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The ACIT, Central Circle-2 (1) , Ahmedabad Versus Shri Kanubhai Maganlal Patel and Shri Anil Shakarabhai Patel and Vica-Versa and Smt. Nayna Anil Patel and Shri Suresh Chandulal Patel, Versus The ACIT, Central Circle-2 (1) , Ahmedabad

2016 (4) TMI 945 - ITAT AHMEDABAD

Addition u/s 69B on lands purchased in villages - on money received - Held that:- Both the lower authorities are found to have heavily relied upon assessee’s vendors’ statements in drawing inference of on money in question. We reiterate that this inference is not based on any evidence either in the statements directly or indirectly linking assessee to any incriminating evidence so as to reach to on money finding. We take note of the fact that the Central Board of Direct Taxes in its circular dat .....

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to observe here that the impugned addition is also based on mere statements retracted within two months which nowhere names the assessee or establish any link to the alleged unexplained investments in question. We draw support from the above stated precedents for accepting assessee’s arguments. The Revenue’s submissions supporting the Assessing Officer’s findings stand rejected. We delete entire addition made u/s. 69B of the Act qua lands purchased in villages Bavla and Kerala - Decided in favo .....

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Patel, Anil Shakarabhai Patel, Smt. Nayana Patel and Shri Suresh Chandulal Patel. The same arises from a common order of the CIT(A)-III, Ahmedabad dated 20-06-2012 passed in case no. CIT(Á)-III/213, 219, 218, 214, 215, 216, 217,212/Ac-CC-2(I)/11-12, in proceedings under section 143(3) r.w.s. 148 of the Income Tax Act, 1961; in short the Act . The Revenue has filed appeals ITA Nos. 1864 to 1866/Ahd/2012 in case of Shri Kanubhai Maganlal Patel in assessment years 2007-08 to 2009-10; respec .....

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ase of Shri Suresh Chandulal Patel in assessment year 2007-08. This completes the instant batch of ten cases. 2. Both parties submit at the outset that the CIT(A) has disposed off all eight appeals filed by these four assessees vide a common order under challenge. And that facts and issues involve are identical in all cases. They express agreement that Revenue s appeal ITAs 1864 to 1866/Ahd/2012 along with assessee s cross appeal ITA 1885/Ahd/2012 in case of Shri Kanubhai Maganbhai Patel for ass .....

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009-10 in cases of assessee Shri Kanubhai Maganlal Patel. This assessee in turn has preferred his cross appeal ITA 1885/Ahd/2012 in assessment year 2007-08 only raising the following substantive grounds:- 1. Ld. CIT (A) erred in law and on facts in confirming addition made by AO of ₹ 28, 37, 245/- and of ₹ 41, 56, 282/- as unexplained investment in land u/s 69B of the Act. Ld. CIT (A) failed to appreciate that the land was paid & accounted for in the books of both the firms where .....

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d @ ₹ 1.5 lac per bigha for land in Bavla from the purchaser accepting that no incriminating material was found during search. This action of Id. CIT (A) confirming addition of unaccounted investment relying on statement of farmers without providing copy of the statement or granting any opportunity to the appellant to confront them is harsh and against the legal principles that deserves to be quashed. 3. Ld. CIT (A) further erred in law and on facts in confirming the view of the AO that re .....

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arly demonstrates that no land was purchased by the appellant from the above 2 farmers in those years. Ld. CIT (A) ought to have deleted the additions himself. 5. Ld. CIT (A) erred in law and on the facts in confirming action of AO in making additions for land purchased in Moti Bhoyan on the basis of loose paper # 72 & 73 of Annexure AS-5 seized from the premises of third party. Both the lower authorities erred in adopting rate per bigha @ ₹ 9 lacs on the basis of seized document when .....

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ho were never confronted by AO to confirm about any cash transaction with the appellant. Ld. CIT (A) ought to have considered submissions and documentary evidences placed on record by the appellant to delete addition made by AO on conjecture, surmises and presumptions. 3. It emerges from the case file that the assessee s substantive grievance is that the CIT(A) ought not to have partly confirmed unexplained investment additions on land purchased in villages Bavla, Kerala and Moti Boyan as indica .....

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rala. Their firm hereinabove appears to have paid the purchase consideration of ₹ 58,06,500/- through cheques. The array of vendors include two persons namely; Shri Budhaji and Bhagaji Thakore. Their share in the land purchased measures 21 bighas. Relevant sale price appears to be ₹ 6 lacs as paid by cheques. It emerges from the case file that the Assessing Officer framed a search assessment in assessee s case under section 143(3) r.w.s. 153A of the Act on 14-05-2010 assessing his ta .....

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ies. The department would summon both the vendors. They recorded their statements before the DDIT/Investigation on 18-06-2006 as follows:- Statement of Shri Budhaji Motiji Thakore. Q.1 Please give your introduction. Ans.: My name is Budhaji Motiji Thakor, residing at thakorevas, Kerala. I am 52 year old having date of birth 1/4/1956. I have studied upto 8th standard and I am doing masionary work. Q.2. Please give details of agricultural land held by you and the details of sale of agricultural la .....

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llage. This land was jointly held by our family members-... For sale of this land we have received some amount by cheque and I received ₹ 8,50,000/- in cash being 1/3rd share in our ancestral property. My other two brothers also received cash and cheque according to their 1/3th share each on sale of this land. I deposited the cheque received on sale of land in Punjab National Bank, Bavla. Out of cash amount received, I kept some amount with me and the balance amount was deposited with the .....

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t Debit Date Amount Cash/Chequ e Date Amount Cash/C heque 29.09.06 150000 No. 362804 ………….. ………….. ………….. 29.09.06 50000 No. 362801 ………….. ………….. ………….. ………….. ………….. ………….. 06.10.06 50000 Cash ………….. ……&he .....

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p;…….. ………….. 15.01.07 25000 Cash ………….. ………….. ………….. 17.02.07 25000 Cash 01.06.07 50000 Cash ………….. ………….. ………….. 14.11.07 52271 Closure Pro. (x) ………….. ………….. ………….. ………….. &h .....

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last 26 years I am employed as worker in Sujan colour Factory. Q.3. Please give details of agricultural land. Ans.We, three brothers, had ancestral agricultural admessuring 70 to 80 bighas. Out of this land, 20 years back some of the land was acquired by the Government for development of GIDC Kerala. For the acquisition of land the State Government paid us @ ₹ 18,000/- per bigha. Out of the remaining 25 bigha land was sold 1 & 1/2 to 2 years back @ 1,40,000/- to 1,50,000/- per bigha. T .....

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n Punjab National Bank, Bavla and Ahmedabad district Co-op Bank, Bavla. The money deposited in banks were withdrawn to construct a house. For construction of house, I had incurred expenses of ₹ 2,50,000/-. For construction of small hut in bavkyard, I spent ₹ 50,000/-. I had also purchased a new Hero-Honda Splender and ₹ 1,75,000/- were utilized to pay the debt of my father.........." Details of Bank A/c of Budhaji M Thakore with PNB (A/c No. 0070000100117753) 6. It is to b .....

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statements. The assessee filed his reply dated 09-10-2011 as referred in page 2 of Assessing Officer s order dated 28-12-2008 as under:- ....Kindly refer to the above subject and the discussion that had taken place from time 'to time during the bourse of above reassessment proceedings. 2. I have to inform your honor that I along with six other member had purchased land at. village-Bhyala and Kerala of Taluka-Bavla, Dist. Ahmedabad during AY 2007-08 to AY 2009-10. This land was purchased as .....

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he firm and the payment was made by the firm, the land should be treated as purchase by the firm and not by the individual partners. 3. As regards land Purchased at Bhyala and Kerala of Taluka-Bavla from Budhaji Motiji Thakor and Bhagaji Motiji Thakor and others, I have to submit that I along with six other members have made purchase' of 133.28 bighas of agricultural land at Village-Bhyala and Kerala of Taluka-Bavla from different farmers of which only. 21 bighas purchased from Budhaji Thako .....

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urchase price accordingly comes to ₹ 1, 99, 92, 720 (133.28 x 150000) as against purchase consideration of ₹ 58, 06,500 shown by us. Thus according to the Department an amount of ₹ 1,41, 86,227 (1,99,92,720 - 58,06,500) has been paid in cash towards purchase price. You have therefore asked me to show cause as to why an addition of ₹ 28,37,245 being 20% (my share) of ₹ 1,41,86,227/- be not made in my case u/s. 69B of the I.T. Act, 1961. 5. I have to submit that the s .....

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mers i.e. Bhudaji M. Thakor and Bhagaji M. Thakor. The balance 112 bighas of agricultural land has been purchased from the farmers other than Bhudhaji Thakor and Bhagaji Thakor. The statement of both these farmers cannot be applied to the others who have not been examined. During the course of search no incriminating material and / or any evidence or statement of land owners pertaining to 112 bighas of land has been found or brought on record by the department to show that purchase consideration .....

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ased in AY2007-08 to 2009-10 for your kind perusal. Considering the above facts, I have therefore to request your honor not to make any addition u/s. 69B of the I.T. Act, 1961, in my case.... " 7. The Assessing Officer treated assessee s various pleas hereinabove to be absurd. He was of the opinion that sellers statements recorded before the DDIT without any duress (supra) as reproduced hereinabove found sufficient evidence to prove on money payments at assessee s behest. He treated the sam .....

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eopening, pleaded violation of principles of natural justice being not supplied vendors statements and not afforded cross examination opportunity. He further assailed correctness of the impugned additions on merits. The CIT(A) observes in the lower appellate order that incriminating evidence in the nature of documents pertaining to land transactions as well as the two vendors statements form cogent material to reopen the search assessments already framed in his case. He thereafter opines that th .....

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cludes that there is no supportive evidence to conclude the inference for making on money additions pertaining to the 112 bighas of lands in the two villages. Both parties raise their first issue qua correctness of additions made in relation to Bavla and Kerala lands. The Revenue submits that the CIT(A) ought to have upheld whole of on money additions as against assessee s arguments seeking to delete the entire amount of unexplained investments made in land purchases of these two villages. 9. We .....

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-ordinate bench has dismissed the former as preferred in the three assessment years in question for having involved low tax effect as Board s circular 21/2015. Cross objections therein have also been rejected to be not maintainable. We find from the lower appellate order that one of the assessment year involves demand amount of ₹ 15,07,600/- coming to be more than the pecuniary limit of ₹ 10 lacs. We observe in these facts that this issue requires our independence adjudication on mer .....

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ous insurances and banking instruments along with the corresponding sources thereof. It has come on record that these two vendors were engaged in other vocations apart from owning the agricultural lands in question. The Assessing Officer draws an inference in these facts that these statements are sacrosanct to form sufficient evidence of on money being paid at assessee s behest. We have already reproduced assessee s representation filed before the assessing authority citing lack of cross examina .....

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er authorities are found to have heavily relied upon assessee s vendors statements in drawing inference of on money in question. We reiterate that this inference is not based on any evidence either in the statements directly or indirectly linking assessee to any incriminating evidence so as to reach to on money finding. We take note of the fact that the Central Board of Direct Taxes in its circular dated 10/03/2003 has already stated that such admission/confession made in course of search have t .....

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re names the assessee or establish any link to the alleged unexplained investments in question. We draw support from the above stated precedents for accepting assessee s arguments. The Revenue s submissions supporting the Assessing Officer s findings stand rejected. We delete entire addition of ₹ 28,37,245/- made u/s. 69B of the Act qua lands purchased in villages Bavla and Kerala (supra). Revenue s appeals ITA 1864 to 1866/Ahd/2012 fail. 12. Now we come to assessee s second substantive gr .....

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e A-5, pages 72 and 73 for making the entire addition of on money cash payment of ₹ 2,07,81,390/- in its hands vide reassessment order dated 26-02-2014. The same is in fact framed post facto the lower appellate under challenge before us. The Revenue fails to rebut this factual position. We hold in these facts that the impugned addition of unexplained investments pertaining to assessee s land purchased in Moti Bhoyan village is not sustainable so as to avoid double taxation. The same accord .....

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