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THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL AHMEDABAD Versus AJAY SURENDRABHAI PATEL

Undisclosed sale of plot - Assessing Officer said that the assessee had paid an aggregate amount of ₹ 7,10,22,110/- during the assessment year 2006- 07 and had failed to explain the source of the same. Since the documented price of Block No.509, 500, 494, 504 and 510 was ₹ 58,11,901/-, the Assessing Officer treated the difference of amount of ₹ 6,52,10,209/- as the deemed income of the assessee under section 69 - ITAT deleted the addition - Held that:- From the concurrent findi .....

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o contend that it establishes a link between the assessee and Vivek Patel, shows that the same has been executed by one of the sellers in favour of Vivek Patel in relation to one of the plots purchased by the assessee, but, significantly, such power-ofattorney has been found to be from the possession of the seller and not from Vivek Patel. Therefore, there is no material on record that prior to the search, Vivek Patel acted upon such power of attorney so as to establish a link, howsoever tenuous .....

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did not know each other prior to the search. Under the circumstances, on the evidence which has come on record, the revenue has failed to establish that any higher consideration has been paid by the respondent assessee in connection with the sale deeds executed in his favour by the sellers in respect of the plots of land in question.

The conclusion arrived at by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel .....

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er amounts by way of on-money and have also shown receipt of such amount in their income-tax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Income-tax v. Daulatram Rawatmull, (1964 (3) TMI 14 - SUPREME Court ), even if circumstances raise a suspicion, suspicion cannot take the place of evidence.- Decided against revenue - TAX APPEAL NO.523 of 2015, TAX APPEAL NO.524 of 2015, TAX APPEAL NO.524 of 2015 - Dated:- 6-11-2015 - MS. HARSHA DEVA .....

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rs are 2006-07, 2008-09 and 2010-11. The facts stated briefly are that during the course of search in the case of one Shri Somabhai Ambalal Prajapati, certain documents were found which indicated that one Shri Vivek Prahladbhai Patel entered into agreements with him to purchase various plots of land. The Assessing Officer completed assessment in the case of Vivek Prahladbhai Patel for assessment year 2005-06 wherein he had observed that as per the conditions laid down in the said banachitthi, wh .....

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as under:- Block No. Survey No. Sharat Sq.mt 540 515 Old Sharat 11432 487 471 New Sharat 11938 497 476, 477, 482 New Sharat 31566 504 488 New Sharat 27822 494 473/2 Old Sharat 4097.5 509 487, 497 New Sharat 32729 500 480 Old Sharat 8296 502 484 Govt. Hold 12950 505 485 Govt. Hold 16662 However, it was noticed that all the above plots were not transferred by the sellers as agreed under the said banachitthi. Shri Somabhai Ambalal Prajapati in his statement recorded under section 131 of the Income .....

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obligation to transfer the lands to Shri Vivek Patel. The total plot-wise sale consideration disclosed by the sellers with regard to the sale of land as per the obligation cast upon them through Banachitthi is reflected in paragraph 2.1 of the assessment order. 3. The plots at Sl. No.1 to 8 in the table were ultimately transferred by Shri Somabhai Prajapati to the respondent assessee namely, Ajaybhai Patel. The Assessing Officer, on a comparison of the amount shown in the seized documents and t .....

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herefore, held that to the extent of the difference between the documented price and the amount shown in the seized documents, there was escapement of income and accordingly issued notice under section 148 of the Act to the assessee seeking to reopen the assessment for the assessment year 2006-07. It appears that the respondent assessee raised objections against the reopening of assessment by issuance of the notice under section 148 of the Act. The Assessing Officer, ultimately held that the sel .....

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ain the source of the same. Since the documented price of Block No.509, 500, 494, 504 and 510 was ₹ 58,11,901/-, the Assessing Officer treated the difference of amount of ₹ 6,52,10,209/- as the deemed income of the assessee under section 69 of the Act. For similar reasons, he made an addition of ₹ 1,91,00,780/- for assessment year 2008-09 and ₹ 73,30,069/- for assessment year 2010-11. The assessee carried the matter in appeal before the Commissioner (Appeals), who allowed .....

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(iv) Power of Attorney was given by Shri Vishnu Prajapati in favour of Shri Vivek Patel. Thus Shri Vivek Patel was acting as agent of Shri Vishnubhai Prajapati and not as agent of appellant. (v) Nowhere in his statement Shri Somabhai Prajapati stated that any payment in cash was received by him from the appellant. In fact he categorically stated that money was received from Shri Vivek Patel only. (vi) No agreement between Vivek Patel and appellant has been brought on record. It was claimed by th .....

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s of which it can be concluded that appellant made any such investment in the relevant financial years. (viii)As mentioned earlier, protective addition was made in the case of Shri Vivek Prahladbhai Patel for A.Y. 2005-06, 2006-07 and 2007-08. The addition for all three years have been also confirmed by the undersigned vide order dated 28/12/2012 in Appeal No.CIT(A)-III/235, 237 & 236/ACCC2( 2)/11/12. 20. I therefore, hold that AO is not justified to make addition u/s.69 in the case of appel .....

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ct was bad in law on account of the fact that the Assessing Officer had not passed any separate order on the objections raised by the assessee. 5. By the impugned order, the Tribunal dismissed the appeals filed by the revenue and allowed the cross-objections filed by the assessee. 6. Mrs. Mauna Bhatt, learned senior standing counsel for the appellant, invited the attention of the court to the facts of the case to submit that a banachithhi (an agreement to sell) executed by the sellers in favour .....

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rson of Vivek Patel. That the evidence on record clearly shows that Shri Vivek Patel agreed as per agreement dated 18th January, 2005 and paid further amount due and therefore, acquired the right to deal with the land. It was submitted that the fact that the sellers have received consideration in cash as confirmed by them makes it clear that such consideration was paid by the assessee who was the immediate beneficiary of the transfer. Strong emphasis was laid upon the power of attorney dated 18t .....

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ds were sold to Ajay Patel as nominee of Vivek Patel and, therefore, have to be treated as having been sold at the price at which Vivek Patel purchased them from the Prajapatis. 6.1 It was submitted that the Tribunal has failed to appreciate that there was ample material on record to establish that the unaccounted money had been received by the sellers of the property which was purchased by the assessee. The seized documents show that Somabhai Prajapati and others have received ₹ 13,02,00, .....

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these details were written by some person coming from the office of Vivek Patel and it has been given to them as there was a little difference in the total consideration whereas according to them, the total consideration came to ₹ 12,79,45,600/-. It was pointed out that Somabhai had stated that the amount of on-money received from the sale of the land was paid to him by the representative of Vivekbhai. It was submitted that, therefore, there is sufficient material on record to establish th .....

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ssessee that he did not know Vivek Patel prior to the search is belied. It was submitted that the evidence on record clearly shows the particulars of the land in question in terms of the seized documents, and accordingly, there is a huge difference between the amount stated in the sale deeds and the seized documents which makes it evident that the differential amount has been paid by way of on-money by the respondent assessee. Therefore, the Assessing Officer was wholly justified in making subst .....

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atel. What had transpired between the original owners and Vivekbhai was exclusively between them. Vivek Patel, who is a party to the agreement, has denied having acted upon the agreement to sell for the reason that all the disputes and objections were not resolved. Alternatively, it was suggested that this could be a sale of the same land to more than one buyer fraudulently and dishonestly, which is a common practice in land dealings where the same piece and parcel of land is sold to different b .....

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ed, he can be called upon to explain the consideration mentioned in the sale deeds, but he cannot be called upon to explain the transactions between the third parties. It was contended that the Assessing Officer had not brought any evidence on record to establish that the assessee had paid any money in excess of the consideration paid by him and that merely on the basis of surmises and conjectures, no addition can be made. 7.1 As regards the power-of-attorney executed by one of the sellers in fa .....

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been used to get the land transferred in the name of the assessee in any of the Government records. Referring to the findings recorded by the Tribunal, it was submitted that essentially, the conclusion arrived at by the Tribunal is based upon concurrent findings of fact recorded by it after appreciation of the evidence on record. It was submitted that neither has any perversity been pointed out in the findings of fact recorded by the Tribunal, nor has any question been proposed to the effect tha .....

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ng authority. A decision on facts of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In the facts of the said case, no such question had been raised before the High Court. The Supreme Court held that unless and until a finding of fact reached by the Tribunal is canvassed be .....

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ry statements made by the vendor or whether reliance may be placed on the loose sheets recovered in the course of the raid are all questions of fact and accordingly dismissed the appeal. Reliance was also placed upon an unreported decision of this court rendered on 3rd February, 2015 in the case of I.T.O. v. Bharat A. Mehta in Tax Appeal No.429/2000 and allied matters as well as on an unreported decision of this court rendered on 25th March, 2011 in the case of Dy. C.I.T. (Asstt.) v. Prarthana C .....

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the submissions advanced by the learned counsel for the respective parties and has perused the record and proceedings of the case. 9. At the outset, it may be noted that the appellant has proposed three questions. However, the first question relates to the cross-objection filed by the respondent assessee, whereas the present appeals arises out of the appeals filed by the revenue before the Tribunal and hence, proposed question No.[A] would not arise out of the impugned order of the Tribunal, in .....

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essee. The Tribunal concurred with the findings of fact recorded by the Commissioner (Appeals) and held as follows:- 15. We find that it is not in dispute that the assessee was not a party to the seized agreement of sale [Banachitthi] which was the basis of making the entire addition. We find that it is not in dispute that the said agreement of sale does not bear the signature of the assessee. Further, we find that nowhere in the statement recorded of sellers, sellers have stated that they have .....

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red Deed of sale. In absence of any such material, the additions were made only on the basis of assumptions and presumptions. In the above circumstances, we do not find any good reason to interfere with the findings of the CIT[A]. Therefore, all the 3 appeals filed by the revenue are dismissed. 11. Thus, the ultimate conclusion arrived at by the Tribunal, is based upon the findings of fact recorded by it upon an appreciation of the record. The learned counsel for the appellant has emphatically a .....

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ent with the sellers and had acted as a confirming party when the sale deeds came to be executed in favour of the assessee Ajay Patel, inasmuch as, the agreement to sell was never cancelled and the sellers had stated that they had executed the sale deeds in favour of the assessee at the instance of Vivek Patel and that the entire consideration had been paid by Vivek Patel. Moreover, in relation to one plot, the seller had executed power-of-attorney in favour of Vivek Patel to take all necessary .....

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een disclosed nor have the dates on which such funds have been received come on record. A perusal of the power-of-attorney on which strong reliance has been placed on behalf of the appellant to contend that it establishes a link between the assessee and Vivek Patel, shows that the same has been executed by one of the sellers in favour of Vivek Patel in relation to one of the plots purchased by the assessee, but, significantly, such power-ofattorney has been found to be from the possession of the .....

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bring any reliable material to establish payment of consideration by Vivek Patel to the sellers or to establish any link between the assessee and Vivek Patel, who have both asserted that they did not know each other prior to the search. Under the circumstances, on the evidence which has come on record, the revenue has failed to establish that any higher consideration has been paid by the respondent assessee in connection with the sale deeds executed in his favour by the sellers in respect of th .....

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