Shri Rajnibhai Dashrathbhai Patel, Ahmedabad V. The ACIT, Cent. Circle-1(4),, Ahmedabad

ITSSA 278/AHD/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1126 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-08-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 17-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: HIREN TRIVEDI
• Keywords: Unexplained investment; Income from undisclosed sources; Documents seized
• Section: 143(3); 153A

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER () ./ I.T(SS).A. NO. 278/AHD/2013 ( ASSESSMENT YEAR : 2006-07) RAJNIBHAI DASHRATHBHAI PATEL A/204, PRAACHI APARTMENT, NEAR UTOPIA SCHOOL, GULAB TOWER ROAD, THALTEJ, AHMEDABAD 380054 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), AHMEDABAD ./ ./ PAN/GIR NO. : ARZPP6233C ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HIREN TRIVEDI, A.R. / RESPONDENT BY : SHRI SURENDRA KUMAR, CIT.D.R. !' DATE OF HEARING 06/08/2019 #$%& !' / DATE OF PRONOUNCEMENT 11/09/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, AHMEDABAD (CIT(A) IN SHORT), DATED 12.04.2013 ARI SING IN THE ASSESSMENT ORDER DATED 26.12.2011 PASSED BY THE ASS ESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2006-07. IT(SS)A NO. 278/AHD/13 [RAJNIBHAI D. PATEL VS. ACIT] A.Y. 2006-07 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE WER E REVISED AND NEW CONCISED GROUNDS WERE FILED WHICH READ AS UNDER: APPELLANT BEING DISSATISFIED WITH THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX, (APPEALS)-I, AHMEDABAD DATED 12.04.2013 AS WELL AS ORDER OF ASSESSING OFFICER DATED 26.12.2 011, PRESENTS THIS APPEAL AGAINST THE SAID ORDERS ON THE FOLLOWING AMO NGST THE OTHER GROUNDS (1) THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER PASSED BY LEARNED AO IN TAXING RS.6,95,087/- AND RS.6,32,228/- RESPECTIVELY ON SUBSTANTIVE AND PRO TECTIVE BASIS. (2) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE PROCEE DINGS INITIATED U/S. 153(C) OF I.T. ACT ARE LEGAL AND VAL ID AND APPLICABLE. (3) THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT APPRECIATIN G THAT THE LEARNED AO WHO SEARCHED THE PREMISES, HAS NOT REC ORDED ANY SATISFACTION THAT THE DOCUMENT BEING BANACHITTH I BELONGED TO THE APPELLANT AND THE SAID PAPERS WERE HANDED OVER TO THE AO OF THE THIRD PARTY. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE REFERRED TO THE ASSESSMENT ORDER AND SUBMI TTED THAT CERTAIN DOCUMENTS WERE SEIZED FROM THE RESIDENCE OF BUYER O F THE PROPERTY SHRI PRAKASH G. PATEL. THE DOCUMENTS SEIZED COMPRISED O F A SIGNED BANACHITTHI (MEMORANDUM AGREEMENT) FOR PURCHASE OF LAND SITUATED AT SUVEY NO.164 OF VILLAGE BAVLA, TALUKA BAVLA BY B. N ANJI GROUP FROM THE ASSESSEE (RAJNIBHAI DASHRATHBHAI PATEL) AND OTH ERS. PLACING RELIANCE UPON THE MEMORANDUM AGREEMENT, THE AO OF THE ASSESS EE INITIATED PROCEEDINGS UNDER S.153C OF THE ACT IN THE HANDS OF THE ASSESSEE AND COMPUTED DIFFERENCE OF RS.28,10,707/- PRESUMED TO H AVE BEEN PAID IN CASH TO THE ASSESSEE AND OTHER JOINT SELLERS OF LAN D TO B. NANJI GROUP. IT WAS POINTED OUT BY THE ASSESSEE THAT THE LAND SOLD BY THE ASSESSEE WAS INHERITED BY 27 PERSONS INCLUDING THE ASSESSEE AS O NE OF THE BENEFICIARIES IN THE FAMILY TREE. THE LAND WAS SOLD TO B. NANJI GROUP ALONGWITH OTHER JOINT CO-OWNERS. IT WAS POINTED OUT THAT A SALE DE ED WAS EXECUTED SUBSEQUENTLY ON 25.05.2005 FOR SALE OF LAND JOINTLY HELD BY 27 PERSONS, IT(SS)A NO. 278/AHD/13 [RAJNIBHAI D. PATEL VS. ACIT] A.Y. 2006-07 - 3 - BUT HOWEVER, THE SALE CONSIDERATION WAS RECEIVED BY ONLY 10 PERSONS AS TABULATED AT PAGE NO.4 OF THE ASSESSMENT ORDER. IT WAS POINTED OUT THAT MOTHER OF THE ASSESSEE PUSHPABEN DASHRATHBHAI PATEL RECEIVED RS. 6,32,225/- AS HER SHARE OF RECEIPT ON SALE. THE NA ME OF THE ASSESSEE DOES NOT FIGURE IN THE LIST OF THE RECIPIENTS OF THE SAL E PROCEEDS. IT WAS THEREAFTER SUBMITTED THAT THE AO HAS WRONGLY INFERR ED THE EXISTENCE OF CASH COMPONENT AND ALSO WRONGLY ALLEGED RECEIPT OF RS.6,95,087/- (CASH COMPONENT RS.28,10,707/- APPORTIONED IN PROPORTIONA TE TO THE RATIO OF THE CHEQUE RECEIPT IN THE HANDS OF MOTHER) TO BE UN ACCOUNTED CASH COMPONENT RECEIVED BY THE ASSESSEE. 3.1 THE LEARNED AR FOR THE ASSESSEE FURTHER POINTED OUT THAT UNACCOUNTED CHEQUE COMPONENT OF RS.6,32,228/- WAS A LSO ASSESSED IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. IT WAS REITERATED THAT THE AFORESAID CHEQUE AMOUNT HAS BEEN RECEIVED BY MOTHER OF THE ASSESSEE AND NOT THE ASSESSEE HIMSELF. IT WAS FURTHER POINT ED OUT THAT THE MOTHER OF THE ASSESSEE HAS NOT BEEN ASSESSED AT ALL EITHER ON SUBSTANTIVE BASIS OR ON PROTECTIVE BASIS. THE LEARNED AR THUS SUBMITTED THAT THE ENTIRE ACTION OF THE AO IN ASSESSING THE CHEQUE AMOUNT RECEIVED B Y MOTHER TO BE THE INCOME OF THE ASSESSEE AS WELL AS CHEQUE COMPONENT PRESUMABLY RECEIVED BY THE ASSESSEE IS BASED ON SURMISES AND CONJUNCTUR ES WITHOUT ANY EVIDENCE THAT SUCH INCOME HAS ACTUALLY ACCRUED TO T HE ASSESSEE. THE LEARNED AR INSISTED THAT THE CHEQUE HAS BEEN RECEIV ED BY THE MOTHER WHO IS ALSO A PART OF 27 PERSONS CONSORTIUM AND THE ASS ESSEE HAS NOT RECEIVED ANY MONEY WHATSOEVER. 3.2 AT THIS STAGE, THE LEARNED AR RAISED TWO LEGAL POINTS; (I) IN THE ABSENCE OF ANY SUBSTANTIVE ASSESSMENT IN THE HANDS OF SOME OTHER ASSESSEE, THE ASSESSMENT ON PROTECTIVE BASIS CANNOT BE CARRIED OUT IN THE HANDS OF THE ASSESSEE. FOR THIS PROPORTION, THE LE ARNED AR REFERRED TO THE DECISION OF THE CO-ORDINATE BENCH IN SURESH K. JAJOO VS. ACIT (2010) 39 SOT 514 (MUM.) & (II) IN THE ABSENCE OF ANY ADDITIONS IN THE HANDS OF IT(SS)A NO. 278/AHD/13 [RAJNIBHAI D. PATEL VS. ACIT] A.Y. 2006-07 - 4 - THE PURCHASERS TOWARDS UNEXPLAINED INVESTMENT FOR A LLEGED CASH COMPONENT, THE SELLERS CANNOT BE PUNISHED UNILATERA LLY FOR UNACCOUNTED SALES. THIS APART, THE LEARNED AR RAISED ARGUMENTS ON MERITS TO CONTEND THAT EVEN ON MERITS SUCH ADDITIONS ARE NOT SUSTAINA BLE. THE LEARNED AR FURTHER SUBMITTED IN THE ALTERNATIVE THAT THE SHARE OF THE APPLICANT IS ONLY 1/5 TH IN THE FAMILY OF PUSHPABEN DASHRATHBHAI PATEL AND THEREFORE CAPITAL GAIN PURPORTEDLY ACCRUED IN THE HANDS OF THE ASSESS EE CANNOT EXCEED 1/5 TH SHARE OF RS.6,95,087/-. 3.3 THE LEARNED AR FURTHER SUBMITTED THAT THE ASSES SEE DOES NOT SEEK TO PRESS THE INVALIDITY OF JURISDICTION AS PER GROU NDS NOS. 2 & 3 OF ITS CONCISED GROUND. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE LOWE R AUTHORITIES AND SUBMITTED IN FURTHERANCE THAT TELL-TALE EVIDENCE IN THE FORM OF HANDWRITTEN BANACHITTHI (MOU) FOUND FROM THE PREMIS ES OF THE PURCHASERS OF THE LAND WHEREBY THE INVOLVEMENT OF C ASH TO THE EXTENT OF RS.28,10,707/- WAS UNEARTHED. THE LEARNED DR ACCOR DINGLY POINTED OUT THAT THE AO HAS RIGHTLY ASSESSED THE PROPORTIONATE RECEIPT OF CASH IN THE HANDS OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE A SSESSMENT OF UNACCOUNTED CASH AND UNACCOUNTED CHEQUE COMPONENT O N SALE OF LAND BY THE ASSESSEE ALONGWITH OTHER JOINT OWNERS ON THE BA SIS OF DOCUMENTS FOUND IN THE COURSE OF SEARCH IN THE CASE OF PURCHA SER (3 RD PARTY) IS IN CONTROVERSY. AS A CONSEQUENCE OF SEARCH IN THE CAS E OF PURCHASERS, PROCEEDINGS UNDER S.153C OF THE ACT WERE INITIATED ON THE ASSESSEE. IN THE CASE OF ASSESSEE, IT WAS NOTICED BY THE AO FROM A MEMORANDUM AGREEMENT THAT THE TOTAL CONSIDERATION OF THE LAND RECEIVED AS PER FINAL SALE DEED AMOUNTING TO RS.25,56,500/- WAS NOT CORRE CT AND THE TRANSACTION OF SALE ALSO INVOLVED CASH COMPONENT AG GREGATING TO RS.28,10,707/- AS WELL. THE AO FOUND THAT THE CONS IDERATION OF RS.6,32,225/- OUT OF RS.25,56,500/- WAS RECEIVED BY MOTHER OF THE IT(SS)A NO. 278/AHD/13 [RAJNIBHAI D. PATEL VS. ACIT] A.Y. 2006-07 - 5 - ASSESSEE IN CHEQUE. THE AO HAS ATTEMPTED TO TAX TH E AFORESAID RECEIPT OF RS.6,32,228/- ROUTED THROUGH BANKING CHANNEL IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. THE MOTHER OF THE ASS ESSEE WAS ASSUMED TO BE ASSESSEE ON SUBSTANTIVE BASIS FOR THE PURPOSES O F THE ASSESSMENT OF THE RECEIPT THROUGH BANKING CHANNEL. LIKEWISE, THE AO HAS ALLOCATED RS.6,95,087/- AS UNACCOUNTED CASH COMPONENT IN SAME PROPOSITION TO THE CHEQUE COMPONENT TO BE UNACCOUNTED INCOME OF THE AS SESSEE. 