The ACIT, Circle-6, Ahmedabad V. M/s. Master Entertainment Centre, Ahmedabad

ITSSA 59/AHD/2007

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9649 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2012
• Assessment Year: misc
• Appeal Filed On: 23-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D C PATWARI; SHANKARLAL MEENA
• Assessee Lawyers: G C PIPARA
• Keywords: Unexplained investment; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO.59/AHD/2007 THE ACIT, CIRCLE-6, AHMEDABAD. V/S. M/S. MASTER ENTERTAINMENT CENTRE. 5, VISHRUT SOCIETY, SUBHASH CHOWK, MEMNAGAR, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : S/SHRI D.C. PATWARI AND SHANKARLAL MEENA, D.R. ASSESSEE(S) BY : SHRI G.C. PIPARA, A.R. / DATE OF HEARING : 19/09/2013 / DATE OF PRONOUNCEMENT: 17/12/2013 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-XII, AHMEDABAD, DATED 08.12.2006. THE REVENUE HAS RAISED THE FOLLOWING GROUND: THE LD. COMMISSIONER OF INCOME TAX (A)-XII, AHMEDAB AD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS.47,23,398/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN LAND. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S. 158BD, DATED 31.12.2004 WERE THAT THE ASSESSEE FIRM IS RUNNING AN ENTERTAINMENT CENTRE. IN RESPECT OF THE IMPUGNED ADDITION THE FINDINGS OF THE AO WERE AS UNDER: IT(SS)A NO.59/AHD/2007 ACIT, CIRCLE-6 AHMEDABAD VS. M/S. MASTER ENTERTAINM ENT CENTRE - 2 - AS PER KATCHA AGREEMENT AND BANA CHITTI BETWEEN SHR I RAMANBHAI HARIBHAI PATEL AND THREE OTHERS WITH SHRI JIVRAJ VA STABHAI DESAI, THE LAND AT SURVEY NO.589 OF KHORAJ HAS BEEN AGREED TO BE SOLD AT THE RATE OF RS.L8,31,0000/- PER BIGHA FOR WHICH RS.6,00,000/ - HAS BEEN PAID BY SHRI JIVRAJBHAI VASTABHAI DESAI TO SHRI RAMANBHAI H ARIBHAI PATEL AND THREE OTHERS ON 1-7-2000,THE DATE OF KATCHA AGR EEMENT AND BANA- CHITTI. THE PAYMENT OF RS.6,00,000/- HAS NOT BEEN D ENIED. THIS HAS ALSO BEEN CONFIRMED BY SHRI JIVRAJBHAI VASTABHAI DESAI I N HIS REPLY DATED 24-10-2002 WITH THE COPY OF THE ACCOUNT AND BALANCE SHEET FILED WITH IT AND COPY OF WHICH IS FILED BY THE ASSESSEE DURING T HE PRESENT PROCEEDINGS. THE SAID LAND HAS BEEN GIVEN ON LEASE TO THE ASSESSEE FIRM W.E.F. 1-7-2000 AS PER AGREEMENT BETWEEN SHRI RAMANBHAI HARIBHAI PATEL AND THE ASSESSEE-FIRM. IN PARA 15 OF THE PARTNERSHIP DEED FURNISHED WITH T HE RETURN OF INCOME OF THE BLOCK PERIOD AND ALSO FOUND IN THE SEIZED MA TERIAL, IT IS, MENTIONED THAT THE LAND AT SURVEY NO.589 OF KHORAJ IS GIVEN TO THE FIRM FOR DEVELOPMENT OF ITS BUSINESS. IT IS OWNED BY SHR I RAMANBHAI HARIBHAI PATEL AND THE AMOUNT OF THE LAND WILL REMA IN CREDITED IN THE ACCOUNT OF THE PARTNER. THUS, THE ASSESSEE FIRM HAS BECOME THE OWNER OF THE LAND AT KHORAJ, WHICH HAS BEEN TRANSFERRED B Y WAY OF LEASE DEED AND BY PARTNERSHIP DEED EXECUTED ON21-7-2000 W.E.F. 1-7-2000. SHRI RAMANBHAI HARIBHAI PATEL AND SHRI RAMESH JIVRAJBHAI DESAI ARE PARTNERS OF THE ASSESSEE FIRM. THE LAND OWNED BY SH RI RAMANBHAI HARIBHAI PATEL HAS BEEN INTRODUCED AS A CAPITAL WIT H THE PARTNERSHIP FIRM AND HAS BEEN SOLD TO SHRI JIVRAJBHAI VASTABAI DESAI ON 1-7-2000 AND ON THE SAME DAY IT IS TRANSFERRED TO THE ASSESS EE FIRM IN WHICH HE HIMSELF IS A PARTNER BY CREDITING THE ACCOUNT WITH THE AMOUNT OF THE LAND. THERE IS NO EVIDENCE WITH SHRI RAMANBHAI H. P ATEL FOR ACQUISITION OF THIS LAND. ON SPECIFIC QUERY IN THIS REGARD, NO EVIDENCE HAS BEEN SUBMITTED. SHRI RAMANBHAI HARIBHAI PATEL I NTRODUCED THE LAND AS CAPITAL IN THE FIRM AND THEREBY IT BECOMES THE BUSINESS ASSET OF THE FIRM. THIS ASSET I.E. THE LAND AT KHORAJ OF SUR VEY NO.589 HAS BEEN SOLD AS PER KATCHA AGREEMENT AND BANACHITTI WHICH W AS TO BE IMPLEMENTED AFTER 9 MONTHS AND FIRST INSTALLMENT OF RS.6,00,000/- WAS ALREADY RECEIVED AS CONFIRMED BY SHRI RAMANBHAI HAR IBHAI PATEL. THEREFORE, THE ENTIRE SALE CONSIDERATION OF THE LAN D IS CONSIDERED AS THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. THE ACTUAL SALE CONSIDERATION OF THE LAND AT SURVEY NO. 589 IS WORKED OUT AS UNDER. THE AREA IN SQ. MTRS MENTIONED IN THE LEASE AGREEME NT IN A-34 CONVERTED INTO SQUARE YARDS BY APPLYING THE CONVERS ION FACTOR AS UNDER: 1 SQ. METRE = 1.2 SQ. YARD. 5800 SQ. METRE = 5800 X 12 SQ.YARD = 6960 SQ. YD. 2700 SQ. YARD = 1 BIGHA AS PER THE AGREEMENT IT(SS)A NO.59/AHD/2007 ACIT, CIRCLE-6 AHMEDABAD VS. M/S. MASTER ENTERTAINM ENT CENTRE - 3 - 1 SQ. YARD = 1/2700 BIGHA. 6960 SQ. YARD = 6960/2700 = 2.58 BIGHA VALUE OF LAND @ RS.18.31 LACS PER BIGHA - 2.58 X 18 31000 = RS. 47,23,398/-. 3. IT WAS NOTED BY THE AO THAT THERE WAS A BANA CHI TTI (KACCHA AGREEMENT) IN RESPECT OF A PROPERTY AT KHORAJ. THE SAID AGREEMENT WAS SIGNED AS A PURCHASER BY SRI JIVRAJ DESAI AND A S A SELLER BY SRI RAMABHAI HARIBHAI PATEL AND OTHERS. AS PER THE BANA CHITTI DESCRIPTION WAS NOTED AS UNDER: A) RATE OF LAND AT RS.18,31,0000/- PER BIGHA. B) RS.6,00,000/- TO BE PAID ON 1/7/2000 ON BANA CHITTI . C) BALANCE PAYMENT TO BE MADE BY 30.4.2001. D) DOCUMENT CHARGES TO BE BORNE BY JIVRAJBHAI MASTER. E) DOCUMENT VALUE ACCORDING WHITE MONEY ARRANGED BY TH E PURCHASER. F) 2700 SQUARE YARD TO BE ONE BIGHA. G) 3.1 AS PER ANNEXURE A-34 SEIZED FROM VISHRUT SOCIET Y A PARTNERSHIP DEED OF MASTER ENTERTAINMENT CENTRE OF THE APPELLANT WAS FOUND. ACCORDING TO SAID PARTNERSHIP DEED ONE S HRI RAMABHAI HARIBHAI PATEL AND SRI RAMESH JIVRAJBHAI DESAI WERE THE PARTNERS OF THE MASTER ENTERTAINMENT CENTRE. BECAUSE THE IMP UGNED AGREEMENT WAS SIGNED BY THOSE PERSONS; HENCE, IT WA S HELD THAT THE INVESTMENT WAS MADE BY THE FIRM. ACCORDINGLY, THE I MPUGNED ADDITION WAS MADE IN THE HANDS OF THE FIRM WHICH WA S CHALLENGED BEFORE LEARNED CIT(A). 4. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT(A ), A FACTUAL FINDING WAS RECORDED BY HIM THAT THE IMPUGN ED LAND WAS CONSIDERED AS AN INVESTMENT IN THE HANDS OF SRI J.V . DESAI WHILE IT(SS)A NO.59/AHD/2007 ACIT, CIRCLE-6 AHMEDABAD VS. M/S. MASTER ENTERTAINM ENT CENTRE - 4 - CONCLUDING THE BLOCK ASSESSMENT IN HIS HAND. ONCE T HE IMPUGNED INVESTMENT IN KHORAJ LAND HAD ALREADY BEEN CONSIDER ED AND TAXED IN THE HANDS OF SRI JIVRAJ V. DESAI, THEREFORE, LEA RNED CIT(A) HAS HELD THAT NO ADVERSE INFERENCE IS REQUIRED TO BE TA KEN IN THE HANDS OF THE ASSESSEE FIRM, RESULTANTLY DELETED THE ADDIT ION. RELEVANT PORTION OF LEARNED CIT(A) IS REPRODUCED BELOW: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, OBSERVATIONS AND FINDINGS OF THE A.O. AND ARGUMENTS OF THE LEARNED A . R. OF THE APPELLANT. THE EVIDENCES FURNISHED BY THE APPELLANT WITH THE WRITTEN SUBMISSIONS IN SUPPORT OF ITS CONTENTIONS HAVE ALSO BEEN PERUSED BY ME. ONGOING THROUGH THE ENTIRE FACTS, I FIND THAT I T IS AN UNDISPUTED FACT THAT THE SAID ISSUE PERTAINING TO LAND AT SURV EY NO.589 OF KHORAJ, HAS ALREADY BEEN CONSIDERED IN DETAIL IN CASE OF SH RI JIVRAJ V. DESAI WHILE FINALIZING THE BLOCK ASSESSMENT ORDER U/S. 15 8BC OF THE ACT PASSED IN HIS CASE ON 31-10-2002. ON PERUSAL OF THE COPY OF BLOCK ASSESSMENT ORDER PASSED IN CASE OF SHRI JIVRAJ V. D ESAI, IT IS SEEN HAT NOT ONLY THE SAID ISSUE HAS BEEN ELABORATELY DISCUS SED BY THE A.O., BUT AN ADDITION OF IDENTICAL AMOUNT I.E. RS.47,23,398/- HAS BEEN MADE IN THE CASE OF SHRI JIVRAJ V. DESAI. THE PAYMENT OF RS .6,00,000/- AS PER THE LOOSE SHEET ALSO APPEARS TO HAVE BEEN MADE BY S HRI JIVRAN V. DESAI -HUF AND NOT THE APPELLANT. FURTHER PERUSAL O F THE EVIDENCES IN FORM OF BALANCE SHEET OF SHRI JIVRAJ V. DESAI -HUF AS AT 31-03-2001 AND THE COPY OF RELEVANT LAND ACCOUNT DULY REFLECTS THE INVESTMENT IN LAND AT KHORAJ IN THE HANDS OF SHRI JIVRANM V. DESA I -HUF. THUS, IN MY OPINION THE ABOVE EVIDENCES GOES TO ESTABLISH BE YOND DOUBT THAT THE OWNER OF LAND IS SHRI JIVRAJ V. DESAI -HUF AND NOT THE APPELLANT FIRM. TO ARRIVE AT SUCH A CONCLUSION MERELY ON THE BASIS OF LEASE DEED IS INCORRECT. COMING TO THE LEASE DEED OF THE LAND AS DISCUSSES BY THE A.O., I FIND THAT THE EXPLANATION OF THE APPELLANT IN THIS RESPECT THAT THE SAID LEASE DEED HAS NOT BEEN ACTED UPON AS NO BUSIN ESS COULD BE COMMENCED BY THE APPELLANT FIRM APPEARS TO BE QUITE REASONABLE AND PLAUSIBLE. FRO M THE ABOVE FACTS, I AM OF THE OPINI ON THAT THE CONCLUSION REACHED BY THE A.O. THAT THE LAND IN QUE STION AT SURVEY NO.589 AT KHORAJ BELONGS TO THE APPELLANT IS GROSSL Y INCORRECT SINCE THE EVIDENCES CLEARLY LEAD TO THE FACT THAT THE SAM E IS OWNED BY SHRI JIVRAJ V. DESAI -HUF SINCE THE PART PAYMENT OF RS.6 ,00,000/- MADE AS PER AGREEMENT IS DULY REFLECTED IN HIS BALANCE SHEE T. FURTHER, THE DOCUMENT REFERRED TO BY THE A.O. A.O. APPEARS TO BE MERELY A BANAKHAT AND NOT THE FINAL SALE AGREEMENT IN VIEW O F PART PAYMENT MADE. FROM THE SUBMISSION FILED BY SHRI JIVRAJ V. D ESAI IN HIS BLOCK ASSESSMENT PROCEEDINGS, THE COPY OF WHICH IS FILED BEFORE ME ALSO, IT IS SEEN THAT THE LAND IN QUESTION HAS NOT BEEN TRANSFE RRED IN NAME OF SHRI IT(SS)A NO.59/AHD/2007 ACIT, CIRCLE-6 AHMEDABAD VS. M/S. MASTER ENTERTAINM ENT CENTRE - 5 - JIVRAJ V. DESAI -HUF AND IS STILL IN THE NAME OF TH E ORIGINAL OWNER. THIS BEING THE CASE, NO ADVERSE INFERENCE IS WARRAN TED IN CASE OF THE APPELLANT. KEEPING IN VIEW THE ENTIRE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT THEREOF, THE ADDITION OF RS.47 ,23,398/-IS HEREBY DELETED. 5. AT PRESENT THE POSITION IS THAT WHILE DECIDING G ROUND NO.3 IN THE CASE OF JIVRAJ V. DESAI IN IT(SS) NO.99 AND 106 /AHD/2004 VIDE AN ORDER DATED 13.12.2013 IN ITAT C BENCH, WHEREI N IT WAS HELD AS UNDER: 14. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS ISSUE IS REQUIRED TO BE RESTORED BAC K TO THE FILE OF AO FOR DE NOVO ADJUDICATION, MAINLY BECAUSE OF THE REASON THAT THE EXACT INVESTMENT UP TO THE END OF THE BLOCK PERIOD WAS RE QUIRED TO BE TAXED IN THE HANDS OF THE ASSESSEE. WE ARE NOT CONVINCED WITH THAT OBSERVATION OF LEARNED CIT(A) THAT SOME BALANCE AMO UNT WAS TO BE PAID BEYOND THE BLOCK PERIOD, HENCE; NO AMOUNT WAS REQUIRED TO BE TAXED WITHIN THE BLOCK PERIOD. THE ACTUAL INVESTMEN T MADE WITH IN THE BLOCK-PERIOD IS REQUIRED TO BE TAXED IN THE CORRECT HANDS. WE ARE ALSO NOT CONVINCED WITH THE OBSERVATION OF THE LEARNED C IT(A) THAT REST OF THE AMOUNT WAS REQUIRED TO BE TAXED IN THE HANDS OF THE HUF, UNLESS AND UNTIL THE STATUS OF THE HUF AND THE INVESTMENT MADE THEREIN HAS DULY BEEN DISCLOSED BY THE ASSESSEE. THE AO IS, THE REFORE, DIRECTED TO EXAMINE THE NATURE OF INVESTMENT DISCLOSED, IF ANY, IN THE HANDS OF THE HUF AND IF FOUND CORRECT THEN THE RELIEF ACCORDING TO LAW DESERVES TO BE ALLOWED. IN THE RESULT, THIS GROUND OF THE REVEN UE IS ALLOWED ONLY FOR STATISTICAL PURPOSE. 5.1 ONCE A VIEW HAS ALREADY BEEN TAKEN IN THE CASE OF SRI JIVRAJ V. DESAI THAT THE INVESTMENT IS REQUIRED TO BE CONS IDERED IN THAT CASE AND THE MATTER WAS RESTORED BACK TO THE FILE O F THE AO, THEREFORE, UNDER THE TOTALITY OF THE FACTS AND CIRC UMSTANCES OF THE CASE, WE HEREBY HOLD THAT THE SAID DECISION OF SRI JIVRAJ V. DESAI BY THE AO WAS MUTATIS MUTANDIS APPLIED IN THE HANDS OF THIS ASSESSEE FIRM, NAMELY, M/S. MASTER ENTERTAINMENT. I N CONSEQUENCE OF THE SAID DIRECTION OF THE TRIBUNAL, WE DEEM IT P ROPER TO REVERT IT(SS)A NO.59/AHD/2007 ACIT, CIRCLE-6 AHMEDABAD VS. M/S. MASTER ENTERTAINM ENT CENTRE - 6 - THIS GROUND OF THE REVENUE BACK TO AO TO BE DECIDED AS PER LAW THEREAFTER HENCE MAY BE TREATED AS ALLOWED FOR STAT ISTICAL PURPOSE. 6. IN THE RESULT, THIS APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSE. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 17/12/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD