TaxTMI 
TaxTMI 
2022 (2) TMI 518
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee firm is engaged in the business of construction of development of plots and bungalows. The assessee-firm filed its return of income for the A.Y. 2008-09 on 07.10.2008 declaring Nil income. The case of the assessee was reopened under section 147 of the Act. Notice under section 148 of the Act dated 25.03.2013 was served upon the assessee. In response to the notice under section 148 of the Act, the assessee furnished original return of income filed under section 139(1) on 7.10.2008. The assessee again vide its application/ letter dated 23.04.2013 requested for reasons recorded. In response to assessee's application dated 23.04.2013, the assessee was provided reasons recorded. The Assessing Officer (AO) after supplying of reasons recorded proceeded for assessment. The AO recorded that survey under section 133A of the Act was carried out on 06.01.2010 at the business premises of assessee. At the time of survey, the assessee firm was developing real estate project in the name and style of Water World Project in outskirts of Surat City. During the survey statement of Gobarbhai Gondalia partner of assessee firm was recorded. In the statement,the partner of assessee stated that he has s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an be converted into non-agricultural land which are to be purchased on behalf of the firm shall be purchased in the name of Gobarbhai Gondalia. Till such agricultural land get converted into non-agricultural land, each partner shall carry on incidental procedure in their respective names subject to technical limitation of law. Further, till the land is converted into non-agricultural land, the transaction on behalf of the firm shall be in the name of individual names i.e. Gobarbhai Gondalia shall make the transaction in his name. All responsibility will be of the firm. Financial Loss arouse out of any issue shall be borne by firm. Conversion and management of agricultural land into non-agricultural land and the management of such land shall be made in the name of firm. The assessee also explained that the seller of land executed sale deed in the year 2007, no part payment of consideration was pending. It was explained that sale consideration was completed in 2007 itself. 4. The reply of the assessee was not accepted by the AO. The AO held that during the survey, the statement of partner was recorded under section 131 of the Act. In the statement, the partner stated that he sold....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Income Tax Authority have power under section 133(1) of the Act for enforcing compliance with requirement made. It was never the claim of survey officer that Mr.Gobarbhai Gondalia refused or evaded to make the statement admitted to be recorded under section 133A of the Act. The statement was recorded at odd hours at 3.30 AM during the course of survey proceedings. During the course of survey proceedings, no evidence was found suggesting that Gobarbhai Gondalia sold the impugned land to assessee-firm for a sum of Rs. 4.22 crore. The statement has already been retracted and no addition can be made in absence of corroborating evidence. It was further stated that the land was purchased by Mr.Gobarbhai Gondalia for a consideration of Rs. 6,30,000/- on 26.04.2007 and on 04.05.2007. The AO made addition without any justification. The assessee also relied on various case laws. The assessee also furnished the copy of purchase deeds dated 26.04.2007 and 04.05.2007 and submitted that the sale consideration as per sale deeds are Rs. 630,000/-. No additional stamp duty was required on such sale deeds by the Stamp valuation authorities as the land were purchased as per Jantri rates. 6. In al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of AO held as under: "8.2 This addition of undisclosed investment has been made primarily on the statement of the partner Shri Gobarbhai Gondalia. The appellant has made detailed submissions and has contested the addition on various grounds which included (i) the statement was given under tension, the partner is semi-literate and signed the statement without knowing the contents (ii) the statement has been retracted (iii) there are obvious discrepancies in the statement like wrong share in partnership firm, wrong details of payments etc. (iv) no profits have been shown by the partner as per the statement (v) the statement is not actually u/s. 131 (vi) the registered value of the land recorded in the books of account of the assessee is within the valuation as per the revenue authorities for the purpose of stamp duty. I have carefully considered the statement of Shri Gobarbhai Gondalia, the entire gamut of facts and circumstances of the case, the assessment order and the submissions of the appellant. It is a peculiar case where the statements and submissions are inconsistent and therefore facts in the entirety rather than any assertion/statement in isolation would....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 gave details of embroidery machinery and power looms owned by his two sons, the name of the concern etc. c) In reply to Q. No. 12 gives details of ownership of property, construction, ancestral property, year of purchase of machinery etc. and in reply to Q. No. 13 gives the details of purchase of machinery and cost. d) Clearly states that he is a working partner and receives Rs. 8,000/- (may not be accounted) in cash per month. Although, there are certain small discrepancies in the statement, however it is clear that the statement was voluntary and not under duress, the partner is a knowledgeable person and considering the human probabilities where a land purchased has been converted into plots and has been accepted to have been sold at over 40 times in books and much above considering the undisclosed money received; I have every reason to believe that the plot could not have been purchased for as low as the sum shown of below Rs. 7 lac; and the partner who is severally and jointly responsible had given the actual value in the statement. Therefore, the value of land is held to be Rs. 4,22,33,400/-. However, the purchase price of the impugned land as sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8 of the impugned order that probably recording the increase in the sale rate of land over different period is clearly unfounded and unjustified. The land was purchased by individual for a total consideration of Rs. 6.30 lakhs and was introduced as capital contribution on 26.04.2007 and 04.05.2007 i.e. within period of 1.5 months from the date of purchase. No addition in case of Gobarbhai Gondalia was made by AO as the land was purchased as per Jantri Rate applicable as determined by the Stamp Valuation Authority. The conclusion of ld.CIT(A) that just within the period of 1.5 months the price of land increased from Rs. 6.3 lakhs to Rs. 4.22 crore and no property would appreciate for more than 68 times within a period of 1.5 months. A huge addition of Rupees more than Rs. 4.5 crore is made on the ground of making payment of unaccounted sale consideration. In case of recipient of such alleged unaccounted sale i.e. partner/ Gobarbhai Gondalia, no addition is made by Revenue on the relevant ground. The addition is made solely on the basis of statement of Gobarbhai Gondalia recorded during the survey on 07.01.2010. The statement was recorded at 3.30 AM during night hours. 10. The ld ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nn.com 682 (Mumbai-Trib.). (xi) Smt. Ranjnaben Mansukhlal Shah v/s. ACIT (2004) 83 TTJ (Rajkot) 369. (xii) DCIT v/s. Premsons (2010) 130 TTJ 159 (Mumbai). (xiii) G. Kanagaraj v/s. ACIT (2001) 73 TTJ 731 (Chennai). (xiv) Govind Ram Chhugani v/s. ACIT (2002) 77 TTJ 339 (Jd). (xv) ITO v/s. Bua Dass (2005) 97 TTJ 650 (Asr)." 12. In further alternative submission, the ld.AR for the assessee submits that the AO recorded that statement of Gobarbhai Gondalia was recorded under section 133(1) of the Act. The recording of statement of Gobarbhai Gondalia under section 133(1) of the Act is illegal and invalid. Since as per the provision of relevant section 133A(6) of the Act, the recourse of provision of section 133(1) of the Act can be invoked by Survey Officer only when person concerned refused to gave his statement or does not cooperate in recording of his statement during survey proceedings. There is no such claim or observation of non-cooperation of Mr. Gobarbhai Gondalia recorded by Survey Officer, therefore, recourse of section 131(1) of the Act for recording the impugned statement on oath by Survey Officer is illegal and invalid. To suppo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issions before Ld. CIT(A) dated 30.05.2015 alongwith CBDT Circular dated 18.12.2014 15 Written submission before Ld. CIT(A) dated 07.12.2015 15. On the other hand the ld CIT-DR for the revenue submits that survey under section 133A was carried out at the premises of the assessee. During the survey statement of partners were recorded under section 131. In the stamen one of the partner namely Gobarbhai Gondalia disclosed that a land admeasuring 76,788 Sq yard was sold by him in the year 2007 @ 550 per Sq yard to the firm and he had received Rs. 4.22 Crore. In response to the question he specifically answered that the said land was purchased by him on a consideration of Rs. 4.16 Crore. The payments made by the firm was not accounted in the books of the firm. The statement of the partner was a valid statement. The retraction made by the partner on the ground that there was duress or any pressure is not supported by any evidence. The retraction was made after more than one month time. The ld Dr for the revenue fully supported the order of the lower authorities. 16. We have considered the rival submissions of the parties and have gone through the orders of the lower authoriti....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The ld AR for the assessee vehemently argued before us that the assessee-firm right from the beginning contended that the assessee- firm never purchased any land out of survey no. 563A/2 and 562-2 at Umbhra from Mr. Gobarbhai Gondalia and that no evidence is brought on record either by the AO or by the ld.CIT(A) about the purchase of investment by firm in the land from Mr. Gobarbhai Gondalia. In fact, the impugned land was purchased by Gobarbhai Gondalia in his individual capacity and after purchase of said land Gobarbhai Gondalia; partner of the assessee introduced the said two piece of land into assessee-firm as his capital contribution. During his submissions the ld AR for the assessee also invited our attention on the contents of deed of partnership deed dated 07.10.2008, copy of which is placed in paper book. We find merit in the submissions of the ld AR for the assessee the impugned land was originally purchased by Mr. Gobarbhai Gondalia as per sale deed dated 09.03.2007 and 26.04.2007, copy of which are available at page No.133 to 171 of paper book (PB). On further perusal of the various clauses of partnership deed 07.10.2008, we find that those pieces of land were introdu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uch admission. 20. The Hon'ble Gujarat high Court in CIT Vs Golden Finance (supra) held that where Assessing Officer made addition on account of unexplained investment on basis of document impounded during survey and statement recorded by partner of assessee-firm, in view of fact that said documents did not suggest that noting were of loans and advances and, moreover, statement recorded during survey could not be relied upon, impugned addition was to be set aside. Thus, considering the above factual discussions and legal view taken by Jurisdictional High Court, we are of the view that there is no justification of making addition in absence of any evidence of unaccounted investment. Hence, we direct the AO to delete the addition. 21. The ld AR for the assessee also vehemently submitted that recording of statement under section 131(1) during the course of survey is illegal and invalid unless there is satisfaction of survey party that the person refuses to make his statement or does not co-operate in recording statement during survey. We have seen that contents of the statement of partners of the assessee recorded under section 131(1), however, there is no endorsement of the sur....