SIDDHI PARAGBHAI PATEL,KHAMBHAT V. THE ITO, WARD-1(3)(1), PETLAD

ITA 1264/AHD/2024

AI Insights

This case involves an appeal by Siddhi Paragbhai Patel against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 1,06,98,700 as unexplained investment under section 69 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer following the purchase of agricultural land valued at Rs. 1,01,98,000, for which the source of funds was not adequately disclosed. The assessee contested that the actual payment made was Rs. 70,27,200, which included a premium for a change in circle rate as per government order, and that substantial payments were made in earlier financial years, not in the assessment year 2015-16 as claimed by the Assessing Officer. The Tribunal noted procedural lapses in the handling of the assessee's submissions and the need for a re-evaluation of the evidence presented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23207 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Unexplained investment; Sale consideration of property below Jantri Value; Principle of natural justice; Source of fund
• Section: 143(3); 143(1); 69; 6; 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member Siddhi Paragbhai Patel Chok Koi No Pado, Khambhat, Gujarat 388620 PAN: AOIPP3661G (Appellant) Vs The ITO, Ward-1(3)(1), Petlad (Respondent) Assessee Represented: Shri Mahesh Varjani, A.R. Revenue Represented: Shri Aashish Rajesh Rewar, Sr.D.R. Date of hearing : 28-11-2024 Date of pronouncement : 03-01-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 24.04.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2015-16. 2. Brief facts of the case is that the assessee is an individual filed his Return of Income on 17-03-2016 declaring taxable income of Rs.6,26,050/- and also agricultural income of Rs.1,18,500/-. The ITA No. 1264/Ahd/2024 Assessment Year 2015-16 I.T.A No. 1264/Ahd/2024 A.Y. 2015-16 Page No Siddhi Paragbhai Patel. vs. ITO 2 return was processed u/s. 143(1) of the Act and taken for scrutiny assessment. The assessee purchased an immovable property namely agricultural land for Rs.1,01,98,000/- on 16-04-2024 but the source of funds were not disclosed. Therefore a show cause notice was issued to explain the source of funds for purchase of the property. The assessee has not produced relevant materials for the source, therefore the Assessing Officer made the entire investment of Rs.1,01,98,000/- and stamp duty of Rs.5,00,000/- as unexplained investment and added as the income of the assessee and demanded tax thereon. 3. Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A) who has confirmed the addition by holding that the assessee failed to file relevant details relating to source of investment in immovable property rather disputing about the date of registration and valuation u/s. 50C of the Act. Thus Ld. CIT(A) confirmed the addition made by the Assessing Officer on the purchase of land as unexplained investment. 4. Aggrieved against the appellate order, assessee is in appeal before us raising the following Grounds of Appeal: a. The learned CIT(A) erred in confirming the addition of Rs. 1,06,98,000/- as unexplained investment under section 69 of the Income Tax Act, 1961, without considering the actual property value and the detailed explanation provided by the appellant. b. The learned CIT(A) failed to acknowledge that the appellant paid stamp duty as per the old circle rate which was approved by virtue of government order and mentioned in the purchase deed. The actual rate applicable to the appellant's area as approved by virtue of government's order was not considered by the Assessing Officer (AO) as well. Hence, I.T.A No. 1264/Ahd/2024 A.Y. 2015-16 Page No Siddhi Paragbhai Patel. vs. ITO 3 both the Assessing Officer (AO) and the learned CIT(A) failed to consider the correct value of property. c. The learned CIT(A) ignored the fact that a major portion of the property payment amounting to Rs. 37,62,000 was made during the financial year 2011-12, and erroneously treated this amount as unexplained investment in the assessment year 2015-16. d. The learned CIT(A) erred in confirming the addition of Rs. 25,49,500 paid as premium to the government for circle rate change, considering it as unexplained investment, despite clear evidence of the payment being made to a government body. e. The learned CIT(A) made an error in treating the stamp duty and other charges paid in cash on 31/03/2014 as unexplained, disregarding the bank statements showing cash withdrawals corresponding to these payments. f. The appellant provided all necessary details and sources of funds to prove the investment in the property, which were unjustly ignored by the AO and the CIT(A). g. The CIT(A) failed to provide a proper opportunity for the appellant to present the case, and the order passed was a mere copy-paste of the AO's findings without considering the appellant's submissions and facts. h. The learned CIT(A) erred in confirming the addition for the Assessment Year 2015- 16, despite no payment or deed registration occurring in that year. All relevant payments were made during the financial years 2011-12 and 2013-14, with no financial activity related to the property in the Assessment Year 2015-16. The AO's addition for the Assessment Year 2015-16 is thus baseless and has created unnecessary litigation. i. The learned CIT(A) erred in confirming the addition based on the property value as per the deed, which is Rs. 1,01,98,000, while the actual payment made for the property, including the premium for circle rate, was only Rs. 70,27,200. The difference of Rs. 31,70,800 is solely due to the change in the circle rate for registration purposes, and no actual payment was made for this amount. The AO has also erroneously added this difference amount and the stamp duty paid of Rs. 5,00,000 as unexplained investment. I.T.A No. 1264/Ahd/2024 A.Y. 2015-16 Page No Siddhi Paragbhai Patel. vs. ITO 4 5. Ld. Counsel appearing for the assessee submitted that the assessee purchased the immovable property for actual value of Rs.70,27,200/- as follows: Particulars Amount (in Rs.) Payment to Seller (Detail mentioned in point no. 2) 39,77,000 Premium Paid as per Government Order 25,49,500 Stamp Duty Paid 5,00,000 Registration Fees Paid 700 Total 70,27,200 5.1. Whereas the property value as per the Sale Deed is Rs.1,01,98,000/-, the difference of Rs.31,70,800/- is due to revision in the circle rate for registration purposes, which has been approved by virtue of Government order and no actual payment was made for this amount. Further the actual payment of Rs.39,77,000/- paid to the sellers were between 20-04-2011 to 26- 08-2011 through banking channel as well as Rs. 1,62,000/- by cash payment. Thus the assessee paid Rs.25,49,500/- towards the premium for the circle rate change to the Government of Gujarat as per approval order dated 12-02-2024 from assessee’s UBI Saving Account vide Cheque No. 027208, whereas the Assessing Officer added the entire amount of Rs.1,01,98,000/- + Stamp Duty of Rs.5,00,000/- also as unexplained investment. Though the assessee filed the appeal on 22-01-2018, Ld. CIT(A) dismissed the appeal vide order dated 24-04-2024 without giving proper opportunity of hearing to the assessee, though the assessee filed its detailed Written Submission. Thus the Ld. CIT(A) passed the appellate order without addressing the submissions made by the assessee which is liable to be set aside. I.T.A No. 1264/Ahd/2024 A.Y. 2015-16 Page No Siddhi Paragbhai Patel. vs. ITO 5 6. Per contra, Ld. Sr. D.R. appearing for the Revenue requested to uphold the additions made by the Lower Authorities. 7. We have given our thoughtful consideration and perused the materials available on record. As it can be seen from the registered Sale Deed which is dated 31-03-2014 but registration was completed by the Sub-Registrar, Khambhat on 16-04-2014 and entered the same in the registration records. Further perusal of the Sale Deed makes it clear the sale consideration of Rs.39,77,000/- were paid between 28-04-2011 to 26-08-2011 by the assessee to the Sellers of Land. 7.1. Further clause (1) & (2) of the Sale Deed deals with the premium amount of Rs. 25,49,500/- paid by the assessee towards the conversion of new tenure land into old tenure land as approved by the District Collector, Anand as follows: “1) At Khambhat Kasba boundary Survey No. 61 measuring 2-70-13 Hec. Are. Sq. Mtrs. And Survey No. 64, 65, measuring 2-39-77 Hec. Are. Land is owned by the Second party in their joint ownership and possession the immovable property, which was of New tenure land and for converting it into Old Tenure Land the Hon. Collector Anand as per his Letter No. GNT/1/VASHI/327 Dt. 12/2/2014 has made the order and on payment of the premium amount of Rs. 25,49,500/- Rupees twenty five lakhs forty nine thousand five hundred only paid by us at State Bank of India, Khambhat Branch vide Challan No. 21/14 Dt. 21/2/2014. 2) As to that the Collector, Anand as per his Order No. GNT/1/L.R. NO. 43/PERMISSION/AGRISR 13/14/VASHI/1759 Dt. 25/3/2014 order the Old Tenure permission was granted and as mentioned in the order on obeying the terms and conditions, we the Purchasers has purchased it and the said land property in the government office records for the transfer of name in the name of the Purchasers as and when required the Sellers shall be giving their signatures and statements and on giving so, we the Second party has intended to Sale the said property on Dt. 31/8/2010 and to that I.T.A No. 1264/Ahd/2024 A.Y. 2015-16 Page No Siddhi Paragbhai Patel. vs. ITO 6 we the Second party for the said agricultural land has accepted the sale proceed amount and the said agricultural land's peaceful and vacant possession has been handed over to the First party.” 7.2. Further the sum of Rs.36,71,500/- was due to change in circle rate and no amount is paid on this account by the assessee to the State Government. Thus original transaction for acquiring this property was Rs.70,27,200/- only. Thus the Assessing Officer is without appreciation of the facts made the addition of Rs.1,06,98,700/- is liable to be deleted. Further the Ld. CIT(A) passed the appellate order without considering the Written submissions filed by the assessee. Therefore in the interest of Principle of Natural Justice we deem it fit to set aside the matter back to the file of Jurisdictional Assessing Officer with a direction to pass fresh order by giving proper opportunity of hearing to the assessee. 8. In the result the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 03-01-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 03/01/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue I.T.A No. 1264/Ahd/2024 A.Y. 2015-16 Page No Siddhi Paragbhai Patel. vs. ITO 7 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद "