Income Tax Appellate Tribunal - Ahmedabad
Shri Rajnibhai Dashrathbhai Patel, ... vs The Acit, Cent. Circle-1(4),,, ... on 11 September, 2019
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'A' अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER आयकर अपील (एसएस) सं./I.T(SS).A. No. 278/Ahd/2013 ( नधा रण वष / Assessment Year : 2006-07) Rajnibhai Dashrathbhai बनाम/ Assistant Commissioner Patel Vs. of Income Tax A/204, Praachi Apartment, Central Circle-1(4), Near Utopia School, Gulab Ahmedabad Tower Road, Thaltej, Ahmedabad 380054 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : ARZPP6233C (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Hiren Trivedi, A.R. यथ क ओर से / Shri Surendra Kumar, CIT.D.R. Respondent by :
सन ु वाई क तार"ख / Date of 06/08/2019 Hearing घोषणा क तार"ख /Date of 11/09/2019 Pronouncement आदे श/O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-I, Ahmedabad ('CIT(A)' in short), dated 12.04.2013 arising in the assessment order dated 26.12.2011 passed by the Assessing Officer (AO) under s. 143(3) r.w.s. 153A of the Income Tax Act, 1961 (the Act) concerning AY 2006-07.
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2. The grounds of appeal raised by the assessee were revised and new concised grounds were filed which read as under:
"Appellant being dissatisfied with the order passed by learned Commissioner of Income Tax, (Appeals )-I, Ahmedabad dated 12.04.2013 as well as order of Assessing Officer dated 26.12.2011, presents this appeal against the sai d orders on the following amongst the other grounds (1) That in the facts and circumstances of the case, the learned CIT(A) has grossly erred in conf irming the order passed by learned AO in taxing Rs.6,95,087/- and Rs.6,32,228/- respectively on substantive and protective basis.
(2) That in the facts and circumstances of the case, the learned CIT(A) has gr ossly erred in holding that the proceedings initiated u/s. 153(C) of I.T. Act are legal and valid and applicable.
(3) That in the facts and circumstances of the case, the learned CIT(A) has gr ossly erred in not appreciating that the learned AO - who searched the premises, has not recorded any satisfaction that the document being Banachitthi belonged to the appellant and the said papers were handed over to the AO of the third party."
3. When the matter was called for hearing, the learned AR for the assessee referred to the assessment order and submitted that certain documents were seized from the residence of buyer of the property Shri Prakash G. Patel. The documents seized comprised of a signed Banachitthi (memorandum agreement) for purchase of land situated at Suvey No.164 of Village Bavla, Taluka Bavla by B. Nanji Group from the assessee (Rajnibhai Dashrathbhai Patel) and others. Placing reliance upon the memorandum agreement, the AO of the assessee initiated proceedings under s.153C of the Act in the hands of the assessee and computed difference of Rs.28,10,707/- presumed to have been paid in cash to the assessee and other joint sellers of land to B. Nanji Group. It was pointed out by the assessee that the land sold by the assessee was inherited by 27 persons including the assessee as one of the beneficiaries in the family tree. The land was sold to B. Nanji Group alongwith other joint co-owners. It was pointed out that a sale deed was executed subsequently on 25.05.2005 for sale of land jointly held by 27 persons, I T ( S S ) A N o . 2 7 8 / Ah d / 1 3 [ R a j n i b h a i D .
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but however, the sale consideration was received by only 10 persons as tabulated at page no.4 of the assessment order. It was pointed out that mother of the assessee Pushpaben Dashrathbhai Patel received Rs. 6,32,225/- as her share of receipt on sale. The name of the assessee does not figure in the list of the recipients of the sale proceeds. It was thereafter submitted that the AO has wrongly inferred the existence of cash component and also wrongly alleged receipt of Rs.6,95,087/- (cash component Rs.28,10,707/- apportioned in proportionate to the ratio of the cheque receipt in the hands of mother) to be unaccounted cash component received by the assessee.
3.1 The learned AR for the assessee further pointed out that unaccounted cheque component of Rs.6,32,228/- was also assessed in the hands of the assessee on protective basis. It was reiterated that the aforesaid cheque amount has been received by mother of the assessee and not the assessee himself. It was further pointed out that the mother of the assessee has not been assessed at all either on substantive basis or on protective basis. The learned AR thus submitted that the entire action of the AO in assessing the cheque amount received by mother to be the income of the assessee as well as cheque component presumably received by the assessee is based on surmises and conjunctures without any evidence that such income has actually accrued to the assessee. The learned AR insisted that the cheque has been received by the mother who is also a part of 27 persons consortium and the assessee has not received any money whatsoever.
3.2 At this stage, the learned AR raised two legal points; (i) in the absence of any substantive assessment in the hands of some other assessee, the assessment on protective basis cannot be carried out in the hands of the assessee. For this proportion, the learned AR referred to the decision of the co-ordinate bench in Suresh K. Jajoo vs. ACIT (2010) 39 SOT 514 (Mum.) & (ii) in the absence of any additions in the hands of I T ( S S ) A N o . 2 7 8 / Ah d / 1 3 [ R a j n i b h a i D .
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component, the sellers cannot be punished unilaterally for unaccounted sales. This apart, the learned AR raised arguments on merits to contend that even on merits such additions are not sustainable. The learned AR further submitted in the alternative that the share of the applicant is only 1/5 t h in the family of Pushpaben Dashrathbhai Patel and therefore capital gain purportedly accrued in the hands of the assessee cannot exceed 1/5 t h share of Rs.6,95,087/-.
3.3 The learned AR further submitted that the assessee does not seek to press the invalidity of jurisdiction as per Grounds Nos. 2 & 3 of its concised ground.
4. The learned DR relied upon the order of the lower authorities and submitted in furtherance that tell-tale evidence in the form of handwritten Banachitthi (MOU) found from the premises of the purchasers of the land whereby the involvement of cash to the extent of Rs.28,10,707/- was unearthed. The learned DR accordingly pointed out that the AO has rightly assessed the proportionate receipt of cash in the hands of the assessee.
5. We have considered the rival submissions. The assessment of unaccounted cash and unaccounted cheque component on sale of land by the assessee alongwith other joint owners on the basis of documents found in the course of search in the case of purchaser (3 r d party) is in controversy. As a consequence of search in the case of purchasers, proceedings under s.153C of the Act were initiated on the assessee. In the case of assessee, it was noticed by the AO from a memorandum agreement that the total consideration of the land received as per final sale deed amounting to Rs.25,56,500/- was not correct and the transaction of sale also involved cash component aggregating to Rs.28,10,707/- as well. The AO found that the consideration of Rs.6,32,225/- out of Rs.25,56,500/- was received by mother of the I T ( S S ) A N o . 2 7 8 / Ah d / 1 3 [ R a j n i b h a i D .
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assessee in cheque. The AO has attempted to tax the aforesaid receipt of Rs.6,32,228/- routed through banking channel in the hands of the assessee on protective basis. The mother of the assessee was assumed to be assessee on substantive basis for the purposes of the assessment of the receipt through banking channel. Likewise, the AO has allocated Rs.6,95,087/- as unaccounted cash component in same proposition to the cheque component to be unaccounted income of the assessee.
6. We straightway notice the first legal objection of the assessee that where no income has been assessed on substantive basis in the hands of any person in so far as the cheque component of Rs.6,32,228/- is concerned, the assessee cannot be made liable to be assessed on protective basis. We find substantial merit in the aforesaid legal objection. The protective assessment evolved by judicial precedent rendered in the case of Lalji Haridas vs. ITO (1994) 43 ITR 387 (SC) has clearly laid down that the protective assessment has to be done only after the substantive assessment. Thus, the protective assessment has to necessarily follow the substantive assessment. In the absence of substantive assessment as is the case in hand, the protective assessment cannot survive. Therefore, the whole basis of assessment of receipt of income in the hands of the assessee is a damp squib in the absence of substantive assessment in the hands of the recepient mother.
7. We also find merit in the second plea raised on behalf of the assessee that in the absence of any addition shown to be sustained in the hands of the corresponding purchasers, the sellers cannot be taxed unilaterally for the alleged cash transaction. This is more so because the purchasers were searched and the alleged document of incriminating nature were found from the premises of the purchasers. Thus, where no cash consideration was recognized to have been paid by the purchaser, the sellers cannot be imputed for alleged mis-deeds of unaccounted transactions. We also find that the action of the AO in holding the cash I T ( S S ) A N o . 2 7 8 / Ah d / 1 3 [ R a j n i b h a i D .
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component to be unaccounted receipt of the assessee (instead of mother) as totally arbitrary and clearly suffers from the vice of discrimination. Where the cheque receipt has been presumed to be the income of the mother of substantive basis, we are unable to see any justification for presumption of the cash component to be the income of the assessee (son) on substantive basis. The whole action of the revenue authorities appears farfetched and untenable. The AO is accordingly directed to delete the additions on this score. We thus find merit in Ground No.1 of the assessee's appeal.
8. Ground No.1 of the assessee's appeal is allowed.
9. Ground Nos. 2 & 3 of the grounds of appeal (concised) are dismissed as not pressed.
10. In the result, the appeal of the assessee is partly allowed.
This Order pronounced in Open Court on 11/09/2019
Sd/- Sd/-
(RAJPAL YADAV) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 11/09/2019
True Copy
S. K. SINHA
आदे श क त!ल"प अ#े"षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं-धत आयकर आयु/त / Concerned CIT
4. आयकर आय/
ु त- अपील / CIT (A)
5. 3वभागीय 6त6न-ध, आयकर अपील"य अ-धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड< फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील"य अ-धकरण, अहमदाबाद ।