The DCITMehsana Circle, Mehsana V. Shri Rameshbhai Manilal Prajapati, Panchmahal

ITSSA 840/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9657 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV CIT D R
• Assessee Lawyers: GAURAV NAHATA
• Keywords: Unexplained investment; Source of fund
• Section: 143(3); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , , , , BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND , SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ' # ' # ' # ' # IT(SS)A NOS. 839 & 840/AHD/2010 ASSESSMENT YEARS : 2003-04 & 04-05 DCIT, MEHSANA CIRCLE, MEHSANA V/S . SHRI RAMESHBHAI MANILAL PRAJAPATI VILLAGE-KHETU FADIA MUKAM-POST-BATAKWADA TALUKA-SANTRAMPUR DIST.-PANCHMAHAL PAN NO. AKOPP5415A (APPELLANT) .. (RESPONDENT) $ % & BY REVENUE SHRI O. P. VAISHNAV, CIT D.R. % & /BY ASSESSEE SHRI GAURAV NAHATA, A.R. '( % ! /DATE OF HEARING 10.12.2013 )*+ % ! /DATE OF PRONOUNCEMENT 13.12.2013 O R D E R PER BENCH THIS TWO APPEALS FILED BY THE REVENUE AGAINST THE O RDER OF THE CIT(A)- GANDHINAGAR, ORDER DATED 29/10/ 2010 FOR A.Y.2003-0 4 & 2004-05. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: (1) THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF UNDISCL OSED INVESTMENT FROM RS.51,80,000/- TO RS.83,000/-, THER EBY DELETING THE ADDITION BY AN AMOUNT OF RS.50,97,000/ - (2) THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN ALLOWING THE CLAIM OF THE ASSESSEE, WITHOUT CONSIDE RING THE IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 2 REMAND REPORT OF THE AO DATED 18.10.2010, IN WHICH THE AO HAS CATEGORICALLY MENTIONED THAT THE PAYMENTS WERE MADE BY THE SOCIETY WAY AHEAD BEFORE ITS INCORPORATION AND ALSO THE STAMP PAPERS USED BY THE MEMBERS FOR GIVING DECLARA TION WERE PURCHASED BY SHREE RAMESHWAR CO-OP. HSG. SOCIE TY LTD. AND ALL THE STAMP PAPERS WERE IN SERIAL AND TH E DECLARATION WAS MADE ONE YEAR AFTER THE PURCHASE OF THE STAMP PAPERS. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. (4) IT IS THEREFORE PRAYED THAT THE ORDER OF THE LE ARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. SIMILAR GROUNDS OF APPEAL ARE RAISED IN A.Y. 04-05 BUT AMOUNT IS DIFFERENT. 2. THE A.O. OBSERVED THAT THERE WAS A SEARCH AND SE IZURE OPERATION U/S.132, CONDUCTED ON THE BATA GROUP ON 04.09.2003 . DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS PERTAINING TO THE ASSESSE E WAS FOUND AS COMMUNICATED BY ACIT, CENTRAL CIRCLE-1(3), AHMADABA D, DATED 14.06.2006 AND AS PER PAGE 86 OF THE APPRAISAL REPORT OF BATA GROUP. AS PER ANNEXURE A- 2 OF SEIZURE MEMO PREPARED AT THE PREMISES OF KIRIT B.MODI IN WHICH IT APPEARED THAT MR. RAMESHBHAI MANILALBHAI PRAJAPATI HAD PROMOTED RAMESHWAR CO-OPERATIVE HOUSING SOCIETY. IN THE STA TEMENT U/S.131 RECORDED ON 14.12.2003 THAT HE WAS PRESIDENT OF RAMESHWAR CO -OPERATIVE HOUSING SOCIETY. HE HAD PAID RS.73 LACS FOR THE ALLOTMENT OF LAND. TOTAL INVESTMENT IN THIS SOCIETY AS PER DETAILS ON PAGE-86,87 OF THE AP PRAISAL IS RS.81,99,150/-. THE PAYMENT WAS MADE ON WITHIN FINANCIAL YEAR 02-03 AND 03-04 AMOUNTING IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 3 TO RS.51,80,000/- AND RS.30,19,150/- RESPECTIVELY. THESE AMOUNTS HAD BEEN PAID TO AUDA. A NOTICE U/S.153C WAS ISSUED ON 30.0 5.2007 BUT ASSESSEE DID NOT RESPOND. THEREFORE, THE A.O. PASSED THE ORDER U/S. 144 IN A.Y. 03-04 AND U/S. 143(3) IN A.Y. 04-05 AND ASSESSED THE INCOME I N A.Y. 03-04 AT RS.51,80,000/- IN A.Y. 04-05 AT RS.30,19,150/-. 3. BEING AGGRIEVED BY HE ORDER OF THE A.O., THE ASS ESSEE CARRIED THE MATTER BEFORE THE CIT(A). AFTER CONSIDERING THE A SSESSEES REPLY, HE PARTLY ALLOWED THE ASSESSEES APPEAL BY OBSERVING AS UNDER : I HAVE CONSIDERED SUBMISSIONS OF THE APPELLANT IN APPEAL PROCEEDINGS, REMAND REPORT / COMMENTS OF THE AO, AN D REPLIES TO THE COMMENTS / OBJECTIONS TO THE REMAND REPORT. THE APPELLANT IN THE STATEMENT U/S. 131 BEFORE ADIT ON 14-10-2003 IN REPLY TO QN. 4 STATED THAT 'THE AMOUNT HAS BEEN DEPOSITED BY COLLE CTING MONEY AS LAND FUND FROM THE MEMBERS OF THE SOCIETY' AND IN REPLY TO Q. NO. 5 STATED THAT 'YES RECEIPTS HAVE BEEN ISSUED TO_ THE_MEMBERS_AGAINST__THE__MONEY RECEIVED FROM THEM. ' THE SAID STATEMENT WAS LYING ON THE REPORTS WITH THE SAME AO ALTHOUGH AS THESE WERE IN SEPARATE FILE RELATED TO OTHER CASE, HE WAS NOT APPARENTLY AWARE OF THEIR EXISTENCE. THE RAMESHWAR CO.OP. HSG. SOCIETY LTD HAD FILED THE EVIDENCES WITH REGARD TO SOURCES OF THE FUNDS COLLECTED FORM MEMBERS OF THE SOCIETY ALONG W ITH PROOF OF IDENTITY AND GENUINENESS, IN THE ASSESSMENT PROCEED INGS OF BATA GROUP ON 16-03-2006 (CLAIM OF ASSESSEE VERIFIED BY THE DCIT, MEHSANA CIRCLE, MEHSANA VIDE HIS LETTER NO MHN/REM.REPORT/RMP/2010-11 DATED 29 TH OCTOBER 2010), WHO HAS TRANSFERRED ALL SUCH FILES TO AO AT MEHSANA AFTER D ECENTRALIZATION AND WERE WITH THE ASSESSING OFFICER THOUGH WITHOUT HIS BEING AWARE. SUCH.PAPER CONTAINS SAUGANDNAMAS / CONFIRMATIONS / DECLARATIONS IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 4 BY THE MEMBERS OF SOCIETY FOR THEIR CONTRIBUTION, W HO ARE THE OWNERS OF THE PLOT OF LAND. IN REMAND PROCEEDINGS, THE AO HAS RECORDED STATEMENT OF 17 MEMBERS OF THE SOCIETY, WHO HAVE AC CEPTED THAT THE AMOUNTS ARE GIVEN BY THEM TO SOCIETY FOR ALLOTMENT OF PLOT OF LAND, THESE STATEMENTS CLEARLY SHOW THAT THE FUNDS DEPOSI TED BY SOCIETY WITH AUDA FOR ALLOTMENT OF LAND WERE CONTRIBUTED BY THE MEMBERS OF THE HSG. SOCIETY, THUS, THOUGH THE EVIDENCES WERE N EW IN APPELLATE PROCEEDINGS, BUT THE SAME WERE CONFIRMED BY AO IN S TATEMENTS OF MEMBERS OF THE SOCIETY THAT THE FUNDS DEPOSITED WIT H AUDA ARE COLLECTED FROM THE MEMBERS OF THE SOCIETY, AS S TATED BY APPELLANT BEFORE ADIT IN THE STATEMENT U/S. 131 ON 14/10/2003 . AS FAR AS ASSESSING OFFICER'S CONTENTION THAT PAYMENTS FOR LA ND WERE MADE TO THE EXTENT OF RS 8,20,000 EVEN A BEFORE THE INCORPO RATION OF THE SOCIETY IS CONCERNED; THIS FACT IS OF NO AVAIL AS P ERSONS WHO HAVE INTENDED TO INVEST IN THE PROPOSED SOCIETY HAVE CON FIRMED THAT THEY HAVE CONTRIBUTED THE AMOUNTS. ALSO IT IS THE USUAL BUSINESS PRACTICE TO PROPOSE A SOCIETY, GOING FOR AUCTION OR PROCESS OF PURCHASE OF LAND AND THEN GET THE SOCIETY REGISTERED. ACCORDINGLY, ON A CONSIDERATION OF THE FACTS ON RECORDS, THE CONTENTI ONS MADE BY THE APPELLANT, STATEMENT RECORDED BY ADIT, STATEMEN TS OF MEMBERS OF THE SOCIETY RECORDED BY ASSESSING OFFICE R IN REMAND PROCEEDINGS, I AM OF THE OPINION THAT THE FU NDS DEPOSITED WITH AUDA ARE COLLECTED BY THE APPELLANT FROM THE MEMBERS OF THE SOCIETY AND ARE NOT BELONGING TO THE PROMOTER SHRI RAMESHBHAI WLANILAL PRAJAPATI, APPELLANT PERSO NALLY, SUBJECT TO THE FINDINGS IN SUBSEQUENT PARA REGARDIN G INVESTMENT OF RS. 1,61,005 IN HIS OWN NAME AND FOR HIS OWN BENEFIT. 15.1 I HAVE GONE THROUGH THE LIST OF MEMBERS OF PLO T OWNERS OF THE RAMESHWAR CO..OP. HSG. SOCIETY LTD, WHO CONTRIBUTED FUNDS AS IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 5 CONTRIBUTION FOR ALLOTMENT OF PLOT, WHICH IN-TURN D EPOSITED WITH AUDA. THE LIST CONTAINS NAME OF THE APPELLANT, WHO HAS FI LED DECLARATION OF SAUGANDNAMA ON PG. 58 & 59 OF PAPER BOOK, WHICH SHO WS THAT PLOT NO. A-08 IS ALLOTTED TO HIM AND FOR THIS HE HAS CON TRIBUTED RS. 1,61,005/-. FURTHER, APPARENTLY NO ONE GOES THROUGH THE ORDEAL OF PROMOTING A SOCIETY, BEING THE CHAIRMAN AND MANAGIN G THE AFFAIRS WITHOUT ANY MONETARY BENEFITS. THEREFORE, DURING TH E APPELLATE PROCEEDINGS THE ASSESSEE WAS ASKED VIDE THE ORDER S HEET DATED 7 OCTOBER 2010, THE FOLLOWING: (I) WHAT WERE THE SOURCES OF INCOME OF THE APPELLAN T AND THE QUANTUM OF INCOME ARE IN ASSESSMENT YEAR 03-04 AND 04-05. (II) SUBSTANTIATE THE INCOME WITH EVIDENCES (III) IT IS SEEN THAT AS PER LIST OF INVESTMENT YOU HAVE INVESTED IN PLOT NO. A-8, GIVE THE SOURCE WITH PROO F. (IV) WHAT WAS THE INTEREST /BENEFIT TO THE OFFER A SSESSEE IN PROMOTING THE SOCIETY AS PRESIDENT. (V) IF THE SOURCE ARE NOT EXPLAINED AND IN FORM OF BENEFIT FROM SOCIETY /OTHERWISE WHY THE INCOME ASSESSED TO BE NOT ENHANCED. THE ASSESSEE REPLIED TO IT VIDE LETTER DATED 18.10. 2010. THE REPLY OF THE ASSESSEE IS EVASIVE AND IT HAS NOT BROUGHT OUT WHAT WAS THE BENEFIT TO THE ASSESSEE IN PROMOTI NG THE SOCIETY. NO ONE WITH A MEAGRE INCOME AS CLAIMED BY ASSESSEE COULD HAVE PROMOTED SUCH A LARGE SOCIETY. IT IS HELD THAT THE ASSESSEE IS HIDING HIS TRUE INCOME AS WELL AS BENEFIT FROM FLOATING TH E SOCIETY. NO PLAUSIBLE EXPLANATION WITH REGARD TO SOURCES OF FUN DS CONTRIBUTED TO SOCIETY ARE FURNISHED BY THE APPELLANT, THEREFORE, THE CONTRIBUTION IN THE YEAR 2002-03 OF RS.83,000/- AND IN THE YEAR 200 3-04 OF RS. 75,750/- IS CONSIDERED AS UNDISCLOSED / UNACCOUNTED INVESTMENT BY IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 6 THE APPELLANT AND THE SAME IS CONFIRMED AS UNDISCLO SED INVESTMENT IN THE ASST. YEAR 2003-04 AND ASST. YEAR 2004-05 OU T OF THE ADDITION OF RS.51,80,000/- AND RS. 30,19,150/- MADE AS UNDIS CLOSED INVESTMENT IN THE ASST. YEAR 2003-04 AND ASST. YEAR 2004-05, IN THE HANDS OF THE APPELLANT. THE REMAINING ADDITION OF R S. 50,97,000/- AND RS. 29,43,400 /- MADE AS UNDISCLOSED INVESTMENT IN THE ASST YEAR 2003-04 AND ASST. YEAR 2004-05 ARE DELETED. 16. FURTHER, NOT ACCEPTING THE ASSESSEE'S CONTENTI ON ABOUT HIS TANGIBLE BENEFITS FROM PROMOTING THE SOCIETY (AS DI SCUSSED IN PARA.15.1, ABOVE) AND THE QUANTUM OF HIS INCOME FRO M HIS OTHER SOURCES LIKE ADVISING THE FARMERS; THE TOTAL INCOME OF THE ASSESSEE FOR ASST. YEAR 2003-04 AND ASST. YEAR 2004-05 IS AS SESSED AT RS 200,000/-EACH. THIS TOTAL INCOME IS HELD TO INCLUDE HIS UNDISCLOSED INVESTMENT IN THE PLOT OF SOCIETY OF RS. 83.000/- I N ASS YEAR 2003-04 AND OF RS. 75,750/-IN ASS YEAR 2004-05, CONFIRMED I N PARA-15.1 ABOVE. THIS WOULD MEAN AND ENHANCEMENT OF RS.1,17, 000 FOR AY 2003-04 AND AN ENHANCEMENT OF RS.1,24,250 FOR AY 2004-05 . 4. NOW, THE REVENUE IS BEFORE US IN BOTH YEARS. LD . CIT D.R. ARGUED THAT THE ASSESSEE HAD DEPOSITED RS.8,20,000/- BEFORE INC ORPORATION OF THE SOCIETY I.E. 24.02.2003. HE DREW OUT ATTENTION ON PAGE NO. 2 OF THE PAPER BOOK, WHICH SHOWS THAT CO-OPERATIVE SOCIETY RECEIVED CASH FROM THE MEMBERS WHICH WAS DEPOSITED WITH THE AUDA THROUGH THIS SOCIETY. THE LD. CIT(A) HAS SOUGHT REMAND REPORT FROM THE A.O. WHICH HAS BEEN CONSIDER ED BY HIM BUT A.O. WAS ABLE TO RECORD STATEMENT ONLY 17 MEMBERS OF THE CO- OPERATIVE SOCIETY ON TEST- CHEQUE BASIS TO FIND OUT THE SOURCE OF AMOUNT DEPOS ITED WITH AUDA FOR ALLOTMENT OF LAND BY RAMESHWAR CO-OPERATIVE HOUSING SOCIETY. IT IS ALSO NOT IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 7 CLEAR WHETHER ALL THE MEMBERS ARE ASSESSED TO TAX O R NOT. THEREFORE, HE REQUESTED TO SET ASIDE THE ISSUE TO THE A.O. FOR DE TAIL INVESTIGATION. 4(I). AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE C ONTENDED THAT SHRI RAMESHBHAI MANILAL PRAJAPATI HAD ACTED AS PRESIDENT OF THE SOCIETY. 51 PERSONS HAVE AGREED TO FORM THE SOCIETY AND GET LAN D THROUGH SOCIETY FOR THEIR INDIVIDUAL PURPOSES. THEREFORE, THEY DEPOSITED CER TAIN AMOUNT FROM TIME-TO- TIME, WHICH WAS TRANSFERRED THROUGH CO-OPERATIVE SO CIETY THROUGH DDS IN TOTALING AMOUNT OF RS.83,25,440/- AS PER PAGE NO.3 OF PAPER BOOK. THE SOCIETY IS AN INDEPENDENT ENTITY AND WHICH WAS CONF IRMED FOR GETTING TO BE ALLOTTED IN THE NAME OF IT BY THE AUDA, THEN IT DIS TRIBUTED TO THE MEMBERS. AS PER PAGE NOS.4 TO 14 OF PAPER BOOK AMOUNTS HAD BEEN TRANSFERRED TO AUDA. AS PER PAGE NO.19, THIS AMOUNT WAS COLLECTED FROM T HE 51 MEMBERS. AS PER PAGE NO.25 OF PAPER BOOK, THIS LAND WAS ALLOTTED TO 51 MEMBERS AND ARGUED THAT LAND WAS ALLOTTED IN THE NAME OF SOCIETY NOT I N THE NAME OF PRESIDENT I.E. ASSESSEE. THE LD. CIT(A) HAD SOUGHT REMAND REPORT FROM THE A.O. THE LD. A.O. RECORDED STATEMENT U/S.131(1) ON TEST-CHEQUE B ASIS. THE A.O. HAD SUBMITTED HIS REMAND REPORT ON 18.10.2010 WHICH HAS BEEN REPRODUCED BY THE LD. CIT(A) AT PAGE NOS. 8 TO 10, WHICH WAS ALSO FOR WARDED TO THE APPELLANT AND APPELLANT SUBMITTED HIS REPLY TO THE LD. CIT(A). T HEREFORE, HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL ON RECORD. THE LAND WAS ALLOTTED IN THE NAME OF SOCIETY BY AUD A WHICH HAS BEEN DISTRIBUTED AMONGST MEMBERS OF THE SOCIETY. THE CO NTRIBUTION MADE BY THE IT(SS)A NOS. 839 & 840/AHD/2010, A.YS. 03-04 & 04-0 5 PAGE 8 MEMBERS, WHICH WAS COLLECTED BY THE ASSESSEE FOR TH EIR BENEFIT AND CO- OPERATIVE SOCIETY WAS THE MEDIUM TO GET LAND FROM T HE AUDA. THE SOCIETYS BOOKS HAVE AUDITED, PAYMENTS HAVE BEEN REMITTED FRO M THE BOOKS OF ACCOUNT OF SOCIETY. THE LD. A.O. ALSO TEST-CHEQUED 17 MEMB ERS WHO HAD ADMITTED THAT THEY MADE PAYMENTS TO GET PLOT OF LAND THROUGH THIS SOCIETY. THE LD. CIT(A) HAD GIVEN FULL OPPORTUNITY TO THE A.O. BEFORE DECID ING THE CASE. THEREFORE, THERE IS NO VIOLATION OF RULE 46A OF THE IT ACT. T HUS, WE CONFIRM THE ORDER OF THE CIT(A) IN BOTH YEARS. 6. IN THE RESULT, REVENUES APPEALS IN BOTH YEARS A RE DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 13.12.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA , , , , % %% % -. -. -. -. / .+ / .+ / .+ / .+ / COPY OF ORDER FORWARDED TO:- 1. $/ REVENUE 2. / ASSESSEE 3. 4 / CONCERNED CIT 4. 4- / CIT (A) 5. .89 -' , , / DR, ITAT, AHMEDABAD 6. 9;< => / GUARD FILE. BY ORDER/ , , ?/ $ , #