6. WE STRAIGHTWAY NOTICE THE FIRST LEGAL OBJECTION OF THE ASSESSEE THAT WHERE NO INCOME HAS BEEN ASSESSED ON SUBSTANTIVE BA SIS IN THE HANDS OF ANY PERSON IN SO FAR AS THE CHEQUE COMPONENT OF RS. 6,32,228/- IS CONCERNED, THE ASSESSEE CANNOT BE MADE LIABLE TO BE ASSESSED ON PROTECTIVE BASIS. WE FIND SUBSTANTIAL MERIT IN THE AFORESAID LEGAL OBJECTION. THE PROTECTIVE ASSESSMENT EVOLVED BY JU DICIAL PRECEDENT RENDERED IN THE CASE OF LALJI HARIDAS VS. ITO (1994) 43 ITR 387 (SC) HAS CLEARLY LAID DOWN THAT THE PROTECTIVE ASSESSMENT HA S TO BE DONE ONLY AFTER THE SUBSTANTIVE ASSESSMENT. THUS, THE PROTECTIVE A SSESSMENT HAS TO NECESSARILY FOLLOW THE SUBSTANTIVE ASSESSMENT. IN THE ABSENCE OF SUBSTANTIVE ASSESSMENT AS IS THE CASE IN HAND, THE PROTECTIVE ASSESSMENT CANNOT SURVIVE. THEREFORE, THE WHOLE BASIS OF ASSE SSMENT OF RECEIPT OF INCOME IN THE HANDS OF THE ASSESSEE IS A DAMP SQUIB IN THE ABSENCE OF SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE RECEPIEN T MOTHER. 7. WE ALSO FIND MERIT IN THE SECOND PLEA RAISED ON BEHALF OF THE ASSESSEE THAT IN THE ABSENCE OF ANY ADDITION SHOWN TO BE SUSTAINED IN THE HANDS OF THE CORRESPONDING PURCHASERS, THE SELLERS CANNOT BE TAXED UNILATERALLY FOR THE ALLEGED CASH TRANSACTION. THI S IS MORE SO BECAUSE THE PURCHASERS WERE SEARCHED AND THE ALLEGED DOCUMENT O F INCRIMINATING NATURE WERE FOUND FROM THE PREMISES OF THE PURCHASE RS. THUS, WHERE NO CASH CONSIDERATION WAS RECOGNIZED TO HAVE BEEN PAID BY THE PURCHASER, THE SELLERS CANNOT BE IMPUTED FOR ALLEGED MIS-DEEDS OF UNACCOUNTED TRANSACTIONS. WE ALSO FIND THAT THE ACTION OF THE AO IN HOLDING THE CASH IT(SS)A NO. 278/AHD/13 [RAJNIBHAI D. PATEL VS. ACIT] A.Y. 2006-07 - 6 - COMPONENT TO BE UNACCOUNTED RECEIPT OF THE ASSESSEE (INSTEAD OF MOTHER) AS TOTALLY ARBITRARY AND CLEARLY SUFFERS FROM THE V ICE OF DISCRIMINATION. WHERE THE CHEQUE RECEIPT HAS BEEN PRESUMED TO BE TH E INCOME OF THE MOTHER OF SUBSTANTIVE BASIS, WE ARE UNABLE TO SEE A NY JUSTIFICATION FOR PRESUMPTION OF THE CASH COMPONENT TO BE THE INCOME OF THE ASSESSEE (SON) ON SUBSTANTIVE BASIS. THE WHOLE ACTION OF TH E REVENUE AUTHORITIES APPEARS FARFETCHED AND UNTENABLE. THE AO IS ACCORD INGLY DIRECTED TO DELETE THE ADDITIONS ON THIS SCORE. WE THUS FIND M ERIT IN GROUND NO.1 OF THE ASSESSEES APPEAL. 8. GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOWED. 9. GROUND NOS. 2 & 3 OF THE GROUNDS OF APPEAL (CONC ISED) ARE DISMISSED AS NOT PRESSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 11/09/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- ). / REVENUE 2. / ASSESSEE +. ,-.! /! / CONCERNED CIT 4. /!- / CIT (A) 2. 345 6!6-.7 ' -.&7 89, / DR, ITAT, AHMEDABAD :. 5;< = / GUARD FILE. BY ORDER / 7 /8 ' -.&7 89, THIS ORDER PRONOUNCED IN OPEN COURT ON 11/09/ 2019