TaxTMI 
TaxTMI 
2024 (2) TMI 866
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....erred to as 'the Act') relating to the Assessment Years 2008-09 & 2009-10. Since common issue is involved in all these appeals and the respondent-assessees herein are Partners of the firm M/s. Vadsar Industrial Development Corporation (VIDC), the Revenue appeals and the Cross Objections filed by the assessees are disposed of by this common order. 2. ITA No. 1425/Ahd/2014 (Revenue's appeal) relating to the Assessment Year 2009-10 is taken as the lead case. The brief facts of the case is that the assessee is a Partner in M/s. Vadsar Industrial Development Corporation (VIDC) which is engaged in development, construction of buildings, purchase and sale of lands and buildings. The Firm VIDC wanted to purchase lands for business, however the Non-Agricultural lands were very costly. Therefore the Firm decided to purchase agricultural lands which is cheaper compared to Non-Agricultural lands. But as per the Govt. of Gujarat Revenue Rules, agricultural lands can be purchased only by agriculturists/farmers and not by any other persons. Therefore the Firm VIDC purchased agricultural lands in the name of its four Partners who are the farmers (remaining 3 Partners are not Farmers). The Firm ....
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....atio of cash payment against the cheque as "4.5:1" The A.O. held that these agricultural lands are purchased by assessee in his personal capacity & unexplained investment in these lands by him. A.O. worked out unaccounted cash payment involved in these blocks as under for the A.Y. 2008-09 Total Sale Price of land of these blocks as per Registered Sale deeds Rs. 1,58,74,840/- Cash Ratio 4.5 : 1 Total cash involved Rs. 7,14,36,780/ (15874840 *4.5) ¼ share of assessee Rs. 1,78,59,195/- It is also observed that during A.Y. 2009-10, Firm VIDC purchased other agricultural lands also bearing Block Nos. 387, 391, 392, 395, 1571, 1572 & 1573. These Block no. of land are written on loose page 73 Annexure AS/5. However A.O. was of the view that in respect of these Block No. also there was dealing of unaccounted cash payment since these lands are situated in same vicinity. Accordingly A.O. worked out unaccounted cash payment in respect of these land transactions also, as under for A.Y. 2009-10. Total Sale price of land Of these blocks as per Registered Sale deeds Rs. 1,00,49,300 Cash Ratio 4.5 : 1 Total cash involved ....
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.... consideration, stamp duty, registration fees, etc, is made by Firm VIDC by a/c payee cheques for cost, and by cash for expenses which are also found recorded in the bank account and books of accounts of the Firm and same are also found in the Balance Sheet of the Firm as at 31/03/2009 also It is also observed that the Firm VIDC is assessed to income tax at PAN No.AAGFV7597P, and its income tax returns have been filed regularly. It has been explained by the AR that in A.Y.2012-13, the Firm has sold some of these lands for Rs.5,07,86,510/- and same is shown in profit & loss account of the Firm on which business profit is earned and offered to tax. The sale of these lands is also reflected in ITR-5 for A.Y. 2012-13. The sale consideration has been received by account payee cheque in the name of the Firm and found credited in bank account of the Firm. The sale price received is not routed through bank account of appellant and other co-owners. 6.4 Taking into account entire facts and circumstances it can be stated that page no.73 has no connection with the appellant because Block Nos. of lands mentioned on this page are belonging to the Firm and shown in the books of ....
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....d that no addition can be made solely on the basis of seized handwritten note book/loose slips which are dumb documents. There being no other corroborative material. 6.7 Under the facts and circumstances of the case and law decided by Hon. Courts and Tribunals mentioned above I am of the considered view that, the addition made by AO in case of appellant for AY in question, of Rs. 4,04,14,657/- (Rs17859195/+Rs22555462/) is deleted and appellant gets relief to that extent. This ground of appeal is allowed. However the issue of investment in land blocks on the basis of loose paper no 73 may be examined in the case of M/s. VIDC the firm in which the appellant and other co purchasers are partners." 5. Aggrieved against the same, the Revenue is in appeal before us in ITA No.1425/Ahd/2014 for A.Y. 2009-10 raising the following Grounds of Appeal: 1) The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in deleting the addition of Rs.4,04, 14,657/- made on account of unexplained investment in agricultural lands. 2) On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-II, Ahmedabad oug....
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....s were found and seized vide Annexure-A-5, in which page-72 and 73 were found to be incriminating by the A.O. As per the A.O. the status indicates that the actual value of land transaction was @ Rs.9 lakhs per bigha, whereas the cheque payment for per bigha of land was Rs.1,05,35, 040/-The A.O. was- of the view that the difference between Rs.9,00,000/- and Rs.1,05,35,040/- was paid in cash for acquisition of land, being the unaccounted cash payment for the purchase of such land. The A.O. also pointed out that the assessment of two partners of the appellant firm were reopened' and assessed. But, since the land was acquired was in the name of the appellant, the addition was required to be made for unexplained cash payment in the hands of the appellant. The A.O., thus, made an addition of unexplained cash payment Rs.2,01,81,390/- for 34.79 bighas of land. The copy of the relevant page of seized material is also part of the assessment order, being at page no. 4 of this order by the AO. 4. Against the said order, assessee preferred first appeal before the ld. CIT(A) and ld. CIT(A) allowed the appeal of the assessee. 5. We have gone through the relevant record and i....
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....l Infrastructure Park, the Hon'ble High Court dismissed the Revenue appeal observing as follows: "....6. A perusal of the order passed by the Commissioner (Appeals) reveals that he, after appreciating the material on record, has found that in the present case, the document has been seized from the premises of a third person and it is not established that it is written by the assessee. The transaction in the document is not self-speaking and that the allegation that cash has been paid is not coming out from the document. Moreover, the document does not contain the name of the assessee, nor does it contain the signature of either of the parties of the assessee firm or of the person searched upon, namely Shri Paresh B. Patel. Moreover, the word "cash" is nowhere mentioned on the seized document. The Commissioner (Appeals) has, accordingly, found that the conclusion by the Assessing Officer that the balance amount is paid by cash, appears to be conjecture or interpolation, and that this conclusion is not evident from the seized document and/or subsequent investigation done. In the light of the above findings recorded by him, the Commissioner (Appeals) was of the view that no a....
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....nbsp; 25,00,000/- 07/10/06 15,00,000/- 20/10/06 10,19,430/- 07/12/06 1,00,19,430/- 1,00,19,430/- Cash 22,26,300/- Cheque" 9.1. From perusal of this loose paper in Page No. 73, the cash transactions are between 31.08.2006 to 17.12.2006 which pertaining to the Assessment Year 2007-08. Whereas the purchase of lands by the assessees in the name of the Firm were between 17.04.2008 to 08.10.2008 which is clearly falls under the Assessment Year 2009-10. However the Ld AO determined the cash and cheque ratio as 4.5 : 1 based on this seized loose sheets which has no relevance to the purchase of agricultural lands by the assessee in the name of its Partnership Firm VIDC. On perusal of the various Sale Deeds executed in the names of the assessees herein, the original land owners only executed the Sale Deed in favour of the assessee on behalf of the Firm VIDC and the Partnership Firm VIDC had made cheque payments to the sellers of the land, which is reflecting in the various Sale deeds executed at the office of the Sub Registrar. Furthermore, the Partnership Firm VIDC sold few....
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....nue and CONos.52, 51/Ahd/2015 & 21/Ahd/2016 filed by the Assessee: 13. These appeals are filed by the Revenue against the remaining three Partners namely Shri Jayesh Ravjibhai Dobariya, Shri Rajesh Rameshbhai Patel and Shri Jagdish Bhagwanji Chandarana. Corresponding Cross Objections filed by the above Assessees. The Grounds of Appeal raised by the Revenue in IT(SS)A No.41/ Ahd /2015 for A.Y. 2009-10 is as follows: 1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.4,04,14.657/- made on account of unaccounted investment in land, despite material on record in support of the addition made by the AO 2. The Ld.CIT(A) has erred in law and on facts in holding that the land was owned by the firm M/s Vadsar Industrial Development Corporation and thereby deleting the made in the case of assessee partner, disregarding the registered purchase deed and detailed reasoning given in the assessment order. 3. The Ld.CIT (A) also failed to appreciate that though firm is a legal entity, it is not capable of taking any decisions on its own, but all the decisions relating to the running the affairs of the firm are taken by the partners and fun....