TaxTMI 
TaxTMI 
2025 (11) TMI 1753
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.... 3. Now we shall take the Revenue's appeal in ITA No. 577/RJT/2015 for A.Y. 2012-13. 4. Grievances raised by the Revenue, in ITA No. 577/RJT/2015 for A.Y. 2012-13, are as follows. "1. The ld. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix for the disallowance made of Rs. 99,76,000/-, out of sundry creditors u/s. 68 of the I.T. Act. 2. The ld. CIT(A) has erred on facts and in law in not appreciating that the persons shown as sundry creditors had even failed to fulfill the basic onuses cast upon them. 3. The ld. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix for the disallowance made of Rs. 83,00,000/- u/s. 68 of the I.T. Act. 4. The ld. CIT(A) has erred on facts and in law in not appreciating the fact that the assessee failed to fulfill the onus of justifying the credit worthiness of the depositor, identity and genuineness of the transaction. 5. The ld. CIT(A) has erred on facts and in law in entertaining new evidence in this regard without giving opportunity to the AO. 6. The ld. CIT(A) has erred on facts and in law in allowing expenses of Rs. ....
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....ssessee under the head "Sundry Creditors". On being asked to furnish the details of the amount, it was explained by the assessee that the amount of Rs. 99,76,000/-, so mentioned in the balance-sheet, represents the amount of money received as advance, being a sum of Rs. 48,25,000/- against the Satakhat, that is, Agreement to sale (Kabja Vagar) of the proposed sale of agricultural land, at Survey No. 517/1 paiki land admeasuring 2 Acre and 20 Guntha and advance of Rs. 51,51,000/-, was against the proposed sale of land, at Survey No. 504 paiki land admeasuring 2 Acres and 20 Gunthas. The Assessing Officer noticed that a sum aggregating Rs. 48,25,000/- was claimed to have been received in cash for the Satakhat, dated 28.03.2012, for the proposed sale of agricultural land, at Survey No. 517/1 paiki land, admeasuring 2 Acre and 20 Guntha from the following 8 persons: Sr. No. Name of the persons 1. Shri Dharmendrasinh Pathubha Jadeja 2. Shri Narpatsinh Pathubha Jadeja 3. Shr Anilsinh Pathubha Jadeja- 4. Shri Mahendrasinh Pathubha Jadeja 5. Shri Dayvantsinh Anopsinh Jadeja 6. Shri Sidhdharajsinh Velubha Jadeja 7. Shri Lakhdirsinh Manubha Jad....
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....,00,000/- 4. Anilsinh Pathubha Jadeja 437030 27.02.2013 6,00,000/- 5. Mahendrasinh Anopsinh Jadeja (signed as Mahendrasinh Pathubha Jadeja) 437031 27.02.2013 6.00,000/- 6. Siddhrajsinh Velubha Jadeja 437032 27.02.2013 6.00.000/- 7. Lakhdirsinh Manubha Jadeja 437033 27.02.2013 6,00,000/- 8. Vanrajsinh Revtubha Jadeja 437034 27.02.2013 6.25,000/- Total 48,25,000/- Likewise, a sum aggregating Rs. 51,51,000/-, was claimed to have been received in cash for the Satakhat, dated 28.03.2012, for the proposed sale of agricultural land, at Survey No. 504 paiki land admeasuring 2 Acre and 20 Guntha from the following 9 persons: Sr. No. Name of the persons 1. Shri Anilsinh Chandubha Jadeja 2. Shri Ashoksinh Chandubha Jadeja 3. Shri Girirajsinh Chandubha Jadeja 4. Shri Mahipalsinh Harishchandrasinh Jadeja 5. Shri Bhagvatsinh Tapubha Jadeja 6. Shri Jogendrasinh Bhagvatsinh Jadeja 7. Shri Rushirajsinh Bhagvatsinh Jadeja 8. Shri Chatursinh Ranubha Jadeja 9. Shri Bhavubha Khengarji Jadeja The Assessing Officer noted that the ....
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..../1 Paiki. Assessee is an absolute owner of said agricultural land since many years. And appeared in her balance-sheet. (ii). During the year under consideration, the assessee was in need of substantial amounts for some payments. Hence assessee enter in sale transactions of said agricultural land. Assessee has sale said agricultural land as under - Survey No: Sale Consideration 504 Rs. 1,78,00,000/- 517/1 Rs. 1,91,00,000/- Assessee made satakhat i.e. agreement to sale of said land on stamp paper of Rs. 100/- on 30.03.2012 and 28.03.2012 respectively. Xerox copy of same has been submitted in my previous submission. (iii). Against the satakhat of the proposed sale of agricultural land I have received following amounts as advances from various persons - Survey No: Date Amounts 504 30.03.2012 Rs. 51,51,000/- 517/1 28.03.2012 Rs. 48,25,000/- (iv). During the assessment proceedings summons has been issued to the purchase and out said some purchase attended and statement recorded. (v). Due to shortage of liquid funds, said purchasers could not made balance payments as a condition of satakhat.....
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....ar as these persons could not make balance payment, as agreed in the said Satakat (agreement). The assessee also submitted that all the persons are having substantial land holdings and all have confirmed having made advances to the assessee and have also confirmed having received the refund of their advances and these persons have confirmed the transactions, even in their statement recorded by the assessing officer. The ld CIT(A) observed that assessee has discharged her onus by proving the identity, creditworthiness and genuineness, as the receipt of advances and refund of advances are also proved by confirmations/statements of the persons concerned. The ld CIT(A) also observed that the confirmations by these persons are the most important evidence in this regard and by no means the Setakat (agreement) in question can be said to be legally invalid. The ld CIT(A) also noticed that Assessing Officer has not brought any material on record, which even indicates that the advances shown are in fact the assessee's own money. Based on these facts and circumstances, the learned CIT(A) deleted the addition. 14. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before....
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....replied to the Assessing Officer, with documentary evidences, therefore, no adverse conclusion can be drawn in respect of other 14 persons, as the Assessing Officer never summoned to these 14 persons and never asked any details and documents and information from them. The Assessing Officer has not summoned, during the proceedings under section 143(3) of the Act, therefore, no any adverse conclusion can be drawn about these 14 persons, hence transactions done by the assessee, with these 14 persons, cannot be treated bogus. Moreover, the agreement (Satakat) does not require registration if the parties to the agreement decided to cancel it, they may cancel the agreement (Satakat) with mutual consent. We note that in the assessee's case, in the subsequent assessment year (A.Y.) 2013-14, the Assessing Officer framed the assessment, on the assessee, by making no any addition in the hands of the assessee, in respect of similar transactions. Therefore, no any adverse inference should be drawn against the assessee, as all the creditors filed confirmation and accepted the transaction in their statement before the Assessing Officer. 18. The Ld. CIT-D.R. contended that since the Assessi....
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....d, what is refunded in same transactions cannot be a ground to disbelieve. 19. We find that ld. CIT(A) held that the identity of the persons concerned is not in doubt. The creditworthiness of the persons is not in doubt. The receipt of advances and refund of advances are also proved by confirmations/statements of the persons concerned. The confirmations by these persons are the most important evidence in this regard and cannot be brushed aside. Necessarily having PAN is not a legal requirement to make or receive advance against sale or to prove the genuineness of such advance so long as the source is satisfactorily explained. By no means the Setakat (agreement) in question can be said to be legally invalid. Therefore, we find that Assessing Officer has simply concluded only on the basis of suspicion/doubt, not on the basis of any cogent material available with him, hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so deleted by ld.CIT(A) is upheld, and ground Nos.1 and 2 raised by the Revenue, are dismissed. 20. Ground Nos. 3 to 5 raised by the Revenue, relate to addition of Rs. 83,00,000/-, on account of unsecur....
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.... a) Hakumatsinh Jadeja Rs. 6,00,000/- Jaipalsinh Jadeja Rs. 6,00,000/- Mayursinh Jadeja Rs. 6,00,000/- Said persons are relative of assessee. (Page No: 15 to 18) b) M/s Saturn enterprise : Rs. 40,00,000/-Confirmation letter with PAN No. and bank statement of Bank of India, Gandhidham branch is attached herewith. Looking to the said statements, said person received by RTGS of Rs. 1,00,00,000/- on 04.02.2012 and out of said amounts given loan of Rs. 40,00,000/- to assessee by issuing cheque on 07.02.2012. (Page No: 19 to 32) c) Shri Hitesh Ratilal Patel : Rs. 10,00,000/- It is a Squared up accounts, Ledger copy of accounts with confirmation is attached herewith. (Page No: 33) d) M/s Shree Associates :Rs. 15,00,000/- It is a squared up accounts. Ledger copy of accounts, contra copy of accounts and copy of bank statement of HDFC Bank from which cheque has been issued is attached herewith. Looking to the said bank statement said M/s Shree Associates has received Rs. 15,00,000/- by transfer amount on 06.07.2011 and issued cheque to assessee on 08.07.2011. Assessee has repaid said amounts of Rs. 15,00,000/- by issuing cheque No: 0687....
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....details, PAN, etc, which are enough to conclude that the assessee has discharged her onus of proving identity, creditworthiness and genuineness of creditors. The Assessing Officer has not brought anything on record which even indicates that the loan amount in question really belongs to the assessee. Hence, the loans taken from these persons cannot be added to the total income of the assessee u/s 68. Accordingly, the addition of these three loan credits of Rs. 65,00,000/- (Rs. 10,00,000 + Rs. 40,00,000+ Rs. 15,00,000) were deleted by ld CIT(A) and addition of Rs. 18,00,000/- was confirmed by ld. CIT(A). This way, the ld. CIT(A), partly allowed the ground of the assessee. 25. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us. 26. Learned CIT-DR for the Revenue, submitted that assessee has taken loan of Rs. 83,00,000/-, from six persons and these six persons has not proved the creditworthiness. Out of six persons three persons have replied with documentary evidences, however, rest three persons, have not submitted enough documentary evidences. The Ld. CIT-D.R. also submitted that during the appellate proceedings, the assessee submitted additional evide....
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.... to the tune of Rs. 65,00,000/- (83,00,000 - 18,00,000/-), we confirm the findings of Ld. CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss ground Nos.3 to 5 raised by the Revenue. 29. In Ground Nos. 6 and 7, the Revenue has raised the issue that expenses of Rs. 1,19,29,140/-, made by the assessee for vacating the land and removing encroachment, were without any supporting documentary evidences. 30. The brief facts qua ground Nos. 6 and 7, are that during the year, the assessee has sold plots of land admeasuring 3976.38 Square Yards and numbering 38, in all for an aggregate consideration of Rs. 2,79,06,710/-, on which assessee has shown 'Short Term Capital Gain' of Rs. 45,03,271/-. It was noticed that the land ad measuring 7339.74 Square Yards, at Survey No. 59/3, was purchased by the assessee on 18.01.2011, for a consideration of Rs. 78,71,170/- (Rs. 75,00,000/- cost and other expenses like stamp duty, registration fee etc, of Rs. 3,71,170/-). Out of the total land area of 7339.74 Square Yards, area ad measuring 3976.38 Square Yards consisted of 38 plot....
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....of Rs. 78,71,170/- after purchasing land it was converted in non-agricultural land. As per non-agricultural order total saleable land area of 7339.4 Square yards. II. Whenever assessee has purchased said land it was entire encroached by so many persons. Some un-authorized persons have created, viz, Shri Gail Krupa Society (Proposed) and sold plots by issuing share certificates. Detail of said society and plot holders has been submitted with my previous submission dated 20.11.2014. III. It is quite natural that, to get vacate possession and relinquishment of their rights in land; assessee has to pay some amounts to said plot holders. To get mental peace and avoid other legal litigation assessee decided to pay Rs. 3000/- per Square Yards to each certificate holder and get the original certificate. Details of payments to plot holders and Xerox copy of share certificate, on the back side of the each certificates containing the receipt of payments made by the assessee where submitted with submission dated: 20.11.2014. IV. It is hard core truth that un-authorized encroached can not vacate without payment of handsome amounts. And particularly when owner of the l....
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....,06,710/- and it is obvious that the sale value is almost seven times of the purchase cost. It simply indicates that the assessee purchased the land at throw away price, but because of either litigation or encroachment for which the assessee might have spent substantial amount in getting the land vacated from encroachers, but how much amount has actually been paid is the bone of contention because neither the claim of payment made by the assessee is fully verifiable in absence of the whereabouts of the payees nor the Assessing Officer has anything on record or any logic to disprove the claim of the assessee completely. Hence in such a situation, the ld.CIT(A) estimated payment made to encroachers at Rs. 2,500/- per square yard instead of Rs. 3000/-, as claimed by the assessee but not allowed at all by the Assessing Officer. Accordingly, the ld CIT(A) allowed the ground of the assessee, partly, and directed the Assessing Officer to recompute the cost of acquisition. 34. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us. 35. Learned CIT-DR for the Revenue submitted that the encroachment expenses paid by the assessee is abnormal in nature, therefore, it sh....
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....lowed @ Rs. 2500/- per sq, yard. We find that Assessing Officer himself (vide Page 22, Para 9.5 of assessment order) acknowledged the encroachment expenses and likely payment by assessee. Therefore, based on the findings of the Assessing Officer, the ld. CIT(A) has passed a reasoned order and allowed the payment on estimated bases at Rs. 2500/- per sq, yard. As regards, affidavit of Mr. Gosai, as additional evidence, we note that Ld.CIT(A) has also called for the remand report, hence ground no. 5 of revenue should not survive, vide order of CIT(A) Page 9, Para 6. Mr. Gosai as a promoter of proposed society, has accepted the fact of payment to various persons and he has confirmed the transactions. We note that the Inspector visited the site after nearly 3 years and by that time, there was lot of development, hence his inspection has no meaning and the said Inspector was not a valuer or an expert. Therefore, considering these facts, the amount estimated by the learned CIT(A) should not be doubted. 38. We note that assessee under consideration, along with her son Shri Axitsinh Jadeja and daughter Miss Alpnaba Jadeja purchased 4 acres 32 guntha of agricultural land at survey no. 59/....
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....hat it is not possible to find them out because the assessee is not in touch with them, however receipts are available, about the payment made to them. Further, the persons involved in encroachments were layman and anti- social elements. During appellate proceeding an affidavit from Shri Devendragiri A. Gosai, was also submitted as evidence to support her claim of payment made through him. The submission along with the said affidavit was forwarded to the Assessing Officer, for this comment and he was also directed to examine, Shri Devendragiri A. Gosal, if he deems fit. The Assessing Officer, submitted his remand report dated 06-08-2015 before they ld. CIT(A). 40. The remand report was forwarded by ld.CIT(A), to the assessee for her comment. The assessee, vide her letter dated 17-08-2015, submitted her comment in which she reiterated the same things as made in her submissions, during assessment proceeding and appellate proceedings. However, one important point has been mentioned, that is, when the proposed society itself is illegal as plot holders were encroachers so question of documents like application of shareholders, registration as co- operative society, etc, related to le....
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.... assessee might have spent substantial amount in getting the land vacated from encroachers. But how much amount has actually been paid is the bone of contention because neither the claim of payment made by the assessee is fully verifiable in absence of the whereabouts of the payees nor the assessing officer has anything on record or any logic to disprove the claim of the assessee, completely. Hence, in such a situation the only option left is to estimate considering all aspects of the case. Hence, considering all the discussions made above and also in the interest of justice the payment made to encroachers was estimated at Rs. 2,500/- per square yard by ld.CIT(A), instead of Rs. 3000/- as claimed by the assessee but not allowed at all by the Assessing Officer. Therefore, ld. CIT(A) allowed the appeal of the assessee, partly and directed the Assessing Officer, to recompute the cost of acquisition. We have gone through the above findings of the ld. CIT(A) and noticed that there is no infirmity in the conclusion reached by the ld. CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition, partly. His order on this addition is, there....
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....penses of Rs. 79,95,500/- and debited under the head of development of land. Detail head- wise expenses, quantity, price, sq. feets of each material is attached herewith. (Page No: 1 to 14) IV. Main reason for disallowance of expenses is enquiry conducted by the inspector of your office Shri Amar Narayan as mentioned in Para No: 9.2 of the said notice. First of all, said land development expenses where incurred during F.Y. 2011-12. Your Inspector personally visited in the month of January 2015 i. e, after 3 years. Assessee has sold open plot of land. However during the visit of your inspector there was developed housing society with proper road, etc. considering above facts how your inspector simply give report that, there is virtually no any materialistic improvement in the condition of land in question. Without visited open land during F.Y. 2011-12 on what basis he compared and said there is no improvement in land. Moreover, your inspector is not technical persons or engineer, etc. Assessee attached herewith detail of each expense, incurred for development. Considering the said estimate of sum of Rs. 25/- per sq. yard is very low. Assessee strongly object for said disall....
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....conclusion that "there is no any materialistic improvement in the condition of the land". The Assessing Officer has not denied or disproved the bills of material (used in constructing roads as well as compound wall, fillings/levelling, etc.) produced before him. As the Assessing Officer has not brought any cogent material on record to disprove the claim of expenses incurred by the assessee, the disallowance of this expense cannot be sustained, therefore, ld. CIT(A) deleted the addition. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us. 48. Ld. CIT-D.R. for the Revenue submitted that the assessee has not submitted the name and address of the payee and the contractors. Therefore, it is in doubt that to whom the assessee has paid the amount for such land improvement cost. During the assessment proceedings, the inspector was sent by the Assessing Officer, to visit the site and inspector has reported that there is no such improvement made in the land, therefore, this issue may be remanded back to the file of the Assessing Officer for verification of the site, whether the assessee has incurred the expenses on improvement cost or not. 49. On the other hand....