TaxTMI 
TaxTMI 
2015 (10) TMI 2507
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....s of both these assessment years by way of common order. Therefore, first we take up all the appeals for the Asstt.Year 2007-08 and 2008-09 together. 3. The grounds of the appeals taken by the assessee are not in consonance with Rule 8 of the Income Tax (Appellate Tribunal) Rules 1963. They are descriptive and argumentative in nature. The assessee has annexed a prayer clause at the end of the grounds of appeal, which exhibits his grievance in both the assessment years. This clause in both the assessment years read as under: Asstt.Year 2007-08 (Assessee's Appeal) 1. The addition of Rs. 1,03,90,705/- confirmed by the ld.CIT(A) on account of unaccounted cash receipts treating the same as business income from alleged land deal out of total addition of Rs. 1,56,58,215/- as made by the ld.AO may kindly be deleted. 2. The addition of Rs. 75,000/- on account of interest income on alleged advances treating the same as accrued interest confirmed by the ld.CIT(A) may kindly be deleted. 3. Such and further relief as the nature and circumstances of the case may justify. Asstt.Year 2007-2008 (Revenue's Appeal) "1. The ld.CIT(A) erred in law and on facts and circumstances of ....
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....al income of the assessee in both the assessment years has raised peripheral issues, viz. (a) assessee did not cooperate with the department during the course of search as well as during the course of assessment proceedings, and (b) assessee is not simply agriculturist, rather, he is trading in land in an organized manner, therefore, the income from sale of land is to be treated as business income instead of capital gain, which is exempt. Because according to the assessee, section 2(14) provides the definition of assets and agricultural land sold by him has been excluded from capital asset. As far as these peripheral issues are concerned, we will revert back in the later part of this order, but, firstly, we want to focus only on the main addition made by the AO. As far as main issues are concerned, the grounds taken by respectively parties in these three appeals are common. The facts relevant to the main additions are as under: 5. During the course of search proceedings, loose paper which has been marked as page no.72 and 73 of Annexure AS-5 were found. The whole dispute in these appeals is depended upon the construction/ interpretation of these loose papers. Copies of loose pap....
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....ils pertained to all the survey numbers mentioned at page no.72 and 73 of the annexure AS-5 found during the course of search. It is pertinent to take note of these details: PAGE NO.72 OF ANNEXURE AS-5 IN THE CSE OF PARESH BABUBHAI PATEL Survey No. Area Sq.Mtr. Name of the seller Name of the purchaser Date of Reg. Sales as per Reg. sale deed. 1197, 1217, 40233 Ishwarbhai Rajkeshkumar 02.11.2007 11466405/- 1219, 1222, Jethidas Patel & Rameshbhai Patel 1223, 1224, Others (POA & Others 1225, 1227 Paresh Babubhai Patel) 1298 5697 Ishwarbhai Rajkeshkumar 02.11.2007 1626780/- Jethidas Patel & Rameshbhai Patel Others (POA & Others Paresh Babubhai Patel) 1228, 1229, 1235, 1248 24497 Rajkesh....
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....2/2006 1005000/- 1243 4043 -do- -do- -do- 525600/- 1251 13200 -do- -do- -do- 1716000/- 1247 4043 -do- -do- -do- 525600/- 1240 3805 -do- -do- -do- 501000/- 1212 14865 -do- -do- -do- 1932540/- 1239 3449 -do- -do- -do- 448380/- 1249 6540 -do- -do- -do- 850500/- 29.48 Vigha 7504620/- Survey No. Area Sq.Mtr. Name of the seller Name of the purchaser Date of Reg. Sales as per Reg. sale deed. 1244 10940 Champaben Naranbhai & Others Kanubhai M. Patel & Others 27/12/2006 1422200/- Survey No. Area Sq.Mtr. Name of the seller Name of the purchaser Date of Reg. Sales as per Reg. sale deed. 1215 2900 Lilaben Thakore Others & Champaben Naranbhai Others & 5/11/06 200000/- 1238 4481 Champaben Rajesh Patel & 17/4/08 2045400/- 1241 4519 Naranbhai & Others 1242 5827 Others &....
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....400/- Cash Received Rs. 59,87,600/-" 10. Identical working has been made in the Asstt.Year 2008-09 on the ground that sale deeds have been executed in the accounting period relevant to the Asstt.Year 2008-09. The working made as under: Survey No. Area Sq.Mtr. Name of seller the Name of purchaser the Date of Reg. Sales as per Reg. sale deed. 1250 7729 Champaben Naranbhai Others & Kanubhai M. Patel & Others 27/12/2006 1005000/- 1243 4043 -do- -do- -do- 525600/- 1251 13200 -do- -do- -do- 1716000/- 1247 4043 -do- -do- -do- 525600/- 1240 3805 -do- -do- -do- 501000/- 1212 14865 -do- -do- -do- 1932540/- 1239 3449 -do- -do- -do- 448380/- 1249 6540 -do- -do- -do- 850500/- 1215 2900 Lilaben Thakore & Others Champaben Naranbhai Others & 5/11/06 200000/- 26 Vigha 7704620/- 11. Dissatisfied with the additions, the assessee carried the matter in appeal. He has made elaborate submissions which has been reproduced by the CIT(A) in....
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....in the sale deed. It may be mentioned that the date of registration of this land is shown at 27/12/2006. Therefore, the authenticity of the transactions recorded in these pages cannot be doubted. 6.7. On the right-hand side of page number 73, the area of 20,654 m2 in respect of four blocks of land namely 1242, 1243, 1241 and 1238 is mentioned. 50% of this has been shown at 10,327 m2 for Vadsar land. 6.8. Further on the back side of live page number 73 total cash amounting to Rs. 100,19,430 has been shown as received on. various dates from 31/8/2006 to -7/12/2006. Total, cheque amount, of Rs. 22,26,300 comprising of two amounts namely 804,100 and 14, 22,200 are shown as received to make the total consideration at Rs. 122,45,730 till 7/12/2006. Out of the amount of Rs. 156,58,21'5,- this- amount of Rs. 122,45,730 has been shown as received and the balance amount of Rs. 34,12,485 as balance. 6.9. From the above mentioned entries it is clear that they are the actual transactions of sale of land and-the receipt of cash and cheques on various dates as mentioned above. Against the name of the appellant an entry of Rs. 132,68,715 is mentioned at the middle of the page and anot....
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....and 1233 are standing in the name of the appellant and Mavjibhai H Desai jointly and had been considered in the working of the total consideration as per page number 73 of Annexure A-S5. In other words, the AO is directed to adopt the total sale consideration of Rs. 156,58,215 as per the seized paper number 73. After reducing the 50% of the documented price of the properties being survey number 1250, 1243, 1251, 1212, 1239, 1247, 1240, 1249 and 1244 and also the land bearing survey number 1220 and 1233, the resultant amount would be the unexplained cash component received by the appellant against the sale of these properties. In other words, the total unaccounted income of the appellant would be Rs. 1,56,58,215 - 52,87,510 = Rs. 1,03,90,705 in A.Y. 2007-08. 6.11. Now the question is whether the sale proceeds of other lands (other than these three lands) not standing in the name of the appellant can be assessed in the hands of the appellant. The appellant has given the name of the sellers and buyers of these lands before the AO. The case of the appellant is that since the lands are not standing in his name, the question of taxing the sale proceeds thereof in his hands does not ar....
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....ch has not been paid to the original sellers of the land. Therefore, the addition of Rs. 98,61,639 was made by him in assessment year 2008-2009 on the basis of the entries in page number 72. Against this addition, the appellant has submitted the same submissions as in assessment year 2007-2008." 12. With the assistance of the ld.representatives, we have gone through the record carefully. On an analysis of both the impugned orders, we find the Revenue authorities have made the addition to the income of the assessee for the following reasons: a) That during the course of search, statement of the assessee was recorded under section 132(4) of the Income Tax Act. In reply to question no.6, the assessee has disclosed details of movable and immovable properties in the name of the assessee and his family members. After looking to large number of properties held by the assessee, it was inferred by the AO that the assessee is not a simply agriculturist; b) During the course of search proceedings and in the subsequent inquiry, statement of the assessee was recorded under section 132(4) and 131 of the Act. In these statements, the assessee has disclosed that he has purchased the land ....
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....d, the AO is not justified in making such observation. The search in this case was conducted on 23.5.2008. Section 153B provides limitation for completion of assessment under section 153A. According to clause (a) of sub-section (1), the AO shall make an order of assessment or reassessment in respect of each assessment year falling within six assessment years, referred to in clause (b) of sub-section (1) of section 153 within a period of two years from the end of the financial year in which last of the authorizations for search under section 132 or for requisition under section 132A was executed. Since the authorization was executed on 23.5.2008, the AO was required to pass the assessment order within two years from the end of the financial year in which the last of the authorisation was executed. The return in response to the notice under section 153A(a) was submitted by the assessee on 31.7.2010, meaning thereby, the notice under section 153A must have not been issued upon the assessee for almost two years from the date of search. The first questionnaire as discernible from the paragraph-2 of the assessment was issued on 21.10.2010. The AO has to pass the assessment order upto ....
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.... to certain purchase dates, and how the assessee was asked to pay stamp duty on the basis of circle rate notified by the Stamp Duty Valuation authority. The ld.First Appellate Authority, thereafter, made reference to the additional income offered by the assessee in these six years under section 153A of the Act. The CIT(A) has observed that the assessee has offered additional income of Rs. 59,89,000/- which indicated that the assessee must be carried out some activities. 15. The ld.counsel for the assessee while impugning the order of the CIT(A) contended that the details of property held by the assessee and his family members has been disclosed in reply to question no.6 during the course of search. No doubt the assessee has made investment in purchase of agriculture land. But, it is pertinent to note that these investments were made ten-fifteen years back. These are lands which were purchased from the brother's wife or his brother, out of ancestral land. The assessee remained a sarpunch of the village. He would have been of the opinion that no outsider should purchase the land of ancestral. These lands were purchased for carrying out agriculture. The assessee has been using the ....
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....he Hon'ble Court read as under: "After analyzing various decisions of the apex court, this court has formulated certain tests to determine as to whether an assessee can be said to be carrying on business. (a) The first test is whether the initial acquisition of the subject-matter of transaction was with the intention of dealing in the item, or with a view to finding an investment. If the transaction, since the inception, appears to be impressed with the character of a commercial transaction entered into with a view to earn profit, it would furnish a valuable guideline. (b) The second test that is often applied is as to why and how and for what purpose the sale was effected subsequently. (c) The third test, which is frequently applied, is as to how the assessee dealt with the subject-matter of transaction during the time the asset was the assessee. Has it been treated as stock-in-trade, or has it been shown in the books of account and balance sheet as an investment. This inquiry, though relevant, is not conclusive. (d) The fourth test is as to how the assessee himself has returned the income from such activities and how the Department has dealt with the same in the co....
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.... has income from other activities. An adjudicator is not required to decide the issue on the basis of peripheral details. If the assessee has income from other activities, would that mean that he was trading in land. The assessee has shown income from commission for facilitating the sale of agriculture land. The ld.First Appellate Authority has disclosed the purchase of land at page no.37 of the impugned order, but to our mind, these are only purchases and would indicate as purchased for investment, as there is no immediate sale of this land. The expression "business" has been defined in sub- section 13 of section (2) of the Act. It includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. This expression has been construed to mean that it is used in taxing statute in a sense of occupation or profession, which demands time, attention and labour of person with an object of making profit. In order to help any person to carry out any business activity, then, the requirement of business is that there must be real, substantial and systematic, organized course of activity or conduct with said purpose of earning profit is to b....
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....rat Group which is connected with construction business wherein main persons are Kanubhai Maganbhai, Sandipbhai Kanubhai, Baldevbhai Maganbhai, Anilbhai Shakarabhai Patel etc. or not? State . A.16. I or my family members are not connected in any manner with aforesaid Group which is.connected with construction business. However, my lands situated in Moti Bhoyan ne.ar village Vadsad Taluka Kalol District Gandhinagar block no. 1244 in my name and joint name of Shri Keshabhai Harkhabhai ad measuring about four vighas were sold during FY 2007-08 to Kanubhai Maganbhai and deal of said land was done for Rs. 8,00,000.00 to Rs. 10,00,000.00. Over and above that, land, block number of which Is not remembered by me at present which is situated in the same village Moti Bhayan in the name of my son Palakbhai and Mavjibhai Haribhai ad measuring about four vighas was also sold to Kanubhai in FY 2007-08 for a consideration of about Rs. 8 lakhs to 10 lakhs. Over and above that, lands of various blocks in same village which are totally ad measuring about 40 vighas which are the lands of the persons other than my family members have been sold through me to Kanubhai Maganbhai and Shri Anilbhai and ....
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.... there. I am showing you page no.68 of Annexure AS-6. See it and give explanation about the details written therein. A. 12 Having seen page no.68 of loose paper File AS-6 shown by you, I am stating that these are the details of the lands of village Moti Bhoyan which were sold by me on commission basis. Seeing this page no.68, I am stating that these are the details of the objections raised for the purpose of title clearance of the respective block number, raised by the advocate. Details thereof are as under, such as, 1218 - To execute document 1231 - To carry out entries 1258 - To carry out entries . 1215 - To carry out entries 1222 to 1230, 1197 - succession of Bhalabhai is to be obtained. - 786, 1248, 13235, 1271 - Banakhat of Dhirubhai, Banakhat of Rameshbhai 1209 Court case. 1209, 1232: To get deleted the name of Mafaji Becharji. Q.13 Inform about the involvement of the persons; Ishwarbhai,Jayrambhai and Dudhiya in respect of above stated block numbered lands of village Moti Bhoyan. A. 13 I state that Ishwarbhai was joint partner in respect of lands of certain block number out of the lands of aforesaid block number of village Moti Bhoyan and at pre....
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....l and he sold this land to Rajeshkumar Rameshbhai Patel. The payment was made through account payee cheque and the consideration was Rs. 19,11,067.50, which was paid through account payee cheque bearing no.097811 date d30.10.2007. The name of the bank and branch is AXIS Bank, Vastrapur Branch. The document registration number is 6701. Similar is the details with regard to each vendor of kasara Nos.1222, 1223 etc. In these survey numbers there are nine vendors. The assessee was holding power of attorney only for two persons, viz. Shri Ishwarbhai Jethidas Patel and Arvindbhai Bhalabhai Patel. All these vendors had received payment through account payee cheques. The cheques have been credited to their bank account. The assessee has placed on record similar details with regard other kshara number vis. 1228 to 1230, 1235 and 1248. All these indicated in tabular form are available at page no.796 to 804 of the paper book. The contention of the assessee was that he was having power of attorney only for two persons. All other land owners have sold their land independently through registered sale deed and the payments have been received through account payee cheque. The question is what i....
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....d these were sold at the rate of Rs. 9,00,000/- per vighas. The assessee does not belong to an organized sector of business undertaking. He is an agriculturist working as a commission-agent facilitating sale of agriculture land. The intellectual compatibility of the assessee being an agriculturist and land broker dealing in agriculture land cannot be equated at par with trained Revenue officers, who have recorded his statement under section 132(4)/131 of the Income Tax Act. It is also to be noted that the assessee is a heart patient who has sought adjustment in the assessment proceedings on the ground that the pace- maker is required to be changed, therefore, his statement is to be appreciated keeping in mind his rustic rural background and his health. If we look into the replies given by the assessee and reproduced by the CIT(A) in the impugned order, then it would reveal that in response to few questions, where he has stated that right now, "he does not have the complete evidence, which are with his advocate", he gave reply in categorical terms with regard to other questions. Therefore, the Revenue authorities are not justified in observing that he did not cooperate at the time o....
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....as nowhere assigned any right acquired by him under some understanding with the farmers. If the assessee has any enforceable legal right, the vendee would not have purchased the property without assigning of those rights by the assessee by signing the sale deed with a remark "relinquishment of rights available to the assessee". It is also worth to mention that vendors have received the payment through account payee cheques. Had the assessee purchased property 10-12 years ago, and now transferred, then the total sale consideration is to be assessed in the hands of the assessee and not only the alleged cash components. Therefore, neither under section 292C, the AO can presume the assessee as the owner of the land mentioned in these survey numbers nor it brought any evidence on record to establish that assessee was the owner or in possession of the land. The Revenue has accepted the purchase price in the hands of the vendee equivalent to the amounts stated in the sale deed. The Revenue has not made any inquiry from the ultimate vendors i.e. farmers, who have executed sale deed. Therefore, the alleged conclusion that the assessee has received cash component is purely based on assumptio....
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....lated, then also no fruitful purpose will be served for the Revenue, because that consideration will be treated as in lieu of transfer of an agriculture land. Such agriculture land will not come within the ambit of capital asset provided under section 2(14) of the Income Tax Act. 27.In the foregoing paragraphs, we have held that the assessee is not a trader. Therefore, if any cash component received by him, the same be treated as receipt from transfer of agricultural land exempt from tax. 28. In view of the above discussion, we allow both the ground no.1 in both the years raised by the assessee under his prayer clause and delete the addition of Rs. 1,56,58,215/- made by the AO in the Asstt.Year 2007-08 and addition of Rs. 98,61,639/- made by the AO in the Asstt.Year 2008-09. Consequently, the ground no.1 raised by the Revenue impugning the deletion of Rs. 53,04,675/- and Rs. 29,93,800/- is rejected. 29. Now we take ground no.2 in Revenue's appeal for the Asstt.Year 2007-08. 30. Grievance of the Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 5,94,075/- added by the AO. 31. Brief facts of the case are that the assessee had purchased various pie....
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.... the Asstt.Year 2004-05, 2005-06 and 2006-07. Similarly, the ground no.2 in the Asstt.Year 2007-08 and 2008-09 though not directly connected to ground no.1 in other years, but they are based on the same principle. In these grounds, the grievance of the assessee is that the ld.CIT(A) has erred in confirming the addition of Rs. 5,93,265/-, Rs. 7,00,053/-, Rs. 8,26,063/-, Rs. 14,54,008/-, Rs. 75,000/-, Rs. 2,55,000/- respectively in the Asstt.Years 2003-04 to 2008-09. These additions have been made on account of accrued interest income of the assessee. 36. Brief facts of the case are that during the course of search, a page inventorised as page no.62 of annexure AS-5 was found and seized. The copy of this page is available on page no.240 of the paper book for the Asstt.Year 2003-04. The ld.CIT(A) has reproduced the noting on this page which read as under: 17,00,000 15/10/1997 To 306,000 15/10/98 20,06,000 To 361,080 15/10/99 23,67,080 To 426,074 15/10/2000 27,93,154 To 502,767 15/10/2001 32,95,921 593,265 15/10/2002 38,89,186 700,053 15/10/203 45,89239 593,....
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.... do not belong to the appellant and nothing to do with the same. The appellant has not given any advance / loan as stated on the said page. The appellant has also not received any interest income as stated on the said page and it does not bear the name of the appellant and accordingly, it was requested by the appellant to the Ld. A.O not to draw any adverse inference. However, the Ld. A.O. has not considered facts of the case and had made the addition merely on his own presumption and assumption which is against the principle of natural justice and equity. v) For making the impugned addition, the Ld. A.O. has not brought on record any cogent material / evidences in support of the allegation of interest earned on the alleged advances of Rs. 20,00,000/-. 40. An identical argument has been raised for page no.62 of the Annexure AS/5. The assessee has pleaded that he has been filing the return of income in the past. He has also contended that he worked as a sarpunch of Vadsar village. He does not remember who has left this paper at his residence. According to him various persons visited him for resolving different types of disputes. Someone must have made some calculations and the....
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....ategorical finding. The first onus is upon the Revenue to charge the assessee with exact details pointing out that these details relate to the assessee. No such effort was done by the AO also. Therefore, we give benefit doubt to the assessee and on the basis of such insufficient incomplete evidence, the assessee cannot be burdened with taxability. We allow all these grounds of appeal and delete the addition. 43. In the Asstt.Year 2003-04, there is one more ground of appeal, wherein the assessee has pleaded that the ld.CIT(A) has erred in confirming the addition of Rs. 19,11,522/- . 44. Brief facts of the case are that the assessee has shown an opening capital balance of Rs. 19,11,522/-. This balance has been disbelieved by the AO on the ground that the assessee has not been maintaining books of accounts. Therefore, the opening capital balance shown by the assessee has been added as a income. 45. On appeal, the ld.CIT(A) has observed that this fact needs to be verified by the AO. The observations of the CIT(A) read as under: "Even if the appellant has not been maintaining any books of accounts as mentioned by the AO in the assessment order, still the addition of opening ....
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....r 2003-04. The ld.AO shall carry out this exercise after providing due opportunity of hearing to the assessee. 47. Now, we take up the appeal of the Revenue i.e. ITA No.613/Ahd/2011. 48. In the first ground, the Revenue has pleaded that the ld.CIT(A) has erred in deleting the addition of Rs. 3,74,470/- which was added by the AO on account of unaccounted cash found at the time of search. 49. Brief facts of the case are that during the course of search a sum of Rs. 3,74,470/- was found. The assessee has contended that the cash represents income from commission received by him on facilitating the sale of agriculture land at Moti Bhoyan. The assessee further contended that he has offered additional income of Rs. 9,00,000/- for the Asstt.Year 2009-10 and that the telescopic benefit of the cash found be given against this additional income. The AO has made separate addition and did not grant the telescoping benefit. 50. On appeal, the CIT(A) has granted telescopic benefit to the assessee. Once the ld.CIT(A) has accepted the fact that the additional income offered by the assessee of Rs. 9 lakhs can easily be take care of alleged unaccounted cash found during the course of sear....
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....ore so, in the Asstt.Year 2009-10. The ld.AO has not assigned any particular reasons for treating the income in the hands of the assessee. We, therefore, do not find any error in the order of the CIT(A). This ground of appeal is rejected. 55. In the next ground of appeal, the grievance of Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 18,50,000/-. 56. Brief facts of the case are that during the course of search, four promissory notes inventory as page nso.102 to 105 of Annexure AS/5 were found. In these promissory notes, it revealed that the assessee has taken loan of Rs. 18,50,000/- from Shri Narayan Shroff and Finance. When the ld.AO has confronted the assessee, then it was contended that he has put his signatures on four promissory notes. In one note, a sum of Rs. 4.50 lakhs was filled, and it is in the name of assessee, whereas in other promissory notes, amount of Rs. 4.00 lakhs, Rs. 4.00 lakhs, Rs. 4.00 lakhs and Rs. 2.00 lakhs are mentioned, but name is blank. The contention of the assesse was that Shri Narayan Shroff has charged a very high interest rate and also asked for collateral securities, and therefore, the transaction was not executed. ....
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....itiated by the AO for the violation of section 269T of the Income-tax Act. The repayment of cash loan cannot be termed as the undisclosed income of the appellant unless the AO comes to the conclusion that the cash loan has been utilised by the appellant in some investment and the loan has been repaid by him out of the unaccounted income of the appellant. In the absence of such finding, the AO can only initiate penalty proceedings for violation of section 269 SS and 269T of the Income-tax Act. Because in the absence of such finding, the source of repayment of cash loan can be stated to be the receipt of cash loan by the appellant from the Shroff. In view of this, the addition of Rs. 18.50 lakhs made by the AO is directed to be deleted. The AO is free to initiate the penalty proceedings under section 271D and 271E of the Income Tax Act for violating the provisions of section 269SS and 269 T of the Income Tax Act." 58. The ld.DR relied upon the order of the AO, whereas the ld. Counsel for the assessee relied upon the order of the CIT(A). 59. On due consideration of the facts, we find that the no amount is outstanding towards the assessee taken from the Shroff. Because, according....