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2016 (7) TMI 166 - ITAT AHMEDABAD

2016 (7) TMI 166 - ITAT AHMEDABAD - TMI - Addition as undisclosed income made u/s 68 - Held that:- M/s Swaminarayan Enterprise had sufficient cash available in their books of account, which was in turn used to give business advances to the assessee society and, therefore, the sum of ₹ 23,86,030/- should not be treated as unexplained income and, accordingly, we delete the impugned addition made by ld. Assessing Officer and allow the ground of assessee. - Addition on unexplained investme .....

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Shri Rajpal Yadav, JM, & Shri Manish Borad, AM. For The Appellant : Shri A. L. Thakkar, AR For The Respondent : Shri R. I. Patel, CIT, DR ORDER PER Manish Borad, Accountant Member. These two cross appeals, one by assessee and the other by the Revenue are directed against the order of ld. CIT(A)XVI, dated 13.01.2011 in appeal No.CIT(A)-XVI/ACIT(OSD)10/296/09-10 passed against order u/s 153C r.w.s. 153A of the IT Act, 1961 (in short the Act) for Asst. Year 2005-06 framed on 29.01.2010 by ACIT( .....

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153C r.w.s. 153A of the Act and information was received in the office of ld. Assessing Officer on 13.8.2008. In the seized documents it was observed that assessee society had acquired 6535 sq.m. of land at Wadaj, Ahmedabad for a consideration of ₹ 2,28,72,500/- vide sale deed dated 4.12.2004 and sale consideration was paid in two parts -first on 1.6.2004 at ₹ 60,00,000/- and the second on 3rd December 2004 at ₹ 1,68,72,500/-. On further investigation it was observed that the P .....

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ncial year 2004-05. 3. In the course of assessment proceedings it was observed by ld. Assessing Officer that there was a cash receipt of ₹ 23,86,030/- shown in the cash book but no satisfactory reply was received for the source of cash received and the same was treated as undisclosed income. Also in regard to purchase of land at ₹ 2,28,72,500/- on 4.12.2004 for land measuring 6535 sq.m. ld. Assessing Officer observed that the office possessed the order u/s 16A of the Wealth Tax Act ( .....

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ence amount of ₹ 1,91,16,119/- was treated as unaccounted and unexplained investment u/s 69 of the Act. After making addition of ₹ 23,86.030/- and ₹ 1,91,16,119/- on account of undisclosed income and unexplained investment, the income of the assessee was assessed at ₹ 2,15,02,149/-. 4. Aggrieved, assessee went in appeal before ld. CIT(A). The ld. CIT(A) confirmed the addition of ₹ 23,86,030/- and deleted the addition of ₹ 1,91,16,119/-. 5. Now the assessee and .....

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elled. 2. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact that no incriminating material & other record was found from the premises of the searched party on the basis of which proceedings U/S.153C of the Income Tax Act, 1961 can be initiated in the case of the appellant. 3. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact that notice u/s.!53C could be issued only for six years immediately preceding the year in which the sea .....

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sfaction note recorded by DCIT, C.C .l(l) Ahmedabad was dtd.08.08.2008 received by the A.O. on 13.08.2008, which is after finalizing the assessments in the case of searched party. 5. The Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of ₹ 23,86,030/- made by the Assessing Officer for the alleged undisclosed income u/s,68 of the I.T. Act, 1961. 6. The appellant craves leave to add, alter, amend, or modify any of the grounds of appeal on or before the date .....

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regular books of account produced before the assessing authority during the course of assessment proceedings. Ld. AR further submitted that development and construction work of housing flats to be constructed on the land owned by the society, was given to M/s Swaminarayan Enterprise, proprietor Umang Hiralal Thakkar and in order to get the registry of the land completed in the name of the society some funds in the normal course of business were taken from Swaminarayan Enterprise also. Ld. AR al .....

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0/- 9. Referring to the above details, ld. AR submitted that the major portion of cash receipt of ₹ 23,86,030/- is on account of amount received from Swaminarayan Enterprises at ₹ 21,94,650/- (Rs.18,51,300 + ₹ 3,43,170/- + ₹ 180/-) and this amount was specifically used for land registration fees and stamp charges incurred by the assessee for getting the registry of the land done in the name of assessee on 4th December, 2004 and the same is verifiable from the details of c .....

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ngs were initiated and the assessment year 2005-06 was completed in his case on 29.3.2006 at an assessed income of ₹ 15,09,65,386/- after making an addition of ₹ 14,84,96,066/- which also referred to the proprietary concern of Umang H. Thakkar in the name of M/s Swaminarayan Enterprise and the necessary details including books of account relating thereto were produced. Ld. AR, therefore, submitted that Swaminarayan Enterprise had sufficient source and cash out of which ₹ 21,94, .....

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ct. 10. On the other hand, ld. DR supported the orders of lower authorities. 11. We have heard the rival contentions and perused the material on record. Through this ground, the assessee is aggrieved with the action of ld. CIT(A) in confirming the addition of ₹ 23,86,030/- as undisclosed income made u/s 68 of the Act. From going through the submissions made by ld. AR as well as relevant pages of the paper book relating to cash book of the assessee as well as M/s Swaminarayan Enterprise, we .....

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y Swaminarayan Enterprise in the form of cheque/cash and on the other hand the booking amount as well as price of the proposed flats was received by M/s Swaminarayan Enterprise on behalf of the assessee society. We further observe that assessee society needed cash funds for making final payment of land purchase as well as to pay the stamp charges and land registration fees and in this process on 3.12.2004 and 4.12.2004 Swaminarayan Enterprise gave cash sum of ₹ 18,51,300/- and ₹ 3,43 .....

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of accounts are audited and more specifically going through the cash book shown at pages 59-61 of M/s Swaminarayan Enterprise we observe that there is a regular flow of cash transaction in the books and sufficient cash balance was available on the date when cash funds were given in the regular course of business to the assessee society. 13. We further observe that assessment u/s 143(3) for Asst. Year 2005-06 was completed on 29.12.2006 in the case of Uman H. Thakkar whereby addition of ₹ 1 .....

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ted as unexplained income and, accordingly, we delete the impugned addition made by ld. Assessing Officer and allow the ground of assessee. 15. Ground No.6 is general in nature, which needs no adjudication. 16. Assessee s appeal is partly allowed. 17. Now we take up Revenue s appeal in IT(SS)A No.274/Ahd/2011 for Asst. Year 2005-06. Revenue has raised following grounds:- 1. The Ld. CIT(A)-XVI, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 1,19,16,119/- made by the A .....

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ppreciating that the cost of land determined by the DVO was based on various comparable sale instances available in the vicinity and considering various factors which affects the land rate of the relevant period and despite sufficient opportunity having been allowed to the assessee by the AO the assessee could not furnish any evidence before the A.O. to rebut the rates adopted by the DVO. 1.3 The Ld. CIT(A) has erred in law and on facts in not appreciating that the facts of the present case is d .....

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6,119/- made by Assessing Officer u/s 69 of the Act. 19. During the course of assessment proceedings ld. Assessing Officer perused the seized documents and observed that assessee has acquired 6535 sq.m. of land at Vadaj on 4.12.2004 for a consideration of ₹ 2,28,72,500/-. On further examining the aspect as to whether there is any undisclosed investment in the purchase of land, ld. Assessing Officer referred the matter to the D.V.O. with reference to the order u/s 16A of W.T. Act on 22.3.20 .....

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ted investment u/s 69 of the Act. This observation of ld. Assessing Officer was duly supported by ld. DR in the course of proceedings before the Tribunal. 20. On the other hand, ld. AR supported the order of ld. CIT(A) and pleaded that assessee had nothing to do with the valuation report dated 31.3.2002 as the assessee was not in existence at that point of time and such valuation report was for wealth tax purposes in the case of third party and the same cannot be used for invoking section 153C o .....

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ng the addition of ₹ 1,91,16,119/- on account of unexplained investment u/s 69 of the Act. With reference to the facts discussed above, we find that ld. Assessing Officer has taken the basis of the valuation report meant for wealth tax purposes for a piece of land measuring 10324 sq.m. valued on 31.3.2002 at ₹ 6,03,02,484/- and on the basis of this information calculated the fair market value of the land purchased by assessee by valuing it at ₹ 4,19,88,618/- by applying the fol .....

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the value on estimate basis and not on the basis of material suggesting investment or expenditure for the purchase of the property. As per the decision of Hon'ble ITAT Delhi in the case of Sanjay Chawla (Supra) a valuation report is only an expert opinion and not evidence whereas registered deed is evidence and hence valuation report cannot be the basis for making addition. Similarly for addition A.O. has to bring material on record as stated by Supreme Court in the case of K P Varghese (Sup .....

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