The Dy. CIT, Central Circle-3, Vadodara V. Smt. Pratibhaben C. Panchmatiya, Anand

ITSSA 408/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1017 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-10-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 142(1); 153A; 143(2); 132

Judgement Text

IT(SS)A NO.408/AHD/2017 A.Y. 2010-11 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER IT(SS)A NO.408/AHD/2017 ASSESSMENT YEAR: 2010-11 DY. COMMISSIONER OF INCOME TAX, VS. SMT. PRATIBHABE N C PANCHMATIYA, CENTRAL CIRCLE 3, VADODARA. 107, SHREE RAM COMP LEX, OPP. UNION BANK, V.V. NAGAR, ANAND. [PAN BBFPP 0906 F] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK SINGH, CIT (D.R.) RESPONDENT BY : SHRI MUKUND BAKSHI, A.R. DATE OF HEARING : 03.10.2019 DATE OF PRONOUNCEMENT : 18.12.2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF LEARNED CIT(A) DATED 08.08.2017. THIS IS A COMMON ORDER PA SSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2010-11 TO 2012-13. HOWEVER, WE A RE CONCERNED WITH A.Y. 2010- 11 ONLY. 2. THE REVENUE HAS TAKEN 4 GROUNDS OF APPEAL BUT IT S GRIEVANCE REVOLVES AROUND A SINGLE ISSUE NAMELY THE CIT(A) HAS ERRED IN DELETIN G THE ADDITION OF RS.1,95,10,000/- WHICH WAS ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE PURCHASE OF LAND. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE VAGHELA GROUP OF C ASES ON 30.08.2013. IN ORDER TO GIVE A LOGICAL END TO THE PROCEEDINGS, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 23.02.2015. IN RESPONSE TO THIS NOTICE, RETURN WAS FILED ON 01.06.2015 DECLARING TOTAL INCOME AT RS.2,75,350/-. LEARNED ASSESSING OFFICER HAS ISSUED NOTICES UNDER SECTION 143(2) AND 142(1) OF T HE ACT. HE FOUND THAT DURING THE ACCOUNTING YEAR THE ASSESSEE HAS PURCHASED LAND BEA RING SURVEY NO.2315, SITUATED AT IT(SS)A NO.408/AHD/2017 A.Y. 2010-11 PAGE 2 OF 6 VINUKAKA MARG, BAKROL, ANAND. THE DEVELOPMENT RIGH T OVER THIS LAND WAS GIVEN TO M/S AASHRITA DEVELOPERS (PROP. NUPUR C. PANCHMATIYA NCP) FOR CONSTRUCTION OF 22 UNITS OF ANAND LAXMI BUNGALOWS. HE FURTHER NOTICED THAT THE LAND WAS PURCHASED THROUGH TWO SALE DEEDS WHICH WERE EXECUTED ON THE SAME DATE AND SAME CONSIDERATION WAS STATED TO BE PAID AT RS.60,50,000/- EACH. HOWEVER, DURING THE COURSE OF SEARCH, A PAPER INVENTORISED AND ANNEXED AS BS-3 (PAGE NO.36) WAS FOUND FROM THE RESIDENCE OF SHRI HIREN C. PANCHMATJYA WHICH DISCLOSED CASH P AYMENTS ALSO. THIS PAPER HAS BEEN REPRODUCED BY THE LEARNED ASSESSING OFFICER AS WELL AS LEARNED CIT(A) AND IT READS AS UNDER:- ANAND LAXMI LAND ACCOUNT DATE PARTICULARS AMOUNT 03.04.2010 CASH AS TOKEN 100000 22.03.2010 FIRST PAYMENT CASH 12800000 22.03.2010 FIRST PAYMENT CHQ 2000000 16.03.2010 FINAL PAYMENT CHQ 10100000 16.03.2010 FINAL PAYMENT CASH 6100000 16.03.2010 DASTAVEJ EXP. 610000 TOTAL AMOUNT PAID FROM ANAND LEELA A/C FOR LAXMI LAND 31710000 4. ON THE STRENGTH OF ABOVE SEIZED MATERIAL, LEARNE D ASSESSING OFFICER CONFRONTED THE ASSESSEE TO SHOW AS TO WHY CASH PAYMENT MADE BY THE ASSESSEE BE NOT TREATED AS UNEXPLAINED INVESTMENT. IN REPLY TO THE QUERY O F THE LEARNED ASSESSING OFFICER, IT WAS CONTENDED BY THE ASSESSEE THAT ACTUALLY THIS LA ND WAS PURCHASED BY MS. NUPUR C. PANCHMATIYA IN THE NAME OF THE ASSESSEE. SHE IS THE ONLY NAME LENDER. MS. NUPUR C. PANCHMATIYA HAS DEVELOPED THE PROJECT OVER IT AN D SOLD. SHE HAS ACCOUNTED FOR THE SALE PROCEEDS AND SHE HAS ACCOUNTED FOR THE ON- MONEY RECEIVED ON THIS PROJECT. ALL THESE WERE OFFERED FOR TAX IN THE SETTLEMENT PE TITION FILED BY MS. NUPUR C. PANCHMATIYA. 5. HOWEVER, THE LEARNED ASSESSING OFFICER DID NOT A CCEPT THIS CONTENTION OF THE ASSESSEE. HE MADE AN ADDITION OF RS.1,95,10,000/- IT(SS)A NO.408/AHD/2017 A.Y. 2010-11 PAGE 3 OF 6 6. DISSATISFIED WITH THE ACTION OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND REITERATED THE CONTENTION. LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE LD. ASSE SSING OFFICER AND THEREAFTER FOUND IT AS A FACT THAT THIS TRANSACTION HAS BEEN OWNED B Y MS. NUPUR C. PANCHMATIYA. SHE HAS OFFERED THE INCOME FROM THIS PROJECT. THE DISC USSION MADE BY THE LD. CIT(A) ON THIS ISSUE READS AS UNDER : 5. THE ABOVE SUBMISSION WAS FORWARDED TO THE ASSES SING OFFICER FOR HIS COMMENTS AND HIS REPORT IS RECEIVED VIDE REFERENCE NO.VDR/DCIT/CC-3/ REMAND REPORT/PP/ 2017- 18 DATED 13.06.2017. THE AO HAS, IN HIS REPORT, NOT DISPUTED THE FACTS AS SUBMITTED BY THE APPELLANT WH ICH, INTER ALIA, INCLUDE THE FOLLOWING: I) DEVELOPMENT OF HOUSING PROJECT BY MS.NUPUR PANC HMATIYA ON THE LAND PURCHASED IN THE NAME OF THE APPELLANT. II) INCORPORATION OF THE TRANSACTIONS FROM THE SALE AND PURCHASE OF THE HOUSING PROJECT ON THE LAND IN THE NAME OF THE APPELLANT AS RECEIVED IN CASH AND IN CHEQUES IN THE CASH FLOW AN D APPLICATION RESPECTIVELY AS FILED BEFORE THE HON'BLE ITSC. III) QUANTIFICATION OF INCOME IN THE CASE OF MS. NUPUR PANCHMATIYA ON INCORPORATING THE TRANSACTIONS AS ABOVE. THE ONLY OBJECTION OF THE AO IS THAT THE CLAIM FOR CLUBBING THE INCOME IN THE HANDS OF MS. NUPUR PANCHMATIYA IS ONLY A DEVICE TO DIVERT HER INCOME AND THAT 'THE ASSESSEE COULD NOT ESTABLISH ANY LINK OF PAYME NTS WITH SUPPORTING DOCUMENTARY EVIDENCES THAT THE CASH PAYMENTS WERE O UT OF THE FUND SOURCE OF MS.NUPUR PANCHMATIYA AS CONTESTED BY THE ASSESSEE B EFORE CIT(A), THE ADDITION MADE IN THE CASE OF THE ASSESSEE BY THE AO DESERVES TO BE SUSTAINED'. 6. IN REJOINDER TO THE REMAND REPORT OF THE AO, THE LD. AR SUBMITS THAT THE OBJECTION AND THE FINDINGS OF THE AO IN THE REMAND REPORT ARE UNFOUNDED AS THE TRANSACTIONS FOR RECEIPT OF SALE PROCEEDS IN CASH A ND THE EXPENSES THEREFROM ARE INCORPORATED IN THE CASH FLOW SUBMITTED WHICH E STABLISHES A LINK BETWEEN THE RECEIPT OF CASH WHICH IS UNACCOUNTED AND THE PA YMENT THEREFROM FOR THE PURCHASE OF LAND IN THE NAME OF THE APPELLANT. THE ENTIRE CASH ON-MONEY ON THE SALE OF THE HOUSING PROJECT CONSTRUCTED AND SOL D AS DEVELOPED ON THE LAND HELD IN THE NAME OF THE APPELLANT IS ALSO ACCOUNTED FOR IN THE COMPUTATION OF INCOME BY MS. NUPUR PANCHMATIYA WHICH IS NOT DOUBTE D AND THEREFORE, THE PAYMENTS FROM SUCH CASH FLOW IN THE PURCHASE OF THE LAND CANNOT ALSO BE DOUBTED OR SAID TO BE WITHOUT ANY LINK. 6.1 THE CHEQUE RECEIPTS ON THE SALE OF THE LAND IS ADMITTEDLY RECEIVED IN THE ACCOUNT OF THE APPELLANT WHICH IS ALSO NOW CONSIDER ED AND OFFERED AS RECEIPT OF IT(SS)A NO.408/AHD/2017 A.Y. 2010-11 PAGE 4 OF 6 MS. NUPUR PANCHMATIYA IN THE APPLICATION FILED TO T HE HONBLE ITSC. MS. NUPUR PANCHMATIYA HAS ACCOUNTED FOR AND OFFERED THE CHEQU E RECEIPTS AND ALSO CASH ON-MONEY RECEIPTS AS PART OF HER RECEIPTS IN THE CO MPUTATION OF INCOME AND, THEREFORE, THE TAXATION OF THE AMOUNT OF INVESTMENT AS UNEXPLAINED IN THE CASE OF THE APPELLANT WOULD AMOUNT TO DOUBLE TAXATION AN D THE SAME WOULD BE UNJUSTIFIED. 7. TO APPRECIATE THE FACTS AND RELIANCE PLACED BY T HE ASSESSEE/THE LD. AR ON THE ORDER OF HONBLE ITSC, MUMBAI, IT WOULD BE A PPROPRIATE TO BRING OUT THE QUANTUM OF ADDITIONAL INCOME DISCLOSED BY THE APPLI CANTS, THE MODE OF EARNING THEREOF AND ADDITIONAL INCOME ORDERED BY THE HONBL E COMMISSION IN ITS ORDER DATED 01/05/2017 U/S 245D(4) WHICH, IN BRIEF, IS AS UNDER: 7.1 MS. NUPUR CHANDRAKANT PANCHMATIYA (MS. NUPUR I N SHORT), AN INDIVIDUAL AND M/S. ANANDITA LUXURIOUS APARTMENTS (ALA IN SHOR T), A PARTNERSHIP FIRM IN WHICH MS. NUPUR PANCHMATIYA IS A PARTNER MADE A JOI NT APPLICATION BEFORE THE HONBLE ITSC, DISCLOSING AN ADDITIONAL INCOME OF RS .220.98 LAKHS IN THE HANDS OF MS. NUPUR PANCHMATIYA AND RS.53.2 LAKHS IN THE H ANDS OF ALA COVERING VARIOUS YEARS FROM A.Y. 2008-09 TO A.Y. 2015-16. I N THE STATEMENT OF FACTS (SOF) ESCAPEMENT OF SALES WAS ATTRIBUTED ON ACCOUNT OF DIVERSION OF SALE CONSIDERATION RELATING TO LAND PORTION TO THE TWO L ADIES IN WHOSE NAME THE RESPECTIVE PLOTS OF LAND WERE REGISTERED AND ON-MON EY COLLECTED IN TWO PROJECTS IN CASH AS WELL AS BY CHEQUE. THE APPLICATION WAS ADMITTED VIDE ORDER U/S 245D(1) DATED 20/11/2015. IT WAS ADMITTED IN THE SO F THAT MS. NUPUR PANCHMATIYA COMMENCED THE BUSINESS OF REAL ESTATE D EVELOPMENT AND CONSTRUCTION IN THE YEAR 2008 WITH THE HELP OF FAMI LY MEMBERS AND DAY-TO-DAY AFFAIRS OF BUSINESS WAS HANDLED BY HER BROTHER, SHR I HIREN CHANDRAKANT PANCHMATIYA. THE INITIAL CAPITAL REQUIRED FOR THE BUSINESS WAS FROM CONTRIBUTION OF THE FAMILY MEMBERS INCLUDING SHRI HIREN PANCHMAT IYA AND FUNDS FOR THE BUSINESS WERE PROVIDED BY SHRI JAYENDRABHAI THOBANI , MATERNAL UNCLE OF MS. NUPUR. DURING THE COURSE OF SEARCH AND SURVEY CONDU CTED ON 26/04/2013, SHRI HIREN PANCHMATIYA, BROTHER, SMT. PRATIBHA C. PANCHM ATIYA, MOTHER, SHRI ANKUR C. PANCHMATIYA, BROTHER, SMT. SONAL PANCHMATIYA, WI FE OF SHRI HIREN PANCHMATIYA WERE COVERED AND CASH OF RS.48,500/- AN D JEWELLERY VALUED AT RS.33,77,150/- WERE FOUND OUT OF WHICH JEWELLERY VA LUED AT RS.27,50,000/- WAS SEIZED. IN THE STATEMENT U/S 132(4) SHRI HIREN PAN CHMATIYA ADMITTED AN UNDISCLOSED INCOME OF RS.1 CRORE AND SINCE THE BUSI NESS IS OWNED BY MS. NUPUR PANCHMATIYA, THE ABOVE DECLARATION MADE BY SH RI HIREN PANCHMATIYA WAS ENDORSED AND ADMITTED AS PERTAINING TO HER VIDE LETTER DATED 23/07/2013 SUBMITTED TO DDIT, INV. WING-1, BARODA. NO DECLARAT ION OF ANY UNDISCLOSED INCOME WAS MADE IN THE CASE OF ALA. 7.2 DURING THE HEARING U/S 245D(4), THE APPLICANTS FURTHER ADMITTED ENHANCED DISCLOSURE BY RS.58.38 LAKHS IN THE HANDS OF MS. NUPUR PANCHMATIYA AND RS.20.23 LAKHS IN THE HANDS OF ALA SPREAD OVER VARIOUS ASSESSMENT YEARS. TAKING INTO ACCOUNT ALL FACTS AND DISCUSSION ON REC ORD, THE HON'BLE INCOME-TAX SETTLEMENT COMMISSION CONCLUDED THAT THE ADDITIONAL INCOME OFFERED CAN BE ACCEPTED WITH REFERENCE TO INCOME DISCLOSED IN THE SETTLEMENT APPLICATION AND THE ORDER WAS PASSED HOLDING THAT THE ORDER SHALL B E VOID IF IT IS SUBSEQUENTLY FOUND BY THE HON'BLE COMMISSION THAT THE SAME HAVE BEEN OBTAINED BY FRAUD IT(SS)A NO.408/AHD/2017 A.Y. 2010-11 PAGE 5 OF 6 OR MISREPRESENTATION OF FACTS. THE HON'BLE SETTLEME NT COMMISSION HAS CONSIDERED ALL FACTS INCLUDING THOSE RELATED TO PUR CHASES OF LANDS, THE SOURCES OF FUNDS THEREOF, THE PERSONS IN WHOSE NAMES THE LA NDS WERE REGISTERED, VARIOUS BORROWINGS AND VARIOUS DEPOSITS OF CHEQUES AND ON-MONEY RECEIVED IN THE COURSE OF BUSINESS. THE ACCOUNTING METHOD, WORK ING OF PROFIT FROM THE BUSINESS AND APPORTIONMENT OF VARIOUS RECEIPTS AND PROFITS FROM THE PROJECTS OVER VARIOUS YEARS WERE ALSO EXAMINED BY THE HON'BL E COMMISSION AND CORRECTED BY THE APPLICANTS DURING THE PROCEEDINGS. 8. FROM THE PERUSAL OF ASSESSMENT ORDER, SUBMISSION S MADE BY THE LD. AR DURING THE APPEAL PROCEEDINGS, THE REMAND REPORT OF THE AO AND THE PROCEEDINGS BEFORE AND THE ORDER U/S 245D(4) BY THE HON'BLE SETTLEMENT COMMISSION, THERE APPEARS TO BE NO SCOPE WHERE UNDE R THE ADDITIONS MADE BY THE AO IN THE IMPUGNED ASSESSMENT ORDERS CAN BE UPH ELD IN ANY WAY. THOUGH THE NAMES OF OTHER FAMILY MEMBERS INCLUDING THE ASS ESSEE IN THE CASE HAVE BEEN USED FOR THE PURCHASE OF LAND AND FOR OTHER AC TIVITIES DURING THE COURSE OF BUSINESS AND BASED ON THE EVIDENCES BEFORE THE DEPA RTMENT, THE ASSESSMENTS IN REGARD TO INVESTMENTS AND TRANSACTIONS SHOULD HA VE BEEN MADE IN THE HANDS OF RESPECTIVE PERSONS INCLUDING THE ASSESSEE IN THE CASE, THE SAME CANNOT BE SUSTAINED NOW IN VIEW OF THE ORDER OF THE HON'BLE S ETTLEMENT COMMISSION AS THAT WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME AM OUNT ALREADY ASSESSED - THAT IS ACCEPTED BY THE HON'BLE SETTLEMENT COMMISSI ON IN THE HANDS OF MS. NUPUR CHANDRAKANT PANCHMATIYA AND M/S. ANANDITA LUX URIOUS APARTMENTS. 8.1 ACCORDINGLY THE ADDITION OF RS.1,95,10,000/- IN THE A.Y. 2010-11 AND OF RS.1,00,000/- IN THE A.Y. 2011-12 MADE IN THE HANDS OF THE APPELLANT BY THE AO ARE TO BE DELETED. IF THE ORDER OF THE HONBLE ITS C BECOMES VOID OR ABATES, THE ASSESSMENT ORDERS SHALL GET REVIVED. HOWEVER, WHILE GIVING EFFECT TO THIS ORDER, THE AO MAY EXAMINE THE APPLICABILITY OF THE PROHIBI TION OF BENARNI TRANSACTION ACT IN THE CASE. 9. THE APPEAL IS ALLOWED. 7. BEFORE US, LEARNED DEPARTMENTAL REPRESENTATIVE R ELIED UPON THE ASSESSMENT ORDER, HOWEVER, HE WAS UNABLE TO CONTROVERT THE FIN DINGS RECORDED BY THE LD. CIT(A). 8. ON THE CONTRARY, LEARNED COUNSEL FOR THE ASSESSE E PLACED RELIANCE ON THE COPY OF THE HONBLE INCOME TAX SETTLEMENT COMMISSION ORD ER DATED 01.05.2017 PASSED IN THE CASE OF MS. NUPUR C. PANCHMATIYA. HE POINTED O UT THAT TAX IMPLICATIONS OF PROJECT OF THIS LAND AS WELL AS ITS DEVELOPMENT HAS DULY BE EN CONSIDERED IN HER CASE IN THIS SETTLEMENT OF THE TAX DISPUTES. 9. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DEMONSTRATED THAT SHE WAS JUST A NAME LENDER. IT(SS)A NO.408/AHD/2017 A.Y. 2010-11 PAGE 6 OF 6 ACTUAL INVESTMENTS WERE MADE BY MS. NUPUR C. PANCHM ATIYA. SHE HAS RECEIVED THE SALE PROCEEDS AFTER DEVELOPMENT OF THIS PROJECT INC LUDING THE ON-MONEY AND SHE HAS PAID THE CASH FOR PURCHASE OF THIS LAND. EVERYTHIN G HAS BEEN ACCOUNTED IN HER ACCOUNT AND SHE HAS OWNED UP THE TRANSACTIONS BEFOR E THE SETTLEMENT COMMISSION. LD. CIT(A) HAS APPRECIATED THE CONTROVERSY IN THE R IGHT PERSPECTIVE AND HAS GIVEN DIRECTION TO THE LEARNED ASSESSING OFFICER THAT IF ORDER OF THE SETTLEMENT COMMISSION BECOMES VOID OR ABATES, THEN THE ASSESSMENT ORDER W ILL REVIVE AFTER CONSIDERING THE WELL REASONED ORDER OF THE LEARNED CIT(A). 10. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THIS APPEAL OF THE REVENUE IS DEVOID OF ANY MERITS AND H ENCE DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2019. SD/- SD/- AMARJIT SINGH RAJPAL YADAV (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 18 TH DAY OF DECEMBER, 2019 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD