The ACIT, Circle-3, Surat V. Shri Bharatkumar Nanubhai Patel, Surat

ITSSA 35/AHD/2008

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7718 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-01-2012
• Assessment Year: misc
• Appeal Filed On: 18-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MISHRA
• Keywords: Unexplained investment; Document seized; Block assessment; Documents seized

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .. !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI B.P.JAIN, ACCOUNTANT MEMBER ./ I.T(SS).A. NO.35/AHD/2008 ( BLOCK PERIOD A.Y. : 1990-91 TO 1999-2000 & UPTO 29/ 10/1999 ) THE ACIT CIRCLE-3 SURAT ' ' ' ' / VS. SHRI BHARATKUMAR NANUBAI DESAI ALIAS DHARMESH NANUBHAI DESAI, 10, KISHORE PARK SOCIETY B/H.ST.XAVIER SCHOOL GHOD-DOD ROAD, SURAT ' #$ ./ ( ./ PAN/GIR NO. : - ( ') / // / APPELLANT ) .. ( *+')/ RESPONDENT ) ') , #/ APPELLANT BY : SHRI RAJ MISHRA SR.D.R. *+') - , # / RESPONDENT BY : SHRI KAMLESH BHATT, C.A. '. - /$/ // / DATE OF HEARING : 19.1.2012 012 - /$ / DATE OF PRONOUNCEMENT : 26.3.12 #3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF THE CIT(A)-II, SURAT DATED 29.11 .2007. THE ONLY GROUND AS ARGUED BEFORE US IS REPRODUCED BELOW:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.64,38,3 75/- MADE IT(SS)A NO.35/A HD/2008 ACIT VS. SH.BHARATKUMAR NANUBHAI DESAI BLOCK AY 1990-91 TO 1999-200 & UPTO 29.10.1999 - 2 - IN THE FORM OF UNACCOUNTED INVESTMENT IN PURCHASE O F NINE FLATS. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.158BC R.W.S.158BD OF THE ACT DATED 29/06 /2006 WERE THAT A SEARCH WAS CARRIED OUT AT THE BUSINESS PREMISES OF TWO CONCERNS; NAMELY, M/S.OHM DEVELOPERS AND M/S.OHM ORGANIZERS ON 29/10/ 1999. A CASH BOOK WAS FOUND AND SEIZED. IT WAS NOTICED THAT IN RESPECT OF A PROJECT KNOWN AS CHANDAN PARK, CITY LIGHT AREA, UMRA SURA T THE ASSESSEE HAS PURCHASED 9 FLATS, NUMBERS WERE DULY MENTIONED BY THE AO. THE ASSESSEE HAS ALLEGED TO HAVE MADE PAYMENTS OF RS.57 ,23,000/- AND RS.7,15,375/-. IT WAS ALSO ALLEGED THAT THE TRAN SACTION WAS ALSO IN CASH AND THERE WAS INVOLVEMENT OF ON-MONEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO EXPLA IN THE SOURCE OF INVESTMENT. THE AO HAS ALSO FOUND THAT THE ASSESSE E WITH THE LEDGER ACCOUNT TERMED AS KATHA VAHI, ACCORDING TO WHICH FLAT-WISE TRANSACTION WAS RECORDED IN THE ACCOUNT OF BHARAT KUMAR N.DESA I. THE ASSESSEE HAS INFORMED THAT DURING THE SAID PERIOD HE WAS IN USA AND IN THIS REGARD PRODUCED NECESSARY DOCUMENTS. THE AO HAS NOT ACCE PTED THE SAID EXPLANATION AND HELD THAT THE INVESTMENT MIGHT HAVE BEEN ASSIGNED TO SOMEONE ELSE AND, THEREFORE, THE INVESTMENT WAS MAD E ON ASSESSEES BEHALF. AS PER AO, THE TRANSACTION MIGHT HAVE TA KEN PLACE THROUGH ONE SHRI NANUBHAI D.DESAI. THE AO HAS ALSO FOUND THAT THE CASE OF M/S.OHM DEVELOPERS WAS COMPLETED AND THE BLOCK ASSE SSMENT WAS MADE ON TOTAL UNDISCLOSED