The Deputy Commissioner Of Income Tax, Central Circle-1, Rajkot V. Shri Hiren Kishorkumar Sodha, Rajkot

ITSSA 53/RJT/2018

AI Insights

The case involves an appeal by the Revenue against the decision of the Commissioner of Income Tax (Appeals) which had deleted the additions made by the Assessing Officer regarding alleged unaccounted cash payments and unexplained agricultural income. The primary contention was whether the cash payments recorded in the seized documents were made to the assessee or through him for the benefit of M/s. J.P. Structure Pvt. Ltd. The Tribunal found that the additions made by the Assessing Officer were unjustified as they amounted to double taxation, given that similar incomes were already accounted for in the books of M/s. J.P. Structure Pvt. Ltd. The Tribunal also upheld the deletion of the addition regarding agricultural income, noting the assessee's consistent reporting of such income over several years.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138267 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Income from undisclosed sources; Document seized; Documents seized; Set aside
• Section: 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The DCIT, Central Circle-1, Rajkot (Appellant) Vs Shri Hiren Kishorbhai Sodha, 301, Race Course Plaza, Race Course Ring Road, Rajkot PAN: AMIPS5737Q (Respondent) Assessee Represented: Shri D. M. Rindani, A.R. Revenue Represented: Shri Shramdeep Sinha, CIT/DR Date of hearing : 03-07-2023 Date of pronouncement : 19-07-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the appellate order dated 17.01.20218 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of the assessment order passed under section 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2011-12. IT(SS)A No. 53/Rjt/2018 Assessment Year 2011-12 I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 2 2. The brief facts of the case is that the assessee alongwith 7 others purchased an agricultural land bearing Survey No. 92 at Mavdi, Rajkot vide Sale Deed dated 26-12-2008 for sale consideration of Rs. 1.15 crores. Vide Partition Deed dated 30-10-2009, the agricultural land was partitioned between the partners in 4 parts and the assessee herein got part 2 and 3 of Survey No. 92 and he converted into non-agricultural land. There was a search and seizure action u/s. 132 of the Act in the premises of the assessee on 18.12.2013. The assessee is one of the director in M/s. J.P. Structure Pvt. Ltd. and Partner in M/s. J.P. Inn. During the course of search at the premises of Shri Jagdish Dobria who is the another director of the M/s. J.P. Structure Pvt. Ltd. and Partner in J.P. Inn, certain loose paper were found and seized. Page No. 36 of Annexure-A/5 pertains to ledger which is titled as “survey No. 92, Jagdishbhai” and period mentioned is “1 st April-2009 to 31 st July - 2013”. The A.O. extracted this page as part of the assessment order at page no. 3 in his assessment order. The A.O. after verification of the contents of this page held that Rs. 2.39 crores have been paid for Survey No. 92 which is the same land belongs to the assessee, on which J.P. Inn has constructed the hotel. Thus the Assessing Officer held that Rs. 2.39 crores was the on-money paid to the assessee and added as the income of the assessee and computed the Short Term Capital Gain. 2.1. Further the assessee offered Rs. 1,05,037/- as agricultural income, the same was not accepted by the A.O. on the ground that the documents submitted by the assessee clearly holds that the agricultural lands are held in joint names and assessee has lessor I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 3 shareholdings, therefore the A.O. treated the agricultural income as unexplained income. 3. Aggrieved against the assessment order, the assessee filed an appeal before Commissioner of Income Tax (Appeals). The Ld. CIT(A) after considering the submissions of the assessee held that the cash book and ledger found from the premises of Shri Jagdishbhai Dobria wherein it is clearly written that “Cash paid to Mavdi Survey No. 92 Through Hirenbhai” and “Cash paid to Mavdi Plot peta apta via Hirenbhai” which clearly proves that cash was not paid to the assessee (Hirenbhai) but through the assessee for the purpose of M/s. J.P. Structure Pvt. Ltd. Further Shri Jagdishbhai Dobria and M/s. J.P. Structure Pvt. Ltd. filed application before the Income Tax Settlement Commission, Mumbai wherein Jagdishbhai Dobria admitted income of Rs. 1.05 crores and M/s. J.P. Structure Pvt. Ltd. offered additional income of Rs. 26.04 crores, the same were accepted by the Settlement Commission vide its order dated 13/04/2016. Therefore the Ld. CIT(A) held that the addition on the same transaction and the same amount again in the hands of the assessee, is nothing but double addition and thereby deleted the addition observing as follows: “.....5.2.2 The facts mentioned in the assessment order with respect to the seized document and the submission of the appellant alongwith the order of the Settlement Commission, Mumbai has been considered thoroughly. The contention of the appellant is factually correct that it is clearly mentioned on page no. 36 of Annexure -A/5 (reproduced at page no. 3 of the assessment order) that cash payment has been written as "Cash paid to Mavdi plot through Hirenbhal". This proves that cash was paid through Hirenbhai i.e. appellant and not to the appellant. It has been written against each and every payment made in installments (11 times). It is absolutely clear from the seized documents, which has been relied upon for making the addition that cash was not paid to the appellant but through the appellant. I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 4 5.2.3 On 16.11.2009. Rs 15 lakhs is mentioned as "Cash paid to Mavdi" Survey No. 92 through Hirenbhai". Exact identical entries are for payment of Rs. 10 lakhs on 17.11.2009, Rs.20 lakhs on 18.11.2009, Rs. 30 lakhs on 23.11.2009 and Rs. 10 lakhs on 21.01.2010 are made. In all these entries total amount is Rs. 85 lakhs in it is written that the cash paid to "Mavdi Survey No. 92 through Hirenbhai which clearly shows that the cash was paid through Shri Hirenbhai, the appellant. It is not mentioned against any entry that the cash was paid to the appellant. Further, this amount of Rs. 85 lakhs paid in cash from 16.11.2009 to 21.01.2010 falls in the FY. 2009-10 pertaining to A.Y. 2010-11 and not to the A.Y. 2011-12, the year under consideration. Therefore, it cannot be assessed for the year under consideration. 5.2.4 Further, payment of cash of Rs. 9 lakhs has been written on 10.04.2010 as "Cash paid to Mavdi Plot peta via Hirenbhal". Exact identical entries were made for payment of Rs. 45 lakhs on 05.05.2010, 25 lakhs on 03.06.2010, Rs. 10 lakhs on 21.06.2010, Rs. 15 lakhs on 14.07.2010 and Rs. 50 lakhs on 30.07.2010. Rs. 25 lakhs had been paid by cheque to Parth Construction on 11.06.2010. Against all the entries showing cash payment, it is clearly written that cash was paid for Mavdi plot via Hirenbhai, "Via" is Gujarati word which means "through" in English. So it is written in English and Gujarati both languages that the cash was paid for Mavdi Plot through Hirenbhal. There is no mention against any entry in any way which shows payment made to the appellant. In these circumstances, additions in the hands of the appellant made by the A.O. are not justified. It is settled legal principle that the seized documents should be read fully & as a whole and not in piecemeal &selective manner, so that true nature of transaction can be understood. In the appellant's case, the AO did not pay attention to the word 'through' and 'via' written on the same--page against each and every entry. Looking to the discussion above, the additions made by the A.O. are not found justified. 5.2.5 The appellant's another contention that this issue of cash payment of Rs. 2.39 Crores by J. P. Structure Pvt. Ltd. In J. P. Land is covered by the application made by the J. P Structure Pvt. Ltd. for A.Y. 2010-11 to 2014- 15 before the Settlement Commission, Mumbai, The Settlement Commission, Mumbai, passed order dated 13.04.2016 u/s 245D(4) of the Act in the case of Shri Jagdishbhai Dobara for A.Y. 2008-09 to 2014-15 and in the case of M/s J. P. Structure Pvt. Ltd. For AY 2010-11 to 2014-15. M/s. J.P. Structure P Ltd has admitted additional income of Rs. 26.04 Crores before the Settlement Commission and the same was accepted by the Settlement Commission, Mumbai in order dated 13.04.2016. The transaction of cash payment of Rs. 2.39 Crores is mentioned in Para - 9 of the order of the Settlement Commission, Mumbai which is reproduced below:- I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 5 "9. With regards to the case of Shri. Jagdishbhai Gordhanbhai Dobaria, the first applicant, cash found and seized in search proceedings has been adequately explained in the hands of second applicant M/s. J. P. Structures Pvt. Ltd. as per cash available at Rs.11.54 crores as on 31.03.2014 in the Balance Sheet of M/s. J. P. Structures Pvt. Ltd. (Page 21 of SOF). Further issue of capital gain on sale of shares of Shree Securities Ltd. will arise only in the year of sale of these shares. The balance sheet as on 31.03.2014 of M/s. J. P. Structures Pvt. Ltd. also explains the amount of unaccounted cash Rs.2.39 crores invested in the JP land by the second applicant M/s. J. P.Structures Pvt. Ltd. The source of expenses/Investments as per seized papers is also satisfactorily explained by the application of additional income as shown in balance sheet of applicant as on 31.3.2014 (page 61 of SOF)" 5.2.6 On going through the order of the Settlement Commission as reproduced above, the issue of cash payment of Rs 2.39 Crores has been specifically mentioned and considered by the Settlement Commission and the same is part of the additional income offered by the J. P. Structure Pvt. Ltd. Therefore, addition of same transaction and the same amount in the hands of the appellant is nothing but double addition, therefore, this deserves to be deleted, hence, deleted.” 3.1. The Ld. CIT(A) also deleted the addition of Rs. 1,05,037/- made as unexplained income of the assessee observing as follows: “The appellant contended that he has submitted 7/12 of the land in support of agricultural income shown in the return of income. The appellant also produced bills for sale of agricultural produce. The appellant is showing agricultural income regularly for several years and after deducting expenditure from the gross income, net income is shown. Therefore, the appellant contended that the addition may be deleted. Facts of the case, assessment order and submissions of the appellant have been considered. It is a fact that the appellant is showing agricultural income for several years and it is not a big amount. The appellant owns agricultural land and filed copies of sale bills of agricultural produce. Keeping in view the overall facts of the case, the additions made by the Assessing Officer is not justified. Hence, the additions made by the Assessing Officer are deleted. Hence, this ground of appeal is allowed.” 4. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.2,39,00,000/- made on account of short term capital gain on transfer of land. I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 6 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating that the addition in the hands of the assessee was not a double addition since in the hands of the M/s J.P. Structure Pvt. Ltd. the amount of Rs.2,39,00,000/- was treated as its investment, whereas in the hands of the assessee it was taxed on receipt of income. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.1,05,037/- made on account of unaccounted income brought in guise of agricultural income.. 4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld.CIT(A) be set aside and that of the A.O. be restored to the above extent. 5. Ld. CIT-DR Shri Shramdeep Sinha appearing for the Revenue supported the order passed by the Assessing Officer and pleaded to uphold the additions made by the Assessing Officer and allow the Revenue’s appeal. 6. Per contra, Ld. Counsel Shri D.M. Rindani appearing for the assessee submitted before us a Paper Book containing copy of the order of the Settlement Commission in the case of Shri Jagdishbhai Dobria and M/s. J.P. Structure Pvt. Ltd. dated 13/04/2016 and Affidavit filed by the assessee and Statement recorded u/s. 132(4) of the Act. The Ld. Counsel submitted that the Ld. CIT(A) after considering the same amount offered by M/s. J.P. Structure Pvt. Ltd. in its Settlement Commission application and thereafter the deleted the above addition in the hands of the assessee. Thus the legal findings arrived by the Ld. CIT(A) does not require any interference. 6.1. Similarly, the agricultural income is also added as undisclosed income without appreciating the fact that the assessee regularly showing agricultural income for the previous as well as subsequent I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 7 assessment years. Thus the Ld. Counsel pleaded that the Grounds raised by the Revenue are devoid of merits and the same are liable to be dismissed. 7. We have given our thoughtful consideration and perused the materials available on record. The Ld. CIT(A) has clearly brought out that “ cash paid to Mavdi Survey No. 92 Through Hirenbhai” and “Cash paid to Mavdi Plot peta apta via Hirenbhai” on the various transactions pertaining to Assessment Years 2010-11 & 2011-12. The Assessing Officer failed to consider the word “through” and “via” in these sentences, but considered as such the cash paid to the assessee, thereby made the addition of Rs. 2.39 crores in the hands of the assessee. Further the balance sheet of M/s. J.P. Structure Pvt. Ltd. seized from the premises of Shri Jagdishbhai Dobria clearly shows that Rs. 2.64 crores has been shown in the assets side as Survey No. 92, Jagdishbhai. This clearly proves that the payment was made through the assessee for the purpose of M/s. J.P. Structure Pvt. Ltd. Further M/s. J.P. Structure Pvt. ltd. in their application before Income Tax Settlement Commission explained the amount of unaccounted cash of Rs. 2.39 crores invested in J.P. Land. The Ld. Income Tax Settlement Commission vide its order dated 13.04.2016 accepted the disclosure made by M/s. J.P. Structure Pvt. Ltd and allowed the application. Relevant Para 9 of ITSC is already extracted by the Ld. CIT(A) in his order. 7.1. Considering the above facts, the Ld. CIT(A) deleted the addition in the hands of the assessee on the ground that taxing the same I.T(SS).A No. 53/Rjt/2018 A.Y. 2011-12 Page No DCIT Vs. Shri Hiren Kishobhai Sodha 8 income in the hands of the assessee will amount to double taxation. The findings arrived by the Ld. CIT(A) is not controvented by the Ld. CIT-DR with any material evidences. In the absence of the same, we have no hesitation in confirming the order of the Ld. CIT(A) and hereby reject the grounds raised by the Revenue. 8. Similarly the agricultural income offered by the assessee was also deleted by Ld. CIT(A) on the ground that the assessee is offering agricultural income for earlier and subsequent assessment years also. This findings of the Ld. CIT(A) does not require any interference, in the absence of contra evidence or material placed by the Revenue. Thus this ground raised by the Revenue is also devoid of merits and the same is liable to be rejected. 9. In the result, the appeal filed by the Revenue is hereby dismissed. Order pronounced in the open court on 19-07-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 19/07/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट