Income Tax Appellate Tribunal - Ahmedabad
Dhananjay H.Patel, Ahmedabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
Before Shri, A.K.Garodia, Accountant Member and
Shri Kul Bharat, Judicial Member
IT(SS)A No.99 & 143/ Ahd/2010
& C.O.100/Ahd/2010
(a/o ITA No.143/Ahd/2010)
Assessment Year:2006-07
Dhananjay H Patel V/s. DCIT, Central Circle-
Bapu's Chora, Jetalpur, 1(1), Ahm edabad
Tal. Dascroi, Dist.
Ahmedabad
PAN No. AM RPP5712B
DCIT, Central Circle- V/s. Dhananjay H Patel
1(1), Ahm edabad Bapu's Chora, Jetalpur,
Tal. Dascroi, Dist.
Ahmedabad
Dhananjay H Patel V/s. DCIT, Central Circle-
Bapu's Chra, Jetalpur 1(1), Ahm edabad
Tal Dascroi, Dist.
Ahmedabad
(Appellant) .. (Respondent)
आवेदक कȧ ओर से/By Assessee Shri P.M. Mehta, AR
राजःव कȧ ओर से/By Revenue Shri B.L. Yadav, SR-DR
सुनवाई कȧ तारȣख/Date of Hearing 21-06-2012
घोषणा कȧ तारȣख/Date of Pronouncement 20-07-2012
ORDER
PER Kul Bharat, Judicial Member:-
These are cross-appeals filed by the assessee and Revenue and Cross-Objection (CO) filed by assessee which are directed against the common order of Ld. Commissioner of Income-tax (Appeals)-III, Ahmedabad of even date i.e. on 11-11-2009 pertains to assessment year 2006-07. The IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 2 assessee has raised the grounds of appeal arose from the result of search operation u/s. 132(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') in the case of Sanjay R Shah and Meeghmani Group therefore all have been heard together and are being disposed of by this consolidated order for the sake of convenience.
First we take up assessee's appeal in IT(SS) No.99/Ahd/2010 .
2. The assessee has raised the grounds of appeal:-
"1. In law and in the facts and circumstances of the appellant's case, the order passed by CIT(A) is bad in law and deserves to be cancelled as he has passed an order without considering and appreciating the facts of case of appellant.
2(a) In law and in the facts and circumstances of the appellant's case, the provisions of the Income Tax Act under which the assessment order is framed is not applicable to the assessment in question and thus the assessment order passed is illegal and void authorities below initio. It requires to be cancelled on this ground itself.
(b) In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) ought to have appreciated that assessment order passed by AO is bad in law and deserves to be cancelled.
3(a) In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the addition of Rs.1,82,437 for undisclosed capital gain. He ought to have deleted such addition made by AO.
(b) In law and in the facts and circumstances of the appellant's case, the CIT(A) ought to have appreciated that sales consideration declared by appellant is what he has actually received and ought to have held that sales consideration mentioned in seized material found from premises of third party cannot be considered or applied in case of appellant.
© Without prejudice to above, amount of Rs.44 lacs mentioned as unpaid amount in seized material cannot be considered as part of sale consideration for various agriculture lands mentioned in such seized document.
4. In the law and in the facts and circumstances of the case, the appellant denies his liability to pay interest."
3. The facts of the case are that a search operation was conducted in the case of Sanjay R Shah and Meeghmani Group by issuing a warrant of authorization u/s. 132 of the Act on 22-09-2005 and various documents/ books of account other valuable articles were found and seized from the various IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 3 premises covered u/s. 132(1) and 132(1A) of the Act. A notice u/s. 143(2), 142(1) of the Act along with detailed questionnaire was issued on 20-08-2007 and served by speed post upon the assessee in order to finalize the assessment u/s.153A rws 153B(1)(b) of the Act. Thereafter the Assessing Officer finalized the assessment proceedings u/s. 144 rws 153A rws 153C rws 153B(1)(b), whereby the addition of Rs.96,000/- on account of household expenses, Rs.1,15,860/- for unexplained business income, unexplained cash credidt of Rs.1.85 lakh and the addition of Rs.4,78,535/- on account of Long Term Capital Gains (LTCG for short) was made. Against this order, assessee filed an appeal before Ld. CIT(A) raising various ground. The grounds raised before Ld. CIT(A) are reproduced hereinbelow:-
"1. In law and on the facts and circumstances of the case, the impugned assessment order is bad in law and hence deserves to be cancelled.
2. In law and on the facts and circumstances of the case, the learned Assessing Officer has passed the present order without having any jurisdiction on the assessee and hence the assessment order is without jurisdiction and thus illegal and void ab initio.
3. In law and on the facts and circumstances of the case, the provisions of the Income-tax under which the assessment order is framed is not applicable to the assessment in question and thus the assessment order passed is illegal and void ab initio It requires to be cancelled on this ground itself.
4. In law and on the facts and circumstances of the case, the learned Assessing Officer has grossly erred in making the addition of Rs.96,000 for unexplained household expenses when no such addition is called for. It may be deleted.
5. In law and on the facts and circumstances of the case, the learned Assessing Officer has grossly erred in making the addition of Rs.1,15,880 for undisclosed business income when no such addition is called for. It may be deleted.
6. In law and on the facts and circumstances of the case, the learned Assessing Officer has grossly erred in making the addition of Rs.12,85,197 for unexplained cash credit when no such addition is called for. It may be deleted.
7. In law and on the facts and circumstances of the case, the learned Assessing Officer has grossly erred in making the addition of Rs.3,64,778 for undisclosed capital gains when no such addition is called for. It may be deleted.
IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 4
8. In law and on the facts and circumstances of the case the learned Assessing Officer has grossly erred in charging interest u/s. 234A, 234B 234C and 234D of the I.T. Act, when no such interest is chargeable. It may be deleted.
9. In law and on the facts and circumstances of the case, the learned Assessing Officer has grossly erred in initiating the proceedings for the levy of penalty u/s. 271(1)(c) when no such penalty is leviable. He may be directed to withdraw such proceedings.
10. In law and on the facts and circumstances of the case, the learned Assessing Officer has grossly erred in initiating the proceedings for the levy of penalty u/s. 271(1)(c) when no such penalty is leviable. He may be directed to withdraw such proceedings."
After considering the facts and submissions of the assessee Ld. CIT(A) party allowed the appeal of assessee.
4. The assessee feeling aggrieved by this order of Ld. CIT(A) filed second appeal before us.
5. The Ld. Authorized Representative for the assessee relied upon the synopsis filed on 20-06-2012 and placed on record. Ld. AR further submitted that he has challenged the validity of the assessment order before Ld. CIT(A) but this ground has not been decided by Ld. CIT(A). It is submitted by Ld AR that Ld. CIT(A) erred in observing that the assessee had challenged the constitutional validity of provisions of Section 143A r.w.s. 153B(1) of the Act.
6. On the contrary Ld. SR-Departmental Representative for the Revenue relied upon the orders passed by authorities below.
7. We have heard the rival submissions, perused the materials available on record. Ld. AR has relied upon the synopsis, same are reproduced hereinbelow:-
"Assessment Year: 2006-07 Hearing of the above referred part-heard matters is fixed before your Honours on 23-5-2012.
IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 5 In the assessee's appeal No. IT[SS]A No.99/A/2010, the assessee has challenged the validity of the assessment framed by the Assessing Officer u/s. 144 r.w.s. 153A r.w.s 153C r.w.s 153B(1)(b) of the I.T. Act and in the Cross- objections filed by the assessee in the departmental appeal, the assessee has again challenged the validity of the assessment order.
At the outset, the assessee respectfully submits before your Honours hat the Cross-objections filed by the assessee being C.Os. No.100/A/2010 in departmental appeal is not pressed. Hence, the same may kindly be dismissed as sot pressed.
In this connection, we have to bring to your Honour's kind notice, the order dated 7-6-2012 passed by the Hon'ble ITAT, Ahmedabad Bench-D in other assessees of the same group wherein similar issue was involved challenging the validity of the assessment order and on the same ground, your Honours have taken a decision vide para-7 on page-7 of the said order as under:-
'We find that assessee had challenged jurisdiction as well as validity of the initiation of the assessment order passed by Assessing Officer u/s. 153A/153. It is the contention of Ld. AR that admittedly no search operation was conducted at the premises of the assessee and no document was recovered from the premises of the assessee and no document was recovered from the premises of the assessee. We find that Ld. CIT(A) has not decided this issue despite a specific ground raised by the assessee and observation of Ld. CIT(A) is that the constitutional validity of provisions of section 153A/153C of the Act was challenged and any ground of appeal challenging the constitutional validity of the forming of the provisions. We find that Ld. CIT(A) has not decided this issue of his jurisdiction and validity of assessment despite the fact that of specific ground had been raised by the assessee. In view of this matter in the interest of justice, we remit back this matter to Ld. CIT(A) to decide afresh after providing reasonable opportunity of being heard to assessee. The appeal of assessee is allowed for statistical purposes."
A copy of the said decision is attached herewith for your Honour's kind perusal.
As the facts of the assessee's case are identical with the other group members of he assessee referred to hereinabove in Hon'ble Tribunal's order, we have to request your Honours to remit back this matter to the Ld. CIT(A) to decide afresh, after providing reasonable opportunity of being heard to the assessee.
So far as the departmental appeal is concerned, this is the appeal filed by the department in the year 2010 and hence, we request your Honours to keep the same pending and adjourn the same, as requested by the Ld. Departmental Representative."
IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 6 Ld. CIT(A) has decided this issue in para 4 to 6 of his order, same is reproduced hereinbelow for the sake of clarity:-
"4. The appellant was served notice u/s. 153C, consequent to the search in case of Sanjay Shah and Meghamani group, on 22/9/2005. The AO noted that the return had been filed originally on 21/7/2006, revised on 9/4/2007 at the income of Rs.2,11,8705/-. In the return filed originally, capital gains had not been shown. The AO served notice(s) u/s. 143(2)/142(1) and questionnaires and the assessee filed written submissions but did not file return u/s. 153A/153C.
5. The Assessing Officer noted that the appellant had, in letter dated 2/10/2007, admitted expenses of Rs.5,000/- per month on the family including his wife and son. The AO felt that this was inadequate and considering factors like inflation, education of children, social/religious functions, etc., should have been about Rs.8,000/- per month and since no withdrawals have been shown, the addition of Rs.96,000/- was made. The AO also noted that the assessee was trading in food grains in the name of Jalaram Trading Co. However, the books of accounts were not maintained and the assessee failed to furnish infomation/details which was repeatedly required, vide notices/questionnaires. The AO therefore felt that provisions of section 44AF were applicable in case of assessee who was a retailer and so estimated the income of Rs.1,15,880/- on the turnover of Rs.30.07 lakhs (after deducting the disclosed business income of Rs.34,501/-). The AO also observed that creditors/depositors to the extent of Rs.12,85,197/- were shown in the balance-sheet as on 31/3/2006 of which no details were filed. Hence he treated them as unexplained cash credit. The AO further observed that the documents seized from the residence of one Lalitbhai K Patel and Kanjtibhai Patel, particularly page 94 of annexure A4, revealed that the land comprised in Block No. 95, 96 and 113 in Jethalpur had been transacted for a consideration, much higher than was disclosed in the returns of the owners, including the append so capital gains have been understated to the extent of Rs.4,78,535/-.
5.A In pages 6 to 11 of his order, the AO discussed the status of the land in Survey No.95, 96, its acquisition by the appellant/other co-owners, its sale to Kantibhai M Patel, the disclosure made by the co-owners, including the appellant before the ADIT(Inv), of having received the consideration by cheque (and disclosed) and in cash (disclosed later). The AO pointed out that the capital gains had not been disclosed in the original return and even in the revised return on the disclosure was not full and true. The detailed questionnaire/show cause notice dated 5/11/2007, (reproduced by the AO in his order), was also served but was not responded to in any manner. The AO thereafter considered the details of the transactions as per the seized records, which were also accepted/verified as correct and authentic by Shri Kantibhai, etc., in his statements and the action taken by the co-owners of the land in this read, i.e. admission of addition therefore computed it, as per the seized records and details and statements of the purchasers/sellers, and added the differential amount.
IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 7
6. Before me, submissions were made/filed, contesting the conclusions of the AO. These are considered as under:
(i) The appellant has questioned the validity of the assessment order by attempting to equate the provisions of Chapter XIV-B with that of section 153A. The provisions of section 153A have been termed as discriminatory and unconstitutional. The CIT(A) is not the proper forum for challenging the constitutional validity of the statutory provisions. This legal ground of appeal is hence rejected.
(ii) In respect of the additions for household expenses it is seen that the A.O was informed of the expenses and their adequacy. There were withdrawals by the other family members as well.
Cash withdrawals (net) Assessment Years Name 2000-01 2001-02 2002-03 2003-04 2004-05 2004-05 2005-06 A/c Year 99-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Satishbhai H 95,000 113,500 55,000 Nil Nil 43,875 Nil Patel A/c/.4866 ADC Bank, Jetlpur Dilipbhai H 140,000 61,500 46,243 Ni, Nil 122,000 10,000 Patel A/c 4760 ADC Bank Jetalpur Harshabhhai H 12,065 27,500 34,500 36,000 42,000 36,000 36,000 patel A/c 4775 ADC Bank R. Mahendrakumar & Co.
Dhananjay H 5,500 Nil Nil Nil Nil Nil Nil Patel A/c 4776 ADC Bank Jetalpur M/s Ami Enter. Leelaben S 55,000 76,500 20,000 50,000 Nil 85,000 37,050 Patel A/c. 4866 Mayank S Patel Nil 341 24,078 Nil 50,316 -- Nil A/c 3794ADC Bank Jetalpur Manoj S Patel 8,400 5,500 20,000 2,500 Nil 23,700 107,591 A/c 3012 ADC 50,000 30,000 Radhakrishna Rice Mills Shobhanaben D 54,000 54,000 54,000 ,60,000 59,474 30,000 14,000 Patel A/c 3040 Dena Bank Jetalpur Total 369,965 428,788 403,821 148,500 109,790- 340,575 204,641 Sale proceeds -- 89,277 -- --- 153,914 96,500 358,075 of Agri. income as per bills enclosed Total 360,965 518,065 403,821 148,500 263,704 437,075 562,716
IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 8 Additions made 336,000 409,200 446,400 483,600 520,800 558,000 595,200 The explanation given about the availability of agriculture produce, community living in small town can also not be discounted. The AO has not brought any evidence on record to suggest that household expenditure incurred were more than what was disclosed by the appellant/family members. Similar addition(s) in A.Y 2005-06 was deleted by CIT(A) in order dated 27/1/2009. In these circumstances, the additions for household were not justified and are deleted. The related ground of appeal is allowed.
(iii) In respect of the addition for business income, it was submitted that adequate opportunity was not given. Moreover, the appellant was a wholesale trader of agriculture products in name of Jalaram Trading Co. and income of Rs.34,507/- was disclosed. The audit u/s 44B was not carried out as the turnover was less than Rs.40 lakhs. The AO had vide his questionnaire dated 20/8/2007 (S.No. 17) sought the English/Hindi version of the Books of account which was answered by the appellant as 'NIL' in reply dated 2/10/2007. This led the AO to believe that proper books of account were not maintained and book results were to be rejected. However the AO has himself referred to the total turnover of Rs.30.07 lakhs as penalty the P&L Account. Thus, the Assessing Officer's insistence on books of account not being audited u/s. 44AB was misplaced. The AO has taken recourse to section 44AF without detailing how and why the other entries in the P&L Account were all cooked up/unverifiable. Thus the conclusion drawn and application of section 44AF was not justified. The addition of Rs.1,50,381/- is deleted."
We find that assessee had challenged jurisdiction as well as validity of the initiation the assessment order passed by Assessing Officer u/s 153A/153C. It is the contention of Ld. AR that admittedly no search operation was conducted at the premises of the assessee and no document was recovered from the premises of the assessee. We find that Ld. CIT(A) has not decided this issue despite a specific ground raised by the assessee and the observation of Ld. CIT(A) is that the constitutional validity of provisions of Section 153A/153C of the Act was challenged and any ground of appeal challenging the constitutional validity of the forming the provisions. We find that Ld. CIT(A) has not decided this issue of his jurisdiction and validity of assessment despite the fact that of specific ground had been raised by the assessee. In view of this matter, and the decision of ITAT-D Bench in other assessees of the same Group in IT(SS)A No.100 to 107/Ahd/2010 order dated 07/06/2012 and in the interest of justice, we remit back this matter to Ld. CIT(A) to decide afresh IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 9 after providing reasonable opportunity of being heard to assessee. The appeal of assessee is allowed for statistical purposes.
8. In the result, assessee's appeal is allowed for statistical purposes.
Now we take up Revenue's appeal in IT(SS) No.143/Ahd/2010.
9. The facts are identical in this appeal with the facts of IT(SS)A No.99/Ahd/2010 of the assessee. Since assessee's appeal is remitted back to the file of Ld. CIT(A) hence we also remit back the appeal of Revenue to the file of Ld. CIT(A) for fresh adjudication, therefore appeal filed by Revenue is allowed for statistical purposes.
10. Now coming to assessee's CO No.100/Ahd/2010, Ld. AR of the assessee has stated that he is instructed by assessee not to press. Hence, we dismiss the CO of assessee as not pressed.
11. In the result, both the cross-appeals of assessee and Revenue are allowed for statistical purposes; but the CO of assessee is dismissed as not pressed.
Order pronounced in Open Court on the date mentioned hereinabove at caption page.
Sd/- Sd/-
(A.K.Garodia) (Kul Bharat)
(Accountant Member) (Judicial Member)
Ahmedabad,
*Dkp
Ǒदनांकः- 20/07/2012 अहमदाबाद ।
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad IT(SS)A No.99, 143/Ahd/2010 & CO 100/Ahd/2010 A.Y. 06-07 Dhananjay H Patel v. DCIT CC-1(1) A'bd Page 10
6. गाड[ फाइल / Guard file.
By order/आदे श से, /True Copy/ उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।
Strengthen preparation & delivery of orders in the ITAT
1) date of taking dictation 13/07
2) direct dictation by Member straight on No computer/laptop/dragon dictate
3) date of typing & draft order place before Member 16/07 4) date of correction 16/07
5) date of further correction
6) date of initial sign by Members 17/07 7) order uploaded on 20/07
8) original dictation pad-part has been enclosed in the file Yes
9) final order and 2nd copy send to Bench Clerk on 20/07