D.C.I.T (Central)1, INDORE V. Shri Raunak Maru, INDORE

ITSSA 195/Ind/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4367 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 28-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Assessee Lawyers: SHALINI MEHTA A RS
• Keywords: Unexplained investment; Document seized; Capital receipt; Documents seized
• Section: 143(3); 13; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A NO.194/IND/2017 ASSESSMENT YEAR: 2010-11 DCIT-(CENTRAL)-1 : REVENUE INDORE V/S SHRI RAJUL BHARGAVA, INDORE , : RESPONDENT PAN :AICPB7540A C.O NO.02/IND/2019 (ARISING OUT OF IT(SS)A NO.194/IND/2017) ASSESSMENT YEAR 2010-11 SHRI RAJUL BHARGAVA, INDORE , : APPELLANT PAN :AICPB7540A V/S DCIT-(CENTRAL)-1 : RESPONDENT INDORE IT(SS)A NO.195/IND/2017 ASSESSMENT YEAR: 2010-11 DCIT-(CENTRAL)-1 : REVENUE INDORE RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 2 V/S SHRI RAUNAK MARU, INDORE : RESPONDENT PAN: BQDPM6420J C.O NO.03/IND/2019 (ARISING OUT OF IT(SS)A NO.195/IND/2017) ASSESSMENT YEAR 2010-11 SHRI RAUNAK MARU, INDORE : APPELLANT PAN BQDPM6420J V/S DCIT-(CENTRAL)-1 : RESPONDENT INDORE REVENUE BY SHRI RAJIB JAIN, CIT-DR ASSESSEE BY SHRI AJAY TULSIYAN & MISS SHALINI MEHTA ARS DATE OF HEARING 07.06.2021 DATE OF PRONOUNCEMENT 16.08.2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE REVENUE AND CROSS OBJECTION RAISED BY THE DIFFERENT ASSESSEE FOR ASSESSMENT YEAR 2010-11 ARE DIRECTED AGAINST THE O RDERS OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-III (IN SHORT LD. CIT], INDORE DATED 24.05.2017 WHICH ARE ARISING OUT OF T HE ORDER U/S RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 3 143(3) R.W.S 147 OF THE INCOME TAX ACT 1961(IN SHO RT THE ACT) EVENLY DATED 23.03.2016 FRAMED BY ACIT-(CENTRAL)-I, INDORE. 2. AS THE ISSUES RAISED IN THESE APPEALS AND CROSS OBJECTIONS ARE COMMON, AT THE REQUEST OF ALL THE PA RTIES, THESE APPEALS AND CROSS OBJECTIONS WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVITY. 3. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL IN IT(SS) A NO.194 & 195/IND/2017 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,62,66,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENT U/S 69 OF THE INCOME TAX ACT, 1961 IN PURCHASE OF LAND PROPERTIES . WHEREAS, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN CO NO.02 & 03/IND/2019 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THA T THE ADDITIONS COULD HAVE BEEN MADE IN THE HANDS OF THE CROSS OBJECTOR EVEN ON THE BASIS OF MATERIAL SEIZED FROM THE POSSESSION OF ANOTHER PERSON. 2. THE IMPUGNED SEIZED MATERIAL WAS NEITHER FOUND AND SEIZED FROM THE CROSS OBJECTOR, NOR MENTIONED T HE NAME OF THE CROSS OBJECTOR AND NOR WAS WRITTEN BY T HE CROSS OBJECTOR THEREFORE THE LD. CIT(A) OUGHT NOT T O RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 4 HAVE UPHELD THE CREDITABILITY AND THE EVIDENTIARY V ALUE OF THE SAME IN THE CASE OF THE CROSS OBJECTOR. 3. THE CROSS OBJECTOR CRAVES LEAVE TO ADD, ALTER MO DIFY, SUBSTITUTE AND/OR WITHDRAW ALL OR ANY OF THE GROUND S OF APPEAL AT ANY STAGE OF THE APPELLATE PROCEEDINGS . 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES FORMED A PARTNERSHIP FIRM M/S RNR DEVCON DURING THE YEAR UND ER CONSIDERATION ON 10 TH MARCH 2010 WHEREIN BOTH THE PARTNERS HAD 50:50 SHARING. THE SAID FIRM PURCHASED A PLOT OF LA ND AT BYPASS INDORE FOR A CONSIDERATION OF RS. 3.5 CRORES MEASUR ING 3.93 HECTARES THROUGH SALE DEED REGISTERED ON 18.03.2010 , WHICH WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE FIRM . LATER ON THE FIRM SOLD A PART OF THE LAND I.E. 1.62 HECTARE OF T HE SAID LAND ON 14.02.2012 TO ONE M/S VEE KAY INFRACOM PVT. LTD. FO R RS. 2,35,80,000/-. THE RESULTANT PROFIT OF RS. 74,24,66 8/- ON THIS SALE WAS OFFERED TO TAX IN THE HANDS OF THE FIRM FO R AY 2012-13. ON 31.03.2012 TWO MORE PERSONS NAMELY SHRINARESHKAK WANI AND SHRI JAI NARAYAN KAKWANI WERE ADMITTED AS PARTN ERS. EVENTUALLY VIDE RETIREMENT DEED DATED 25.07.2012 TH E ASSESSEES RETIRED FROM THE SAID PARTNERSHIP FIRM. DURING THE COURSE OF SEARCH PROCEEDINGS, CERTAIN PEN DRIVE WAS SEIZED FR OM THE RESIDENTIAL PREMISES OF ONE SHRI ASHOK VAISHNAV WHO WAS THE RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 5 ACCOUNTANT OF M/S CHL HOSPITAL LTD., WHEREIN CERTAI N NOTINGS WERE FOUND. ON THE BASIS OF THESE NOTINGS, DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, VIDE COMMUNICATION DATED 15 .01.2016 REFERRING TO THE DOCUMENT SEIZED DURING THE SEARCH OPERATION FROM THE PREMISES OF CHL AND THE DATA RECOVERED FRO M THE PEN DRIVE OF SHRI ASHOK VAISHNAV ACCOUNTANT, CHL HOSPIT AL INDORE, THE ASSESSING OFFICER OBSERVED THAT THE BYPASS LAND WAS PURCHASED AT RS. 13.06 CRORES OUT OF WHICH 3.81 CRO RES (3.5 CR. AS PER REGISTRY DEED PLUS 31 LACS FOR STAMP) WAS SH OWN IN FY 2009-10. IT IS FURTHER MENTIONED BY THE ASSESSING O FFICER THAT THE PAYMENT SCHEDULE OF THE SAME CAN BE FOUND FROM EXCE L SHEET TH- 1 FOUND FROM THE PEN DRIVE OF SHRI ASHOK VAISHNAV W HICH ALSO INDICATE THAT THE PAYMENT TO THE TUNE OF 10.56 CROR ES WAS MADE. THEREFORE, THE ASSESSEES WERE REQUIRED TO SHOW CAUS E AS TO WHY 50% OF THE AMOUNT OF RS. 9,25,32,000/- I.E. RS. 4,6 2,66,000/- BE NOT TREATED AS UNACCOUNTED INVESTMENTS IN THE HANDS OF THE ASSESSEES IN FY 2009-10 ON ACCOUNT OF INVESTMENT MA DE BY THE PARTNERSHIP FIRM IN THIS LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEES FILED SEVERAL WRITTEN SU BMISSIONS PROVIDING INFORMATION, EXPLANATIONS AND DOCUMENTATI ON AS REQUIRED BY THE ASSESSING OFFICER. THE ASSESSING O FFICER RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 6 CONCLUDED THE ASSESSMENT PROCEEDINGS AND MADE ADDIT ION OF RS.4,62,66,000/- U/S 69 ON ACCOUNT OF ALLEGED UNDIS CLOSED INVESTMENT MADE OUT OF BOOKS FOR PURCHASE OF LAND A T MAYAKHEDI. 5. FELT AGGRIEVED, THE ASSESSEES FILED THE APPEALS BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE FACTS, MATERIAL ON RECORD AND SUBMISSIONS DELETED THE ADDITION. THE RELEVANT FIND INGS OF THE LD. CIT(A) IS REPRODUCED HEREUNDER: 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE DETAILED SUBMISSIONS MADE BY THE APPELLANT. THE APP ELLANT HAS SUBMITTED THAT THE CONTENTS AND DATA OF DOCUMEN TS LPS - AV-1 ON THE BASIS OF WHICH ADDITION HAS BEEN MADE, WERE RECOVERED FROM THE PEN DRIVE OF SHRI ASHOK VAI SHNAV AND NOT FROM THE POSSESSION OF THE APPELLANT. THE APPELLANT HAS CHALLENGED THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE SAID SEIZED MATERIAL AND A LSO ''ON THE STATEMENTS OF SHRI ASHOK VAISHNAV. AS THE APPEL LANT HAS SEPARATELY CHALLENGED THIS ISSUE THROUGH GROUND NO. 2 IT WILL BE DEALT WITH WHILE DEALING WITH THE SAID G ROUND. 4.1 THE APPELLANT HAS SUBMITTED THAT THE LAND ADMEASURING 3.93 HECTARE WAS PURCHASED BY THE FIRM M/S RNR DEVCON FOR RS. 350 LACS VIDE REGISTERED SALE DE ED AND COMPLETE DETAILS OF THE PERSONS FROM WHOM THE SAID PROPERTY WAS PURCHASED BY THE FIRM ARE AVAILABLE IN THE RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 7 REGISTERED SALE DEED. THE 5. IT IS ALSO SUBMITTED THAT AN APPLICATION WAS FIL ED BEFORE THE HORI'BLC INCOME TAX SETTLEMENT COMMISSION (ITSC) ON 17.09.2014. THE APPLICATION WAS ADMITTED VIDE COMMON ORDER UJS 2450(1) AND WAS ALLOWED TO BE PROCEEDED WITH VIDE COMMON ORDER UJS 2450(2C) DATED 14.11.2014. HOWEVER , WHILE PASSING THE FINAL ORDER UJS 2450(4) DATED 15.05.'2015, THE HON'BLE ITSC REJECTED THE APPLICAT ION ON THE TECHNICAL GROUND REGARDING THE THRESHOLD LIMIT OF INCOME TAX. THE APPELLANT HAS PLACED ON RECORD COPY OF THE REPORT UNDER RULE 9 (OF SETTLEMENT COMMISSION PROCE DURE RULES, 1997) SUBMITTED BY THE PR. CIT (CENTRAL), BH OPAL BEFORE ITSC. THE COPY OF THE ORDER OF THE HON'BLE I TSC PASSED IN THE APPELLANT'S CASE IS ALSO PLACED ON RECORD. 5.1 IT IS SEEN THAT THE PR. CIT (CENTRAL) BHOPAL IN THE REPORT FILED UNDER RULE 9 OF SETTLEMENT COMMISSION PROCEDU RE RULES, 1997 BEFORE LTSC HAS DISCUSSED THE ABOVE ISS UE IN RESPECT OF THE UNACCOUNTED INVESTMENT MADE IN THE PURCHASE OF THE LAND IN DETAIL AND FINALLY CONCLUDED AT PAGE 14 OF THE SAID REPORT AS UNDER: - 'IN 'THE LIGHT OF ABOVE DISCUSSION, I AM TO HOLD THE AMOUNT OF UNDISCLOSED INCOME IN THE HANDS OF THE FIRM AND PAR TNERS HAS TO COMPUTED AS PER PROVISIONS OF THE INCOME TAX ACT AS UNDER UNACCOUNTED INVESTMENT IN 'BYPASS LAND'- LAND HAS BEEN PURCHASE D DURING F. RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 8 Y.2009-10. TOTAL ACTUAL PURCHASE AMOUNT IS RS.13. 06 CRORES, OUT OF WHICH RS.3.81 CRORES HAVE BEEN SHOWN IN THE BOOKS (3.5 CRORE AS PER REGISTRY DEED + 31 LACS AS STAMP EXPENSES). THUS, REST OF THE AMOUNT OF RS.9,25,32,000/- NEEDS TO BE TREATED AS UNACCOUNTED INVESTMENT IN THE HANDS OF M/ S. RNR DEVCON IN A. Y.201 0-11.' 5.2 THE HON'BLE ITSC IN ITS ORDER IN PARA 17.3 HAS STATED THAT THE CIT (DR) ALSO DURING THE COURSE OF HEARING BEFORE THE ITSC H AS CONTENDED THAT THE INCOME IN RESPECT OF THE IMPUGNED LAND DOES NOT BELONG TO THE PARTNERS BUT PERTAINS TO THE FIRM, MIS RNR DEVCON. THE HON'BLE ITSC HAS ALSO HE, THAT THE UNACCOUNTED INVESTMENT IN THE LAND PURCHASED BY THE FIRM MIS RNR DEVCON IS REQUIRED TO BE TAXED IN THE HANDS OF THE FIRM. THE OBSERVATION OF THE HON'BLE ITSC IN PARA 1 8 ON PAGE 40 OF ITS ORDER IS AS UNDER:- 18. WE HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS BROUGHT TO OUR NOTICE IN THE APPLICATION FILED, RULE 9 REPORT, SUBMISSIONS OF BOTH CIT(DR) AND AR. THE FOL LOWING FACTS ARE RECAPITULATED. (I) THE APPLICANT AND SHRI RAUNAK MARU WERE THE TWO PAR TNERS IN M/ S. RNR DEVCON HAVING 50% SHARES EACH. THE FIRM PURCHASED A PLOT OF LAND ADME ASURING 3.93 HECTARES OF LAND FOR A CONSIDERATION RECORDED IN TH E BOOKS AT RS. 3. 8] CRORES, DURING F. Y. 2009-10. THE ACTUAL CONSIDERATION FOR THIS PURCHASE WAS RS. ] 3. 06 CRORES AS FOUND OUT FROM DOCUMENTS SEIZED DURING TH E COURSE OF SEARCH (L.P.S. - AB-L) AS WELL AS ON THE BASIS OF STATEMENT RECORDED DURING S EARCH. [II] THE ABOVE LAND WAS SOLD FOR RS.22.5 CRORES IN TWO T RENCHES DURING F.Y.2011- 12 AND 2012-] 3. THE TOTAL SALE CONSIDERATION WAS RS. 22.50 CRORES. THE FIRST SALE WAS OF 1.62 HECTARES AS PER AGREEMENT DATED 14.2.2012, WHEN THE FIRM M/ S. RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 9 RNR DEVCON SOLD THE LAND TO M/ S. VEEKAY INFRACOM PVT. LTD. THEREAFTER AS PER PARTNERSHIP DEED DATED 31.03.2102 TWO NEW PARTNERS SHRI NARESH KAKIUANI AND SHRI JAINARAYAN KAKUIANI WERE ADMITTED AS PARTNERS. THE CAPITAL GAIN OF RS. 74,21,668/ - ON SALE OF 1.62 HECTARES OF LAND WAS OFFERED IN THE HANDS OF THE FI RM AS CAPITAL GAIN FOR A. Y.2012-13. (III) THEREAFTER AS PER DEED OF RETIREMENT DATED 25.07.2012, SHRI RAJUL BHARGAVA AND SHRI RAUNAK MARU RETIRED FROM THE FIRM WITH SHRI NARESH KAKWANI AND SHRI JAINARAYAN KAKWANI CONTINUING AS PARTNERS OF T HE FIRM. THE REMAINING PART OF LAND ADMEASURING 2.21 HECTARES WAS THUS TRANSFERRED THROUGH THE TRANSFER OF PARTNERSHIP FIRM. 18.1 ON THESE FACTS WE HAVE NO DOUBT IN OUR MIND TH AT BOTH THE UNACCOUNTED INVESTMENT IN LAND PURCHASED BY THE FIRM M/ S. RNR. DEVCON AS WELL AS THE PROFIT ARISING ON SALE O F LAND BY THE FIRM ARE REQUIRED TO BE TAXED IN THE HA NDS OF THE FIRM. THE RECEIPTS BY THE APPLICANT (ACCOUNTED AS WELL AS UNACCOUNTED) IN LIE U OF FOREGOING THEIR PARTNERSHIP SHARES TO KAKWANI FAMILY WOULD BE CAPITAL RECEIPTS AND NOT REVENUE RECEIPTS. EVEN THE APPLICANT IN HIS SOF STATES THAT LEGALLY SUCH INCOM E BELONGS TO THE FIRM. HOWEVER, HE HAD OFFERED ONLY A PART OF SUCH INCOME AT RS.52,91, 374/- ON THE GROUND THAT HE HAD NO CONTROL AND AUTHORITY OVER THE FIRM AND THE OFFER O F ADDITIONAL INCOME WAS IN ORDER TO BUY PEACE OF MIND AND TO AVOID LITIGATION . 18.2 WE THEREFORE HOLD THAT THE APPLICANT BY OFFERING IN COME OF RS.52,91,374/- IN HIS OWN HAINDS, EVEN THOUGH THE SAME ADMITTEDLY BELONGS TO THE FIRM, HAS NOT MADE A FULL AND TRUE DISCLOSURE OF HIS INCOME. FURTHER IF THE AMOUNT OF RS. 52, 91,3741 - WHICH A6T.UP.LLY BELONGS TO THE FIRM IS TAKEN OUT, THE OF FER OF ADDITIONAL INCOME MADE BY THE DPPFJCANT, WOULD FAIL ON THE TECHNICAL REQUIREMENTS PRESCRIBED UL S 245C REGARDING RE,SHOLD LIMIT OF INCOME TAX.' 6. CHARGE OF INCOME TAX AS PER SECTION 4 IS PRESCRI BED IN RESPECT OF TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY 'PERSON'. THE EXPRESSION 'PERSON' IS RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 10 DEFINED IN SECTION 2(31) WHEREIN A FIRM IS SEPARATE LY INCLUDED. THUS, A PARTNERSHIP FIRM IS A SEPARATE ASSESSABLE ENTITY UN DER THE INCOME TAX ACT, 1961 DISTINCT FROM ITS PARTNERS FOR THE PURPOS ES OF CHARGING INCOME TAX IN RESPECT OF ITS INCOME OF THE PREVIOUS YEAR. THE HON'BLE SUPREME COURT IN ITO VS. CH. ATCHAIAH (1996) 218 ITR 0239 H AS HELD THAT UNLIKE UNDER SECTION 3 OF THE 1922 ACT, THE ITO HAS GOT NO OPTION UNDER SECTION 4 OF THE INCOME TAX ACT, 1961 TO ASSESS EITHER THE AOP OR THE INDIVIDUAL MEMBER THEREOF AND HE HAS TO TAX ONLY THE RIGHT PER SON. IT WAS OBSERVED AS UNDER: 'SECTION 4 EXTRACTED HEREINABOVE SAYS THAT INCOME TAX SHALL BE CHARGED ON THE TOTAL INCOME OF 'OF EVERY PERSON' AND THE EX PRESSION 'PERSON' IS DEFINED IN CL. (31) OF S. 2. THE DEFINITION MERELY SAYS THAT EXPRESSION 'PERSON' INCLUDES INTER ALIA A FIRM AND AN AO? OR A BOI WHETHER INCORPORATED OR NOT. THERE ARE NO WORDS IN THE PRES ENT ACT WHICH EMPOWER THE ITO OR GIVE HIM AN OPTION TO TAX EITHER THE AO? OR ITS MEMBERS INDIVIDUALLY OR FOR THAT MATTER TO TAX THE FIRM OR ITS PARTNERS INDIVIDUALLY. IF IT IS THE INCOME OF THE AO? IN LAW , AO? ALONE HAS TO BE TAXED; THE MEMBERS OF THE AO? CANNOT BE TAXED INDIV IDUALLY IN RESPECT OF THE INCOME OF THE AO?S. CONSIDERATION OF THE INTERE ST OF THE REVENUE HAS NO PLACE IN THIS SCHEME. WHEN S. 4( 1) OF THE PRESENT ACT SPEAKS OF LEVY OF INCOME TAX ON THE TOTAL INCOME OF EVERY PERSON, IT NECESSARILY MEAN THE PERSON WHO IS LIABLE TO PAY INCOME TAX IN RESPECT O F THAT TOTAL INCOME ACCORDING TO LAW.' 6.1 SECTION 69 GOVERNS THE TAXABILITY OF UNEXPLAINE D INVESTMENTS AND IT IS PROVIDED THAT WHERE THE ASSES SEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOK S OF RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 11 ACCOUNTS AND NO SATISFACTORY EXPLANATION IS OFFERED ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE. IN THE INSTANT CASE THE INVESTMENT HAS BE EN MADE IN THE NAME OF M/ S RNR DEVCON AND ALSO RECORDED IN THE BOOKS OF ACCOUNTS OF THE FIRM AND THEREFORE, THE AD DITION WAS REQUIRED TO BE MADE IN THE HANDS OF THE PARTNER SHIP FIRM. THE PRINCIPAL CIT(CENTRAL) BHOPAL HAS ALSO CATEGORICALLY STATED IN HIS REPORT UNDER RULE 9 THA T THE AMOUNT OF RS. 9,25,32,000/ - NEEDS TO BE TREATED AS UNACCOUNTED INVESTMENT IN THE HANDS OF M/S RNR DEVC ON IN AY 2010-11. THE HON'BLE ITSC HAS ALSO MADE THE S AME OBSERVATION IN PARA 18.1 OF ITS ORDER. THUS, THE AC TION OF THE ASSESSING OFFICER IN ASSESSING THE SAID INCOME UNDE R SECTION 69 IN THE HANDS OF THE APPELLANT IS NOT JUS TIFIED, NOT ONLY BECAUSE OF THE ABOVE STATED VIEWS OF THE HIGHE R AUTHORITIES BUT ALSO IN VIEW OF THE POSITION OF LAW AS DISCUSSED ABOVE. 6.2 IN VIEW OF THE DISCUSSIONS IN THE PRECEDING PAR AGRAPHS I AM OF THE OPINION THAT THE ASSESSING OFFICER WAS NO T JUSTIFIED IN MAKING THE ADDITION OF RS. 4,62,66,000 / - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE HANDS OF T HE APPELLANT. THE SAME IS THEREFORE DELETED AND GROUND NO.1 IS ALLOWED. RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 12 6. BEING AGGRIEVED, THE REVENUE FILED APPEALS BEFOR E THIS TRIBUNAL AND ASSESSEES HAVE ALSO FILED CROSS-OBJECT IONS AS REPRODUCED ABOVE. BEFORE US, LD. CIT-DR RELIED ON T HE ORDERS AND SUBMITTED THAT THE BYPASS LAND WAS PURCHASED AT RS. 13.06 CRORES, OUT OF WHICH 3.81 CRORES WAS SHOW N IN THE YEAR UNDER CONSIDERATION AND THE PAYMENT SCHEDULE OF THE SAME IS CLEAR FROM THE PERUSAL OF EXCEL SHEET TH-1 FOUND FR OM THE PEN DRIVE OF SHRI ASHOK VAISHNAV WHICH ALSO INDICATES T HAT THE PAYMENT TO THE TUNE OF 10.56 CRORES WAS MADE, THERE FORE, 50% OF THE AMOUNT OF RS. 9,25,32,000/- I.E. RS. 4,62,66,00 0/- WAS RIGHTLY TREATED AS UNACCOUNTED INVESTMENTS IN THE H ANDS OF THE ASSESSEES. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ON THE BASIS OF CERTAIN NOTINGS FOUND IN THE PAN DRIVE SEIZED FROM THE POSS ESSION OF ONE MR. ASHOK VAISHNAV (ACCOUNTANT OF M/S CHL HOSPITAL) AND LPS AV-1 SEIZED FROM PREMISES OF CHL HOSPITAL PRESUMED THAT THE ABOVE REFERRED IMPUGNED LAND WAS PURCHASED FOR RS. 13.06 CRORES OUT OF WHICH AMOUNT OF RS. 9.25 CRORES WAS P AID AS ON- MONEY OUT OF THE BOOKS. BUT, THE ASSESSING OFFICER DID NOT CONSISER THE FACT THAT SECTION 4 OF THE ACT CREATES A CHARGE UPON EVERY PERSON WITH RESPECT TO ITS TOTAL INCOME OF TH E PREVIOUS YEAR. RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 13 THUS, THERE CANNOT BE ANY DOUBT THAT A FIRM HAS A S EPARATE AND DISTINCT ASSESSABLE ENTITY FOR THE PURPOSE OF TAXAT ION AND AS PER CIRCULAR NO. 8/2014 DATED 31.03.2014 ISSUED BY THE CBDT, INCOME OF A FIRM IS TO BE TAXED IN THE HANDS OF THE FIRM ONLY AND THE SAME CAN UNDER NO CIRCUMSTANCES BE TAXED IN THE HANDS OF THE PARTNERS AS HAS ALSO BEEN HELD BY THE HONBLE S UPREME COURT IN ITO V/S CH. ATCHAIAH (1996) 218 ITR 0239 EXPLAIN ING THE PROVISIONS OF SECTION 2(13), 3 AND 4 THAT IF IT IS THE INCOME OF THE AOP IN LAW, AOP ALONE HAS BE TAXED AND THAT THE MEM BERS OF THE AOP CANNOT BE TAXED INDIVIDUALLY IN RESPECT OF THE INCOME OF THE AOP. THE ASSESSING OFFICER DID NOT CONSIDER THE FAC T THAT INVESTMENT IN THE IMPUGNED LAND WAS MADE BY THE PAR TNERSHIP FIRM. THE IMPUGNED LAND WAS REGISTERED IN THE NAME OF THE PARTNERSHIP FIRM. THE SAID INVESTMENT WAS RECORDED IN THE BOOKS OF THE FIRM. SUBSEQUENTLY, WHEN PART OF THE LAND WA S SOLD, THE RESULTANT PROFIT WAS OFFERED IN THE HANDS OF THE FI RM, WHICH HAS BEEN ASSESSED BY THE DEPARTMENT. NO NOTINGS OF DETA ILS OF ANY CASH PAYMENTS WERE FOUND IN THE SEARCH. THEREFORE, THERE IS NO BASIS OF MAKING THE ADDITION IN THE CASE OF THE ASS ESSEES. THE ADDITION MADE IS PURELY ON SURMISES AND CONJECTURES . FURTHER, THE ASSESSEES HAVE FILED THE APPLICATION BEFORE THE ITSC FOR RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 14 SETTLEMENT OF THEIR CASES IN THE FIRST ROUND OF LIT IGATION. THE PCIT (CENTRAL) BHOPAL HAD SUBMITTED A REPORT WHICH CATEG ORICALLY STATED THAT THE AMOUNT OF RS. 9,25,32,000/- WAS REQ UIRED TO BE TREATED AS UNACCOUNTED INVESTMENT IN THE HANDS OF T HE FIRM M/S RNR DEVCON IN AY 2010-11. THUS, THE ADDITION MADE B Y THE ASSESSING OFFICER IS CONTRARY TO THE FINDINGS AND T HE DECISION OF THE ITSC IN THE ASSESSEES OWN CASES. LD. COUNSEL F OR THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE HONB LE HIGH COURT OF GAUHATI (1997) 223 ITR 544. 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEES ENTERED INTO A PARTNERSHIP ON 10.03.2010 UNDER THE NAME AND STYLE OF M/S RNR DEVCON WITH 50% SHARE EAC H AND THIS FIRM PURCHASED A PLOT OF LAND AT BYPASS INDORE FOR A CONSIDERATION OF RS. 3.5 CRORES MEASURING 3.93 HECT ARES THROUGH SALE DEED REGISTERED ON 18.03.2010, WHICH WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE FIRM. LATER ON, THE FI RM SOLD A PART OF THE LAND I.E. 1.62 HECTARE OF THE SAID LAND ON 14.0 2.2012 TO ONE M/S VEE KAY INFRACOM PVT. LTD. FOR RS. 2,35,80,000/ -. THE RESULTANT PROFIT OF RS. 74,24,668/- ON THIS SALE WA S OFFERED TO TAX IN THE HANDS OF THE FIRM FOR AY 2012-13. THE ASSESS ING OFFICER ON RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 15 THE BASIS OF CERTAIN NOTINGS AS NARRATED ABOVE WAS OF THE VIEW THAT THE SAID LAND WAS PURCHASED FOR RS. 13.06 CROR ES, OUT OF WHICH, AN AMOUNT OF RS. 9.25 CRORES WAS PAID AS ON- MONEY OUT OF THE BOOKS. ACCORDINGLY, THE ASSESSING OFFICER MADE AN ADDITION @50% OF THIS AMOUNT AMOUNTING TO RS. 4,62,66,000/- EACH IN THE HANDS OF THE ASSESSEES. HOWEVER, WE DO NOT FIND ANY JUSTIFICATION OF THE ACTION OF THE ASSESSING OFFICER DUE TO THE F ACT THAT THE ASSESSING OFFICER FAILED TO CONSIDER THE FACT THAT SECTION 4 OF THE ACT CREATES A CHARGE UPON EVERY PERSON WITH RESPECT TO ITS TOTAL INCOME OF THE PREVIOUS YEAR AND THE TERM PERSON I S DEFINED U/S 2(31) TO INCLUDE AMONGST OTHERS, A FIRM AS WELL. TH US A PARTNERSHIP FIRM POSSESSES A SEPARATE LEGAL PERSONA LITY AND EXISTENCE OF ITS OWN DE HORS ITS PARTNERS. THUS, TH ERE CANNOT BE ANY DOUBT THAT A FIRM HAS A SEPARATE AND DISTINCT A SSESSABLE ENTITY FOR THE PURPOSE OF TAXATION. DIFFERENT TAX R ATES ARE PRESCRIBED FOR A PARTNERSHIP FIRM. THE PROCEDURE OF ITS ASSESSMENTS IS SEPARATELY PROVIDED IN SECTION 184. THE SHARE OF PROFIT IN THE PARTNERSHIP FIRM COMING TO THE PARTNE RS IS EXEMPT U/S 10(2A) AND THE CIRCULAR NO. 8/2014 DATED 31.03. 2014 ISSUED BY THE CBDT CLARIFYING THE INTERPRETATION OF PROVIS ION OF SECTION 10(2A) CLARIFIES THAT INCOME OF A FIRM IS TO BE TAX ED IN THE HANDS RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 16 OF THE FIRM ONLY AND THE SAME CAN UNDER NO CIRCUMST ANCES BE TAXED IN THE HANDS OF THE PARTNERS. FURTHER, THE AS SESSING OFFICER FAILED TO CONSIDER THAT THE INVESTMENT IN THE SAID LAND WAS MADE BY THE PARTNERSHIP FIRM AND ALSO THE LAND WAS REGIS TERED IN THE NAME OF THE PARTNERSHIP FIRM. THE SAID INVESTMENT W AS RECORDED IN THE BOOKS OF THE FIRM AND WHEN PART OF THE LAND WAS SOLD, THE RESULTANT PROFIT WAS OFFERED IN THE HANDS OF THE FI RM, WHICH HAS BEEN ASSESSED BY THE DEPARTMENT. WE FIND THAT THERE IS NO NOTING FOUND IN ANY SEIZED MATERIAL THAT THE ALLEGED PAYME NT IN CASH WAS MADE BY THE ASSESSEE PARTNER. THEREFORE, THE AD DITION MADE IS PURELY ON SURMISES AND CONJECTURES AS THERE IS N O BASIS FOR MAKING THE ADDITION IN THE CASE OF THE PRESENT ASSE SSEES. THUS, THE ADDITION ON ACCOUNT OF ALLEGED ADDITIONAL INVES TMENT MADE IN THE SAID LAND OUGHT NOT TO HAVE BEEN MADE IN THE HA NDS OF THE PARTNERS I.E. PRESENT ASSESSEES. WE ALSO FIND THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS CONTRARY TO THE FI NDINGS OF THE LD. PCIT(CENTRAL) IN THE ASSESSEES OWN CASE AS THE ASSESSEES HAD FILED APPLICATIONS BEFORE THE ITSC FOR SETTLEMENT O F HIS CASE IN THE FIRST ROUND OF LITIGATION. THE PCIT (CENTRAL) BHOPA L HAD SUBMITTED A REPORT UNDER RULE 9 (OF SETTLEMENT COMMISSION PRO CEDURE RULES, 1997) AS REQUIRED U/S 245D(3) DURING THOSE P ROCEEDINGS. RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 17 COPY OF THE REPORT UNDER RULE 9 IS ENCLOSED IN THE PAPER BOOK AND FROM THE PERUSAL OF THE SAME, WE FIND THAT THE PCIT (CENTRAL) BHOPAL IN HIS REPORT FILED UNDER RULE 9, BEFORE ITS C HAS CATEGORICALLY STATED THAT THE AMOUNT OF RS. 9,25,32 ,000/- WAS REQUIRED TO BE TREATED AS UNACCOUNTED INVESTMENT IN THE HANDS OF THE FIRM M/S RNR DEVCON IN AY 2010-11. THEREFORE, E VEN AS PER THE REPORT OF THE PCIT CENTRAL, THE ADDITION COULD NOT HAVE BEEN MADE IN THE HANDS OF THE PRESENT ASSESSEES. THIS FA CT COULD NOT BE CONTROVERTED BY THE LD. CIT-DR BY BRINGING ANY C ONTRARY MATERIAL ON RECORD. WE FIND THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS CONTRARY TO THE FINDINGS AND T HE DECISION OF THE ITSC IN THE ASSESSEES OWN CASES AS THE ITSC, W HILE DEALING WITH THE APPLICATION OF THE ASSESSEES HAS DISCUSSED THE FACTS AND AFTER CONSIDERING THE REPORT OF THE PCIT UNDER RULE 9, HAS ALSO RENDERED A CATEGORICAL FINDING STATING THAT WE HAVE NO DOUBT IN OUR MIND THAT BOTH THE UNACCOUNTED INVESTMENT IN LA ND PURCHASED BY THE FIRM M/S RNR DEVCON AS WELL AS THE PROFIT AR ISING ON SALE OF LAND BY THE FIRM ARE REQUIRED TO BE TAXED IN THE HA NDS OF THE FIRM. THE RECEIPTS OF THE APPLICANTS (ACCOUNTED AS WELL A S UNACCOUNTED) IN LIEU OF FORGOING THEIR PARTNERSHIP SHARE TO KAKW ANI FAMILY WOULD BE CAPITAL RECEIPTS AND NOT REVENUE RECEIPTS. THEREFORE, EVEN AS RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 18 PER THE CATEGORICAL FINDINGS OF THE ITSC IN THE ASS ESSEES OWN CASES, THE ALLEGED UNACCOUNTED INVESTMENT COULD NOT HAVE BEEN TAXED IN THE HANDS OF THE PRESENT ASSESSEES. IT IS ALSO NOTEWORTHY THAT THESE OBSERVATIONS OF THE ITSC HAVE BEEN ACCEP TED BY THE PCIT/ASSESSING OFFICER IN SO FAR AS THE ORDER OF IT SC HAS NOT BEEN CHALLENGED. THE ASSESSING OFFICER FAILED TO BR ING ANY EVIDENCE SUGGESTING THAT THE ALLEGED ON-MONEY FOR P URCHASE OF THE LAND WAS PAID BY THE ASSESSEES OUT OF THEIR PER SONAL RESOURCES. THERE IS NO REFERENCE OF ANY ENQUIRY HAV ING BEEN CONDUCTED FROM THE FIRM. THUS, THE ADDITION HAS BEE N MADE ONLY ON SURMISES AND CONJECTURES. THUS, O N THESE FACTS IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS (SUPRA), WE HAVE NO DOUBT IN OUR MIND THAT THE INVESTMENT IN LAND PURCHASE BY THE SAID FIRM AS WELL AS THE PROFIT ARISING ON SALE OF LAND BY THE FIRM IS REQUIRED TO BE TAXED IN THE HANDS OF THE FI RM AND NOT IN THE HANDS OF THE PARTNER I.E. PRESENT ASSESS EES. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE FINDINGS RECORDED BY THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, THE ONLY GROUND NO.1 RAISED IN BOTH TH E DEPARTMENTAL APPEAL IN CASE OF PRESENT ASSESSEES IS DISMISSED. THUS, BOTH THE DEPARTMENTAL APPEALS ARE RAJUL BHARGAV & RAUNAK MARU IT(SS)A NO.194 & 194/IN D/2017 & C.O.NO.02&03/IND/2019 19 DISMISSED. 8. SO FAR AS CROSS-OBJECTIONS FILED BY THE ASSESSEE S ARE CONCERNED, THE SAME BEING ACADEMIC IN NATURE ARE INFRUCTUOUS AS WE HAVE ALREADY DECIDED THE ISSUE ON MERIT IN PRECEDING PARAS. 9. IN THE RESULT, REVENUES APPEALS ARE DISMISSED WHEREAS CROSS-OBJECTIONS FILED BY THE ASSESSEES ARE DISPOSED OF AS INFRUCTUOUS. ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 16.8.2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNTANT ME MBER / DATED : 16.8.2021 !VYAS! COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE