Shri Shreyansh Kantilal Shah, Ahmedabad V. The ACIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 838/AHD/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7918 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOSHI
• Assessee Lawyers: P M MEHTA
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.(SS). NO.838 / AHD/2010 (ASSESSMENT YEAR 2007-08) SHRI SHREYANSH KANTILAL SHAH, A/204, ASHUTOSH APARTMENT B/H LOYALA SCHOOL, NAVRANGPURA, AHMEDABAD VS. ACIT, CC-1(1), AHMEDABAD PAN/GIR NO. : ANKPS6133R (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI P M MEHTA, AR RESPONDENT BY: SHRI ALOK JOSHI, CIT DR DATE OF HEARING: 18.11.2011 DATE OF PRONOUNCEMENT: 21.12.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) I, AHMEDABAD DATED 27.10.2010 FOR THE ASSESS MENT YEAR 2007-08. THE GROUND RAISED BY THE ASSESSEE IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DEPARTMENT AUTHORITIES HAVE ERRED IN CONSIDERING IT A CASE FIT FOR MAKING AN ADDITION FOR UNEXPLAINED INVESTMENT AND HAVE FURTHE R ERRED IN QUANTIFYING THAT ADDITION TO A SUM OF RS.2,98,000/- . 2. BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAG E ARE NOTED BY THE LD. CIT(A) IN PARA 4-4.1 OF HIS ORDER WHICH IS REPRODUC ED BELOW: 4. GROUND NO.2 IS AGAINST AN ADDITION OF RS.2,98,0 00/- MADE FOR THE UNEXPLAINED INVESTMENT. THIS ISSUE HAS BEEN DISCUSSED PARA 3 OF THE ASSESSMENT ORDER. IT IS NOTED BY THE A.O . THAT SEARCH WAS I.T.(SS).NO.838 /AHD/2010 2 CARRIED OUT U/S 132 IN THE SAVVY GROUP OF CASES ON 14.02.2007. DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREM ISES OF THE APPELLANT, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZ ED. PAGE 52 OF ANNEXURE A-1 CONTAINS CERTAIN NOTING ABOUT AREA AND RATE OF A PARTICULAR PROPERTY. AS THIS NOTING RECORDED PAYME NT IN CASH. SHRI KANTILAL SHAH, FATHER OF THE APPELLANT WHO WAS PRES ENT AT THE RESIDENCE AT THE TIME OF SEARCH WAS ASKED TO EXPLAI N THE DOCUMENTS. THE APPELLANT SHREYANS SHAH WAS ALSO ASKED TO EXPLA IN THESE DOCUMENTS. THE A.O. HAS REPRODUCED EXTRACTS FROM T HE NOTICE U/S 142(1) ISSUED TO THE APPELLANT WHEREIN IT WAS POINT ED OUT TO THE APPELLANT THAT SHRI KANTILAL SHAH WHO WAS PRESENT A T THE TIME OF SEARCH ON 14.02.2007, HAD EXPLAINED THAT THE PAGE N O.52 RELATE TO PURCHASE OF SHOP NO.101 AT SHAPAT-IV PROJECT WHERE HE HAD BOOKED ONE OFFICE IN THE NAME OF HIS HUF AND HIS SO N SHREYANS AND THAT THIS PAPER WAS GIVEN BY THE COMPANY WHEREI N AREAS WAS SHOWN AT 1490 SQ. FT. THE RATE WAS FIXED AT RS.1,0 00/- PER SQ. FT OUT OF WHICH RS.800/- WAS TO BE GIVEN BY CHEQUE AND RS. 200/- BY CASH. HE HAD ALSO STATED THAT HE HAD ALREADY PAID RS.7,40 ,000/- FOR PURCHASE OF OFFICE BY CHEQUE. IT WAS IN THIS CONTE XT ALSO POINTED OUT THAT SHREYANS SHAH HAD CLEARLY MENTIONED THAT H IS FINANCIAL AFFAIRS WERE BEING LOOKED AFTER BY HIS FATHER. THE APPELLANT HAD IN REPLY TO SUCH NOTICE DENIED CASH PAYMENT AND ALSO E XPLAINED THAT THE RATE AGREED WAS RS.800/- PER SQ. FT AND THE RAT E OF RS.200/- REPRESENTED CHARGES FOR ADDITIONAL WORK / EXTRA CHA RGES OF THE AGGREGATE AMOUNT OF RS.2,81,655/-. IT WAS ALSO STA TED BY THE ASSESSEE THAT HE HAD PAID RS.7,40,000/- AND THAT RS .7,33,655/- WAS DUE. THE APPELLANT HAD ALSO STATED THAT CHARGES OF RS.2,98,000/- WAS THE CHARGES FOR ADDITIONAL WORK WHICH WAS PLANN ED TO BE DONE LIKE FLOORING, POP ETC. THE APPELLANT HAD ALSO EXP LAINED THAT THIS ADDITIONAL WORK WAS NOT CLAIMED OUT AS THE PROPERTY WAS GIVEN ON RENT AND THE TENANT HAD CARRIED OUT THE WORK AS PER THEIR REQUIREMENT, FOR WHICH CONFIRMATION OF THE TENANT W AS GIVEN. 4.1 THE ABOVE EXPLANATION HAS NOT BEEN ACCEPTED BY THE A.O. HE HAS STATED THAT THE NOTINGS IN THE SEIZED PAPER MADE IT CLEAR THAT THE PAYMENT WERE MADE IN CASH. THE TERM CH IMPLI ES CHEQUE AND THE TERM CA IMPLIES CASH AND THAT THESE TERMS CA CANNOT BE CONSIDERED AS CHARGES FOR ADDITIONAL WORK AS CLA IMED BY THE APPELLANT. THE A.O. HAS ALSO RELIED UPON THE STATE MENT OF KANTILAL SHAH AND STATED THAT HE HAD CLEAR IDEA ABOUT THE FI NANCIAL AFFAIRS OF THE FAMILY AND IN HIS STATEMENT GIVEN AT THE TIME O F SEARCH, HE HAD STATED ABOUT THE RATE OF 200/- PER SQ. FT TO BE PAI D BY CASH. HE HAS I.T.(SS).NO.838 /AHD/2010 3 ALSO STATED THAT THE SAVVY CONSTRUCTION COMPANY HAS ACCEPTED THE UNACCOUNTED INCOME ARISEN OUT OF SALES IN SHAPAT IV PROJECT. HE HAS, ACCORDINGLY ADDED RS.2,98,000/- BEING THE VALU E OF 1490 SQ. FT AT THE RATE OF RS.200/- PER SQ. FT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. THAT THE RELEVAN T PAPER IS AVAILABLE ON PAGE 7 OF THE PAPER BOOK ON THE BASIS OF WHICH A DDITION HAS BEEN MADE BY THE A.O. HE ALSO SUBMITTED THAT A COPY OF THE S TATEMENT RECODED U/S 132(4) IS AVAILABLE ON PAGES 14-18 OF THE PAPER BOO K AND THE RELEVANT QUESTION AND ANSWER ARE APPEARING ON PAGE 17 OF THE PAPER BOOK. IT IS SUBMITTED THAT IN REPLY TO QUESTION NO.7, IT WAS ST ATED IN THE STATEMENT THAT AS PER THE PAPER, THIS WAS WRITTEN TO PURCHASE THE OFFICE AREA OF 1490 SQ. FT AND THE RATE WAS FINALIZED @ 1000/- PER SQ. FT. OUT OF WHICH RS.800/- PER SQ. FT WAS TO BE GIVEN BY CHEQUE AND THE BALANCE RS .200/- PER SQ. FT. WAS TO BE GIVEN BY CASH AND ASSESSEE HAS ALREADY PAID R S.7.40 LACS TOWARDS PURCHASE OF OFFICE BY CHEQUE. BEFORE US, IT IS SU BMITTED THAT THIS PRICE OF RS.200/- PER SQ. FT IS FOR EXTRA WORK AND THE SAME WAS NOT PAID AS NO EXTRA WORK WAS CARRIED OUT. IT IS ALSO SUBMITTED THAT TH IS WAS ACQUIRED IN ASSESSMENT YEAR 2003-04 AND NOT IN THE PRESENT YEAR AND HENCE, NO ADDITION CAN BE MADE IN THE PRESENT YEAR EVEN IF IT IS FOUND THAT THIS PAPER IS CORRECT. IN REPLY, LD. D.R. SUPPORTED THE ORDER S OF AUTHORITIES BELOW. HE ALSO SUBMITTED THAT AS PER THE PAPER WHICH IS AV AILABLE ON PAGE 7OF THE PAPER BOOK, CONSIDERATION REGARDING EXTRA WORK IS S EPARATELY NOTED AND HENCE, THIS AMOUNT OF RS.2.98 LACS @ RS.200/- PER S Q. FT IS NOT IN RESPECT OF EXTRA WORK AND HENCE, THE ORDERS OF AUTHORITIES BELOW SHOULD BE CONFIRMED. I.T.(SS).NO.838 /AHD/2010 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IN THE STATEMENT RECORDED U/S 132(4) ON 14.02. 2007 OF SHRI KANTILAL SHIVALAL SHAH FATHER OF THE ASSESSEE, IT WAS STATED BY HIM IN REPLY TO QUESTION NO.2 THAT THIS PROPERTY IN QUESTION WAS AC QUIRED DURING FINANCIAL YEAR 2003-04 FOR AN AMOUNT OF RS.9 LACS. OUT OF WHI CH THE SHARE OF THE ASSESSEE HUF WAS STATED TO BE 40% AND THE SHARE OF JYOTSNA SHAH WAS 40% AND THE SHARE OF SHREYANS SHAH, SON OF THE ASSE SSEE WAS 20% AND IT WAS PURCHASED IN JOINT NAMES. WE FIND THAT THIS AS PECT HAS NOT BEEN EXAMINED BY ANY OF THE AUTHORITIES BELOW AS TO WHET HER THE PROPERTY IN QUESTION WAS PURCHASED IN 2003-04 OR IN THE PRESENT YEAR. IN THE PAPER AVAILABLE ON PAGE 7 OF THE PAPER BOOK, THERE IS NO DATE MENTIONED AND THIS AMOUNT OF RS.2.98 LACS IS SHOWN AS DUE. HENCE, IT IS VERY MUCH RELEVANT TO FIND OUT AS TO WHEN THIS AMOUNT OF CASH OF RS.2. 98 LACS WAS PAID BY THE ASSESSEE, IF PAID AND THIS IS VERY MUCH RELEVANT TO FIND OUT AS TO WHEN THIS PROPERTY WAS IN FACT SHOWN AS PURCHASED BY THE ASSE SSEE IN ITS RETURN OF INCOME / BALANCE SHEET AND WHEN THIS PROPERTY IS RE GISTERED IN THE NAME OF THE ASSESSEE BECAUSE THE CASH PAYMENT CANNOT BE IN NORMAL CIRCUMSTANCES AFTER THE DATE OF REGISTRY OF THE PROPERTY IN THE N AME OF THE BUYER. IF THE PROPERTY WAS REGISTERED IN THE NAME OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04 OR ANY SUBSEQUENT YEAR PRIOR TO THE PRESENT ASSESSMENT YEAR, THEN THE ADDITION CANNOT BE MADE IN THE PRESENT YEAR ON THE BASIS OF THIS PAPER FOUND IN THE COURSE OF SEARCH ON WHICH NO DATE IS M ENTIONED. IN THE PAPER BOOK FILED BEFORE US, NO SUCH BALANCE SHEET OF THE ASSESSEE OR ANY CO- OWNER IS FURNISHED OF ANY OF THE YEAR EITHER THE PR ESENT YEAR OR EARLIER YEAR. UNDER THESE FACTS, WE FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER EXAMINING AL L THESE ASPECTS. WE, I.T.(SS).NO.838 /AHD/2010 5 THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON THI S ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DEC ISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (G.C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 15/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.20/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.21/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21/12/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..