SHRI JAYSHUKHBHAI CHAKABHAI THESIYA,DHORAJI, DIST. RAJKOT V. THE INCOME TAX OFFICER, WARD-2 (1) (1), RAJKOT

ITA 362/RJT/2017

AI Insights

The case involves an appeal by Jaysukhbhai Chhakabhai Thesiya against the order of the Learned Commissioner of Income Tax (Appeals)-2, Rajkot, which confirmed the additions made by the Assessing Officer under section 143(3) of the Income-tax Act, 1961. The additions pertained to unexplained investments in immovable properties and unaccounted short-term capital gains from the sale of these properties. The Tribunal examined the documents and evidence provided by the assessee, including bank statements, purchase deeds, and gift deeds, and found that the assessee had sufficiently explained the sources of investment and the claimed expenses were genuine.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26391 (ITAT-RAJKOT)
• Duration Of Justice: 7 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 30-10-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH KUMAR PANDEY
• Assessee Lawyers: KALPESH DOSHI
• Keywords: Cost of acquisition; Gift; Capital Gains
• Section: 143(2); 48

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं./ITA No.362/RJT/2017 (Ǔनधा[रणवष[ / Assessment Year: (2011-12) (Physical Hearing) JaysukhbhaiChhakabhaiThesiya, C/o. Jay Ambe Traders, Jetpur Road, Dhoraji Vs. The ITO, Ward -2(1)(!), Rajkot èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AASPT6109M (Assessee) (Respondent) Assessee by : Shri Kalpesh Doshi, AR Respondent by : Shri Ashish Kumar Pandey, Sr. DR Date of Hearing : 08/08/2024 Date of Pronouncement : 05 / 08/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2014-15, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-2, Rajkot [in short ‘Ld. CIT(A)’], dated 23.08.2017, which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘assessing officer’) u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 30.12.2016. 2. The grounds of appeal raised by the assessee are as follows: “1. The grounds of appeal mentioned hereunder are without prejudice to one another. Page | 2 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya 2. The Ld. CIT (A) has erred in law and in facts in confirming an addition of Rs.65,19,010/-, as against returned income of Rs.2,92,511/-, made by the Ld. assessing officer. 3. The CIT(A) grievously erred on facts as also in law by confirming the addition made by ld. assessing officer and in not accepting our detailed submission of source of purchase of property of Rs.37,50,000/- by considering the same as non- genuine and lack of creditworthiness. The disallowance is totally unwarranted and unjustified as all the transactions are genuine and therefore may kindly be deleted. 4. Further, the learned CIT(A) grievously erred on facts as also in law by holding the disallowance of cost of improvement expenses of Rs.20,56,050/- and stamp duty and registration fees of Rs.4,04,865/- in calculation of short-term capital gains made by the ld assessing officer considering that claim of expense lacks plausible evidence and façade of improvement has been created. As all expenses are genuine and supported by vouchers/ bills, the disallowance being arbitrary deserves to be deleted and therefore may kindly be deleted.” 3. The above grounds raised by the assessee, are interconnected and mix, therefore, we shall adjudicate them together. The assessee, before us, is an individual and filed his return of income for assessment year 2014-15, on 24.09.2015, declaring total income at Rs.2,92,511/- and agriculture income of Rs.37,650/-. The assessee`s return of income was processed u/s143 (1) of the Income Tax Act, 1961. Later on, the assessee`s case, was selected for scrutiny under CASS and notice u/s 143(2) was issued on 31.08.2016, which was duly served upon the assessee. In response to these notices, the assessee filed all relevant accounts and details, before the assessing officer. The assessee, filed before assessing officer, all relevant accounts, bank statements, contra ledger, confirmations etc, which were verified by the assessing officer. On verification of return of income and ITS data, it was noticed by the assessing officer that during the year under consideration, the assessee has purchased immovable property worth Rs.25,00,000/-, at survey no.796P6 and Rs.12,50,000/- [Rs.25,00,000/2] at survey no.796P1-, both totaling to Rs.37,50,000/- ( Rs.25,00,000 +Rs.12,50,000). Both landwere purchased on the same date Page | 3 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya i.e. 14.08.2013. During the course of assessment proceedings, the assessee was asked to submit the source of investments in the immovable properties with supporting documentary evidences. In response, the assessee filed written submission on 23.12.2016, before assessing officer, with source of investments. It was stated by the assessee that he has received gift from various relatives for purchase of these immovable properties. On verification of these gift deeds,the assessing officer noticed that the same were prepared during finance year (F.Y.) 2016-17 and persons from whom such gifts were received, are not filing return of income in the Income Tax department. In view of the above evidences on records, the assessing officer, made addition of an amount of Rs.37,50,000/-[Rs.25,00,000/- plus Rs. 12,50,000/-, treating as unexplained and added to the total income of the assessee. 4. It was also noted by the assessing officer that during the year under consideration, the assessee has sold the above two Immovable properties for Rs.41,51,000/- each. The short term capital gain(STCG) arising out of sale of these two properties are also not paid by the assessee, during the year under consideration. It was noticed by the assessing officer that the assessee has claimed cost of Improvement for leveling the land and in support of this, the assessees has submitted vouchers. The assessing officer noticed that primafacie, these vouchers appeared to be fabricated and purely an afterthought work, therefore, assessing officer worked out short term capital gain(STCG), as under: PLOT NO.1 SALE PRICE RS.41,51,000/- (-) PURCHASE COST RS.25,00,000/- STCG RS.16,51,000/- Page | 4 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya PLOT NO.2 SALE PRICE Rs.20,75,500/- [RS.4151000/2] [HALF SHARE] (-) PURCHASE COST Rs.12,50,000/- [25,00,000/2] [HALF SHARE] STCG Rs.8,25,500/- 5. In view of the above, the assessing officer noticed that assessee has not offered STCG on sale of the above mentioned two properties. Therefore, STCG of Rs.16,51,000/- of Plot No.1 and STCG of Rs.8,25,500/- of Plot No.2 , totaling to Rs. 24,76,500/-, (Rs.16,51,000 +Rs.8,25,500), was added to the total income of the assessee for the year under consideration. 6. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before Ld. CIT(A), who has confirmed the action of the assessing officer. The learned CIT(A), just reiterated the findings of the assessing officer, and confirmed the addition made by the assessing officer. Aggrieved, by the order of Ld. CIT(A), the assessee is in further appeal before us. 7. Shri Kalpesh Doshi, the Learned Counsel for the assessee, pleaded that during the assessment proceedings, the assessee submitted the following documents and evidences viz: (1) Copy of ITR and computation of income (vide Pb. 14 to 16), (2) Copy of purchase deed survey no.796/P6 and translation of relevant pages (vide Pb. 17 to 29), (3) Copy of purchase deed survey no.796/P1 and translation of relevant pages (vide Pb. 30 to 41), (4) Copy of bank statement of bank of baroda (vide Pb.42 to 43), (5) Copy of bank statement of Rajkot District Co-operative (vide Pb. Page | 5 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya 44), (6) Copy of bank statement of Saurashtra Gramin Bank (vide Pb.45 to 47), (7)Documentary evidences of donors and depositors (vide Pb. 48 to 57), (8) Copy of sale deed 796 P1 and translation of relevant pages (vide Pb. 141 to 148), (9) Copy of sale deed of propertyNo.796 P6 and translation of relevant pages (vide Pb. 149 to 156) and (10) Copy of vouchers of expenses incurred (vide Pb. 157 to 175).Therefore, Ld. Counsel, contended that assessee submitted the plausible documents and evidences before the assessing officer, therefore claim of the assessee should be allowed. 8. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 9. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We find that assessee is an individual and partner in Shri Jay Ambe Traders and Shree Jay AmbeAgro Fuel, and earning remuneration and interest from firm and also engaged in agricultural activities. The return of income for the year under consideration is filed on 24/09/2015 declaring income of Rs.2,92,511/-. During the year under consideration, assessee has purchased two immovable properties on 14/08/2013. The details are as under: Property details Amount (Rs.) Purchase Deed is enclosed at page no. Survey no. 796/P6 25,00,000 17 - 29 Survey no. 796/P1 (Assessee is co-owner) 12,50,000 (A's share) 30 - 41 Page | 6 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya Total investment 37,50,000 During the course of assessment proceedings, the assessing officer has called for various details with respect to investment in properties, the assessee has duly submitted copy of purchase deed, copy of ledger account, copy of bank statement and cash flow statement. The assessee has duly submitted that the investment in property is made out of withdrawals from bank account and gift received from relatives as under: Source of investment Amount (Rs.) Withdrawals from Bank Account 28,15,000 Gift received from relatives 16,42,000 Total 44,57,000 With respect to withdrawals from bank account, amounting to Rs.28,15,000/-, it is submitted that assessee has made withdrawals from bank account on various dates as under: Date of withdrawal Amount (Rs.) Bank of Baroda A/c No. 08620100006901 16/02/2010 35,000 11/01/2011 65,000 03/08/2012 5,00,000 09/08/2012 40,000 02/04/2013 10,000 08/08/2013 1,00,000 10/08/2013 1,00,000 14/08/2013 1,00,000 Total (a) 9,50,000 Rajkot District Co-operative Bank A/c No. 614005042619 27/07/2010 12,00,000 11/03/2010 40,000 17/04/2013 4,00,000 Total (b) 16,40,000 Saurashtra Gramin Bank A/c No. 78004315940 Page | 7 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya 08/05/2013 1,00,000 Total (c) 1,00,000 Saurashtra Gramin Bank A/c No. 78004315984 08/05/2013 1,25,000 Total (d) 1,25,000 Total (a+b+c+d) 28,15,000 The copies of bank statements are submitted by the assessee, at page No. 42 to 47 of the paper book. From the above facts, we find that assessee has sufficient cash withdrawals from bank account amounting to Rs. 28,15,000/-, which has been utilized for purchasing the immovable property. The copy of bank statement and detailed cash flow reflecting withdrawals made from various banks is also submitted during the assessment proceedings. However, assessing officer has failed to consider the same. The said bank statements and cash flow statement has also been submitted before Ld. CIT(A), however, Ld. CIT(A) has also failed to appreciate the same. We note that assessing officer and CIT(A), both have failed to comment on withdrawals. With respect to Gift received from relatives, assessee has duly submitted various documents viz., copy of affidavits confirming gifts given, copy of election card, copy of bank passbook and confirmations of Doners. 10. We find that the reconciliation of addition as per assessment order and grounds of appeal as per Form 36 is explained by the assessee, with documentary evidences, which is as under : Particulars Amount (Rs.) Sale consideration of Agricultural Land bearing Survey no. 796/P6 41,51,000/- Sale consideration of Agricultural Land bearing Survey no. 796/P1 20, 75,500/- Total 62,26,500/- Page | 8 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya Less: Cost of acquisition of Agricultural Land bearing Survey no. 796/P6 (24,99,990/-) Less: Cost of acquisition of Agricultural Land bearing Survey no. 796/P1 (12,50,010/-) Less: Cost of improvement (20,56, 050/-) Less: Cost of registration (4,04,865/-) Short Term Capital Gain 15,585/- We find that as per assessment order the capital gains is at Rs. 24,76,500/- (16,51,000 + 8,25,500). The capital gain, as per assessee, is Rs. 15,585/-, after allowing the cost of improvement and registration expenses. Therefore, there is a difference of Rs. 24,60,915/-(24,76,500-15,585), which is mentioned by the assessee, in ground number four raised by the assessee. We find merit in the submissions of learned Counsel and the reconciliation submitted by him. We have examined the reconciliation submitted by the assessee and find no error. We note that assessing officer made first addition to the tune of Rs. 37,50,000/- and the assessee has explained the sources of money to make said investment in immovable properties, by producing sufficient evidences, hence addition needs to be deleted. The second addition was made by assessing officer of Rs. 24,76,500/- (Rs. 16,51,000/- + 8,25,500) in respect of plot no. 1 and plot no. 2, which is factually not sustainable in the eye of law. We note that after considering the cost of acquisition of agricultural land and cost of improvement, the short- term capital gain comes to Rs. 15,585/-, on which the assessee should pay tax. Therefore, considering these facts, we direct Page | 9 ITA No.362/RJT/2017 Jaysukhbhai C. Thesiya the assessing officer, to tax the short term capital gain, in the hands of the assessee, to the tune of Rs. 15,585/-, only. Hence, assessee`s appeal is partly allowed. 11. In the result, the appeal of the assessee is partly allowed in above terms. Order is pronounced in the open court on 05 /11/2024 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 05 / 11 /2024 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot Date Initial 1. Draft dictated on (dictation sheet is enclosed with main file.) 08.08.2024 } PS 2. Draft placed before author 08.08.2024 PS 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Draft dictation sheets are attached PS "