Shri Vikash R.Patel, Ahmedabad V. The ACIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 196/AHD/2013

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9159 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-11-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 132; 153A; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH (Conducted Through Virtual Court) Before: Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member Sl. No. Appeal ITA/IT(SS)A A.Y. Appellant Respondent A.R. D.R. 1 IT(SS)A 196/Ahd/2013 2008-09 Shri Vikash R. Patel (ACCPP4640D) ACIT, CC-1(1), A’bad Shri D.K. Parikh Shri O.P. Sharma & Shri L.P. Jain 2 IT(SS)A 201/Ahd/2013 2008-09 Deepak G. Prajapati (ABCPP4846L) ACIT, CC-1(1), A’bad Ms. Nupur Shah Shri O.P. Sharma 3 ITA 1001/Ahd/2013 2008-09 Shri Brijesh Sukhdev Patel (AGWPP415H) ACIT, CC-1(1), A’bad Shri Mahesh S. Chhajed Shri O.P. Sharma Date of hearing : 10-08 -2021 Date of pronouncement : 08-11 -2021 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- These three appeals filed by different assessees for A.Y. 2008-09, arise from order of the CIT(A)-1, Ahmedabad, in proceedings under section 143(3) r.w.s. 153A of the Income Tax Act, 1961; in short “the Act”. Since these appeals are based on similar facts on identical issues, therefore, for the sake of convenience, these appeals are adjudicated together by taking ITA 1001/Ahd/2013 as lead case and its findings will be applicable to the remaining two appeals. ITA No. 1001/Ahd/2013 A.Y. 2008-09 2. The assessee has raised following grounds of appeal:- “1. The Order passed by the Ld. CIT(A). is against law, equity and Justice. 2. The Ld. CIT (A) has erred in law and on facts in upholding the order of the Ld A.O. of addition made on presumption and surmises of unaccounted investment by the appellant in purchase of land to the extent of Rs 47,66,666/- " 3. The Ld. CIT (A) has erred in law and on facts in upholding the notional rent income of to the extent of Rs. 25,200/-” I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 2 3. There was a search action u/s. 132 of the act on 4 th March, 2010 at the residential premises of Shri Vikas R. Patel at 23 Umiya Banglow Ghatlodia Ahmedabad. During the course of search a memorandum of understanding dated 7 th April, 2007 it was found and seized pertaining to land at Chandlodia as per page 1 to 6 of annexure A-1. As per the said MOU, Shri Brijesh S. Patel and Shri Mahendra D. Patel (first party) agreed to purchase the aforesaid land at Chandlodia at final plot no. 32 IT-29 of survey no. 217/1 and 218/2 from Shri Anil Kumar G. Darji, Shri Amit Kumar K. Patel and Shri Narendara R. Patel (second party) @ Rs. 10171/- per sq. yard. As per the statement of Shri Vikash R. Patel recorded on the day of search the unaccounted payment to the tune of Rs. 2.5 cores in cash was made. The registered sale deed for this land was executed at Rs. 20 lacs between the aforesaid sellers and M/s. Uma Shakti Residency (buy) on 31 st October, 2007. During the course of assessment proceedings with regard to the issue of unaccounted cash payment of Rs. 2.5 crore the assessee claimed that the source of cash payment was out of the unaccounted collection received from the client of the assessee firm for Uma Shakti Residency project. It is claimed that the payment of Rs. 2.5 crore including cheques of Rs. 20 lacs were given to land owners against land payment. The detailed submission dated 29 th Nov, 2011 submitted by the assessee has been incorporated by the Assessing Officer in the assessment order at page no. 2 to 8. The assessee has also submitted that this payment was made from its own unaccounted collection and unaccounted collection of M/s. Shakti Corporation (UTAP). The funds collected from the member of UTAP for extra work to be carried out in the flats. The same were used by the partners for making payments to I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 3 the farmers of land at Chandlodia. It is also submitted that collection of UTAP was started from 20 th Jan, 2007 out of such collection and same was used for making part payment to farmers of land. The assessee has also submitted that the booking from the project of the assessee firm Umiya Tirth Residency was started just before the memorandum of understanding on 22 nd June, 2007 and the collection made from the members were used for making payment to the farmers of the land at Chandlodia which was purchased for UTRE project. In its submission, the assessee has submitted unaccounted fund to the amount of Rs. 87 lacs were used from the collection of UTAP and the remaining payment of Rs 163 lacs were used from the collection of UTRE project of the assessee firm for making payment to the owner of the lands at Chandlodia. In this regard, the assessee firm has submitted the fund flow statement which is reproduced as under:- INFLOW AMOUNT OUTFLOW AMOUNT Year 2006-07 (from 22-02-07 to 31-03-07) Collection from members of Umiya Tirth Residency (UTRE) part of Rs. 300.19 lacs (Uma Shakti Corporation Residency Project) 7600000 UTRE land purchase out of members collection 4100000 Fund received from partners Sh. 400000 Balance 3900000 Brijesh & Vikas (UTAP) I TOTAL 8000000 TOTAL 8000000 Year 2007-08 (from 01-04-07 to 31-03-08) Balance 3900000 UTRE land purchase out of members collection 20900000 I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 4 Collection from members of Umiya Tirth Residency (UTRE) part of Rs. 300.19 lacs (Uma Shakti Corporation Residency Project) 20225000 Balance 11525000 Fund received from partners Sh. Brijesh & Vikas (UTAP) 8300000 0 TOTAL 32425000 TOTAL 32425000 Year 2008-09 (from 01-04-08 to 31-03-09) Balance 11525000 Refund given to Partner Sh. Brijesh & Vikas (UTAP) for land funds from UTAP. 4000000 Collection from members of Umiya Tirth Residency (UTRE) part of Rs. 300.19 lacs (Uma Shakti Corporation Residency Project) .«*, 3789000 Refund at the time of cancellation of booking to members 1250000 0 Fund given to Partner - Dipakbhai (land - Survey no. 206 - Enclave) 4000000 0 Balance 6064000 TOTAL 15314000 TOTAL 15314000 Year 2009-10 (from 01-04-09 to 31-03-10) Balance 6064000 Refund given to Partner Sh. Brijesh & Vikas (UTAP) for land funds from UTAP. 4700000 Collection from members of Umiya Tirth Residency (UTRE) part of Rs. 300.19 lacs (Uma Shakti Corporation Residency Project) 1005000 Refund at the time of cancellation of booking to members 1350000 Fund given to Partner - Dipakbhai (land - Survey no. 206 - Enclave) 1000000 0 Balance -04-03-10 19000 TOTAL 7069000 TOTAL 7069000 I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 5 The Assessing Officer has not agreed with the submission of the assessee. He has stated that during the course of search no evidence with respect to unaccounted receipt in respect of Uma Shakti Residency was seized and impounded. The Assessing Officer has further stated that during the course of assessment the assessee has submitted affidavits of some of the clients containing declaration with respect to contribution made in cash and through cheques. The Assessing Officer has found that in the affidavits no specific date of the amount contributed by the client was mentioned. The Assessing Officer has also stated that ledger attached along with the affidavits were not contained signature of the members and these ledgers have been prepared by the assessee firm without giving any supporting evidences of genuineness of transactions. The Assessing Officer has also stated that assessee firm has come into existence only on 22-10-2007. Therefore, the assessee could not substantiate that how the client can contribute the amount in cash as on 27 th Feb, 2007 before the formation of the assessee firm. The Assessing Officer has also stated that the client would make investment in the project after the existence of firm, therefore, it cannot be accepted that client would have contributed on money for chosen flats from the project plan which was never existed. The Assessing Officer has also stated that there was no approved project plan, it cannot be accepted that members would have chosen flat without the project plan. The Assessing Officer has stated that cash flow submitted by the assessee firm at the assessment stage was an creation of an afterthought exercise with the purpose of covering the unaccounted investment of Rs. 2.50 crores made by the other persons, therefore, the same I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 6 was rejected by the Assessing Officer. The assessee has submitted that unaccounted funds to the extent of Rs. 87 lacs were used from the collection of UTAP and the remaining payment of Rs. 163 lacs were used from the collection of the UTRE project of the assessee firm for making payment to the owners of the land at Chandlodia. The Assessing Officer has hence calculated the unexplained cash paid at Rs. 163 lacs after deducting of Rs. 87 lacs from the total consideration of Rs. 2.5 crores. The Assessing Officer has also reduced tax payment of Rs. 20 lacs paid by cheque by the Uma Shakti Corporation and the remaining amount of Rs. 1.43 crore was held as paid by the erstwhile partners of the assessee firm. The Assessing Officer has made substantial addition @ Rs. 47,66,666/- each in the cases of Shri. Vikash R. Patel, Shri Brijesh S. Patel and Shri Dipak G. Prajparti. 4. The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) held that the partnership firm was not existed prior to 20-10-2007 and the protective addition in the case of the firm was deleted . Accordingly, the substantive addition in the hands of the partners were confirmed to the extent of Rs. 4,76,66,667/- 5. Heard both the sides and perused the material on record. During the course of assessment, the Assessing Officer noticed that out of total payment of Rs. 2.5 crores made for the purchase of land at Chandlodia payment of Rs. 1.63 crore was made from the unaccounted collection of M/s. Shakti Residency and payment of Rs. 87 lacs was made from the unaccounted collection of M/s. Uma Shakti Corporation –UTAP. The ld. CIT(A) has stated that payment of Rs. 20 lacs was made by cheque for the purchase of I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 7 the said land therefore out of total payment of Rs. 1,63,00,000/- a sum of Rs. 2,00,000/- held as explained and remaining unexplained amount of Rs. 1,43,00,000/- paid by the partners was added on substantive basis @ Rs. 47,66,666/- each in the cases of the above referred three partners. The ld. CIT(A) has deleted the protective additions of the same made in the hands of the firm. The relevant part of the operative para of the ld. CIT(A) is reproduced as under:- “8. I have gone through the assessment order and the submission of the A.R. carefully. It is seen cash payments of Rs.1,63,00,000/- for acquisition of lands at survey no. 217/1 & 217/2 of Chandlodiya has not been disputed either by the AO or the appellant. The Assessing Officer has made addition of proportionate on money payment made for acquisition of land of Rs.1,63,00,000/- for acquisition of lands at survey no. 217/1 & 217/2 of Chandlodiya by the appellant Shri Vikash R. Patel on substantive basis. The substantive additions have also been made in the hands of others -Shri Vikas R. Patel and Shri Dipak G. Prajapati at Rs.54,33,333/- each. Protective addition has been made in the hands of the firm Umashakti Residency Project. The AO has done so on the ground that the sources of such cash payments of Rs. 1,63.00,000/- by the firm Umashakti Residency Project remains unexplained because when the payments were made in cash the partnership was not in existence. The formation of partnership firm took place on 20.10.2007 vide partnership deed dated 20.10.2007. The purchase deed for lands was executed on 31.10.2007. All the cash payment were made on the following dates: Payments - Noted in Seized papers Date Amount VikaPatel(Res)-A-l/13 22-02-07 500000 VikaPatel(Res)-A-l/13 23-02-07 600000 VikaPatel(Res)-A-l/13 25-03-07 3000000 VikaPatel(Res)-A-l/13 03-04-07 7500000 VikaPatel (Res) -A-l/13 07-04-07 2200000 Vika Patel (Res) -A-l/13 09-04-07 1200000 Vika Patel (Res) -A-l/11 19-05-07 1500000 Vika Patel (Res) -A-l/11 27-05-07 3000000 VikaPatel (Res) -A-l/12 19-06-07 1500000 VikaPatel (Res) -A-l/14 11-07-07 2000000 Total Rs. 2,30,00,000/- I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 8 8.1 The appellant Shri Brijesh S. Patel stated that: (i) The firm -was orally formed on 22.02.2007, when the Bana-Chitti for lands at Survey no. 217/1 & 217/2 was executed for the housing project of the appellant-firm. (ii) Payment of Rs. 2,50,00,000/- was given to the land owners /farmers from 22.02.2007 to 11.07.2007, such payments were given from the extra collection of firm Uma Shakti Corporation and the extra collection of the appellant-firm. J (iii) There was extra collection of Umiya Tirth Residency Project of the appellant-firm amounted to Rs. 3,00,19,000/-, such details were furnished to AO in the assessment proceedings, as the collection book was not seized I impounded at the time of search / survey and it was claimed that payment of Rs. 1,63,00,000/- was made from such extra collection from the members of appellant-firm. (iv) It is further claimed that official cash of other firm USC-UTAP of Rs. 10,00,000/- and cheque of Rs. 20,00,000/- was given on 19.06.2007, which is part of payments of Rs. 2,50,00,000/- . The contention of the appellant is not convincing at all. The firm came in existence on 20.10.2007 vide deed of partnership dated 20.102007. No evidence has been adduced at any stage to prove that the partnership firm came into existence prior to 20.102007. Cash payments were made for the purchase of land to the extent of Rs.2,30,00,000/- prior to the date on which the partnership came into existence. The collection of on-money by a partnership firm for any project cannot start till there is a partnership. The land sale deed was executed on 30.10.2007. There is no evidence whatsoever to prove that on-money was collected prior to the formation of the partnership. No material with regard to on-money collection / extra collection is seized / impounded indicating collection of on-money prior to 21.102007. As seen in the other group concerns, namely Uma Shakti Corporation, Uma Shakti Corporation Kalol Project and Uma Vir Infrastructure, extra collection / receipts details are seized / impounded, which shows thaTthe group is maintaining records of such extra collection along with accounted collection. In the firm Umashakti Residency Project, evidences of payment of on money for purchase of lands are however no evidence has been seized to show that there was any on -money collection by the firm from prospective buyers before 21.10.2007. It is clear that no one would make a deal or any payment to a non-existent firm that too for a project for which even the land was not purchased. This clearly indicates that the firm had undoubtedly not collected any on-money a before the execution of the deed for purchase of land. The evidences of collection of on money is proved by the noting in the diaryof Shri BhagwanbhaiK Azara a partner of the firm, however these records indicate that the on-money has been collected only subsequently and not prior to 20.10.2007. 8.3 In view of the above and in absence of any seized material related to collection details prior to formation of the partnership, it can be said that the on-money / extra collection was received only after making payment of lands i.e. 11.07.2007, the last payment date, on/ which possession of land can be said to be received. 8.4 Under such circumstances, the extra collection / receipts of Rs. 1,63,00,000/- can be said as received only after such dates, but since the cash payments for purchase of land are already made before 11.07.2007, no benefit of such extra collection can be given against land payments. It is seen that the Assessing Officer has accepted that funds received from the partners for the payment of land to the extent of Rs.87,00,000/- was not unexplained. The Assessing Officer has hence calculated the unexplained cash paid at Rs. 1,63,00,0007- by deducting the sum of Rs.87,00,000/- from the total consideration of Rs.2,50,00,000/-. It is seen that M/s. Uma Shakti Corporation had made payment of Rs.20,00,000/- by cheque for the purchase of this land which is included in the sum of Rs. 1,63,00,000/-. The payment made by cheque issued by the firm M/s. Uma Shakti Corporation, is recorded in the books of accounts of Ms. Uma Shakti Corporation. As such this payment of Rs.20,00,000/- cannot be said to be made from unexplained sources. Since the cheque was issued by M/s. Uma Shakti Corporation from its regular incomes recorded in the books of accounts and M/s. Uma Shakti Corporation is assessed to tax regularly, therefore, out of the total payment of Rs. 1,63,00,000/- a sum of Rs.20,00,000/- is held to be out of explained sources and remaining amount of Rs. 1,43,00,000/- is held as paid by erstwhile partners of the firm. The AO I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 9 has rightly decided that the payments are made by erstwhile partners of the firm and made substantial addition in their hands and protective addition in the hands of the appellant Shri Brijesh S. Patel. 