Income Tax Appellate Tribunal - Ahmedabad
Girishbhai Babaldas Patel, Patan vs Department Of Income Tax on 11 May, 2012
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ ''A'', अहमदाबाद
।
IN THE INCOME TAX APPELLATE TRIBUNAL AT
AHMEDABAD,
"A" BENCH
सव[ौी ए.
ए.के.गरोǑडया,
गरोǑडया, लेखा सदःय एवं ौी कुल भारत,
भारत, Ûयाियक
सदःय के सम¢ ।
BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER
AND
KUL BHARAT, JUDICIAL MEMBER)
ITA. Nos.1739 and 1740/Ahd/2012
Asstt. Year : 2008-2009 & 2009-2010
Asstt.CIT, बनाम/Vs. Shri Girishbhai Babaldas Patel
Patan Circle. 37, Arbudanagar, Vibhag-2
B/h. GEB Substation
Patan 384265
PAN : ACDPP 8416 C
(अपीलाथȸ / Appellant) (ू×यथȸ / Respondent)
राजःव कȧ ओर से/ : Shri Rahul Kumar
Revenue by
िनधा[ǐरती कȧ ओर से/ : Shri Gaurav Nahta
Assessee by
सुनवाई कȧ तारȣख/ : 24th January, 2013
Date of Hearing
घोषणा कȧ तारȣख/ : 28th February, 2013
Date of Pronouncement
ORDER
PER A.K. GARODIA, ACCOUNTANT MEMBER: Both these
appeals are filed by the Revenue, which are directed against the order of the learned CIT(A), Gandhinagar dated 11.5.2012 for assessment ITA. Nos.1739 and 1740/Ahd/2012 year 2008-09 and 2009-10. Both these appeals were heard together, and are being disposed of by way of this common order for the sake of convenience.
2. The ground no.1 in both the years is inter-connected, which is as under:
"1. The ld.CIT(A) has erred in law and on facts in deleting the addition made by the AO for Rs.37,98,900/- for A.Y.2008-09 and Rs.1,35,43,500/- for A.Y.2009-10 made on account of undisclosed income from sale properties which was offered by the assessee at the time of survey proceedings."
3. The brief facts, on this issue are that, it is noted by the AO in para-4 of the assessment order for A.Y 2008-2009 that there was a survey carried out in the case of the assessee on 11-9-2007 in which the assessee has admitted undisclosed income of Rs.1,03,23,900/- for A.Y.2008-2009. But in the course of assessment of that year, it was seen by the AO that the assessee has not offered this much amount in the return of income and has only offered Rs.65,00,000/- under the head "Other Sources" on account of income earned in investments. Therefore, the AO issued show cause notice to the assessee as to why the balance amount of Rs.38,23,900/- should not be added in the total income. Various replies were submitted by the assessee before the AO, and after considering the same, the AO was not satisfied and made addition in A.Y.2008-2009. Similarly, in A.Y.2009-2010 also, it was noted by the AO in the assessment order that in course of survey, the assessee has declared an income of Rs.1,96,43,500/- for A.Y.2009-2010, but the income declared in this year by the assessee on account of income earned from investment was only Rs.61 lakhs, -2- ITA. Nos.1739 and 1740/Ahd/2012 and hence, the AO issued show cause notice to the assessee as to why the balance income of Rs.1,35,43,500/- should not be taxed in the hands of the assessee in A.Y.2009-2010. Various replies were submitted by the assessee in that year also, but AO was not satisfied and made addition of this amount of Rs.1,35,43,500/- in A.Y.2009- 2010 also.
4. Being aggrieved, the assessee carried the matter in appeal before the CIT(A) on this issue in both the years. As per the combined order passed by the CIT(A), he deleted the entire addition for both the years, and now the Revenue is in appeal before us in both the years.
5. The learned DR supported the orders of the AO, whereas the learned AR supported the orders of the learned CIT(A). He also placed reliance on the judgment of the Hon'ble Chhatisgarh High Court, rendered in the case of Income-tax Officer Vs Vijay Kumar Kesar (Chhattisgarh) as reported in 327 ITR 497. He also placed reliance on the judgment of the Hon'ble Gujarat High Court rendered in the case of S. R. Koshti Vs Commissioner of Income-tax (Guj), as reported in 276 ITR 165 (Guj).
6. We have considered rival submissions and perused the material on record and gone through the orders of the authorities below. We find that the basis of the addition made by the AO in both the years is the statement given by the assessee in the course of survey, and since the amount declared by the assessee in the return of income for these two years was less than the amount disclosed in the survey proceedings, the AO made addition for differential amount in both the -3- ITA. Nos.1739 and 1740/Ahd/2012 years. This addition in both the years were deleted by the learned CIT(A), as per para 12.4 at page no.20 to 24 of his order, and for the sake of convenience, these paras of the order of the learned CIT(A) are reproduced below.
"12.4 I have considered submissions of the appellant, assessment order, facts of the case and evidences furnished by the appellant. There is no dispute between the appellant and the AO on the basic facts that the two lands in question were agreed to be purchased (1) Limbodiwadi land whose survey no is 265 was purchased with rate of Rs. 39 lacs per vigha, it was of 8.5 vigha which amounts to Rs. 3,31,50,000/-. On page no.12 sale is shown amounting to Rs.5,27,93,500/- with reference to Rs. 62.11 lacs per vigha and the difference is of Rs.1,96,43,500/- (ii) On page no. 11 of Ann. A-3 on survey no. 358/2, the amount of the sale Is written as 3,51,64,000 and on the back of page no.9 the figure of resale value is written as 4,54,87,900/-. The difference of the above is Rs.1,03,23,900/-which Is not shown In the books of accounts, The appellant has not rescinded from the basic facts admitted during the survey, as above.
The basic difference of opinion between the AO and the appellant now is when the profit accrued and in which year these should be brought to tax. While the AO is seeking to tax on the basis of the statement of the appellant alone, without any other factual or legal reason; I agree with the appellant fully that though he was aware of the facts, he could not be accepted to know the entire law regarding taxability and accrual at the time of survey. He has pleaded that the dealing in land were verbal contract and no banakhat or written agreement whatsoever were entered into. The AO has also relied on the notings in a note-book found during the course of survey and the statement of the appellant; and there is no contention of even the -4- ITA. Nos.1739 and 1740/Ahd/2012 department that any written agreements/bhanakhats were indeed entered into nor were any found during the course of the Survey.
Further, the appellant has also contended that the lands were not taken possession of and therefore, not given possession to the purchaser before the date of survey.
Having considered all facts and the position of law, I am of the definite opinion that the statements of the appellant supported by the documents and other evidences can bind him only to the facts, admitted. The taxability has to be determined as per the correct law.
Now, the transactions are in respect of immovable properties. The immovable properties can be considered to be transferred (purchased or sold) in the year in which the registered sale deed is executed or under section 2(47)( v), any transaction involving allowing of possession to be taken over or retained in part-performance of a contract of the nature referred to in section 53A of the Transfer of Property Act would come within the ambit.of section 2(47)(v ). In order to attract section 53A, the following conditions need to be fulfilled. There should be a contract for consideration; it should be in writing; it should be signed by the transferor; it should pertain to transfer of immovable property; the transferee should have taken possession of the property; lastly the transferee should be ready and willing to perform his part of the contract. (Hon'ble Mumbai High Court in the case of Chaturbhuj Dwardkadas Kapadia vs CIT-260 ITR 491).It is clear that the complete purchase and sale of the properties as per law, did not take -5- ITA. Nos.1739 and 1740/Ahd/2012 place till the date of survey and as the appellant is admitting that these were completed after survey in that assessment year, itself, the total income of these transactions should be offered and taxed by that year i.e. Asst. Yr. 2010-11.
Now, percentage completion method is recognized method in the case of various projects particularly housing projects; as per Clause 7.1 of AS-7 Pate Enterprises Vs. DCIT; ITAT Pune 'A' Bench- 125 TTJ 974. Here also, the assessee has entered into agreement of purchasing and selling of the lands which were not to be executed Immediately and long period of 3 years etc., were given for this purpose. At the most, the department can attempt to tax the incomes as soon • as the percentage payments for sales are received. The noting in the diaries are the only reliable evidence in this regard, particularly where neither the department nor the appellant is contesting them. As per the noting the Shailja Land was agreed to be purchased in June, 2007 and the appellant is submitting that it was agreed to be sold immediately within a short time. As per noting, 15% payment was received from the buyer and then 10% was received in June, 2008. By the preponderance of probability, it can be said that 15% payment was received before March, 2008 i.e. in AY 2008-09. No further payments have been received on the sale of this land as per the noting till the date of survey. Therefore, at the most 15% of the profit of this land is proved taxable in AY 2008-09 and further 10% In AY 2009-10 and it is not the case of the AO that It has not been offered even to this extent.
Similarly, as per the noting, the Limbodiwadi Land was agreed to be purchased in July, 2008 and the appellant is submitting that it was agreed to be sold immediately within short time. As per page 12 of Annexure A/4 noting, Rs.5 lac was -6- ITA. Nos.1739 and 1740/Ahd/2012 received on 24/09/2009 (AY 2010-11) and further 25"/0 i.e. Rs.13198375 payment was to be received on 30/11/2009 i.e. after the date of survey. As per page no. 25, the balance payment was to be received only after 2 ½ years of the verbal agreement to sale. Therefore, only Rs.5 lac payment have been proved to be received (that too only in AY 2010-11) on the sale of this land till the date of survey as per the noting.
Therefore, as per the accrual of income and the percentage completion of the contract (in absence of actual transfer of lands neither by registry nor under section 2(47)(v), in part-performance of a contract of the nature referred to in section 53A of the Transfer of Property Act) the assessee was only liable to be taxed on income of 25%'of total ultimate profits on Shailja Land till (including assessment year 2008-09) assessment year 2009-10. In fact, the taxability of the entire profit of Limbodiwadi land can be forced upon the appellant earliest in AY 2010-11. The appellant ha$ , shown more than these profits in these years without any doubt. They appellant is also bound to show the remaining profits in AY 2010-11 as it has admitted that the complete transactions have been completed in that year. Another plea which the appellant is taking in the appellate proceedings is regarding the deduction in profits by way of expenses i.e. Rs. 10 lac for approach road in Shailja Land and Rs.3,25,000/Dalali expenses of Limbodiwadi land. Although, the claim is apparently supported by the transactions recorded in impounded documents, no such stand was taken before the AO. Further, even in the statements at the time of survey, the appellant has stated that the entire difference of sales and purchase price is his income. The AO is free to examine this claim and decide as he deems fit, while assessing the income for AY 2010-11 after consideration of all -7- ITA. Nos.1739 and 1740/Ahd/2012 the relevant facts and giving the assessee opportunity of being heard. As the incomes offered on these agreement of sale of properties is not less than that proved to have accrued in the 2 assessment years; no additions on these accounts are warranted, in these years.
Accordingly, the additions made for differential income in both the years are deleted. The grounds are allowed."
7. From the above order of the learned CIT(A), we find that a finding is given by the learned CIT(A) that in respect of immovable properties, it could be considered to have been transferred in the year in which registered sale deed is executed or under section 2(47)(v) and any transaction involving allowing of possession to be taken over or retained in part performance of a contract of the nature, referred to in Section 53A of the Transfer of Property Act, would come within the ambit of section 2(47)(v). The learned CIT(A) has noted the judgment of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwardkadas Kapadia Vs. CIT, 260 ITR 491 and has noted certain criterion for the purpose of invoking the provisions of Section 2(47)(v). He has also noted that there should be a contract for consideration, it should be in writing and it should be signed by the transferor and pertained to transfer of immovable properties and should have taken the possession of the property, and lastly, the transferee should be ready and willing to perform his part of the contract. The learned CIT(A) has noted at page 23 of his order that as per the noting in the diaries, the Shailja land was agreed to be purchased in June, 2007 and as per the assessee, it was agreed to be sold immediately within a short time. He has further noted that as per the noting, 15% payments were received from the buyer in that year -8- ITA. Nos.1739 and 1740/Ahd/2012 and then 10% was received in June, 2008. He has also noted that no further payment was received for the sale of this land as per noting in dairy till the date of survey, and hence, as per the learned CIT(A), at the most, 15% of the profit of this land can be taxed in A.Y.2008- 2009 and further 10% in A.Y.2009-2010 and it is not the case of the Revenue that, the assessee has not offered even to this extent. There is no finding of the AO that whose land in question was taken by the assessee in the relevant years, and the possession was handed over to the ultimate buyers in these respective years i.e. Shailja land in A.Y.2008-2009 and Limbodiwadi land in A.Y.2009-10. Regarding Limbodiwadi land, it was noted by the learned CIT(A) that only Rs.5 lakhs have been received in A.Y.2010-11, and entire balance amount was received after that. Hence, as per the learned CIT(A), there is no part-performance of the contract of the nature referred to in Section 53A of the T.P. Act, and therefore the provision of Section 2(47)(v) of the IT Act are not applicable in respect of both these land in these two years. The learned CIT(A) has worked out profit on percentage completion method and has given a finding that the profit declared by the AO in these two years, is more than the profit to be declared as per the percentage completion method. He has also given a finding that total profit declared by the assessee in the course of survey for the assessment years 2008-2009 to 2010-11 is of Rs.6,29,65,650/- being the total of Rs.1,03,23,900/- for A.Y.2008-2009, Rs.1,96,43,500/- for A.Y.2009-2010 and Rs.3,29,98,650/- in A.Y.2010-11. This finding of Ld. CIT(A) that the provisions of Section 2(47)Iv) are not applicable in these two years could not be controverted by Ld. D.R. of the revenue. Hence, in fact, no part of profit in respect of these lands is taxable in these two years and entire profit is taxable in assessment -9- ITA. Nos.1739 and 1740/Ahd/2012 year 2010-11 but since the assessee has suo-moto declared this much profit in these two yeas and there is no appeal of the assessee, we do not find any reason to interfere in the order of Ld. CIT(A) because in the absence of sale of property or part performance of contract, no profit is in fact taxable in these two yeas and in that situation, whatever is suo-moto declared by the assessee, cannot be increased in these years and the balance profit can be taxed only in assessment year 2010-11 i.e. in the year of sale. We, therefore, decline to interfere in the order of Ld. CIT(A) on this issue. This ground is rejected in both the years.
8. Now, we take up ground No.2 of appeal in assessment year 2008-09 which reads as under:
"The Ld. CIT(A) has erred in law and on facts in deleting the addition made by the A.O. for Rs.1,35,050/- made on account of interest loss of house property income, deduction of LIC expenses & Medi claim."
9. Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A).
10. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue was decided by Ld. CIT(A) as per para 13.3 of his order, which is reproduced below for the sake of ready reference:
"I have considered submissions of the appellant, assessment order, facts of the case and evidences furnished by the appellant, it is seen that the appellant ha offered incomes of Rs.65,00,000/- in the assessment year 20008-09, therefore, on a consideration of the facts on records, the contentions made by the appellant and as per provisions of the Act, I am of the opinion that the interest loss of house property is deductible from other incomes and deduction of LIC and Medi-claim are deductible from gross total income as per provision of the Income tax Act, 1961. Accordingly, the A.O. is directed to -10- ITA. Nos.1739 and 1740/Ahd/2012 allow both the claims and addition of/Rs.1,35,050/- is deleted. The ground is allowed."
11. From the above para of the order of Ld. CIT(A), we find that there is interest loss on house property deductible from other income and deduction on account of LIC payment and Medi-claim are deducted from gross total income as per the provisions of the Income tax Act, 1961. We do not find any mistake in the finding of Ld. CIT(A) and hence, we decline to interfere in his order on this issue also. This ground is also rejected.
12. Now, we take up ground No.2 of the revenue's appeal for assessment year 1009-10 which reads as under:
"The Ld. CIT(A) has erred in law and on facts in deleting the addition made by the A.O. of Rs.3,18,373/- made on the basis of amount reflected in TDS certificates."
13. Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A).
14. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue was decided by Ld. CIT(A) as per para 14.3 of his order which reads as under:
"I have considered submissions of the appellant, assessment order, facts of the case and evidences furnished by the appellant, it is seen that the appellant has offered income from contract of Rs.2,65,137/- (totally missed by the AO) and bank interest of Rs.10,596/- in profit & loss account as well as income tax return of A.Y. 2009-10. As per the provisions of section 44AD, income from contract work cannot be less than 8% of the receipts, whereas the appellant has shown 8.35%, therefore, I am of the opinion that the appellant has offered both the incomes properly. Accordingly, the AO is directed to delete estimated addition of Rs.3,18,373/-. The ground is allowed."-11-
ITA. Nos.1739 and 1740/Ahd/2012
15. From the above para o the order of Ld. CIT(A) we find that a clear finding is given by Ld. CIT(A) that the assessee has offered income from contract of Rs.2,65,137/- which is totally missed by the A.O. and bank interest of Rs.10,596/- was also offered by the assessee in the P & L account as well as in income tax return for this year. He has also given finding that as per the provision of Section 44AD, income from contract work cannot be less than 8% of the receipt but the assessee has shown income @ 8.35%. These findings of Ld. CIT(A) could not be controverted by the Ld. D.R. and therefore, we decline to interfere in the order of Ld. CIT(A) on this issue also. This ground is also rejected.
16. In the result, both the appeals of the Revenue are dismissed.
17. Order pronounced in Open Court on the date mentioned hereinabove.
Sd./- Sd./-
कुल भारत /KUL BHARAT)
(क ए.के.गरोǑडया /A.K. GARODIA)
(ए
Ûयाियक सदःय /JUDICIAL लेखा सदःय /ACCOUNTANT
MEMBER MEMBER
Vijay/Sp.
Copy of the order forwarded to:
1) : Appellant
2) : Respondent
3) : CIT(A)
4) : CIT concerned
5) : DR, ITAT.
BY ORDER
DR/AR, ITAT, AHMEDABAD
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ITA. Nos.1739 and 1740/Ahd/2012
1. Date of dictation : 08-02-2013
2. Date on which the typed : 11/12-02-
draft is placed before the 2013/20.02.2013 Dictating Member.
3. Date on which the approved :
draft comes to the
Sr.P.S./P.S
4. Date on which the fair order : 28/02/2013
is placed before the
Dictating Member for
pronouncement.
5. Date on which fair order :
placed before Other
Member
6. Date on which the fair order : 28/02/2013
comes back to the
Sr.P.S./P.S.
7. Date on which the file goes : 28/02/2013
to the Bench Clerk.
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
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