Gujarat High Court
A C I T - Central Circle - 1 - Baroda vs Govindbhai N on 22 July, 2011
Author: Akil Kureshi
Bench: Akil Kureshi
A C I T - CENTRAL CIRCLE - 1 - BARODA....Appellant(s)V/SGOVINDBHAI N PATEL....Opponent(s) O/TAXAP/3/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 3 of 2012 ================================================================ A C I T - CENTRAL CIRCLE - 1 - BARODA....Appellant(s) Versus GOVINDBHAI N PATEL....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 NOTICE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI 25th March 2013 ORAL ORDER
(PER : HONOURABLE MR. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad [ Tribunal for short] dated 22nd July 2011, raising following questions for our consideration :-
{I} Whether on the facts and in the circumstances of the case, the Tribunal was right in law in ignoring Annexure A-14 seized at the time of search and held to be irrelevant when part of the notings in the same document was found and accepted as correct ?
{II} Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 8,85,000/= made on account of undisclosed investment in IVPs and accrued interest thereon amounting to Rs. 14,20,832/=, ignoring the fact that the Annexure A014 contains the details of investment upto April 1999 only and the search u/s. 132 (1) was conducted in the case of the assessee on 11th February 2002 and that the assessee had invested further amount in the IVPs and KVPs then those mentioned in Annexure A-14 ?
{III} Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 8,00,000/= made on account of undisclosed investment in KVPs and accured interest thereon amounting to Rs. 5,13,256/=, ignoring the fact that the Annexure A-14 contains the details of investment upto April 1999 only and the search under Section 132 (1) was conducted in the case of the assessee on 11/02/2002 and that the assessee had invested further amount in the IVPs and KVPs than those mentioned in Annexure A-14 ?
{IV} Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 25,87,350/= made on account of undisclosed investment in agricultural land rejecting the evidence collected by the Assessing Officer as not admissible ignoring the established law that rigour of Evidence Act is not applicable to Income Tax proceedings ?
Question nos. I and II are overlapping.
They pertain to Revenue s dispute with regard to deletion made by CIT [A], as confirmed by the Tribunal of an amount of Rs. 8.85 lakhs added by the Assessing Officer during the block assessment proceedings in case of respondent-assessee as undisclosed investment in Indira Vikas Patra [ IVP for short] and interest of Rs. 14.20 lakhs [rounded off] accrued thereon.
The Assessing Officer had made such addition which prompted the assessee to prefer appeal before the Commissioner [Appeals]. CIT [A] did not accept the Revenue s stand that the document Annexure A-14 seized during the course of search recorded details of investment upto April 1999 and that page-59 of Annexure A/16 contains the details of investment made after April 1999. CIT [A] observed that, there is no base to come to such absurd conclusion. There is no evidence in the seized material to show that Annexure A-14 written upto April 1999 and Annexure A-16 contained the investment made even after April 1999. On the contrary, Annexure A-14 pages 17 to 20 are more reliable as they give comprehensive details of investment made in IVPs on different dates. Last investment in IVPs as noted in Annexure 14 is not for April 1999 but it is for 4.9.1999.
Such decision of CIT [A] came up for consideration before the Tribunal at the hands of the Revenue. Tribunal confirmed the view of the CIT [A].
With respect to interest on maturity, CIT [A] observed that -
Thus, in view of the facts that the Assessing Officer himself having opted not to tax any interest income on IVPs lost presumably because the Assessing Officer realized that the assessee would not have received such interest, there being no reason or logic behind the alleged impending risk of liability for being taxed for investment in the year of receipt of interest and above all, it is option of the assessee to be exercised by him as to the method of accounting the income and has opted to be taxed on receipt basis etc., when considered in totally there is no justification for including interest accrued amounting to Rs. 14,20,832/= as is done, it deserves to be deleted.
Such conclusion of CIT [A] came up for consideration by the Tribunal at the hands of the Revenue. Tribunal confirmed the view of CIT [A], making following observations :-
41. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the revenue. The A.O noted the maturity value of the IVPs at Rs. 1,10,20,000/= and presumed that since the IVPs mature after period of 5 ¿ years at double the value of the investment, therefore, he has takne investment in IVPs at Rs.
55,10,000/=. The assessee filed cash flow statement of unaccounted income to show undisclosed investment in IVPs in a sum of Rs. 46,25,000/= which is based on the seized papers. The assessee also explained the bifurcation given in Annexure A/1 page 42 that investment in IVPs was only Rs. 92,50,000/=. It would show that the A.O merely presumed that since the IVPs mature after period of 5 ¿ years at double the value of investment, therefore, investment would be of Rs. 55,10,000/=. Such a presumption of the Assessing Officer was not based upon the evidence or material on record. The learned CIT (A) therefore, on going through the seized papers and material on record rightly deleted the addition of Rs. 8,85,000/= being the difference of Rs. 55,10,000/= and Rs. 46,25,000/=. This ground of appeal of the revenue has no merit and is accordingly dismissed.
Revenue in the present appeal has raised above noted two questions in this respect.
Learned counsel for the Revenue vehemently contended that CIT [A] as well as Tribunal ignored the contents of the document Annexure A-14 which, according to him, contain the details of investment only upto April 1999 and the search was actually conducted on 11th February 2002. He, therefore, contended that the assessee would have made further investment in IVPs in addition to those mentioned in Annexure A-14. We have, however, noticed that CIT [A] had discarded the Revenue s theory that document Annexure A-14 enlist investments only upto April 1999 and that document Annexure A-16 recorded further investment. This being a pure question of fact, in our opinion, no question of law arises for our consideration. Essentially, CIT [A] and Tribunal have examined the evidence on record and found not basis for making addition as undisclosed investment in IVPs.
Question III pertains to deletion of a sum of Rs. 8,00,000/=, addition of which was made by the Assessing Officer towards undisclosed investment in Kisan Vikas Patra [ KVP for short] and the interest of Rs. 5.13 lakhs [rounded off] accrued thereon. Here also, Revenue has placed heavy reliance on the contents of Annexure A-14, as can be seen from the question itself. CIT [A] and Tribunal had examined this issue similarly. In particular, CIT [A] accepted the assessee s version that such deposits were made by the partners out of the undisclosed income of M/s. GNP Auto Cassettes which was included in the total disclosure of Rs. 15,00,000/= made by the firm. Such being the conclusion of CIT [A] which was also upheld by the Tribunal, in our opinion, the issue being factual in nature, no question of law arises.
The sole surviving Question IV pertains to addition of Rs. 25.87 lakhs [rounded off] made by the Assessing Officer on account of undisclosed investment in purchase of agricultural land situated at village Hadiwada. The Assessing Officer had carried out investment and had collected statements of the sellers of the land in question to establish that they had received cash payment from the assessee towards the sale consideration. He provided such statements to the assessee as also the certification of the Talati that such statements were recorded in his presence. The assessee, however, strongly disputed the contents thereof and requested for cross examination of the authors of such statements. The Assessing Officer refused to grant such cross examination on the premise that the sale deeds are executed. CIT [A] deleted the addition, making following observations :-
51.8 We have considered the rival submissions and material available on record and do not find any justification to interfere with the order of the learned CIT (A) in deleting the addition. It is not in dispute that the A.O proceeded to make addition on the basis of enquiries conducted behind the back of the assessee without giving any opportunity of being heard or without giving any opportunity to cross examine the statements of the sellers. The learned CIT [A] was, therefore, justified in holding that the addition cannot be sustained on this ground itself. The Hon ble Supreme Court in the case of Kishanchand Chellaram, 125 ITR 713 held that, the evidence collected at the back of the assessee has to be confronted to the assessee to give him opportunity to rebut the evidence, otherwise, same would not be admissible in evidence against the assessee. The assessee filed specific replies before the Assessing Officer controverting the statements of the sellers and material collected behind the back of the assessee and also requested for their cross examination, but the Assessing Officer deliberately did not allow the assessee to cross examine the statements and materials collected at the back of the assessee cannot be read in evidence against the assessee. The assessee pleaded before the Assessing Officer that confirmation of sellers are not reliable because there was difference in Bighas of land and land sold to the assessee. None explained how much land sold to the assessee and how much consideration was received by them. Some confirmations were not of sellers. Assessee gave instances of sale consideration of comparable cases showing more or less same rates. The comparable case cited by the Assessing Officer was of non-agricultural land but in the case of the assessee, it was agricultural land even on the date of search. Thus, there is a denial of opportunity to the assessee.
The objections of the assessee to their statements were very specific which have also not been taken into consideration by the Assessing Officer in proper perspective. None of the objections of the assessee has been controverted by the Assessing Officer. No material is brought on record to show that assessee paid any money over and above what is stated in the sale deeds/documents. In the absence of any other corroborative evidence on record, the Assessing Officer was not justified in making the addition. Since, it is old matter, therefore, we do not find it proper to remand the matter to the file of the Assessing Officer for providing further opportunity to the assessee to cross examine such statements of the sellers particularly when according to learned counsel for the assessee they have filed affidavits before the revenue department to contradict their signatures and statements obtained by the Inspector. Considering the facts and circumstances noted above, we are of the view that the learned CIT (A) on proper appreciation of the facts and material on record rightly deleted the addition. This ground of appeal of the revenue has not merit. The same is accordingly dismissed.
From the above, it could be seen that primarily the Assessing Officer had made additions on two basis firstly, that some of the lands in the village were sold at a higher price, and that in the present case, sellers had given statements to the Assessing Officer of having received higher sale consideration. Both the grounds were knocked down by the CIT [A] and Tribunal on the premise that the other lands were not shown to be comparable and that the witnesses were not offered for cross examination. In fact, the assessee had contended that the lands sought to be compared by the Assessing Officer were converted into non-agriculture, and therefore, naturally fetched much higher price. Equally, it is undisputed that the witnesses were never allowed to be cross examined.
In view of the above background, we are of the opinion that neither CIT [A] nor the Tribunal committed any error. Whether any sale consideration in excess to what was disclosed before the Assessing Officer was paid or not is essentially based on facts to be judged on the basis of relevant material on record. When CIT [A] and the Tribunal both concurrently came to the conclusion that there is no evidence supporting the Assessing Officer s version that the assessee had invested large amount in purchase of the land, in our opinion, no question of law arises.
In the result, Tax Appeal is dismissed.
(AKIL KURESHI, J.) (Ms. SONIA GOKANI, J.) Prakash* Page 9 of 9