Shri Mahavirsinh Dolatsinh Jadeja, RAJKOT-GUJARAT V. The Assistant Commr. Income Tax,Cen. Cir-2, RAJKOT-GUJARAT

ITSSA 36/RJT/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6587 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 3 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Tax effect
• Section: 69B; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER SL. NOS. ITA/IT(SS)A NO(S) ASSESSMENT YEAR (S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. IT(SS)A 03/RJT/11 2007-08 SHRI MAHAVIRSINH D.JADEJA PROP.OF PM PRODUCTS 1-NAVARANGPURA B/H.BHAKTINAGAR STN RAJKOT PAN: ABVPJ 4650 R ACIT CENTRAL CIRCLE-2 RAJKOT 2. ITA 116/RJT/11 2008-09 -DO-ASSESSEE -DO-REVENU E 3. IT(SS)A36/RJT/13 2007-08 -DO-ASSESSEE -DO-REVE NUE 4. IT(SS)A37/RJT/13 2008-09 -DO-ASSESSEE -DO-REVE NUE ASSESSEE BY : SHRI M.J. RANPURA, AR REVENUE BY : SHRI JITENDRA KUMAR, CIT-DR / DATE OF HEARING 28/01/2019 / DATE OF PRONOUNCEMENT 26 /02/2019 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE COMMIS SIONER OF INCOME TAX (APPEALS)IV, AHMEDABAD [CIT(A) IN SHORT] VIDE APPE AL NO.CIT(A)- IV/328-R/CC-2/09-10 DATED 19/01/2011 & 07/10/2013 ARISING FROM THE ASSESSMENT ORDER(S) PASSED UNDER S.153A OF THE INC OME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') DATED 30 /12/2009 RELEVANT TO ASSESSMENT YEAR (AY) 2007-08 & 2008-09 RESPECTIV ELY. IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 2 - 2. OUT OF THESE FOUR APPEALS, IT(SS)A NO.03/RJT/20 11 FOR AY 2007- 08 AND ITA NO.116/RJT/2011 FOR AY 2008-09 ARE CROSS -APPEALS FOR QUANTUM PROCEEDINGS AND REMAINING TWO APPEALS, I.E. IT(SS)A NOS.36 & 37/RJT/2013 FOR AYS 2007-08 & 2008-09 ARE FOR PENAL TY PROCEEDINGS U/S.271(1)(C) OF THE ACT. 3. SINCE TWO APPEALS ARE BEARING SAME FACTS AND CIR CUMSTANCES AND ONLY AMOUNT AND ASSESSMENT YEAR ARE DIFFERENT AND R EMAINING TWO APPEALS ARE OF PENALTY, THEREFORE FOR THE SAKE OF C ONVENIENCES, FIRST OF ALL, WE WOULD LIKE TO DISPOSE OF ASSESSEES APPEAL IT(SS )A NO.03/RJT/2011 FOR AY 2007-08. 4. THE ASSESSEE HAS TAKEN SOLITARY GROUND THAT THE LD.CIT(A) ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE ADDITION OF RS.50,00,000/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN AGRICU LTURAL LAND SITUATED AT SURVEY NO.87/1, VAVDI. THE ADDITION OF RS.50,00,00 0/- MAY KINDLY BE DELETED. 5. FACTS OF THE CASE ARE EMANATED FROM THE ASSESSME NT ORDER ARE REPRODUCED. (4) DURING THE COURSE OF SEARCH AT THE PREMISES OF ONE SHRI JAYANTIBHAI J TANTI AND CASH OF OTHERS RS.88,51,500/- WAS FOUND. DURING THE COURSE OF SEARCH, SHRI JAYANTIBHAI JAGABHAI TANTI VIDE ANSWER TO QUESTION NO.17 OF HIS STATEMENT DATED 30-05-2007, ADMITTED THAT OUT OF TH E SUM OF RS.88,51,500/-, A SUM OF RS.87,49,500/- BELONGS TO HIS FATHER-IN-LAW SHRI KESHUBHAI NANJIBHAI KORAT. ACCORDINGLY, SUMMONS U/S. 131 (1A) WAS ISSUE D TO SHRI MAHESHBHAI IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 3 - KESHUBHAI KORAT, SON OF SHRI KESHUBHAI KORAT, TO EX AMINE THE VERACITY OF THE STATEMENT GIVEN BY SHRI JAYANTIBHAI TANTI. SHRI MAH ESHBHAI KESHUBHAI KORAT WAS ALSO EXAMINED ON OATH AND WAS ASKED TO EXPLAIN THE SOURCE OF RS.87,49,500/-, WHICH WAS LYING AT THE RESIDENCE OF SHRI JAYANTIBHAI TANTI. SHRI MAHESHBHAI KORAT, SON OF KESHUBHAI, VIDE ANSWE R TO QUESTION NO.5, STATED THAT LAND ADMEASURING 2 ACRE 8 GUNTHA WHICH WAS IN THE NAME OF HIS FATHER WAS SOLD FOR A SUM OF RS.1,65,00,000/- TO TH E ASSESSEE. IT IS SEEN THAT THE TOTAL SALE CONSIDERATION OF THE ABOVE MENTIONED LAN D AT SURVEY NO 87/1 WAS DECIDED AT RS.75,00,000/- PER ACRE, AMOUNTING TO RS .1,65,00,000/- OUT OF WHICH ADVANCE OF RS.50,00,000/- WAS PAID AS PER THE AGREE MENT TO SALE DATED 23.2.2007 (RELEVANT TO AY 07-08) AND RECEIPT WAS MA DE IN THE NAME OF ONE SHRI VINUBHAI SAKARIA, A PERSON WHO WORKS AS SITE S UPERVISOR IN CONSTRUCTION FIRM. MOREOVER, ON THE SAME DATE, THE AGREEMENT'TO SALE DATED 23.2.2007 WAS ALSO; MADE IN THE NAME OF SHRI VINUBHAI SAKARIA WHI CH WAS REGISTERED WITH SUB-REGISTRAR, ZONE NO 2, (REGISTRATION NO. 2928) F OR A SUM OF RS.3,50,000/-. THUS ON THE SAME DATE TWO AGREEMENTS HAS BEEN MADE FOR THE SALE OF SAME LAND WITH THE SAME PERSON ONE DISCLOSING THE SALE VALUE AT RS.1,65,00,000/-AND THE OTHER SHOWING VALUE OF ONLY RS.3,50,000/-. GENERALL Y THIS MODUS OPERAND! OF ON MONEY PAYMENT OF TRANSACTING ON MONEY PAYMENT IS FOLLOWED IN LAND TRANSACTIONS. FINALLY, THIS LAND WAS SOLD BY SHRI K ESHUBHAI NANJIBHAI KARAT TO THE ASSESSEE ON 19/05/2007. THE FINAL SALE DEED WAS PREPARED ONLY FOR RS.3,51,000/- VIDE SALE DEED NO. 092644 DTD.'19/05/ 2007. SHRI KESHUBHAI ALSO PRODUCED A COPY OF ONE NOTARIZED RECEIPT DATED 23.2 .2007 BEFORE THE INVESTIGATION WING, WHEREIN IT IS CLEARLY MENTIONED THAT THE PROPERTY IS 1.65 CRORES AND THAT RS.50.00 LAC IS RECEIVED AS ADVANCE . ANOTHER INTERESTING FEATURE IS THAT SHRI VINODBHAI VALJIBHAI SAKARIA WH O HAD INITIALLY PURCHASED THE ABOVE LAND BY EXECUTING AN AGREEMENT TO SALE HA S NOW BECOME ONE OF THE TWO WITNESSES WHO HAD SIGNED THE FINAL SALE DEED. T HUS, IT BECAME CLEAR THAT THIS PARTICULAR LAND WAS CLANDESTINELY TRANSFERRED WITH MINIMUM DOCUMENTED PRICE. SINCE, THE ABOVE LAND WAS SOLD BY SHRI KESHU BHAI NANJIBHAI KORAT, THEREFORE, HE WAS ALSO EXAMINED ON OATH AND HIS STA TEMENT DATED 26/06/07 WAS RECORDED BY THE INVESTIGATION WING DURING THE COURS E OF SEARCH RELEVANT PROCEEDINGS. IN THIS STATEMENT, HE CONFIRMED THAT T HE SAID LAND WAS SOLD FOR RS.1,65,00,000/- AND HE ALSO PRODUCED COPY OF SALE DEED TO DESCRIBE THE NAME AND ADDRESS OF THE PURCHASER. INTERESTINGLY, SHRI K ESHUBHAI KORAT WAS NEVER ASSESSED TO TAX. LATER ON, THE ASSESSEE WAS ALSO CO NFRONTED THIS MATTER AND ASKED TO EXPLAIN THE SOURCE OF INVESTMENT OF RS. 1. 65 CRORE IN THE PURCHASE OF ABOVE PROPERTY. HOWEVER, VIDE Q NO.3 TO 7 OF HIS ST ATEMENT DATED 25-07-2007, HE VEHEMENTLY DENIED INVESTMENT TO THE TUNE OF RS.1 .65 CRORES BUT REITERATED THAT HE HAD PURCHASED THE PROPERTY ONLY FOR RS.3,51 ,000/-. HE FURTHER IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 4 - SUBMITTED DURING THE COURSE OF SEARCH THAT, HE DOES NOT KNOW SHRI VINUBHAI VALJIBHAI SAKARIA. INTERESTINGLY, IF HE DID NOT KNO W SHRI VINUBHAI VALJIBHAI SAKARIA, THEN HOW DID THE SIGNATURE OF SHRI VINUBHA I SAKARIYA APPEAR AS WITNESS IN THE FINAL SALE DEED AS THE WITNESS OF TH E ASSESSEE HIMSELF? IN FACT THERE WERE TWO WITNESS WHO HAS SIGNED IN THE FINAL SALE DEED, ONE BEING SHRI MAHESH KARAT THE SON OF SHRI KESHUBHAI KORAT AS WIT NESS OF THE SELLER AND THE OTHER WAS SHRI VINUBHAI SAKARIYA AS WITNESS OF THE PURCHASER I.E. THE ASSESSEE HIMSELF. (4.1) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF THE RETURN FILED BY SHRI KESHUBHAI KARAT, WHO IS AGED A ROUND 80 YEARS, AND A FARMER BY PROFESSION, IT WAS NOTICED THAT HE HAD WO RKED OUT CAPITAL GAIN ON THE SALE OF THE SAID LAND AND OFFERED CAPITAL GAIN TO T HE EXTENT OF RS.1,59,49,OOO/- . THIS IS THE SAME AGRICULTURAL LAND SOLD BY HIM TO THE ASSESSEE, WHICH HAS BEEN DENIED BY THE ASSESSEE. THE RETURN OF INCOME, STATE MENT RECORDED U/S. 132(4) AND THE AGREEMENT TO SALE FOUND DURING THE COURSE O F SEARCH OF SHRI KESHUBHAI KARAT IS WITNESS TO THE FACT THAT THE SOURCE OF CAS H IS FROM THE SALE OF AGRICULTURAL LAND BELONGING TO SHRI KESHUBHAI KARAT . HENCE, ON ONE HAND SHRI KESHUBHAI IS ADMITTING THE FACT THAT THE SOURCE OF CASH IS LAND SOLD BY HIM TO THE ASSESSEE AND HE IS OFFERING CAPITAL GAIN ON THE SAME WHEREAS ON THE OTHER HAND, THE ASSESSEE IS ADMITTING THAT THE LAND PURCH ASED BY HIM IS ONLY TO THE TUNE OF RS.3,51,000/-. IF SALES CONSIDERATION OF RS 1.65 CRORES BECOMES CAPITAL GAIN FOR SHRI KESHUBHAI, THEN SIMULTANEOUSLY THE SA ME AMOUNT BECOMES INVESTMENT OF THE PURCHASER. THE MODUS OPERAND! ADO PTED IN THE TRANSACTION TO CAMOUFLAGE AND CONCEAL THE ACTUAL TRANSFER CONSIDER ATION BY PREPARING TWO SIMULTANEOUS AGREEMENT TO SALE ON ONE SINGLE DATE F OR DIFFERENT CONSIDERATIONS PROVES THE CLANDESTINE NATURE INVOLVED THEREIN. THE ASSESSEE IS THE ACTUAL PURCHASER OF THE LAND AND THE ACTUAL PURCHASE CONSI DERATION WAS ALSO ESTABLISHED AT RS 1.65 CRORES. IT IS ALSO INCREDIBL E TO BELIEVE, LAND ADMEASURING MORE THAN TWO ACRES, SITUATED WITHIN 8 KILOMETERS O F THE RAJKOT CITY WOULD FETCH ONLY RS 3.51 LAKHS. IN FACT IN THE CASE OF ONE OF T HE ASSESSEE OF THIS CIRCLE, SHRI KAMLESH MEHTA WHO IS ASSESSED WITH THIS CIRCLE, HAV ING PA NO. ACKPM 9144 R, RESIDING AT 'AMITA' 1 BHAKTINAGAR STATION PLOT, RAJKOT ' FOR AY 2004-05, 2005-06 AND 2006-07, WHOSE LAND SITUATED IN A NEARB Y LOCALITY (NEAR KOTHARIYA) WHERE THE ASSESSEE'S LAND IS SITUATED, H AD SHOWN THE SALE CONSIDERATION AT RS.1250/- PER SQ METER, WHICH COME S TO RS.50,00,000/- PER ACRE. IN FACT, THE ADDITION MADE ON ACCOUNT OF CAPI TAL GAIN HAS BEEN SUSTAINED BY THE LD. CIT(A)-IV, AHMEDABAD PASSED VIDE ORDER N O. CIT(A)IV/179.R/CC- 2/08-09 DATED 27.11.2008 (AY 06-07). IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 5 - (4.2) ANOTHER REASON TO HOLD THAT THE AGSESSEE HAS ADOPTED A SHREWD METHOD TO TRANSFER LAND IN HIS NAME BY UNDERSTATING THE SALES CONSIDERATION IS ESTABLISHED BY THE FACT THAT, SHRI VINUBHAI SAKARIA, WHO WAS TH E BENEFICIARY IN ONE OF THE AGREEMENT TO SALE DEED, INCIDENTALLY AND SURPRISING LY BECAME THE .WITNESS TO THE FINAJ SALE DEED AS THE WITNESS OF THE ASSESSEE. THUS, THE ASSESSEE'S INTENTION IN PREPARING TWO AGREEMENTS TO SALE WAS TO COYER UP THE LEGAL HURDLES, AS ALSO TO ENSURE THAT AFTER PAYING ADVANCE, SHRI KESHUBHAI KARAT DOES NOT TURN AWAY FROM THE-DEAL. SO BY PREPARING TWO AGREEMENTS TO SA LE, THE ASSESSEE WAS SUCCESSFUL IN HITTING TWO BIRDS WITH ONE STONE. (4.3) IT IS ALSO SEEN FROM THE RETURN OF INCOME FIL ED BY THE ASSESSEE THAT, THE ASSESSEE HAS NOT RECORDED THIS TRANSACTION IN HIS B OOKS AT ALL. THEREFORE IT IS AMPLY ESTABLISHED THAT THE INTENTION OF THE ASSESSE E WAS TO CONCEAL THE DEAL EVEN ON THE REGISTERED VALUE. IT IS ONLY DUE TO THE PROACTIVE SEARCH ACTION OF THE DEPARTMENT AND WHEN SUBSTANTIAL CASH WAS FOUND, DID THE MATTER COME TO LIGHT. THEREFORE, THE CASH UNDOUBTEDLY REPRESENTS THE SALE PROCEEDS AND THAT THE ASSESSEE HAS MADE INVESTMENT TO THE TUNE OF RS 1.65 CRORES, WHICH IS UNEXPLAINED IN THE HANDS OF THE ASSESSEE. TWO ISSUE S ARISE AT THIS STAGE, THAT IS; A. WHO IS THE ACTUAL PURCHASER OF THE PROPERTY, WHE THER THE ASSESSEE (PARTY TO ONE AGREEMENT TO SALE) OR SHRI VINUBHAI SAKARIA (PA RTY TO ANOTHER AGREEMENT TO SALE) AND B. WHAT IS THE ACTUAL SALE CONSIDER ATION (WHETHER DOCUMENTED PRICE OF RS 3.51 LACS OR PRICE AS PER NOTARIZED MON EY RECEIPT OF RS 1.65 CRORES). (4.4) IT THEREFORE BECAME IMPERATIVE TO ESTABLISH T HE ROLE OF SHRI VINUBHAI SAKARIA IN THE DEAL, WHO HAPPENS TO BE ONE OF THE P ARTY TO THE DEAL (AGREEMENT TO SALE) AND THEN BECAME WITNESS IN THE FINAL AGREE MENT. FROM HIS STATEMENT IT IS CLEAR THAT HE IS A MAN OF NO MEANS AND EARNS HIS LIVELIHOOD BY WORKING AS A SUPERVISOR IN A CONSTRUCTION FIRM, HAVING INCOME OF AROUND RS. 10,0007-. HE WAS ASKED AS TO WHETHER HE KNOWS SHRI KESHUBHAI KOR AT OR SHRI MAHAVIRSINH JADEJA (ASSESSEE), WHICH HE DENIED. HE ALSO DENIED TO HAVE STRUCK ANY LAND DEAL AND EXPRESSED COMPLETE IGNORANCE WHEN THE NOTA RIZED CASH RECEIPT WAS SHOWN TO HIM. IT IS THEREFORE ESTABLISHED THAT SHRI VINUBHAI SAKARIA IS MERELY 8 NAME LENDER AND HE IS NOT A PARTY TO DEAL. (4.5) SINCE THE ASSESSEE HAS ALSO DENIED INVESTMENT TO THE TUNE OF RS.1.65 CRORES, THEREFORE, IT BECAME NECESSARY TO CROSS EXA MINE THE ASSESSEE AND SHRI KESHUBHAI KORAT. DURING THE COURSE OF CROSS EXAMINA TION, SHRI KESHUBHAI IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 6 - KORAT WAS SPECIFICALLY ASKED TO EXPLAIN THE CASH FO UND FROM THE RESIDENCE OF SHRI JAYANTIBHAI TANTI, HIS SON-IN-LAW. HE ADMITTED THAT, THE CASH FOUND WAS PROCEEDS FROM THE SALE OF THE IMPUGNED LAND. HE WAS ALSO ASKED TO IDENTIFY THE ASSESSEE, FOR WHICH HE ADMITTED THAT, THE CASH WAS GIVEN TO HIM AT NIGHT AND HE COULD 'LOT PROPERLY IDENTIFY THE ASSESSEE. THIS VER SION MAY HOLD TRUE BECAUSE, SHRI KESHUBHAI KORAT IS A MAN OF 80 YEARS OF AGE AN D HE IS HAVING PROBLEM WITH HIS EYE SIGHT AND HEARING. (4.6) AT THIS STAGE, ANOTHER INTERESTING ARGUMENT W HICH WAS RAISED BY THE AR OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DING WAS THAT, IT IS POSSIBLE THAT THE SAID CASH MAY REPRESENT THE INCOME OF SHRI KESHUBHAI KORAT, AND HE, IN ORDER TO MITIGATE HIS TAX LIABILITY BY OFFERING CAPITAL GAIN AND GETTING IMMUNITY FROM PENALTY WOULD BE CASTING IT UPON THE ASSESSEE. HOWEVER, THIS ARGUMENT FAILS TO SURVIVE ON TWO GROUNDS. (I) SHRI KESHUBHAI IS A FARMER AND THE LAND IN QUES TION HAS BEEN RECEIVED BY HIM AS INHERITANCE. THERE IS NOTHING IN THE SEIZED MATERIALS WHICH REVEAL THAT SHRI KESHUBHAI HAD ANY SOURCE WHICH WOULD GENERATE SUCH HUGE AMOUNT OF CASH. FURTHER SINCE SHRI KESHUBHAI'S ONLY SOURCE WA S. AGRICULTURAL INCOME, WHICH IS EXEMPT IN ANY CASE, AND THUS, THERE WOULD HAVE BEEN NO LIABILITY UPON HIM TO DISCLOSE THE SAME. FURTHER, IT IS ALSO SEEN FROM THE RETURN OF SHRI- KESHUBHAI THAT, IN THE WORKING OF CAPITAL GAIN, SHR I KESHUBHAI, AFTER INDEXATION, HAD SHOWN CAPITAL GAIN TO THE EXTENT OF AROUND 1.60 CRORES. SO FAR AS PENALTY IS CONCERNED, SINCE THE SAME ACCRUED ONL Y IN THIS YEAR (THAT IS THE SEARCH RELEVANT AY), AND AS DUE DATE FOR FILING OF RETURN WAS STILL DUE, THERE, IS NO QUESTION OF INITIATING PENALTY PROCEEDINGS. THER EFORE THE ARGUMENT OF THE ID. AR OF THE ASSESSEE THAT THIS CASH MAY REPRESENT THE UNACCOUNTED INCOME OF SHRI KESHUBHAI KORAT, IS LAID TO REST. (II) THE SECOND LIMB THAT NEGATES THE ID. AR'S ARGU MENT IS THAT, IF THE THEORY OF 'INCOME FROM OTHER SOURCES' COMES INTO PLAY,.THEN T HE .QUANTUM OF UNDISCLOSED INCOME WOULD NOT BE RS.1.65 CRORES BUT ONLY TO THE EXTENT OF THE SEIZED CASH I.E., RS.88,51,500/-. THE AMOUNT OF RS 1.65 CRORES COMES INTO PLAY ONLY IF THE SALE OF PROPERTY COMES INTO QUESTION. IF SHRI KESHU BHAI WOULD HAVE ADOPTED A STRATEGY TO SHOW THE SEIZED CASH AS HIS UNACCOUNTED INCOME, THEN THE TAX EFFECT WOULD HAVE BEEN ROUGHLY 30% OF RS 88.51 LACS, WHICH WOULD HAVE WORKED OUT TO RS 26.55 LACS. AGAINST THIS, BY SHOWING IT AS CA PITAL GAIN AND AFTER WORKING OUT INDEXATION, THE GAIN OFFERED IS RS 1.60 CRORES, WHICH RESULTED IN TAX OF MORE THAN RS.32 LACS. THEREFORE, HAD IT BEEN INCOME FROM OTHER SOURCES, SHRI KESHUBHAI WOULD HAVE ENDED UP IN PAYING 25% LESSER TAX. HE DID NOT DO SO IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 7 - BECAUSE HE CHOSE TO HOLD TO WHAT IS TRUTH, THOUGH A T THE COST OF PAYING MORE TAX. HE HIMSELF BROUGHT THE NOTARIZED MONEY RECEIPT TO THE SEARCH AUTHORITIES DURING THE COURSE OF SEARCH ITSELF AND MADE STATEME NT TO THE EFFECT THAT THE CASH REPRESENTS SALE CONSIDERATION ONLY. THE STATEMENT W AS SPONTANEOUS, CONSISTENT AND SUPPORTED BY EVIDENCE. THEREFORE, THE AR'S ARGU MENT HAS NO LOGICAL END AND AN ATTEMPT TO PROVE IT AS HIS UNACCOUNTED INCOM E FROM OTHER SOURCES WOULD BE ETHICALLY UNSOUND. (4.7) DURING THE COURSE OF CROSS EXAMINATION, WHEN THE ASSESSEE WAS ASKED TO CONFORM THE STATEMENT OF SHRI KESHUBHAI, HE DENIED AND STATED THAT, HE HAD NOT GIVEN ANY CONSIDERATION OVER AND ABOVE THE DOCUMENT ED PRICE. (5.0) IN CASE OF CIVIL LAW THE EXISTENCE OF A FACT IS PROVED BY THE THEORY OF PREPONDERANCE OF PROBABILITY ON THE BASIS OF THE DO CUMENTS FOUND AND THE CIRCUMSTANTIAL EVIDENCES. WHEREAS IN; THE CRIMINAL LAW A FACT IS TO BE PROVED ON THE THEORY OF BEYOND REASONABLE DOUBT. INCOME TA X LAW IS A CIVIL LAW AND THEREFORE EXISTENCE OF A FACT IS TO BE PROVED BY TH E THEORY OF PREPONDERANCE OF PROBABILITY ON THE BASIS OF THE DOCUMENTS FOUND AND THE CIRCUMSTANTIAL EVIDENCES. THIS PRINCIPLE OF PREPONDERANCE OF PROBA BILITY AND CIRCUMSTANTIAL EVIDENCES TO BE CONSIDERED TO DETERMINE A FACT FOR THE PURPOSE OF IMPLEMENTATION OF TAXATION LAW, HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 8 01(SC). IN THE CASE OF RAJIV TANDON VS CIT REPORTED IN 294 ITR 458 (DELHI) , THE HON'BLE DELHI COURT HAS OBSERVED THAT TAXATION AUTHORITY NEEDS TO LOOK INTO THE CIRCUMSTANTIAL EVIDENCE AND IF CIRCUMSTANCES ARE UN USUAL OR UNNATURAL THEN THE THEORY BASED ON THE UNUSUAL OR UNNATURAL CIRCUM STANCES IS TO BE REJECTED. IN THIS CASE ON THE BASIS OF CIRCUMSTANTIAL EVIDENC ES AND THEORY OF PREPONDERANCE OF PROBABILITY IT HAS BEEN PROVED BY THE DISCUSSION IN EARLIER PARAGRAPHS THAT THE ASSESSEE HAS PAID RS. 1,65,00,0 001- FOR PURCHASE OF THE LAND. (5.1) FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT O NE AGRICULTURAL LAND HAS BEEN TRANSACTED AND ONE PARTY HAD OFFERED AND PAID CAPIT AL GAIN ON THE SAME. THE SECOND PARTY (I.E. THE ASSESSEE) THOUGH CONCEDING T HAT THE TRANSACTION DID TAKE PLACE (WHICH IS DULY REGISTERED), HAS HOWEVER DENIE D TO QUANTUM OF THE DEAL. SINCE CASH HAS BEEN FOUND FROM THE POSSESSION OF TH E SELLER SHRI KESHUBHAI (FROM THE POSSESSION OF HIS SON-IN-LAW) AND AS A MO NEY RECEIPT DULY NOTARIZED AND REGISTERED HAS BEEN FOUND, IN WHICH THE DEAL SI ZE HAS BEEN MENTIONED AT RS.1.65 CRORES, THEREFORE, IT IS AMPLY ESTABLISHED THAT THE ACTUAL SALE CONSIDERATION OF RS.1.65 CRORES HAVE BEEN MET FROM THE ASSESSEE'S UNACCOUNTED IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 8 - SOURCES. FURTHER, AS THE ASSESSEE . HAS NOT EVEN RE CORDED THE TRANSACTION IN HIS BOOKS EVEN AT THE REGISTERED SALE DEED VALUE OF RS. 3.51 LAKHS, THE BOOKS OF THE ASSESSEE IS NOT RELIABLE AND THEY ARE LIABLE TO REJ ECTION. (6.0) IN VIEW OF THE ABOVE DISCUSSION, AN ADDITION OF RS.1.65 CRORES IS MADE TO THE TOTAL INCOME OF THE ASSESSEE BEING HIS UNEXPLAI NED INVESTMENT IN PURCHASE OF -LAND SITUATED AT 87/1, VAVDI. OUT OF THIS AMOUN T RS.50,00,000/- HAS BEEN PAID AS ADVANCE ON 23.2.2007 AND THE BALANCE OF RS. 1,15,00,000/- HAS BEEN PAID ON 19.5.2007. THEREFORE RS. 50,00,000/- IS BEI NG TREATED AS UNACCOUNTED INVESTMENT BY WAY OF MAKING ADVANCE PAYMENT FOR PUR CHASE OF LAND FROM UNDISCLOSED SOURCES IN THE ASSESSMENT YEAR 2007-08 AND THE BALANCE RS.1,15,00,000/- IS BEING TREATED AS UNACCOUNTED IN VESTMENT BY WAY OF MAKING PAYMENT ON THE DATE OF SALE FOR PURCHASE OF LAND FR OM UNDISCLOSED SOURCES IN THE ASSESSMENT YEAR 2008-09. I AM CONVINCED THAT TH E ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND THEREFORE, PENALT Y PROCEEDINGS U/S.271(1)(C) HAS BEEN SEPARATELY INITIATED. 6. AGAINST THE ADDITION OF RS.50 LAKHS, ASSESSEE PR EFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE LD. AO. 7. BY WAY OF SECOND APPEAL, ASSESSEE HAS COME BEFOR E US. 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IN THIS CASE, ASSESSEE IS AN INDIVIDUAL AND ASSESSED T O TAX AND HE IS ENGAGED IN THE BUSINESS OF MANUFACTURING DIFFERENT KINDS OF BEARING AND NYLON CAGES AS ALSO ENGAGED IN THE JOB WORK OF THE SAME U NDER THE NAME AND STYLE P.M. PRODUCTS. 8.1. A SEARCH TOOK PLACE AT THE RESIDENTIAL PREMISE S OF ONE SHRI JAYANTIBHAI JAGABHAI TANTI AND CASH OF RS.88,51,500 /- WAS FOUND. DURING THE COURSE OF SEARCH, SHRI JAYANTIBHAI JAGABHAI TAN TI VIDE ANSWER TO QUESTION NO.17 OF HIS STATEMENT DATED 30/05/2007 AD MITTED THAT OUT OF THE IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 9 - SUM OF RS.88,51,500/-, A SUM OF RS.87,49,500/- BE LONGS TO HIS FATHER-IN- LAW SHRI KESHUBHAI KORAT. ACCORDINGLY, A SUMMONS U /S.131(1A) WAS ISSUED TO SHRI MAHESHBHAI KESHUBHAI KORAT, SON OF SHRI KESHUBHAI KORAT, TO EXAMINE THE VERACITY OF THE STATEMENT GIV EN BY SHRI JAYANTIBHAI TANTI. SHRI MAHESHBHAI KESHUBHAI KORAT WAS ALSO EX AMINED ON OATH AND WAS ASKED TO EXPLAIN THE SOURCE OF RS.87,49,500/-, WHICH WAS LYING AT THE RESIDENCE OF SHRI JAYANTIBHAI TANTI. SHRI MAHESHBH AI KORAT, SON OF KESHUBHAI VIDE ANSWER TO QUESTION NO.5, STATED THAT LAND ADMEASURING 2 ACRES 8 GUNTHAS WHICH WAS IN THE NAME OF HIS FATHER WAS SOLD FOR A SUM OF RS.1,65,00,000/- TO THE ASSESSEE. IT IS SEEN THAT THE TOTAL SALE CONSIDERATION OF THE ABOVE MENTIONED LAND AT SURVEY NO.87/1 WAS DECIDED AT RS.75,00,000/- PER ACRE, AMOUNTING TO RS .1,65,00,000/- OUT OF WHICH ADVANCE OF RS.50,00,000/- WAS PAID AS PER THE AGREEMENT TO SALE DATED 23.2.2007 (RELEVANT TO AY 2007-08) AND RECEIP T WAS MADE IN THE NAME OF ONE SHRI VINUBHAI SAKARIA. MOROEVER, ON T HE SAME DATE, THE AGREEMENT TO SALE DATED 23/02/2007 WAS ALSO MADE IN THE NAME OF SHRI VINUBHAI SAKARIA WHICH WAS REGISTERED WITH SUB-REGI STRAR, ZONE NO.2, (REGISTRATION NO.2928) FOR A SUM OF RS.3,50,000/-. THE FINAL SALE DEED WAS PREPARED ONLY FOR RS.3,51,000/- VIDE SALE DEED NO.092644 DATED 19/05/2007 BY SHRI VINODBHAI VALJIGHAI SAKARIA IN F AVOUR OF THE ASSESSEE. 8.2. NOW A QUESTION BEFORE US IS THAT WHETHER ASSES SEE HAS MADE PAYMENT OF RS.1.65 CRORES TO THE KESHUBHAI KORAT OR NOT. IN THIS CASE, WHEN THE DEPARTMENT HAD CARRIED OUT SEARCH AT THE P REMISES OF SHRI IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 10 - JAYANTIBHAI JAGABHAI TANTI, FROM WHOSE RESIDENCE, CASH TO THE TUNE OF RS.88,51,500/- WAS FOUND. SHRI JAYATIBHAI JAGABHAI TANTI IS ALSO A BUSINESS MAN AND ALSO ENGAGED IN VARIOUS MANUFACTUR ING ACTIVITIES. THUS, THE CASH WAS FOUND FROM THE PREMISES OF A THI RD PERSON NOT RELATED TO THE DEAL I.E., THE ASSESSEE OR SHRI KESHUBHAI KO RAT. 8.3. IN THIS CASE, DEPARTMENT HAS TAKEN THE STATEME NT OF NOT THE SELLER BUT HIS SON STATEMENT WAS RECORDED AND STATEMENT O F SHRI KESHUBHAI KORAT WAS RECORDED AFTER ALMOST ONE MONTH FROM THE DATE OF SEARCH. IF THE LAND BELONGED TO SHRI KESHUBHAI KORAT, THEN HIS STATEMENT OUGHT TO BE MADE THE PRIMA FACIE EVIDENCE AND NOT THE STATEM ENT OF HIS SON AND ORDER OF THE LD.AO IS HAVING SEVERAL CONTRADICTIONS . FIRST OF ALL, THE SO- CALLED MONEY RECEIPT IS UNSIGNED AND ASSESSEE HAD P AID ADVANCE OF RS.50 LAKHS, THE MONEY RECEIPT OUGHT TO HAVE BEEN ISSUED BY SHRI KESHUBHAI KORAT TO THE ASSESSEE. HOWEVER, IN THIS CASE, MONE Y RECEIPT WAS PRODUCED BY SHRI KESHUBHAI KORAT TO THE INVESTIGATI ON WING. THIS MONEY RECEIPT WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE. IN FACT, TRANSACTION TOOK PLACE AS PER THE FINDING NARRATED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER, THE MONEY RECEIPT OUGHT TO HAVE BEEN FOUND FROM THE POSSESSION OF ASSESSEE. 8.4. THE SEARCH AT THE PREMISES OF THE ASSESSEE DID NOT YIELD ANYTHING. NO DOCUMENTS, MONEY RECEIPT, AGREEMENT, ETC. WAS FO UND WHICH ESTABLISHES THAT THE ASSESSEE HAD PAID A TOTAL CONS IDERATION OF RS.1.65 CRORES TO SHRI KESHUBHAI KORAT. DURING THE COURSE OF CROSS-EXAMINATION, IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 11 - SHRI KESHUBHAI KORAT HAD DENIED TO HAVE RECEIVED CA SH FROM THE ASSESSEE. THE ASSESSING OFFICER HOWEVER, SIDELINED THIS ASPECT BY HOLDING ON THE BASIS OF WHIMS AND FANCIES THAT SHRI KESHUBHAI KORAT WAS AGED AND WAS HAVING EYE SIGHT PROBLEM. IN SUPPORT OF HIS CONTENTION, ASSESSEE CITED A JUDGEMENT OF HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. FAIRDEAL TEXTILE PARK (P.) LTD. REP ORTED IN 43 TAXMANN.COM 393. THE RELEVANT PORTION OF THE ORDER (HEAD NOTES) READS AS UNDER:- SECTION 69B OF THE INCOME-TAX ACT, 1961 - UNDISCLO SED INVESTMENT (INVESTMENT IN IMMOVABLE PROPERTY) - DURING SEARCH OF ASSESSEE COMPANY, TWO AGREEMENT TO SELL WERE FOUND, ACCORDIN G TO WHICH CASH PAYMENT WAS MADE BY ASSESSEE FOR PURCHASE OF LAND F OR ESTABLISHING A TEXTILE PARK - ASSESSING OFFICER FOUND THAT THERE W AS HUGE DIFFERENCE BETWEEN PRICE OF LAND SHOWN IN THOSE AGREEMENTS AT RS. 2.80 LAKH PER BIGHA AND PRICE SHOWN IN SALE DEEDS RELATED TO THOS E LANDS AT RS. 70,000 TO 80,000 PER BIGHA - THEREFORE, HE CONCLUDED THAT THERE WAS HUGE ON- MONEY TRANSACTION AND HE ADDED THAT DIFFERENTIAL AM OUNT IN INCOME OF ASSESSEE AS UNEXPLAINED INCOME - HOWEVER, THOSE AGR EEMENTS WERE CLAIMED TO BE CANCELLED BY EXECUTORS OF SAME - IT W AS FOUND THAT LAND HAD BEEN ORIGINALLY AGREED TO BE PURCHASED THROUGH MIDD LEMAN BUT ON REALIZING THAT MIDDLEMAN WAS TRYING TO SURREPTITIOU SLY POCKET HUGE AMOUNT OF MONEY, PURCHASES WERE MADE DIRECTLY FROM OWNERS AND ORIGINAL AGREEMENTS FOR SELL FOUND IN SEARCH WERE N OT AT ALL IMPLEMENTED - WHETHER IN ABSENCE OF ANY OTHER EVIDENCE OF ON-MO NEY PAYMENT, TRIBUNAL WAS JUSTIFIED IN DELETING ADDITION - HELD, YES [PARA 10] [IN FAVOUR OF ASSESSEE]. 9. AS NOTHING HAS BEEN RECOVERED FROM THE PREMISES OF THE ASSESSEE AND THERE ARE NO EVIDENCE THAT APPELLANT HAS MADE P AYMENT OF RS.1.65 CRORES AND RESPECTFULLY FOLLOWING THE DECISION OF H ONBLE JURISDICTIONAL IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 12 - HIGH COURT IN THE CASE OF FAIRDEAL TEXTILE PARK (P. )LTD.(SUPRA) AND IN THE ABSENCE OF ANY CLINCHING EVIDENCE, WE GIVE RELIEF T O THE ASSESSEE AND HOLD THAT IN THESE CIRCUMSTANCES ADDITION CANNOT BE SUST ATINED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN IT(SS) A NO.03/RJT/2011 FOR AY 2007-08 IS ALLOWED. ASSESSEES APPEAL IN ITA NO.116/RJT/2011 FOR AY 200 8-09 11. SINCE RELIEF HAS BEEN GRANTED BY US IN THE CONN ECTING APPEAL OF THE ASSESSEE(SUPRA) AND IN THIS APPEAL ONLY ASSESSMENT YEAR AND AMOUNT IS DIFFERENT. THUS, FOR PARITY OF REASONS NOTED ABOVE , OUR VIEW IN IT(SS)A NO.03/RJT/2011 FOR AY 2007-08 ABOVE SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL CAPTIONED ABOVE. AS A RESULT, THE APP EAL OF THE ASSESSEE IN ITA NO.116/RJT/2011 FOR AY 2008-09 IS ALLOWED . 12. NOW WE TAKE UP THE ASSESSEES APPEALS IN IT(SS) A NOS.36 & 37/RJT/2013 FOR AYS 2007-08 & 2008-09 RESPECTIVELY FOR CONFIRMING OF PENALTY BY THE LD.CIT(A). 13. IN THESE APPEALS, ASSESSEE AGGRIEVED FOR LEVYIN G OF CONSEQUENTIAL PENALTY BY THE LD.AO AND THEREAFTER CONFIRMED BY TH E CIT(A).. SINCE RELIEF HAS BEEN GRANTED IN THE QUANTUM APPEALS OF T HE ASSESSEE(SUPRA), THERE IS NO BASIS FOR LEVY/CONFIRMING THE PENALTY. THEREFORE, WE ALLOW THESE APPEALS OF THE ASSESSEE AND ACCORDINGLY DELET E THE PENALTY IT(SS)A NO.3/RJT/2011, ITA NO.116/RJT/2011, IT(SS)NOS.36 & 37/RJT/2013 SHRI MAHAVIRSINH D.JADEJA VS. ACIT ASST.YEARS 2007-08 & 2 008-09 - 13 - CONFIRMED BY THE LD.CIT(A). AS A RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 14. IN THE COMBINED RESULT, ALL THE FOUR APPEALS FI LED BY THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 26/02/2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDIC IAL MEMBER AHMEDABAD; DATED 26/02/2019 .. ,... / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $%$&' ( / CONCERNED CIT 4. ( ( ) / THE CIT(A)-IV, AHMEDABAD 5. ,-.'&' , &' , /DR,ITAT,RAJKOT 6. .:;< / GUARD FILE. / BY ORDER, #,' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, RAJKOT 1. DATE OF DICTATION ..26.2.19 (DICTATION-PAD 18- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE)DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATIN G MEMBER 27.2.2019 2. 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 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.26.2.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.2.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER