9911796707
TMI Blog2012 (8) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000-01, 2001-02 & 2003-04 the respondent-assessee has filed cross objections, however, those cross objections were dismissed, being withdrawn by the assessee, vide ITAT "C" Bench Ahmedabad order dated 01/11/2011. The Respected Co-ordinate Bench has also noted that those cross objections were belatedly filed and time-barred by 1170 days as well. Considering the said request of withdrawal, the Bench has decided as follows:- "3. It may be noted that in all the Cross Objections the assessee challenged initiation of proceedings u/s. 153C of the IT Act. The learned Counsel for the assessee submitted that the grounds of Cross Objections have been decided by the learned CIT(A) against the assessee and submitted that delay in filing the Cross Objections was due to the bona fide belief that the assessee could support the order passed by the learned CIT(A) without filing the Cross Objections because Rule 27 of the Appellate Tribunal Rules permit the Respondent in departmental appeal to support the order appealed against on any of the grounds decided against him. He has, therefore, submitted that the assessee however, due to abandoned precaution filed the Cross Objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal the only objection raised is that ld. CIT(A) ought to have held that the cash and jewellery requisitioned u/s. l32A belonged to the assessee, i.e. Mahendra A. Patel and not Shri Dharan Karia. Likewise, in the case of Tarun D. Karia the issue is in respect of assessment of cash and jewellery in his hands. Considering these reasons, those two appeals for A.Y. 2004-05 have been segregated and we have decided to proceed with this group of eight appeals and those two appeals have been adjourned as per the notings on the order-sheet of those cases. We have made this clarificatory remark to overcome any confusion or misunderstanding, may arise in future. 3. At the start of the hearing, Ld. AR Mr. S.N. Divatia has raised an issue, that in the light of the observation of the ITAT "C" Bench order dt. 1.11.2011 (referred supra), the respondent-assessee is entitled to invoke the provisions of Rule 27 and thereupon wanted to challenge the initiation of proceedings u/s.l53C of the I.T. Act. His vehement contention is that the withdrawal of Cross Objection was conditional as is appearing from the language of the said judgment of the Tribunal. The appellant has a right to raise a legal issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction of the assessment in a Department's appeal before the Tribunal. Such a situation arises when the assessee has accepted the decision of CIT(A), but the department did not, so the Commissioner of Income-tax filed an appeal before the Tribunal against it. During the hearing of the appeal before the Tribunal it was admitted that although no appeal had been filed but also withdrawn the Cross Objection and that under rule 27 of the Income-tax Appellate Tribunal Rules, 1946, the respondent is entitled to support the order of the CIT(A) on any of the grounds decided against him though the respondent has not appealed and prayed that he be allowed to support the order on any ground even on the question of the jurisdiction. Assessee's counsel also pressed orally that he should be allowed to argue on the question of assessability also in view of Rule 27. It would mean that he would be cutting at the very root of the matter and if he is successful would completely destroy the CIT(A)'s order. So the question is that whether such an action through which an order could get annulled be termed as an action in support of it? Otherwise in this appeal the Revenue has challenged the quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal, provided he has filed such objection in the appellate Court within one month from the date of service on him or his pleader" and it is in the form of a memorandum of appeal. When a trial Court decrees or dismisses a suit entirely, no difficulty arises about the respondent's rights in the appellate Court. In such a case the appeal, whether it is by the plaintiff or by the defendant, is in respect of the whole subject-matter of the suit (unless he gives up a portion of it and it is therefore out of consideration). Whatever is the judgment of the trial Court, whether accepting the plaintiffs case, or rejecting it, in toto, it may be based upon one ground or more than one ground. A plaintiff may have one, or more than one, ground of attack and similarly a defendant have may have one, or more than one, ground of defence. To simplify the discussion I would confine myself to one ground and two grounds of attack and one ground and two grounds of defence. When both grounds of attack are accepted by the trial Court, it cannot be doubted that the defendant-respondent has a right to urge that both of them are wrong. Actually in order to succeed in the appeal he must show that both are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the suit and that in the absence of provisions to the contrary an appellate Court has all the powers of the trial Court in respect of the subject-matter of the suit and the whole suit is laid open before it (barring, of course, what has been given up in appeal). Both grounds of attack are again for consideration before the appellate Court, the one accepted by the trial Court and brought before it by the defendant-appellant and the other rejected by it and brought before it by the plaintiff-respondent in his oral argument. It is not necessary for the plaintiff even to file at cross-objection against the rejection, which is merely a substitute for an appeal. In the same way when one ground of defence is accepted and the other rejected the defendant-respondent in the appeal filed by the plaintiff has a right to urge that the trial Court had wrongly rejected the other ground; if he succeeds the appeal will fail even though the plaintiff succeeds in showing that one ground was wrongly accepted, So far I have been dealing with decreeing or dismissing a suit in toto. Now I come to the complicated case of a suit being decreed in part and dismissed in part. This is a case different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection is to be in the place of an appeal which he could have filed and he could have filed an appeal only in respect of the decree regarding the other part of his claim. Therefore, the words "the decree" with reference to the cross-objection in the rule mean the part of the decree other than that dealt with in the earlier part of the rule and in respect of which he has been given the right of supporting it on any of the grounds decided against him. It is important to bear this distinction in mind and the failure to do so has resulted in confusion and error. The provision in r. 27, with which we are concerned, is to be distinguished from that in order 41, r. 22(1). While r. 22(1) gives two rights to the respondent, one in respect of part of the claim decreed in his favour, and the other in respect of the part disallowed, r. 27 deals with the order of the lower Court, viz., the AAC in its entirety. It does not contemplate the splitting of the AAC's order into two parts for the simple reason that an assessment order is incapable of being treated as an order partly allowing something and partly disallowing the other thing. While in respect of a claim of a plaintiff it can be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the income at a certain figure, and the right given to him is of urging another ground, though rejected by the AAC, in support of it; he must support the order, i.e., must not ask for any variation (in his favour) in the order. In other words he must not ask for any reduction in the assessed income. Asking for any reduction in the assessed income is not supporting the order assessing it." 3.5 From the above reproduction few important points of law emerges, to be highlighted so as to resolve the controversy. (1) An appeal lies from operative part of the judgment and not from the reasons in support of it. Naturally certain findings ought to have been given, whether on facts or on law, on which the operative part of the judgment is based, but those ought not to be the ground of an appeal. (2) A successful party, i.e. presently the respondent- assessee, cannot appeal merely in respect of a finding given adversely to get corrected, as notwithstanding the said adverse finding, the operative judgment is in his favour. He is not aggrieved by the outcome of the judgment. (3) An appeal lies by an aggrieved litigant, if not aggrieved no appeal. There is no gain by appealing against an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onounced by the Hon'ble Bombay High Court in the case of B.R. Bamasi (supra), wherein the assessee wanted to raise a new point as a ground of defence in the appeal but stopped to raise due to the reason that such new point may affect the validity of the entire assessment proceedings. The Court has said that the point would have served as a weapon of defence against the appeal, but it could not be made a weapon of attack against the order insofar as it was against the assessee. Relevant portion of this judgment is reproduced below:- "It has further held that the respondent in an appeal is undoubtedly entitled to support the decree which is in his favour on any grounds which are available to him, even though the decision of the lower Court in his favour may not have been based on those grounds. It has further held that if the appellant in his challenge to the decree of the lower Court is entitled to take a new ground not agitated in the Court below by leave of the Court, there appears to be no reason why a respondent in support of the decree in his favour passed by the lower Court should not be entitled to agitate a new ground and subject to the same limitation. A Division Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to raise a new ground, provided it is a ground of law and does not necessitate any other evidence to be recorded the nature of which would not only be a defence to the appeal itself but may also affect the validity of the entire assessment proceedings. If the ground succeeds, the only result would be that the appeal would fail. The acceptance of the ground would show that the entire assessment proceedings were invalid, but yet the Tribunal which hears that appeal would have no power to disturb or to set aside the order in favour of the appellant against which the appeal has been filed. The ground would serve only as a weapon of defence against the appeal. If the respondent has not himself taken any proceedings to challenge the order in appeal, the Tribunal cannot set aside the order appealed against. That order would stand and would have full effect insofar as it is against the respondent. The Tribunal refused to allow the assessee to take up this ground under an incorrect impression of law that if the point was allowed to be urged and succeeded, the Tribunal would have not only to dismiss the appeal, but also to set aside the entire assessment. The point would have serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon'ble Gujarat High Court pronounced in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. vs. CIT reported at 282 ITR 321 (Guj.), wherein the ld.CIT(A) has decided the issue of levy of penalty in favour of the assessee by deleting in entirety, hence cross-objection was not filed by the assessee. It was quoted that the Tribunal has lost the sight of the fact that there was no occasion for the assessee to feel aggrieved by that favourable verdict, hence no cross-objection or an appeal was filed. The Court has opined that in a case a party having succeeded before CIT(A) opts not to file cross-objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or accepted the part thereof which was against the respondent-assessee. The Hon'ble Court has therefore concluded that the Tribunal has unfortunately drawn such an inference which was not favourable to the respondent-assessee. If the inference drawn by the Tribunal is accepted as correct proposition, it would render Rule 27 of Tribunal Rules redundant and nugatory. Even in the case of DCIT vs. Turquoise Investment & Finance Ltd. report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... police raid was conducted at the premises of M/s.Kalgi on 26/08/2003. Certain documents were requisitioned and on the basis of those documents, it was found that some of them were belonging to the assessee. Due to that reason, a notice u/s.153C r.w.s. 153A(a) of the IT Act was issued. In respect of the above ground, it was noted that the assessee has purchased an agricultural land at Thor from one Mr. Dhiren J.Raval on 01/01/1999. The assessee was asked to explain the source of acquisition of the property. The mode of payment was stated to be "cash and hawala". As per the sale documents, a sale consideration of Rs.5 lacs was paid in respect of the pieces of land having four survey numbers 1920, 1921, 1924 and 1930 situated at Thor, Kadi, Mehsana. The AO has examined the "sale deed" wherein it was found that the impugned sum of Rs.5 lacs was paid to the seller in earlier years. As per AO, since the assessee has not filed any balance sheet or capital account in the past either in the regular return or the return filed u/s.153C of IT Act, therefore it was not proved that the impugned amount of Rs.5 lacs was paid in earlier years. However, during the course of hearing, a balance-sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these details, the addition of Rs.5 lakhs made by the A.O. was not justified and is deleted." 7. From the side of the Revenue, Ld.DR Mr.S.K.Gupta has appeared and argued that the assessee has debited the registration charges and stamp duty, therefore it was established that the land was indeed purchased by the assessee. Why a person would sell the land before getting the sale consideration?, Ld. D.R. questioned. Also, it was wrong on the part to claim that the said amount of Rs.5 lacs was paid in earlier years. The assessee has utterly failed to prove that in fact the said amount of Rs.5 lacs was ever paid in the past. In some of the documents, the seller has denied of receiving any payment as sale consideration, however, on some of the documents the assessee was treated as the owner of the property being purchased through a registered sale-deed. Ld.DR has drawn our attention on all the said sale-deeds pertaining to the respective piece of land as per their distinctive survey numbers and informed that identically it was noted as per one of the clause of the saledeeds that the sale consideration was received in piece-meal, i.e. small amounts of cash in pieces. Ld.DR has therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown as either deposit or loan in the name of Shri Dhiren J.Raval ever in the past. Even the stand of the assessee kept on changing for the reason that at one place in the affidavit Mr. Dhiren Raval has stated that no consideration was received , but when it was questioned that why without receiving any consideration a prudent man would sell the land, the other stand was taken that the amount in question was received in the past year so not to be taxed in the year under consideration. This dilly-dally conduct has thus created doubt. We are convinced with the argument of the ld. CITDR Mr. Gupta that the amount of consideration might have been received by the vendor in piece-meal but within the financial year under consideration. Hence the investment has actually been made during the year under consideration. Otherwise, the legal presumption is that the documents which have found belonging to the assessee should be read as it was noted, therefore, the investment is to be considered in the year in which a document is registered and the property is purchased. Therefore we hold that the issue is very straight that the four pieces of land were purchased through registered sale deeds, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily and his net income has to be seen in light of household expenses there and cost of living in USA. The availability of funds on account of sale of store, if any, to Shri Atul Doshi cannot be considered relevant to assessment year under consideration as such sale is said to have occurred during subsequent years. Most importantly the specific details of expenses incurred for purchase of such 'store' and sources thereof are not given in the letter of Shri Biral M.Patel as it would have been determinative for finding out the net profit generated out of such sale. In fact the claim of sale of store and restaurants by Biral M.Patel in USA remain unsubstantiated as no documentary evidences such as deed, agreement or legal documents for such sales were produced during hearings despite the fact that assessee is father of Biral M.Patel and assessment proceedings were going on in the cases of both the assessee and Shri Sandip M.Patel respectively father and brother of Biral M.patel. The issue of verification of gifts and unsecured loans from Biral M.patel to assessee and his family members was know to Authorized representative and the assessee both since the beginning of proceedings. A let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank accounts could not be obtained but that the gifts were made out of his income, savings, sale of assets, etc. and the remittance was through proper channel. Shri Biral had settled in USA and had sent the amount through banking channels and was the real son of the appellant. Also that the amount had been received in the bank account of the appellant from out of the NRE bank account of his son. In view of these facts and the decisions of the Hon'ble Gujarat high Court in the case Murlidhar Lahorimal and in case of Nemichand Kothari, 264 ITR 254 (Cal), the addition made by the A.O. is not justified and is therefore deleted. The related ground of appeal is allowed." 13. From the side of the Revenue, ld.DR Mr. Gupta has placed reliance on the order of the AO and pleaded that without giving an opportunity to the Revenue Department, ld.CIT(A) has unduly granted relief to the assessee. Ld.DR Mr.Gupta has also argued that the son was earning a paltry salary income, therefore he has insufficient funds to advance as loan/gift to any of his family members. He has cited a decision of Hon'ble Gujarat High Court pronounced in the case of Dinesh Babulal Thakkar vs. ACIT 341 ITR 632(Guj.), but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue was about the gift where the relationship could not be established. It was found that the gift was without occasion, without any relationship and there was no family connection with the donor. In the absence of non-availability of the details and the activities of the donor in USA the view taken by the Tribunal was upheld. As far as the present case is concerned, the Honble Gujarat High court's view is worth to record that the genuineness of the transaction is established having the transaction been made through bank and if revenue not satisfied with the sufficiency of funds of the donor, it was up to the revenue to take appropriate action and at best those could be the factors to be called upon from the donor, but that could not be a ground for disbelieving a gift. Respectfully following the verdict, we therefore hold that the ld.CIT(A) has rightly deleted the addition, hence this ground of the Revenue is hereby dismissed. 16. Rest of the sub-grounds shall be dealt with in the following paragraphs. Revenue's appeal for A.Y. 1999-2000 is partly allowed. B. Revenue's appeals, ITA Nos.868, 869, 1339 and 870/Ahd/2008, respectively for A.Ys. 2000-01, 2001-02, 2002-03 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was therefore argued that the A.O. had not only adopted the quantum of the gift erroneously at exaggerated figure but had also overlooked the fact that these were gifts received from the real son, Shri Biral alias Gulu Patel, settled abroad, whose creditworthiness had been adequately explained even though the source of the source was not required to be proved. The entire receipts had passed through normal banking channels. The son, Biral had settled in USA and was sending his savings as gifts/loans to his real family members, as would be expected from a son." 18. Having heard the submissions of both the sides and on due consideration of the evidences placed on record about the source of gift being made by the son found to be settled in USA and the amount being remitted through NRE bank transaction and that the source was satisfactorily explained, we are of the considered view that the findings on facts given by ld.CIT(A) is hereby confirmed. For all the years, this issue goes in favour of the Assessee and grounds in this regard are hereby dismissed. Resultantly, appeals for AYs 2000-01, 2001-02, 2002-03 & 2003-04 are dismissed. C. Assessee's appeal, ITA No.1016/Ahd/2008 for A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.Patel (Kalgi Group). Those papers and the documents were duly listed and numbered as per the Police Panchnama. Ld.AR Mr.Divatia has drawn our attention on those documents and stated that those were electricity bills, a bill of hotel in the Residency, telephone bill of Bharat Sanchar Nigam Ltd., there was a cash memo of Kiran Motors, a Gujarat written-slip and Invoices of Toyota, lists and amounts in Gujarati. So, the ld.AR argued that those documents did not reveal any material through which it could be judged that the assessee has concealed the income. However, it is not in dispute that in compliance of the said notices, the assessee has filed a return of income on 04/09/2006 and declared an income of Rs.8,20,107/-. Ld.AR has placed reliance on a decision of Hon'ble Gujarat High Court pronounced in the case of Vijaybhai N.Chandrani 333 ITR 436 (Guj.). In this decision, the scope of section 153C of the Act was discussed and it was found that the loose-papers found at the time of search though in the name of assessee but did not belong to the assessee. On the basis of the peculiarity of that case in respect of the documents found, a finding on fact was that undoubtedly those docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminating material has been forwarded by an another Government Authority, i.e. Police Department to the AO and those requisitioned documents did belong to the assessee, then the only recourse left with the AO was to start the proceedings, so that the investigation on those documents could be made. In the present case as well, on receiving the information in the shape of documents seized, the AO had to proceed with the investigation. The right recourse was to issue notice u/s.153C of IT Act. If prima-facie, certain documents are found to be belonging to an another person, nevertheless on the face of impugned documents it may or may not reveal the concealment amount of income, the AO is duty bound first to investigate and then only be able to decide about the factum of concealed income. Therefore, as a first step, a notice u/s.153C is a sine-qua-non for starting the proceedings. We, therefore, hold that there was no fallacy in the issuance of notice u/s.153C of IT Act. This ground of Assessee is dismissed. 20. Apropos to Ground No.3.2, it was observed by the AO that the assessee had shown long-term capital gain of Rs.5,88,307/- for sale of land at Chandlodiya for a total considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the housing society on 31/3/2002. This payment to society is explained to be the reimbursement of expenses that society incurred on behalf of the appellant by paying fees / of Rs.25 lakhs dues to AUDA, all in cash (though copies of receipts of AUDA filed, total only about Rs.8.16 lakhs). Strangely, these receipts of AUDA are dated 20/1/2002, 19/7/2002, 28/10/2002 i.e. after the sale deed was registered in favour of the society on 28/9/2001. There is no explanation why the appellant would have continued to deposit amount(s) with AUDA even when the impugned land had been transferred. It is also interesting to note that the cash availability in bank account of the appellant is due to receipt of cheques of over Rs.22 lakhs, having been shown as confirming party in the sale deed. There are also cash deposits of over Rs.14.99 lakh (Rs.1.74 lakh + Rs.2.55 lakhs + Rs.10.70 laks). Thereafter, payment of Rs.25 lakh is shown made to the Society on 31/3/2002 by way of withdrawn cash. Thus in effect, the amount received from Society by cheques has been returned again to the society. This smacks of a quid pro quo arrangement. Further the expenses on registration etc. claimed to have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.Ys. 1998-99 and 2001-02 respectively in the case of Sandip M.Patel 23. For A.Y. 1998-99 grounds raised are as under: 1) The learned CIT(A) erred in law and on facts in deleting the addition of Rs.22,53,279/- (Rs.6,28,520/- for A.Y.2001-02) made on account of unexplained cash credit. 1.1) The learned CIT(A) erred in accepting the explanations furnished by the assessee especially when no documentary or other evidences were furnished in support of such explanations. 1.2) The learned CIT(A) ought to have consider the fact that the assessee had claimed to have received gift/loan of Rs.22,53,279/- and Rs.6,28,520/- totaling to Rs.28,81,799/- from his brother in assessment year 1998-99 and 2001-02. Apart from the above, assessee's father Shri Mahendra A.Patel had claimed to have received gifts/loan amounting to Rs.1,10,78,845/- from the very same person i.e. Shri Biral M.Patel. In the above background of facts, the learned CIT(A) should have held that the assessee failed to establish the creditworthiness of the persons from whom huge sums were received. 2) The learned CIT(A) erred in law and on facts in deleting the addition of Rs.41,30,000/- made on account of unexplained cash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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