND BY CONCERNED PERSONS S/SHRI HARESH BH AI AND BHUSHAN BHAI. CONSEQUENTLY NO ADVERSE INFERENCE CAN BE DRAWN IN THIS BEHALF. (B)THE SEIZED PAPER IS THE SOLE INCRIMINATING EVIDE NCE WHICH IS NEITHER DISPUTED BY ASSESSEE NOR BY DEPARTMENT. ITS EVIDENTIARY VALUE CANNOT BE DISTORTED TO ADOPT WHAT IS FAVORABL E TO DEPARTMENT AND DECLINE TO GIVE EFFECT TO PORTION WH ICH SUPPORTS THE ASSESSEES VERSION. THE JOTTINGS ON THE SEIZED PAPER MUST BE GIVEN FULL AND PROPER EFFECT IN A DISPASSIONATE MAN NER. (C) THE EVIDENCE IN SUPPORT OF ASSESSEES CLAIM THA T AGGREGATE AMOUNT OF PART SALE CONSIDERATION RS. 2,50,00,000/- WAS PAID TO SHRI HARESHBHAI PRIOR TO 26.1.2004. IS EVIDENT FR OM THE SEIZED PAPER ITSELF. BESIDES SHRI HARESH BHAI THE VENDOR H AS ALSO CONFIRMED THIS FACT. CONSEQUENTLY THERE IS NO IOTA OF EVIDENCE TO DRAW ANY ADVERSE INFERENCE ON THIS ISSUE. - THE FIRST PAYMENT FROM SHRI BHUSHAN BHAI WAS RECE IVED BY THE ASSESSEE ON 26.1.2004 I.E. HARESH BHAIS ACCEPTANCE OF PAYABILITY OF OUTSTANDING DUE FROM ASSESSEE BY TRANSFER OF THU IS LIABILITY TO BHUSHAN BHAI. THIS FACT IS ACCEPTED BY HARESH BHAI, BHUSHAN BHAI, ASSESSEE AND EVIDENCED BY THE CRUCIAL EVIDENC E I.E. THE SEIZED PAPER ITSELF. CONFIRMATION AND PAN OF SHRI HARESHBHAI, WHO IS INDEPENDENTLY ASSESSED TO INCOME-TAX IS ALSO ON THE RECORD. THE POSSESSION OF LAND WAS DELIVERED ON TH E SAME DAY TO SHRI BHUSHANBHAI. ALL THESE UNCONTROVERTED FACTS AND CIRCUMSTANCES LEAD TO AN UN ESCAPABLE CONCLUSION TH AT THE TRANSACTION WAS EFFECTED IN TERMS OF SEC 45(1) RWS 2(47)(VI) WITH SHRI BHUSHAN BHAI ON 26-1-2004. - BESIDES THE SAID TRANSFER OF LIABILITY OF RS. RS. 3,80,91,806/- OVERTAKEN BY BHUSHAN BHAI AS PART OF SALE CONSIDERA TION, DURING THE F.Y. 2003-04 ITSELF ASSESSEE RECEIVED FURTHER A GGREGATE SUM OF RS. 75,00,000/- FROM SHRI BHUSHANBHAI TOWARDS TH E SALE CONSIDERATION. -THE BALANCE OF SALE CONSIDERATION P AYABLE BY SHRI BHUSHANBHAI WAS IN THE NATURE OF A DEBT DUE TO ASSESSEE ON WHICH INTEREST IS PAYABLE BY BHUSHAN BHAI WHICH AL SO IS REFLECTED IN THE SEIZED PAPER ITSELF. FURTHER ASS ESSEE HAS OFFERED THIS INTEREST INCOME IN THE RETURN OF INCOME FILED U/S 153A FOR AY 2005-06 AND IS ACCEPTED BY LD. AO. ALL THESE FAC TS CLEARLY DEMONSTRATE THAT TRANSACTIONS OF PURCHASE AND SALE WERE COMPLETED ON 26.1.2004 I.E. DURING THE FINANCIAL YE AR 2003-04 IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 13 AND AY 2004-05 AND LIABLE TO BE TAXED U/S 45(1) RWS 2(47)(VI) IN AY 2004-05. (D) THERE IS NO MERIT IN LD. AOS SELF CONTRADICTOR Y OBSERVATION THAT ASSESSEE IS NOT THE OWNER OF THE LAND. ON ONE HAND IT IS OBSERVED THAT ASSESSEE IS NOT THE OWNER THEN WHY T HE CAPITAL GAINS HAVE BEEN TXED IN SUBSEQUENT YEARS. THE SEIZE D PAPER IS ONLY EVIDENCE AND THE CONTENT THEREOF HAVE BEEN ACC EPTED BY ALL CONCERNED. IN THIS EVENTUALITY THE INCRIMINATING PA PER REMAINS FULLY EXPLAINED BY THE ASSESSEE. THEN WHERE IS THE QUESTION OF ADDITION. THUS LD. AO IN ORDER TO SOMEHOW MAKE THE ADDITIONS MISDIRECTED HIMSELF INTO THESE3 SELF CONTRADICTORY OBSERVATIONS. (E) THE ASSESSING OFFICER MISDIRECTED HIMSELF BY A FAULTY OBSERVATION THAT AS PER THE SEIZED PAPER THE ASSESS EE RECEIVED RS. 75,00,000 DURING THE FINANCIAL YEAR 2003-04, RS . 96,50,000 DURING THE FINANCIAL YEAR 2004-05 AND RS. 1,02,95, 000 DURING THE FINANCIAL YEAR 2006-07 BUT THERE IS NO EVIDENCE TO SUBSTANTIATE THIS CLAIM. IT WAS EXPLAINED THAT WHEN THE DEPARTME NT IS SOLELY PROCEEDING ON THE BASIS OF CONTENTS OF SEIZED PAPER THE SAME HAS TO BE ACCEPTED FULLY AND NOT IN PART, MORE SO W HEN ALL CONCERNED HAS ACCEPTED THE TRANSACTION AND EACH AND EVERY ENTRY IS EXPLAINED BY THE ASSESSEE. III. THE SEIZED PAPER IS SELF-EXPLANATORY AND EVERY EXPLANATION ABOUT THE DATES, AMOUNT, NATURE AND OTHER DETAILS ARE FULLY E XPLAINED BY THE ASSESSEE WHICH ARE CORROBORATED WITH THE EVIDENCE. HOWEVER LD. AO UNJUSTIFIABLY HELD THAT THE ASSESSEE WAS NOT ABLE T O EXPLAIN THE CONTENTS OF SEIZED DOCUMENT AND NO SUPPORTING EVIDE NCE IS PRODUCED. THESE OBSERVATIONS ARE TOTALLY IRRELEVANT AS THE ASSESSEE HAS OWNED UP AND ADMITTED ALL THE TRANSACTIONS REFL ECTED IN THE SEIZED PAPER AND ARE CONFIRMED BY OTHER PARTIES I.E . HARESH BHAI AND BHUSHAN BHAI. LD. AO HAS HARPED ON THE FACT THAT TR ANSACTIONS ARE NOT ACCOUNTED WHICH IS NOT DISPUTED BY ASSESSEE BY ACCE PTING THE SEIZED PAPER IS UNACCOUNTED. BESIDES THIS ISSUE HAS NO EFF ECT ON THE LEGAL ISSUE OF DETERMINING THE YEAR OF CHARGEABILITY IN T ERMS OF SEC. 45(1)RWS 2(47)(VI). IV. THUS THE ASSESSEES CONTENTION THAT THE POSSESS ION OF LAND WAS TRANSFERRED TO SHRI BHUSHANBHAI ON 26-1-200 ITSELF AGAINST THE SAID PART PAYMENT OF RS.3,80,91,806/- (TRANSFER OF REMAI NING AMOUNT PAYABLE TO SHRI HARESHBHAI), COMPENSATORY INTEREST WAS PAYABLE FOR REMAINING SALE CONSIDERATION AND THE CONFIRMATIONS OF HARESH BHAI IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 14 AND BHANUBHAI, CLEAR NOTINGS ON THE SEIZED PAPER I N THIS BEHALF ARE MUTUALLY CORROBORATED. V. AT SUB-PARA-6, THE AOS HAS MADE ADVERSE OBSERV ATIONS THAT ASSESSEE HAS NOT SUBMITTED ANY SALE OR PURCHASE DOCUMENT; NO EVIDENCE IS GIVEN THAT PAYMENT TOWARDS PURCHASE WAS MADE PRIOR TO 26.1.2004; ASSESSEE WAS NOT LEGAL OWNER OF THE SAID LAND, THER EFORE, THIS LAND CANNOT BE TREATED AS CAPITAL ASSET OF THE ASSESSEE. THESE OBSERVATIONS MADE BY THE ASSESSING OFFICER ARE SELF-CONTRADICTOR Y. FIRSTLY THE INCOME HAS BEEN CHARGED TO TAX AS PROFIT ARISING FR OM THE PURCHASE AND SALE OF THE LAND; CONSEQUENTLY ADVERSE OBSERVAT IONS ABOUT OWNERSHIP OR DOCUMENTARY EVIDENCE AND OBSERVATION T HAT LAND WAS NOT ASSESSEES CAPITAL ASSET HAVE NO RELEVANCE AND BECOME SELF CONTRADICTORY QUA THE AO. VI. A CAREFUL PERUSAL OF ASSESSMENT ORDERS WILL REV EAL THAT LD. AO HAS ACCEPTED: A. THE DIFFERENCE BETWEEN THE PURCHASE PRICE AND TH E SALE PRICE REFLECTED IN THE SEIZED PAPER. B. FACT THAT THE ASSESSEE STARTED RECEIVING THE SAL E CONSIDERATION IN CASH STARTING FROM 26.1.2004 AS REFLECTED IN THE SE IZED PAPER. C. FROM THE SEIZED PAPER IT IS CLEAR THAT ON THIS DATE, THE HAWALA OF PAYING RS. 3,80,91,806/- ON BEHALF OF ASSESSEE WAS UNEQUIVOCALLY ACCEPTED BY SHRI BHUSHANBHAI VYAS TO SHRI HARESHB HAI AS FINAL PAYMENT BY ASSESSEE QUA THE ORIGINAL PURCHASE OF LA ND. C. THESE FACTS CLEARLY DEMONSTRATE THAT IN ANY CASE THE PURCHASE AS WELL AS SALE TRANSACTIONS OF THE LAND WERE CONCLUDE D AND CLOSED ON 26.1.2004. THUS THE FACT OF PURCHASE AND SALE O F LAND OR AT LEAST PURCHASE AND SALE OF RIGHT IN THE IMPUGNED LAND WHI CH IS A CAPITAL ASSET TOOK PLACE ON 26-1-2004. ITS LIABILIT Y UNDER INCOME TAX IS FIXED BY THE LAW IN TERMS OF SEC. 45(1) WHIC H CAN NEITHER BE POSTPONED NOR PROPONED. THE LEGAL PROVISIONS CANNOT BE TWISTED TO SUIT THE ENDS OF REVENUE. AS PER CLEAR PROVISION S THE LIABILITY IS FIXED ON THE DATE OF SUCH TRANSFER AND NOT ON THE D ATES OF RECEIPTS OF BALANCE SALE PROCEEDS, SUCH CONCEPT IS ALIEN TO LAW. D. THERE IS NO BASIS WHATSOEVER FOR THE ADDITIONS M ADE BY LD. AO IN AYS 2005-06 AND 2007-08 WHICH IS IN CONTRAVENTION O F EXPRESS LEGAL PROVISIONS OF SEC. 45(1) AND THERE IS NO ENAB LING PROVISION TO SUPPORT SUCH ADDITIONS. 7. LD. C.I.T. (APPEALS) INSTEAD OF DECIDING THE ISS UE ON CLEAR FACTUAL POSITION, MERITS AND IN ACCORDANCE WITH THE PROVISI ONS OF THE INCOME-TAX IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 15 ACT, ASSUMED THAT AS THE ASSESSEE WAS TRYING TO EV ADE PAYMENT OF TAX ON PROFIT OF RS.1,99,53,020 QUA THE IMPUGNED UPHELD T HE ADDITIONS. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. C.I.T. (APPEALS)S RELEVANT OBSERVATIONS AT VARIOUS PARAS ADMIT MANY O F THE FACTS AND MAKE THINGS CLEARER. AT PARA 6.2THAT FACTS ARE CRYSTAL C LEAR AND THERE IS NO DISPUTE BETWEEN THE AO AND ASSESSEE REGARDING FACTUM OF SAL E OR THE AMOUNT OF PROFIT ON IMPUGNED SALE OF LAND AND THE ONLY ISSUE FOR ADJUDICATION WAS REGARDING THE FIXATION OF ASSESSMENT YEAR OF TAXABI LITY OF THIS INCOME. IN THE SAME PARA, IT IS FURTHER OBSERVED THAT THE RIGHTS I N THE LAND WERE PURCHASED BY THE APPELLANT AT A COST OF RS.6,30,91,806/-. AT AND AT PARA 6.3 FURTHER OBSERVED THAT THE SAME PIECE OF LAND WAS SOLD BY T HE APPELLANT TO SHRI BHUSHANBHAI VYAS FOR THE SALE CONSIDERATION OF RS.8 ,30,44,826 AND OUT OF THE TOTAL SALE CONSIDERATION, A SUM OF RS.3,80,91,8 06 WAS DIRECTLY PAID BY SHRI BHUSHANBHAI VYAS TO SHRI HARESHBHAI FROM WHOM THE LAND WAS ORIGINALLY PURCHASED BY THE APPELLANT. AT PARA-6.4 THE LEARNED C.I.T. (APPEALS) HAS FURTHER OBSERVED THAT AS PER THE S EIZED PAPER THE FIRST CASH PAYMENT OF RS.1,25,000 WAS RECEIVED BY THE APPELLAN T FROM SHRI BHUSHANBHAI VYAS ON 26TH JANUARY, 2004 AND THAT DUR ING THE FINANCIAL YEAR 2003-04 TOTAL PAYMENT OF RS.75,00,000 WAS RECEIVED BY THE APPELLANT. AT PARA-6.5 THE LEARNED C.I.T. (APPEALS) HAS FURTHER O BSERVED THAT DURING THE FINANCIAL YEAR 2004-05 CASH PAYMENT OF RS.96,50,000 /- WAS RECEIVED AND DURING THE FINANCIAL YEAR 2006-07 A SUM OF RS.1,02, 95,000/- WAS RECEIVED BY THE APPELLANT FROM SHRI BHUSHANBHAI VYAS AS PER THE NOTINGS ON THE SAME SEIZED PAPER. IT IS ALSO OBSERVED THAT ON THE OUTS TANDING AMOUNT, INTEREST @ 1.5% P.M. WAS PAYABLE BY SHRI BHUSHANBHAI VYAS TO THE APPELLANT AS PER THE NOTING ON THE SEIZED PAPER IS DULY DISCLOSED IN THE RETURN OF INCOME FILED FOR THE AY 2005-06 AND BROUGHT TO TAX IN THE ASSESS MENT MADE U/S.153A OF THE I.T. ACT. IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 16 9. ASSESSEE HAS CONSISTENTLY AND UNWAVERINGLY DEMON STRATED THAT POSSESSION OF THE SAID LAND WAS HANDED OVER TO SHRI BHUSHANBHAI VYAS ON 26TH JANUARY, 2004 WHEN THE FIRST CASH PAYMENT WAS RECEIVED AND ON THIS DATE THE TRANSFER OF BALANCE SALE CONSIDERATION PAY ABLE TO SHRI HARESH BHAI OF RS.3,80,91,806/- WAS MADE BY SHRI BHUSHANBHAI V YAS TO SHRI HARESHBHAI. THESE FACTS ARE ESTABLISHED FROM THE NO TINGS ON THE SEIZED PAPER ITSELF AND CONFIRMED BY ALL CONCERNED. IT IS UNDISPUTED THAT EXCEPT THE NOTINGS ON THE SEIZED PAPER THERE IS NO OTHER MATER IAL OR EVIDENCE FOUND BY THE DEPARTMENT IN CONNECTION WITH THE AFORESAID TRA NSACTION OF LAND. 9.1 PERTINENTLY AT PARA-7 LD. C.I.T. (APPEALS) HA S CLEARLY OBSERVED THAT A LETTER FROM SHRI HARESHBHAI WAS FILED WHEREIN IT WA S MENTIONED THAT THE POSSESSION OF THE LAND WAS HANDED OVER ON 26TH JANU ARY, 2004. HOWEVER LD. C.I.T. (APPEALS) MADE A WRONG ASSUMPTION THAT THE P OSSESSION WAS HANDED OVER TO THE APPELLANT AND NOT TO SHRI BHUSHANBHAI V YAS. ON THESE MISASSUMPTION LD. C.I.T. (APPEALS) HELD THAT ASSES SEE COULD NOT SUPPORT THE CLAIM THAT POSSESSION OF THE LAND WAS HANDED OVER T O SHRI BHUSHANBHAI VYAS IN JANUARY, 2004. 9.2 LD. COUNSEL VEHEMENTLY CONTENDS THAT THE FINDIN G OF LD. C.I.T. (APPEALS) IN THIS BEHALF ARE CONTRARY TO GLARING FA CTS, WRITTEN SUBMISSIONS AND COPIOUS MATERIAL AVAILABLE ON RECORD WHICH CLEA RLY SUPPORTS ASSESSEES CLAIM. AO IN THE ORDER HAS MENTIONED THAT FILED RE LEVANT EVIDENCE IN THE FORM COMPLETE ADDRESSES AND PANS OF SHRI HARESHBHAI AS WELL AS SHRI BHUSHANBHAI VYAS WAS FILED. AT PARA-5 (IV) IT IS ME NTIONED THAT AFTER TAKING POSSESSION OF IMPUGNED LAND ON 26-1-2004 THE MANAGE MENT OF THE COMPANY PUSHPAK CONSTRUCTION PVT. LTD. WHERE SAID S HRI BHUSHANBHAI VYAS WAS A DIRECTOR A REVISED BUILDING PLAN TO BE CONSTRUCTED ON THIS LAND WAS PREPARED DURING FEBRUARY AND MARCH, 2004 WHICH WAS WITH AUDA FOR APPROVAL. AFTER DUE INQUIRIES AND VERIFICATION THE BUILDING PLAN WAS IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 17 APPROVED BY AUDA ON 14TH JUNE, 2004 FROM AUDA. EARL IER, PERMISSION WAS IN THE NAME OF THE OLD OWNER. THE ORIGINAL PERM ISSION AS WELL AS THE NEW PERMISSION DATED 14TH JUNE, 2004 WAS FILED LD. AO AND IS PART OF THE RECORD. THE APPLICATION FOR APPROVAL CANNOT BE MADE WITHOUT THE POSSESSION OF LAND AS AUDA AUTHORITIES ALWAYS VERIFY THE AUTHE NTICITY OF POSSESSION AND OWNERSHIP. ALL THESE FACTS TOGETHER WITH OTHER EVIDENCE CLEAR ESTABLISH THAT THE POSSESSION WAS DELIVERED TO SHRI SHUSHAN B HAI ON 261-2004. 9.3 NOWHERE IN THE ORDERS OF LD. AO; THESE FACTUAL ASPECTS ARE DISPUTED BUT ARE BLISSFULLY UNADDRESSED BY THE LD. ASSESSING OFFICER. LD. CIT(A) THOUGH WRITES ABOUT THEM BUT WHILE CONCLUDING THE I SSUES THESE CRUCIAL ASPECTS ARE IGNORED AND MERELY ON RELIED ON SUMMARY ASSUMPTIONS THAT THE ASSESSEE INTENDED TO EVADE TAXES BY FOLLOWING OBSER VATIONS:- 8. IT IS A SETTLED POSITION OF LAW THAT INCOME ARI SING TO THE PERSON IS TAXABLE EITHER ON ACCRUAL OR RECEIPT BASIS. IT IS ACCEPTED BY THE APPELLANT AND BY THE AO THAT THE APPELLANT HAS NOT OFFERED ANY INCOME O UT OF UNDISCLOSED RECEIPT FOR TAXATION IN THE YEAR OF ACCRUAL. IT IS ALSO A M ATTER OF FACT AND ACCEPTED BY THE APPELLANT THAT THE MONEY WAS RECEIVED BY HIM I N CASH AND WAS NOT ACCOUNTED FOR IN ITS REGULAR BOOKS OF ACCOUNT AND NO TAXES WAS PAID ON THE ABOVE. THUS IN NUT SHELL THE APPELLANT ARGUED THA T SINCE HE HAS ESCAPED THE UNDISCLOSED INCOME FROM TAX ON ACCRUAL BASIS THERE FORE HE SHOULD BE ALLOWED TO EVADE THE TAX ON UNDISPUTED UNACCOUNTED INCOME ON RECEIPT BASIS ALSO AND TAKING THE SHELTER OF THE PROVISION OF THE ACT FOR THIS PURPOSE. THE ABOVE ARGUMENT AND REQUEST OF THE APPELLANT IS AN IRRAT IONAL ARGUMENT THUS CANNOT BE ACCEPTED AS IT IS AGAINST THE SPIRIT OF THE IT ACT. NO DOUBT THE REASONING OFFERED BY THE A O IN BRINGING TO TAX THE AFORESAID INCOME IS NOT SOUND BUT NEVERTHELESS IT DOES NOT GIVE ANY ESCAPE ROUTE TO THE APPELLANT TO AVOID PAYMENT OF TAXES. 