INCOME AT RS.3,08,01,600/- VID E ORDER DATED 30/11/2001 U/S.158BC. ON PERUSAL OF THE ORDER OF T HE AO, WE HAVE NOTED THAT THERE WERE CERTAIN CONFUSIONS ABOUT THE NINE FLATS IN QUESTION AND, THEREFORE, THE PARA-11 OF THE AO IS WORTH REPR ODUCTION: IT(SS)A NO.35/A HD/2008 ACIT VS. SH.BHARATKUMAR NANUBHAI DESAI BLOCK AY 1990-91 TO 1999-200 & UPTO 29.10.1999 - 3 - 11. IT IS SEEN FROM THE PAGE NO.16 & 17 OF THE SE IZED KHATAVAHI MARKED AS ANNEXURE-B-2/26 THAT THE ASSESSEE NAMED A S SHRI BHARAT N SHAH HAD PURCHASED 9 FLATS BEARING NOS.B-1 01, C-102, 401, 402, E-101, 102, 401, 402 & B-102 IN CHANDAN P ARK, CITY LIGHT AREA, SURAT FOR TOTAL CONSIDERATION OF RS.57, 23,000/- AND RS.7,15,375/-. IT IS NOT CLEAR FROM THE IMPUGNED S EIZED KHATAVAHI THAT WHICH ARE THOSE 18 FLATS RECEIVED BY SHRI NANU BHAI D.DESAI IN CONSIDERATION OF SALE OF LAND AS DISCUSSED ABOVE. THE TRANSACTION IS NOTED TO HAVE BEEN DONE THROUGH SHRI NANUKAKA. I T IS ALSO MARKED AS CASH HAWALO NANUKAK 13-07-1999. IT IS NOT CLEAR FROM RECORD THAT THESE 9 FLATS ARE COVERED BY SAID HAWALA OF 18 FLATS AS STATED IN THE BLOCK ASSESSMENT ORDER IN TH E CASE OF SHRI NANUBHAI D DESAI. THERE IS NO DETAILS AS TO WHICH WERE THE NUMBERS OF THE FLAT, IF AT ALL WERE ADJUSTED AGAINS T THE SALE CONSIDERATION OF LAND AS IT APPEARS FROM THE BLOCK ASSESSMENT ORDER. FURTHER, IF IT WERE THE FLAT OF HAWALO AS A RGUED BY THE ASSESSEE, THESE FLAT COULD HAVE BEEN NOTED IN THE N AME OF SHRI NANUBHAI D.DESAI AND NOT IN THE NAME OF ANY OTHER P ERSON. FURTHER, APART IT HAS BEEN CLEARLY MENTIONED THAT C ASH WAS RECEIVED BY THE ORGANIZERS OF CHANDAN PARK APTT. T HESE 9 FLAT ARE NOTED IN THE NAME OF SHRI BHARATKUMAR N.DESAI AND N OT IN THE NAME OF SHRI NANUBHAI D.DESAI. THE COST OF EACH FL AT OF 1475/- SQ. FT. @ 485/- PER SQ.FT. IS MENTIONED AS RS.7,15, 375/-. THIS INCLUDES DOCUMENT PRICE AND ON MONEY CONSIDERATION OF THE FLAT. 2.1. FINALLY, IT WAS CONCLUDED BY THE AO THAT TOTAL UNDISCLOSED INVESTMENT OF RS.64,38,375/- WAS MADE BY THE ASSESS EE AND THE SAME WAS ACCORDINGLY TAXED. THE MATTER WAS CARRIED BEFORE T HE FIRST APPELLATE AUTHORITY. 3. THE LD.CIT(A) HAS EXAMINED THE SEIZED DOCUMENTS AND THEREAFTER CONCLUDED AS UNDER:- 11.5 THUS, TAKING INTO ACCOUNT THE FACTS AND CIRCU MSTANCES OF THE CASE AS DISCUSSED ABOVE IN CONSIDERABLE DETAIL, I H AVE COME TO THE IT(SS)A NO.35/A HD/2008 ACIT VS. SH.BHARATKUMAR NANUBHAI DESAI BLOCK AY 1990-91 TO 1999-200 & UPTO 29.10.1999 - 4 - INEVITABLE CONCLUSION THAT THE AO HAD GROSSLY ERRE D IN ASSESSING THE INVESTMENT MADE TOWARDS THE PURCHASE OF THE 8 F LATS AT CHANDAN PARK APARTMENTS, CITY LIGHT, SURAT IN THE H ANDS OF THE ASSESSEE. IN DOING SO, HE IGNORED GLARING EVIDENCE WHICH CLEARLY SHOWED THAT THE FLATS, THOUGH RECORDED IN THE NAME OF THE ASSESSEE HAD BEEN RECEIVED BY HIS FATHER IN PART CONSIDERATI ON OF THE SALE OF LAND TO THE BUILDER ON WHICH THE SAID APARTMENTS WE RE BUILT. THIS WAS CORROBORATED BY THE SUBMISSIONS MADE BY THE ASS ESSEES FATHER SHRI NANUBHAI DESAI IN COURSE OF HIS BLOCK-A SSESSMENT PROCEEDINGS, BY THE BLOCK ASSESSMENT ORDER IN HIS C ASE, AND BY THE SALE DEEDS PERTAINING TO THE SAID FLATS WHERE THE S ELLERS WERE PERSONS OTHER THAN THE ASSESSEE, WHICH MEANT THAT T HE ASSESSEE HAD NOT THE REMOTEST LINK WITH THE SAID FLATS AND F INALLY, THE AFFIDAVIT OF THE BUILDER HIMSELF, WHO CLEARLY CORRO BORATED THE CLAIM OF THE ASSESSEE AND HIS FATHER. THE AO THEREFORE, IS DIRECTED TO DEL4ETE THE ADDITION OF THE SUM OF RS.64,38,375. 4. FROM THE SIDE OF THE REVENUE, LD.DR MR.RAJ MISHR A AND FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LD.AR MR.KAMLESH B HATT APPEARED AND RESPECTIVELY PLACED RELIANCE ON THE ORDERS OF THE A O AND CIT(A). WE HAVE HEARD BOTH THE SIDES AND PERUSED THE COMPILATI ON FILED IN THE LIGHT OF THE ORDERS OF THE AUTHORITIES BELOW. AN IMPORTANT FACT HAS BEEN CONSIDERED BY LD.CIT(A) THAT AS FAR AS THE ASSESSEE WAS CONCERNED, DURING THE PERIOD UNDER CONSIDERATION, HE WAS NOT IN INDI A AND LIVING IN USA SINCE 1992-93. ON ACCOUNT OF THE SAID REASON, THE AO HAD TAKEN A VIEW THAT THE IMPUGNED TRANSACTIONS HAVE BEEN MADE ON BE HALF OF THE ASSESSEE THROUGH HIS FATHER SHRI NANUBHAI D.DESAI. AN ANOTH ER FACT WAS NOTED THAT ON THE SEIZED DOCUMENTS, THERE WAS A MENTION O F HASTAK NANU KAKA. WHILE ARGUING BEFORE LD.CIT(A), IT WAS PLE ADED THAT 18 FLATS HAVE BEEN RECEIVED BY SHRI NANUBHAI DESAI. A TOTAL CONSIDERATION OF THOSE FLATS WAS STATED TO BE RS.3,58,01,000/-. THE ALLEGED NINE FLATS WHICH WERE TAXED IN THE HANDS OF THE ASSESSEE WERE STATED TO BE INCLUSIVE IT(SS)A NO.35/A HD/2008 ACIT VS. SH.BHARATKUMAR NANUBHAI DESAI BLOCK AY 1990-91 TO 1999-200 & UPTO 29.10.1999 - 5 - IN 18 FLATS AND NOT IN ADDITION TO THE 18 FLATS. RATHER IT WAS VEHEMENTLY CONTENDED THAT IF THE INVESTMENT IN 9 FLATS IS SEPA RATELY TAXED IN ADDITION TO THE 18 FLATS DULY DISCLOSED, THEN IT WOULD RESUL T INTO DOUBLE TAXATION. TO ASCERTAIN THE DISCLOSURE OF 18 FLATS IN THE HAND S OF SHRI NANUBHAI DESAI IN BLOCK PROCEEDINGS, LD.CIT(A) HAS REFERRED THE MATTER TO AO AND CALLED FOR A REMAND REPORT. THOUGH THE AO HAS NO T DISPUTED SOME OF THE FACTS BUT REITERATED THAT THOSE FLATS WERE LATE R ON SOLD BY SHRI NANUBHAI DESAI AND THOSE FLATS MIGHT HAVE BEEN SOLD BY THE ASSESSEE THROUGH HIS FATHER AS A POWER OF ATTORNEY HOLDER. HOWEVER, THE SAID ALLEGATION WAS STRONGLY REFUTED AND IT WAS CONTESTE D THAT THERE WAS NO POWER OF ATTORNEY AT ALL EXECUTED BY THE ASSESSEE A ND NO SUCH EVIDENCE WAS FOUND AT THE TIME OF SEARCH. THE LD.CIT(A) HA S EXAMINED THE RELEVANT DOCUMENTS AND, THEREAFTER, NOTED CERTAIN E RRORS WHICH WERE COMMITTED BY THE AO WHILE READING THE SEIZED DOCUME NTS. LD.CIT(A) HAS ALSO REFERRED AN AFFIDAVIT OF SHRI NANUBHAI DES AI. IT WAS AFFIRMED ON OATH THAT THE IMPUGNED FACTS HAVE IN FACT BELONGED TO SHRI NANUBHAI DESAI AND THOSE WERE DULY COVERED IN HIS BLOCK ASSE SSMENT PROCEEDINGS. LD. CIT(A) HAS APPRECIATED THAT THERE WAS AN AGREEM ENT ON THE BASIS OF WHICH AGAINST THE SALE CONSIDERATION OF LAND SHRI N ANUBHAI DESAI HAS AGREED TO RETAIN 18 FLATS AND THEREFORE OUT OF THE AGREED SALE CONSIDERATION OF THE LAND, THE VALUE OF 18 FLATS WAS DEDUCTED AND THE BALANCE AMOUNT REMAINED PAYABLE TO SHRI NANUBHAI DESAI. IT HAS ALSO BEEN NOTED THAT THE DOCUMENTS HAVE REVEALED THAT THERE WAS SOME FUR THER NEGOTIATIONS SINCE IT WAS FOUND BY SHRI NANUBHAI DESAI THAT THE FLATS HAVE BEEN VALUED AT THE VERY HIGH RATE AND, THEREFORE, FOR THE PURPO SE OF RECOVERING THE AMOUNT HE HAD KEPT ONLY 8 FLATS AND RETURNED THE RE MAINING 10 FLATS TO M/S.OHM DEVELOPERS. THOSE EIGHT FLATS WHICH WERE R ETAINED BY SHRI IT(SS)A NO.35/A HD/2008 ACIT VS. SH.BHARATKUMAR NANUBHAI DESAI BLOCK AY 1990-91 TO 1999-200 & UPTO 29.10.1999 - 6 - NANUBHAI DESAI HAVE ALSO BEEN DULY RECORDED IN HIS ASSESSMENT PROCEEDINGS. ON THE BASIS OF THOSE SEIZED MATERIAL , LD.CIT(A) HAS AFFIRMED THAT THOSE FLATS WERE NOT PURCHASED BY THE ASSESSEE, BUT THOSE WERE MERELY NOTED IN HIS NAME. EVEN THE MENTIONIN G OF HASTHAK NANU KAKA GAVE A CLEAR INDICATION THAT THE FLATS WERE O N ACCOUNT OF SHRI NANUBHAI DESAI. IN HIS AFFIDAVIT, IT WAS CLARIFIED THAT AGAINST THE SALE CONSIDERATION, A PART OF THE CONSIDERATION TO THE E XTENT OF RS.57,23,000/- WAS ADJUSTED AGAINST THOSE FLATS. THE SAID FACTU AL POSITION WAS STATED TO BE FURTHER CORROBORATED BY THE FACT THAT THE REMAIN ING 8 FLATS WERE LATER ON SOLD BY SHRI NANUBHAI DESAI, FATHER OF THE ASSESSEE . THE SALE DEEDS AND THE DETAILS OF THE SALES TRANSACTION ALONG WITH THE NAMES OF THE PURCHASERS WERE ALSO FOUND TO BE INFORMED TO THE REVENUE DEPAR TMENT. CONSIDERING ALL THESE DETAILS AND THE EVIDENCES ON RECORD, WE HEREBY AFFIRM THE FACTUAL FINDING AS MADE BY THE CIT(A) TH AT THE IMPUGNED INVESTMENT ON THOSE FLATS COULD NOT BE TRACED TO TH E ASSESSEE. RESULTANTLY, WE HEREBY AFFIRM THOSE FINDING OF LD.C IT(A) AND DISMISS THE GROUND OF REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 26/ 03 /2012 PRONOUNCED ON 26/03/12 BY THE FOLLOWING NOMINATED HONBLE MEMBERS SD/- SD/- (TRM) (MKS) AM JM 4/..', .'../ T.C. NAIR, SR. PS IT(SS)A NO.35/A HD/2008 ACIT VS. SH.BHARATKUMAR NANUBHAI DESAI BLOCK AY 1990-91 TO 1999-200 & UPTO 29.10.1999 - 7 - #3 - *5 6#52 #3 - *5 6#52 #3 - *5 6#52 #3 - *5 6#52/ COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-II, SURAT 5. 5:; *' , , / DR, ITAT, AHMEDABAD 6. ;< =. / GUARD FILE. #3' #3' #3' #3' / BY ORDER, +5 * //TRUE COPY// > >> >/ // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..9.3.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9.3.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.26.3.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.3.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER