TaxTMI 
TaxTMI 
2015 (1) TMI 1066
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....the appellant and quashed the notice. 3. At the time of hearing, the AR of the assessee submitted that he is not pressing ground No.1 of the appeal and has also made endorsement to this effect in the memorandum of appeal; therefore, this ground of appeal of the assessee in all the three years under consideration is dismissed for want of prosecution. 4. The second and third common ground of appeal taken in all the years under consideration is that the CIT(A) erred in confirming the addition made by the Assessing Officer on protective basis u/s 69 of the Act of Rs. 3,25,51,000/- for AY 2005-06, Rs. 6,51,00,000/- for AY 2006- 07 and Rs. 3,25,50,000/- for AY 2007-08. 5. The facts of the case as borne out from the order of the Commissioner of Income Tax (Appeals) are as under: "5.1 During the course of search in the case of one Shri Somabhai Ambalal Prajapati, certain documents were found which indicated that appellant entered into agreements with him to purchase various plots of land. The relevant portion of assessment order for A.Y. 2005-06 is reproduced below:- ....
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....ajapati is mentioned which is summarized as under: Block No. Vigha Rate Amount 504 11.70 21.85 2,55,64,500 494 1.72 29.51 50,75,720 512-B 3.74 21.85 81,71,900 509 6.88 21.85 1,50,32,800 500 3.49 29.51 1,02,98,990 512-A 5.40 21.85 1,17,99,000 510 5.10 29.51 1,50,50,100 Total 9,09,93,010 3.3 Rate shown in this paper is exactly the same rate which is shown in Banachitti. Further, on page No. 117 of Annexure A-22, following details are mentioned: Old Sharat 540 4.97 494 1.78 Rate Rs. 29,51,000/- 500 3.60 510 5.28 15.63 Rs. 4,61,24,130/- received. Navi Sharat 509 7.11 504 12.09 497 Rate Rs. 21,85,000/- 487 512A 5.58 512B 3.87 Received Rs. 6,26,00,250/- Rs. 13,02,00,000/- Received (-) Rs. 10,87,24,380/- For completed Dastavej Old+New Rs. 2,14,75,520/- Received but Dastavej yet ....
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.... (F.Y.96-97) 1.15,89,440 1) Maniben Somabhai. 2) Pankaj Somabhai. 3) Hiralben Somabhai. 4) Kamlesh Sombhai. 5) Nishaben Pankajbhai. 6)Ialaben Somabhai 19,31,573. 19,31,573. 19,31,573. 19,31.573. 19,31,573. 19,31,573. 2010-2011 (8) 513 9480 18/0 6/20 09 96,67,069 95,880 95,71,189. 1) Vishnubhai Ambalal. 95,71,189 3.5 Further, Shri Somabhai Ambalal Prajapati in his statement recorded u/s. 132(4) of the Act on 25.01.2010 when confronted with page no. 111 of Annexure A-22, it was replied by him that on this page details of transaction pertaining to above referred to land is written. According to him it has been written by some person coming from the office of the assessee and it has been given to them as there was a little difference in total consideration wherein according to them the total consideration came to Rs. 12,79,45,600/-. 3.6 Shri Somabhai Ambalal Prajapati in his statement recorded on 25.01.2010 has reiterated that the amount of on-money received on Sale of land was paid to him by person coming from the office of the assessee and page no. 111 of Annexure A-22 was ....
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....ould have been cancelled the original banachithi would have been in the possession of the sellers and not the assessee as claimed by the assessee. • Further the lands agreed to have been sold have actually been transferred by the sellers after entering into agreement to sell with the assessee. • The sellers have disclosed the sale consideration as per the rates mentioned in banachithi and offered capital gains on the same as per the share held by them in the land sold consequent to banachithi. • It is pertinent to note here that the following lands that have been transferred by the sellers are not recorded in the banachithi. In this regard, Shri Somabhai A Prajapati in his statement recorded under section 131 of the Act on 14.12.2011 has specifically in answer to question No. 3 has stated that the land bearing Block Nos. 502, 505, 587,497, and 540 were disputed plots and thus could not be transferred. Thus, in order to honour the terms of the banachithi as the sellers had already received consideration for the sale of land Blocks bearing No. 510, 512-A, 512-B, & 513 were transferred at the insistence and directions of the assessee to the ultim....
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....05 3,25,50,000/- Cash As per the schedule of payment recorded in banachithi. 20.04.2006 3,25,50,000/- Cash As per the schedule of payment recorded in banachithi. Total 13,02,00,000/- 3.19 It has also been confirmed by the sellers that the land was transferred to Shri Ajay S Patel (Block Nos. 504, 494, 509, 500, 510, 512-A, 512-B & 513 at Bhadaj) and Shri Dhirubhai Amin (Block No. 502 & 505 at Bhadaj) at the instance of the assessee. Since, Ajay Patel being the final beneficiary has denied to have paid any amount over and above the documented price to the seller, thus, the source of the payments made by the assessee to the sellers in this regard remains unexplained. 3.20 It is clear that an aggregate amount of Rs. 3,25,50,000/- was paid by the assessee during the relevant assessment year towards the purchase of the rights in the above mentioned plots of land which were subsequently transferred to the ultimate purchasers at the direction and insistence of the assessee. The assessee has failed to explain the source of the same. Thus, the amount of Rs. 3,25,50,000 is treated as deemed to be the income of the asses....
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....sp; " Somabhai Ambalal Prajapati Chandubhai Ambalal Prajapati Vishnubhai Ambalal Prajapati" Now Please refer to chart appended herewith at page 207 shows correct fact come to know by Vivek regarding actual owner who were no party of Banachitthi Further as per Cl 3 to Cl 7 none of the condition were fulfilled please see the chart at page 206 appended herewith Chart at a glance shows analytic factual narration of alleged block and it is not in dispute that Mr. Vivek has nothing to do with such sale he is not a confirming party nor any mention in any sale deed that they have received any amount from Vivek and Mr. Vivek agree to such sale in lieu of alleged Bana chitthi. Since according to Vivek Bana chitthi was cancelled after having knowledge of cheating and no compliance of terms and conditions &accordingly he has received cheque of Rs. 11,00,000 back. 1. It is not in dispute that your that your appellant has not purchased any of the land mentioned in agreement in question of any payment does not arise. Banakhal money of Rs. 1100000 cheque received back. It is pertinent to note that there is nowhere mentioned of Rs. 1100000 cash received by them as alleged anywhere in....
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.... 18. The say that land were later on transferred to Ajaybhai at the instance of the assessee is just an allegation. There is no documentary evidence, oral evidence is also not supported by independent witnesses. 19. In absence of exact date of amount paid, Name of persons who brought the money etc, handwriting of third person the amount cannot be taxed in the hands of third party. 20. No transaction of land has been entered into with Vivek Patel. No evidence to show that he was confirming party. The presumption u/s 132 (4) / 132(4A) are binding on the persons who make them & not on third party. Mr. Vivek Patel has stated that Bana chithi was cancelled. The cheque of Rs. 11 Lacs issued was already taken back. 21. In some cases the price of the land actually sold (Ajay Patel etc) differs from the price agreed upon in the deed. 22. As alleged by Prajapati lands were transferred & consideration as per Banachithi was received before the stipulated date April 2006. However the subsequent transfer of land are done up to 18-6- 2009. The deponents have not explained as to now it was possible that consideration (land) was not passed over even if the total amounts was receiv....
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....at the same rates for different plots of land even though the same were not included in the original agreement. He clarified that the sale deeds were executed in the names of persons which were suggested by appellant. He also clarified that cash was received from time to time from appellant through one of his person. The entire amount of cash was received by April, 2006 and the appellant took the confirmation on phone regarding receipt of cash. He also stated that the sale deeds were executed in the name of Shri Ajay Patel. The deeds were prepared by advocates of appellant and his signatures were taken in the presence of sub-registrar. Whenever these documents were executed, the respective amounts were returned back to the appellant in cash and in this manner the adjustments were internally settled. 5.8 The appellant on the other hand, has tried to argue that since he is not the ultimate buyer, he did not pay any cash to Somabhai and statement of Shri Somabhai is false. It is observed that the original agreement to sell or the banakhat is dated 18/1/2005 and as per this banakhat, the first installment of 25....
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.....14 crores for which it is alleged that sale deed are pending and as per loose paper No 111 the amount is 1279 lacs. Not even in the statements by vendors no light is thrown on this. (ii) The actual vendors are not produced for cross examination. In such circumstances the statement of Mr. Pankaj Prajapati is not relevant. Statement of Pankaj recorded u/s 132 (4) is not supplied till date though specifically demanded as early as 24-2- 2010. The Land shown in Banakhat was subsequently purchased by Mr. Ajay Patel. In the sale deeds there is no mention of consideration received from Vivek Patel. There is no relationship between Vivek Patel and Ajay Patel. Mr. Pankaj Prajapati has not stated in his statement as to how the alleged advanced received from Mr. Vivek Patel was dealt with. (iii) At the time of entering into agreement some of the land were new sharat land. The liability of paying premium to the Government before sale was attached to those land. In some ofthe land subsequently payment liability is of purchaser i.e. Mr. Ajay Patel, as premium directly to Governme....
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....O. has stated that as the blocks are transferred to ultimate buyers the addition is proposed in their hands. However there is no finding has been given as to whether the transactions are entered into paying stamp duty at circle jantri rates. (ix) The A.O. has given the finding that cash as banachitthi was given to the vendors relying on their statements and loose chits found from their possession. (x) Search was on 8-12-2009 and 9-12-2009 the Statement of Somabhai Prajapati was recorded on 25-1-2010. On 14-12-2009 the statement of Vivek patel was recorded. However inspite of denial the same was not shown to Somabhai and no explanation was sought on that. Thereafter also Vivekbhai's statement was recorded on 9-2-2010. In spite of the another denial no explanation is sought for from Prajapati. Even in the statement recorded on 13-12-2011 and 14-12-2011 no clarification are sought on this aspect. Most importantly neither Pankaj on whose handwriting page 111 is written for Somabhai has been able to identify the person concerned who actually brought the money from Vivek Patel's office. (xi) There are various inconsistencies. In fact Mr. Ajay Patel has purchased certain ....
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....absurd to say that such a huge amount one can give in advance without any possession of land and/or any registered documents and any adequate strong security. (5) After entering into Banachithi the vendors were not able to establish clear title (to the property in question. In view of that Banachithi was cancelled. The advance of Rs. 11,00,000 were given by way of cheque. However that cheque was cancelled. The cancelled cheque was produced before IT0 (Inv) Unit II. On other hand there is no such noting by Prajapati in their loose paper that Rs. 11,00,000 cash received as alleged by them. (6) The statement of Somabhai Prajapati refers to disclosure made by his son Pankaj (Please see statement of Somabhai dated 25-1-2010 Q No 7). However statement of Pankaj has not been given to us so far till date though we have specifically demand vide our application dated 24-2-2010 addressed to 1TO (Inv) unit 11 as well as our letter dated 5- 10-2011 addressed to Asstt. Commissioner of Income tax central circle 2 (2). The statement of Pankaj u./s 132 (4) was recorded and it is first statement in respect of disclosure and dealings....
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....unt as per the Agreement to sell, the amount of cash as per the deed was returned to Shri Vivekbhai" If so where is details of such withdrawal and repayment C from Bank Please refer to Q 11 and its reply; As per statement dated 14-12-2001 of Somabhai (11) The A.O. has, bifurcated the total amount as per loose paper i.e. Rs. 13,02,00,000 in four equal installment. Thus it appears that same funds have rotated. The A.O. has not taken any cognizance of the same. (12) In A-11 he has stated that sale deeds were made by Advocates of Vivekbhai. However none of the above case has been identified. The fees of the advocates was not paid by the assessee. (13) The reliance is placed by sized paper No 114. It shows the list of blocks and amounts are mentioned against some blocks. Against block no 502/505 'cancelled' is written. No clarification is sought on this. The date is not mentioned on this paper. The reference to the assessee is not there on this statement. (14) The difference is not reconciled. In spite Of issuing summons and recording the statement no question of this like are even put to Somabhai Prajapati and Pankaj Prajapati Thus due to the above inconsis....
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.... (xvi) A Chart at a glance of analytical narration of terms and condition of Bana Chitthi and rate agreed upon that of as per said Bana chitthi page 13 to 16 was having pre condition that of as per Cl 3 to Cl. 7 and request to read this Bana chitthi an Annexure B Page c & d and statement recorded by ITO (Inv) Unit II Ahmedabad on 24-12-2009 of Mr. Vivek Patel Page 5 to 8 which makes it clear that there is no question of any such payment at all, who will pay such a huge amount when there is no surety of titled clear of land and no security of this amount which alleged to have been paid by the payee appellant (i) No possession of land (ii) No Promissory not or any other documentation of such payment. (iii) No cogent and convincing material brought on records that there is prima facie case that on facts payment is due with reference to agreement are complied with and party concerned who had right of Banakhat has been made party in sale deed and he carried out his banakhat right and alleged investment made by him. (iv)(a) Entire story is nothing but oral say unbelievable alleged transactions. (b) No Cross Examination (c) Statement of your appellant is on record as ....
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....en then oral say without any evidences is being believed and that that too by not allowing cross examination. (xvii) In summaries the issue, whole case the reliance is put on Banakhat dated-IB-1-2005. The Assessee has said that such documents was never implemented. The advance was given by cheque has been given back. The vendor has in fact not been able to transfer the land in the given time. Then ultimately some of the blocks were transferred to Mr Ajay Patel. In the statement recorded u/s 131 both assessee and Ajay Patel has denied any connection interse and with Banakhat. There were dispute with respect to some blocks which were not cleared . The possession also was not given. When the total consideration stated to be received is matched with the rates in banakhat attain there is a disparity The statement of Mr. Somabhai Prajapati and Mr. Pankaj Prajapati are required to be thoroughly examined . He has explained the investment made other expenses as telescoped against the cash generated from this so called transaction. In the case of capital gains on sale of land the benefit if lower rate of tax, benefits u/s 54G etc. are available. Thus he has shown the cash avai....
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.... by the seller Somabhai Prajapati in the Cross Examination conducted on 14.08.2012. 4. The so called defects claimed as reason for cancellation by Vivek Patel are actually known to him at the time of the agreement itself and highlighted in the statement in the agreement (Paper Book 3 of the assessee page Nos. 263-264). 5. The receipt of cash as per the terms of the agreement is proved by the confirmation of the satisfaction of the terms in statements given by Somabhai Prajapati. 6. It is also confirmed by document No. A-22, P-114 which reveals receipt of cash as per the terms of the agreement. 7. A further documents seized namely A-22, P-117 also evidences receipt of cash to the tune of Rs. 13,02,00,000/-. 8. Hence the documentary evidence found during the search support each other and proves the veracity of agreement dated 18.01.2005. 9. The seller i.e. Prajapati's have readily filed returns of income and paid the taxes which also show that the transaction was gone through on the higher amount as per agreement and not on the petty amount shown in the documents with the buyers. 10. The fact of Shri Vivek Patel continuing with the agreement with the Prajapat....
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....s been highlighted that the sale agreement with Dhirubhai Amin clearly states that no Banakhat existed. Here it may be noted that the same was on 13.05.2010 much after the search on 08.12.2009 and hence the document was tailored, at the instance of Vivek Patel to substantiate his claim that the Banakhat had been rescinded. This will further be proved if the other 8 documents entered into before the search action are filed and subject to further inquiries, since new evidence has been filed. It is requested that further inquiries may be ordered as above before taking the evidence on record. Detailed submissions on facts are as per oral submissions. The legal issues are as per oral submissions. Sd/- ....
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....r honour, the Ld. CIT (DR) had an opportunity to examine the file of Shri Ajai Patel and verification of assessment order and records showed the existence of an MOU between Shri Vishnubhai Ambalal Prajapati and Shri Vivek Prahladbhai Patel dated 18/06/2009 with respect of transfer of property at Block No. 513 Survey no. 490/2 Tal Daskroi. The Ld. CIT (ITAT) brought the above fact to the notice of the undersigned and hence, a copy of the document was requisitioned from the O/O the CIT (DR), ITAT, Ahmedabad, as the case files of Shri Ajai Patel was sent to the ITAT from ITO Ward 4(3), Ahmedabad. Perusal of the document reveals the fact that an MOU was signed between Shri Vishnubhai Ambalal Prajapati and Shri Vivek Prahladbhai Patel dated 18/06/2009 with respect of transfer of property at Block No. 513 Survey no. 490/2 Tal Daskroi. It is brought to your kind notice that this property was one of the 9 blocks sold by the Prajapati group in lieu of the blocks as per the banachitti dated 18.01.2005. Thus, the assessee claim that the earlier banachittis were cancelled is incorrect. This document also validates the contention made by Shri Somabhai Prajapati that the MOUs were not cancelled.....
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....erved that the plots of land in question were ultimately not purchased by the assessee. However, the seller contended that out of 9 plots of land mentioned in the agreement to sale (Banachithi), 4 plots of land were sold by them to Shri Ajay S. Patel, 2 plots of land was sold to Shri Chirag Dhirubhai alias Dhirajlal Amin and in lieu of 4 blocks of land bearing Survey Nos. 502, 505, 497 and 540, land bearing block Nos. 512A, 512-B, 510 & 513 were sold to Shri Ajay S. Patel. The seller contended that this sale of land to Shri Ajay S. Patel was made at the insistence of the assessee. Thus, the Assessing Officer observed that though the plots of land were not purchased by the assessee and therefore, substantive additions are to be made in the hands of the purchaser. Block No. Survey No. 540 515 487 471 497 476, 477,482 504 488 494 473/2 509 487, 497 500 480 502 484 505 485 However, he, on protective basis, made the addition of the undisclosed investment in the hands of the assessee also, by assuming that the assessee had in fact made the investment as per the agreement to sale (Banachithi) on the due date as envis....
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....tended that after execution of the agreement to sale (Banachithi), the assessee came to know that the plots for which agreements were entered into by three brothers viz. Shri Somabhai A. Prajapati, Shri Vishnubhai A. Prajapati & Shri Chandubhai A. Prajapati were not the complete owners of the said plots and they had no absolute and full right to sell those 9 plots and therefore, the assessee had not paid any amount in pursuance to the said agreement to sale (Banachithi). He claimed that even the amount of Rs. 11,00,000/- which was paid at the time of execution of agreement to sale (Banachithi) was paid by cheque and that cheque was taken back by the assessee and was cancelled. He contended that on the basis of the said agreement to sale (Banachithi) it cannot be held that the assessee actually paid any amount more than Rs. 11,00,000/- to Shri Somabhai A. Prajapati on any agreed date. The assessee further pointed out from the statement of Shri Somabhai A. Prajapati, which was recorded on 14.08.2012 before the Assessing Officer, that the said statement clearly shows that there is no evidence with the said Shri Somabhai A. Prajapati to substantiate whatever claim he made before the As....
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....e claimed to have received was claimed by him as non-taxable receipt being exempt u/s 54B of the Act. The assessee has placed copies of the assessment orders passed in the case of Shri Somabhai A. Prajapati passed u/s 153A r.w.s. 143(3) of the Income-tax Act for Assessment Years 2006-07 and 2008-09, both dated 29.12.2011, at page Nos.480-502 of the paper-book marked as "C - Contradiction in brief emerging from the statements of Shri Somabhai Prajapati and his son Pankaj Prajapati on material issues" filed in the case of Shri Ajay S. Patel and pointed out that the said Shri Somabhai A. Prajapati on one hand shown the amount as received against sale of plots and on the other hand claimed that the said receipt resulted in non-taxable income in his hand, because of claim of exemption u/s 54B of the Act. The assessee contended that the above circumstance shows that the alleged receipt was claimed by Shri Somabhai A. Prajapati for claiming exemption u/s 54B and therefore, was a self-serving statement and therefore, cannot be treated as sacrosanct and an evidence against the assessee. In view of the above facts and circumstances of the case, the Department could not bring on record any re....