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2022 (10) TMI 121
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....ing in makin g addition of Rs. 34,85,466/- on account of alleged cash investment in property. 3. It is therefore prayed that the above addition may please b e deleted as learned members of the tribunal may deem it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. Brief facts of the case are that the assessee has filed his return of income for the year under consideration on 29/01/2008 declaring total income of Rs. 1,29,242/-. In the computation of income, the assessee has shown interest income, remuneration and share from partnership firm namely M/s Krish Impex, commission income and income from house property. The case was processed under Section 143(1) of the Income Tax Act, 1961 (in short the Act). Subsequently, the case of assessee was reopened under Section 147 of the Act. Notice under Section 148 was issued to the assessee on 31/3/2014. The case of assessee was reopened by the Assessing officer by recording reasons that a survey action under Section 133A of the Act was carried out at the business premises of Shri Baldevbhai Bhikhabhai Patel on 23/03/2013 by the ACIT, Circle....
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.... to show cause as to why such amount should not be treated as income for F.Y. 2006-07. 4. The assessee filed his reply, contents of which is recorded in para 7 of assessment order. In reply, the assessee submitted that he never purchased any land out of survey No. 223, 224 and 225 at village Vesu and asked the Assessing Officer to provide the documents or any evidence of such purchase. The assessee explained that page No. 2,5,8 and 13 of BFI-16 does not describe any purchase. The name mentioned as Himmatlal Savani is not of the assessee, he may be some other Himmatlal Savani, such document does not bear the signature of assessee. The assessee furnished copy of income tax returns of four preceding years for comparing his signature. The assessee clearly denied any transaction with Baldevbhai Bhikhabhai Patel. The assessee further stated that these papers are not in the handwriting of assessee. The assessee never met Shri Baldevbhai Bhikhabhai Patel and that similar facts were stated at the time of recording of his statement under Section131 of the Act. The assessee in alternative and without prejudice submission submitted that even for the days mentioned in such diary relates to A....
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....s account, capital account and balance sheet. On the basis of such details, the assessee asserted that he is not capable of making such huge investment of Rs. 34,85,466/-. The Assessing Officer only on the basis of statement of "Hitesh Savani" mentioned in the diary made addition without proving that the assessee made investment or earned gain on sale of such land. On the basis of name mentioned in the seized material, the Assessing officer reopened the case of assessee. The assessee has not purchased such land out of survey No. 223, 224 and 225. The assessee is totally unaware of any such diary for producing land at Vesu which was seized by Income tax department from the premises of Shri Baldevbhai Bhikhabhai Patel. Neither the assessee had made any investment nor any transaction was registered in his name. Some random diary found at the premises of third person does not mean that the same person as mentioned in the diary is the assessee when the assessee does not know such third person. There is no signature of assessee on such diary. The assessee further submitted that on perusal of details mentioned in the diary it relates to A.Y. 2011-12 and 2012-13 and in any case, there is n....
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....me of 'Hitesh Savani' and Himmatbhai Savani, so it is likely that either they are siblings or father-son duo. The assessee's father's name is Himmatbhai Savani hence there is probability that assessee is the person referred in seized material. Thus, the Assessing Officer rightly reopened the assessment order of father of assessee but dropped the proceedings. The ld. CIT(A) also compared the signature of assessee on seized material with the signature of Income tax return of assessee and held that assessee is the same person and concluded that the assessing Officer rightly made addition for investment of 7.09% of total cost of Rs. 4.29 crores. 8. On the reopening, the ld. CIT(A) held that 'A.R.' is right in saying reasons recorded are based on wrong incriminating material. The reopening of assessment suffers from defect, however, it is not fatal or incurable enough to make reassessment invalid. Further aggrieved, the assessee has filed the present appeal before the Tribunal. 9. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (Sr.DR) for the revenue. The ld. AR of the assessee submits t....
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....ues was without any supporting material. There was no full and true disclosure of the unaccounted income, in the application before the Settlement Commission. It was also reported that during the course of verification, the statement of Hitesh Savani was recorded under section 131, who denied any involvement in the land transaction. Hitesh Savani also denied receipt of any part of the sale proceeds as stated by the assessee. Thus, on the basis of the denial of Hitesh Savani of having any connection with the assessee the Principal Commissioner opined that the entire sale proceeds of the land to the extent of Rs. 53 crores had to be construed as that of Baldevbhai B Patel. On the basis of such report the petition of Baldevbhai B Patel was rejected under section 245D(4) by Income Tax Settlement Commission vide order dated 29.09.2016. The order of Income Tax Settlement Commission was challenged by Baldevbhai B Patel before Hon'ble High Court, by filing Special Civil Application, however, the same was dismissed vide order dated 24.08.2017 (reported viz; (2017) 85 taxmann.com 250 Gujarat. 11. The ld. AR of the assessee submits that the Hon'ble Jurisdictional High Court in Baldevbhai B....
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....horities. The ld. Sr. DR for the revenue on the objection against the jurisdiction of Assessing Officer, no such objection was raised by assessee either during the assessment or before 1st Appellate Authority, thus, the assessee is now precluded from raising such legal or technical issue. On addition on merit, the ld. Sr. DR submits that during the survey proceedings, statement of Baldevbhai B Patel was recorded, who clearly named the assessee as his partner in purchase of land in question. The name of assessee is clearly mentioned in the evidence seized during the survey action. The assessee has cooked up the story that he has no relationship with Baldevbhai B Patel. 15. We have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the assessing officer made the addition by taking view that assessee is a dormant partner in the transaction of land of survey No. 223, 224 and 225 at Vesu, Surat. The transaction was conducted by Baldevbhai Bhikhabhai Patel who is active partner amongst the two, who had admitted in his statement under Section 131 as well. The name of assessee is not mentioned in the purchase ....
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....d by ld Income Tax Settlement Commission and the petition of Baldevbhai P Patel was dismissed and on further appeal Jurisdictional High Court was dismissed. For proper appreciation of facts, the entire relevant part of decision of Hon'ble High Court is extracted below; 2. Facts in brief are as under: The petitioner is an individual carrying on business as Labour contractor as well as a broker dealing in land and building. Survey under section 133A of the Act was conducted at the residence-cum-business premises of the assessee on 23.03.2013. During such survey, incriminating documents were found such as diaries and loose papers. These documents and papers were later impounded. According to the department, the documents impounded revealed unaccounted business dealings and unaccounted income of the assessee. The Income Tax authorities initiated reassessment proceedings in respect of the assessment years 2007-08 to assessment years 2012-13 and notice under section 133(2) was issued in respect of the assessment year 2013-14. 3. On 30.03.2015, the petitioner filed an application under section 245C of the Act before the Settlement Commission, Mumbai. By an order....
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....e author of the Rule 9 report, the disclosure on behalf of the assessee on such issues was without any supporting material. There was no full and true disclosure of the unaccounted income, in the application before the Settlement Commission. The report recorded the fact that based on the furnished details identification of the said third parties, became extremely difficult. It was, therefore, difficult to find out whether the funds were indeed obtained from third parties. 8. During the course of verification, the statement of Shri Hitesh Savani was recorded under section 131 of the Act. Shri Hitesh Savani in such statement recorded on 11.03.2015 denied any involvement in the land transaction. He also denied receipt of any part of the sale proceeds as stated by the assessee, Shri Baldev Patel. In view of the denial of Shri Savani of having any connection with the assessee the Principal Commissioner of Income Tax opined that the entire sale proceeds of the land at Vesu to the extent of Rs. 53 crores had to be construed as that of the assessee-Baldev Patel. The Rule 9 report recorded that the additional unaccounted income detected from the entries in the impounded documents o....
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....Hitesh Savani was examined on 11.03.2015 however a copy of the statement of Shri Hitesh was not provided to him. Shri Savani was also not offered for cross examination. This, according to counsel, amounted to breach of the principles of natural justice. 12. The other contention that Mr. Divetia advanced was on the merits of the order of the settlement commission. It was contended that sufficient evidence was on record by way of entries in the cash books and the ledger accounts to show the connection of Shri Hitesh Savani with the dealing of the lands at Vesu. According to Mr. Divetia, one of the co-owner of the land Shri Parbat, on being questioned, categorically admitted that the assessee and Hitesh Savani had a share of investment to the extent of 14.18%. Shri Divetia during the course of arguments has taken us through the Statement of Shri Parbat which is annexed to the petition. 13. Mr. Divetia also invited our attention to the copies of the entries which are annexed to the paper book filed before the Settlement Commission, to establish the connection in the land dealings vis-a-vis Hitesh Savani. The entries in the ledger account showed that Hiteshbhai Savani ....
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....full and true disclosure deserves interference? 20. Section 245C of the Income Tax Act enables the assessee to make application at any stage of a case relating to him. He can make such application in such form and the manner prescribed. The section further envisages that such an application imposed contain a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income payable on such income and such other particulars as may be prescribed. 21. As far as the assessee in question is concerned, he filed an application under section 245C on 08.04.2015. In the application so far filed, according to him the manner of deriving additional income was classified under various heads. Based on such classification and the manner of disclosure of such income, the assessee came forth to disclose the income before the Settlement Commission as under: Asst. Year Amount of additional income of Rs. Remarks 2007-08 17,57,000/- 2008-09 06,68,500/- 2009-10 58,85,730/- 2010-11 16,18,980/- 2011-12 ....
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.... receivable as share on sale of land at survey no. 223,224 and 225 at Vesu, Surat. None of the dates in BFI 16 page 2 and page 12(backside) tally with the dates on which the share of sale of land of survey No. 223, 224 and 225 at Vesu Surat was received. Therefore, the connection sought to be made by the applicant that the amounts relate to payment of 50% share to Shri Hitesh Himmatbhai Savani is not established. Moreover, no evidence has been brought on record by the applicant to establish that the signatures are of Shri Hitesh Himmatbhai Savani. In the absence of any co-relation, the applicant's submission that section 292C(1)(iii) is applicable in respect of the signatures cannot be accepted. In paras No 11, 12 and 13 the applicant has sought to refers to entries in BFI 16 and claimed that Shri Hitesh Himmatbhai Savani has collected amounts which are distributed among the two partners and that money has also been collected on behalf of both the partners. However, although these entries show transactions relating to Hitesh the connection with the entries of amounts received as per BFI 35-page 12 (discussed above) is not. In para no. 14 of PB-V submitted by applicant on 26.09.....
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.... of Shri Hiteshbhai Savani was made by the applicant. In para no 32 of the report dated 15.07.2016 supra, the Pr CIT has noted that in response to question no.11 where Shri Hitesh Himmatbhai Savani was required to give his comments on the statement of the applicant about their joint share in the purchase and sale of the land at Vesu, the applicant has stated that he had properly read the statement but did not know any person by the name of Shri Baldevbhai Bhikhabhai Patel and was not involved in any joint share in the purchase and sale of the land at Vesu. The applicant has referred to the statement of Shri Parbatbhi one of the co-owners of Vesu land (especially replies to question no 4,5,6 and 9) to support the contention of the applicant that the parties are known to each other. In para no.32 of report dated 15.7.2016 supra the Pr CIT has referred to Shri Hitesh Himmatbhai Savani being also shown the statement of Shri Ravjibhai Karamsingh Sutharia who had stated that Shri Baldevbhai Bhikhabhai Patel and his friend Shri Hitesh Himmatbhai Savani has jointly invested in cash in the purchase of R.S. No 223, 224 and 225 Vesu, Surat and upon sale of the land, had taken their share of t....
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....he investments and further transactions were on behalf of Vince Patel, Piyush and Sanjay are not furnished. The complete details of the land have not been made available for determining the identity of the person entirely into the transactions. The entries in the impounded documents do not prove that the transactions are of third parties. None of the receipts or payments in the case of Shri Vince Patel are stated to have relation to any bank account. The main claim appears to be that since Vince Patel [refer pages 202 and 205 of PB-II submitted by the applicant on 23.08.2016]. However, the free English translation of loose paper BFI 8 page 15 (page 208 of applicant's PB submitted on 23.08.2016) shows that on the left side "Vince+Baldevbhai" is noted and therefore it appears that the claim that since Vince is written on top of the page, the transactions relate to him is not correct. The applicant has placed emphasis on BFI 8 pg 47 "returned to Vince (page no. 212 of applicant's PB-II submitted on 23.08.2016). However, the return has to be seen with reference to BFI 8 pg 15 discussed above in which Vince + Baldevbhai is noted. The claim of noting of returning of Rs 10 lacs pl....
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..... During the course of hearings that the Settlement Commission undertook at no point of time had the assessee comeforth requesting either for a copy of Shri Savani's statement of asking for permission to cross examine Shri Hitesh Savani. In absence of such a request the contention, is an afterthought. 32. In the order dated 26.09.2016, the Settlement Commission has found that there was no full and complete disclosure of income so as to entertain an application for settlement. Based on the report of the Principal Commissioner of Income Tax, it was found that though the applicant sought to disclose the income of Rs. 32 crores through the application, in fact the income that ought to have been disclosed was Rs. 85 crores (rounded off). The finding of fact was arrived at by the Commission holding that in absence of full and true disclosure at the hands of the assessee, the application did not merit consideration. 33. We do not find any reason to interfere in view of the narrow scope of judicial review to substitute our wisdom for the one taken by the Settlement Commission. The petition is, therefore, dismissed." 17. Considering the categorical finding of the In....