FALGUNI RAMESHBHAI PATEL, SURAT V. ACIT, CENTRAL CIRCLE-4, SURAT

ITSSA 2/SRT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1628 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 16-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Share purchase agreement
• Section: 131; 143(3); 153A; 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./IT(SS)A No.02/SRT/2020 Assessment Year: (2010-11) (Physical Court Hearing) Falguni Rameshbhai Patel, House No.148 & 149, At & Post – Bharthana (Vesu), Surat-395017. Vs. The ACIT, Central Circle-4, Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AICPP9257G (Assessee) (Respondent) Assessee by Shri Mehul Shah, CA Respondent by Shri H. P. Meena, CIT(DR) Date of Hearing 01/07/2022 Date of Pronouncement 28/09/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee pertaining to Assessment Year (AY) 2010-11, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-4, Surat [in short “the ld. CIT(A)”] in Appeal No. ITBA/APL/S/91/2019-20/1024315476(1) dated 27.01.2020 which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 16.01.2015. 2. The grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of Assessing Officer by sustaining the addition of Rs.4,78,500/- out of total addition of Rs.9,57,000/- on account of unexplained money u/s. 69A of the Act. 2. It is therefore prayed that the addition made by assessing officer may please be deleted. 3. Assessee craves leave to add, alter or delete any ground(s) either before or in the curse of hearing of the appeal.” Page | 2 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel 3. Succinct facts are that assessee before us is an individual and has shown income from business and other source in her return of income. During the search action on 27.12.2012 various incriminating documents relating to unaccounted income of current financial year was found and impounded pertaining to the assessee. Notice under section 143(2) and notice under section 142(1) was issued and served on assessee on 14.12.2012. During the course of search proceedings, loose paper found and seized at page no.20 in annexure- BS1, contains bank statement of account bearing no.2759410110002127, held in Bank of India, Bardoli, in the name of assessee. It was observed by the assessing officer that cash was deposited in said bank account on various dates from 04.12.2009 to 29.03.2010. The Assessee was asked to substantiate the statements given during post search proceeding under section 131 wherein the assessee has stated that, “the cash was deposited on various dates by my cousins. The amounts have been received from the sale of agricultural proceeds, cultivated in the land holding by joint family at Vanesa, Bardoli”. 4. She further explained to the assessing officer that her brothers and parents are residing in USA, but they are having share in the inherited agricultural land and taking profit from that land since long time. She stated as follows: “Observing these profits my parents directed to my cousin and brothers to give share in the agricultural income to me also. So they all are depositing the cash amounts in my bank account at Bardoli. She further argued that the cash deposited is lump sum share in agricultural income for the duration of 10-12 years.” 5. Apart from this, in response to the notice of the Assessing Officer, the assessee submitted its reply before the Assessing Officer which is reproduced below: “Assessee filed his say by letter dated 22.12.2014. the reply filed by the assessee on this issue is produced below: “I attached herewith photo copy of following documents, as a proof of evidence to the statement given by me client on 05.04.2013 under section 131 of the I.T. Act. i. Photo copy of the Bank of India Bardoli Branch pass-book. Page | 3 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel ii. Agriculture land uttara of 7/12 and 8/A of the village: Vanesa, Tal: Palsana, dist: Surat in 7/12 uttara, the name of my client, her father, mother, sister and brother is reflecting. It shows the name of the full family members of “Mr. CHHAGANBHAI RANCHODBHAI PATEL” ii. Certificate received from “Shree Khedut Sahakari Khand Udyog Mandli Limited, Baben Bardoli” where the sugarcane was given. The sugarcane was given in the name of the head of the family as well as the holder of “Share Certificate” belongs of the Bardoli Sugar Factory. As the share certificate is in the name of “Mr. Mohanbhai Ranchodbhai Patel” i.e. the uncle of my client, the sugar cane cultivated by the whole family was given in the name of the head of the family i.e. Mr. Mohanbhai Ranchodbhai Patel. From the above given details. It is clear that whatever cash has been received is received as a share of family member which have been deposited in the bank. My client has received the cash from her cousins as the share of her family and not in her individual capacity because she is the only member staying in India and on behalf of her family, she has received the money and deposited the money in the Bank. It means she has received the money and deposited the money in the Bank. It means she has acted as a “TRUSTEE”. Secondly, the bank account is opened at Bardoli for the reason that there should be a separate bank account for “Agriculture Income of the Family”. The other point your honor can trace out that the joint holder of this particular account is my client’s cousin brother, namely Mr. Bhavinkumar Mohanbhai Patel. So it is proved that the Bank of India, Bardoli Branch Account is not an “Individual” account of my client but is\t’s a family account. For the simplicity of doing the family transactions, it has been given name as one of the holder in the particular account. So in brief, the agriculture income of the paternal family has been received by my client as one of the family members and not in her “Individual” Capacity and hence the same has not been shown in her “Individual” I.T. Return filed so far. Therefore, I request your honor to drop idea of adding the cash deposited in Bank of India, Bardoli Branch S. B. Account No. 275910110002127 for an amount of Rs.9,57,000.00 and obliged.” 6. However, the Assessing Officer has rejected the contention of the assessee and made addition to the tune of Rs.9,57,000/- under the head “Income from other sources”. 7. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted 50% addition made by assessing officer, observing as follows: “....I find that the assessee has opened joint account with her cousin is a peculiar fact and when the Assessing Officer has made addition simply on the Page | 4 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel basis of ownership of cash deposits, assessee alone cannot be held as owner of such cash when the bank account is in joint name. Hence, I direct the Assessing Officer to treat cash of Rs.4,78,500/- as unexplained money belonging to the assessee. The assessee gets a relief of Rs.4,78,500/- accordingly. Ground No.1 is partly allowed.” 8. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. 9. Learned Counsel for the assessee submits that assessee has joint bank account and all the deposits in the joint bank account pertains to her joint holder and does not belong to her. To support his plea, Ld. Counsel has submitted an affidavit which is reproduced below: “I, Shri Mohanbhai Ranchhodbhai Patel, aged about 61 years, Hindu by case, resident of Patel Faliyu, Vanesa, Surat do hereby take oath and state on solemn affirmation as under: 1. That I and my family reside in India and my brother Shri Chhaganbhai Ranchhodbhai Patel along with his wife and son viz. Madhukanta C. Patel and Hiren C. Patel are residing in the CANADA since long. 2. That Smt. Falguniben Ramesbhai Patel is my niece and daughter of my brother Shri Chhaganbhai R. Patel and is the only member of my brother’s family who is residing in India. My brother and his family comprising of the under mentioned family member are owners of agricultural land situated at Block No.83, Village – Vanesa, Palsana, Surat. a. Chhaganbhai R. Patel b. Madhukantben C. Patel c. Falguniben C Patel d. Swatiben C Patel e. Hirenbhai C Patel As my brother and his son are residing in the CANADA, and as per the understanding with my brother and as per instructions received from him, I myself and my family were looking after the cultivation of his agricultural land since long and whatever proceeds of agricultural produce derived from the said land was divided between our families. I used to take sugarcane crop from the said agricultural land of my brother and I was supplying sugarcane to Khedut Sahakari Khand Udhyog Mandli Ltd., wherein I was a shareholder and member of the said society. 3. that during F.Y. 2009-10 relevant to AY.2010-11 my brother Shri Chhaganbhai patel and his son Shri Hiren C Patel had instructed me to give their share of their family’s agricultural income to Smt. Falguniben Ramesh Patel, resident of House No.148 & 149, At & Post Bharthana, Surat as per out Page | 5 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel family understanding. Therefore, a separate bank account was opened in the joint names Smt. Falguniben R Patel and her cousin (my son) Bhavinkumar Mohanbhai Patel and specially, the said amount was not given to Falguniben R Patel in her individually capacity but as a caretaker/trustee of the income of the entire family of Shri Chhaganbhai R Patel. 4. I, myself and my sons had deposited lump sum cash amounts on various dated in the bank account of smt. Falguniben R Patel which pertained to my brother’s share of agricultural income of 10 to 12 years of agricultural income. I further state that whatever cash amounts had been deposited in the jointly owned bank account of my niece was pertaining to the share of agricultural income of Shri Chhaganbhai R Patel and not to Falguniben R Patel in her individual capacity. 5. This affidavit is being sworn to produce before the Commissioner of Income Tax (Appeals), Surat with my request to admit the evidences which have been filed before him as I had not willfully committed any default in not filling the same before the Income Tax Officer, Surat. That the above stated facts are true and correct t the best of my knowledge and belief and I know that to make a false affidavit is an offence.” 10. The Ld. Counsel also submits the land records before the Bench and contended that the receipts deposited in the bank account pertain to the sale of agricultural produce and therefore addition should be deleted. 11. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. The Ld. Counsel submitted before us the statement on oath taken under section 131 of the Act dated 05.04.2013 which is placed at paper book page no.4 & 5, wherein in answer to question no.2, the assessee submitted that the amounts deposited in various bank accounts during financial year 2009-10 pertains to her cousin and these amounts have been received from sale of agricultural produce, Page | 6 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel cultivated in the land holding by joint family at Vanesa, Bardoli. These questions and answers are reproduced below: “Q.2 During the course of search proceedings on 27.12.2012 at the residential premises, a loose paper file has been impounded as per Annexure- BS/1 in which on page No.20, a copy of bank statement dated 11.03.2011 of Bank of India, Bardoli in the name of Falguniben Rameshbhai Patel, Account No.27591010002127 wherein cash deposited on various dates from 01.12.2009 to 29.03.2010 totalling to Rs.12,21,890/- has been reflected. Please explain the source of cash deposited in the bank account maintained by Falguniben R. Patel. Ans: These amounts have been deposited on various dates during the F.Y.2009-10 by my cousins. The amounts have been received from sale of agricultural proceeds cultivated in the land holding by joint family at Vanesa, Bardoli. My brothers and parents reside in USA but they are having shares in the agricultural land and taking profit from that land since long time. Observing these profits, my parents directed to my cousins and brothers to give share in the agricultural income to me. So, they all are deposited the cash amount in my bank account at Bardoli, which is lump sum figure of 10-12 years of agricultural income. I will produce the documentary evidences with regard to the cash deposited in Bank of India, Bardoli in my account within 2-3 days.” 13. From the above question and answer, it is vivid that amount deposited in the bank account is out of agricultural receipts and does not belong to the assessee under consideration. We also note that assessee has explained the source of the deposits in the bank account with documentary evidences before the Assessing Officer and before the ld. CIT(A) and they did not find fault in these documents. 14. We note that assessee has challenged the addition made by the assessing officer of Rs.9,57,000/-, and out of this total addition, the ld CIT(A) deleted Rs.4,78,500/-, which is 50% of the total addition (50% of Rs.9,57,000). For remaining addition of Rs.4,78,500/-, the assessee is in further appeal before us. That is, ld CIT(A) deleted 50% addition based on guess work/ estimation. The ld CIT(A) held that since assessee has a joint bank account therefore 50% money so deposited in bank account pertains to assessee and 50% pertains to another joint holder. The assessee argued before the ld CIT(A) that ownership of all the deposits in the bank account belong to other joint holder and to prove that, the assessee has submitted affidavit stating that she is not the owner of the Page | 7 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel transactions mentioned in the said joint bank account. Since the assessee submitted affidavit stating that money belong to another joint holder therefore now onus is on ld CIT(A) to prove it otherwise. We note that assessee along with her family jointly owned an agricultural land at Block No.83, Vanesa, Palsana, Surat. The ld Counsel has contended that the assessee’s brothers and parents including her father Chagganbhai Ranchodbhai Patel reside outside India and the entire cultivation of agricultural land and supply of sugarcane is taken up by Mr. Mohanbhai Ranchhodbhai Patel (brother of Chagganbhai Ranchhodbhai Patel and the uncle of assessee) and thus his name has been entered by Khedul Sahakari Khand Udhyog Mandli Ltd., Bardoli as a member and confirmations are in his name and thus the cash deposit pertains to agricultural income of the family. The Ld Counsel has further contended that both the brothers have an understanding to share profits from agricultural activity and thus as assessee is the only member residing in India from her family and so the assessee has opened a joint account with her cousin Bhavin Mohanbhai Patel (son of Mr. Mohanbhai Ranchhodbhai Patel) to deposit their family share of the agricultural receipts of past many years. According to the assessee the following facts supports his contentions: (1) The assessee has given the statement on oath under 131 and has maintained her stand throughout and no further queries are confronted by investigation Wing. (2) No incriminating material were found regarding involvement of assessee in any other business or any other additions were made during assessment under 153A any of the remaining 5 years. (3) Otherwise also, there was no reason to open bank account in joint name with the cousin by the assessee. 15. We note that assessee also submitted the evidences relating to agricultural receipts and evidence relating to land holding by the assessee. We note that assessee`s uncle name has been entered by Khedul Sahakari Khand Page | 8 IT(SS)A 02/SRT/2020/AY.2010-11 Falguni Rameshbhai Patel Udhyog Mandli Ltd., Bardoli as a member and confirmations are in his name and thus the cash deposit pertains to agricultural income of the family. The assessing officer has not made any adverse finding in any of these documents even, though all the details were furnished by the assessee before him. The assessing officer ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion and to make the addition, however, the assessing officer has failed to do so. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed. 16. In the result, the appeal filed by the assessee is allowed. Order is pronounced in the open court on 28/09/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 28/09/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat