Gujarat High Court
Commissioner Of Income Tax -I vs Jayaben Ratilal on 2 July, 2013
Bench: M.R. Shah, Sonia Gokani
COMMISSIONER OF INCOME TAX -I....Appellant(s)V/SJAYABEN RATILAL SORATHIA....Opponent(s) O/TAXAP/914/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 914 of 2012 ================================================================ COMMISSIONER OF INCOME TAX -I....Appellant(s) Versus JAYABEN RATILAL SORATHIA....Opponent(s) ================================================================ Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI Date : 02/07/2013 ORAL ORDER
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.00. Present appeal has been preferred by the appellant against the impugned judgement and order passed by the Income Tax Appellate Tribunal by which the appellate tribunal has dismissed the said appeal preferred by the revenue confirming the order passed by the CIT(A) dtd. 21/10/2009 for A.Y. 2005-06 on the following proposed questions of law :
(i) Whether ITAT was justified in holding that no addition can be for on money payment in respect of year under consideration u/s. 153A of the Act just on the ground that no evidence in regard of on money payment for sale of plot in year under consideration was found, despite the fact that evidences of on money were found, seized & declared by assessee for same project although for other years?
(ii) Whether ITAT was justified in stating that decision of Hon ble Andra Pradesh High Court in the case of Mr.Gopal Lal Bhadruka Vs. DCIT, was not applicable in this case, just because evidence found was of immediate succeeding year?
(iii) Whether ITAT was justified in interpreting decision of Hon ble Andra Pradesh High Court in case of Mr.Gopal Lal Bhadruka Vs. DCIT, in a way that AO can make estimated addition for transaction on 01/04/2005, but not for 31/3/2005, despite the fact that both the transactions are for same project and in real estate project is more important than year?
2.00. Facts leading to the present appeal in nutshell are as under :-
2.01. The dispute is with respect of the A.Y. 2005-06. That the Assessing Officer done regular assessment under section 143 under section 143(3) of the Income Tax Act (hereinafter referred to as the Act ) with respect to A.Y. 2005-06.
2.02. It appears that a search action under section 132 of the Act was carried out at the premises of the son of the assessee Mr.Sanjay R. Sorathiya on 11/10/2006. During the course of search, various documents pertaining to the assessee were found. Therefore, a notice under section 153C of the Act dtd. 14/10/20087 was issued and served upon the assessee. It also appears that during the course of search, one diary containing noting in regard to the sale of the plots of land in Madhuvan Green Vilas Project on Revenue Survey No.107 were found. On the basis of the said diary, the assessee made disclosure of Rs.65 Lacs. The said disclosure of Rs.65 Lacs pertains to land selling transactions of A.Y. 2006-07. The assessee also sold some plots of land in A.Y. 2007-08. Accordingly, profit of sale plots of land amounting to Rs.16,29,612/- was shown in the return of income for A.Y. 2007-08. It appears that thereafter on the basis of search carried out and the disclosure of Rs.65 Lacs pertaining to the land selling transactions in the A.Y. 2006-07 and 2007-08, the Assessing Officer reopened assessment with respect to A.Y. 2005-06 with respect to sale of plots of land admeasuring 6426.01 sold in A.Y. 2005-06. As the Assessing Officer was of the opinion that in the return of A.Y.2005-06, the assessee had not shown any profit as done in A.Y. 2006-07 and 2007-08, a show cause notice was issued and served upon the assessee to show cause why same ratio and ratio of profit should not be applied to the sales which took place in the year 2005-06. That the Assessing Officer applying same ratio and ratio modus-operandi, total undisclosed on sale on plots of land admeasuring 6426.01 sq.mtrs. sold during the year under consideration, worked out to Rs.36,94,955/- being extra sale profits received on sale of plots of the land at the rate of Rs.575/- per sq.mtrs. as done in the A.Y. 2006-07 and 2007-08 and made addition of Rs.36,94,955/- in the total income of the assessee.
2.03. Being aggrieved by the order of assessment in making addition of Rs.36,94,955/- in the total income of the assessee with respect to the A.Y. 2005-06, appellant preferred appeal before the CIT(A) and by speaking and well reasoned order, the CIT(A) partly allowed the said appeal and deleting addition of Rs.36,94,955/- in the total income of the assessee with respect to the A.Y. 2005-06.
2.04. Feeling aggrieved by the order passed by the CIT(A) in deleting addition of Rs.36,94,955/- made by the Assessing Officer, the revenue preferred further appeal before the ITAT and the ITAT by the impugned judgement and order has dismissed the said appeal.
2.05. Feeling aggrieved by the impugned judgement and order passed by the ITAT in dismissing the appeal and confirming the order passed by the CIT(A) in deleting addition of Rs.36,94,955/-, which was made by the Assessing Officer, the revenue has preferred present appeal with aforesaid proposed questions of law.
3.00. Mr.Pranav G. Desai, learned counsel appearing on behalf of the appellant has vehemently submitted that the tribunal has not properly appreciated the provisions of law more particularly section 153A of the Act, which permits the Assessing Officer to reopen / reassess the return of six preceding years. It is submitted that therefore, considering section 153A and 153C of the Act, the Assessing Officer was justified in reopening the assessment with respect to A.Y. 2005-06 and considering the same ratio and ratio modus-operandi with respect to A.Y.2006-07 and 2007-08 rightly added undisclosed income on the sale of plots of land admeasuring 6426.10 sq.mtrs. sold during the year under consideration being extra sale profits received on sale of plots of land at the rate of Rs.575/- per sq.mtrs. as done in the A.Y. 2006-07 and 2007-08.
3.01. Mr.Pranav G. Desai, learned counsel appearing on behalf of the revenue has further submitted that the tribunal has not properly appreciated the decision of Andhra Pradesh High Court on the issue in the case of Gopal Lal Bhadruka Versus Deputy Commissioner of Income-Tax, reported in [2012] 346 ITR 106 (AP). It is submitted that the tribunal has materially erred in distinguishing the facts of case before the Andhra Pradesh High Court in the aforesaid decision.
4.00. At the outset, it is required to be noted that on the basis of search carried out in the premises of the son of the assessee and diary seized and on the basis of noting in the said diary, the assessee made disclosure of Rs.65 Lacs for the A.Y. 2006-07 with respect to the sale transactions which took place during the A.Y. 2006-07 and applying same ratio and ratio relating to A.Y. 2006-07 and A.Y. 2007-08, the Assessing Officer determined the income for the A.Y. 2005-06 and considering the fact that the regular assessment was framed under section 143(3) and there was no any seized material with respect to A.Y. 2005-06, considering the aforesaid fact and observing that no incriminating material was found with respect to A.Y. 2005-06 and during the assessment, the Assessing Officer did not find any defect in the books of accounts maintained by the assessee and considering the fact that even no any material was found during the search relating to assessment year in question, CIT(A) directed to delete addition of Rs.36,94,955/- by observing that the Assessing Officer was not justified in making addition of Rs.36,94,955/- solely on the basis of the disclosure of Rs.65 Lacs with respect to transactions which took place in the year 2006-07 and the order passed by the CIT(A) is rightly confirmed by the Tribunal.
4.01. While confirming the order passed by the CIT(A), the ITA(T) has observed as under :-
......
In the present case, although the project is same for which some plots of land were sold in the present year but evidence found regarding the receipt of the non-money is in respect of subsequent year i.e. 2006-07 although, the project is same. Now the question is whether the receipt of on-money is subsequent year can be a valid basis to hold that on-money was also received in the present year in absence of any incriminating materials having been found in the course of search and also in absence of any corroborating material have been brought on record by AO in support of his contention that similar on-money was received by the assessee in the present year also. We have to keep in mind the prices of land keep on changing were generally rising. Hence, if extra prices were commanded by the assessee in the AY 2006-07 and 2007-08, it cannot be valid basis to say that the same prices was commanded by assessee in AY 2005-06 also without any incriminating material or corroborating material. This should also be kept in mind that the present year is the first year of the project and subsequent years are second and third year of the project, the project commands extra price in the market and therefore, it may be possible that in the first year i.e. in the present year, the assessee sold some of the plots on a lower prices as declared by the assessee commanded extra prices and received same in the form of on-money. Hence, in our considered opinion, on the basis of evidences regarding on-money receipt on the subsequent years without any direct material or corroborating material in support of receipt of on-money in a preceding year i.e. in the present year, addition made by AO cannot be sustained.
4.02. Now so far as the reliance placed upon the decision of the Andhra Pradesh High Court in the case of Gopal Lal Bhadruka (supra) is concerned, it is required to be noted that in the case before the Andhra Pradesh High Court, the land sale transaction was in the very assessment year in which the search was carried out. It is true and it cannot be disputed that considering section 153A of the Act, Assessing Officer can reopen and/or reassess the return with respect to six preceding years. However, there must be some incriminating material available with the assessing officer with respect to the sale transactions in the particular assessment year such as in the present case 2005-2006. Under the circumstances, on facts, the decision of the Andhra Pradesh High Court shall not be applicable to the facts of the present case.
5.00. In view of the above and the reasoning given by the tribunal reproduced hereinabove, we do not see any reason to interfere with the impugned judgement and order passed by the ITAT as no substantial question of law much less substantial question of law arise in the present appeal. Hence, present appeal deserves to be dismissed and is accordingly dismissed.
(M.R.SHAH, J.) (MS SONIA GOKANI, J.) Rafik.
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