Income Tax Appellate Tribunal - Pune
V.R. Khemani And Others , Nashik vs Assessee on 24 February, 2000
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH B, PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JM
AND SHRI R.C. SHARMA, AM
ITA No. 466 and 467/PN/07
A.Y.2002-03 and 2003-04)
V.R. Khemani and others
3 Sargam Apartment,
Racca Colony,
Sharanpur Road
Nasik 422 002
PAN AAABV 0069 L Appellant
Vs.
Asstt. CIT Cent. Cir. 2, Nasik Respondent
I.T.A No. 1175/PN/2007: A.Y. 2004-05
Nilam Anil Khemani,
3 Sargam Apartment,
Racca Colony,
Sharanpur Road
Nasik 422 002
PAN AHPK 4960 M Appellant
Vs.
Asstt. CIT Cent. Cir. 2, Nasik Respondent
Appellants by : Shri Pramod Shingte
Respondent by : Shri Mukesh Dubey
ORDER
Per Shailendra Kumar Yadav JM All these appeals pertain to the same group for A.Y. 2002-03, 2003-04 and 2004-05. For the sake of convenience these are being disposed off by a common order. ITA No. 466/PN/2007 for A.Y. 2002-03
2. This is an appeal by the assessee on the issue of addition of Rs. 3,38,453/-. A search was conducted on Khemani group 2 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 (AOP) on 9-10-2003. During the course of search a copy of agreement to sell (sathekhat) dated 24-2-2000 was recovered showing sale of plots of about 13257 sq. yard of land in Survey No. 78 to Smt. Hansa D. Kapadia by the assessee for a consideration of Rs. 63,04,103/-. This agreement to sell was not having signature. A copy of registered sale deed dated 30- 5-2001 for sale of same lands in survey no. 78 was found showing total consideration of Rs. 59,65,650/-. Thus difference of Rs. 3,38,453/- was found by the A.O in this regard. The assessee on inquiry from the A.O on this issue, submitted that the assessee has received only Rs. 59,65,650/- . The search party examined Shri Anil Khemani (son of Shri V.R. Khemani, one of the members of AOP) on this issue. The A.O rejecting the contention of the assessee made an addition of Rs. 3,38,453/-, which was confirmed by the CIT(A). Same has been agitated before us.
3. The stand of the assessee is that he has received only Rs. 59,65,650/- and he has also incurred expenditure over and above the same. So addition in question is not justified. On the other hand learned DR supported the orders of the authorities below.
4. After going through the rival submissions and material on record, we are not inclined to interfere with the findings of the CIT(A) because the agreement to sell dated 24-2-2000 3 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 indicate the consideration of Rs. 63,04,103/- while in the sale deed the consideration has been mentioned at Rs. 59,65,650/. The assessee has not substantiated its claim that he has not received Rs. 63,04,103/- as per agreement in question. So, we are not inclined to interfere with the findings of the CIT(A). The same is accordingly upheld on this issue. ITA No. 467/PN/2007 for A.Y. 2003-04
5. In this appeal, the assessee has opposed the addition of Rs. 36,50,000/-. As discussed above, the assessee's premises were searched on 9-10-2003. some documents vide annexure A/2 (pages 11 to 14) were seized from the residential premises of Shri Vasudeo Radhakisan Khemani. This contained the earnest money receipt of Rs. 10,00,000/- by M/s. Rushabh Motors (P) Ltd. to the assessee. This was the payment received from Rushabh Motors (P) Ltd. by the assessee. As per the agreement between the assessee and said purchaser, the sale of property bearing Survey No. 294((P) was fixed for total consideration of Rs. 1,35,00,000/- and out of this Rs. 10,00,000/- was received as an earnest money. The said property admeasured 5200 sq.mt as per ULC record and 6000 sq. mts. as per 7/12 extract. The property was situated at village Pathardi. The only issue in the appeal is with regards to the addition of Rs. 36,50,000/-. As discussed above, assessee's premises were search by Income-tax Department on 9-10-2003. Some documents vide annexure A/2 were seized 4 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 from residential premises of Shri Vasudeo Radhakrisan Khemani. This contained the earnest money receipt dated 22- 7-2002 on stamp paper of Rs. 100/-. This was for the payment of Rs. 10,00,000/- by M/s. Rushabh Motors (P) Ltd. to the assessee. As per the agreement between Shri Vasudeo Radhakrisan Khemani, Smt. Isharibai Radhakisan Khemani and Smt. Kamlabai Bhagwandas Dhirwani as vendors and M/s. Rishabh Motors (P) Ltd. as purchasers the sale of property bearing Survey No. 294(P) was fixed for total consideration of Rs. 1,35,00,000/- and out of this Rs. 10,00,000/.- was received as an earnest money. The said property was admeasuring 5200 sq. mtrs as per ULC records and 6000 sq. mtrs as per 7/12 extracts situated at village Pathardi. The aforesaid earnest money receipt was duly registered with the Executive Magistrate, Nasik. However, the registered sale deed in respect of proportionate property was subsequently executed on 11-11-2000 for a consideration of Rs. 98,50,000/- only. Thus, the difference of Rs. 36,50,000- was found by the A.O and after rejecting the contention raised on behalf of the assessee, the A.O made addition thereof. The same was confirmed by the CIT(A).
6. The stand of the assessee is that Shri Anil Khemani son of Shri Vasudeo R. Khemani, in answer to question no. 11 of statement recorded on 12-11-2003 stated that the difference is on account of the fact that the consideration of Rs.
5 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 1,35,00,000/- was decided for land admeasuring 6000 sq.mtrs as per 7/12 extract and with an understanding that the same fell in commercial zone. Though as per ULC records, the area of the land was 5200 sq. mtrs but within a span of 15 days of earnest money receipt dated 22-7-2002 M/s. Rushabh Motors (P) Ld. made inquiries and found out that the said land though as per 7/12 extract is 6000 sq. mtrs but actually it is only 5200 sq. mtrs and is located in industrial zone and is not having commercial use. It was also found that prime front portion of the said land of about 800 sq. mtrs has been acquired by Nasik Municipal Corporation for development of road. M/s. Rishabh Motors (P) Ltd. issued a letter dated 10-8- 2002 and informed the concerned party the actual situation and status of the land. Copy of the said letter was also brought to the notice of search party on the date of search action. Hence it was claimed and explained on behalf of the assessee that as per letter of M/s. Rushabh Motors (P) Ltd. dated 10-8-2002 another agreement was made for consideration of Rs. 98,50,000/- which was acted upon. It was also brought to our knowledge the affidavit of Mr. Anil Vasudeo Khemani executed on 10-11-2005 filed on behalf of M/s. Rushabh Motors (P) Ltd. at the relevant point of time. We find that the assessee has categorically stated at the time of search that receipt of earnest money found at the time of search was not acted upon for the reasons discussed above. Moreover, this thing has been re-affirmed by the purchaser 6 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 vide letter as well as affidavit. There is nothing on record to suggest that the assessee has acted upon the agreement dated 22-7-2002. It is also not in dispute that actual size of the plot was 5200 sq. mtrs as mentioned in ULC agreement and not 6000 sq. mtrs as mentioned in 7/12 extract situated at village Pathardi. In this background, the revenue authorities were not justified in making the addition in question for the amounts mentioned in the agreement and not acted upon by way of sale deed. The sale deed mentioned only the amount of Rs. 98,50,000/-. There is nothing on record to suggest that the amount in question has been received by the assessee in any manner. The revenue authorities have also not has not falsified the stand of the assessee taken on the date of search itself coupled with confirmation of same by purchasing party. In view of the above, the addition in question is not justified and the same is directed to be deleted.
ITA No. 1175/PN/2007 for A.Y. 2004-05
7. This appeal has been filed against the order of the CIT(A) on the point of penalty u/s 271(1)(c) of the Act. The assessee is an individual and a member of Khemani group where action u/s 132 was carried out on 9-10-2003. During the course of search certain gold/diamond jewellery was recovered from the bed room of the assessee. The explanation of the assessee was that these ornaments were received on various family functions and occasions. However, in the absence of any 7 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 documentary evidence and after giving set off for the Streedhan of three lady members of the family total worth of undisclosed jewellery was worked out at Rs. 3,28,928/-. The same amount was assessed for A.Y. 2004-05 whereas the assessee had filed return showing NIL income. The penalty was levied for the same which was confirmed by the CIT(A).
8. The stand of the assessee before us is that the penalty in question is not justified when the jewellery was received on various occasions like festivals and functions and was not proved to have been acquired out of undisclosed sources of the assessee. The ownership of jewellery was also not established by the revenue authorities. It was also submitted that the ownership of the jewellery holding established by the revenue authorities at the strength f search only which is not justified. and the revenue authorities have not appreciated that the entire jewellery was duly explained and was assessed in the hands of the assessee on estimate basis. So the penalty be deleted. On the other hand, the learned DR supported the orders of lower authorities.
9. We find that the addition has been made on the basis of seized ornaments after giving benefit of Streedhan. The stand of the assessee has been that ladies used to receive ornaments in question on different occasions which is normal procedure. So, it could not be established beyond doubt that investment 8 ITA 466 , 467 and 1175//PN/07 Khemani group A.Y. 2003-04 and 2004-05 in ornaments over and above the Streedhan accepted by the revenue authorities was made out of undisclosed income of the assessee. Without prejudice to the above, the ornaments have been valued on estimated basis. So the addition which is the basis for penalty has element of estimation. While taking the overall view, according to us, it is not a fit case for levy of penalty because receiving of ornaments on different occasions cannot be ruled out as such. Moreover, the valuation of ornaments by way of estimation and making addition cannot be sound the basis for levying the penalty. Accordingly, the penalty in question is directed to be deleted.
10. In the result, the appeal in ITA No. 466/PN/2007 is dismissed, appeal in ITA No. 467/PN/2007 and 1175/PN/2007 are allowed Order is pronounced in the open court on 24th September 2010 Sd/- sd/-
(R.C. SHARMA) (SHAILENDRA KUMAR YADAV)
Accountant Member Judicial Member
Pune dated the 24th September 2010
Ankam
Copy of the order is forwarded to :
1. Assessee
2. Department
3. CIT(A)-I Nagpur ,
4. CIT (Central) Nagpur
5. D.R. ITAT 'B' Bench
By order
Asstt. Registrar
9 ITA 466 , 467 and 1175//PN/07
Khemani group
A.Y. 2003-04 and 2004-05
I.T.A.T Pune