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PR. COMMISSIONER OF INCOME TAX-III, AHMEDABAD Versus VIVEK PRAHLADBHAI PATEL

Unexplained investments u/s. 69 - ITAT deleted the addition - Held that:- Upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that .....

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n findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel for the appellant, despite strenuous efforts, is not in a position to point out any perversity in the findings recorded by the Tribunal. Under the circumstances, in the absence of any material to the contrary being brought to the notice of the court so as to dislodge the findings of fact recorded by the Tribunal, the impugned order of the Tribunal being based upon concurrent findings of fact record .....

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961 (hereinafter referred to as the Act ) arise out of the common order dated 9th January, 2015 passed by the Income Tax Appellate Tribunal, C Bench, Ahmedabad (hereinafter referred to as the Tribunal ) in ITA Nos.128/Ahd/2013, 129/Ahd/2013 and 130/Ahd/2013 and hence, all the appeals were heard together and are disposed of by this common judgment. 2. The appellant - revenue has questioned the above referred order of the Tribunal by proposing the following six questions:- (1) Whether the Ld. Trib .....

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e assessee? (3) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that the assessee was given an opportunity of cross examination on 14.08.2012, however he failed to avail the opportunity and thus could not prove that the MOU was cancelled? (4) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that the seller Shri Somabhai Ambalal Prajapati in his statement recorded under section 132(4) of the Act admitted to have received the sale .....

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not appreciating that the Additions made are based on the documentary evidences found during the search which corroborates the veracity of the agreement dated 18.01.2005? 3. The assessment years are 2005-06, 2006-07 and 2007-08. During the course of search in the case of one Shri Somabhai Ambalal Prajapati, certain documents were found which indicated that the respondent assessee had entered into agreements with him to purchase various plots of land. The banachithi (agreement to sell) had been s .....

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rein he clarified that plots bearing No.502, 505, 540, 497 and 487 were disputed and could not be transferred due to pending civil suits and that in place of those plots, plots bearing No.512A, 512B, 510 and 513, which are in the same vicinity, at Bhadaj were transferred to the persons specified by the respondent assessee. It was further the case of Somabhai that they had already received the consideration in terms of the banachithi and, therefore, were under an obligation to transfer the lands .....

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statement recorded on 14/12/2011 Shri Somabhai Prajapati has categorically stated that the entire deal was made by him with appellant for the purpose of selling various plots of land. He also stated that the total payment of all these deals was received by him but civil disputes were going on in respect of certain plots of land. Hence separate sale deeds were executed at the same rates for different plots of land even though the same were not included in the original agreement. He clarified that .....

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sub-registrar. Whenever these documents were executed, the respective amounts were returned back to the appellant in cash and in this manner the adjustments were internally settled. 5.8 The appellant on the other hand, has tried to argue that since he is not the ultimate buyer, he did not pay any cash to Somabhai and statement of Shri Somabhai is false. It is observed that the original agreement to sell or the banakhat is dated 18/1/2005 and as per this banakhat, the first installment of 25% was .....

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ance to Shri Somabhai. Therefore, the fact that the deal did not materialize subsequently is not relevant. 5.9 In view of categorical statement of Shri Somabhai that he received full payment of ₹ 13.02 crores in cash from appellant as per the terms of banakhat the burden on appellant was very heavy to prove that statement of Shri Somabhai is not correct. Appellant was also allowed opportunity for cross examination of Somabhai but even from this cross examination appellant has not been able .....

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ground no.2 of the appeal for AY 2006- 07 and 2007-08 are also dismissed. Additions of ₹ 6,51,00,000/- for AY 2006-07 and ₹ 3,25,50,000/- for AY 2007-08 are confirmed. The assessee went in appeal before the Tribunal. By the impugned order, the Tribunal held that insofar as assessment year 2005-06 is concerned, the agreement proves that ₹ 11,00,000/- had been paid by the assessee on 18th January, 2005 and did not accept the submission of the assessee that such amount was paid b .....

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at the agreement to sell had been executed between the sellers and the respondent-assessee namely, Vivek Prahladbhai Patel. It was submitted that Somabhai in his statement recorded under section 131 of the Act has clearly stated that on-money had been received by him to the extent stated in the agreement to sell from the respondent assessee. A power-of-attorney had been executed in relation to one of the plots by the seller in favour of the assessee for taking steps for entering the name of the .....

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e of Malik Brothers (P) Ltd. v. Commissioner of Income-tax, (2007) 162 Taxmann 43, for the proposition that when the assessee is afforded reasonable opportunity, despite which he does not ask for any documents for crossexamination, it goes to show that the assessee had nothing to explain and that he was not interested in cross-examining the witness. The decision of the Delhi High Court in the case of Commissioner of Income-tax v. Narinder Kr. Budhiraja, (2014) 89 CCH 44 Del HC, was cited wherein .....

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ed in the agreement to sell had been received through the person of the assessee, the Tribunal was not justified in holding that sufficient evidence had not been produced on record by the revenue. Reliance was also placed upon the decision of the Kerala High Court in the case of Commissioner of Income Tax v. P.M. Aboobacker, (2014) 107 DTR 383 (Ker), wherein one Mr. Noushad had declared the income from sale of property and had paid the tax and the question before the court was whether when these .....

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sessee had paid more amounts for the purchase of property amounting to ₹ 54,20,000/-. When that fact is proved, the burden shifts to the assessee to prove otherwise. He had an opportunity to cross-examine the witness and there was nothing on record to indicate that the witness had spoken a false story. The learned counsel submitted that in the facts of the present case, the respondent assessee has not crossexamined the witness. The revenue has clearly, on the basis of the seized documents .....

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n the decision of the Madras High Court in the case of Commissioner of Income Tax v. K. Dadakhan, (2003) 182 CTR 469 Mad. It was submitted that on the evidence which has been brought on record viz., the agreement to sell dated 18th January, 2005 is a valid document and a precise one giving specific dates of payment to be made by Vivek Patel; the assessee s claim of having cancelled the agreement is not supported by any further cancellation agreement which should normally have been available with .....

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the revenue has clearly established payment of the amounts referred to in the agreement to sell by the assessee. It was submitted that moreover, the sellers namely, the Prajapatis have filed returns of income declaring receipt of the amount mentioned in the agreement to sell and have paid tax thereon, which shows that the transactions have gone through on the higher amount as per the agreement and not on the petty amount shown in the documents with the buyers. It was submitted that thus the rev .....

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essary legal matters in connection with the sale of Block No.513 which was sold to Ajay Patel. It was submitted that this clearly shows the prior relationship between the assessee and Ajay Patel even before the date of search. It was, accordingly, contended that the revenue through overwhelming evidence has duly established the payment of on-money to the sellers by the assessee, under the circumstances, the Assessing Officer was wholly justified in making protective assessment in his hands and t .....

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t was never acted upon by both the parties. As per the agreement to sell, the assessee was to purchase nine plots of land from the three brothers namely, Somabhai Prajapati, Vishnubhai Prajapati and Chandubhai Prajapati, but not a single plot was ever purchased by the assessee. It was submitted that the agreement to sell was never acted upon and that in fact even the cheque for a sum of ₹ 11,00,000/- which had been handed over to the land owners at the time of execution of the agreement of .....

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why he would make payment of such a huge amount more so, when there was no relationship between him and the ultimate buyer - Ajay Patel to whom the plots of land which were agreed to be sold to the assessee, were eventually sold. It was pointed out that the revenue has failed to establish any connection between the assessee and Ajay Patel. It was contended that the Tribunal has duly appreciated the evidence on record and has recorded findings of fact on which it has based its conclusion, and th .....

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y 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 unreported decisions of this court in the case of I.T.O. v. Bharat A. Mehta, rendered on 3rd February, 2015 in Tax Appeal No.429/2000 and allied matters and in the case of Dy. C.I.T. (Asstt.) v. Prarthana Construction Pvt. Ltd. rendered on 25th March, 2011 in Tax Appeal No.79/2000, wherein the court ha .....

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iple that it is the Tribunal which is the final fact-finding 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 .....

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hat the appeals being thoroughly devoid of merits, deserve to be dismissed. 6. This court has considered the submissions advanced by the learned counsel for the respective parties and has perused the record and proceedings of the case. The facts as emerging from the record reveal that an agreement to sell came to be found during the course of search at the premises of the Prajapatis. Such agreement to sell was executed between the three Prajapati brothers and the respondentassessee namely, Vivek .....

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d has been executed in favour of the assessee and the plots of land which were agreed to be sold to the assessee have ultimately been sold to one Ajay Patel by way of registered sale deeds for a much lower consideration than that reflected in the agreement to sell. In the sale deeds executed in favour of Ajay Patel there is no reference to the agreement to sell executed in favour of the assessee, nor is the assessee a confirming party to such sale deeds. Thus, the revenue has failed to establish .....

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that the assessee knew Ajay Patel even prior to the date of the search and, therefore, the submission that the assessee did not know Ajay Patel prior to the date of search is incorrect. A perusal of the power-of-attorney executed by Vishnubhai Prajapati in favour of the assessee indicates that the same only empowers him to carry out necessary procedures with the Government office for transferring the property in the name of Ajay Patel. However, such power-of-attorney has been found in the posse .....

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greement to sell and has also failed to establish any link between the assessee and Ajay Patel. 7. The Tribunal, in the impugned order has found that the statements of Somabhai Prajapati and the assessee are contradictory. No material has been brought on record to substantiate the factum that the lands were sold to Ajay Patel at the instance of the assessee as claimed by Somabhai Prajapati. The Tribunal has further noted that Shri Somabhai in his statement has stated that the amount received by .....

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ht on record to show that there was an agreement with the assessee for such exchange of plots. The Tribunal was of the view that in the absence of any such material, it cannot be assumed that the statement of Somabhai Prajapati was sacrosanct and not a self serving statement more so, when the alleged amount which he claimed to have received was claimed by him as non-taxable receipt being exempt under section 54B of the Act. Upon appreciation of the entire material on record, the Tribunal has com .....

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