Income Tax Appellate Tribunal - Ahmedabad
The Acit, Central Circle-1(4),, ... vs Shri Sandeep Sudhakar Aarekar, Valsad on 6 February, 2017
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'बी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" B " BENCH, AHMEDABAD
सव ी आर.पी.तोलानी, या यक सद य एवं द प कुमार के डया, लेखा सद य के सम!।
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER
And SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./IT(ss)A No.65/Ahd/2013
( नधा रण वष / Assessment Year : 2010-11)
ACIT, Central Circle- बनाम/ Shri Sandeep Sudhakar
1(4) Vs. Aarekar
Ashram Road Brahman Falia, Bhilad
Ahmedabad Umergaon,
Dist.Valsad-396 105
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AEPPA 7821 J
(अपीलाथ( /Appellant) .. ( )यथ( / Respondent)
AND
Cross Objection No.100/Ahd/2013 (In ITA No.65/Ahd/2013)
AY 2010-11
Shri Sandeep Sudhakar Aarekar Vs. ACIT
Valsad Cen.Cir-1, Ahmedabad
(Cross Objector) .... (Respondent)
Assessee by : Mr.Bhavik Khandhediya, AR
Revenue by : Mr. Jagadish, CIT-DR
ु वाई क+ तार ख /
सन Date of Hearing 24/01/2017
घोषणा क+ तार ख /Date of Pronounce ment 06/02/2017
आदे श / O R D E R
PER PRADIP KUMAR KEDIA, AM:
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-I, Ahmedabad [CIT(A) in short] IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -2- dated 29/11/2012 for the Assessment Year (AY) 2010-11 and Assessee is in Cross Objection thereof.
2. The Revenue has raised the following grounds of appeal:-
1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.41,25,830/- made on account of unaccounted cash receipt on sale of land.
2. On facts and circumstances of the case, the Ld.CIT(A) ought to have upheld the addition because the seized documents clearly showed that the assessee has received cash payment over and above the rate shown in the registered deed. No evidence is brought on record to show that the amount received was repaid on account of non-conversion of land use.
3. Cross Objection No.100/Ahd/2013 for AY 2010-11 (in IT(ss)A No.65/Ahd/2013 - AY 2010-11). The following ground has been raised by the assessee in its cross-objection:-
(1) The Ld. AO has erred in law and on facts in making addition / disallowance of unaccounted cash receipts on sale of land of Rs.
41,25,8307- by taking the rate of Rs. 12,34,0007- per acre on the basis of a single unregistered, unsigned, unnotorised seized agreement to sell found during the course of search.
(2) The Ld. AO erred in considering only one part of the agreement seized to sell (the only basis on which the impugned addition is made) and neglecting the other part of the seized agreement. The other part of the seized agreement itself provided that the rate of Rs. 12,34,000/- per IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -3- acre is dependent upon the pre-condition of conversion of said agricultural land into non-agricultural land and the seller is also further required to obtain necessary permissions, approvals for conversion of said Land into Non-Agricultural basis .
(3) The Ld. AO failed to appreciate the facts of the registered sale deed; the registered sale deed being the material piece of evidence. The registered sale deed itself stated that at the time of sale, the land was agricultural land and not non-agricultural land. Further, whatever cash money has been received viz. Rs. 24,50,000/- (assessee's share) has been mentioned in the register sale deed. The Ld. AO has not brought any material on record to show that the assessee has understated the consideration in the registered sale deed.
(4) The Ld. AO erred in considering the cash component amounting to Rs. 24,50,000/-(assessee's share) as mentioned in the seized agreement has duly been accounted for by the assessee in his audited books of accounts as well as in the registered sale deed by way of consideration towards sale of land.
(5) Further, The Ld. AO also erred in ignoring the Stamp Duty valuation rates/ prescribed jantri rates of the agricultural land. The jantri rates of non-agricultural land are more than 5 times the jantri rates of agricultural land. Thus, why the purchaser would pay the full amount as mentioned in the agreement even though the seller was not converting the agricultural land into non-agricultural land.
(6) Therefore, the Ld. AO totally erred in facts as well as in law in making the addition on assumptive basis on notional income which is not at ail tenable.
(7) Thus, Ld. Commissioner of Income Tax (Appeals) rightly deleted the addition /disallowance on law as well as on facts, addition being on notional basis by relying on various judicial pronouncements. (8) Accordingly, in view of the above, the addition made by the Ld. AO is required to be deleted.
IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -4-
4. In the course of hearing before the Tribunal, the Ld.AR for the assessee also pointed out that additional ground has also been raised in terms of Rule 11 of Income Tax Appellate Tribunal Rules, 1963 in support of its Cross Objection.
5. The Additional ground seeks to challenge the validity of initiation of proceedings under section 153C of the Income Tax Act, 1961 (hereinafter referred to as "the Act") which is of legal nature and therefore we are inclined to admit the same.
6. Additional ground raised by the Assessee in its Cross objection reads as under:-
As per the recent Circular No.24/2015, dated 31-12-2015, at the time of or along with the initiation proceedings against the search under section 153C or in the course of assessment proceedings under section 158BC of the Act or immediately after the assessment proceedings are completed under section 158BD of the Act recording of satisfaction is required.
Further, even in respect of "all other persons than the searched person" such recording of satisfaction by assessing officer is required." The circular further goes to the extent that, if in the pending matters, the guidelines laid down by the Apex Court of recording of satisfaction note is not met with, such litigation should be withdrawn or not pressed or the appeal should also not be filed. The resultant effect would be that, the requirements of recording of satisfaction note for exercise of power under section 153-C is mandatory requirement and cannot be given a go-bye, IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -5- either at the stage of initiation or during the course of assessment or at the conclusion of the assessment. Therefore, it I necessary to examine the said aspect, namely whether there was compliance of the requirement of satisfaction recording before final conclusion was drawn and as to whether the assessment made under section 153C was in accordance with the provisions of the Act or bad in law."
7. The Revenue in its appeal has assailed the action of the CIT(A) towards reversal of addition of Rs.41,25,830/- made by the Assessing Officer (AO) on account of unaccounted cash receipts on sale of land. It was contended by the Ld.DR that the seized documents clearly showed that the assessee has received cash payments over and above the rate shown in the registered-deed. It was alleged that no evidence has been brought on record to show that the amount received was repaid on account of non-conversion of land use.
8. We have considered the rival submissions. On perusal of the "statement of facts" placed by assessee before the CIT(A), we note that the assessee is engaged in carrying on business of vehicle hiring and brokerage income. The assessee also carries agricultural activities and earns agricultural income. Relevant to the case, the assessee owned certain parcel of agricultural land at village Bhat Karambeli. The assessee sold the land to one Nanji Enterprises by Registered sale-deed IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -6- dated 11/08/2010 where the assessee claimed to have been received Rs.45,54,720/- as sales consideration which was claimed by the assessee to be reflected in AY 2011-12. It is observed that search proceedings were made at the premise of the purchaser on 04/03/2010 where an agreement to sale towards sale of impugned land entered into by the assessee along with other sellers with the purchaser M/s.B.Nanji Enterprises (P) Ltd. was found. As per the agreement to sale dated 26/12/2010 the sale consideration was determined at Rs.86,80,550/- by the AO placing reliance on agreement to sale. The AO accordingly assumed cash component of Rs.41,25,830/- in the aforesaid sale pertaining to the assessee as undisclosed income for the AY 2010-11. It is the case of the assessee that actual sale price stands at Rs.45,54,720/- as per the sale agreement entered into at a later stage. The agreement to sale entered into initially is required to be ignored. At this stage, we take note of assertions made by the assessee in the "statement of facts" to the effect that agreement to sale originally entered was purportedly inflated for financial loan purposes owing to request of the purchase party. It was thus claimed that the object of the agreement was merely to meet loan requirement of the purchaser party and was not purportedly intended to be acted upon. On perusal of the order of the CIT(A), on the other hand, we find that CIT(A) has accepted the plea of the assessee that the registration of land was only an agricultural land and not a non- agricultural land. Since the land being agricultural land, the sale IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -7- consideration has come down considerably. The CIT(A) also inter alia blamed the AO that no cross-checking with the purchaser has been made. The CIT(A) also relied upon some affidavit filed by the assessee and granted relief as sought by the assessee on merit. On conceptuous of these facts, we find that the process of reasoning to arrive at the aforesaid conclusion by the CIT(A) is not convincing. The CIT(A) has proceeded on a different tangent vis-à-vis SOF. The reason for inflated sale consideration in the first document of sale in the form of agreement to sale found in the course of search at the premise of the purchase has not been addressed. Needless to say, the jurisdiction of the CIT(A) is not adversarial in nature. He ought to have made requisite enquiry from the purchaser and any other party if he considered expedient for fact finding in the matter. He is not expected to simply shift blame on the AO for omissions and commissions and come to a conclusion which apparently is non-descript and requires further examination on facts.
9. As noted in the preceding para, the issue has been determined by the CIT(A) without due note of the facts asserted in SOF as well as without proper enquiry. The reasons given in SOF for difference in sale price as per Agreement to sale vis-a-vis later agreement for sale also does not appear to be in tune with submissions of the assessee before CIT(A). In IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -8- the circumstances, we are unable to determine the factual aspect on merits as the relevant documents has not been cited before us.
10. We simultaneously note that the assessee is also aggrieved by the assumption of jurisdiction by the AO under section 153C of the Act as per its additional grounds of appeal. The legal issue raised by the assessee goes to the root of the matter and therefore holds primacy for outcome of subject matter of appeal. The factual finding by the CIT(A) is required to be clearly recorded. For this purpose, the CIT(A) may also enquire into the status of the assessment in the case of other co- sellers, namely Smt. Rajni Rajendra Patel and Smt.Dhangurdiben Manoharlal Patel who were owners of major part of the land in reference.
11. Therefore, having regard to the totality of the circumstances, we consider it expedient that the entire issue raised by the parties concerned involving determination on jurisdiction and merits is restored back to the file of CIT(A) for de novo examination in accordance with law. It shall thus be open to the CIT(A) to re-examine the entire issue without being influenced by findings given in earlier proceedings before it. The CIT(A) shall address respective concerns of the Revenue as well as that of the Assessee as per their respective grounds of appeals after affording proper opportunity of being heard to the parties involved.
IT(ss)A No.65/Ahd/2013 & CO No.100/Ahd/2013 Shri Sandeep Sudhakar Arekar vs. ACIT Asst.Year - 2010-11 -9-
12. In the result, appeal of the Revenue as well as cross objection of the Assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 06/02/2017
Sd/- Sd/-
(आर.पी.तोलानी) ( द प कुमार के डया)
या यक सद य लेखा सद य
( R.P. TOLANI ) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 06/ 02 /2017
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :
1. अपीलाथ( / The Appellant
2. )यथ( / The Respondent.
3. संबं4धत आयकर आयु6त / Concerned CIT
4. आयकर आय6
ु त(अपील) / The CIT(A)-I, Ahmedabad
5. 7वभागीय त न4ध, आयकर अपील य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स)या7पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 24/25.1.17 (dictation-pad 14 pages attached at the end of this appeal- file)
2. Date on which the typed draft is placed before the Dictating Member ...24/25.1.17
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S.......6.2.17
7. Date on which the file goes to the Bench Clerk.....................6.2.17
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................