PRABHAT KUMAR,BOKARO V. ITO WARD 3 (1), BOKARO

ITA 72/RAN/2024

AI Insights

The case involves appeals by Prabhat Kumar against the orders of the CIT(A), which upheld the protective additions made by the Assessing Officer regarding excess payments made for land purchases by M/s. Patel Seva Sangh, of which Kumar was an executive committee member. The Tribunal noted that similar protective additions were made in the cases of other committee members, but substantive additions were made in the case of the trust itself. The Tribunal directed the Assessing Officer to verify whether substantive additions were indeed made in the trust's case and, if so, to delete the protective additions in Kumar's case to avoid double taxation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 39634 (ITAT-RANCHI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2015-2016
• Appeal Filed On: 29-03-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KHUBCHAND T. PANDYA
• Assessee Lawyers: DEVESH PODDAR
• Keywords: Set aside; Sale consideration of property below Jantri Value; Principle of natural justice; Assessment record
• Section: 147; 148; 250; 143(1)

Judgement Text

" अपील\u0005य अ\u0007धकरण, राँची \u000fयायपीठ, राँची IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM आयकर अपील सं./ITA Nos.70 to 72/RAN/2024 (\u0011नधा\u0013रण वष\u0013 / Assessment Years :2013-14 to 2015-16 ) Prabhat Kumar, Bokaro 1151, Sector-4C, Bokaro, Jharkhand-827004. (PAN: AFSPK3289C) Vs. ITO, Ward-3(1), Bokaro (अपीलाथ\r /Appellant) : (\u000e\u000fयथ\r / Respondent) Appellant by : Shri Devesh Poddar, Advocate Respondent by : Shri Khubchand T. Pandya, Sr. DR सुनवाई क\u0014 तार\u0016ख / Date of Hearing : 05/11/2024 घोषणा क\u0014 तार\u0016ख/Date of Pronouncement : 08/11/2024 आदेश / O R D E R All these captioned appeals preferred by the assessee emanates from the separate orders of ld. CIT(A), NFAC, Delhi (hereinafter referred to as \"the Ld. CIT(A)\" evenly dated 06.02.2024 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the \"Act\") for Assessment Years 2013- 14 to 2015-16 as per the grounds of appeal on record: 2. At the time of hearing the parties herein conceded that the facts and issues in all these appeals are absolutely similar and identical and, therefore, on hearing their submissions all these ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 2 appeals are heard together and disposed of vide this common order. 3. The assessee through his Learned. Authorised Representative submitted that ITA No. 70/Ran/2024 may be taken as the lead case for adjudicating all these appeals. The relevant facts as appearing therein is that the assessee during the relevant year filed return of income for A.Y. 2013-14 on 29.07.2013 declaring an income of ₹ 13,61,610/-. The said return was processed u/s. 143(1) of the Act. As per the information received during the assessment proceedings in the case of Patel Seva Sangh, Bokaro, it was found that earlier executive members of the old executive committee of the Sangh i.e. Shri Ajit Kumar, Shri Manoranjan Kumar, Shri Suresh Kumar and Shri Prabhat Kumar had purchased a piece of land for ₹9,91,800/- (as per concerned sale deeds) but made actual payment for ₹2,40,13,140/- to the involved land broker during FY 2012-13 to 2014-15. Thus, excess payment of ₹1,40,93,340/- was made in the land valued at ₹99,19,800/- by the said four executive members. Subsequently, the Assessing Officer passed order u/s. 147 read with section 144B of the Act assessing total income of ₹27,26,360/- for A.Y. 2013-14 making addition of ₹13,64,750/- on protective basis. 4. The Learned. CIT(A).NFAC had simply upheld the addition made by the Assessing Officer without bringing in any new enquiry or verification of facts. 5. I have given careful consideration to the facts and circumstances in this case, heard the submissions of the parties ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 3 herein and have analysed the documents on record. That the sole issue involved in these three appeals is with respect of the addition made on protective basis against the alleged excess payment made for the purchase of land in the name of M/s. Patel Seva Sangh in which the assessee was one of the executive committee members and signatory to bank account along with the three others namely Shri Ajit Kumar, Shri Manoranjan Kumar and Shri Suresh Kumar. The undisputed fact is that M/s. Patel Seva Sangh during the period of A.Y. 2013-14 to 2015-16 had purchased a land at ₹2,40,13,140/- stamp duty value of which was ₹99,19,800/- and as such excess payment had been made by the trust for the purchase of the land. That the proceedings u/s. 147 was initiated in case of the assessee along with other persons alleging that these four persons were the executive committee members and signing authority at the relevant period and as such were responsible for the excess payment made. That being the case, proceedings u/s. 148 was initiated and addition of the proportionate ratio as below has been made in case of the assessee: Assessment Year (A) Total Amount Paid (B) Actual Stamp duty Value (C) Excess amount paid by the trust (D=B-C) Addition made in case of assessee (1/4th share of excess amount i.e. 1/4th of D) 2013-14 1,22,59,000/- 60,00,000/- 54,59,000/- 13,64,750/- 2014-15 97,08,670/- 21,89,800/- 75,18,870/- 18,79,720/- 2015-16 20,45,470/- 17,82,000/- 2,63,740/- 65,867/- 6. The said proceedings u/s. 148 was initiated in the hands of the executive committee members (including the assessee) as well as in the hands of the trust M/s. Patel Seva Sangh. The assessment ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 4 had been framed wherein in the case of the assessee the additions as per the aforesaid table has been made being 1/4th share of the excess amount. At the time of hearing, it was vehemently contended by the Learned Authorised Representative that the trust M/s. Patel Seva Sangh had made the payments directly from the bank account of the trust. It was also contended that the sole reason for the revenue to frame the assessee through proceeding u/s. 147/148 of the Act is that along with the other executive committee members the assessee was also an authorized signatory at the relevant point of time. The addition in the hands of the assessee had been made on protective basis whereas on the same issue substantive addition has been made in the hands of the trust M/s. Patel Seva Sangh. The Learned. Authorised Representative further submitted that since parallel proceedings u/s.147/148 of the Act had been initiated in respect of the other executive members wherein in the case of one Mr. Suresh Kumar the assessment was completed accepting the returned income and no addition was made in the same set of identical facts with that of the assessee. The Learned Authorised Representative filed a copy of the assessment order of Shri Suresh Kumar for A.Y. 2014-15 in the paper book on record. The learned. Authorised Representative further submitted that in case of another executive committee member i.e. Shri Ajit Kumar, the Learned. CIT(A) had observed and held as follows: \"7.1.1 On a perusal of the appellant's submission, it is clear that the appellant was one of Members (Chairperson) of the Managing Committee of a School run by M/s. Patel Seva Sangh. There had been dispute between the old and the new Executive Committees of Patel Seva Sangh. This apart, the school run by the society, Patel Seva ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 5 Sangh received huge amount funds/fees/receipts for which the appellant during the course of the assessment proceedings could not furnish submission/evidence to the satisfaction of the Assessing Officer and thus, protective assessment was made in his case considering him as one of the members of the old Executive committee of Patel Seva Sangh. The appellant in his submissions claimed that he was just a member of the School Managing committee as Chairperson and one of the authorized signatories to operate the bank account opened in the name of the school with PAN of Patel Seva Sangh. Considering the appellant's submission and the documents furnished, it is understood that Executive Committee of Patel Seva Sangh and the School Managing committee being run by Patel Seva Sangh are different entities. Further, the contentions of the appellant regarding the protective assessment completed in his case are found to be genuine. 7.1.2. The was requested to furnish his comments on the submissions and supporting documents furnished by the appellant during the course of the first appeal proceedings. The Assessing Officer's report was furnished to the\\ appellant calling for rejoinder for which the appellant furnished his submissions as under: \"To The Commissioner of Income Tax (Appeals) Income Tax Department Sub: In response to your last Notice dated 28.05.2024 Dear Sir, I have already submitted the supporting documentary evidences and/or documents in support of any Grounds of Appeal in our previous communication with I T dept. I would like to draw your attention on following points: (a) The amount in dispute for taxation is the difference of actual amount paid to the party (through Bank instruments, not in cash) as per market rate decided by executive committee of Patel Seva Sangh and the cost of the land mentioned in the Registry Deeds which is as per Government rate for purchase of land for Patel Seva Sangh. (b) In this case assessee is Patel Seva Sangh, PAN: AABTP2202N whose assessment has already been completed for the Assessment Year 2013-14, 2014-15 & 2015-16 by the I T Dept. Relevant substantive additions for the said Assessment Years have already been made in the name of Patel Seva Sangh itself. M/s. Patel Seva Sangh, Bokaro has already deposited one installment of revised tax also. ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 6 (c) The assessment orders for the A.Y. 2013-14, 2014-15 & 2015- 16 of Patel Seva Sangh, nowhere mentions for any protective addition in the hands of the individual. (d) Entire cost of the land has been paid by Patel Seva Sangh through difference banking channel (but not in cash) which has been verified by the Assessing Officer and all the figures are shown in the audited books of accounts of the Patel Seva Sangh in the relevant A.Y. 2013-14, 2114-25 & 2015-16. (e) Assessing Officer has already accepted the Audited Books of Accounts during the course of assessment of Sardar Patel Public School, Sector-9, Bokaro0 Steel City for the relevant A.Y. 2013-14, 2114-25 & 2015-16 and has also accepted that the owner of the procured land is Patel Seva Sangh, Bokaro. (f) Patel Seva Sangh has neither disputed the ownership of its land at Pindrajora nor its newly opened bank account no. 1813901000003102 of Indian Overseas Bank, Sector-9, B. S. City. (g) I/We had not availed any financial gain of even a single penny from Patel Seva Sangh, Bokaro. In view of above, it is my humble request to drop the proceedings in my case as addition has already been made in the case of Patel Seva Sangh which owns the land, building as well as the bank account and the same are also reflected in their audited balance sheet. Thanking You, Sir Yours faithfully. Sd/- (Ajit Kumar) PAN No. AEMPK3625H)\" 7.1.3. The appellant's rejoinder/submission has been considered. The appellant has reiterated that the addition was made in the case of M./s. Patel Seva Sangh for the A.Y. 2013-14. It is noticed that the transactions related to the Society were added in the hands of the appellant as noticed from the documents furnished by the appellant, The Assessing Officer did not make any comments on the documents or explanation furnished by the appellant when called for u/r. 46A of the I. T. Rules. The Assessing Officer has only commented that he agrees with the opinion of the Assessing Officer but has not verified nor commented on the evidence furnished by the appellant. Thus, it is opined that the Assessing Officer does not have any comments to offer regarding the contentions of the appellant. ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 7 7.1.2. In view of the above, the AO is directed to verify the assessment records of M/s. Patel Seva Sangh where substantive assessment is completed as claimed by the assessee appellant and delete the additions made protectively in the case of the appellant. Thus, Grounds of appeal Nos. 1, 2 & 3 are allowed subject to verification by the Assessing Officer.\" 7. That as evident from the afoeresaid observation by the Department undoubtedly the land was purchased by Patel Seva Sangh and that the Learned. CIT(A) had accepted that in case of the trust i.e. Patel Seva Sangh the addition has been made on substantive basis whereas the addition in the hand of the executive member i.e. Shri Ajit Kumar and others (including the assessee) has been made on protective basis. It is also recorded that there had been a dispute between the old and the new executive committee members of the Patel Seva Sangh and the same land was purchased for expansion of school building by Patel Seva Sangh. That during assessment proceedings, the Assessing Officer was not satisfied with the evidence furnished and, therefore, protective assessment was made in the case of the said executive committee member, considering him as one of the member of the old executive committee of Patel Seva Sangh and one of the authorized signatory. That in view of the entire facts finally, the Learned. CIT(A) had directed the Assessing Officer to verify from the assessment record of the trust i.e. Patel Seva Sangh whether substantive assessment has been completed in the hands of the trust and accordingly to delete the protective assessment addition in the hands of the assessee. These facts are absolutely identical also with the case of the assessee before me. The Learned Departmental Representative only reiterated the decisions of the ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 8 subordinate authorities placing strong reliance on them, however, he could not dispute the fact that whatever has been held in respect of similar proceedings of one of the executive committee member i.e. Shri Ajit Kumar is absolutely similar and identical with the fact of the case of the assessee. The Learned Departmental Representative also could not refute the factual position that the land was purchased by the trust and not in the individual name of the executive committee members and that payment was made from bank account of the trust. Learned. Departmental Representative, however, fairly conceded that if substantive addition has been done in case of the trust then there cannot be protective addition made in case of the trustee in respect of same set of facts. 8. It is a matter of common knowledge as held by various legal authorities that reopening is not permissible in respect of protective addition since the substantive addition has already been made in case of connected entity. However, in this case, verification is required whether the substantive addition has been completed in respect of the trust or not. Though it was submitted by the Learned Authorised Representative that in respect of Shri Ajit Kumar who was one of the executive committee members along with that of the assessee, in the consequential order passed by the Assessing Officer, the relief has been granted to him, but keeping the scales of justice balanced, I am of the considered view that in respect of the present assessee factual verification should be conducted at the level of the Assessing Officer whether in case of the trust substantive addition has been completed and accordingly, the Assessing Officer shall pass order as per law ITA Nos.70 to 72/Ran/2024 Prabhat Kumar, A.Ys. 2013-14 to 2015-16 9 complying with principles of natural justice. There cannot be any double taxation. If the substantive addition is completed in case of the trust then the protective addition in the hands of the trustees, i.e. the assessee, has to be deleted subject to verification by the Assessing Officer. In view thereof for all these three appeals the order of the learned CIT(A)/NFAC is set aside and the matters are remanded to the file of the Assessing Officer as per the aforestated directions. Needless to say that the Assessing Officer shall provide sufficient opportunity of hearing to the Assessee. As per the above terms all the three appeals of the assessee stands allowed for statistical purpose. 9. In the result, all the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 08/11/2024. Sd/- (Partha Sarathi Chaudhury) Judicial Member राँची Ranchi; \u001cदनांक Dated 08 /11/2024 Jd, Sr.P.S.(on tour) आदेश क\u001a \u001b\u0011त\u001dल\u001eप अ\u001fे\u001eषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) On tour, ITAT, Ranchi 1. अपीलाथ\r / The Appellant- Shri Prabhat Kumar , Bokaro 2. \u000e\u000fयथ\r / The Respondent- ITO, Ward-3(1), Bokaro 3. आयकर आयु\u0006(अपील) / The CIT(A), NFAC, Delhi 4. आयकर आयु\u001eत / Pr. CIT, Ranchi 5. िवभागीय \u0010ितिनिध, आयकर अपीलीय अिधकरण, राँची / DR, ITAT, Ranchi. 6. गाड! फाईल / Guard file. स\u000fया#पत \u000e$त //True Copy// "