Income Tax Appellate Tribunal - Rajkot
The Asstt. Commr. Of Income Tax, ... vs Shri Vinod Gangaram Patel,, Bhuj on 17 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT
BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER
AND
SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER
आयकर (खोज-और-ज ती) अपील सं./IT(SS)A No.67/RJT/2017
(Assessment Year: 2013-14)
(Physical Hearing)
Assistant Commissioner of Shri Vinod Gang aram Patel,
Incom e-tax, Cen tral Circle -2, Plot No.56-57, Pramukh Swami
nd
Rajkot "Amruta Estate", 2 Vs. Nagar, Odhav An nexe, Bhuj
Floor, M.G. Road, Rajkot-360
001
थायीले खासं . /जीआइआरसं . /PAN/GIR No.: APHPP9494H
(अपीलाथ / Appellant) ( यथ /Respondent)
त आप /Cross Objection No.13/RJT/2017
(Arising out of IT(SS)A No. 67/RJT/2 017)
(Assessment Yea rs: 2013-1 4)
Vinod Gangaram Patel, Vs. Assistant Com missioner of
Plot No.56-57, Pramukh Swami Incom e-tax, Cen tral Circle -2,
Nagar, Odhav An nexe, Bhuj Rajkot "Amruta Estate", 2 n d
Floor, M.G. Ro ad, Rajkot-360
001
थायीले खासं . /जीआइआरसं . /PAN/GIR No.: APHPP9494H
(अपीलाथ / Appellant)) ( यथ /Respondent)
आयकर अपील सं./IT(SS)A No.82/RJT/2017
(Assessment Year: 2012-13)
Vinod Gangaram Patel, Vs. Assistant Commissioner of
Plot No.56-57, Pramukh Swami Incom e-tax, Cen tral Circle -2,
Nagar, Odhav An nexe, Bhuj Rajkot "Amruta Estate", 2 n d
Floor, M.G. Road, Rajkot-360
001
थायीले खासं . /जीआइआरसं . /PAN/GIR No.: APHPP9494H
(अपीलाथ / Appellant)) ( यथ /Respondent)
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 2
Vinod Gangaram Patel
नधा रती क ओर से/Assessee by : Shri Shramdeep Sinha, CIT-DR
राज व क ओर से/Respondent by : Shri Chetan Agarwal & Brijesh Parekh, AR
सन
ु वाई क तार ख/ Date of Hearing : 29/07/2024
घोषणा क तार ख/Date of Pronouncement : 17/09/2024
आदे श / ORDER
PER DR. A. L. SAINI, AM:
This is the bunch of three appeals filed by Revenue and Assessee. For assessment years 2013-14, the Revenue has filed the appeal in IT(SS)A No.67/Rjt/2017 and assessee has filed the Cross Objection No.13/Rjt/2017. The assessee has also filed an appeal in IT(SS)A No.82/Rjt/2017. All these appeals and cross objections, filed by the Revenue and Assessee are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), which in turn arise out of separate assessment orders passed by the Assessing Officer (in short 'AO') u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act').
2. First, we shall take Revenue's appeal in IT(SS)A No.67/Rjt/2017, for assessment year 2013-14 and Assessee's cross objections, in CO No.13/Rjt/2017, for assessment year 2013-14.
3. The cross objection filed by the assessee, for Assessment Year 2013-14, is barred by limitation by 28 days. The assessee has moved a petition requesting the Bench to condone the delay. Based on the contents of the petition for condonation of delay, the Ld. Counsel for the assessee argued that assessee has explained the sufficient cause/reason in the petition for condonation of delay and therefore, in the interest of justice, the delay may be condoned.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 3 Vinod Gangaram Patel
4. On the other hand, Learned Commissioner of Income-tax - Departmental Representative (Ld. CIT-DR) opposed the prayer of the assessee to condone the delay and stated that delay should not be condoned on such flimsy reasons.
5. We have heard both the parties on this preliminary issue. We are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others, reported in 167 ITR 471, (1988 SC 897) (7) has observed as follows:
"4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay."
6. When we weigh this aspect then the side of justice becomes heavier and casts a duty on us to deliver justice. We note that the reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this cross objection. We, therefore, condone the delay and admit the cross objection for hearing.
7. The grounds of appeal raised by the Revenue in IT(SS)A No. 67/Rjt/2017, are as follows:
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,46,87,000/- without appreciating the fact that the said amount was added by the A.O on the basis of I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 4 Vinod Gangaram Patel seized documents which represents the unaccounted income/profit/investment of the assessee in the property
2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in law and/or on facts in holding that the sale deed was not executed and allowed the appeal of the assessee on the basis of title search report furnished by the assessee which was not forwarded to the A O for reporting
3. On the facts and in the circumstances of the case and in law the Ld CIT(A) has erred in law and/or on facts in holding that since the deal was cancelled no addition is required ignoring the fact that even if it is admitted that the sale deed was not executed, the assessee had paid the amount of Rs 2,46,87,000/- in cash which remain unexplained.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition Rs.1,89,000/-on account of unexplained cash deposit.
5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.4,00,000/- on account of unexplained investment in construction of house.
6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.
7. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent."
8. The grounds of appeal raised by the assessee, in Co No.13/Rjt/2017, are as follows:
"1. LD. CIT(A) has erred in law as well as on facts in confirming addition of Rs.47,574/- being made by assessing officer on account undisclosed interest expense.
2. Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs.2,00,000/- on estimated basis from addition of Rs.3,89,000/- being made by assessing officer on account cash deposited in bank account treated as unexplained.
Respondent craves leave to add, amend, alter or withdraw any ground of cross- objection."
9. The assessee has also raised additional ground in cross objection, which is reproduced below:
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 5 Vinod Gangaram Patel
"Ld. assessing officer erred in law as well as on fact in making addition of Rs.2,46,87,000/- and Rs.4,47,574/- in assessment framed u/s 153A, which is based on material seized from third party, for which assessment ought to have been made u/s 153C of the Act."
10. The Ld. Counsel for the assessee informs the Bench that assessee does not wish to press ground nos.1 of cross objection, therefore, we dismiss ground no.1 of cross objection, as not pressed.
11. The grounds of appeal raised by the assessee in IT(SS)A No. 82/Rjt/2017, are as follows:
"1. Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs.10,00,000/- on estimated basis from addition of Rs.23,74,424/- being made by assessing officer on account cash deposited in bank account treated as unexplained."
12. First, we shall take Revenue`s appeal, in IT(SS)A No.67/Rjt/2017 for AY.2013-14. Ground no.1 to 3 raised by the Revenue relates to addition of Rs.2,46,87,000/-.
13. The relevant material facts, as culled out from the material on record, are as follows. A search and seizure action u/s 132 of the Act, was carried out at the premises of the assessee on 30.07.2013. Then after, the proceedings u/s 153A of the Act was initiated by issuing of notice dated 27.05.2014, which was duly served upon the assessee. The assessee was required to file return of income within 30 days of the receipt of the notice. The assessee filed a letter dated 26.06.2014, stating that he has filed return u/s 139(1) on 02.01.2014, showing income of Rs.6,28,570. Though the assessee has not indicated that this may be treated as return filed u/s 153A, however, the same was treated by the assessing officer, as if, return was filed, in response to notice under section 153A of the Act. A notice u/s 143(2) of the Act was issued on 28.8.2014 I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 6 Vinod Gangaram Patel which was served upon the assessee. Further detailed questionnaires were issued on 27.07.2015, along with notices issued u/s 142(1) of the Act. The assessee is having income from land trading activities and agricultural income. The search revealed that the assessee was director in the company Tirthbhoomi Infrastructure Private Limited, which is a private limited company having, its registered office at 103, Shah Commercial Center, opposite SBI, Station Road, Bhuj. The company was incorporated in 21-12- 2011. Following is the list of directors at the time of incorporation:
The Assessing Officer noted that the company has undertaken one residential project called "City Arise "at revenue Survey No-43, Kukma, Bhuj. The project is located inside the campus of Citi Square Township. Various incriminating papers related with this project are found from various premises covered under search. The land on R. S. No-43, on which the project City Arise is constructed have total area of 17,325 Square Yard. As per the map of the project, total project is divided into 4 parts. The project consists of one BHK flats and two BHK flats. Total construction areas as par the approved plan of the project is 15953.22 Sq. Meters. The construction permission for this project was granted on 14-03-2012. The land was sold to the company Tirthbhoomi Infrastructure Private Limited. The details of the same are found on page-61 of Annexure-A/8 from residence of Karsan Velji Patel, Madhapar I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 7 Vinod Gangaram Patel Bhuj in connection with Sri Rajendra V. Shah. The total land area is 17325 Sq. Yards and cheques value of Rs.47,25,000/- is mentioned. However, the actual value of the land is far higher than this amount. The details of land available on various pages are summarized, as follows, for sake of convenience:
14. The assessing officer noted that total area of the land is 17325/- Sq. Yard. The rate of land has been mentioned as 3150/Sq. Yard. Hence, total cost of land is mentioned at 5,45,75,735/- (Five Crores forty-five lakhs seventy- five thousand seven hundred and thirty-five). Below this value, percentage of partnership of this project is mentioned, which is as below:
Towards the bottom side of the page, value of Rs.4,98,50,735/-, and Rs.47,25,000/- is mentioned. Also 42.25 with the word "White" is mentioned on the page. It means that total value of Rs.47,25,000/- is paid through cheques for the purchase of the land and rest of Rs. 4,98,50,735/- was unaccounted payment in cash for the land and which will not be part of regular books of account. For this reason, figure-2 is encircled with this amount. It means that payment of Rs.4,98,50,735/-, was to be paid in 2 I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 8 Vinod Gangaram Patel number (unaccounted) and 47,25,000/- is encircled with figure-1, which means payments through 1 number (accounted). The detailed break-up of the value of land, the share of holding of various individuals, the division of value to be paid in cash and cheques, the total expenditure on the project etc. has been found in the seized material. The details are very explicitly mentioned on this page. The detail is also appearing on page-86 of Annexure-A/8 from residence of Karsan Velji Patel, Madhapar Bhuj, in connection with Sri Rajendra V Shah. The extract of the same is reproduced by assessing officer in the assessment order. The following details are available:
(i) Details of share of each parties involved in the project Citi Arise.
(ii) Details of value of land for this project and shares to be paid in cash and cheques.
(iii) Details of expenses made on this project. The cash amount is nil for development expenses.
(iv) The last column is related to sum of land expenses and development expenses and its further break-up in cash and cheques.
15. Hence, assessing officer ('AO') noted that total value of the land is fixed at Rs.5,45,75,735/-, out of which, the amount of Rs.4,98,50,735/-, was cash portion and Rs.47,25,000/-, was through banking channel. These figures state an important fact, that is, only 10% value of the land is shown in regular books of account and rest 90% is outside the books of account. It is very clear from the analysis that 90% of land transactions are outside the books of account and thus huge taxes evasion are done on such transactions. Further, it is seen that 45% share of the project was sold to persons namely Sri Nilesh Chande, Jayesh C. Morabia and Vinod Patel and Vijay S. Ramjiyani I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 9 Vinod Gangaram Patel (Patel Group). The other partners have paid their contribution in land as per their ratio of holding in the above project. The detail of contribution paid by them with respect to the land is also found in the seized Annexure. Page 37 of Annexure A/10 mentions the details of contribution paid by Sri Vijay S Ramjiyani. It is seen from the extract that details of VIJ account is mentioned. The VIJ refers to Sri Vijay S. Ramjiyani. Since the Patel group has share of 25% in the project and there are two people in this group, hence in the above table contribution of 12.5% is mentioned against, Sri Vijay S. Ramjiyani. He has paid Rs.68,22,000/- for value of plot in cash and Rs.4,09,375/- through bank. Hence, total amount paid by him is Rs.72,31,375/-. To confront the above fact, Sri Vijay S. Ramjiyani was summoned and his statement was recorded dated 06.02.2014, in which he has accepted the fact that value of the land was determined at the rate of Rs.3,150 Sq. Yard. Further, it is seen that Patel group had share of 25% in the project. Out of total of 25% of the Patel group, the other 12.5% was with the assessee. The details of this were found on the page 64 of Annexure-A/10 seized from the premise of Sri Karsan Velji Patel, Madhapar in connection with Sri Rajendra V. Shah. The extract of page 64 is produced below:
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 10 Vinod Gangaram Patel
16. Hence, the assessing officer ('AO') observed that it is clear that total amount of Rs.2,46,87,000/- (two crores forty-six lakhs and eighty-seven thousand) was received by the assessee from Sri Rajendra V. Shah and his associates. Therefore, the assessee was asked to explain the above and also asked to show cause as to why the same should not be treated as his unexplained transactions, in the absence of any details.
17. In response, the assessee filed his reply on 02.02.2016, before the assessing officer, stating therein as under:
"The company Tirthbhoomi Infrastructure P. Ltd is a private limited company having its registered office at 103, Shah Commercial Centre, Opp SBI, Station Road, Bhuj. The company was incorporated on 21.12.2011. I have resigned from this company as on 8th Spt. 2012. 100000 shares held by me were transferred to Mr Parth Anil Shah as on 20.10.2012."
18. However, the assessing officer ('AO') rejected the contention of the assessee and observed that the assessee is director in the company Tirathbhoomi Infrastructure P. Ltd with 12.5% share (25% between him and Vijay S. Ramjiyani). Evidences of unexplained investment (indirectly leading to unaccounted capital contribution) were found. When the assessee was exiting the value of the land was determined first at Rs 3150 sq yard which was subsequently revised to Rs. 3500 sq yard. Thus, assessing officer noticed that there is unexplained investment as well as unaccounted profit. Both of these together constitute the sum of Rs. 81.71 lacs. The cash represents, on money receipt or payment, for which the onus is upon the assessee to explain I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 11 Vinod Gangaram Patel the same, which he has not explained. Then there is clear mention of profit earned from Dombivalli of Rs. 4.00 lac. All these represents the unaccounted transactions of the assessee. Since the assessee has failed to explain the same, therefore, assessing officer has treated the same as unexplained income / profit / investment of the assessee. Hence, the sum of Rs 2,46,87,000/- was added to the total income.
19. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the addition made by the assessing officer. The ld CIT(A) observed that the project could not materialize and the assessee withdrew himself on 08.09.2012, from the company and transferred his shareholding on 20.10.2012, to Shri Parth Anil Shah. This fact was confirmed by Shri Vijay S Ramjiyani in his statement recorded during post search enquiries. He furnished certificate cum Search Report dated 19.09.2016 of Company Secretary. The report was accompanied by Annexure-A having details of shareholders, copy of resignation letter, dated 08.09.2012 filed by the assessee to the Board of Directors of the Company and copy of Form-32. In Form-32, it was mentioned that Shri Vinod Gangaram Patel was not associated with the Theerthabhoomi Infrastructure Pvt Ltd with effect from 08.09.2012. The Hon'ble Settlement Commission also gave categorical finding, in the case of Shri Rajendra V Shah, Shri Manish Chandra S Shah and Shri Laxmidas N Thakar, in the order u/s 245D (4) of the Act that the Patel Group was to come as shareholder in Theerthabhoomi Infrastructure Pvt Ltd and the price of Rs.3150 per sq. yard was used to calculate the mutual contribution. These parties confirmed that no such transaction took place till date of passing the order by the Settlement Commission and the said land was purchased by Theerthabhoomi I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 12 Vinod Gangaram Patel Infrastructure Pvt Ltd. The ld CIT(A) noticed that the findings of the Hon'ble Settlement Commission on page 60 to 62 clearly state that this transaction did not materialize. Therefore, after having regard to the facts and circumstances of the case and material evidence on record, the addition of Rs.2,46,87,000/- was deleted by ld CIT(A).
20. Aggrieved by the order of the Ld. CIT(A), the Revenue and assessee both are in appeal before us.
21. Learned DR for the revenue, vehemently argued that the Patel Group consisting of Shri Vinod Patel and Shri Vijay S. Ramjiyani were having 25% share in the project of Theerthabhoomi Infrastructure Pvt Ltd and they paid to Rs.68.22 laks in cash and Rs.4,09,375/- through bank for purchase of the plot. Apart from this, Shri Ramjiyani in his statement recorded u/s 131(1A) confirmed that the rate of land in Theerthabhoomi Infrastructure Pvt Ltd was decided @ 3150 sq. yard. The assessee was having 12.5% share in the project. These findings were based on the notings on page No. 64 of Annexure-A/10 seized, from the premises of Shri Karsan V Patel, in connection with Rajendra V Shah. On the basis of the notings, in page 64 of Annexure A-10, seized from the premises of Shri Karshan V Patel, the assessing officer concluded that the assessee was having share in land of Theerthabhoomi Infrastructure Pvt Ltd.Therefore, the assessee received Rs.2,46,87,000/- from Rajendra V Shah and his associates, hence, assessing officer, has rightly made the addition, in the hands of the assessee, therefore, the finding of assessing officer may be upheld.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 13 Vinod Gangaram Patel
22. On the other hand, Shri Chetan Agarwal, Learned Counsel for the assessee, argued that the land was to be sold to Rajendra V Shah against 12.5% share of investment in Tirthbhoomii Infrastructure Pvt Ltd and the value of his share in the land was worked out at Rs.90 lakh. However, the deal could not materialize and the assessee had to resign from Tirthbhoomi Infrastructure Pvt Ltd on 08.09.2012. This fact was confirmed by Shri Vijay S. Ramjiyani, the partner of the assessee, in his statement, in answer to question no.11, recorded u/s 131(1A) on 06.02.2014, during the post search inquiries. Copy of his statement was placed on page no.9 to 11 of the paper book. Thus, the said land of Khakar was still in the joint ownership and possession of the assessee and Shri Vijay S Ramjiyani. Title Search Report from an advocate was furnished in support of his submission on page no. 12 & 13 of the paper book. Therefore, Learned Counsel contended that assessing officer has failed to rebut the evidence placed by the assessee in the assessment proceedings. The assessing officer, did not place any material on record to disprove the claim of the assessee. Therefore, after having regard to the facts and circumstances of the case, it is difficult to agree with the findings of the assessing officer as they are evidently contrary to the fact, which established beyond any doubt, that the Khakar land was still under the ownership of the assessee and his partner. Similarly, the Title Search Report dated 27.10.2016 of an advocate was placed on record wherein the particulars of the land held from 2002 to 2016 were recorded and it is in joint ownership in the name of the assessee and Shri Patel Karshan Dhanji Madha. In the given facts and circumstances of the case the finding of the assessing officer was not correct. This way, the ld Counsel for the assessee, reiterated the submissions I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 14 Vinod Gangaram Patel made during the appellate proceedings and stated that ld. CIT(A) has passed a reasoned and speaking order, therefore, the same should be upheld.
23. We have heard, both sides in detail and also perused the records of the case including the paper book filed by the assesses- company. The necessary facts of the case have already been discussed in paragraphs above. On examination of the facts and circumstances of the case, the finding of the assessing officer was that the Patel Group consisting of Shri Vinod Patel and Shri Vijay S Ramjiyani were having 25% share in the project of Theerthabhoomi Infrastructure Pvt Ltd and they paid to Rs.68.22 laks, in cash and Rs.4,09,375/- through bank for purchase of the plot. It was also mentioned that Shri Ramjiyani in his statement recorded u/s131(1A) confirmed that the rate of land in Theerthabhoomi Infrastructure P Ltd was decided @ 3150sq. yard. The assessee was having 12.5% share in the project. The findings of the assessing officer were based on the notings on page No. 64 of Annexure-A/10 seized from the premises of Shri Karsan V Patel in connection with Rajendra V Shah. On the basis of the notings in page 64 of Annexure A-10, seized from the premises of Shri Karshan V Patel, the assessing officer concluded that the assessee was having share in land of Theerthabhoomi Infrastructure Pvt Ltd. Therefore, the assessee received Rs.2,46,87,000/- from Rajendra V Shah and his associates. It was also held that the transaction related to plot of survey No.321 involving the amount of Rs.46,16,000/- and Rs.81,71,000/- was held to be, as share of the assessee, in the company's land, cash of Rs.25 lakhs and profit from Dombivali of Rs.4 lakhs as unexpected investment. Thus, the total unexplained investment was determined at Rs.2,46,87,000/- including Rs.90 lakhs from Khakar land.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 15 Vinod Gangaram Patel
24. During the appellate proceedings, the assessee argued before ld CIT (A) that land was to be sold to Rajendra V Shah against 12.5% share of investment in Tirthbhoomii Infrastructure Pvt Ltd and the value of his share in the land was worked out at Rs.90 lakh. However, the deal could not materialize and the assessee had to resign from Tirthbhoomi Infrastructure Pvt Ltd on 08.09.2012. This fact was confirmed by Shri Vijay S. Ramjiyani, the partner of the assessee, in his statement, in answer to question no.11, recorded u/s 131(1A) on 06.02.2014, during the post search inquiries. Copy of his statement was placed on page no.9 to 11 of the paper book. Thus, the said land of Khakar was still in the joint ownership and possession of the assessee and Shri Vijay S Ramjiyani. Title Search Report from an advocate was furnished in support of his submission on page no. 12 & 13 of the paper book. In view of the given facts and circumstances of the case, it was evident that the assessing officer failed to rebut the evidence placed by the assessee in the assessment proceedings. The assessing officer did not place any material on record to disprove the claim of the assessee. Therefore, after having regard to the facts and circumstances of the case, it is difficult to agree with the findings of the assessing officer, as they are evidently contrary to the fact, which established beyond any doubt, that the Khakar land was still under the ownership of the assessee and his partner. Similarly, the Title Search Report dated 27.10.2016 of an advocate was placed on record wherein the particulars of the land held from 2002 to 2016 were recorded and it is in joint ownership in the name of the assessee and Shri Patel Karshan Dhanji Madha. In the given facts and circumstances of the case the finding of the assessing officer was not correct. It was gathered from the facts related to addition of Rs.46.16 lakhs for the plot bearing survey no.321 that its rate was projected at Rs.13000/- per sq. yard. It I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 16 Vinod Gangaram Patel was a residential plot in Madhapar, Bhuj owned by Shri Dipesh P Khandor, Shri Kamlesh P Khandor, Smt Jyotiben A Shah and Shri Parth Anil Shah. All these co-owners of the land engaged the assessee as broker to sell their land. However, the assessee could not find any purchaser of this land and ultimately no deal could materialize. In support of his submission, the assessee filed copy of Title Search Report of advocate dated 28.10.2016, on page 14 to 15 of the paper book. Therefore, the rate of the plot mentioned at Rs.13,000/- appears to be just projection only.
25. Based on the above facts, the learned CIT(A) observed that Title Search Certificate revealed that the land of plot No. 15 was still in the joint ownership and possession of Shri Dipesh P Khandor, Shri Kamlesh P Khandor, Smt Jyotiben A Shah and Shri Parth Anil Shah since 2006 to 2016. In view of the given facts and circumstances of the case, it was evident that the assessing officer failed to rebut the evidence placed by the assessee in the assessment proceedings. The assessing officer, did not place any material on record to disprove the claim of the assessee. Therefore, after having regard to the facts and circumstances of the case, it is difficult to agree with the findings of the assessing officer, as they are contrary to the self-evident facts. Therefore, Ld CIT(A) held that the finding of the assessing officer was not correct.
26. The ld CIT(A) also noticed regarding share of the assessee in Tirthbhoomi Infrastructure Pvt Ltd, the finding of the assessing officer was that the assessee made investment in lieu of 12.5% shares. After perusal of the submission of the assessee and supporting material, it was noticed by ld CIT(A) that the project could not materialize and the assessee withdrew I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 17 Vinod Gangaram Patel himself on 08.09.2012 from the company and transferred his shareholding on 20.10.2012, to Shri Parth Anil Shah. This fact was confirmed by Shri Vijay S Ramjiyani, in his statement recorded during post search enquiries. He furnished certificate cum Search Report dated 19.09.2016 of Company Secretary. The report was accompanied by Annexure-A having details of shareholders, copy of resignation letter dated 08.09.2012, filed by the assessee to the Board of Directors of the Company and copy of Form-32. In Form-32, it was mentioned that Shri Vinod Gangaram Patel was not associated with the Theerthabhoomi Infrastructure Pvt Ltd with effect from 08.09.2012. The Hon'ble Settlement Commission also gave categorical finding, in the case of Shri Rajendra V Shah, Shri Manish Chandra S Shah and Shri Laxmidas N Thakar, in the order u/s 245D (4) of the Act that the Patel Group was to come as shareholder in Theerthabhoomi Infrastructure Pvt Ltd and the price of Rs.3150 per sq. yard was used to calculate the mutual contribution. These parties confirmed that no such transaction took place till date of passing the order by the Settlement Commission and the said land was purchased by Theerthabhoomi Infrastructure Pvt Ltd. The ld CIT(A) relied on the findings of the Hon'ble Settlement Commission, (on page 60 to 62 in their order) which are reproduced as below:
"This transaction did not materialize. Subsequently, this property is under a proposal of transfer to a company named Theerthabhoomi Infrastructure P Ltd. as seen from page nos. 68, 69 and 70. As per the Rule 9 Report, this property is sold at a rate of Rs.3150 per sq. yard. For a total consideration of Rs.5,45,75,735/-, out of which the applicant share is 45% and hence a profit of Rs. 2,45,59,080/- accrued and the same should be offered for tax. The applicant argued from these pages only that these are merely projections wherein two other groups viz. Jayeshbhdi and Patel Group were to come as shareholder of Theerthabhoomi Infrastructure P Ltd. and the price of Rs.3150 per sq. yard was used to calculate the mutual contributions. They have confirmed that no such transaction took place and till today the ownership of the property remains with the Shah and Chande family only. In support of their contention, they have filed copies of Balance Sheet of I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 18 Vinod Gangaram Patel Theerthabhoomi Infrastructure P Ltd which confirms that Jayeshbhai and Patel Group have not joined as shareholders and the said land is purchased by this company at a total cost of Rs.51 lacs. The individuals in whose names this land was originally purchased have disclosed these transactions in their Income Tax records. On this basis, it is seen that this land is not sold and the claim in the Rule 9 Report that profit on its sale should be taxed is not correct."
27. Therefore, based on these facts and circumstances, the ld CIT (A) deleted the addition of Rs.2,46,87,000/-. On a careful reading of the order of Ld.CIT(A) and the findings thereon, we do not find any valid reason to interfere with the decision and findings of the Ld.CIT(A). Hence, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue.
28. In the result, ground Nos.1 to 3 raised by the Revenue, are dismissed.
29. Now, we shall adjudicate ground No.4 of Revenue`s appeal and ground Nos. 2 of assessee`s, cross objection, which are common and identical, which are reproduced below"
Ground No.4 of Revenue:
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition Rs.1,89,000/-,on account of unexplained cash deposit.
Ground No.2 of assessee`s cross objections:
2. Ld. CIT(A) has erred in law as well as on facts, in confirming addition of Rs.2,00,000/-, on estimated basis from addition of Rs.3,89,000/-, being made by assessing officer on account cash deposited in bank account treated as unexplained.
30. Succinct facts qua the issue are that during the assessment proceedings, the assessing officer noticed that the bank statement of the assessee, revealed cash deposits, which are mentioned below:
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 19 Vinod Gangaram Patel The assessee was asked to explain the source of the same. In response, the assessee submitted its reply before the assessing officer stating that the same were from the cash generated from its business of construction and agricultural activities. However, the assessing officer, rejected the contention of the assessee and held that these cash deposits were nothing but the unaccounted income of the assessee, hence the same was therefore added to the assessee's total income at Rs.3,89,000/-.
31. On appeal, ld CIT (A) deleted the addition partly. The ld CIT(A) had examined account of Bank of Baroda, in the books of the assessee, and it was noticed by ld CIT(A) that assessee deposited brokerage income of Rs.90,000/- on 22.05.2012. It was also observed that there were frequent withdrawals and deposits of cash within very short span of time. The assessee also received income from construction activities and income from brokerage which he claimed to have been deposited in cash in his bank accounts. However, assessee did not submit entire evidences in the appeal proceedings, therefore, ld CIT(A) estimated unexplained cash deposits of the assessee to Rs.2,00,000/-, and deleted the balance addition of Rs. 1,89,000/-. Thus, ld CIT(A) partly allowed the appeal of the assessee.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 20 Vinod Gangaram Patel
32. Aggrieved by the order of the ld CIT (A), the Revenue, as well as, assessee (by way of Cross Objection), both are in appeal before us.
33. Learned DR for the Revenue, argued that ld. CIT(A), should have sustained the addition made by the assessing officer and the part addition of Rs.1,89,000/-, deleted by ld. CIT(A) is not justified. On the other hand, the ld. Counsel for the assessee, argued that assessee has submitted all the possible evidences and documents, before the lower authorities, therefore, entire addition of Rs.3,89,000/-, should have been deleted by the ld CIT(A).
34. We have heard both the parties. We note that cash was generated from assessee`s business of construction and agricultural activities. The assessee submitted before ld CIT(A) that the source of deposits were explained by the assessee, during the course of recording his statement u/s 132(4) of the Act, stating that it was earned from agricultural activities and construction business. The assessee furnished copy of cash book and bank book ( vide page Nos.29 to 32 of the paper book). In fact, the ld. CIT(A) accepted the cash deposit in the bank of Baroda, which was out of brokerage income of Rs.90,000/- and therefore deleted the addition partly. We note that assessing officer did not find any mistake in the cash book, bank statement and statement u/s 132(4) of the Act. We note that assessing officer has not refuted or discredited these evidences and documents. The assessing officer does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidences in support of its claim, they cannot be brushed I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 21 Vinod Gangaram Patel aside based on surmises, hence, based on this factual position, we delete the addition sustained by ld CIT(A) of Rs. 2,00,000/-.
35. In the result, ground No. 4 raised by the Revenue is dismissed, whereas ground No.2 raised by the assessee in cross objection No. 13/RJT/2017, is allowed.
36. Ground No.5 raised by the revenue, relates to addition of Rs. 4,00,000/-.
37. Succinct facts qua ground No.5 are that during the assessment proceedings, the assessing officer noticed that in the course of search/survey, details of cash loan accepted, and repayment of loan with interest was found on page-20 & 22 of Annexure-A/9. During the course of assessment proceedings, the assessee was asked to explain the same. The assessee, submitted before the assessing officer that cash amount was accepted from Dr. Magan Patel. The assessee stated that said cash loan had been taken for construction of house. The assessee had repaid Rs.4,00,000/- and interest of Rs.47,574/-. Therefore, the assessing officer made addition to the tune of Rs.4,00,000/-.
38. On appeal, the ld. CIT(A) deleted the addition, therefore, Revenue is in appeal before us. We have heard both the parties. The Ld. 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. On the other hand, ld Counsel for the assessee, defended the order passed by the learned CIT(A). We find that the assessee borrowed loan of Rs.4,00,000/-, in cash and paid interest of Rs.47,574/- on it. The finding of the assessing officer was based on the noting made on page 20 and 22 of I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 22 Vinod Gangaram Patel Annexure-A9. The assessing officer made addition of the loan as well as interest paid on it. The assessee submitted in the statement of facts that it was cash loan from Dr. Maganlal Patel. The loan was used in the construction of the house. The document seized was having clear information to this effect. The assessee admitted that interest was paid on this loan. Admittedly, the loan was received in cash, therefore, in view of the relevant provisions of the Income Tax Act, the amount of loan cannot be added to the income of the assessee. The cash loan taken by the assessee is not an income. However, the revenue has right to initiate penalty proceedings, on the assessee, under section 269SS/269T of the Act, which the revenue has failed to do so. Therefore, we note that ld. CIT( A) has rightly deleted the addition, hence, we dismiss ground No.5 raised by the Revenue.
39. In the result, ground No.5 raised by the Revenue, is dismissed.
40. Ground No.6 and 7, raised by the Revenue are general in nature, hence, do not require adjudication.
41. Now, we shall adjudicate assessee`s appeal in IT(SS)A No.82/Rjt/2017. Grounds of appeal, raised by the assessee is reproduced below for ready reference:
"1. Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs.10,00,000/- on estimated basis from addition of Rs.23,74,424/- being made by assessing officer on account cash deposited in bank account treated as unexplained."
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 23 Vinod Gangaram Patel
42. Succinct facts qua the issue are that during the assessment proceedings, the assessing officer noticed that assessee has deposited cash in various bank accounts, to the tune of Rs.23,74,424/-. The summary of cash deposit into various bank accounts of the assessee, is stated in the assessment order. The assessee was asked to explain the source of the same. In response, the assessee replied to the assessing officer, during the assessment proceedings, stating that the same were cash generated from its business of construction and agricultural activities. However, the assessing officer rejected the contention of the assessee and made addition to the assessee's total income of, Rs.23,74,424/-.
43. Aggrieved by the order of the assessing officer, the assessee, carried the matter, in appeal before Ld. CIT(A), who has partly allowed the appeal of the assessee. The ld CIT(A) noticed that from the bank book that assessee was having cash deposits as well as deposits through cheques and housing loans from Bank of Baroda. It was further observed by ld CIT(A) that there were frequent withdrawals and deposits of cash within very short span of time. The assessee also received income from construction activities and income from brokerage, which the assessee claimed to have been deposited in cash, in his bank accounts. Therefore, after considering the facts and circumstances of the case, the ld CIT(A) was of the view that it would be just and fair to estimate unexplained cash deposits of the assessee to Rs. 10 lakhs. Therefore, out of total addition of Rs.23,74,424/-, the ld CIT(A) restricted the addition to the tune of Rs.10,00,000/- and balance addition of Rs.13,74,424/- (Rs.23,74,424- Rs.10,00,000), was deleted by ld CIT (A), therefore the ld CIT(A), partly allowed the appeal of the assessee. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 24 Vinod Gangaram Patel
44. Ld. Counsel for the assessee, argued that assessee had deposited the cash from agriculture activities and from construction activities and this fact has been explained by the assessee, during the search and seizure proceedings, and therefore, addition sustained by Ld.CTT(A) may be deleted.
45. On the other hand, Learned Commissioner of Income Tax - Departmental Representative (Ld. CIT-DR) for the Revenue reiterated the stand taken by the ld. CIT(A), which we have already noted in our earlier para and is not being repeated for the sake of brevity.
46. 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 note that assessee has submitted the cash book and bank book and other relevant documents to demonstrate that assessee has deposited the cash out of agricultural activities and out of construction activities and this fact has been explained by the assessee, by way of a statement, during the search and seizure proceedings. We note that assessee has explained the source during the course of search proceedings, that cash was deposited out of business and agricultural income. The investment was duly accounted in the books of accounts of the assessee. However, the assessing officer ignored the explanation and made addition. In support of his submission the assessee furnished copy of cash book, ledger account of investment on page No. 5 to 8 of the paper book. He also submitted cash flow statement from 01.04.2011 to 31.3.2012. Based on this factual position, we delete the addition sustained by I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 25 Vinod Gangaram Patel ld. CIT(A) to the tune of Rs.10,00,000/- and allow the ground raised by the assessee.
47. In the result, appeal filed by the assessee (in ITA No.82/RJT/2017), is allowed.
48. Since we have dismissed, the appeal filed by the Revenue in IT (SS)A No. 67/RJT/2017, and we allowed the assessee`s appeal in IT(SS)A No.82/RJT/2017, we also allowed ground No.2 raised by the assessee in cross objection ( Ground No.1 of CO was not pressed by the assessee), therefore, additional ground raised by the assessee in cross objection No. 13/RJT/2017, becomes academic and infructuous, hence does not require adjudication.
49. In the combined result, the appeal of the Revenue in IT(SS)A No.67/Rjt/2017 is dismissed, Cross Objection filed by the assessee, in CO No.13/Rjt/2017, is partly allowed, whereas the appeal of the assessee (in IT(SS)A No.82/Rjt/2017, is allowed.
Order pronounced in the open court on 17/09/2024.
Sd/- Sd/-
(DINESH MOHAN SINHA) (DR. A. L. SAINI)
याियक सद य/ Judicial Member लेखा सद य/ Accountant
Member
राजकोट /Rajkot
िदनांक/ Date: 17/09/2024
DKP Outsourcing Sr.P.S
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 26
Vinod Gangaram Patel
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
अपीलाथ / The Appellant
यथ / The Respondent
आयकर आयु / CIT
आयकर आयु (अपील)/ The CIT(A)
िवभागीय ितिनिध, आयकरअ पीलीय आिधकरण, सूरत/ DR, ITAT, SURAT
गाडफाईल/ Guard File
By order/आदेश से,
// True Copy //
सहायक पंजीकार
आयकर अपीलीय अिधकरण, राजकोट
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर (खोज-और-ज ती) अपील सं./IT(SS)A No.67/RJT/2017 (Assessment Year: 2013-14) (Physical Hearing) Assistant Commissioner of Shri Vinod Gang aram Patel, Incom e-tax, Cen tral Circle -2, Plot No.56-57, Pramukh Swami nd Rajkot "Amruta Estate", 2 Vs. Nagar, Odhav An nexe, Bhuj Floor, M.G. Road, Rajkot-360 001 थायीले खासं . /जीआइआरसं . /PAN/GIR No.: APHPP9494H (अपीलाथ / Appellant) ( यथ /Respondent) त आप /Cross Objection No.13/RJT/2017 (Arising out of IT(SS)A No. 67/RJT/2 017) (Assessment Yea rs: 2013-1 4) Vinod Gangaram Patel, Vs. Assistant Com missioner of Plot No.56-57, Pramukh Swami Incom e-tax, Cen tral Circle -2, Nagar, Odhav An nexe, Bhuj Rajkot "Amruta Estate", 2 n d Floor, M.G. Ro ad, Rajkot-360 001 थायीले खासं . /जीआइआरसं . /PAN/GIR No.: APHPP9494H (अपीलाथ / Appellant)) ( यथ /Respondent) आयकर अपील सं./IT(SS)A No.82/RJT/2017 (Assessment Year: 2012-13) Vinod Gangaram Patel, Vs. Assistant Commissioner of Plot No.56-57, Pramukh Swami Incom e-tax, Cen tral Circle -2, Nagar, Odhav An nexe, Bhuj Rajkot "Amruta Estate", 2 n d Floor, M.G. Road, Rajkot-360 001 थायीले खासं . /जीआइआरसं . /PAN/GIR No.: APHPP9494H (अपीलाथ / Appellant)) ( यथ /Respondent) I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 2 Vinod Gangaram Patel नधा रती क ओर से/Assessee by : Shri Shramdeep Sinha, CIT-DR राज व क ओर से/Respondent by : Shri Chetan Agarwal & Brijesh Parekh, AR सन ु वाई क तार ख/ Date of Hearing : 29/07/2024 घोषणा क तार ख/Date of Pronouncement : 17/09/2024 आदे श / ORDER PER DR. A. L. SAINI, AM:
This is the bunch of three appeals filed by Revenue and Assessee. For assessment years 2013-14, the Revenue has filed the appeal in IT(SS)A No.67/Rjt/2017 and assessee has filed the Cross Objection No.13/Rjt/2017. The assessee has also filed an appeal in IT(SS)A No.82/Rjt/2017. All these appeals and cross objections, filed by the Revenue and Assessee are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), which in turn arise out of separate assessment orders passed by the Assessing Officer (in short 'AO') u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act').
2. First, we shall take Revenue's appeal in IT(SS)A No.67/Rjt/2017, for assessment year 2013-14 and Assessee's cross objections, in CO No.13/Rjt/2017, for assessment year 2013-14.
3. The cross objection filed by the assessee, for Assessment Year 2013-14, is barred by limitation by 28 days. The assessee has moved a petition requesting the Bench to condone the delay. Based on the contents of the petition for condonation of delay, the Ld. Counsel for the assessee argued that assessee has explained the sufficient cause/reason in the petition for condonation of delay and therefore, in the interest of justice, the delay may be condoned.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 3 Vinod Gangaram Patel
4. On the other hand, Learned Commissioner of Income-tax -
Departmental Representative (Ld. CIT-DR) opposed the prayer of the assessee to condone the delay and stated that delay should not be condoned on such flimsy reasons.
5. We have heard both the parties on this preliminary issue. We are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others, reported in 167 ITR 471, (1988 SC 897) (7) has observed as follows:
"4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay."
6. When we weigh this aspect then the side of justice becomes heavier and casts a duty on us to deliver justice. We note that the reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this cross objection. We, therefore, condone the delay and admit the cross objection for hearing.
7. The grounds of appeal raised by the Revenue in IT(SS)A No. 67/Rjt/2017, are as follows:
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,46,87,000/- without appreciating the fact that the said amount was added by the A.O on the basis of I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 4 Vinod Gangaram Patel seized documents which represents the unaccounted income/profit/investment of the assessee in the property
2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in law and/or on facts in holding that the sale deed was not executed and allowed the appeal of the assessee on the basis of title search report furnished by the assessee which was not forwarded to the A O for reporting
3. On the facts and in the circumstances of the case and in law the Ld CIT(A) has erred in law and/or on facts in holding that since the deal was cancelled no addition is required ignoring the fact that even if it is admitted that the sale deed was not executed, the assessee had paid the amount of Rs 2,46,87,000/- in cash which remain unexplained.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition Rs.1,89,000/-on account of unexplained cash deposit.
5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.4,00,000/- on account of unexplained investment in construction of house.
6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.
7. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent."
8. The grounds of appeal raised by the assessee, in Co No.13/Rjt/2017, are as follows:
"1. LD. CIT(A) has erred in law as well as on facts in confirming addition of Rs.47,574/- being made by assessing officer on account undisclosed interest expense.
2. Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs.2,00,000/- on estimated basis from addition of Rs.3,89,000/- being made by assessing officer on account cash deposited in bank account treated as unexplained.
Respondent craves leave to add, amend, alter or withdraw any ground of cross- objection."
9. The assessee has also raised additional ground in cross objection, which is reproduced below:
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 5 Vinod Gangaram Patel
"Ld. assessing officer erred in law as well as on fact in making addition of Rs.2,46,87,000/- and Rs.4,47,574/- in assessment framed u/s 153A, which is based on material seized from third party, for which assessment ought to have been made u/s 153C of the Act."
10. The Ld. Counsel for the assessee informs the Bench that assessee does not wish to press ground nos.1 of cross objection, therefore, we dismiss ground no.1 of cross objection, as not pressed.
11. The grounds of appeal raised by the assessee in IT(SS)A No. 82/Rjt/2017, are as follows:
"1. Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs.10,00,000/- on estimated basis from addition of Rs.23,74,424/- being made by assessing officer on account cash deposited in bank account treated as unexplained."
12. First, we shall take Revenue`s appeal, in IT(SS)A No.67/Rjt/2017 for AY.2013-14. Ground no.1 to 3 raised by the Revenue relates to addition of Rs.2,46,87,000/-.
13. The relevant material facts, as culled out from the material on record, are as follows. A search and seizure action u/s 132 of the Act, was carried out at the premises of the assessee on 30.07.2013. Then after, the proceedings u/s 153A of the Act was initiated by issuing of notice dated 27.05.2014, which was duly served upon the assessee. The assessee was required to file return of income within 30 days of the receipt of the notice. The assessee filed a letter dated 26.06.2014, stating that he has filed return u/s 139(1) on 02.01.2014, showing income of Rs.6,28,570. Though the assessee has not indicated that this may be treated as return filed u/s 153A, however, the same was treated by the assessing officer, as if, return was filed, in response to notice under section 153A of the Act. A notice u/s 143(2) of the Act was issued on 28.8.2014 I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 6 Vinod Gangaram Patel which was served upon the assessee. Further detailed questionnaires were issued on 27.07.2015, along with notices issued u/s 142(1) of the Act. The assessee is having income from land trading activities and agricultural income. The search revealed that the assessee was director in the company Tirthbhoomi Infrastructure Private Limited, which is a private limited company having, its registered office at 103, Shah Commercial Center, opposite SBI, Station Road, Bhuj. The company was incorporated in 21-12- 2011. Following is the list of directors at the time of incorporation:
The Assessing Officer noted that the company has undertaken one residential project called "City Arise "at revenue Survey No-43, Kukma, Bhuj. The project is located inside the campus of Citi Square Township. Various incriminating papers related with this project are found from various premises covered under search. The land on R. S. No-43, on which the project City Arise is constructed have total area of 17,325 Square Yard. As per the map of the project, total project is divided into 4 parts. The project consists of one BHK flats and two BHK flats. Total construction areas as par the approved plan of the project is 15953.22 Sq. Meters. The construction permission for this project was granted on 14-03-2012. The land was sold to the company Tirthbhoomi Infrastructure Private Limited. The details of the same are found on page-61 of Annexure-A/8 from residence of Karsan Velji Patel, Madhapar I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 7 Vinod Gangaram Patel Bhuj in connection with Sri Rajendra V. Shah. The total land area is 17325 Sq. Yards and cheques value of Rs.47,25,000/- is mentioned. However, the actual value of the land is far higher than this amount. The details of land available on various pages are summarized, as follows, for sake of convenience:
14. The assessing officer noted that total area of the land is 17325/- Sq. Yard. The rate of land has been mentioned as 3150/Sq. Yard. Hence, total cost of land is mentioned at 5,45,75,735/- (Five Crores forty-five lakhs seventy- five thousand seven hundred and thirty-five). Below this value, percentage of partnership of this project is mentioned, which is as below:
Towards the bottom side of the page, value of Rs.4,98,50,735/-, and Rs.47,25,000/- is mentioned. Also 42.25 with the word "White" is mentioned on the page. It means that total value of Rs.47,25,000/- is paid through cheques for the purchase of the land and rest of Rs. 4,98,50,735/- was unaccounted payment in cash for the land and which will not be part of regular books of account. For this reason, figure-2 is encircled with this amount. It means that payment of Rs.4,98,50,735/-, was to be paid in 2 I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 8 Vinod Gangaram Patel number (unaccounted) and 47,25,000/- is encircled with figure-1, which means payments through 1 number (accounted). The detailed break-up of the value of land, the share of holding of various individuals, the division of value to be paid in cash and cheques, the total expenditure on the project etc. has been found in the seized material. The details are very explicitly mentioned on this page. The detail is also appearing on page-86 of Annexure-A/8 from residence of Karsan Velji Patel, Madhapar Bhuj, in connection with Sri Rajendra V Shah. The extract of the same is reproduced by assessing officer in the assessment order. The following details are available:
(i) Details of share of each parties involved in the project Citi Arise.
(ii) Details of value of land for this project and shares to be paid in cash and cheques.
(iii) Details of expenses made on this project. The cash amount is nil for development expenses.
(iv) The last column is related to sum of land expenses and development expenses and its further break-up in cash and cheques.
15. Hence, assessing officer ('AO') noted that total value of the land is fixed at Rs.5,45,75,735/-, out of which, the amount of Rs.4,98,50,735/-, was cash portion and Rs.47,25,000/-, was through banking channel. These figures state an important fact, that is, only 10% value of the land is shown in regular books of account and rest 90% is outside the books of account. It is very clear from the analysis that 90% of land transactions are outside the books of account and thus huge taxes evasion are done on such transactions. Further, it is seen that 45% share of the project was sold to persons namely Sri Nilesh Chande, Jayesh C. Morabia and Vinod Patel and Vijay S. Ramjiyani I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 9 Vinod Gangaram Patel (Patel Group). The other partners have paid their contribution in land as per their ratio of holding in the above project. The detail of contribution paid by them with respect to the land is also found in the seized Annexure. Page 37 of Annexure A/10 mentions the details of contribution paid by Sri Vijay S Ramjiyani. It is seen from the extract that details of VIJ account is mentioned. The VIJ refers to Sri Vijay S. Ramjiyani. Since the Patel group has share of 25% in the project and there are two people in this group, hence in the above table contribution of 12.5% is mentioned against, Sri Vijay S. Ramjiyani. He has paid Rs.68,22,000/- for value of plot in cash and Rs.4,09,375/- through bank. Hence, total amount paid by him is Rs.72,31,375/-. To confront the above fact, Sri Vijay S. Ramjiyani was summoned and his statement was recorded dated 06.02.2014, in which he has accepted the fact that value of the land was determined at the rate of Rs.3,150 Sq. Yard. Further, it is seen that Patel group had share of 25% in the project. Out of total of 25% of the Patel group, the other 12.5% was with the assessee. The details of this were found on the page 64 of Annexure-A/10 seized from the premise of Sri Karsan Velji Patel, Madhapar in connection with Sri Rajendra V. Shah. The extract of page 64 is produced below:
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 10 Vinod Gangaram Patel
16. Hence, the assessing officer ('AO') observed that it is clear that total amount of Rs.2,46,87,000/- (two crores forty-six lakhs and eighty-seven thousand) was received by the assessee from Sri Rajendra V. Shah and his associates. Therefore, the assessee was asked to explain the above and also asked to show cause as to why the same should not be treated as his unexplained transactions, in the absence of any details.
17. In response, the assessee filed his reply on 02.02.2016, before the assessing officer, stating therein as under:
"The company Tirthbhoomi Infrastructure P. Ltd is a private limited company having its registered office at 103, Shah Commercial Centre, Opp SBI, Station Road, Bhuj. The company was incorporated on 21.12.2011. I have resigned from this company as on 8th Spt. 2012. 100000 shares held by me were transferred to Mr Parth Anil Shah as on 20.10.2012."
18. However, the assessing officer ('AO') rejected the contention of the assessee and observed that the assessee is director in the company Tirathbhoomi Infrastructure P. Ltd with 12.5% share (25% between him and Vijay S. Ramjiyani). Evidences of unexplained investment (indirectly leading to unaccounted capital contribution) were found. When the assessee was exiting the value of the land was determined first at Rs 3150 sq yard which was subsequently revised to Rs. 3500 sq yard. Thus, assessing officer noticed that there is unexplained investment as well as unaccounted profit. Both of these together constitute the sum of Rs. 81.71 lacs. The cash represents, on money receipt or payment, for which the onus is upon the assessee to explain I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 11 Vinod Gangaram Patel the same, which he has not explained. Then there is clear mention of profit earned from Dombivalli of Rs. 4.00 lac. All these represents the unaccounted transactions of the assessee. Since the assessee has failed to explain the same, therefore, assessing officer has treated the same as unexplained income / profit / investment of the assessee. Hence, the sum of Rs 2,46,87,000/- was added to the total income.
19. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the addition made by the assessing officer. The ld CIT(A) observed that the project could not materialize and the assessee withdrew himself on 08.09.2012, from the company and transferred his shareholding on 20.10.2012, to Shri Parth Anil Shah. This fact was confirmed by Shri Vijay S Ramjiyani in his statement recorded during post search enquiries. He furnished certificate cum Search Report dated 19.09.2016 of Company Secretary. The report was accompanied by Annexure-A having details of shareholders, copy of resignation letter, dated 08.09.2012 filed by the assessee to the Board of Directors of the Company and copy of Form-32. In Form-32, it was mentioned that Shri Vinod Gangaram Patel was not associated with the Theerthabhoomi Infrastructure Pvt Ltd with effect from 08.09.2012. The Hon'ble Settlement Commission also gave categorical finding, in the case of Shri Rajendra V Shah, Shri Manish Chandra S Shah and Shri Laxmidas N Thakar, in the order u/s 245D (4) of the Act that the Patel Group was to come as shareholder in Theerthabhoomi Infrastructure Pvt Ltd and the price of Rs.3150 per sq. yard was used to calculate the mutual contribution. These parties confirmed that no such transaction took place till date of passing the order by the Settlement Commission and the said land was purchased by Theerthabhoomi I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 12 Vinod Gangaram Patel Infrastructure Pvt Ltd. The ld CIT(A) noticed that the findings of the Hon'ble Settlement Commission on page 60 to 62 clearly state that this transaction did not materialize. Therefore, after having regard to the facts and circumstances of the case and material evidence on record, the addition of Rs.2,46,87,000/- was deleted by ld CIT(A).
20. Aggrieved by the order of the Ld. CIT(A), the Revenue and assessee both are in appeal before us.
21. Learned DR for the revenue, vehemently argued that the Patel Group consisting of Shri Vinod Patel and Shri Vijay S. Ramjiyani were having 25% share in the project of Theerthabhoomi Infrastructure Pvt Ltd and they paid to Rs.68.22 laks in cash and Rs.4,09,375/- through bank for purchase of the plot. Apart from this, Shri Ramjiyani in his statement recorded u/s 131(1A) confirmed that the rate of land in Theerthabhoomi Infrastructure Pvt Ltd was decided @ 3150 sq. yard. The assessee was having 12.5% share in the project. These findings were based on the notings on page No. 64 of Annexure-A/10 seized, from the premises of Shri Karsan V Patel, in connection with Rajendra V Shah. On the basis of the notings, in page 64 of Annexure A-10, seized from the premises of Shri Karshan V Patel, the assessing officer concluded that the assessee was having share in land of Theerthabhoomi Infrastructure Pvt Ltd.Therefore, the assessee received Rs.2,46,87,000/- from Rajendra V Shah and his associates, hence, assessing officer, has rightly made the addition, in the hands of the assessee, therefore, the finding of assessing officer may be upheld.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 13 Vinod Gangaram Patel
22. On the other hand, Shri Chetan Agarwal, Learned Counsel for the assessee, argued that the land was to be sold to Rajendra V Shah against 12.5% share of investment in Tirthbhoomii Infrastructure Pvt Ltd and the value of his share in the land was worked out at Rs.90 lakh. However, the deal could not materialize and the assessee had to resign from Tirthbhoomi Infrastructure Pvt Ltd on 08.09.2012. This fact was confirmed by Shri Vijay S. Ramjiyani, the partner of the assessee, in his statement, in answer to question no.11, recorded u/s 131(1A) on 06.02.2014, during the post search inquiries. Copy of his statement was placed on page no.9 to 11 of the paper book. Thus, the said land of Khakar was still in the joint ownership and possession of the assessee and Shri Vijay S Ramjiyani. Title Search Report from an advocate was furnished in support of his submission on page no. 12 & 13 of the paper book. Therefore, Learned Counsel contended that assessing officer has failed to rebut the evidence placed by the assessee in the assessment proceedings. The assessing officer, did not place any material on record to disprove the claim of the assessee. Therefore, after having regard to the facts and circumstances of the case, it is difficult to agree with the findings of the assessing officer as they are evidently contrary to the fact, which established beyond any doubt, that the Khakar land was still under the ownership of the assessee and his partner. Similarly, the Title Search Report dated 27.10.2016 of an advocate was placed on record wherein the particulars of the land held from 2002 to 2016 were recorded and it is in joint ownership in the name of the assessee and Shri Patel Karshan Dhanji Madha. In the given facts and circumstances of the case the finding of the assessing officer was not correct. This way, the ld Counsel for the assessee, reiterated the submissions I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 14 Vinod Gangaram Patel made during the appellate proceedings and stated that ld. CIT(A) has passed a reasoned and speaking order, therefore, the same should be upheld.
23. We have heard, both sides in detail and also perused the records of the case including the paper book filed by the assesses- company. The necessary facts of the case have already been discussed in paragraphs above. On examination of the facts and circumstances of the case, the finding of the assessing officer was that the Patel Group consisting of Shri Vinod Patel and Shri Vijay S Ramjiyani were having 25% share in the project of Theerthabhoomi Infrastructure Pvt Ltd and they paid to Rs.68.22 laks, in cash and Rs.4,09,375/- through bank for purchase of the plot. It was also mentioned that Shri Ramjiyani in his statement recorded u/s131(1A) confirmed that the rate of land in Theerthabhoomi Infrastructure P Ltd was decided @ 3150sq. yard. The assessee was having 12.5% share in the project. The findings of the assessing officer were based on the notings on page No. 64 of Annexure-A/10 seized from the premises of Shri Karsan V Patel in connection with Rajendra V Shah. On the basis of the notings in page 64 of Annexure A-10, seized from the premises of Shri Karshan V Patel, the assessing officer concluded that the assessee was having share in land of Theerthabhoomi Infrastructure Pvt Ltd. Therefore, the assessee received Rs.2,46,87,000/- from Rajendra V Shah and his associates. It was also held that the transaction related to plot of survey No.321 involving the amount of Rs.46,16,000/- and Rs.81,71,000/- was held to be, as share of the assessee, in the company's land, cash of Rs.25 lakhs and profit from Dombivali of Rs.4 lakhs as unexpected investment. Thus, the total unexplained investment was determined at Rs.2,46,87,000/- including Rs.90 lakhs from Khakar land.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 15 Vinod Gangaram Patel
24. During the appellate proceedings, the assessee argued before ld CIT (A) that land was to be sold to Rajendra V Shah against 12.5% share of investment in Tirthbhoomii Infrastructure Pvt Ltd and the value of his share in the land was worked out at Rs.90 lakh. However, the deal could not materialize and the assessee had to resign from Tirthbhoomi Infrastructure Pvt Ltd on 08.09.2012. This fact was confirmed by Shri Vijay S. Ramjiyani, the partner of the assessee, in his statement, in answer to question no.11, recorded u/s 131(1A) on 06.02.2014, during the post search inquiries. Copy of his statement was placed on page no.9 to 11 of the paper book. Thus, the said land of Khakar was still in the joint ownership and possession of the assessee and Shri Vijay S Ramjiyani. Title Search Report from an advocate was furnished in support of his submission on page no. 12 & 13 of the paper book. In view of the given facts and circumstances of the case, it was evident that the assessing officer failed to rebut the evidence placed by the assessee in the assessment proceedings. The assessing officer did not place any material on record to disprove the claim of the assessee. Therefore, after having regard to the facts and circumstances of the case, it is difficult to agree with the findings of the assessing officer, as they are evidently contrary to the fact, which established beyond any doubt, that the Khakar land was still under the ownership of the assessee and his partner. Similarly, the Title Search Report dated 27.10.2016 of an advocate was placed on record wherein the particulars of the land held from 2002 to 2016 were recorded and it is in joint ownership in the name of the assessee and Shri Patel Karshan Dhanji Madha. In the given facts and circumstances of the case the finding of the assessing officer was not correct. It was gathered from the facts related to addition of Rs.46.16 lakhs for the plot bearing survey no.321 that its rate was projected at Rs.13000/- per sq. yard. It I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 16 Vinod Gangaram Patel was a residential plot in Madhapar, Bhuj owned by Shri Dipesh P Khandor, Shri Kamlesh P Khandor, Smt Jyotiben A Shah and Shri Parth Anil Shah. All these co-owners of the land engaged the assessee as broker to sell their land. However, the assessee could not find any purchaser of this land and ultimately no deal could materialize. In support of his submission, the assessee filed copy of Title Search Report of advocate dated 28.10.2016, on page 14 to 15 of the paper book. Therefore, the rate of the plot mentioned at Rs.13,000/- appears to be just projection only.
25. Based on the above facts, the learned CIT(A) observed that Title Search Certificate revealed that the land of plot No. 15 was still in the joint ownership and possession of Shri Dipesh P Khandor, Shri Kamlesh P Khandor, Smt Jyotiben A Shah and Shri Parth Anil Shah since 2006 to 2016. In view of the given facts and circumstances of the case, it was evident that the assessing officer failed to rebut the evidence placed by the assessee in the assessment proceedings. The assessing officer, did not place any material on record to disprove the claim of the assessee. Therefore, after having regard to the facts and circumstances of the case, it is difficult to agree with the findings of the assessing officer, as they are contrary to the self-evident facts. Therefore, Ld CIT(A) held that the finding of the assessing officer was not correct.
26. The ld CIT(A) also noticed regarding share of the assessee in Tirthbhoomi Infrastructure Pvt Ltd, the finding of the assessing officer was that the assessee made investment in lieu of 12.5% shares. After perusal of the submission of the assessee and supporting material, it was noticed by ld CIT(A) that the project could not materialize and the assessee withdrew I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 17 Vinod Gangaram Patel himself on 08.09.2012 from the company and transferred his shareholding on 20.10.2012, to Shri Parth Anil Shah. This fact was confirmed by Shri Vijay S Ramjiyani, in his statement recorded during post search enquiries. He furnished certificate cum Search Report dated 19.09.2016 of Company Secretary. The report was accompanied by Annexure-A having details of shareholders, copy of resignation letter dated 08.09.2012, filed by the assessee to the Board of Directors of the Company and copy of Form-32. In Form-32, it was mentioned that Shri Vinod Gangaram Patel was not associated with the Theerthabhoomi Infrastructure Pvt Ltd with effect from 08.09.2012. The Hon'ble Settlement Commission also gave categorical finding, in the case of Shri Rajendra V Shah, Shri Manish Chandra S Shah and Shri Laxmidas N Thakar, in the order u/s 245D (4) of the Act that the Patel Group was to come as shareholder in Theerthabhoomi Infrastructure Pvt Ltd and the price of Rs.3150 per sq. yard was used to calculate the mutual contribution. These parties confirmed that no such transaction took place till date of passing the order by the Settlement Commission and the said land was purchased by Theerthabhoomi Infrastructure Pvt Ltd. The ld CIT(A) relied on the findings of the Hon'ble Settlement Commission, (on page 60 to 62 in their order) which are reproduced as below:
"This transaction did not materialize. Subsequently, this property is under a proposal of transfer to a company named Theerthabhoomi Infrastructure P Ltd. as seen from page nos. 68, 69 and 70. As per the Rule 9 Report, this property is sold at a rate of Rs.3150 per sq. yard. For a total consideration of Rs.5,45,75,735/-, out of which the applicant share is 45% and hence a profit of Rs. 2,45,59,080/- accrued and the same should be offered for tax. The applicant argued from these pages only that these are merely projections wherein two other groups viz. Jayeshbhdi and Patel Group were to come as shareholder of Theerthabhoomi Infrastructure P Ltd. and the price of Rs.3150 per sq. yard was used to calculate the mutual contributions. They have confirmed that no such transaction took place and till today the ownership of the property remains with the Shah and Chande family only. In support of their contention, they have filed copies of Balance Sheet of I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 18 Vinod Gangaram Patel Theerthabhoomi Infrastructure P Ltd which confirms that Jayeshbhai and Patel Group have not joined as shareholders and the said land is purchased by this company at a total cost of Rs.51 lacs. The individuals in whose names this land was originally purchased have disclosed these transactions in their Income Tax records. On this basis, it is seen that this land is not sold and the claim in the Rule 9 Report that profit on its sale should be taxed is not correct."
27. Therefore, based on these facts and circumstances, the ld CIT (A) deleted the addition of Rs.2,46,87,000/-. On a careful reading of the order of Ld.CIT(A) and the findings thereon, we do not find any valid reason to interfere with the decision and findings of the Ld.CIT(A). Hence, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue.
28. In the result, ground Nos.1 to 3 raised by the Revenue, are dismissed.
29. Now, we shall adjudicate ground No.4 of Revenue`s appeal and ground Nos. 2 of assessee`s, cross objection, which are common and identical, which are reproduced below"
Ground No.4 of Revenue:
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition Rs.1,89,000/-,on account of unexplained cash deposit.
Ground No.2 of assessee`s cross objections:
2. Ld. CIT(A) has erred in law as well as on facts, in confirming addition of Rs.2,00,000/-, on estimated basis from addition of Rs.3,89,000/-, being made by assessing officer on account cash deposited in bank account treated as unexplained.
30. Succinct facts qua the issue are that during the assessment proceedings, the assessing officer noticed that the bank statement of the assessee, revealed cash deposits, which are mentioned below:
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 19 Vinod Gangaram Patel The assessee was asked to explain the source of the same. In response, the assessee submitted its reply before the assessing officer stating that the same were from the cash generated from its business of construction and agricultural activities. However, the assessing officer, rejected the contention of the assessee and held that these cash deposits were nothing but the unaccounted income of the assessee, hence the same was therefore added to the assessee's total income at Rs.3,89,000/-.
31. On appeal, ld CIT (A) deleted the addition partly. The ld CIT(A) had examined account of Bank of Baroda, in the books of the assessee, and it was noticed by ld CIT(A) that assessee deposited brokerage income of Rs.90,000/- on 22.05.2012. It was also observed that there were frequent withdrawals and deposits of cash within very short span of time. The assessee also received income from construction activities and income from brokerage which he claimed to have been deposited in cash in his bank accounts. However, assessee did not submit entire evidences in the appeal proceedings, therefore, ld CIT(A) estimated unexplained cash deposits of the assessee to Rs.2,00,000/-, and deleted the balance addition of Rs. 1,89,000/-. Thus, ld CIT(A) partly allowed the appeal of the assessee.
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 20 Vinod Gangaram Patel
32. Aggrieved by the order of the ld CIT (A), the Revenue, as well as, assessee (by way of Cross Objection), both are in appeal before us.
33. Learned DR for the Revenue, argued that ld. CIT(A), should have sustained the addition made by the assessing officer and the part addition of Rs.1,89,000/-, deleted by ld. CIT(A) is not justified. On the other hand, the ld. Counsel for the assessee, argued that assessee has submitted all the possible evidences and documents, before the lower authorities, therefore, entire addition of Rs.3,89,000/-, should have been deleted by the ld CIT(A).
34. We have heard both the parties. We note that cash was generated from assessee`s business of construction and agricultural activities. The assessee submitted before ld CIT(A) that the source of deposits were explained by the assessee, during the course of recording his statement u/s 132(4) of the Act, stating that it was earned from agricultural activities and construction business. The assessee furnished copy of cash book and bank book ( vide page Nos.29 to 32 of the paper book). In fact, the ld. CIT(A) accepted the cash deposit in the bank of Baroda, which was out of brokerage income of Rs.90,000/- and therefore deleted the addition partly. We note that assessing officer did not find any mistake in the cash book, bank statement and statement u/s 132(4) of the Act. We note that assessing officer has not refuted or discredited these evidences and documents. The assessing officer does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidences in support of its claim, they cannot be brushed I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 21 Vinod Gangaram Patel aside based on surmises, hence, based on this factual position, we delete the addition sustained by ld CIT(A) of Rs. 2,00,000/-.
35. In the result, ground No. 4 raised by the Revenue is dismissed, whereas ground No.2 raised by the assessee in cross objection No. 13/RJT/2017, is allowed.
36. Ground No.5 raised by the revenue, relates to addition of Rs. 4,00,000/-.
37. Succinct facts qua ground No.5 are that during the assessment proceedings, the assessing officer noticed that in the course of search/survey, details of cash loan accepted, and repayment of loan with interest was found on page-20 & 22 of Annexure-A/9. During the course of assessment proceedings, the assessee was asked to explain the same. The assessee, submitted before the assessing officer that cash amount was accepted from Dr. Magan Patel. The assessee stated that said cash loan had been taken for construction of house. The assessee had repaid Rs.4,00,000/- and interest of Rs.47,574/-. Therefore, the assessing officer made addition to the tune of Rs.4,00,000/-.
38. On appeal, the ld. CIT(A) deleted the addition, therefore, Revenue is in appeal before us. We have heard both the parties. The Ld. 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. On the other hand, ld Counsel for the assessee, defended the order passed by the learned CIT(A). We find that the assessee borrowed loan of Rs.4,00,000/-, in cash and paid interest of Rs.47,574/- on it. The finding of the assessing officer was based on the noting made on page 20 and 22 of I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 22 Vinod Gangaram Patel Annexure-A9. The assessing officer made addition of the loan as well as interest paid on it. The assessee submitted in the statement of facts that it was cash loan from Dr. Maganlal Patel. The loan was used in the construction of the house. The document seized was having clear information to this effect. The assessee admitted that interest was paid on this loan. Admittedly, the loan was received in cash, therefore, in view of the relevant provisions of the Income Tax Act, the amount of loan cannot be added to the income of the assessee. The cash loan taken by the assessee is not an income. However, the revenue has right to initiate penalty proceedings, on the assessee, under section 269SS/269T of the Act, which the revenue has failed to do so. Therefore, we note that ld. CIT( A) has rightly deleted the addition, hence, we dismiss ground No.5 raised by the Revenue.
39. In the result, ground No.5 raised by the Revenue, is dismissed.
40. Ground No.6 and 7, raised by the Revenue are general in nature, hence, do not require adjudication.
41. Now, we shall adjudicate assessee`s appeal in IT(SS)A No.82/Rjt/2017. Grounds of appeal, raised by the assessee is reproduced below for ready reference:
"1. Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs.10,00,000/- on estimated basis from addition of Rs.23,74,424/- being made by assessing officer on account cash deposited in bank account treated as unexplained."
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 23 Vinod Gangaram Patel
42. Succinct facts qua the issue are that during the assessment proceedings, the assessing officer noticed that assessee has deposited cash in various bank accounts, to the tune of Rs.23,74,424/-. The summary of cash deposit into various bank accounts of the assessee, is stated in the assessment order. The assessee was asked to explain the source of the same. In response, the assessee replied to the assessing officer, during the assessment proceedings, stating that the same were cash generated from its business of construction and agricultural activities. However, the assessing officer rejected the contention of the assessee and made addition to the assessee's total income of, Rs.23,74,424/-.
43. Aggrieved by the order of the assessing officer, the assessee, carried the matter, in appeal before Ld. CIT(A), who has partly allowed the appeal of the assessee. The ld CIT(A) noticed that from the bank book that assessee was having cash deposits as well as deposits through cheques and housing loans from Bank of Baroda. It was further observed by ld CIT(A) that there were frequent withdrawals and deposits of cash within very short span of time. The assessee also received income from construction activities and income from brokerage, which the assessee claimed to have been deposited in cash, in his bank accounts. Therefore, after considering the facts and circumstances of the case, the ld CIT(A) was of the view that it would be just and fair to estimate unexplained cash deposits of the assessee to Rs. 10 lakhs. Therefore, out of total addition of Rs.23,74,424/-, the ld CIT(A) restricted the addition to the tune of Rs.10,00,000/- and balance addition of Rs.13,74,424/- (Rs.23,74,424- Rs.10,00,000), was deleted by ld CIT (A), therefore the ld CIT(A), partly allowed the appeal of the assessee. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 24 Vinod Gangaram Patel
44. Ld. Counsel for the assessee, argued that assessee had deposited the cash from agriculture activities and from construction activities and this fact has been explained by the assessee, during the search and seizure proceedings, and therefore, addition sustained by Ld.CTT(A) may be deleted.
45. On the other hand, Learned Commissioner of Income Tax - Departmental Representative (Ld. CIT-DR) for the Revenue reiterated the stand taken by the ld. CIT(A), which we have already noted in our earlier para and is not being repeated for the sake of brevity.
46. 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 note that assessee has submitted the cash book and bank book and other relevant documents to demonstrate that assessee has deposited the cash out of agricultural activities and out of construction activities and this fact has been explained by the assessee, by way of a statement, during the search and seizure proceedings. We note that assessee has explained the source during the course of search proceedings, that cash was deposited out of business and agricultural income. The investment was duly accounted in the books of accounts of the assessee. However, the assessing officer ignored the explanation and made addition. In support of his submission the assessee furnished copy of cash book, ledger account of investment on page No. 5 to 8 of the paper book. He also submitted cash flow statement from 01.04.2011 to 31.3.2012. Based on this factual position, we delete the addition sustained by I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 25 Vinod Gangaram Patel ld. CIT(A) to the tune of Rs.10,00,000/- and allow the ground raised by the assessee.
47. In the result, appeal filed by the assessee (in ITA No.82/RJT/2017), is allowed.
48. Since we have dismissed, the appeal filed by the Revenue in IT (SS)A No. 67/RJT/2017, and we allowed the assessee`s appeal in IT(SS)A No.82/RJT/2017, we also allowed ground No.2 raised by the assessee in cross objection ( Ground No.1 of CO was not pressed by the assessee), therefore, additional ground raised by the assessee in cross objection No. 13/RJT/2017, becomes academic and infructuous, hence does not require adjudication.
49. In the combined result, the appeal of the Revenue in IT(SS)A No.67/Rjt/2017 is dismissed, Cross Objection filed by the assessee, in CO No.13/Rjt/2017, is partly allowed, whereas the appeal of the assessee (in IT(SS)A No.82/Rjt/2017, is allowed.
Order pronounced in the open court on 17/09/2024.
Sd/- Sd/-
(DINESH MOHAN SINHA) (DR. A. L. SAINI)
याियक सद य/ Judicial Member लेखा सद य/ Accountant
Member
राजकोट /Rajkot
िदनांक/ Date: 17/09/2024
DKP Outsourcing Sr.P.S
I.T(SS)A Nos.67, 82/Rjt/2017 & Co No.13/Rjt/2017 26
Vinod Gangaram Patel
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
अपीलाथ / The Appellant
यथ / The Respondent
आयकर आयु / CIT
आयकर आयु (अपील)/ The CIT(A)
िवभागीय ितिनिध, आयकरअ पीलीय आिधकरण, सूरत/ DR, ITAT, SURAT
गाडफाईल/ Guard File
By order/आदेश से,
// True Copy //
सहायक पंजीकार
आयकर अपीलीय अिधकरण, राजकोट