9.4 THUS IN NO UNCERTAIN TERMS IT IS HELD THAT AOS REASONING IN TAXING THE PROFITS IN AYS. 2005-06 AND 07-08 IS NOT SOUND BUT IT IS ASSUMED THAT ASSESSEE SHOULD NOT HAVE ESCAPE ROUTE, THEREFORE, T HE ADDITIONS ARE CONFIRMED. LD. CIT(A)) BEING AN APPELLATE AUTHORITY IS OBLIGED TO APPRECIATE THE CORRECT FACTS AND FOLLOW THE RELEVANT LEGAL PRO VISIONS. THE LAW DOES NOT PERMIT TO TAX THE A TRANSACTION IN WRONG ASSESSMENT YEARS ON THE GROUND THAT WAS ESCAPING. IT IS TRITE LAW THAT THE TAXES S HOULD BE LAWFULLY LEVIED IN IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 18 CORRECT MANNER, RIGHT ASSESSMENT YEAR BASED ON CORR ECT APPRECIATION OF FACTS AND LAW AND NOT ON INTENDMENTS. THUS TWILLY NILLY THE YEAR OF CHARGEABILITY OF PROFITS FROM ONE TRANSACTION OF SALE OF ONE PIEC E OF LAND IS FIXED BY LD. CIT(A) IN TWO AYS I.E. 2005-06 AND 2007-08 ON RECEI PT BASIS. HOW CAN ONE TRANSACTION OF SALE OF ONE PIECE OF IMMOVABLE PROPE RTY BE TAXED IN TWO ASSESSMENT YEARS. THERE IS NO LEGAL PROVISION TO JU STIFY SUCH APPROACH AND CONCLUSION. THUS THE LEARNED C.I.T. (APPEALS) HAS G ROSSLY ERRED IN COMPLETELY IGNORING THE MATERIAL FACTS, EVIDENCE AN D APPLICABLE LAW AVAILABLE ON RECORD WHICH CLEARLY LEADS TO INESCAPA BLE CONCLUSION THAT THE IMPUGNED LAND WAS TRANSFERRED IN TERMS OF SEC. 45(1 ) RWS 2(47)(V)IN AY 2004-05 AND NOT IN AYS 2005-06 AND 2007-08. THUS LD . CIT(A) CONFIRMED THE ADDITIONS BY ARRIVING AT AN UNTENABLE CONCLUSION IN THIS BEHALF. 9.5 PROVISIONS OF SECS. 45(1) RWS 2(47) CLEARLY PO STULATE THAT IF ANY PROFIT ARISES FROM THE TRANSFER OF A CAPITAL ASSET IN A P REVIOUS YEAR THE SAME SHALL BE DEEMED TO BE THE INCOME OF THAT PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. IN THE PRESENT CASE THE TRANSFER OF THE LAND HAS TAKEN PLACE IN THE FINANCIAL YEAR 2003-04 AND, THEREFORE, THE INCOME H AS TO BE BROUGHT TO THE CHARGE OF TAX IN THE ASSESSMENT YEAR 2004-05. 10. IT IS CONTENDED THAT UPHOLDING OF THESE ADDITIO NS IN AYS. 2005-06 AND 2007-08 IS TOTALLY UNJUSTIFIED AND AGAINST THE MATE RIAL AVAILABLE ON RECORD AND LEGAL PROVISIONS. BY THE LEARNED C.I.T. (APPEAL S) BEING AGAINST THE PROVISIONS OF LAW BE DIRECTED TO BE DELETED. RELI ANCE IS PLACED ON: 11. GROUND NO.2 FOR AY 2005-06 PERTAINS TO CONFIRMA TION OF DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION OF RS.13,36,738/- U/S.54F. BRIEF FACTS AS DISCUSSED AT PARAS 9 & 10 OF THE ASSESSMENT ORDER T HAT DURING THE PREVIOUS YEAR RELEVANT TO AY 2005-06, ASSESSEE SOLD A PIEC E OF LAND FOR RS. 19,00,000 ON 20TH AUGUST, 2004. THIS LAND WAS PURCHASED BY TH E ASSESSEE ON 26TH JUNE, 1998 FOR RS. 4,11,885/-. THE TRANSACTION RESU LTED INTO LONG TERM CAPITAL IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 19 GAIN OF RS. 13,36,738. THE ASSESSEE INVESTED A SUM OF RS. 19,00,000/- ON 1ST SEPTEMBER, 2004 IN CONSTRUCTION OF THE NEW RESIDEN TIAL HOUSE. ALLOTMENT LETTER WAS ISSUED TO THE ASSESSEE FOR THE SAME HOUS E PROPERTY ON 3RD SEPTEMBER, 2004. THE CONSTRUCTION OF HOUSE WAS COMP LETED ON 24.2.2007 AS PER BUILDING USE PERMISSION WHICH IS ALSO WITHIN THE PRESCRIBED PERIOD OF THREE YEARS; SALE DEED OF THE NEW HOUSE WAS EXECUTE D AND REGISTERED ON 31.3.2008. THE ASSESSEE FILED COMPUTATION OF LTCG C LAIMING EXEMPTION QUA INVESTMENT OF A SUM OF RS. 19,00,000/- IN NEW HOUSE WHICH WAS ELIGIBLE FOR DEDUCTION U/S. 54F OF THE I. T. ACT. 11.1 LD. AO OBSERVED THAT THE RESIDENTIAL HOUSE WAS EFFECTIVELY REGISTERED ON 31.3.2008, THEREFORE, THE NEW HOUSE WILL BE TREA TED AS PURCHASED ON THIS DATE WHICH WAS BEYOND THE PRESCRIBED PERIOD U/S. 5 4F AND, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 54F. ON INVESTMENT OF RS. 19,00,000/-. ASSESSEE FILED DETAILED WRITTEN SUBMIS SIONS RELEVANT PART THEREOF IS AS UNDER: IT IS RESPECTFULLY SUBMITTED THAT ALL THE FACTS WE RE FULLY EXPLAINED AND PUT BEFORE THE ASSESSING OFFICER, BUT HE HAS IGNORED TH E BASIC FACT THAT THE ASSESSEE INVESTED A SUM OF RS. 19,00,000/- ON 1ST S EPTEMBER, 2004 IN CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE. ALLOTMEN T LETTER WAS ISSUED TO THE ASSESSEE FOR THE SAME HOUSE PROPERTY ON 3RD SEPTEMB ER, 2004. THE CONSTRUCTION OF HOUSE WAS COMPLETED ON 24.2.2007 AS PER BUILDING USE PERMISSION WHICH IS ALSO WITHIN THE PRESCRIBED PERI OD OF THREE YEARS. HOWEVER, SALE DEED WAS EXECUTED AND REGISTERED ON 3 1.3.2008. IT IS SUBMITTED THAT IN THESE FACTS, THE ASSESSEE IS FULLY ENTITLED TO DEDUCTION / EXEMPTION U/S. 54F. IN THE WRITTEN SUBMISSIONS ALREADY FILED DURIN G THE COURSE OF APPELLATE PROCEEDINGS, IN SUPPORT OF THIS CONTENTION, ASSESSE E HAS RELIED ON THE FOLLOWING TWO CASES:- (1) CIT VS. SMT. BEENA K. JAIN [1994] 75 TAXMAN 145 (BOMBAY) (2) CIT VS. AJITSINGH KHAJANCHI [2007] 163 TAXMAN 4 26 (MP) 4.3 IT IS REITERATED THAT ALL THE CONDITIONS OF SE CTION 54F WHICH IS AKIN TO SECTION 54 OF THE I.T. ACT ARE FULLY SATISFIED BY T HE ASSESSEE AND THE ASSESSING OFFICER WAS TOTALLY UNJUSTIFIED IN DENYING TO THE A SSESSEE THE BENEFIT OF SECTION 54F. THE RELEVANT FACTS STATED ABOVE ARE NO T DISPUTED BY THE IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 20 ASSESSING OFFICER. THE CAPITAL GAIN IS OF RS. 13,36 ,738 ON THE SALE OF LAND ON 29TH AUGUST, 2004. THE TOTAL CONSIDERATION RECEIVED BY THE ASSESSEE WAS RS. 19,00,000 AND THE FULL AMOUNT WAS INVESTED ON 1ST SEPTEMBER, 2004 FOR CONSTRUCTION OF NEW RESIDENTIAL HOUSE. ALLOTMENT L ETTER WAS ALSO ISSUED TO THE ASSESSEE ON 3RD SEPTEMBER, 2004 AND THE CONSTRU CTION WAS COMPLETED ON 24TH FEBRUARY, 2007 WHICH IS ALSO WITHIN THE PERIOD OF THREE YEARS. COURTS HAVE HELD THAT EVEN IF CONSTRUCTION GOES BEYOND THE PRESCRIBED PERIOD OF THREE YEARS, IF INVESTMENT HAS BEEN MADE WITHIN THAT PERI OD, EXEMPTION U/S. 54F WOULD BE ADMISSIBLE. THE CASE OF THE ASSESSEE IS ON A STRONGER FOOTING, BECAUSE ALL THE STATUTORY CONDITIONS HAVE BEEN FULFILLED AN D EVEN THE CONSTRUCTION HAS BEEN COMPLETED WITHIN THE PERIOD OF THREE YEARS. TH E APPELLANT RELIED ON VARIOUS OTHER LEGAL PRECEDENTS MENTIONED IN THE SUB MISSIONS AND ON HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. RA M GOPAL, 230 TAXMAN 205 / 55 TAXMANN.COM 536 WHEREIN IT HAS BEEN HELD T HAT EVEN WHERE THE ASSESSEE ACQUIRED PROPERTY BY PROVISIONAL BOOKING, HE WAS ELIGIBLE FOR EXEMPTION U/S.54 OF THE I.T. ACT. THE HON'BLE DELHI HIGH COURT FOLLOWED ITS EARLIER DECISION IN THE CASE OF GULSHAN MALIK VS. C IT, 223 TAXMAN 243 / 43 TAXMANN.COM 200. 11.2 THE LEARNED C.I.T. (APPEALS) REJECTED THE CLAI M BY SIMPLY OBSERVING THAT THERE WAS NO EVIDENCE THAT THE POSSESSION OF L AND ON WHICH THE PROPOSED BUNGALOW ALLOTTED TO THE ASSESSEE WAS TO B E CONSTRUCTED, WAS HANDED OVER TO SHRI BHUSHANBHAI VYAS IN THE MONTH O F JANUARY, 2004. THE BUILDING PLANS WERE APPROVED BY AUDA IN JUNE, 2004, BY SALE OF OLD PIECE OF LAND THE ASSESSEE RECEIVED A SUM OF RS.19 LACS ON 29TH AUGUST, 2004 AND THE AFORESAID ENTIRE AMOUNT OF RS.19 LACS WAS INVES TED ON 1ST SEPTEMBER, 2004 BY MAKING PAYMENT TO THE BUILDER AND ALLOTME NT LETTER WAS ISSUED ON 3RD SEPTEMBER, 2004. EVEN THE CONSTRUCTION WAS COMP LETED ON 24TH FEBRUARY, 2007 AS PER THE BUILDING USE PERMISSION ( BUP) WHICH IS ALSO WITHIN THE PRESCRIBED PERIOD OF THREE YEARS. THUS ASSESSEE WAS IN COMPLETE AND POSSESSION OF THE NEW PLOT IN JUNE 2004 ON WHIC H A RESIDENTIAL HOUSE WAS CONSTRUCTED IN FEB 2007 BY A DULY APPROVED BUIL DING PLAN. MERELY BECAUSE SALE DEED WAS DELAYED AND FINALLY EXECUTED AND REGISTERED ON 31ST MARCH, 2008 CANNOT DETRACT FROM THE FACTUM OF ASSES SEES CONSTRUCTION OF NEW RESIDENTIAL HOUSE IN FEB. 2007 WHICH CLEARLY FA LLS WITHIN 3 YEARS AND IS IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 21 ELIGIBLE FOR DEDUCTION U/S 54F. LD. CIT(A) HOWEVER FAILED TO APPRECIATE THE CLEARLY POSITION AND UPHELD THE DISALLOWANCE. 11.3 LD. COUNSEL REITERATED THE FACTS, CIRCUMSTANCE S AND CASE LAWS. RELEVANT PROVISION OF SEC. 54F READS AS UNDER: 54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL A SSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WIT HIN A PERIOD OF THREE YEARS AFTER THAT DATE 41[CONSTRUCTED, ONE RESIDENTIAL HOU SE IN INDIA (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAP ITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY. 11.4 IT IS CONTENDED THAT REGISTRATION IS A TECHNIC AL FORMALITY. ASSESSEES BEING ALREADY IN LAWFUL OWNERSHIP AND POSSESSION OF PLOT, DULY AUTHORIZED TO CONSTRUCT THE NEW RESIDENTIAL HOUSE AND THERE BE ING NO DOUBT ABOUT CONSTRUCTION OF NEW RESIDENTIAL HOUSE WITHIN 3 YEAR S, THE BENEFIT OF EXEMPTION U/S 54F CANNOT BE DENIED ONLY ON A TECHNI CAL OBJECTION. RELIANCE IS PLACED ON MUMBAI ITAT JUDGMENT IN THE CASE OF M/ S RAJEEV B. SHAH V. ITO IN ITA NO.262/MUM/2015. THE RELEVANT PORTION O F THE JUDGMENT READS AS UNDER:- ..IT IS IMPOSSIBLE FOR THE ASSESSEE TO COMPLETE OTHER FORMALITIES I.E. TAKING OVER POSSESSION FOR GETTING THE FLAT REGISTE RED IN HIS NAME AND THIS CANNOT BE THE REASON FOR DENYING THE CLAIM OF THE A SSESSEE FOR DEDUCTION U/S 54 OF THE ACT. IN VIEW OF THE ABOVE FACTS OF THE CA SE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT, BECAUSE THE ASSESSEE HAS ALREADY INVESTED A SUM OF RS.18.60 LAKHS IN THE RESIDENTIAL PROPERTY UNDER CONSTRUCTION WITHIN THE TIME LIMIT PRESCRIBED U/S. 54F OF THE ACT. ACCORDINGLY, THIS ISSUE OF ASSESSEES APPEAL IS ALL OWED. 11.5 FURTHER RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASES OF MYSORE MINERAL V CIT 239 ITR 775 & CIT V P ODDAR CEMENT PVT. LTD. 226 ITR 625. IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 22 12. LD. CIT (DR) APROPOS FIRST GROUND RELIED ON THE ORDERS OF CIT(A). IT IS CONTENDED THAT ASSESSEE FAILED TO ESTABLISH THAT TH E POSSESSION OF IMPUGNED LAND WAS HANDED OVER BY HARESHBHAI OR ASSESSEE TO S HRI BHANU BHAI IN AY 2004-05. THE APPELLANT HAS NOT OFFERED ANY INCOME O UT OF UNDISCLOSED RECEIPT FOR TAXATION IN THE YEAR OF ALLEGED ACCRUAL AS IT FALLS BEYOND THE TIME LIMIT PRESCRIBED FOR ASSESSMENT U/S 153A. APPELLANT RECEIVED THE UNACCOUNTED INCOME IN CASH AND NO TAXES ARE PAID. S INCE ON ACCRUAL BASIS ASSESSEE IS EVADING THE TAX ON UNACCOUNTED BY TAKIN G SHELTER BEHIND THE PROVISIONS OF THE INCOME TAX ACT LD. CIT(A) REJECTE D IRRATIONAL ARGUMENTS AND LEFT WITH NO CHOICE TAXED THE INCOME ON RECEIPT BASIS. CONSEQUENTLY IN THE GIVEN FACTS AND CIRCUMSTANCES LD. CIT(A) HAS CO RRECTLY UPHELD THE PROFITS CHARGEABLE ON SALE OF LAND IN YEAR OF RECEIPTS. 13. APROPOS SECOND FOR AY 2005-06 REGARDING EXEMPTI ON U/S 54F LD DR CONTENDS THAT THE ASSESSEE CANNOT BE HELD TO HAVE C ONSTRUCTED THE NEW HOUSE WITHOUT THE REGISTRATION OF THE DOCUMENT ON 3 1-3-08. SAME BEING BEYOND 3 YEARS THE EXEMPTION U/S54F WAS RIGHTLY DEN IED. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADVERTING TO THE FIRST ISSUE, IN BOTH THE YEARS SOLE CONTROVERSY PERTAINS TO DECIDING THE YEAR OF TAXABI LITY OF INCOME ARISING OUT OF THE SALE OF IMPUGNED PIECE OF LAND. ASSESSEES C LAIM IS TO THE EFFECT THAT ON 26-1-2004 THE IMPUGNED LAND WAS SOLD TO SHRI BHU SHANBHAI OF PUSHAP CONSTRUCTION, THEREFORE THE GAINS OF THIS SALE OF L AND ARE LEGALLY LIABLE TO BE TAXED IN AY 2004-05 IN TERMS OF SEC. 45(1) OR EVEN IF IT IS ASSUMED THAT ENTIRE SALE CONSIDERATION WAS NOT PAID THEN ALSO RWS 2(47) (V) THE SAME HAS TO BE TREATED TRANSFER AS THE POSSESSION WAS TRANSFERRED ALONG WITH PART PAYMENT. 14.1 SINCE THE MAJOR PART OF CONTRACT FOR SALE OF L AND STOOD EXECUTED THE BALANCE OF SALE CONSIDERATION WAS AGREED TO BE A DE BT OWED BY BHUSHAN BHAI IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 23 ON WHICH INTEREST WAS PAYABLE TO ASSESSEE. THESE FA CTS ARE MENTIONED IN THE SEIZED PAPER WHICH IS THE ONLY EVIDENCE ON WHICH DE PARTMENT HAS RELIED. THE INTEREST IS AND IS PAID BY VENDEE SHRI BHUSHAN BHAI TO THE ASSESSEE IN AY 2004-05 AND ACCEPTED BY DEPARTMENT. FOLLOWING FACTS CLEARLY EMERGE FROM THE RECORD: I. THERE IS NO DOUBT THAT THE SOLE MATERIAL BASED ON W HICH THE IMPUGNED UNDISCLOSED TRANSACTION OF SALE OF LAND WA S DISCOVERED IS SEIZED PAPER BEING PAGE NO. 64 OF ANN EXURE-A/1. NO OTHER MATERIAL WAS FOUND OR IS RELIED ON BY THE DEPARTMENT. THE NOTING IN THE SEIZED PAPER ARE DENIED BY THE AS SESSEE AND IN POST SEARCH ENQUIRIES EXPLAINED EACH AND EVERY E NTRY WRITTEN IN THE SEIZED DOCUMENT. II. THE ENTRIES IN THE SEIZED PAPER 1; ASSESSEES STATE MENT AND EXPLANATION:; CONFIRMATION OF ORIGINAL VENDOR SHRI HARESH BHAI PATEL AND SECOND PURCHASER SHRI BHUSHANBHAI, THE LA ND IS QUESTION STOOD TRANSFERRED WITH POSSESSION TO SHRI BHUSHANBHAI ON 26-1-04. III. RELEVANT PROVISIONS READ AS UNDER:- 45. [(1)] ANY PROFITS OR GAINS ARISING FROM THE TR ANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G AN D 54H, BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'CAPITAL GA INS', AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHI CH THE TRANSFER TOOK PLACE. 2(47) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES,. . (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR . VI. THE RELEVANT PIECE OF LAND WAS PURCHASED BY ASSESS EE ON 1 ST JULY, 2003 FROM SHRI HARESHBHAI J. PATEL AT A PRICE OF R S. 6,30,91,906/- IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 24 AGAINST WHICH TRANSACTION THE ASSESSEE PAID CASH OF RS. 2,50,00,000/- TO SHRI HARESHBHAI PRIOR TO 26.1.200 4. V. ON 26.1.2004 THE SAID LAND WAS SOLD BY THE ASSESSEE TO SHRI BHUSHANBHAI VYAS FOR A CONSIDERATION OF RS. 8,30,44 ,826/-. OUT THIS SALE CONSIDERATION AN AMOUNT OF RS. 3,80,91,80 6/- (BALANCE PAYABLE BY ASSESSEE TO SHRI HARESHBHAI QUA THE FIR ST PURCHASE) WAS AGREED TO BE PAID BY SHRI BHUSHAN BHAI DIRECTL Y TO SHRI HARESHBHAI, THIS WAS MUTUALLY AGREED AND ACCEPTED. THE FACT ABOUT THIS TRANSFER OF OUTSTANDING IS CLEARLY REFLE CTED IN THE SEIZED PAPER ITSELF AND FURTHER SUPPORTED BY CONFIRMATIONS IN THIS BEHALF FROM SHRI HARESH BHAI FILED BEFORE THE INVESTIGATIN G OFFICER DURING POST-SEARCH INQUIRIES AND ALSO BEFORE THE AS SESSING OFFICER. VI. IN THIS MANNER THE TOTAL PURCHASE CONSIDERATION OF RS.6,30,91,906/- WAS FULLY PAID BY 26.1.2004 TO SHR I HARESH BHAI PATEL. THE POSSESSION OF THE LAND WAS HANDED OVER T O SHRI BHUSHAN BHAI ON 26.1.2004 ITSELF WHICH IS CONFIRMED BY SHRI HARESH BHAI. VII. THE BALANCE AMOUNT OF RS.4,49,53,020/- RECEIVABLE B Y THE ASSESSEE FROM SHRI BHUSHAN BHAI VYAS WAS PAID IN NEXT YEARS , THE DETAILS THEREOF OF ARE CLEARLY MENTIONED IN THE JOTTINGS ON THE SEIZED PAPER. 4.2 THE AO OBSERVED THAT NO EVIDENCE WAS FURNISHED BY ASSESSEE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE THAT THE SUM OF RS. 2,50,00,000 WAS PAID TO SHRI HARESHBHAI PRIOR TO 26.1.2004 AND FURT HER THERE IS NO EVIDENCE THAT THE OUTSTANDING HAWALA AMOUNT OF RS. 3,80,91 ,806 WAS ALSO PAID ON OR BEFORE 26.1.2004. ASSESSEE CONTENDS THAT THESE FACT S ARE MENTIONED IN THE SEIZED PAPER ITSELF WHICH IS THE SOLE EVIDENCE RELI ED ON BY AO AND DULY EXPLAINED BY ASSESSEE. SHRI HARESHBHAI THE ORIGINAL VENDOR WHO IS REGULARLY IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 25 ASSESSED TO TAX, HAS FILED A CONFIRMATION AGREEING TO ALL THESE FACTS. WHEN THE INCRIMINATING DOCUMENT, ASSESSEES EXPLANATION AND CONFIRMATION OF CONCERNED PERSON ARE ON THE RECORD, THERE IS NO JUS TIFICATION IN AOS WRONG FINDING THAT ASSESSEE HAS NOT SUBSTANTIATED HIS CON TENTIONS. THE CORROBORATION IS VERY MUCH CLEAR ON THE FACE OF RECORD IN DEMONSTRATIVE MANNER. LD. CIT(A) HAS HELD THAT AO HAS ADOPTED A W RONG APPROACH, REVENUE HAS ACCEPTED THE ORDER OF LD. CIT(A). THERE FORE THE MISCONCEPTION OF FACTS ADOPTED BY AO BECOMES VERY CLEARLY AND HIS FINDINGS BECOME UNRELIABLE. 4.3 LD. AO HAS GIVEN CONTRADICTORY OBSERVATIONS BY TAXING THE INCOME ARISING FROM TRANSFER OF LAND AND THEREAFTER ALSO H OLDING THAT THE LAND IS NOT A CAPITAL ASSET IN THE HANDS OF THE ASSESSEE. YET A GAIN AN ADVERSE INFERENCE IS DRAWN THAT LAND STOOD IN THE NAME OF SOME COOPERATI VE SOCIETY. ALL THESE OBSERVATIONS ARE CONTRADICTORY AS IF THE PROCEEDS A RE NOT GAINS FROM LAND THAN THE DEBIT AND CREDIT ENTRIES STAND EXPLAINED B Y THE ASSESSEE EITHER FROM HARESHBHAI OR BHANUBHAI. THE PAPER STANDS EXPLAINED PART PAYMENT IF ANY MADE BY ASSESSEE STAND S PRIOR TO THE PERIOD OF SEA RCH AND CANNOT BE TAX U/S 153A. THUS THE OBSERVATIONS OF LD. AO HAVE BEEN RIG HTLY HELD BY LD. CIT(A) AS UNRELIABLE AT PARA 8 OF HIS ORDER BY CLEARLY OBS ERVING THAT NO DOUBT THE REASONING OFFERED BY THE AO IN BRINGING TO TAX THE AFORESAID INCOME IS NOT SOUND. IN VIEW OF THESE FACTS THE OBSERVATIONS OF AO CANNOT BE RELIED BESIDES DEPARTMENT HAS ACCEPTED THE ORDER OF LD. CI T(A) IN THIS BEHALF. 4.4 LD. CIT(A) DID NOT ACCEPT THE CONFIRMATION OF HARESH BHAI WHICH STATED THAT AS THE FULL PAYMENT WAS MADE RECEIVED BY HARESHBHAI WHO HANDED OVER THE POSSESSION OF LAND TO SHRI BHUSHANB HAI ON 26-1-2004. AT THE MOST THIS LETTER MAY INDICATE THAT THE RIGHTS I N LAND WERE HANDED OVER BY SH. HARESHBHAI AFTER GETTING FULL AND FINAL PAYMENT TO THE APPELLANT. THIS FINDING OF LD. CIT(A) IS MISDIRECTED AND CONTRARY T O MATERIAL ON RECORD IN AS IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 26 MUCH AS THE ASSESSEE, HARESHBHAI AND BHANUBHAI HAVE ACCEPTED THESE FACTS. WITHOUT CONTROVERTING THERE EVIDENCE IT CANNOT BE A SSUMED THAT HARESHBHAI TRANSFERRED THE POSSESSION TO ASSESSEE WHO DID NOT GAVE IT TO BHUSHAN BHAI. ASSESSEE HAS DEMONSTRATED THAT POSSESSION WAS HANDE D OVER TO BHUSHAN BHAI ON 26-1-2004, ON THE SAME DATE AND BALANCE WAS TREATED AS DEBT ON WHICH BHUSHAN BHAI INTEREST WHICH IS OFFERED IN AY 2005-06. THESE CRUCIAL FACTS SUPPORT THE CASE OF ASSESSEE. IN OUR VIEW LD. CIT(A) HAS DISLODGED MATERIAL ON RECORD ON ASSUMPTIONS AND WE HOLD THAT THE POSSESSION OF LAND IN QUESTION WAS TRANSFERRED BY ASSESSEE TO SHRI BHU SHAN BHAI. ASSUMING THERE WAS ANY DOUBT ABOUT THE BALANCE CONSIDERATION BECOMING A DEBT OR OUTSTANDING PART SALE CONSIDERATION IT DOES NOT IN ANY WAY DETRACT FROM THE FACTS THAT POSSESSION WAS TRANSFERRED AND PART CONS IDERATION WAS RECEIVED. IN THIS EVENTUALITY ALSO SEC. 45(1) RWS 2(47)(V) MA KES THE DATE OF TRANSFER 26- 1-2004 FALLING IN FY 2003-04 AND CHARGEABILITY TO T AX IN AY 2004-05 ONLY. 4.5 IT IS SETTLED LAW THAT CHARGING SECTION UNDER I NCOME TAX ACT SHOULD BE STRICTLY CONSTRUED AND THE INCOME COMPUTED UNDER TH E PROVISION OF ACT SHOULD BE ASSESSED IN CORRECT ASSESSMENT YEARS. LD. AO & CIT(A), BOTH HAVE BOTH ULTIMATELY HELD THE GAINS TO BE CHARGEABLE AS INCOME ON SALE OF LAND ONLY. THEREFORE PROVISION OF SEC. 45(1) OR RWS 2(47 )(V) ARE CLEARLY APPLICABLE, THEY PROVIDE MANDATORY WAY OF COMPUTING THE INCOME ARISING FROM TRANSFER OF LAND COUPLED WITH PART PAYMENT WHICH IS TRANSFER IN PART PERFORMANCE OF CONTRACT. HERE ALSO SEC. 45(1) RWS 2(47)(V) MAKES T HE DATE OF TRANSFER 26-1- 2004 FALLING IN FY 2003-04 AND CHARGEABILITY TO TAX IN AY 2004-05. 4.6 LD. CIT(A) HAS CLEARLY OBSERVED THAT NO DOUBT THE REASONING OFFERED BY THE AO IN BRINGING TO TAX THE AFORESAID INCOME I S NOT SOUND BUT NEVERTHELESS IT DOES NOT GIVE ANY ESCAPE ROUTE TO T HE APPELLANT TO AVOID PAYMENT OF TAXES.IN OUR CONSIDERED VIEW THE EXPRES S PROVISIONS OF LAW CANNOT BE DISTORTED SO AS TO COLLECT REVENUE IN WRO NG ASSESSMENT YEARS. IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 27 BESIDES LD. CIT(A) TILL END HAS NOT COME TO THE CON CLUSION AS TO WHAT IS THE DATE OF SALE OR TRANSFER OF LAND. A RECEIPT QUA SAL E OF IMMOVABLE PROPERTY BECOMES A TAXABLE RECEIPT AFTER THE SALE IS COMPLET E ON A PARTICULAR DATE. IN THE ABSENCE OF EXACT DATE OF TRANSFER THE RECEIPTS MERELY BECOME ADVANCE AND CANNOT BE TAXED ON RECEIPT BASIS. 4.7 THE SOLE EVIDENCE OF THIS UNDISCLOSED TRANSACTI ON OF SALE OF LAND IS THE ABOVE SEIZED PAPER NO OTHER EVIDENCE IS RELIED BY A UTHORITIES BELOW. ASSESSEE HAS EXPLAINED EACH AND EVERY ENTRY AND COR ROBORATED IT WITH CONFIRMATIONS OF HARESHBHAI AND BHUSHAN BHAI WHO AR E REGULARLY ASSESSED TO TAX. THE ASSESSEE HAS DISCHARGED HIS BURDEN TO E XPLAIN THE CONTENTS OF SEIZED PAPER AND CORROBORATE IT WITH CONFIRMATION T O EXPLAIN THAT THE TRANSFER OF IMMOVABLE PROPERTY MATERIALIZED ON 26-1 -2004 IN TERMS OF SEC. 45(1) RWS 2(47)(V) WHICH IS FY 2003-04 AND AY 2004- 05. 4.8 THE FINDING OF LD. CIT(A) THAT PROFITS ARE TAXE D ON RECEIPT BASIS IN AYS 2005-06 AND 07-08 AS THE SAME HAS NOT BEEN OFFERED BY THE APPELLANT ON THE ACCRUAL BASIS IS UNTENABLE AND CONTRARY TO FACTS AN D CLEAR LEGAL PROVISIONS IN THIS BEHALF. A LEVY OF TAX WHICH IS FIXED AND MANDA TE BY PROVISIONS OF SEC. 45(1) RWS 2(47)(V) CANNOT BE PROPONED OR POSTPONED ON ASSUMPTIONS, INTENDMENTS OR TO COLLECT REVENUE. BESIDES THERE IS NO JUSTIFICATION IN CIT(A)S ORDER IN NOT FIXING THE DATE OF TRANSFER, WORKING OUT THE INCOME AND TAXING ON RECEIPT BASIS. THE WHOLE APPROACH MILITAT E AGAINST THE SCHEME OF ACT AND EXPRESS LEGAL PROVISIONS. 4.9. THUS IN THE GIVEN FACTS, CIRCUMSTANCES AND LEG AL PROVISIONS AND TRITE LAW THAT INCOME SHOULD BE ASSESSED ONLY IN RIGHT AS SESSMENT YEAR ONLY, WE HOLD THAT THE TRANSFER OF LAND HAVING TAKEN PLACE O N 26-1-2004 IS LIABLE TO BE TAXED FOR FY 2003-04 I.E. AY 2004-05 AND NOT AYS 20 05-06 AND 07-08 AS HELD IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 28 BY LD. CIT(A). THE GROUNDS RAISED BY ASSESSEE IN TH IS BEHALF ARE ALLOWED AND THE IMPUGNED ADDITIONS ARE DELETED. 4.10 APROPOS THE SECOND GROUND IN AY 2005-06, WE HA VE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE ASSESSEE SOLD A PIECE OF LAND FOR RS. 19,00,000 ON 20TH AUGUST, 2 004 RESULTING INTO LONG TERM CAPITAL GAIN OF RS. 13,36,738. THE ASSESSEE HA D INVESTED A SUM OF RS. 19,00,000/- TILL 1ST SEPTEMBER, 2004 TOWARDS CONST RUCTION OF A NEW RESIDENTIAL HOUSE, ALLOTMENT LETTER THEREOF WAS IS SUED TO THE ASSESSEE FOR THE SAME HOUSE PROPERTY ON 3RD SEPTEMBER, 2004. THE CON STRUCTION OF HOUSE WAS COMPLETED ON 24.2.2007 AS PER BUILDING USE PER MISSION WHICH IS ALSO WITHIN THE PRESCRIBED PERIOD OF THREE YEARS. DUE TO SOME TECHNICALITIES THE SALE DEED OF THE NEW HOUSE GOT SLIGHTLY DELAYED AND WAS REGISTERED ON 31.3.2008. AO DID NOT DISPUTE THESE FACTS, HOWEVER HELD THAT SALE DEED BEING BEYOND 3 YEARS, ASSESSEE WAS NOT ELIGIBLE FOR DEDUC TION U/S. 54F OF THE I. T. ACT. 4.11 ASSESSEE CONTENDS THAT NO DISPUTE IS RAISED BY LD. AO ABOUT THE DATES OF PURCHASE OF PLOT, SANCTION OF BUILDING PLAN, ALL OTMENT LETTER AND MERELY BECAUSE REGISTRATION OF DOCUMENT IS DELAYED, THIS TECHNICAL FORMALITY HAS BEEN HELD TO DECISIVE TO DENY EXEMPTION. ASSESSEES BEING ALREADY IN LAWFUL OWNERSHIP AND POSSESSION OF PLOT, DULY AUTHORIZED T O CONSTRUCT THE NEW RESIDENTIAL HOUSE AND THERE BEING NO DOUBT ABOUT CO NSTRUCTION OF NEW RESIDENTIAL HOUSE WITHIN 3 YEARS, THE BENEFIT OF EX EMPTION U/S 54F CANNOT BE DENIED ONLY ON A TECHNICAL OBJECTION. WHAT IS CONTE MPLATED BY SEC. 54F IS CONSTRUCTION OF NEW HOUSE AND NOT THE REGISTRATION. THUS THE OBJECTION OF LD. AO MILITATES AGAINST THE REQUIREMENT OF LAW AND EXE MPTION HAS BEEN WRONGFULLY DENIED. 4.12 IN OUR CONSIDERED VIEW THERE IS MERIT IN THE C ONTENTIONS OF ASSESSEE THAT HE WAS DEFACTO OWNER OF PROPERTY IN LAWFUL POS SESSION, OWNERSHIP AND IT(SS)A NOS. 169 & 170/AHD/2015 MAGANBHAI HARJIBHAI BHAKHAR VS. DCIT AY : 2005-06 & 2007-08 29 PERMISSION TO CONSTRUCT A HOUSE. ALL THESE FORMALIT IES ARE COMPLETED WITHIN PRESCRIBED PERIOD OF THREE YEARS. THUS THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 54F OUR VIEW IS FORTIFIED BY HONBLE SUPREME CO URT JUDGMENTS IN THE CASES OF MYSORE MINERALS AND PODDAR CEMENTS AND MUM BAI ITAT JUDGMENT IN THE CASE OF M/S RAJEEV B. SHAH (SUPRA), RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F. THIS GROUND OF THE ASSESSEE IS ALLOWED. 15. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 27 TH OCTOBER, 2016 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 27/10/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD