Appeal Details
Counselvise Citation
[2015] 122 COUNSELVISE.COM (IT) 1056 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 year(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
29-10-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
C
Next Hearing Date
06-08-2015
Assessment Year
2003-2004
Appeal Filed On
18-10-2011
Judgement Text
, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ IT(SS)A NO.541 AND 542/AHD/2011 / ASSTT. YEAR: 2007-2008 AND 2008-2009 AND IT(SS)A NO.564, 565, 566, AND 567/AHD/2011 ASSTT. YEAR: 2003-04, 2004-05, 2005-06 AND 2006-07 SHRI PARESHBHAI B. PATEL 8-A, PANCHVILLA BUNGALOWS OPP: LADI MARRIAGE HALL MEMNAGAR 380 052 AHMEDABAD. PAN : ABXPP 3071 C VS ACIT, CENT.CIR.2(4) AHMEDABAD. IT(SS)A NO.573 AND 613/AHD/2011 ASSTT. YEAR: 2007-2008 AND 2009-10 ACIT, CENT.CIR.2(4) AHMEDABAD. VS SHRI PARESHBHAI B. PATEL 8-A, PANCHVILLA BUNGALOWS OPP: LADI MARRIAGE HALL MEMNAGAR 380 052 AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI DHIREN SHAH REVENUE BY : SHRI SURENDRA KUMAR, CIT-DR ! / DATE OF HEARING : 06/08/2015 '#$ ! / DATE OF PRONOUNCEMENT: 29 /10/2015 SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 2 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: OUT OF THE PRESENT BUNCH OF EIGHT APPEALS, SIX ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD.CIT(A) DATED 01.09.2011 IN THE ASSTT.YEARS 2003-04 TO 2008-09 RE SPECTIVELY. IN THE ASSTT YEAR 2007-08 AND 2009-10, THE DEPARTMENT IS A LSO IN APPEAL BEFORE US. SINCE COMMON ISSUES ARE INVOLVED, THEREF ORE, WE HEARD ALL THE APPEALS TOGETHER AND DEEM IT APPROPRIATE TO DIS POSE OFF THEM BY THIS COMMON ORDER. 2. THE MAJOR ISSUES ARE INVOLVED IN THE CROSS APPEA LS FOR THE ASSTT.YEAR 2007-08 AND ASSESSEES APPEAL IN THE ASS TT.YEAR 2008-09. THE LD.FIRST APPELLATE AUTHORITY ALSO DECIDED THE A PPEALS OF BOTH THESE ASSESSMENT YEARS BY WAY OF COMMON ORDER. THEREFORE , FIRST WE TAKE UP ALL THE APPEALS FOR THE ASSTT.YEAR 2007-08 AND 2008 -09 TOGETHER. 3. THE GROUNDS OF THE APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES 1963. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NA TURE. THE ASSESSEE HAS ANNEXED A PRAYER CLAUSE AT THE END OF THE GROUN DS OF APPEAL, WHICH EXHIBITS HIS GRIEVANCE IN BOTH THE ASSESSMENT YEARS . THIS CLAUSE IN BOTH THE ASSESSMENT YEARS READ AS UNDER: ASSTT.YEAR 2007-08 (ASSESSEES APPEAL) 1. THE ADDITION OF RS.1,03,90,705/- CONFIRMED BY THE L D.CIT(A) ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS TREATING TH E SAME AS BUSINESS INCOME FROM ALLEGED LAND DEAL OUT OF TOTAL ADDITION OF RS.1,56,58,215/- AS MADE BY THE LD.AO MAY KINDLY BE DELETED. 2. THE ADDITION OF RS.75,000/- ON ACCOUNT OF INTEREST INCOME ON ALLEGED ADVANCES TREATING THE SAME AS ACCRUED IN TEREST CONFIRMED BY THE LD.CIT(A) MAY KINDLY BE DELETED. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 3 3. SUCH AND FURTHER RELIEF AS THE NATURE AND CIRCUMSTA NCES OF THE CASE MAY JUSTIFY. ASSTT.YEAR 2007-2008 (REVENUES APPEAL) 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS AND CI RCUMSTANCES OF THE CASE BY DELETING ADDITION MADE BY THE AO OF RS.53,04,675/- AND RS.29,93,800/- RELYING ON THE NO TINGS IN THE SEIZED MATERIALS OUT OF RS.1,86,53,180/-. 2. THE LD.CIT(A) FURTHER ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING ADDITION MADE OF RS.5,94,075/- ON ACCOUNT OF DIFFERENCE IN OTHER JAN TRI RATE AS THE ASSESSEE HAD ACCEPTED THE VALUE AS PER DEPUTY COLLE CTOR STAMPS DUTY VALUATION CELL, GANDHINAGAR AND PAID THE ADDIT IONAL STAMP DUTY THEREON. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO ON THE ABOVE ISSUES. ASSTT.YEAR 2008-09 (ASSESSEES APPEAL) 1. THE ADDITION OF RS.20,54,508/- OUT OF THE TOTAL ADD ITION OF RS.98,61,639/- ON ACCOUNT OF UNACCOUNTED CASH RECEI PTS FOR WHICH THE LD. CIT(A) HAS GIVEN A DIRECTION TO THE AO FOR VERIFICATION MAY KINDLY BE DELETED. 2. THE TELESCOPING EFFECT IN RESPECT OF BROKERAGE INCO ME @ % HELD BY THE LD.CIT(A) ON THE LAND DEAL TRANSACTIO N MAY KINDLY BE GIVEN AGAINST THE ADDITIONAL INCOME OFFERED BY T HE APPELLANT IN THE RETURN OF INCOME. 3. THE ADDITION OF RS.2,55,000/- ON ACCOUNT OF INTERES T INCOME ON ALLEGED ADVANCES TREATING THE SAME AS ACCRUED IN TEREST CONFIRMED BY THE LD.CIT(A) MAY KINDLY BE DELETED. 4. SUCH AND FURTHER RELIEF AS THE NATURE AND CIRCUMSTA NCES OF THE CASE MAY JUSTIFY. 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED IN THE GROUP CASES OF ADI AVIRAT ON 23.5.2008. RESIDENTIAL PREMISES O F THE ASSESSEE WAS ALSO SUBJECT TO SEARCH ON 23.5.2008. DURING THE CO URSE OF SEARCH, SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 4 INCRIMINATING MATERIALS INCLUDING LOOSE PAPER WERE FOUND. THESE WERE INVENTORISED AS ANNEXURE AS-1 TO AS-9 AND ANNEXURE AR-1 TO AR-4. IN ORDER TO GIVE LOGICAL END TO THE SEARCH PROCEEDINGS A NOTICE UNDER SECTION 153A(A) WAS ISSUED UPON THE ASSESSEE. IN R ESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED RETURN OF INCOME ON 31.7.2010 DECLARING AN INCOME OF RS.9,91,679/- AND RS.28,69,110/- IN TH E ASSTT.YEARS 2007-08 AND 2008-09 RESPECTIVELY. THE AO HAD ISSU ED A NOTICE UNDER SECTION 142 ALONG WITH QUESTIONNAIRE UPON THE ASSES SEE ON 21.9.2010. HE FURTHER ISSUED A FRESH NOTICE UNDER SECTION 143( 2) ALONGWITH A QUESTIONNAIRE UNDER SECTION 142(1) ON 22.10.2010, B ECAUSE, THE INCUMBENT IN THE SEAT OF THE AO HAS CHANGED. THE LD.AO APART FROM MAKING ADDITION TO THE TOTAL INCOME OF THE ASSESSEE IN BOTH THE ASSESSMENT YEARS HAS RAISED PERIPHERAL ISSUES, VIZ. (A) ASSESSEE DID NOT COOPERATE WITH THE DEPARTMENT DURING THE COURSE OF SEARCH AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND (B ) ASSESSEE IS NOT SIMPLY AGRICULTURIST, RATHER, HE IS TRADING IN LAND IN AN ORGANIZED MANNER, THEREFORE, THE INCOME FROM SALE OF LAND IS TO BE TREATED AS BUSINESS INCOME INSTEAD OF CAPITAL GAIN, WHICH IS E XEMPT. BECAUSE ACCORDING TO THE ASSESSEE, SECTION 2(14) PROVIDES T HE DEFINITION OF ASSETS AND AGRICULTURAL LAND SOLD BY HIM HAS BEEN E XCLUDED FROM CAPITAL ASSET. AS FAR AS THESE PERIPHERAL ISSUES ARE CONCER NED, WE WILL REVERT BACK IN THE LATER PART OF THIS ORDER, BUT, FIRSTLY, WE WANT TO FOCUS ONLY ON THE MAIN ADDITION MADE BY THE AO. AS FAR AS MAIN I SSUES ARE CONCERNED, THE GROUNDS TAKEN BY RESPECTIVELY PARTIE S IN THESE THREE APPEALS ARE COMMON. THE FACTS RELEVANT TO THE MAIN ADDITIONS ARE AS UNDER: 5. DURING THE COURSE OF SEARCH PROCEEDINGS, LOOSE P APER WHICH HAS BEEN MARKED AS PAGE NO.72 AND 73 OF ANNEXURE AS-5 W ERE FOUND. THE WHOLE DISPUTE IN THESE APPEALS IS DEPENDED UPON THE CONSTRUCTION/ INTERPRETATION OF THESE LOOSE PAPERS. COPIES OF LO OSE PAPER ARE AVAILABLE AT PAGE NO.1020, 1021 AND 1022 OF PAPER BOOK-4. TH E LD.COMMISSIONER SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 5 HAS REPRODUCED PAGE NO.73 AS WELL AS ITS BACK-SIDE IN THE IMPUGNED ORDER ON PAGE NO.41 AND 42. IN ORDER TO APPRECIATE THE CONTROVERSY IN A MORE SCIENTIFIC WAY, IT IS NECESSARY TO TAKE NOTE OF THIS PAGE NO.73 OF THE SEIZED PAPER WHICH HAS BEEN REPRODUCED BY THE C IT(A) AT PAGE NOS.41 AND 42. IT READ AS UNDER: 1250-7729 1243-4043 REMAINING/PENDNG: 1251-13200 1242 : 5827 1212-14865 1246-1243:5827 1239-3449 1241:4519 1247-4043 1238:4481 1240-3805 =20654 1249-6540 HALF THEREOF WOULD BE 10327 1244-10940 CHEQUE 1422200 -------- BLOCK 1215 = 0.29.00 68614 BLOCK 1245 = 0.06.00 /29.48 X 900000 = 2,65,37,430 PARESHBHAI 13268715/- 2389500/- ----------- 15658215 1220-6540 1233-5827 ------ SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 6 12367 DIVIDEND BY 5.31 VIGHA X 900000 4779000 CHEQUE 80410 CHEQUE 1422200 2 2226300 PARESHBHAI 2389500 2389500 6.5 ON THE BACK SIDE OF PAGE NUMBER 73 THE FOLLOWIN G ENTRIES ARE APPEARING: CASH DATE CHEQUE 500,000 31/8/2006 22,26,300 550,000 2/9/2006 29,00,000 22/9/2006 10,50,000 26/9/2006 25,00,000 7/10/2006 15,00,000 20/10/2006 10,19,430 7/2/2006 100,19,430 100,19,430 CASH 22,26,300 CHEQUE 122,45,730 156,58,215 122,45,730 RECEIVED 34,2485 ----------- 6. WHILE CONSTRUING THESE PAGES, THE LD.AO HAS OBSE RVED THAT LAND MENTIONED IN SURVEY NOS. AVAILABLE ON THESE PAGES H AVE BEEN SOLD BY THE ASSESSEE AT THE RATE OF RS.9,00,000/- PER VIGHA WHICH IS FAR MORE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 7 THAN THE AMOUNT STATED IN THE SALE DEED. THE ASSES SEE HAD RECEIVED CASH COMPONENTS ON SALE OF THESE LANDS, WHICH WAS N OT FURTHER GIVEN TO THE ORIGINAL LAND OWNERS, AND THEREFORE, INCOME OUG HT TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. HE NOTICED THE DETAILS OF LAND, NAME OF SELLER, NAME OF PURCHASER, DATE OF REGISTRATION OF SALE AS PER REGISTERED SALE DEED IN TABULAR FORM. THESE DETAILS PERTAINED TO ALL THE SURVEY NUMBERS MENTIONED AT PAGE NO.72 AND 73 OF THE ANNEX URE AS-5 FOUND DURING THE COURSE OF SEARCH. IT IS PERTINENT TO TA KE NOTE OF THESE DETAILS: PAGE NO.72 OF ANNEXURE AS-5 IN THE CSE OF PARESH BA BUBHAI PATEL SURVEY NO. AREA SQ.MTR. NAME OF THE SELLER NAME OF THE PURCHASER DATE OF REG. SALES AS PER REG. SALE DEED. 1197, 1217, 1219, 1222, 1223, 1224, 1225, 1227 40233 ISHWARBHAI JETHIDAS PATEL & OTHERS (POA PARESH BABUBHAI PATEL) RAJKESHKUMAR RAMESHBHAI PATEL & OTHERS 02.11.2007 11466405/- 1298 5697 ISHWARBHAI JETHIDAS PATEL & OTHERS (POA PARESH BABUBHAI PATEL) RAJKESHKUMAR RAMESHBHAI PATEL & OTHERS 02.11.2007 1626780/- 1228, 1229, 1230, 1235, 1248 1235, 1248 24497 RAJKESHKUMAR RAMESHBHAI PATEL & OTHERS 02.11.2007 6981645/- 786 8086 ISHWARBHAI JETHIDAS PATEL & OTHERS (POA PARESH BABUBHAI PATEL) RAJKESHKUMAR RAMESHBHAI PATEL & OTHERS 02.11.2007 1018836/- 1232 5827 ISHWARBHAI JETHIDAS PATEL & OTHERS (POA PARESH BABUBHAI PATEL) RAJKESHKUMAR RAMESHBHAI PATEL & OTHERS 02.11.2007 1660695/- 1218 3092 GABHAJI NATHAJI THAKORE &OTHERS (POA JAYENDRA MAVJIBHAI) JAGDISHBHAI BHAGWANBHAI CHANDARANA & OTHERS 18.01.2008 882000/- 1231 9513 GABHAJI NATHAJI THAKORE &OTHERS (POA JAYENDRA MAVJIBHAI) RAJENDRABHAI BHALABHAI PATEL & OTHERS 01.09.2007 100000/- 1258 9409 KESHABHAI HARKHABHAI PARMAR & DHIRUBHAI BABUBHAI PATEL JAGDISHBHAI BHAGWANBHAI CHANDARANA & OTHERS 04.10.2008 1,411350/- 106360 2,34,87,016/- SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 8 SQ.MTRS. 43.20 VIGHA PAGE NO.73 OF ANNEXURE AS-5 IN THE CSE OF PARESH BA BUBHAI PATEL SURVEY NO. AREA SQ.MTR. NAME OF THE SELLER NAME OF THE PURCHASER DATE OF REG. SALES AS PER REG. SALE DEED. 1250 7729 CHAMPABEN NARANBHAI & OTHERS KANUBHAI M. PATEL & OTHERS 27/12/2006 1005000/- 1243 4043 -DO- -DO- -DO- 525600/- 1251 13200 -DO- -DO- -DO- 1716000/- 1247 4043 -DO- -DO- -DO- 525600/- 1240 3805 -DO- -DO- -DO- 501000/- 1212 14865 -DO- -DO- -DO- 1932540/- 1239 3449 -DO- -DO- -DO- 448380/- 1249 6540 -DO- -DO- -DO- 850500/- 29.48 VIGHA 7504620/- SURVEY NO. AREA SQ.MTR. NAME OF THE SELLER NAME OF THE PURCHASER DATE OF REG. SALES AS PER REG. SALE DEED. 1244 10940 CHAMPABEN NARANBHAI & OTHERS KANUBHAI M. PATEL & OTHERS 27/12/2006 1422200/- SURVEY NO. AREA SQ.MTR. NAME OF THE SELLER NAME OF THE PURCHASER DATE OF REG. SALES AS PER REG. SALE DEED. 1215 2900 LILABEN THAKORE & OTHERS CHAMPABEN NARANBHAI & OTHERS 5/11/06 200000/- 1238 1241 1242 1243 4481 4519 5827 4827 =8.87 VIGHA CHAMPABEN NARANBHAI & OTHERS RAJESH PATEL & OTHERS 17/4/08 2045400/- 2245400/- 7. APART FROM ABOVE LAND HOLDING, IT WAS ALSO ALLEG ED THAT ON PAGE NO.73 THE ASSESSEE HAS SOLD THREE SURVEY NUMBERS BE ARING NO.1244, 1220, 1233, ADMEASURING TOTAL LAND OF 23307 SQ.METE RS EQUIVALENT TO 10.02 VIGHAS , IN WHICH THE ASSESSEE HAS HALF SHARE OF THE LAND. THE DETAILS OF THESE LAND HAVE BEEN NARRATED BY THE AO AT PAGE NO.25 OF THE ASSESSMENT ORDER, WHICH READS AS UNDER: SURVEY NO. AREA SQ.MTR. NAME OF THE SELLER NAME OF THE PURCHASER DATE OF REG. SALES AS PER REG. SALE DEED. 1244 10940 PARESHBHAI KANUBHAI M. PATEL 27/12/06 14 22200/- SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 9 BABUBHAI PAEL & MAVJIBHAI HARIBHAI DESAI 1220 6540 PARESHBHAI BABUBHAI PAEL & MAVJIBHAI HARIBHAI DESAI KANUBHAI M. PATEL 27/12/06 850200/- 1233 5827 PARESHBHAI BABUBHAI PAEL & MAVJIBHAI HARIBHAI DESAI KANUBHAI M. PATEL 27/12/06 758000/- 23307 SQ. MT. 10.02 VIGHA 3030400/- 8. THE LD.AO HAS MADE ADDITION OF RS.1,56,95,380/- AND RS.79,93,800/- IN THE ASSTT.YEAR 2007-08. HE MADE WORKING ON THE GROUND THAT ON PAGE NO.73 OF ANNEXURE AS-5, THE ASS ESSEE HAS SOLD 26 VIGHAS OF LAND. IT OUGHT TO BE CONSTRUED THAT THE LAND W AS SOLD AT THE RATE OF RS.9,00,000/- PER VIGHA . THEREFORE, HE DEBITED SALE CONSIDERATION DISCLOSED IN THE SALE DEED FROM THE T OTAL SALE CONSIDERATION WORKED OUT BY APPLYING RATE OF RS.9,0 0,000/- PER VIGHA . THE WORKING MADE BY HIM READ AS UNDER: VALUE OF THE LAND =26 VIGHA X RS.9,00,000/- = RS.2,34,00,000/- VALUE SHOWN IN SALE DEEDS = RS. 77,04,620/- CASH RECEIVED RS.1,56,95,380/- 9. SIMILARLY, WITH REGARD TO THE LAND OWNED BY THE ASSESSEE IN JOINT OWNERSHIP ALONG WITH SHRI MAVJIBHAI HARIBHAI DESAI, HE WORKED OUT THE SALE CONSIDERATION OUGHT TO HAVE BEEN RECEIVED BY T HE ASSESSEE AS UNDER: VALUE OF THE LAND =10.02 VIGHA X RS.9,00,000/- = RS.90,18,000/- VALUE SHOWN IN SALE DEEDS = RS. 30,30,400/- CASH RECEIVED RS.59,87,600/- SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 10 10. IDENTICAL WORKING HAS BEEN MADE IN THE ASSTT.YE AR 2008-09 ON THE GROUND THAT SALE DEEDS HAVE BEEN EXECUTED IN THE AC COUNTING PERIOD RELEVANT TO THE ASSTT.YEAR 2008-09. THE WORKING MA DE AS UNDER: SURVEY NO. AREA SQ.MTR. NAME OF THE SELLER NAME OF THE PURCHASER DATE OF REG. SALES AS PER REG. SALE DEED. 1250 7729 CHAMPABEN NARANBHAI & OTHERS KANUBHAI M. PATEL & OTHERS 27/12/2006 1005000/- 1243 4043 -DO- -DO- -DO- 525600/- 1251 13200 -DO- -DO- -DO- 1716000/- 1247 4043 -DO- -DO- -DO- 525600/- 1240 3805 -DO- -DO- -DO- 501000/- 1212 14865 -DO- -DO- -DO- 1932540/- 1239 3449 -DO- -DO- -DO- 448380/- 1249 6540 -DO- -DO- -DO- 850500/- 1215 2900 LILABEN THAKORE & OTHERS CHAMPABEN NARANBHAI & OTHERS 5/11/06 200000/- 26 VIGHA 7704620/- 11. DISSATISFIED WITH THE ADDITIONS, THE ASSESSEE C ARRIED THE MATTER IN APPEAL. HE HAS MADE ELABORATE SUBMISSIONS WHICH HA S BEEN REPRODUCED BY THE CIT(A) IN THE IMPUGNED ORDER. TH E LD.FIRST APPELLATE AUTHORITY HAS PARTLY CONFIRMED THE ADDITION. THE F INDING RECORDED BY THE CIT(A) WHILE CONSTRUING OR DRAWING INFERENCE FR OM PAGE NOS.72 AND 73 OF ANNEXURE AS-5 READ AS UNDER: 6.6. FROM THE ABOVE PAGE NUMBER 73 OF THE SEIZED D OCUMENT AS-5, IT IS CLEAR THAT A TOTAL OF 58,614 M2 OF LAND (29.48 BIGHA) HAS BEEN SOLD AT THE RATE OF 900,000 PER BIGHA AT R S.265,37,430. 50% OF THIS AMOUNT AMOUNTING TO RS. 132,68,715 HAS BEEN MENTIONED AGAINST THE NAME OF SHRI PARESHBHAI, THE APPELLANT. AGAINST THIS, CHEQUE AMOUNT OF RS.14, 22,200 ONLY H AS BEEN MENTIONED AS RECEIVED . THE SALE OF TWO BLOCKS, NAM ELY 1220 AND 1233 TOTAL ADMEASURING TO 12 367 M2 (5.31 BIGHA) AT THE RATE OF RS'90.0,000.IS SHOWN AT RS.47,79,000. AGAINST THIS AMOUNT RECEIPT OF RS.804,100 HAS BEEN MENTIONED. AS THE AP PELLANT HAD 50% SHARE IN THESE TWO LANDS, HIS SHARE HAS BEEN SH OWN AT RS.23,89,500. IT MAY BE MENTIONED THAT THESE TWO BL OCKS NAMELY BLOCK NUMBER 1220 AND 1233 ARE BELONGING TO THE APP ELLANT. THE APPELLANT HAS NOT DISPUTED THE RECEIPT OF CHEQUE AM OUNT OF RS.804,100 AGAINST THE SALE OF THIS PROPERTY. IF TH E CHEQUE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 11 AMOUNT OF RS.804,100 HAS BEEN RECEIVED AGAINST THE SALE OF THE TWO BLOCKS AS PER SEIZED PAGE NUMBER 73, THEN THE R EMAINING ENTRIES OF THE SAME PAGE ARE ALSO TO BE TREATED AS CORRECT. IN THE SAME PAGE THE TOTAL SALE CONSIDERATION OF RS.23,89, 500 IN RESPECT OF THESE TWO BLOCKS HAS BEEN WRITTEN AGAINST THE NA ME OF THE APPELLANT UNDER THE FIGURE OF RS. 132,68,715 BEING THE 50% SHARE OF THE APPELLANT IN BLOCK NUMBER 1250, 1243, 1251, 1212, 1238, 1247, 1240, 1249 AND 1244. IT SHOWS THAT THE APPELL ANT HAD 50% INTEREST IN THESE BLOCKS ALSO. EVEN THOUGH,-THESE B LOCKS ARE SHOWN IN THE NAME OF SOME OTHER FANNERS, THE STATEM ENT OF THE APPELLANT RECORDED ON 23/5/2008 IS RELEVANT IN WHIC H HE HAD STATED THAT THOUGH THE PROPERTIES HAS BEEN PURCHASE D BY HIM LONG BACK, THE REGISTRATION HAS NOT YET BEEN DONE IN SOM E CASES AND IN MANY CASES THE REGISTRATION HAS' BEEN DONE DURING T HE LAST L TO 2 YEARS. THEREFORE, IT IS POSSIBLE THAT THESE BLOCKS WERE PURCHASED BY THE APPELLANT FROM THE FARMERS BUT THE SALE DEED THEREOF WAS NOT EXECUTED IN THE NAME OF THE APPELLANT. AS THE A PPELLANT WAS SURPANCH, HE HAD A DOMINANT SAY AMONG THE FARMERS O FFICE AREA, THEREFORE, AT THE TIME OF THE FINAL SALE BY THE APP ELLANT, THE ORIGINAL SELLER (FARMERS) HAS SIGNED IN THE SALE DE ED. IT MAY BE MENTIONED THAT THE DATE OF REGISTRATION OF THIS LAN D IS SHOWN AT 27/12/2006. THEREFORE, THE AUTHENTICITY OF THE TRAN SACTIONS RECORDED IN THESE PAGES CANNOT BE DOUBTED. 6.7. ON THE RIGHT-HAND SIDE OF PAGE NUMBER 73, THE AREA OF 20,654 M2 IN RESPECT OF FOUR BLOCKS OF LAND NAMELY 1242, 1243, 1241 AND 1238 IS MENTIONED. 50% OF THIS HAS BEEN SH OWN AT 10,327 M2 FOR VADSAR LAND. 6.8. FURTHER ON THE BACK SIDE OF LIVE PAGE NUMBER 7 3 TOTAL CASH AMOUNTING TO RS.100,19,430 HAS BEEN SHOWN AS RECEIV ED ON. VARIOUS DATES FROM 31/8/2006 TO -7/12/2006. TOTAL, CHEQUE AMOUNT, OF RS.22,26,300 COMPRISING OF TWO AMOUNTS N AMELY 804,100 AND 14, 22,200 ARE SHOWN AS RECEIVED TO MAK E THE TOTAL CONSIDERATION AT RS. 122,45,730 TILL 7/12/2006. OUT OF THE AMOUNT OF RS.156,58,21'5,- THIS- AMOUNT OF RS. 122,45,730 HAS BEEN SHOWN AS RECEIVED AND THE BALANCE AMOUNT OF RS.34,1 2,485 AS BALANCE. 6.9. FROM THE ABOVE MENTIONED ENTRIES IT IS CLEAR T HAT THEY ARE THE ACTUAL TRANSACTIONS OF SALE OF LAND AND-THE RECEIPT OF CASH AND CHEQUES ON VARIOUS DATES AS MENTIONED ABOVE. AGAINS T THE NAME OF THE APPELLANT AN ENTRY OF RS.132,68,715 IS MENTI ONED AT THE MIDDLE OF THE PAGE AND ANOTHER ENTRY OF RS.23,89,50 0 HAS BEEN MENTIONED AT THE BOTTOM OF THE PAGE NUMBER 73. IN O THER WORDS, THE APPELLANT HAS RECEIVED TOTAL AMOUNT OF RS.156,5 8,215 INCLUDING THE CHEQUE AMOUNTS OF RS.22,26,300. OUT O F THIS, THE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 12 APPELLANT HAS RECEIVED CASH OF RS. 100,19,430 DURIN G THE PERIOD 31/8/2006 TO 7/12/2006 AS PER THE BACK SIDE OF PAGE NUMBER 73 OF THE ANNEXURE A S5 (IT MAY BE STATED THAT THOUGH THE APPELLANT HAS SUBMITTED A COPY OF PAGE NUMBER 73 BUT HAD NOT SUBMITTED A COPY OF THE BACK SIDE OF PAGE NUMBER 73 IN THE PAPE R BOOK OR IN THE WRITTEN SUBMISSIONS BEFORE ME. THE SAME HAS BEE N OBTAINED BY ME FROM THE AO. THE APPELLANT HAS NOT DISPUTED T HE RECEIPT OF THE CHEQUE OF RS.22,26,300 AGAINST THE SALE OF THE PROPERTIES TILL 7/12/2006. THEREFORE, THE CASH COMPONENT MENTIONED AGAINST HIS NAME IN THIS PAPER IS TO BE PRESUMED TO HAVE BEEN R ECEIVED BY THE APPELLANT. BECAUSE, THE CONTENTS OF THE PAPER E ITHER ARE CORRECT OR INCORRECT. IT CANNOT BE PARTLY CORRECT A ND PARTLY INCORRECT. SINCE THE CHEQUE AMOUNT AGAINST THE. SAL E OF THE TWO BLOCKS NUMBER 1220 AND 1233 HAS NOT BEEN DISPUTED B Y THE APPELLANT, THE CASH AMOUNT SHOWN ALONG WITH THE CHE QUE AMOUNT ALSO MUST HAVE BEEN RECEIVED BY HIM. IT MAY BE MENT IONED THAT THE APPELLANT HAD DISOWNED, THE TRANSACTIONS APPEAR ING ON PAGE NUMBER 72 AND 73 OF ANNEXURE A-S5 DESPITE THE FACT THAT THE PROPERTIES BEARING SURVEY .NUMBER 1244, 1220 AND 12 33 ARE STANDING IN THE JOINT NAMES OF THE APPELLANT AND MA VJIBHAI H DESAI AND THE DOCUMENTS WERE SEIZED FROM HIS PREMIS ES. IN MY OPINION, SINCE THE SAME LAND HAS BEEN SOLD BY THE A PPELLANT ALONGWITH OTHER LANDS AS MENTIONED IN THESE PAGES, IT HAS TO BE PRESUMED THAT THESE TWO PAGES ARE PERTAINING TO THE TRANSACTIONS OF LAND SALE BY THE APPELLANT: 6.10. IT MAY BE MENTIONED THAT THE AO HAS WRONGLY INCLUDED THE SURVEY NUMBER 1215 ADMEASURING 2900 M2 IN PAGE NUMB ER 24 OF THE ASSESSMENT ORDER FOR WORKING OUT THE ON MONEY ( CASH) RECEIVED BY THE APPELLANT. I HAVE VERIFIED THE SEIZ ED MATERIAL AND FOUND THAT THE SURVEY NUMBER 1215 ADMEASURING 2900 M2 AND SURVEY NUMBER 1245 ADMEASURING 600 M2 HAVE BEEN SHO WN UNDER THE HEAD OF REMAINING/PENDING ALONGWITH OTHER SURVEY NUMBERS NAMELY 1242, 1243, 1241 AND 1238. THEREFORE , ON THE BASIS OF PAGE NUMBER 73, THE TOTAL CONSIDERATION RE CEIVED BY SHRI PARESHBHAI COMES TO RS.156,58,215 INCLUDING THE CHE QUE OF RS.22,26,300. THE SURVEY NUMBERS 1244, 1220 AND 123 3 ARE STANDING IN THE NAME OF THE APPELLANT AND MAVJIBHAI H DESAI JOINTLY AND HAD BEEN CONSIDERED IN THE WORKING OF T HE TOTAL CONSIDERATION AS PER PAGE NUMBER 73 OF ANNEXURE A-S 5. IN OTHER WORDS, THE AO IS DIRECTED TO ADOPT THE TOTAL SALE C ONSIDERATION OF RS.156,58,215 AS PER THE SEIZED PAPER NUMBER 73. AF TER REDUCING THE 50% OF THE DOCUMENTED PRICE OF THE PROPERTIES B EING SURVEY NUMBER 1250, 1243, 1251, 1212, 1239, 1247, 1240, 12 49 AND 1244 AND ALSO THE LAND BEARING SURVEY NUMBER 1220 A ND 1233, THE RESULTANT AMOUNT WOULD BE THE UNEXPLAINED CASH COMPONENT SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 13 RECEIVED BY THE APPELLANT AGAINST THE SALE OF THESE PROPERTIES. IN OTHER WORDS, THE TOTAL UNACCOUNTED INCOME OF THE AP PELLANT WOULD BE RS. 1,56,58,215 - 52,87,510 = RS. 1,03,90,705 IN A.Y. 2007- 08. 6.11. NOW THE QUESTION IS WHETHER THE SALE PROCEEDS OF OTHER LANDS (OTHER THAN THESE THREE LANDS) NOT STANDING I N THE NAME OF THE APPELLANT CAN BE ASSESSED IN THE HANDS OF THE A PPELLANT. THE APPELLANT HAS GIVEN THE NAME OF THE SELLERS AND BU YERS OF THESE LANDS BEFORE THE AO. THE CASE OF THE APPELLANT IS T HAT SINCE THE LANDS ARE NOT STANDING IN HIS NAME, THE QUESTION OF TAXING THE SALE PROCEEDS THEREOF IN HIS HANDS DOES NOT ARISE. THE C ONTENTION OF THE APPELLANT IS CORRECT IN NORMAL CASES. BUT IN TH E PRESENT CASE, THE APPELLANT HAS HIMSELF STATED BEFORE THE AO IN T HE STATEMENT RECORDED ON 23/5/2008 THAT HE HAD BOUGHT MANY PROPE RTIES 10 TO 15 YEARS BACK AND GOT THEM REGISTERED IN HIS NAME O NLY DURING LAST ONE AND HALF YEAR. FURTHER, EVEN IF IT IS PRES UMED THAT THE APPELLANT HAS SOLD THE PROPERTIES ON BEHALF OF SOME OTHER PERSONS AS ADMITTED BY HIM IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, IN THAT CASE, AS PER THE SEIZED PAPER TH E TOTAL CONSIDERATION HAS BEEN RECEIVED BY THE APPELLANT. I T IS THE DUTY OF THE APPELLANT TO STATE AS TO WHOM HE HAS PAID HOW M UCH AMOUNT. SINCE THE APPELLANT HAS DISOWNED THE TRANSACTIONS R ECORDED IN PAGE NUMBER 72 AND 73 OF ANNEXURE A-S5, IN MY VIEW, THE AO WAS JUSTIFIED IN HOLDING THAT THE CASH AMOUNT HAS N OT BEEN PASSED TO THE SELLER OF THE PROPERTIES AND THE AMOUNT HAS BEEN RETAINED BY HIM. IN MY VIEW, THE BURDEN OF PROOF CASTED UPON THE APPELLANT AS PER SECTION 292C OF THE INCOME-TAX ACT HAS NOT BEEN DISCHARGED BY THE APPELLANT. THEREFORE, TO THE EXTE NT OF THE AMOUNTS SHOWN AS RECEIVED AS PER PAGE NUMBER 73 OF ANNEXURE A-S5, THE APPELLANT HIMSELF HAD RECEIVED ON MONEY O N THE SALE OF THE LAND AS MENTIONED THEREIN. SUBJECT TO MY DIRECT IONS AS MENTIONED ABOVE, IN PRINCIPLE, THE ADDITION OF ON M ONEY IN ASSESSMENT YEAR 2007-2008 ON THE BASIS OF THE SEIZE D PAPER IS PARTLY CONFIRMED. AS HELD EARLIER, SINCE THE WORKIN G IN PAGE NUMBER 73 ALSO INCLUDE THE SALE OF THE THREE BLOCKS NAMELY 1220, 1233 AND 1244 OWNED BY THE APPELLANT, SEPARATE ADDI TION OF RS.29,93,800 CANNOT BE MADE BY THE AO IN ASSESSMENT YEAR 2007-2008. IN OTHER WORDS, THE APPELLANT HAS RECEIVED TOTAL SALE CONSIDERATION AT THE RATE OF RS.9 LAKH PER BIGHA AND THE APPELLANT IS ASSESSABLE ONLY IN RESPECT OF THAT AMOUNT WHICH IS RECEIVED BY THE APPELLANT AS APPEARING AGAINST HIS NAME IN PAGE NUMBER 73 OF THIS ANNEXURE. 7. SIMILARLY IN ASSESSMENT YEAR 2008-2009, AT PAGE NUMBER 23 AND 24 OF THE ASSESSMENT ORDER, ON THE BASIS OF PAG E NUMBER 72 OF ANNEXURE A-S5, THE AO HELD THAT SINCE THE SALE O F 84,351 M2 SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 14 (36.24 BIGHA) OF LAND APPEARING AT PAGE NUMBER 72 H AVE BEEN REGISTERED ON 2/11/2007 FOR TOTAL AMOUNT OF RS.227, 54,361, THE VALUE OF THE LAND AT THE RATE OF RS.900,000 PER BIG HA COMES TO RS. 326,16,000- THE BALANCE OF RS.98,61,639 REPRESENTS THE ON MONEY RECEIVED BY THE APPELLANT WHICH HAS NOT BEEN PAID TO THE ORIGINAL SELLERS OF THE LAND. THEREFORE, THE ADDIT ION OF RS.98,61,639 WAS MADE BY HIM IN ASSESSMENT YEAR 200 8-2009 ON THE BASIS OF THE ENTRIES IN PAGE NUMBER 72. AGAINS T THIS ADDITION, THE APPELLANT HAS SUBMITTED THE SAME SUBMISSIONS AS IN ASSESSMENT YEAR 2007-2008. 12. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. ON AN ANALYSIS OF BO TH THE IMPUGNED ORDERS, WE FIND THE REVENUE AUTHORITIES HAVE MADE T HE ADDITION TO THE INCOME OF THE ASSESSEE FOR THE FOLLOWING REASONS: A) THAT DURING THE COURSE OF SEARCH, STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT. IN REPLY TO QUESTION NO.6, THE ASSESSEE HAS DISCLOSED DETAILS OF MOVABLE AND IMMOVABLE PROPERTIES IN THE NAME OF THE ASSESSEE AND HIS FAMILY MEMBERS. AFTER LOOKING TO LARGE NUMBER OF PROPERTIES HELD BY THE ASSESSEE, IT WAS I NFERRED BY THE AO THAT THE ASSESSEE IS NOT A SIMPLY AGRICULTUR IST; B) DURING THE COURSE OF SEARCH PROCEEDINGS AND IN THE SUBSEQUENT INQUIRY, STATEMENT OF THE ASSESSEE WAS RECORDED UND ER SECTION 132(4) AND 131 OF THE ACT. IN THESE STATEMENTS, TH E ASSESSEE HAS DISCLOSED THAT HE HAS PURCHASED THE LAND IN THE PAST WHICH WAS CONVERTED INTO NON-AGRICULTURE LAND, AND HE HAS SOLD THE PLOTS. THE MANNER IN WHICH THE ASSESSEE HAS CARRIE D OUT THE LAND BROKING BUSINESS AS WELL AS PURCHASES AND SALE OF LAND AT A FREQUENT INTERVALS INDICATES THAT THE ASSESSEE IS A TRADER IN THE LAND; C) IN REPLY TO QUESTION NO.6, IN THE STATEMENT RECORDE D UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE HAS NARRATE D PROPERTIES SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 15 AT SR.10, 14, 17 AND 21, WHEREBY HE HAS DISCLOSED T HAT THESE PROPERTIES WERE PURCHASED IN THE PAST, SAY, FIVE TO TEN YEARS EARLIER, BUT THE PURCHASE DEED HAS BEEN EXECUTED IN HIS NAME RECENTLY. THIS INDICATES THAT THE ASSESSEE MUST HA VE SOME UNDERSTANDING WITH THE ORIGINAL LAND OWNERS WHOSE D ETAILS OF THE LAND ARE MENTIONED AT PAGE NOS.72 AND 73 OF THE AS-5, MEANING THEREBY, THAT THE ASSESSEE HAS SOLD THESE P IECES OF LAND IN THE CAPACITY OF OWNER. ONCE THE ASSESSEE H AS SOLD THE LAND AS AN OWNER, THEN ANY CASH COMPONENT RECEIVED BY HIM IS TO BE ASSESSED IN HIS HAND. D) THE LD.AO FURTHER INFERRED THAT THE ASSESSEE MUST H AVE SOME RIGHT IN THESE LANDS, AND THEREFORE, HE HAS FACILIT ATED TRANSFER OF THESE LANDS TO THE BUILDER COMPANIES. IN VIEW OF HIS SOME RIGHTS, HE MUST HAVE RETAINED CASH COMPONENT WHICH WAS NOT GIVEN TO THE ORIGINAL LAND OWNERS MENTIONED IN THE REGISTERED SALE DEED. THEREFORE, THE CASH COMPONENT, ALLEGED TO HAVE BEEN RECEIVED BY THE ASSESSEE DISCERNIBLE IN PAGE N O.73 OF THE SEIZED MATERIAL, DESERVED TO BE ASSESSED IN THE HAN DS OF THE ASSESSEE. E) READING PAGE NOS.72 AND 73 HAD INDICATED THAT THE L AND WAS ACTUALLY SOLD AT THE RATE OF RS.9,00,000/- PER VIGHA AND CASH COMPONENT RECEIVED AT THIS RATE AFTER DEBITING THE RATE MENTIONED IN THE REGISTERED SALE DEED OUGHT TO BE A SSESSED IN THE HANDS OF THE ASSESSEE. F) THE ASSESSEE FAILED TO EXPLAIN THE DETAILS NARRATED ON PAGE NOS.72 AND 73 WITH PLAUSIBLE EVIDENCE, AND THEREFOR E, THESE TRANSACTIONS ARE TO BE TREATED AS BELONGING TO THE ASSESSEE. 13. LET US EXAMINE THE FACTS ON RECORD AND TO DECID E WHETHER INFERENCES DRAWN BY THE LD.REVENUE AUTHORITIES ARE SUPPORTED BY THE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 16 EVIDENCE AVAILABLE ON RECORD OR NOT. THE FIRST ISS UE, THE AO HAS EMPHASIZED THAT THE ASSESSEE DID NOT COOPERATE WITH THE DEPARTMENT AND TRY TO BLOCK THE INVESTIGATION. ACCORDING TO T HE AO, THE ASSESSEE HAD ADOPTED A COLLUSIVE ATTITUDE, AND THEREFORE CRE ATED HURDLES IN THE INVESTIGATION CONDUCTED BY THE DEPARTMENT. TO OUR MIND, THE AO IS NOT JUSTIFIED IN MAKING SUCH OBSERVATION. THE SEARCH I N THIS CASE WAS CONDUCTED ON 23.5.2008. SECTION 153B PROVIDES LIMI TATION FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A. ACCOR DING TO CLAUSE (A) OF SUB-SECTION (1), THE AO SHALL MAKE AN ORDER OF A SSESSMENT OR REASSESSMENT IN RESPECT OF EACH ASSESSMENT YEAR FAL LING WITHIN SIX ASSESSMENT YEARS, REFERRED TO IN CLAUSE (B) OF SUB- SECTION (1) OF SECTION 153 WITHIN A PERIOD OF TWO YEARS FROM THE END OF TH E FINANCIAL YEAR IN WHICH LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER S ECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED. SINCE THE AUTHORIZATION WAS EXECUTED ON 23.5.2008, THE AO WAS REQUIRED TO P ASS THE ASSESSMENT ORDER WITHIN TWO YEARS FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTHORISATION WAS EXECUTED. THE RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 153A(A) WAS SU BMITTED BY THE ASSESSEE ON 31.7.2010, MEANING THEREBY, THE NOTICE UNDER SECTION 153A MUST HAVE NOT BEEN ISSUED UPON THE ASSESSEE FO R ALMOST TWO YEARS FROM THE DATE OF SEARCH. THE FIRST QUESTIONN AIRE AS DISCERNIBLE FROM THE PARAGRAPH-2 OF THE ASSESSMENT WAS ISSUED O N 21.10.2010. THE AO HAS TO PASS THE ASSESSMENT ORDER UPTO 31.12. 2010 AS EMPHASIZED BY HIM. HE WASTED ALMOST TWO YEARS, WHI CH COULD BE USED FOR PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSE E FOR DEFENDING HIMSELF. ALL OF A SUDDEN, HE EXPECTED THAT THE ASS ESSEE SHOULD SUBMIT EVERYTHING WITHIN TWO AND HALF MONTHS. WHEN THE AS SESSEE HAS POINTED OUT THAT HE BEING HEART PATIENT HAS TO GET PACEMAKE R REPLACED, AND IT IS NOT POSSIBLE FOR HIM TO COME TO HIS OFFICE. THE LD .AO HAS OBSERVED THAT ASSESSEE HAS TRIED TO OBSTRUCT INVESTIGATION. WE A LSO FIND THAT WITH THE ATTITUDE OF THE AO, THE ASSESSEE HAS FILED A COMPLA INT TO THE DIRECTOR SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 17 GENERAL OF INVESTIGATION ON 30.12.2010. A COPY OF THE COMPLIANT IS AVAILABLE ON PAGE NO.805 OF THE PAPER BOOK. THIS T O OUR MIND, THE AO WAS NOT JUSTIFIED IN BLAMING THE ASSESSEE THAT THE SUBMISSIONS MADE BY THE ASSESSEE ARE BELATED ON 24.12.2010 AND ONLY SIX DAYS TIME LEFT FOR COMPLETION OF THE ASSESSMENT ORDER. THEREFORE, NO INQUIRY SHOULD BE CONDUCTED. IN OUR OPINION, IT IS THE AO WHO TOOK PROCEEDINGS AT A TIME BARRED STAGE BY STARTING THE INVESTIGATION AT THE F AG-END. THEREFORE, NO BLAME CAN BE PUT UPON THE ASSESSEE. 14. THE NEXT REASON ASSIGNED BY THE REVENUE AUTHORI TIES AND WHICH HAS ULTIMATE BEARING ON THE CONTROVERSY IS THAT THE ASSESSEE IS A TRADER IN THE LAND, AND THEREFORE, INCOME FROM THE PURCHAS E AND SALE OF LAND IS TO BE ASSESSED AS BUSINESS INCOME. ON ANALYSIS O F THE RECORD, WE FIND THAT THE ASSESSEE HAS SHOWN THREE TYPES OF INCOME V IZ. (I) AGRICULTURE INCOME, (II) COMMISSION INCOME FOR FACILITATING THE SALE OF AGRICULTURE LAND FROM THE FARMERS, BUILDERS ETC., AND (III) INC OME FROM SALE OF LAND, WHICH ACCORDING TO THE ASSESSEE WERE AGRICULTURE LA ND, THEREFORE, IT IS EXEMPT EVEN FROM THE CAPITAL GAIN TAX. THE LD.FIRS T APPELLATE AUTHORITY HAS DEALT WITH THESE ISSUES IN PARA-6 ON PAGE NOS.3 6 TO 40 OF THE IMPUGNED ORDER. ACCORDING THE LD.CIT(A), THE ASSES SEE HAD DISCLOSED PURCHASE OF 25 PIECES OF LAND EITHER IN HIS NAME OR IN THE NAME OF FAMILY MEMBERS DURING THE LAST 15 YEARS. EXCEPT FO R FIVE-SIX PIECES OF LAND, ALL THE LANDS HAVE BEEN PURCHASED DURING THE LAST TWO-THREE YEARS. THE ASSESSEE HAS SOLD PLOT NO.1220 ON 27.12.2006. IT WAS PURCHASED ON 3.12.2005. SIMILARLY, HE SOLD BLOCK NO.1233 27. 12.2006, WHICH WAS PURCHASED ON 22.2.2006 AND BLOCK NO.1244 SOLD ON 27 .12.2006 WHICH WAS PURCHASED ON 5.9.1997. THE LD.FIRST APPELLATE AUTHORITY, THEREAFTER MADE REFERENCE TO CERTAIN PURCHASE DATES , AND HOW THE ASSESSEE WAS ASKED TO PAY STAMP DUTY ON THE BASIS O F CIRCLE RATE NOTIFIED BY THE STAMP DUTY VALUATION AUTHORITY. TH E LD.FIRST APPELLATE AUTHORITY, THEREAFTER, MADE REFERENCE TO THE ADDITI ONAL INCOME OFFERED BY THE ASSESSEE IN THESE SIX YEARS UNDER SECTION 15 3A OF THE ACT. THE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 18 CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS OFFERED A DDITIONAL INCOME OF RS.59,89,000/- WHICH INDICATED THAT THE ASSESSEE MU ST BE CARRIED OUT SOME ACTIVITIES. 15. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF THE CIT(A) CONTENDED THAT THE DETAILS OF PROPERTY HELD BY THE ASSESSEE AND HIS FAMILY MEMBERS HAS BEEN DISCLOSED IN REPLY TO Q UESTION NO.6 DURING THE COURSE OF SEARCH. NO DOUBT THE ASSESSEE HAS MA DE INVESTMENT IN PURCHASE OF AGRICULTURE LAND. BUT, IT IS PERTINENT TO NOTE THAT THESE INVESTMENTS WERE MADE TEN-FIFTEEN YEARS BACK. THES E ARE LANDS WHICH WERE PURCHASED FROM THE BROTHERS WIFE OR HIS BROTH ER, OUT OF ANCESTRAL LAND. THE ASSESSEE REMAINED A SARPUNCH OF THE VILLAGE. HE WOULD HAVE BEEN OF THE OPINION THAT NO OUTSIDER SHOULD PURCHAS E THE LAND OF ANCESTRAL. THESE LANDS WERE PURCHASED FOR CARRYING OUT AGRICULTURE. THE ASSESSEE HAS BEEN USING THE LAND FOR AGRICULTUR E PURPOSE. HOW THE PURCHASE OF LAND OUT OF AGRICULTURE LAND WOULD MAKE THE ASSESSEE AS A TRADER IN THE LAND HOLDING ? THE ASSESSEE HAS NEVE R HELD THE LAND AS STOCK-IN-TRADE. HE HAS BEEN FILING THE RETURN FOR SO MANY YEARS, BECAUSE HE HAS INCOME AS COMMISSION AGENT DEALING I N LAND. ONLY PIECE OF LAND WHICH WAS PURCHASED BY THE ASSESSEE A ND SOLD IS MENTIONED AT SR.NO.24, LAND ADMEASURING 2800 TO 290 0 SQ.METERS FORMING PART AND PARCEL OF BLOCK NO.776 SITUATED IN VILLAGE VADSAD BELONGING TO KESHABHAI AND THREE PARTNERS WAS PURCH ASED FOR RS.80,000/- 12 YEARS BACK. THIS WAS CONVERTED INTO NON-AGRICULTURE LAND AND IT WAS SOLD DURING THE LAST SIX YEARS TO D IFFERENT PERSONS IN THE FORM OF PLOTS. EXCEPT THIS ONE TRANSACTION, THERE IS NO OTHER TRANSACTION, WHERE THE ASSESSEE HAS GOT CONVERTED AGRICULTURE LA ND INTO NON- AGRICULTURE LAND AND SOLD IN THE SHAPE OF PLOTS. A S FAR AS THE ALLEGATIONS OF THE CIT(A) THAT THE ASSESSEE HAS SOLD THREE PIEC ES OF LAND, IT IS PERTINENT TO NOTE THAT, ONE PIECE OF LAND WAS PURCH ASED BY THE ASSESSEE ON 5.9.1997 I.E. ALMOST MORE THAN NINE YEARS FROM I TS SALE. HOW, ON SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 19 THE BASIS OF THIS ISOLATED TRANSACTIONS, THE ASSESS EE CAN BE TERMED AS THE TRADER IN THE LAND ? 16. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT IT IS NOT ISOLATED TRANSACTIONS WHICH ARE CONSIDERED BY THE REVENUE AU THORITIES. HUGE INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF AGRI CULTURE LAND IN THE LAST 15 YEARS WOULD INDICATE THAT HE WAS CARRYING O UT THIS ACTIVITY IN AN ORGANIZED MANNER. HE HAS FACILITATED A NUMBER OF P ERSONS TO SELL THEIR LANDS TO THE BUILDERS. THUS, APART FROM BEING BROK ER IN LAND DEALINGS, HE HAS TRADED IN LAND AT HIS OWN. HE RELIED UPON T HE ORDERS OF THE REVENUE AUTHORITIES BELOW. 17. WE HAVE CONSIDERED RIVAL CONTENTIONS. BEFORE W E EMBARK UPON AN INQUIRY ON THE FACTS OF THE PRESENT CASE SO AS TO F IND WHETHER THE ASSESSEE IS TO BE TERMED AS INVOLVED IN TRADING IN LAND OR HE HAS TO BE TREATED AS SIMPLY AGRICULTURIST WHO HAS PURCHASED T HE AGRICULTURE LAND, WE WOULD LIKE TO REFER CERTAIN BROAD PRINCIPLES PRO POUNDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PA RI MANGALDAS GIRDHARDAS VS. CIT, REPORTED IN 1977 CTR 647. THES E ARE THE BROAD TESTS WHICH ARE THE RELEVANT FOR TESTING ANY TRANSA CTION, WHETHER CARRIED OUT AS A TRADER OR AS INVESTOR. THE TRANSACTION MA Y BE SHARE TRADING OR IN THE LAND. THE TESTS PROPOUNDED BY THE HONBLE C OURT READ AS UNDER: AFTER ANALYZING VARIOUS DECISIONS OF THE APEX COUR T, THIS COURT HAS FORMULATED CERTAIN TESTS TO DETERMINE AS TO WHETHER AN ASSESSEE CAN BE SAID TO BE CARRYING ON BUSINESS. (A) THE FIRST TEST IS WHETHER THE INITIAL ACQUISITI ON OF THE SUBJECT-MATTER OF TRANSACTION WAS WITH THE INTENTIO N OF DEALING IN THE ITEM, OR WITH A VIEW TO FINDING AN I NVESTMENT. IF THE TRANSACTION, SINCE THE INCEPTION, APPEARS TO BE IMPRESSED WITH THE CHARACTER OF A COMMERCIAL TRANSA CTION ENTERED INTO WITH A VIEW TO EARN PROFIT, IT WOULD F URNISH A VALUABLE GUIDELINE. (B) THE SECOND TEST THAT IS OFTEN APPLIED IS AS TO WHY AND HOW AND FOR WHAT PURPOSE THE SALE WAS EFFECTED SUBSEQUENTLY. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 20 (C) THE THIRD TEST, WHICH IS FREQUENTLY APPLIED, IS AS TO HOW THE ASSESSEE DEALT WITH THE SUBJECT-MATTER OF TRANS ACTION DURING THE TIME THE ASSET WAS THE ASSESSEE. HAS IT BEEN TREATED AS STOCK-IN-TRADE, OR HAS IT BEEN SHOWN IN THE BOOKS OF ACCOUNT AND BALANCE SHEET AS AN INVESTMENT. THIS INQUIRY, THOUGH RELEVANT, IS NOT CONCLUSIVE. (D) THE FOURTH TEST IS AS TO HOW THE ASSESSEE HIMSE LF HAS RETURNED THE INCOME FROM SUCH ACTIVITIES AND HOW TH E DEPARTMENT HAS DEALT WITH THE SAME IN THE COURSE OF PRECEDING AND SUCCEEDING ASSESSMENTS. THIS FACTOR, THOUGH NOT CONCLUSIVE, CAN AFFORD GOOD AND COGENT EVIDENCE TO JUDGE THE NATURE OF THE TRANSACTION AND WOULD BE A RELEVANT CIRCUMSTANCE TO BE CONSIDERED IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION. (E) THE FIFTH TEST, NORMALLY APPLIED IN CASE OF PAR TNERSHIP FIRMS AND COMPANIES, IS WHETHER THE DEED OF PARTNER SHIP OR THE MEMORANDUM OF ASSOCIATION, AS THE CASE MAY BE, AUTHORIZES SUCH AN ACTIVITY. (F) THE LAST BUT NOT THE LEAST, RATHER THE MOST IMP ORTANT TEST, IS AS TO THE VOLUME, FREQUENCY, CONTINUITY AN D REGULARITY OF TRANSACTION OF PURCHASE AND SALE OF T HE GOODS CONCERNED. IN A CASE WHERE THERE IS REPETITION AND CONTINUITY, COUPLED WITH THE MAGNITUDE OF THE TRANS ACTION, BEARING REASONABLE PROPOSITION TO THE STRENGTH OF H OLDING THEN AN INFERENCE CAN READILY BE DRAWN THAT THE ACT IVITY IS IN THE NATURE OF BUSINESS. 18. IF WE VISUALIZE THE FACTS OF THE PRESENT CASE I N THE LIGHT OF THE ABOVE, THEN IT WOULD REVEAL THAT THE ASSESSEE HAS D ISCLOSED PURCHASE OF AGRICULTURE LAND EITHER IN HIS NAME OR IN HIS FAMIL Y MEMBERS NAMES. THESE DETAILS ARE CONTAINED IN REPLY TO QUESTION NO .6 OF THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. A PERUSA L OF THESE DETAILS WOULD INDICATE THAT ALL THE LANDS HAVE BEEN RETAINE D BY THE ASSESSEE. HE HAS NEVER RESOLD, THOUGH, EXCEPT ONE PIECE. SO THERE IS NO REPETITION OF THE TRANSACTION. THE ASSESSEE HAS SO LD THREE PIECES OF LAND WHICH WERE JOINTLY HELD ALONG WITH SHRI MAVJIBHAI H ARIBHAI DESAI. BOTH THESE PERSONS WERE OWNER IN EQUAL SHARE OF THESE TH REE PIECES OF LAND. THIS LAND IS ADMEASURING 10.02 VIGHA . ONE PIECE OF LAND IS ACQUIRED IN SEPTEMBER, 1997, MEANING THEREBY, THE LAND WAS RETA INED BY THE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 21 ASSESSEE FOR MORE THAN NINE YEARS. THE LD.CIT(A) H AS MADE REFERENCE TO THE STAMP DUTY VALUATION AUTHORITY AS PER DETAIL S AT PAGE NO.37. BUT WE FAILED TO UNDERSTAND HOW THE DIFFERENCE BETWEEN THE STAMP DUTY VALUATION DISCLOSED BY THE ASSESSEE IN THE SALE DEE D VIS--VIS THE RATES NOTIFIED BY THE STAMP DUTY VALUATION AUTHORITY CHAR GED FROM THE ASSESSEE COULD GOAD AN ADJUDICATOR TO SAY THAT THE ASSESSEE IS A TRADER. IT IS ALTOGETHER A IRRELEVANT DETAILS, WHICH HAS BE EN CONSIDERED BY THE LD.CIT(A). TO OUR MIND, SUCH TYPE OF DETAILS HAS N O BEARING IN DECIDING THE CHARACTER OF A TRANSACTION. SIMILARLY, THE LD. FIRST APPELLATE AUTHORITY HAS OBSERVED THAT THE ASSESSEE HAS INCOME FROM OTHE R ACTIVITIES. AN ADJUDICATOR IS NOT REQUIRED TO DECIDE THE ISSUE ON THE BASIS OF PERIPHERAL DETAILS. IF THE ASSESSEE HAS INCOME FROM OTHER ACT IVITIES, WOULD THAT MEAN THAT HE WAS TRADING IN LAND. THE ASSESSEE HAS SHOWN INCOME FROM COMMISSION FOR FACILITATING THE SALE OF AGRICU LTURE LAND. THE LD.FIRST APPELLATE AUTHORITY HAS DISCLOSED THE PURCHASE OF L AND AT PAGE NO.37 OF THE IMPUGNED ORDER, BUT TO OUR MIND, THESE ARE ONLY PURCHASES AND WOULD INDICATE AS PURCHASED FOR INVESTMENT, AS THER E IS NO IMMEDIATE SALE OF THIS LAND. THE EXPRESSION BUSINESS HAS B EEN DEFINED IN SUB- SECTION 13 OF SECTION (2) OF THE ACT. IT INCLUDES ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATU RE OF TRADE, COMMERCE OR MANUFACTURE. THIS EXPRESSION HAS BEEN CONSTRUED TO MEAN THAT IT IS USED IN TAXING STATUTE IN A SENSE O F OCCUPATION OR PROFESSION, WHICH DEMANDS TIME, ATTENTION AND LABOU R OF PERSON WITH AN OBJECT OF MAKING PROFIT. IN ORDER TO HELP ANY PERS ON TO CARRY OUT ANY BUSINESS ACTIVITY, THEN, THE REQUIREMENT OF BUSINES S IS THAT THERE MUST BE REAL, SUBSTANTIAL AND SYSTEMATIC, ORGANIZED COUR SE OF ACTIVITY OR CONDUCT WITH SAID PURPOSE OF EARNING PROFIT IS TO B E TERMED AS BUSINESS. IN THE PRESENT CASE, THE LD.REVENUE AUTHORITIES HAV E MERELY MADE REFERENCE TO THE LAND HELD BY THE ASSESSEE, WHICH W AS PURCHASED FOR THE LAST 15 YEARS AND 3 PIECES OF LAND SOLD BY HIM. OU T OF THESE THREE PIECES, ONE WAS PURCHASED IN 1997, APART FROM THIS, THE OPERATING FORCE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 22 OF ALL THE REASONING AND THE MATERIALS IS TOWARDS E ARNING OF COMMISSION INCOME BY THE ASSESSEE FOR FACILITATING THE LAND TR ANSACTION. THEREFORE, IN OUR OPINION, THE ASSESSEE CANNOT BE TERMED AS TR ADER IN THE LAND. 19. THE NEXT ISSUE IS WHAT IS QUANTUM OF THE INCOME AROSE TO THE ASSESSEE ON SALE OF AGRICULTURE LAND NARRATED IN PA GE NOS.72 AND 73 OF THE ANNEXURE AS-5 FOUND DURING THE COURSE OF SEARCH . THE CASE OF THE REVENUE IS THAT ON PERUSAL OF THESE PAGES WOULD IND ICATE THAT THE LAND IN THE SURVEY NUMBERS MENTIONED WERE SOLD. THE ACT UAL SALE CONSIDERATION WAS RECEIVED AT THE RATE OF RS.9 LAKH S WHICH IS MORE THAN THE AMOUNT STATED IN THE SALE DEED. THE ASSESSEE H AS DISCLOSED IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, IN REPLY TO QUESTION NO.6 THAT HE HAS PURCHASED THE PROPERTY IN THE PAST , WHOSE DOCUMENTS WERE REGISTERED RECENTLY. A REFERENCE TO THIS CAN BE MADE TO SERIAL NOS.10, 14, 17 AND 21 TO THE PROPERTY MENTIONED IN REPLY TO QUESTION NO.6. THUS, ACCORDING TO THE AO, ONCE THE ASSESSEE IS IN THE HABIT OF SETTLING THE PURCHASE OF LAND, WHOSE DOCUMENTS CAN BE EXECUTED SUBSEQUENTLY, WOULD INDICATE THAT THE ASSESSEE MUST HAVE PURCHASED THESE PIECES OF LAND ON POWER OF ATTORNEY FROM THE ORIGINAL LAND OWNERS. WHEN THESE LANDS WERE SOLD, HE HAS RECEIVED THE PUR CHASE PRICE AT THE RATE OF RS.9,00,000/- PER VIGHA . THE AMOUNTS STATED IN THE SALE DEED HAVE BEEN GIVEN TO THE ORIGINAL LAND OWNERS AND THE CASH COMPONENT HAS BEEN RETAINED BY THE ASSESSEE. 20. THE LD.AO HAS MADE DISCUSSION ABOUT THE RIGHTS DEVOLVED UPON ANY PERSONS WHO IS HOLDING POWER OF ATTORNEY, AND T HEREAFTER, DREW INFERENCE. 21. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. BEFORE WE EMBARK UPO N THE FACTS CONSIDERED BY THE AO, WE DEEM IT APPROPRIATE TO TAK E NOTE OF THE REPLIES GIVEN BY THE ASSESSEE DURING THE COURSE OF SEARCH AND POST- SEARCH INQUIRY. THESE REPLIES READ AS UNDER: SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 23 STATEMENT UNDER SECTION 132(4) DATED 23.5.2008 'Q.I6.WHETHER YOU AND YOUR FAMILY MEMBERS ARE HAVIN G ANY BUSINESS TRANSACTION IN ANY MANNER WITH AVIRAT GROU P WHICH IS CONNECTED WITH CONSTRUCTION BUSINESS WHEREIN MAIN P ERSONS ARE KANUBHAI MAGANBHAI, SANDIPBHAI KANUBHAI, BALDEVBHAI MAGANBHAI, ANILBHAI SHAKARABHAI PATEL ETC. OR NOT? STATE . A.16. I OR MY FAMILY MEMBERS ARE NOT CONNECTED IN A NY MANNER WITH AFORESAID GROUP WHICH IS.CONNECTED WITH CONSTR UCTION BUSINESS. HOWEVER, MY LANDS SITUATED IN MOTI BHOYAN NE.AR VILLAGE VADSAD TALUKA KALOL DISTRICT GANDHINAGAR BLOCK NO. 1244 IN MY NAME AND JOINT NAME OF SHRI KESHABHAI HARKHABHAI AD MEASURING ABOUT FOUR VIGHAS WERE SOLD DURING FY 2007-08 TO KA NUBHAI MAGANBHAI AND DEAL OF SAID LAND WAS DONE FOR RS.8,0 0,000.00 TO RS.10,00,000.00. OVER AND ABOVE THAT, LAND, BLOCK N UMBER OF WHICH IS NOT REMEMBERED BY ME AT PRESENT WHICH IS S ITUATED IN THE SAME VILLAGE MOTI BHAYAN IN THE NAME OF MY SON PALAKBHAI AND MAVJIBHAI HARIBHAI AD MEASURING ABOUT FOUR VIGH AS WAS ALSO SOLD TO KANUBHAI IN FY 2007-08 FOR A CONSIDERATION OF ABOUT RS.8 LAKHS TO 10 LAKHS. OVER AND ABOVE THAT, LANDS OF VA RIOUS BLOCKS IN SAME VILLAGE WHICH ARE TOTALLY AD MEASURING ABOUT 4 0 VIGHAS WHICH ARE THE LANDS OF THE PERSONS OTHER THAN MY FA MILY MEMBERS HAVE BEEN SOLD THROUGH ME TO KANUBHAI MAGANBHAI AND SHRI ANILBHAI AND TRANSACTION OF SAID LANDS WAS DONE THR OUGH ME. SAID LANDS COMES TO ABOUT 40 BIGHAS AND FOR COMMISSION A MOUNT IT WAS DECIDED TO PAY TO ME VZ PER CENT OF THE SALE PR ICE AT THE PRICE OF RS.2,00,000.00 PER VIGHA AND CONSIDERING HALF PE R CENT OF RS.80 LAKHS, COMMISSION COMES TO RS.4,00,000.00 AND FROM THAT, DURING FY 2007-08, KANUBHAI AND ANILBHAI HAVE PAID TO ME COMMISSION OF RS. 1,50,000.00 AND REMAINING COMMISS ION HAS YET NOT BEEN PAID TO ME BECAUSE THERE IS DISPUTE IN RES PECT OF SAID LANDS AND, THEREFORE, MY COMMISSION IS YET UNPAID Q.28. TODAY DURING THE COURSE OF SEARCH PROCEEDING S, FROM YOUR HOUSE, LOOSE PAPERS/DOCUMENTS AS PER FILE NO. AS-5 PAGE NO. 1 TO 108 ARE FOUND WHICH HAVE BEEN SEIZED WHICH ARE HAVI NG PAGE NO. 1 TO 108. YOU CHECK IT ONE BY ONE. I AM SHOWING. SE RIAL WISE EXPLAIN THE SAME. A.28. AFTER HAVING SEEN THE AFORESAID FILE NO. AS-5 PAGE NO. 1 TO 108 IN DETAIL,! WANT TO STATE THAT ALL THE PAPERS A RE IN RESPECT OF THE BUSINESS OF PURCHASE/SALE OF LAND FOR WHICH AT PRESENT NOT ABLE TO EXPLAIN BECAUSE MY EVIDENCE BOOKS ARE LYING WITH MY SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 24 ADVOCATE/ACCOUNTANT AND MY MENTAL AND PHYSICAL COND ITION IS NOT GOOD AND, THEREFORE, NOT ABLE TO GIVE ANSWER. . STATEMENT UNDER SECTION 132(4)/131 DATED 12.6.2008 Q.3 IN THE WORK OF LAND BROKER, WITH WHOM AND IN RESPECT OF WHICH LAND, BROKERAGE OF LAND HAS BEEN RECEI VED? STATE. A.3 IN THE BUSINESS OF LAND BROKERAGE, LAND OF VILLAGE MOTI BHOYAN BLOCK NO. 1200 SERIES ABOUT 30-40 VIGHAS OF RAJENDRABHAI BHALABHAI PATEL AND MAVJIBHAI HARIBHAI DESAI AND PA LAKBHAI PARESHBHAI PATEL WAS SOLD TO ANILBHAI SHAKARABHAI PATEL.RANIPWALA, PRICE WHEREOF AS PER DOCUMENT APPR OXIMATELY WAS RS.2,00,000.00 PER VIGHA (RS.TWO LAKHS ONLY) WH EREIN I HAD RECEIVED BROKERAGE AT THE RATE OF VS % AND UPTIL NO W, TOWARDS BROKERAGE, I HAVE RECEIVED RS, 1,50,000.00 (RS. ONE LAKH FIFTY THOUSAND ONLY) TOWARDS BROKERAGE BEFORE TWO MONTHS. SAID BROKERAGE HAS BEEN RECEIVED IN CASH. STATEMENT DATED 13-6-2008. Q.12 I AM SHOWING YOU THE BOOKS/LOOSE PAPER AS PER ANNEXURE AS/1 TO AS/9 SEIZED FROM YOU BY THE INCOME TAX DEPA RTMENT DURING THE SEARCH PROCEEDINGS DATED 23.5.2008 WHERE IN WHATEVER PAPERS (LOOSE PAPERS) CHITS OF PAPER WERE FOUND, SA ME HAVE BEEN ARRANGED IN FILE AND SEALED WHEREIN SIGNATURE OF YO URSELF AND WITNESSES WHO HAD COME TO YOUR HOUSE HAVE BEEN OBTA INED AND SIGNATURE OF THE RESPECTIVE AUTHORIZED OFFICER HAS ALSO BEEN THERE. I AM SHOWING YOU PAGE NO.68 OF ANNEXURE AS-6. SEE I T AND GIVE EXPLANATION ABOUT THE DETAILS WRITTEN THEREIN. A. 12 HAVING SEEN PAGE NO.68 OF LOOSE PAPER FILE AS -6 SHOWN BY YOU, I AM STATING THAT THESE ARE THE DETAILS OF THE LANDS OF VILLAGE MOTI BHOYAN WHICH WERE SOLD BY ME ON COMMISSION BAS IS. SEEING THIS PAGE NO.68, I AM STATING THAT THESE ARE THE DE TAILS OF THE OBJECTIONS RAISED FOR THE PURPOSE OF TITLE CLEARANC E OF THE RESPECTIVE BLOCK NUMBER, RAISED BY THE ADVOCATE. DETAILS THEREOF ARE AS UNDER, SUCH AS, 1218 - TO EXECUTE DOCUMENT 1231 - TO CARRY OUT ENTRIES 1258 - TO CARRY OUT ENTRIES . 1215 - TO CARRY OUT ENTRIES 1222 TO 1230, 1197 - SUCCESSION OF BHALABHAI IS TO BE OBTAINED. - SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 25 786, 1248, 13235, 1271 BANAKHAT OF DHIRUBHAI, BAN AKHAT OF RAMESHBHAI 1209 COURT CASE. 1209, 1232: TO GET DELETED THE NAME OF MAFAJI BECHA RJI. Q.13 INFORM ABOUT THE INVOLVEMENT OF THE PERSON S; ISHWARBHAI,JAYRAMBHAI AND DUDHIYA IN RESPECT OF ABO VE STATED BLOCK NUMBERED LANDS OF VILLAGE MOTI BHOYAN. A. 13 I STATE THAT ISHWARBHAI WAS JOINT PARTNER IN RESPECT OF LANDS OF CERTAIN BLOCK NUMBER OUT OF THE LANDS OF A FORESAID BLOCK NUMBER OF VILLAGE MOTI BHOYAN AND AT PRESENT, SAID ISHWARBHAI JETHIDAS PATEL HAS SETTLED IN AMERICA. JAYRAMBHAI I S SON OF MAVJIBHA RABARI WHO IS DOING THE WORK OF LAND BROKE R AND AS REGARDS DUDHIYA, I AM NOT HAVING INFORMATION ABOUT COMPLETE NAME OF DUDHIYA BUT OUT OF THE LANDS OF AFORESAID B LOCK NUMBER OF MOTI BHOYALA.CERTAIN LANDS WERE KNOWN AS LAND OF DUDHIYA. AS PER MY KNOWLEDGE, IT MAY BE POSSIBLE THAT BANAKHAT FOR THIS LAND MIGHT HAVE BEEN DONE IN HIS NAME. Q.14 I AM SHOWING YOU PAGE 73 OF LOOSE PAPER FILE A S/5 WHERE THERE-IS MENTION OF THE NAME OF DUDHIYA, WHEREIN DE TAILS OF NUMBERS AS PER DOCUMENT ARE STATED AS UNDER: NUMBERS AS PER DOCUMENT 1250-7729 1243-4043 1251-13200 1212- 14865 1239- 3449 1247-4043 1240-3805 1249-6540 1244-10940 ------------ 68614 DIVIDED BY 29.48 VIGHA X 9,00,000.00=2,65,37, 430 REMAINING/PENDING: 1242-5827 1246-1243:5827 1241: 4519 1238:4481=20654 AND HALF THEREOF WOULD BE 10327 CHEQUE 1422200 SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 26 BLOCK 1215 = 0.29.00 - BLOCK 1245 = 0.06.00 PARESHBHAI 13268715/- 2389500/- 15658215/- 1220-6540 1233-5827 12357 DIVIDED BY 5.31 VIGHA 47,82,600 X 900000 CHEQUE 804100 4779000 CHEQUE 1422200 2226300. 2 PARESHHAI-2389500 2389500 SEE TO IT AND EXPLAIN ABOUT THE DETAILS WRITTEN THEREIN. A.14 AFORESAID PAGE NO. 73 IS PART OF LOOSE PAPER F ILE AS/5 WHICH I HAVE READ ABSOLUTELY IN PEACEFUL MANNER AND THE D ETAILS WRITTEN THEREIN AND STATED IN THIS QUESTION ARE SIMILAR. HA VING SEEN SAID PAGE NO. 73, I -AM STATING THAT THE LANDS OF BLOCK NUMBERS STATED IN THIS PAGE OF VILLAGE MOTI BHOYAN, AGRICULTURAL L ANDS OF BLOCK NO. 1220 AND 1233 WERE SOLD AS LAND BROKER TO ANILBHAL SHAKARABHAL PATEL. AS REGARDS OTHER DETAILS EXCEPT THIS, FOR LA CK OF COMPLETE KNOWLEDGE AT PRESENT WITH ME, I WILL GIVE EXPLANATI ON ABOUT THE SAME TO YOU ON 16.6.2008 MONDAY AT 11.00 HOURS OF T HE MORNING. AT PRESENT, I AM REQUESTING YOU TO STOP MY STATEMEN T ON TEMPORARY BASIS WITH A REQUEST TO FIX IT ON MONDAY AT 11.00 HOURS OF MORNING AGAIN. 22. THE ASSESSEE HAS PLACED ON RECORD COMPLETE DETA ILS OF REVENUE RECORD OF ALL THESE SURVEY NUMBERS. HE HAS PLACED DETAILS OF OLD SURVEY NUMBERS AND WHO WAS THE OWNER OF THESE LANDS. THE ASSESSEE THEREAFTER PRODUCED THE DETAILS OF REGISTERED SALE DEED AND HOW THE PAYMENTS HAVE BEEN RECEIVED. FOR THE EXAMPLE SAKE, THE LAND BEARING SURVEY NO.1197 WAS OWNED BY ISHWARBHAI JETHIDAS PAT EL AND HE SOLD THIS LAND TO RAJESHKUMAR RAMESHBHAI PATEL. THE PAY MENT WAS MADE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 27 THROUGH ACCOUNT PAYEE CHEQUE AND THE CONSIDERATION WAS RS.19,11,067.50, WHICH WAS PAID THROUGH ACCOUNT PAY EE CHEQUE BEARING NO.097811 DATE D30.10.2007. THE NAME OF TH E BANK AND BRANCH IS AXIS BANK, VASTRAPUR BRANCH. THE DOCUMEN T REGISTRATION NUMBER IS 6701. SIMILAR IS THE DETAILS WITH REGARD TO EACH VENDOR OF KASARA NOS.1222, 1223 ETC. IN THESE SURVEY NUMBERS THERE ARE NINE VENDORS. THE ASSESSEE WAS HOLDING POWER OF ATTORNE Y ONLY FOR TWO PERSONS, VIZ. SHRI ISHWARBHAI JETHIDAS PATEL AND AR VINDBHAI BHALABHAI PATEL. ALL THESE VENDORS HAD RECEIVED PAYMENT THRO UGH ACCOUNT PAYEE CHEQUES. THE CHEQUES HAVE BEEN CREDITED TO THEIR B ANK ACCOUNT. THE ASSESSEE HAS PLACED ON RECORD SIMILAR DETAILS WITH REGARD OTHER KSHARA NUMBER VIS. 1228 TO 1230, 1235 AND 1248. ALL THESE INDICA TED IN TABULAR FORM ARE AVAILABLE AT PAGE NO.796 TO 804 OF THE PAPER BOOK. THE CONTENTION OF THE ASSESSEE WAS THAT HE WAS HAVI NG POWER OF ATTORNEY ONLY FOR TWO PERSONS. ALL OTHER LAND OWNE RS HAVE SOLD THEIR LAND INDEPENDENTLY THROUGH REGISTERED SALE DEED AND THE PAYMENTS HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. T HE QUESTION IS WHAT IS THE BASIS FOR THE AO TO HARBOR A BELIEF THA T SINCE THE ASSESSEE WAS HOLDING POWER OF ATTORNEY, THEREFORE, HE WOULD HAVE GOT CASH COMPONENTS, WHICH IS ASSESSABLE IN THE HAND OF THE ASSESSEE ? THE BASIS FOR HARBOURING THIS PLEA IS THAT IN THE PAST THE ASSESSEE HAS PURCHASED THE LAND WHOSE DOCUMENTS WAS EXECUTED AFT ER 8-10 YEARS. THE LD.AO HAS FAILED TO APPRECIATE ONE ASPECT THAT THE OWNERSHIP OF IMMOVABLE PROPERTIES WOULD BE RECOGNIZED IN THE NAM E OF A PERSON WHEN A REGISTERED SALE DEED IS BEING EXECUTED AS PE R SECTION 17 OF INDIAN REGISTRATION ACT. THERE MAY BE AN UNDERSTAN DING BETWEEN TWO INDIVIDUALS FOR A TRANSFER OF LAND AND DOCUMENTATIO N MIGHT HAVE BEEN REGISTERED LATER ON, BUT THEN THE LEGAL TITLE WOULD VESTS IN THE ORIGINAL OWNER UNLESS AND UNTIL THE TRANSFER HAS TAKEN PLACE BY WAY OF REGISTRATION OF SALE DEED AND BY EFFECTING MUTATION OR CHANGE OF OWNERSHIP IN THE LAND RECORD. THE FALLACY IN THE A PPROACH OF THE AO SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 28 WOULD BE ANALYZED WITH DIFFERENT ANGLE ALSO. IF TH E ASSESSEE HAS ANY RIGHT IN THE LAND QUA WHICH THE REVENUE FAILED TO LAY HIS HAND, THEN ALS O NO VENDEE WOULD PURCHASE THE LAND UNLESS SOME RIGHT S, IF ANY AVAILABLE AND DISCERNIBLE FROM THE REVENUE RECORD ARE BEING A SSIGNED BY THAT THIRD PERSON. IN OTHER WORDS, THE ASSESSEE WOULD HAVE SIGNED THE SALE DEED AS AN ASSIGNEE OF HIS RIGHT EMBEDDED IN THIS L AND BY VIRTUE OF SOME UNDERSTANDING BETWEEN THE FARMERS. THIS FACT CAN BE ASSIGNED BY RECORD OF THESE ORIGINAL LAND OWNERS. IT IS ALSO P ERTINENT TO NOTE THAT IF THE ASSESSEE HAS PURCHASED THE LAND IN THE PAST, AN D THEREFORE, DOCUMENTATION HAS BEEN EXECUTED DIRECTLY IN THE NAM E OF PERSON MENTIONED BY THE ASSESSEE I.E. REPRESENTATIVE OF TH E BUILDER, THEN WHOLE SALE CONSIDERATION WOULD HAVE COME TO THE ASSESSEE AND NOT THE ONLY CASH COMPONENTS, IF ANY RECEIVED. 23. IT IS ALSO WORTH TO NOTE THAT IN CASE OF VENDEE , THE INVESTMENTS DISCLOSED IN THE SALE DEED HAVE BEEN ACCEPTED. NO UNEXPLAINED INVESTMENT HAS BEEN ADDED IN THEIR CASE IN SPITE OF COMPLAINT MADE BY THE ASSESSEE. IN OTHER WORDS, THE PURCHASE COST IN THE CASE OF VENDEE IS EQUIVALENT TO THE AMOUNT MENTIONED IN THE SALE D EED. 24. REPLIES GIVEN BY THE ASSESSEE IN RESPONSE TO QU ESTION NO.16 DURING THE COURSE OF SEARCH AND IN POST-INQUIRY, IT IS DISCERNIBLE THAT THE ASSESSEE HAS EXPLAINED HIS POSITION FROM THE VERY B EGINNING. HE NOWHERE STATED THAT HE HAS SOME LEGAL TITLE IN THES E LANDS, AND THESE WERE SOLD AT THE RATE OF RS.9,00,000/- PER VIGHAS . THE ASSESSEE DOES NOT BELONG TO AN ORGANIZED SECTOR OF BUSINESS UNDER TAKING. HE IS AN AGRICULTURIST WORKING AS A COMMISSION-AGENT FACILIT ATING SALE OF AGRICULTURE LAND. THE INTELLECTUAL COMPATIBILITY O F THE ASSESSEE BEING AN AGRICULTURIST AND LAND BROKER DEALING IN AGRICULTUR E LAND CANNOT BE EQUATED AT PAR WITH TRAINED REVENUE OFFICERS, WHO H AVE RECORDED HIS STATEMENT UNDER SECTION 132(4)/131 OF THE INCOME TA X ACT. IT IS ALSO TO BE NOTED THAT THE ASSESSEE IS A HEART PATIENT WH O HAS SOUGHT SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 29 ADJUSTMENT IN THE ASSESSMENT PROCEEDINGS ON THE GRO UND THAT THE PACE- MAKER IS REQUIRED TO BE CHANGED, THEREFORE, HIS STA TEMENT IS TO BE APPRECIATED KEEPING IN MIND HIS RUSTIC RURAL BACKGR OUND AND HIS HEALTH. IF WE LOOK INTO THE REPLIES GIVEN BY THE ASSESSEE A ND REPRODUCED BY THE CIT(A) IN THE IMPUGNED ORDER, THEN IT WOULD REVEAL THAT IN RESPONSE TO FEW QUESTIONS, WHERE HE HAS STATED THAT RIGHT NOW, HE DOES NOT HAVE THE COMPLETE EVIDENCE, WHICH ARE WITH HIS ADVOCATE , HE GAVE REPLY IN CATEGORICAL TERMS WITH REGARD TO OTHER QUESTIONS. THEREFORE, THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN OBSERVING THAT HE DID NOT COOPERATE AT THE TIME OF SEARCH. THE ASSESSEE DISC LOSED DETAILS WHICH HE POSSESSED. HE HAS GIVEN STATEMENT DISOWNING TH E PAGE NO.72 AND 73 AND LATER ON HE HAS EXPLAINED THE ENTRIES IN THE PAGE ALONG WITH COMPLETE DOCUMENTARY EVIDENCES FROM THE REVENUE AUT HORITIES OF THE STATE GOVERNMENT. 25. AT THE COST OF REPETITION, WE WOULD LIKE TO SUM MARIZE THE FOLLOWING REASONING: 26. ON PERUSAL OF PAGE NOS.72 AND 73 OF ANNEXURE AS /5, WE FIND THAT THE AO HAS BASICALLY DRAWN FOUR INFERENCES VIZ. I) THE SURVEY NUMBERS MENTIONED IN THESE PAGES HAVE BEEN TRANSFERRED BY THE FARMERS DURING THESE ASSESSMENT YEARS. AS FAR AS THIS INFERENCE IS DRAWN, THERE IS NO ERROR AT EN D OF THE REVENUE AUTHORITIES, BECAUSE, THIS FACT HAS BEEN APPROVED W ITH THE HELP OF SALE DEED PRODUCED BY THE ASSESSEE THAT THESE SURVE Y NUMBERS HAVE BEEN TRANSFERRED; II) SECOND INFERENCE DRAWN BY THE AO IS THAT THE AS SESSEE IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT ON DATE OF SEARCH HAS REPLIED THAT HE HAS PURCHASED SOME OF TH E PROPERTIES FIVE-TEN YEARS BACK AND THE DOCUMENT HAS BEEN EXECU TED RECENTLY. A REFERENCE TO THE REPLY OF THE ASSESSEE QUA QUESTION SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 30 NO.6 AND PROPERTY MENTIONED AT SERIAL NO10, 14, 17 AND 21 CAN BE MADE. ON THE BASIS OF THIS REPLY, THE LD.AO ASSUME D THAT THE ASSESSEE MUST HAVE PURCHASED THESE LANDS AND HE HAS TRANSFERRED THE LAND AT THE RATE OF RS.9,00,000/- PER VIGHA , WHICH IS FAR MORE THAN THE SALE CONSIDERATION STATED IN THE SALE DEED . THE DIFFERENCE BETWEEN THE AMOUNTS STATED IN THE SALE D EED AND CALCULATED AT THE RATE OF RS.9,00,000/- DESERVE TO BE TREATED AS INCOME OF THE ASSESSEE. IN OUR OPINION, THE EVIDEN CE FOR ARRIVING THIS ASSUMPTION IS NOT AVAILABLE ON RECORD. THE PR OPERTIES WHICH HAVE BEEN PURCHASED BY THE ASSESSEE ABOUT 10-12 YEA RS BACK ARE THE SPECIFIC PROPERTIES. IT IS SETTLED BETWEEN THE VENDEE AND THE VENDOR THAT UPTO AND UNTIL THE PROPERTY WAS NOT TRA NSFERRED BY WAY OF REGISTERED SALE DEED, THE ASSESSEE COULD NOT BE TERMED AS OWNER OF THE PROPERTY. IF IN THE PAST HE HAS ACQUI RED CERTAIN PROPERTY WITH AN UNDERSTANDING THAT SALE DEED WAS E XECUTED SUBSEQUENTLY, THAT WOULD NOT MEAN THAT FOR ALL THE TRANSACTIONS, WHERE HE HAS NO ROLE TO PLAY, HE WILL BE CONSTRUED AS OWNER. IF WE GO BY THIS ASSUMPTION OF THE LD.REVENUE AUTHORIT IES, THEN NO ONE CAN BE TREATED AS OWNER OF ANY PROPERTY. APART FROM ABOVE, IT IS ALSO PERTINENT TO NOTE THAT IN THE SALE DEED, THE ASSESSEE HAS NOWHERE ASSIGNED ANY RIGHT ACQUIRED BY HIM UNDER SO ME UNDERSTANDING WITH THE FARMERS. IF THE ASSESSEE HA S ANY ENFORCEABLE LEGAL RIGHT, THE VENDEE WOULD NOT HAVE PURCHASED THE PROPERTY WITHOUT ASSIGNING OF THOSE RIGHTS BY THE A SSESSEE BY SIGNING THE SALE DEED WITH A REMARK RELINQUISHMENT OF RIGHTS AVAILABLE TO THE ASSESSEE. IT IS ALSO WORTH TO ME NTION THAT VENDORS HAVE RECEIVED THE PAYMENT THROUGH ACCOUNT P AYEE CHEQUES. HAD THE ASSESSEE PURCHASED PROPERTY 10-12 YEARS AGO, AND NOW TRANSFERRED, THEN THE TOTAL SALE CONSIDERAT ION IS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE AND NOT ONLY THE ALLEGED CASH COMPONENTS. THEREFORE, NEITHER UNDER SECTION 292C, THE AO SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 31 CAN PRESUME THE ASSESSEE AS THE OWNER OF THE LAND M ENTIONED IN THESE SURVEY NUMBERS NOR IT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THAT ASSESSEE WAS THE OWNER OR IN POSSESS ION OF THE LAND. THE REVENUE HAS ACCEPTED THE PURCHASE PRICE IN THE HANDS OF THE VENDEE EQUIVALENT TO THE AMOUNTS STATED IN T HE SALE DEED. THE REVENUE HAS NOT MADE ANY INQUIRY FROM THE ULTIM ATE VENDORS I.E. FARMERS, WHO HAVE EXECUTED SALE DEED. THEREFO RE, THE ALLEGED CONCLUSION THAT THE ASSESSEE HAS RECEIVED CASH COMP ONENT IS PURELY BASED ON ASSUMPTION WITHOUT ANY EVIDENCE FOR SUBSTANTIATING THIS FACT. III) THE NEXT INFERENCE DRAWN BY THE AO THAT A DOCU MENT WAS FOUND FROM THE PREMISES OF THE ASSESSEE, THEREFORE, IT IS TO BE TREATED AS BELONGING TO THE ASSESSEE. AS FAR AS TH IS INFERENCE IS CONCERNED, WE DO NOT FIND ANY ERROR IN THE CONCLUSI ON OF THE REVENUE AUTHORITIES. ONCE A DOCUMENT IS FOUND FROM THE PREMISES OF THE ASSESSEE, THEN IT IS THE DUTY OF TH E ASSESSEE TO EXPLAIN THE CONTENTS IN THE DOCUMENTS. THE DOCUMEN T IS PRESUMABLY BELONGED TO THE ASSESSEE AND ONUS IS ALW AYS UPON THE ASSESSEE TO EXPLAIN THE DOCUMENTS. IN THESE DO CUMENTS THREE SURVEY NUMBERS WERE HELD BY THE ASSESSEE JOIN TLY, WHICH HAS ALSO BEEN TRANSFERRED. MEANING THEREBY, THE AS SESSEE HAS INFORMATION ABOUT THE NOTING IN THE DOCUMENTS. THE REFORE, HE IS REQUIRED TO EXPLAIN THE PAGES. BUT TO OUR MIND, TH E ASSESSEE HAS SUCCESSFULLY DISCHARGED HIS ONUS. HE HAS FILED THE COPIES OF LAND REVENUE RECORD, COPIES OF THE SALE DEED, DETAILS OF CHEQUE VIDE WHICH PAYMENT WAS MADE BY THE VENDEE TO THE VENDOR. HE HAS ESTABLISHED THAT THE AMOUNTS MENTIONED IN THESE SUR VEY NUMBERS EXCEPT THREE, HAS NO RELATION WITH HIM. HE HAS JUS T ACTED AS POWER OF ATTORNEY QUA TWO PERSONS WHO ARE RESIDING IN US. THE SALE CONSIDERATION HAS BEEN PAID TO THEM ALSO THROU GH ACCOUNT PAYEE CHEQUES. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 32 IV) FORTH INFERENCE DRAWN BY THE AO THAT THE LAND W AS TRANSFERRED AT THE RATE OF RS.9.00 LAKHS PER VIGHA . NO DOUBT A CALCULATION HAS BEEN MADE BY APPLYING THIS RATE. I T IS DISCERNIBLE FROM THE PAGES. HOWEVER, WHETHER IT HAS BEEN ACTUA LLY ACTED UPON BY THE PARTIES, NO CORROBORATIVE EVIDENCE HAS BEEN COLLECTED BY THE REVENUE NOR ANY ATTEMPT WAS MADE. THE CALCU LATION WAS FOUND FROM THE RESIDENCE OF THE ASSESSEE, BUT IT DO ES NOT MEAN THAT IT WAS ONLY RECEIVED BY THE ASSESSEE, BECAUSE, THERE WAS NO RIGHTS WITH THE ASSESSEE EXCEPT THREE SURVEY NUMBER S TO ALIENATE OR TO CHARGE THE PRICE. AS FAR AS KSHARA NUMBERS SOLD BY THE ASSESSEE UNDER JOINT OWNERSHIP I.E. SURVEY BEARING NO.1244, 1220 AND 123 3 ARE CONCERNED, A PRESUMPTION CAN BE DRAWN THAT THESE AM OUNTS MIGHT HAVE BEEN TRANSFERRED BY THE ASSESSEE AT THE RATE OF RS.9,00,000/- PER VIGHA . BUT WE HAVE HELD THAT THE ASSESSEE IS AN AGRICULTURIST AND NOT A TRADER IN THE AGRICULTUR E LAND. THE WHOLE EXERCISE BY THE AO IN BRANDING THE ASSESSEE A S TRADER IN THE LAND WAS WITH AN ANGLE THAT EVEN IF ON-MONEY RE CEIVED IN CASH IS BEING CALCULATED, THEN ALSO NO FRUITFUL PURPOSE WILL BE SERVED FOR THE REVENUE, BECAUSE THAT CONSIDERATION WILL BE TRE ATED AS IN LIEU OF TRANSFER OF AN AGRICULTURE LAND. SUCH AGRICULTU RE LAND WILL NOT COME WITHIN THE AMBIT OF CAPITAL ASSET PROVIDED UND ER SECTION 2(14) OF THE INCOME TAX ACT. 27. IN THE FOREGOING PARAGRAPHS, WE HAVE HELD THAT THE ASSESSEE IS NOT A TRADER. THEREFORE, IF ANY CASH COMPONENT REC EIVED BY HIM, THE SAME BE TREATED AS RECEIPT FROM TRANSFER OF AGRICUL TURAL LAND EXEMPT FROM TAX. 28. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW BOTH THE GROUND NO.1 IN BOTH THE YEARS RAISED BY THE ASSESSEE UNDER HIS PRA YER CLAUSE AND DELETE THE ADDITION OF RS.1,56,58,215/- MADE BY THE AO IN THE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 33 ASSTT.YEAR 2007-08 AND ADDITION OF RS.98,61,639/- M ADE BY THE AO IN THE ASSTT.YEAR 2008-09. CONSEQUENTLY, THE GROUND N O.1 RAISED BY THE REVENUE IMPUGNING THE DELETION OF RS.53,04,675/- AN D RS.29,93,800/- IS REJECTED. 29. NOW WE TAKE GROUND NO.2 IN REVENUES APPEAL FOR THE ASSTT.YEAR 2007-08. 30. GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.5,94,075/- ADDED BY THE AO. 31. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AD PURCHASED VARIOUS PIECE OF LAND THROUGH SALE DEED REGISTERED ON 5/10 AND 10/10/2006. ACCORDING TO THE AO, THERE WAS A DIFFE RENCE OF RS.5,94,075/- BETWEEN THE SALE CONSIDERATION SHOWN IN THE SALE DEED VIS-A-VIS THE VALUE ON WHICH THE STAMP DUTY WAS PAI D. THE AO HAS ASSUMED THAT THE ASSESSEE MUST HAVE PAID THE PURCHA SE PRICE OF THE LAND EQUIVALENT TO THE VALUE ON WHICH THE STAMP DUT Y WAS PAID. HE ACCORDINGLY, WITH THE HELP OF SECTION 50C MADE ADDI TION OF RS.5,94,075/-. 32. ON APPEAL, THE LD.CIT(A) HAS DELETED THE ADDITI ON. 33. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE INCOME TAX ACT AND SECTION 50C ARE THE RELEVANT PROVISIONS FOR THE PRESENT CONTROVERSY . SECTION 48 OF THE INCOME TAX ACT PROVIDES MODE OF COMPUTATION OF CAPI TAL GAIN. IT CONTEMPLATES THAT THE INCOME CHARGEABLE UNDER THE CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, VIZ. (I) EXPENDITURE INCURRED WH OLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, AND (II) COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 34 34. SECTION 50C OF THE INCOME TAX ACT PROVIDE THAT WHERE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH I S LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOV ERNMENT FOR THE PURPOSE OF PAYMENTS OF STAMP DUTY IN RESPECT OF SUC H TRANSFER THE VALUE SO ADOPTED BY THE ASSESSEE FOR THE PURPOSE OF SECTI ON 48 BE DEEMED TO BE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCR UED AS A RESULT OF SUCH TRANSFER. THUS, A CONJOINT READING OF BOTH SECTION S WOULD INDICATE THAT WHILE CALCULATING THE CAPITAL GAIN UNDER SECTION 48 , THE VALUE ADOPTED FOR THE PAYMENT OF THE STAMP DUTY WOULD BE CONSIDER ED AS FULL SALE CONSIDERATION RECEIVED OR ACCRUED TO THE ASSESSEE O N TRANSFER OF A CAPITAL ASSET. IN THE PRESENT CASE NO CAPITAL GAIN COMPUTATION IS THERE. THE ASSESSEE IS A PURCHASER THEREFORE DEEMING FICTI ON PROVIDED UNDER SECTION 50C CANNOT BE APPLIED UPON THE ASSESSEE. T HE LD.FIRST APPELLATE AUTHORITY HAS ACCEPTED THIS FACT, AND WE DO NOT FIN D ANY ERROR IN THE ORDER OF THE CIT(A). THIS GROUND OF APPEAL IS REJE CTED. 35. GROUND NO.1 IN THE ASSESSEES APPEAL FOR THE AS STT.YEAR 2003-04 IS INTERCONNECTED WITH GROUND NO.1 IN THE ASSTT.YEA R 2004-05, 2005-06 AND 2006-07. SIMILARLY, THE GROUND NO.2 IN THE ASS TT.YEAR 2007-08 AND 2008-09 THOUGH NOT DIRECTLY CONNECTED TO GROUND NO. 1 IN OTHER YEARS, BUT THEY ARE BASED ON THE SAME PRINCIPLE. IN THESE GROUNDS, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.5,93,265/-, RS.7,00,053/-, RS.8, 26,063/-, RS.14,54,008/-, RS.75,000/-, RS.2,55,000/- RESPECTI VELY IN THE ASSTT.YEARS 2003-04 TO 2008-09. THESE ADDITIONS HA VE BEEN MADE ON ACCOUNT OF ACCRUED INTEREST INCOME OF THE ASSESSEE. 36. BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH, A PAGE INVENTORISED AS PAGE NO.62 OF ANNEXURE AS-5 WAS FOU ND AND SEIZED. THE COPY OF THIS PAGE IS AVAILABLE ON PAGE NO.240 O F THE PAPER BOOK FOR SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 35 THE ASSTT.YEAR 2003-04. THE LD.CIT(A) HAS REPRODUC ED THE NOTING ON THIS PAGE WHICH READ AS UNDER: 17,00,000 15/10/1997 TO 306,000 15/10/98 20,06,000 TO 361,080 15/10/99 23,67,080 TO 426,074 15/10/2000 27,93,154 TO 502,767 15/10/2001 32,95,921 593,265 15/10/2002 38,89,186 700,053 15/10/203 45,89239 593,265 15/10/04 54,15,302 974,754 15/10/05 63,90,056 479,254 15/3/05 68,69,310 37. THE LD.AO HAS OBSERVED THAT THE ASSESSEE HAS GI VEN A LOAN OF RS.17 LAKHS ON WHICH INTEREST WAS CHARGED AT THE RA TE OF 18%. HE CALCULATED THE INTEREST FOR ASSTT.YEAR 2003-04 OF R S.5,93,265/-. THIS INTEREST INCOME HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE FOR THE ASSTT.YEAR 2003-04 ON THE GROUND THAT THE INTEREST MUST HAVE BEEN SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 36 ACCRUED TO THE ASSESSEE IN THIS YEAR. ON THE STREN GTH OF SIMILAR CALCULATION, HE CALCULATED THE INTEREST AT RS.7,00, 053/- AND IN OTHER YEARS I.E. UPTO THE ASSTT.YEAR 2006-07. FOR THE PU RPOSE OF ASSTT.YEAR 2007-08 AND 2008-09, IT IS OBSERVED THAT A PAPER IN VENTORISED AS PAGE NO.75 OF ANNEXURE AS/5 WAS FOUND. ACCORDING TO THE AO, THE ASSESSEE HAS GIVEN A LOAN OF RS.20 LAKSH ON 15.1.2007 AT THE RATE OF 18%. 38. THE INTEREST ACCRUED ON THESE ADVANCES IS RS.75 ,000/- RELEVANT TO THE ASSTT.YEAR 2007-08 AND RS.2,55,000/- RELEVANT F OR THE ASSTT.YEAR 2008-09. 39. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVE, WE HAVE PERUSED BOTH THESE PAPERS. THE CONTENTION OF THE ASSESSEE HAS BEEN REPRODUCED BY THE LD.CIT(A) WITH REGARD TO PAGE NO. 75 AT PAGE NO.54 OF THE IMPUGNED ORDER. THIS CONTENTION READS AS UNDER : III) DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE APPELLANT SUBMITTED THAT NOTINGS ON PAGE NO.75 IS N OT IN HIS HANDWRITING AS WELL AS NOT IN THE HANDWRITING OF AN Y OF APPELLANT'S FAMILY MEMBERS. IV) THE APPELLANT SUBMITTED THAT DURING HIS TENURE AS A SURPANCH OF VADSAR VILLAGE PANCHAYAT AND THEREAFTER , TILL DATE, SO MANY PARTIES OF VADSAR VILLAGE AND SURROUNDING AREA S USED TO APPROACH HIM AS A MEDIATOR FOR RESOLVING THEIR DISP UTES AND DIFFERENCES. THE NOTINGS ON PAGE NO.75 SEEMS TO BE ONE OF THE PARTIES AMONGST THE PARTIES WHO ARE HAVING THE DISP UTES AND THEY MIGHT HAVE VISITED THE RESIDENCE OF APPELLANT TO DI SCUSS THE MATTER OF DISPUTE BETWEEN OTHER PARTIES. THE PARTY WHO HAD VISITED THE RESIDENCE, OF APPELLANT MUST HAVE LEFT SOME CALCULATIONS OF INTEREST FOR DISCUSSION WITH THE AP PELLANT. THJE APPELLANT FURTHER SUBMITTED THAT DUE TO HIS INVOLVE MENT IN SOCIAL LIFE AND PUBLIC LIFE MANY PERSONS USED TO VISIT HIM EVERY DAY AND THEREFORE, IT IS VERY DIFFICULT TO REMEMBER THAT TH E NOTINGS MADE ON PAGE NO.75 IS OF WHICH PARTY. THE APPELLANT SUBM ITTED THAT THE DETAILS ON PAGE NO.75 DO NOT BELONG TO THE APPELLAN T AND NOTHING TO DO WITH THE SAME. THE APPELLANT HAS NOT GIVEN AN Y ADVANCE / LOAN AS STATED ON THE SAID PAGE. THE APPELLANT HAS ALSO NOT RECEIVED ANY INTEREST INCOME AS STATED ON THE SAID PAGE AND IT DOES NOT BEAR THE NAME OF THE APPELLANT AND ACCORDI NGLY, IT WAS REQUESTED BY THE APPELLANT TO THE LD. A.O NOT TO DR AW ANY ADVERSE SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 37 INFERENCE. HOWEVER, THE LD. A.O. HAS NOT CONSIDERED FACTS OF THE CASE AND HAD MADE THE ADDITION MERELY ON HIS OWN PR ESUMPTION AND ASSUMPTION WHICH IS AGAINST THE PRINCIPLE OF NA TURAL JUSTICE AND EQUITY. V) FOR MAKING THE IMPUGNED ADDITION, THE LD . A.O. HAS NOT BROUGHT ON RECORD ANY COGENT MATERIAL / EVIDENCES I N SUPPORT OF THE ALLEGATION OF INTEREST EARNED ON THE ALLEGED AD VANCES OF RS.20,00,000/-. 40. AN IDENTICAL ARGUMENT HAS BEEN RAISED FOR PAGE NO.62 OF THE ANNEXURE AS/5. THE ASSESSEE HAS PLEADED THAT HE HA S BEEN FILING THE RETURN OF INCOME IN THE PAST. HE HAS ALSO CONTENDE D THAT HE WORKED AS A SARPUNCH OF VADSAR VILLAGE. HE DOES NOT REMEMBER WHO HAS L EFT THIS PAPER AT HIS RESIDENCE. ACCORDING TO HIM VARIOUS P ERSONS VISITED HIM FOR RESOLVING DIFFERENT TYPES OF DISPUTES. SOMEONE MUS T HAVE MADE SOME CALCULATIONS AND THE PAPER REMAINED THERE. THE STA TIONERY USED IS ALSO OF THE PANCHAYAT . THE LD. REVENUE AUTHORITIES HAVE NOT ACCEPTED TH E CONTENTIONS OF THE ASSESSEE. 41. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED HIS CONTENTIONS AS WERE RAISED BEFORE THE REVENUE AUTHORITIES. THE LD .DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVENUE AUTHORI TIES. 42. A PERUSAL OF THE SEIZED PAPER WOULD INDICATE TH AT EXCEPT NOTING OF THE AMOUNT AND THE DATES NOTHING ELSE IS DISCERNIBL E. WE HAVE PERUSED THE STATEMENT OF THE ASSESSEE RECORDED UNDER SECTIO N 132(4) OF THE ACT, WHOSE ENGLISH TRANSLATION IS AVAILABLE ON PAGE NO.2 9 TO 63 OF THE PAPER BOOK. THE SEARCH TEAM HAS NOWHERE CONFRONTED THE A SSESSEE SPECIFICALLY WITH THESE TWO PAGES. A VAGUE QUESTIO N UNDER QUESTION NO.28 HAS BEEN ASKED. THE QUESTION IS TODAY DURIN G THE COURSE OF SEARCH PROCEEDINGS FROM YOU HOUSE LOOSE PAPERS/DOCU MENTS AS PER FILE NO.AS-5 PAGE NO.1 T6O 108 ARE FOUND, WHICH HAVE BEE N SEIZED WHICH ARE HAVING PAGE NO.1 TO 108. YOU CHECK IT ONE BY O NE. I AM SHOWING SERIAL WISE, EXPLAIN THE SAME . THE REPLY OF THE A SSESSEE IS AFTER SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 38 HAVING SEEN THE AFORESAID FILE IN DETAIL, I WANT TO STATE THAT ALL THE PAPERS ARE IN RESPECT OF THE BUSINESS OF PURCHASE/ SALE OF LAND FOR WHICH AT PRESENT NOT ABLE TO EXPLAIN BECAUSE MY EVIDENCE BOOKS ARE LYING WITH MY ADVOCATE/ACCOUNTANT AND MY MENTAL AND PHYSICAL C ONDITION IS NOT GOOD AND, THEREFORE, NOT ABLE TO GIVE ANSWER. ALL EGATION OF THE REVENUE IS THAT SINCE THE PAPER IS FOUND FROM THE P REMISES OF THE ASSESSEE, ASSESSEE HAS TO EXPLAIN THE PAPER. NO DO UBT THE PAPER IS FOUND FROM THE PREMISES OF THE ASSESSEE AND HE WAS UNDER AN OBLIGATION TO EXPLAIN ENTRIES IN THE PAPER BOOK. B UT ACCORDING TO THE ASSESSEE, THIS PAPER IS NEITHER IN HIS HAND WRITING NOR IN THE HAND WRITING OF ANY FAMILY MEMBERS. THIS ASPECT IS PLEA DED TIME AND AGAIN BEFORE THE AO, AND IT WAS NOT GOT VERIFIED. THE SE COND ARGUMENTS TAKEN BY THE ASSESSEE IS THAT HE HAS WORKED AS SARPUNCH FOR A QUITE LONG TIME AND BEING A POLITICAL PERSON, SO MANY PEOPLE MIGHT HAVE VISITED HIM. ALL THESE PAPERS MIGHT BE BELONGED TO THIRD-PERSONS WHO WOULD HAVE VISITED HIM FOR RESOLUTION OF SOME DISPUTE. THIS P OSSIBILITY CANNOT BE RULED OUT, BECAUSE, THE AO ATLEAST OUGHT TO HAVE PR OVED THAT IT IS IN THE HAND-WRITING OF THE ASSESSEE OR OF ANY FAMILY MEMBE R. IN THE ABSENCE OF CORROBORATIVE EVIDENCE, IT IS QUITE DIFFICULT TO GIVE ANY CATEGORICAL FINDING. THE FIRST ONUS IS UPON THE REVENUE TO CHA RGE THE ASSESSEE WITH EXACT DETAILS POINTING OUT THAT THESE DETAILS RELAT E TO THE ASSESSEE. NO SUCH EFFORT WAS DONE BY THE AO ALSO. THEREFORE, W E GIVE BENEFIT DOUBT TO THE ASSESSEE AND ON THE BASIS OF SUCH INSUFFICIE NT INCOMPLETE EVIDENCE, THE ASSESSEE CANNOT BE BURDENED WITH TAXA BILITY. WE ALLOW ALL THESE GROUNDS OF APPEAL AND DELETE THE ADDITION. 43. IN THE ASSTT.YEAR 2003-04, THERE IS ONE MORE GR OUND OF APPEAL, WHEREIN THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.19,11,522/- . 44. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS SHOWN AN OPENING CAPITAL BALANCE OF RS.19,11,522/-. THIS BA LANCE HAS BEEN SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 39 DISBELIEVED BY THE AO ON THE GROUND THAT THE ASSESS EE HAS NOT BEEN MAINTAINING BOOKS OF ACCOUNTS. THEREFORE, THE OPEN ING CAPITAL BALANCE SHOWN BY THE ASSESSEE HAS BEEN ADDED AS A INCOME. 45. ON APPEAL, THE LD.CIT(A) HAS OBSERVED THAT THIS FACT NEEDS TO BE VERIFIED BY THE AO. THE OBSERVATIONS OF THE CIT(A) READ AS UNDER: EVEN IF THE APPELLANT HAS NOT BEEN MAINTAINING ANY BOOKS OF ACCOUNTS AS MENTIONED BY THE AO IN THE ASSESSMENT O RDER, STILL THE ADDITION OF OPENING BALANCE CANNOT BE MADE IF I T IS PROVED THAT THE INVESTMENTS AND THE LIABILITIES ARE PERTAI NING TO THE PERIOD PRIOR TO 1/4/2002 THE AO IS THEREFORE DIREC TED TO VERIFY WHETHER THE APPELLANT HAS BEEN FILING THE BALANCE S HEET WITH THE RETURN OF INCOME IN EARLIER ASSESSMENT YEARS I.E. A SSESSMENT YEARS 1989-99, 1999-2000, 2001-2002 AND 2002-03. I F IT IS FOUND BY HIM THAT THE APPELLANT HAS FILED THE BALAN CE SHEET WITH THE RETURN OF INCOME OR THE ASSESSMENT YEAR 2002-03 , AND IN THE SAID RETURN THE INVESTMENT AND LIABILITIES ARE SHOW N WHICH RESULTED IN THE CAPITAL BALANCE CAN BE MADE IN ASSESSMENT YE AR 2003- 2004. HOWEVER, IF THE AO FINDS THAT NO BALANCE SHE ET HAS BEEN FILED BY THE APPELLANT WITH THE RETURNS OF INCOME O F EARLIER YEAR PARTICULARS ASSESSMENT YEAR 2002-03, THEN THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE INVESTMENTS AND THE LIAB ILITIES SHOWN AS ON 31/3/2002 ARE PERTAINING TO THE PERIOD PRIOR TO 1/4/2002. IF THE ASSESSEE IS ABLE TO PROVE BEFORE THE AO THAT THE INVESTMENTS AND THE LIABILITIES ARE PERTAINING TO E ARLIER YEARS, THEN ONLY THE ADDITION MADE BY HIM IS DIRECTED TO BE DEL ETED, OTHERWISE THE ADDITION WOULD STAND CONFIRMED. SUBJECT TO THI S DIRECTION, THIS GROUND IS DISPOSED OFF. 46. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO POWER WITH THE CIT(A) TO RESTORE ANY ISSUE. HE FURTHER D REW OUR ATTENTION TOWARDS PAGE NO.241 TO 248 OF THE PAPER BOOK. ON P AGE NO.247, THE ASSESSEE HAS PLACED ON RECORD COPY OF THE BALANCE S HEET AS ON 31.3.2002. IN THE BALANCE SHEET THE ASSESSEE HAS S HOWN CAPITAL BALANCE OF RS.19,11,522/-. PRIOR TO FINANCE ACT, 2 001 W.E.F. 1.6.2001, THE LD.CIT(A) HAS POWER TO SET ASIDE ANY ISSUE TO T HE AO. THIS POWER PROVIDED UNDER SECTION 251 OF THE INCOME TAX ACT HA S BEEN TAKEN AWAY FROM THE LD.CIT(A). THE LD.FIRST APPELLATE AUTHORI TY HAS TO DECIDE THE APPEAL ON MERIT. NO ISSUE CAN BE REMITTED BACK TO THE AO. HOWEVER, SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 40 CONSIDERING THE OBSERVATIONS OF THE LD.CIT(A) EXTRA CTED SUPRA, WE ARE OF THE VIEW THAT THIS ASPECT NEEDS VERIFICATION. THE AO HAS NOT RECORDED ANY CATEGORICAL FINDING ON THIS ISSUE. WE DIRECT T HE AO TO VERIFY WHETHER THE ASSESSEE HAS FILED THE BALANCE SHEET WI TH THE RETURN OF INCOME IN EARLIER YEARS, MORE PARTICULARLY, FOR THE ASSTT.YEAR 2002-03 AND DISCLOSED THE CAPITAL BALANCE IN THE CLOSING AC COUNT AT RS.19,11,522/-, THEN NO ADDITION WILL BE MADE ON AC COUNT OF OPENING CAPITAL BALANCE IN THE ASSTT.YEAR 2003-04. THE LD. AO SHALL CARRY OUT THIS EXERCISE AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 47. NOW, WE TAKE UP THE APPEAL OF THE REVENUE I.E. ITA NO.613/AHD/2011. 48. IN THE FIRST GROUND, THE REVENUE HAS PLEADED TH AT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,74,470/- WHICH WAS ADDED BY THE AO ON ACCOUNT OF UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH. 49. BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH A SUM OF RS.3,74,470/- WAS FOUND. THE ASSESSEE HAS CONTE NDED THAT THE CASH REPRESENTS INCOME FROM COMMISSION RECEIVED BY HIM O N FACILITATING THE SALE OF AGRICULTURE LAND AT MOTI BHOYAN. THE ASSES SEE FURTHER CONTENDED THAT HE HAS OFFERED ADDITIONAL INCOME OF RS.9,00,00 0/- FOR THE ASSTT.YEAR 2009-10 AND THAT THE TELESCOPIC BENEFIT OF THE CASH FOUND BE GIVEN AGAINST THIS ADDITIONAL INCOME. THE AO HAS M ADE SEPARATE ADDITION AND DID NOT GRANT THE TELESCOPING BENEFIT. 50. ON APPEAL, THE CIT(A) HAS GRANTED TELESCOPIC BE NEFIT TO THE ASSESSEE. ONCE THE LD.CIT(A) HAS ACCEPTED THE FACT THAT THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE OF RS.9 LAKHS CAN EA SILY BE TAKE CARE OF ALLEGED UNACCOUNTED CASH FOUND DURING THE COURSE OF SEARCH CARRIED OUT DURING THE ACCOUNTING PERIOD 2009-10. WE FIND NO E RROR IN THE FINDING OF THE LD.CIT(A), WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS REJECTED. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 41 51. THE NEXT GRIEVANCE OF THE REVENUE IS THAT THE L D.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,43,000/-. 52. BRIEF FACTS OF THE CASE ARE THAT AT TIME OF SEA RCH LOOSE PAPERS INVENTORISED AS PAGE NOS.46 TO 48 OF ANNEXURE-AS/5 WERE FOUND. ON PERUSAL OF THESE PAPERS, IT REVEALED THAT THE AMOUN T TOTALING TO RS.7,43,000/- WAS TAKEN FROM TEN INDIVIDUALS. THE ASSESSEE HAS CONTENDED THAT THESE PAPERS RELATE TO LIBERTY POLYM ERS INDUSTRIES, WHICH IS A PARTNERSHIP FIRM WHERE HIS WIFE IS A PAR TNER. THE BALANCE SHEET OF M/S.LIBERTY POLYMERS FROM ITS BOOKS OF ACC OUNTS WAS FILED BEFORE THE AO. IT WAS CONTENDED THAT THESE LOANS W ERE TAKEN LONG BACK, AND THEREFORE, NOT ASSESSABLE IN THE HANDS OF THE ASSESSEE. THE LD.AO DID NOT ACCEPT CONTENTIONS OF THE ASSESSEE. 53. ON APPEAL, THE LD.CIT(A) HAS ACCEPTED THE CONTE NTIONS OF THE ASSESSEE. THE FINDINGS RECORDED BY THE LD.CIT(A) I N PARA -9 READS AS UNDER: 9. FURTHER, IT IS SEEN THAT IN THE SEIZED PAPERS TH E DATE OF THE TRANSACTION IS ALSO MENTIONED AS YEAR 2000. FOR EXA MPLE, ABOVE THE NAME OF SHRI RASHIKBHAI N PATEL, THE DATE IS ME NTIONED AS 7/8/2000. SIMILARLY BELOW THE NAME OF SHRI ASHOK C BHAGAT (RECEIPT NUMBER 575 65,000.IDS) THE DATE IS MENTION ED AS 7/8/2000 THIS CLEARLY SHOWS THAT THE SEIZED DOCUMEN T PERTAINS TO ASSESSMENT YEAR 2001-2002 AND IT BELONGS TO M/S. LI BERTY POLYMERS INDUSTRIES AND NOT TO THE APPELLANT AS HEL D BY THE AO IN THE ASSESSMENT ORDER. IN FACT, THE AO HAS NOT CONSI DERED THE SUBMISSION OF THE APPELLANT DATED 23/12/2010 FILED ON 24/12/2010 WITH THE AO. HAD HE CONSIDERED THE SAME, THE ADDITION WOULD HAVE NOT BEEN MADE BY HIM IN THE HAN DS OF THE APPELLANT IN ASSESSMENT YEAR 2009-2010 PARTICULARLY WHEN THE DOCUMENTS CLEARLY SHOW THE DATES AS 2000. I HAVE, T HEREFORE NO HESITATION IN DELETING THE ADDITION OF RS.743,000 M ADE BY THE AO ON THIS ACCOUNT. 54. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES W E HAVE GONE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE FIN DING RECORDED BY THE CIT(A) WOULD INDICATE THAT THE SEIZED DOCUMENTS PER TAINED TO ASSTT.YEAR SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 42 2001-02. THESE ARE LOANS TAKEN BY M/S.LIBERTY POLY MERS INDUSTRIES AND NOT BY THE ASSESSEE. THEREFORE, THEIR ADDITIONS CA NNOT BE MADE IN THE HANDS OF THE ASSESSEE, MORE SO, IN THE ASSTT.YEAR 2 009-10. THE LD.AO HAS NOT ASSIGNED ANY PARTICULAR REASONS FOR TREATIN G THE INCOME IN THE HANDS OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A). THIS GROUND OF APPEAL IS REJECTED. 55. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 18,50,000/-. 56. BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH, FOUR PROMISSORY NOTES INVENTORY AS PAGE NSO.102 TO 105 O F ANNEXURE AS/5 WERE FOUND. IN THESE PROMISSORY NOTES, IT REVEALED THAT THE ASSESSEE HAS TAKEN LOAN OF RS.18,50,000/- FROM SHRI NARAYAN SHROFF AND FINANCE. WHEN THE LD.AO HAS CONFRONTED THE ASSESSEE, THEN IT WAS CONTENDED THAT HE HAS PUT HIS SIGNATURES ON FOUR PROMISSORY N OTES. IN ONE NOTE, A SUM OF RS.4.50 LAKHS WAS FILLED, AND IT IS IN THE N AME OF ASSESSEE, WHEREAS IN OTHER PROMISSORY NOTES, AMOUNT OF RS.4.0 0 LAKHS, RS.4.00 LAKHS, RS.4.00 LAKHS AND RS.2.00 LAKHS ARE MENTIONE D, BUT NAME IS BLANK. THE CONTENTION OF THE ASSESSE WAS THAT SHRI NARAYAN SHROFF HAS CHARGED A VERY HIGH INTEREST RATE AND ALSO ASKED FO R COLLATERAL SECURITIES, AND THEREFORE, THE TRANSACTION WAS NOT EXECUTED. T HE LD.AO DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE. HE MADE ADD ITION OF RS.18,50,000/-. 57. ON APPEAL, THE LD.CIT(A) IN PRINCIPLE AGREED WI TH THE AO THAT NO PERSON WOULD EXECUTE THE PROMISSORY NOTE IN FAVOUR OF A SHROFF UNLESS GETS FINANCE, BUT HE DELETED THE ADDITION. THE FIN DING OF THE CIT(A) READS AS UNDER: 11. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT. IT IS NOT DENIED BY THE APPELLANT THAT HIS SIGNATURES ARE APP EARING ON THE PROMISSORY NOTES TOTALING RS. 18.50 LACS. ALL THE P ROMISSORY NOTES SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 43 HAVE BEEN DULY SIGNED BY THE APPELLANT. ONE OF THEM FOR RS. 4.50 LACS IS IN THE NAME OF THE APPELLANT WHEREAS THE BA LANCE FOUR OF RS. 41AKH, 4 LAKH, 4 LAKH AND RS. 2 LACS ARE BLANK. I WOULD HAVE ACCEPTED THE CONTENTION OF THE AR THAT NEITHER ANY LOAN WAS TAKEN BY THE APPELLANT FROM THE SHROFF NOR THE SAME WAS R ETURNED BACK TO HIM, IF THE PROMISSORY NOTES WERE SIGNED BY THE APPELLANT. THE FACT THAT ALL THE PROMISSORY NOTES HAD BEEN SIGNED BY THE APPELLANT CLEARLY SHOWS THAT THE LOAN HAS BEEN RECE IVED AND REPAID BY THE APPELLANT. NO PERSON WILL SIGN A PROM ISSORY NOTE IN FAVOUR OF A SHROFF UNLESS BE GETS THE FINANCE FROM THAT SHROFF. THE CONTENTION OF THE AR THAT THE SHROFF ALSO DENIED HA VING PAID THE CASH OF RS.18.50 LACS TO THE APPELLANT, IN MY VIEW IS OF NO HELP TO THE APPELLANT BECAUSE NO SHROFF WOULD ADMIT THAT HE HAD GIVEN UNACCOUNTED LOAN TO THE APPELLANT. THE CONFIRMATION RECEIVED FROM THE SHROFF IS NOTHING BUT A SELF SERVING DOCUM ENT. THEREFORE, IN PRINCIPLE I AGREE WITH THE AO THAT THE LOAN HAS BEEN RECEIVED BY THE APPELLANT FROM THE SHROFF AND IT HAS BEEN REPAI D TO THE SHROFF TO GET BACK THE PROMISSORY NOTES FROM HIM. HOWEVER, THE QUESTION ARISES WHETHER THE AMOUNT OF RS. 18.50 LAC S CAN BE. CONSIDERED AS THE INCOME OF THE APPELLANT. IN MY VI EW, EVEN IF IT IS ACCEPTED THAT AGAINST THE PROMISSORY NOTES THE A PPELLANT HAS RECEIVED THE CASH LOAN OF RS. 18.50.LACS AND THE SA ME WAS REPAID BY HIM TO GET BACK, HIS PROMISSORY NOTES FROM THE S HROFF, IN THAT CASE, THE AMOUNT OF RS.18.50 LACS CANNOT BE TERMED AS THE UNACCOUNTED INCOME OF THE APPELLANT. AT THE MOST, I T CAN BE STATED THAT THE APPELLANT HAD RECEIVED UNACCOUNTED CASH LOANS FROM THE SHROFF ON WHICH PENALTY CAN BE INITIATED B Y- THE AO FOR VIOLATION OF SECTION 269 SS OF THE INCOME-TAX ACT. SIMILARLY ON THE REPAYMENT OF THE CASH LOAN BY THE APPELLANT TO THE SHROFF, .ONLY PENALTY CAN BE INITIATED BY THE AO FOR THE VIOLATIO N OF SECTION 269T OF THE INCOME-TAX ACT. THE REPAYMENT OF CASH LOAN C ANNOT BE TERMED AS THE UNDISCLOSED INCOME OF THE APPELLANT UNLESS THE AO COMES TO THE CONCLUSION THAT THE CASH LOAN HAS BEEN UTILISED BY THE APPELLANT IN SOME INVESTMENT AND THE LOAN HAS B EEN REPAID BY HIM OUT OF THE UNACCOUNTED INCOME OF THE APPELLANT. IN THE ABSENCE OF SUCH FINDING, THE AO CAN ONLY INITIATE P ENALTY PROCEEDINGS FOR VIOLATION OF SECTION 269 SS AND 269 T OF THE INCOME-TAX ACT. BECAUSE IN THE ABSENCE OF SUCH FIND ING, THE SOURCE OF REPAYMENT OF CASH LOAN CAN BE STATED TO B E THE RECEIPT OF CASH LOAN BY THE APPELLANT FROM THE SHROFF. IN VIEW OF THIS, THE ADDITION OF RS.18.50 LAKHS MADE BY THE AO IS DIRECT ED TO BE DELETED. THE AO IS FREE TO INITIATE THE PENALTY PR OCEEDINGS UNDER SECTION 271D AND 271E OF THE INCOME TAX ACT FOR VIO LATING THE PROVISIONS OF SECTION 269SS AND 269 T OF THE INCOME TAX ACT. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 44 58. THE LD.DR RELIED UPON THE ORDER OF THE AO, WHER EAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF T HE CIT(A). 59. ON DUE CONSIDERATION OF THE FACTS, WE FIND THAT THE NO AMOUNT IS OUTSTANDING TOWARDS THE ASSESSEE TAKEN FROM THE SHR OFF. BECAUSE, ACCORDING TO THE CIT(A), IF THE ASSESSEE HAS TAKEN LOAN AND THEN RETURNED THAT LOAN AND COLLECTED BACK HIS PROMISSOR Y NOTE, THEN ALSO NO UNACCOUNTED INCOME COULD BE CONSTRUED AS GENERATED. THE AO DID NOT FIND UNEXPLAINED INVESTMENT DURING THE COURSE OF SE ARCH. THUS, WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE LD.CIT(A) EXTRACTED (SUPRA). THIS GROUND OF THE REVENUE IS ALSO REJECTED. 60. THE NEXT GRIEVANCE OF THE REVENUE IS THAT THE L D.CIT(A) HAS ERRED IN DELETING THE ADDITION OF 2,48,570/-. THE FINDIN G OF THE LD.CIT(A) ON THIS ISSUE READS AS UNDER: 13. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT. I HAVE ALSO SEEN THE SEIZED PAGES 39 AND 40 OF ANNEXURE AS -1. IN FACT, ENTRIES ARE APPEARING NOT ONLY ON PAGE NUMBER 39 AN D 40 BUT ALSO BACK SIDE OF PAGE NUMBER 39 AND 40. THE AO HAS CONSIDERED THE RESULTANT FIGURE OF RS. 114,726 APPEARING AT PA GE NUMBER 40 AND RS. 133,844 AT PAGE NUMBER 39, THE TOTAL OF WHI CH COMES TO RS.248,570. IN FACT ON THE BACK SIDE OF PAGE NUMBER 40 THE ENTRY OF RS. 133,844 IS APPEARING WHICH IS THE LAST FIGUR E AT PAGE NUMBER 39. ON THE BACK SIDE OF PAGE NUMBER 39 SOME CALCULATION IS MADE TO ARRIVE AT FOUR DIFFERENT FIGURES OF 1668 88, 879309,;143684 AND 39428. I DO NOT KNOW AS TO WHY T HE AO HAS ONLY CONSIDERED THE FIGURE OF RS.133844 AS APPEARIN G AT PAGE NUMBER 39 AND DID NOT CONSIDER THE FIGURES AS APPEA RING AT THE BACK SIDE OF PAGE NUMBER 39. HOWEVER, TO THE BEST O F MY EFFORTS, I HAVE NOT BEEN ABLE TO UNDERSTAND AS TO WHAT THESE FIGURES REPRESENT. IN THE ABSENCE OF THE NATURE OF TRANSACT IONS- WHETHER THEY ARE PERTAINING TO THE APPELLANT OR TO SOMEBODY ELSE, WHETHER THEY ARE IN THE NATURE OF INCOME OR INVESTMENTS, IN MY OPINION THE AO CANNOT MAKE 'ANY' ADDITION ON ACCOUNT OF SOM E ROUGH WORKING. IN MY OPINION, THERE IS NOTHING IN THE PAG E TO SHOW THAT THE INCOME HAS BEEN EARNED BY THE APPELLANT. THE EN TRIES ARE MERELY SOME ADDITIONS AND SUBTRACTIONS. I THEREFORE , HAVE NO HESITATION IN DELETING THE ADDITION OF RS.248,570 M ADE BY THE AO ON THIS ACCOUNT. SHRI PARESHBHAI B. PATEL VS. ACIT, AHD (8 APPEALS) ITA NO.541 AND 542/AHD/2011 AND OTHERS. 45 61. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD. THE LD. FIRST APPELLATE AUTHOR ITY HAS DELETED THE ADDITION ON THE GROUND THAT IT IS DIFFICULT TO INFE R THE NATURE OF INCOME WHETHER THE INVESTMENT OR OTHERWISE. THE ENTRIES R EFLECTED IN THE SEIZED PAPER DO NOT GOAD ADJUDICATING AUTHORITY TO ANY LOGICAL CONCLUSION. THE LD.DR ALSO FAILED TO POINT OUT THE ERROR IN THE CONCLUSIONS ARRIVED BY THE CIT(A). HE SIMPLY RELIE D UPON THE ORDER OF THE AO. THEREFORE, WE DO NOT SEE ANY REASON TO INT ERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. THIS GROUND OF THE RE VENUE IS DISMISSED. 62. IN THE RESULT, APPEALS OF THE ASSESSEE FOR THE ASSTT.YEAR 2003-04 IS PARTLY ALLOWED AND FOR THE ASSTT.YEARS 2004-05, 2005-06, 2006-07, 2007-2008 AND 2008-09 ARE ALLOWED. THE APPEALS OF T HE REVENUE FOR THE ASST.YEARS 2007-08 AND 2009-10 ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29 TH OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER
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