Income Tax Appellate Tribunal - Ahmedabad
Shri Jayesh P. Patel, Anand vs The Dy.Cit.,Anand Circle,, Anand on 15 May, 2019
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'सी', अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, AHMEDABAD सव ी द प कुमार के डया, लेखा सद य एवं महावीर साद, या यक सद य के सम । BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER आयकर (ss) अपील सं./IT(ss)A No.17/Ahd/2012 (Block Period : 01/04/1988 to 18/03/1997) Shri Jayesh P.Patel बनाम/ The DCIT 23, Aryanagar Vs. Anand Circle Amul Dairy Road Anand Anand थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AEQPP 4782 E (अपीलाथ& /Appellant) .. ( 'यथ& / Respondent) अपीलाथ& ओर से /Appellant by : Shri Aseem L. Thakkar, CA 'यथ& क) ओर से/Respondent by : Shri O.P. Sharma, CIT-DR ु वाई क) तार ख / सन Date of Hearing 18/02/2019 घोषणा क) तार ख /Date of Pronounce ment 15/ 05/2019 आदे श / O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax(Appeals)-IV, Baroda [CIT(A) in short] dated 16/11/2011 in the matter of assessment order under s.158C(2) rws 143(3) & 254 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 31/12/2007 relevant to Block Period 01/04/1988 to 18/03/1997.
IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -2-
2. The solitary ground of appeal raised by the Assessee reads as under:-
The learned Commissioner of Income Tax (Appeals) - IV, Baroda, erred in law and on facts in confirming penalty levied by Dy.Commissioner of income Tax, Anand Circle, Anand of Rs.57,58,700/- u/s.158BFA(2) of the IT Act, 1961.
3. Briefly stated, pursuant to search and seizure action under s.132 of the Act in the business and the residential premises of the assessee on 18/03/1997, the assessee was allegedly found to be owner of undisclosed income of Rs.96,35,468/- by the Assessing Officer. The CIT(A) in the first appeal in quantum proceedings, revised the aforesaid undisclosed income of the assessee to the extent of Rs.95,97,832/-. The aforesaid quantum order of the CIT(A) was challenged by the assessee before ITAT. The ITAT vide its order dated 20/11/2017 in IT(ss)A No.33/Ahd/2009 for the block period from FY 1987-88 to 18/03/1997 set aside the basis for making the addition towards unaccounted income in a fundamental manner. The ITAT however, retained the addition of Rs.25 lakhs on pure estimation basis to put an end to the litigation cropped up. It will be apt to reproduce the quantum order for ready reference.
1. With this appeal, the Assessee has challenged the correctness of the order of the ACIT, Anand Circle framed u/s. 158BC r.w.s. 143(3) and 254 of the Act.
2. This is the second round of litigation. In the first round of litigation, the assessment was framed u/s. 158BC r.w.s. 143(3)of the Act for the block IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -3- period from F.Y. 1987-88 to 18.03.1997 vide order dated 23.03.1999. The litigation travelled up to the Tribunal and the Tribunal vide order dated 11.08.2006 in IT(SS)A Nos. 316, 299 & 58/Ahd/2003 set aside the matter for deciding the matter afresh after verification of the claim of the assessee.
3. The additions made by the A.O. as agitated by the assessee before us can be understood from the following chart:-
No. Nature of addition Amount (Rs.)
1 Unaccounted investment in 32 guntha at R.S. 75000
No. 813, Anand.
2 Unaccounted investment in R.S. No. 1061001
615/1, 615/2, 615/3 Anand.
3 Unaccounted Dalali 5000
4 Unaccounted investment in R.S. No. 1135/3 105000
Anand, 250 Jitodia
5 Unaccounted investment in 116 guntha of land 11000
at R.S. No. 1707 Karamsad
6 Unaccounted investment in 106.75 guntha at 110000
R.S. No. 1314, 14.3.1, 14.3.2, Jitodia
7 Unaccounted investment in 70 guntha of land at 10000
R.S. No. 67/7
8 Unaccounted investment in 49.57 guntha of 25000
land at R.S. No. 1242/1, 2, 3
9 Unaccounted Dalaii 5000
10 Unaccounted investment in 53.62 guntha of 100000
land at R.S. No. 735/4 & 737/2
IT(ss)A No.17/Ahd/2012
Shri Jayesh P.Patel vs. CIT
Block Period 01/04/1988 to 18/03/1997
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11 Unexplained expenditure 125000
12 Unaccounted investments / profit at land 26700
at R.S. 2741/1, 2741/4A, 2741/4B
13 Unaccounted Dalali 3000
14 Unaccounted investment in 316 guntha of land 10000 at R.S. No. 2068 Bakrol 15 Unaccounted investment in 9.11 gunthas of land 280000 at R.S. No. 2031/2/2 16 Unaccounted Dalali 5000 17 Unaccounted investment in land of 26,81 50000 guntha at R.S. No. 1182/1 18 Unaccounted investment in 17.86 guntha of 71000 land at P.P. No. 125 19 Unaccounted Dalali 5000 20 Unaccounted investment and business 353000 profit in 44 guntha of land at R.S. No. 691 New, 873 Old 21 Unaccounted Dalali 10000 22 Unaccounted investment in 54.70 guntha of 50000 land at R.S. No. 380, Mogri 23 Unaccounted investment in 66.78 guntha of 147500 land at R.S. No. 1182/1, 1182/2 IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -5- 24 Unaccounted investment in 30.47 guntha of 25000 land at R.S. No. 1105/3A, 3B, 4A, 4B and 1110/1, 2, 3 25 Unaccounted investment in 17.2 guntha of land 86000 at R.S. No. 1021, 1022 Anand 26 Unaccounted investment in 15.18 guntha of 202000 land at R.S. No. 488/1, Anand 27 Unaccounted Dalali 11000 28 Unaccounted investment in 7.08 guntha of land 3500 at R.S. No. 582/4, Navli 29 Unaccounted investment in 16.19 guntha 25000 at R.S. No. 1863, Bakrol 30 Unaccounted investment in 71.84 guntha of 51000 land at R.S. No. 180 & 183 31 Unaccounted investment in 220.36 guntha of 5000 land at R.S. No. 311, 320, 368 32 Unaccounted investment in 78 guntha of land at 2500 R.S. No. 1131/12B, Anand 33 Unaccounted investment in 43,03 guntha of 42000 land at R.S. No. 1280/1,2,3, 34 Unaccounted investment in 25.29 guntha of 25000 land at Revenue Survey No. 161 of Jitodia 35 Unaccounted investment in Share & NSC 19000 36 Unaccounted advances through promissory 600000 note IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -6- 37 Unaccounted business profit as per 4620688 Annexure A/6 (residence) 38 Unaccounted gold ornaments 263340 39 Unaccounted investment in KVP / FD and 250712 others as per Annexure K, L, M. 40 Unaccounted investment in household 167636 valuables 41 Unaccounted deposits in Bank account of the 75000 assessee 42 Unaccounted investment in shares as 98187 discussed investment in shares 43 Unaccounted money lending through 264781 promissory note of M/s. Swaminarayan Financier 44 Miscellaneous investment in Maruti Car 154923 Typewriter & others
4. The allegation of the revenue is that the assessee is mainly involved in the business of sale and purchase of land and also earning brokerage to some extent in some of the land. The revenue alleges that the assessee involved himself in disputed immovable properties and charged hefty amounts for putting himself out of the dispute. The revenue further alleges that the assessee has acquired various properties either in his name or in the names of his family members and employees. It is also the allegation of the revenue that by entertaining disputed land or creating dispute by virtue of banakhat with various land purchase, the assessee has pocketed huge amount of unaccounted income. In support of these allegations, the Assessing Officer has heavily relied upon the IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -7- Banakhats which were found and seized from the premises of the assessee at the time of search and seizure proceedings.
5. The assessee has strongly refuted the allegations of the revenue by claiming that he is only a land broker and in support of his contentions, the assessee furnished the confirmations of various land owners at the time of the first round of litigation. The assessee further claims that the proof of ownership of the land in question was also furnished to the Assessing Officer. The assessee strongly contended that he is merely a mediator and a conduit between the owner of the land and the prospective purchasers and has only tried to facilitate the deals by earning some Dalali (brokerage). The assessee strongly refuted the allegation that the Banakhats found at the time of search pertain to purchase of immovable properties by him. In support of his claim, the assessee states that there is not even a singly evidence which could suggest that the impugned properties were in the name of the assessee.
6. We have given a very dispassionate consideration to the orders of the authorities below. There is no dispute that several Banakhats were found from the premises of the assessee. Some of the Banakhats are not even signed by any parties. It is true that the Banakhats have the name of the assessee or his family members or his employees. But, it is equally true that there is not even a single evidence which could show that the assessee was the owner of the impugned properties. It appears that the assessee was acting as a conduit between the purchasers and the sellers of the disputed land as a broker.
7. Our view is fortified by the fact that one register A-6 was found at the time of search which contain notings in respect of purchase of land from various parties. The entries on the debit side reflected the payment made to the land owner and the entries on the credit side represented the money received from the purchaser. The total of the receipt side was Rs. 1,46,32,959/- whereas the payments aggregated to Rs.1,00,18,271/-. The A.O. has added the difference of Rs. 46,20,688/- as unaccounted business profits of the assessee in addition to the amounts found paid as per the Banakhats.
IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -8-
8. The entries in the register appears to be pertaining to the Banakhats found at the time of search on the basis of which the Assessing Officer has made the additions as exhibited in the chart elsewhere. The contention of the assessee was dismissed merely because the amounts did tally but the dates did not.
9. In our considered opinion, the claim of the assessee that he was acting only as a broker/conduit cannot be brushed aside lightly. We are of the opinion that additions of such magnitude should be taken to its logical conclusion. What was found from the premises of the assessee can be understood from the following chart:-
Item Relevant Found Seized
Annexure
Gold X/J 1268 gms. 180 gms.
Ornaments Rs. 5,30,285 Rs. 42,000
Jewellery
Cash C/C-1 Rs. 76,820 Rs. 70,000
Xerox copy K Rs. 42,000 --
of KVP
Xerox copy L Rs. 36,000 --
of KVP Xerox copy
NSC FDR M Rs. 2,40,630 --
KVP
Other V Household --
valuables Appliances
10. The above chart shows that the assessee was a man of small means. If the assessee has made exorbitant profit from the land transactions, as alleged by the revenue, the same should be reflected in the standard of living of the assessee and also the seizure made by the revenue. The seizure of the valuables found at the time of search as mentioned hereinabove speaks for themselves. Nothing is coming from the record to show any lavish ceremonial function taken in the family in the block period. Considering these facts, additions of such magnitude cannot be sustained. The A.O. is entitled to make any deductions from the seized Banakhats and the deductions made by the A.O. may have some meaning but are devoid of any substance.
IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997 -9-
11. If, we accept the contentions of the assessee that all details relating to the ownership of the land have been furnished alongwith 7/12 abstracts in respect of all the survey numbers, then these Government documents and the details of transactions will need further verification.
12. We failed to persuade ourselves to once again set aside the matter to the files of the A.O. for further verification for the reason that 20 years have since elapsed and the impugned lands must have changed 3-4 hands in this period. Therefore, it would not be practical for the Assessing Officer to do the necessary verification and it would not only be injustice to the revenue but also to the assessee to bring evidences after a lapse of 20 years.
13. But, then every litigation should come to an end. In our considered opinion, there is no point in keeping this dispute alive, therefore considering the nature of transactions vis-à-vis the contentions of the assessee and pointing out that further verification would not result into any purposeful and meaningful result after a gap of 20 years, Therefore, to put an end to the litigation an addition of Rs. 25 lakhs should meet the ends of justice on the given peculiar facts of the case in hand.
14. We accordingly direct the A.O. to restrict the additions to Rs. 25 lakhs which will cover all the related unexplained investments as alleged by the A.O.
15. Appeal of the Assessee is partly allowed."
4. From the appellate order of the Co-ordinate Bench in quantum proceedings, it is crystal clear that additions towards undisclosed income has been sustained in the hands of the assessee purely on estimated basis having regard to the peculiar facts and circumstances of the case. A question thus arises as to whether penalty under s.158BFA(2) is justified where alleged undisclosed income was finalized on the basis of IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997
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estimation alone. A perusal of provisions of section 158BFA demonstrates that legislature has used different phraseology in sub- section(1) and sub-section(2) thereof whereby while the payment of interest under s.158BFA(1) is mandatory, levy of penalty is discretionary. It shows that the authority concerned is vested with the discretion towards levy of penalty. It is trite position of law that any discretion vested in an authority has to be exercised in a reasonable and rational manner depending upon the facts and circumstances of each case. It is also trite that the process of imposition of penalty is not automatic in the eventuality of estimated income. All the attendant circumstances of the case requires to be carefully scrutinized. The question whether penalty should be levied must be considered on the basis of the judicial determination. It must be proved beyond the shadow of doubt that there was actually income and further such income was not disclosed. The mere fact of addition on estimated basis particularly when the undidsclosed income is concluded on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty. An estimation so made may be correct or may not be correct. The degree of proof required for imposition of penalty is quite different from and is on a much higher pedestal, then required for the purpose of making additions on estimated basis and de hors sufficient evidence, penalty cannot be levied. Such view has been expressed by the Hon'ble Rajasthan High Court in CIT vs. IT(ss)A No.17/Ahd/2012 Shri Jayesh P.Patel vs. CIT Block Period 01/04/1988 to 18/03/1997
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Dr.Giriraj Agarwal Giri 346 ITR 152 (Raj.) and CIT vs. Becharbhai P.Parmar (2012) 341 ITR 499(Guj.) relied upon on behalf of the assessee.
4.1. It is manifest that the undisclosed income has been ultimately determined purely on estimated basis shorn of adequate reference to underlying material. The estimation has been made with caveats like "
to put an end to the litigation " and "meet the ends of justice in the given peculiar facts etc". Such basis of addition, in our view, cannot entail onerous burden in the form of penalty. In the circumstances, the statutory discretion vested with the revenue authorities, in our opinion, requires to be exercised in favour of assessee. Therefore, we set aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty imposed under s.158BFA(2) of the Act.
5. In the result, appeal of the assessee is allowed.
This Order pronounced in Open Court on 15 / 05/2019
Sd/- Sd/-
(महावीर साद) ( द प कुमार के डया)
या यक सद य ले खा सद य
( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 15/ 05 /2019
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
IT(ss)A No.17/Ahd/2012
Shri Jayesh P.Patel vs. CIT
Block Period 01/04/1988 to 18/03/1997
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आदे श क त ल!प अ"े!षत/Copy of the Order forwarded to :
1. अपीलाथ& / The Appellant
2. 'यथ& / The Respondent.
3. संबं6धत आयकर आयु8त / Concerned CIT
4. आयकर आयु8त(अपील) / The CIT(A)-IV, Baroda
5. 9वभागीय त न6ध, आयकर अपील य अ6धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स'या9पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation ..6.5.19 (dictation-pad 12- pages attached at the end of this appeal-file)
2. Date on which the typed draft is placed before the Dictating Member ...6.5.19
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.......15.5.19
7. Date on which the file goes to the Bench Clerk.....................15.5.19
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..................