8.5 In view of the above, the unexplained payments are reduced by Rs.20,00,000/-, therefore, addition was required to be made in the hands of partners - Shri Vikas R. Patel, Shri Brijesh S. Patel and Shri Dipak G. Prajapati @ Rs.47,66,666/- each. Because the firm has not made any payment, was not in existence till such payments were made, the protective addition of Rs. 1,63,00,0007- in the hands of firm is deleted. Accordingly, the substantive addition in the hands of three partners is confirmed to the extent of Rs.47,66,666/- each partner including the appellant.” After considering the fact of the case, material on record and fining of the ld. CIT(A) as elaborated above, we observed that it is undisputed fact that the partnership firm Uma Shakti Corporation Residency had come into existence on 22.10-2007. The three persons Shri. Vikas R. Patel, Shri Brijesh S. Patel and Shri Dipak G. Prajapati as per the seized document A-1/13 have made unaccounted cash payments to the seller of the land on the different dates as mentioned above in the findings of the ld. CIT(A). These facts and evidences categorically demonstrate that the firm was not in existence till such payment were made. Receipt of on money cannot be started by the firm before its existence. The firm would launch the residential project on acquisition of the land and the client would start making payment on approval of the project plan. We have gone through these affidavits referred by the ld. counsel and noticed that there is no specific information of the particular date on which the contribution in cash was made by such clients. There is no receipt issued as acknowledge of payment made by the clients. Without project plan and other relevant documents evidences the claim of the assessee on the basis of some affidavit cannot overrule the material fact that without the existence of the firm and project such claim is an afterthought and not tenable. The assessee failed to produce other supporting evidences and we find that subsequent affidavit filed appears to be nothing but an afterthought exercise to cover the unexplained cash I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 10 payment even before the existence of the firm. Therefore, we do not find any merit in the ground no. 2 of appeal of the assessee and the same stands dismissed. Ground No. 3 (Upholding rent income to the extent of Rs. 25,200/-) 6. The assessee was the owner of the two residential houses during the year under consideration (i) Heritage House, Science Road (ii) Vaisnava Devi Apartment. During the year, Vaishnava Apartment remained vacant. In view of the provision of section 22 and 23 of the act the Assessing Officer has estimated the accrual value of the property at Rs.72000 p.a. The ld. CIT(A) restricted the rental vale Rs. Rs. 36000/-. 7. Heard both the sides and perused the material on record. Before CIT(A) the assessee contended that annual rent can be fetched of Rs. 6000/-. However, the assessee failed to furnish any supporting evidences in support of his contention. Looking to the facts and material on record, we do not find any error in the decision of ld. CIT(A) and the this ground of appeal is dismissed. IT(SS)A No. 196/Ahd/2013 A.Y. 2008-09 Ground No. 2 8. As the facts and issues involved in ground no. 2 of appeal vide IT(SS)A No. 196/Ahd/20 13 Assess men t Year 2008 -0 9 are similar as in groun d no. 2 of IT(SS)A No. 1 001/Ahd/2013 Asse ss ment Year 200 8-09 th erefore after ap plying the decision adjudicated vid e IT(SS)A No. 100 1/Ah d/2013 as supra in this order, this grou nd of ap peal of th e assessee is d ismi s sed. I.T(SS).A Nos. 196 & 201/Ahd/2013 & ITA No 1001/Ahd/2013 Page No Different assessees vs. ACIT 11 IT(SS)A No. 201/Ahd/2013 A.Y. 2008-09 Ground No. 2 9. As the facts and issues involved in ground no. 2 of appeal vide IT(SS)A No. 201/Ahd/20 13 Assess men t Year 2008 -0 9 are similar as in groun d no. 2 of IT(SS)A No. 1 001/Ahd/2013 Asse ss ment Year 200 8-09 th erefore after ap plying the decision adjudicated vid e IT(SS)A No. 100 1/Ah d/2013 as supra in this order, this grou nd of ap peal of th e assessee is d is mi s se d. 10. In the result, all the three appeals filed by different assessees are dismissed. Order pronounced in the open court on 08-11-2021 Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 08/11/2021 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद