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Shri Sendhabhai M. Desai Versus DCIT, Cent. Cir. 1 (3) Ahmedabad. and ACIT, Cent. Cir. 1 (2) , Ahmedabad.

2016 (7) TMI 1081 - ITAT AHMEDABAD

Undisclosed purchases - whether vendees have paid more amounts in cash to the vendor for purchase of land? - Held that:- No doubt the Revenue was able to collect information for initiating inquiry but failed to bring clinching evidence on record demonstrating the fact that vendees have paid more amounts in cash to the vendor for purchase of land. This fact may be appreciated with the different angle also. The sale deed was executed on 11.8.2008. The assessees have come to know about the dispute .....

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appeals of the assessee and delete addition in each hands of the assessees in the Asstt.Year 2008-09 (except from the hand of Manibhai V. Patel, because status of his appeal is not available at this stage) and in the Asstt.Year 2009-10. - Decided in favour of assessee - ITA No.482/Ahd/2012, ITA No.593, 594, 595, 596/Ahd/2013, ITA No.2722/Ahd/2011, ITA No.3012/Ahd/2011, ITA No.1974/Ahd/2013, ITA No.2723/Ahd/2015, ITA No.1973/Ahd/2013, ITA No.3011/Ahd/2011, ITA No.483/Ahd/2012, ITA No.484/Ahd/2012 .....

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. Rest of eleven appeals arose from the assessment orders passed under sections 143(3)/144/153C of the Income Tax Act. Though the facts on all vital points are common, therefore, for the facility of reference, I am taking facts from ITA No.482/Ahd/2012 and 3012/Ahd/2011 in the case of Shri Sendhabhai Desai and Rajulaben S. Doshi. 3. Brief facts of the case are that a search and seizure operation was carried out under section 132 of the Income Tax Act on the premises of Shri Gandaji Ambaram Thako .....

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s here in numbers here in these appeals were vendees. Shri Gandaji A. Thakor has disclosed that the land was actually sold for a consideration of ₹ 2.10 crores. He disclosed how the sale proceeds were utilized by him. The vendees i.e. appellants are the resident of Bhandu, Mehsana and Himatnagar. They have been filing the I.T. return with I.T. authority of their respective town. Since information came to the notice of department by virtue of search, therefore, jurisdiction over them was tr .....

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33,500/- in the accounting year relevant to the Asstt.Year 2008-09, it was construed by the AO that this much of the cash was paid by the assessees in the Asstt.Year 2008-09. He further made investment of ₹ 20,66,500/- in the accounting year relevant to the Asstt.Year 2009-10. Therefore, the AO construed that payment to this expenditure was made by the assessees in the next year. Accordingly, he made addition of ₹ 1,35,33,500/- in equal shares in the hands of the appellants. This lea .....

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Ashokbhai C. Modi were time barred before the ld.CIT(A) by five and half months. These appeals have been dismissed by the ld.CIT(A) on account of barred by limitation. In order to explain the delay, it was contended by the assessee that they have handed over their income-tax proceedings to one A.B. Shah & Co., Chartered Accountants on receipt of assessment orders in the month of December, 2011. They have handed over the orders to Shri Rajen Maheshchandra Dalvadi, who was working as clerk in .....

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e on the ground that along with the appeal papers, the assessees have not filed application for condonation of delay. The affidavit of the clerk has been filed during the appeal hearing. The ld.CIT(A) was of the opinion that the application in proper format ought to have been filed along with appeal and the affidavit should have also been filed at that point of time. Since affidavit was filed on 6.5.2013, during the course of hearing, the ld.CIT(A) construed as if no reasonable cause has been de .....

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filed copies of I.T. returns and submitted that ACIT, Ahmedabad had no jurisdiction over her, therefore, she did not take cognizance of the notice. According to the assessees the notice for transfer of jurisdiction u/s.127 was received, but, thereafter no order was received. Thus, this is the background of exparte assessment orders. The issue on merit, otherwise, open before theld.CIT(A). From the affidavit of Shri Rajen M. Dalvadi, it is discernible that he owned-up responsibility of negligence .....

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ircumstances of the case, I am satisfied that the assessees have explained the delay in filing the appeal belatedly before the ld.CIT(A). I condone the delay in filing the appeals before the ld.CIT(A). 6. According to the procedural norms, appeals deserve to be set aside to the file of the ld.CIT(A) for adjudication on merit, but since a common issue, which is similar on merit, is involved in all other appeals, where arguments have been advanced by the ld.representatives, I proceed to decide the .....

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the land, and they have apprised the vendors to accept sale consideration through account payee cheque. The assessee have purchased the land vide sale deed dated 11.8.2008. They have submitted the documents for change of mutation in their names in the revenue record. The Talati, Adalaj Gram Panchayat has recorded their names as purchaser and owner of the land. However, this order dated 27.7.2009 was challenged by Shri Rjaeshbhai J. Desai and Smt.Ashaben before Prant Officer, Gandhinagar. He pass .....

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Name of the purchaser Date of document Regn. No. Amount of Sale Hemendra Lilabhai shah 27.09.2007 12062 57,28,350/- Jayantibhai Gumaji Thakor 29.05.2008 9904 35,00,000/- Rajeshbhai J. Desai & Others 08.10.2007 12445 61,00,000/- 8. These dates were close to the purchase deed executed in favour of the assessee. The ld.counsel for the assessee further contended that the ld.CIT(A) has made reference to the statement of all the family members of Shri Gandaji A. Thakor recorded under section 132( .....

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ellip;.. I further submit that the statement of Shri Gandaji A. Thakor given during search operation and given during post search inquiry and fact narrated during assessment proceedings are going to be used against me and as per the provisions of the Income Tax Act, the above statements and facts cannot be used against me without giving coy of the same to me hence it is requested to give me copy of the above statements and facts to me at your earliest. I reserve my right to crossexamine the pers .....

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ntral Excise, Kolkata in Civil Appeal No.4228 of 2006, he contended that these evidences ought to be excluded from consideration. Copy of the Hon ble Supreme Court decision dated 2.9.2015 has been placed on record. Relevant part of the judgment reads as under: According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasm .....

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g Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that crossexamination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why .....

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that the vendors are farmers. One son of the vendor was an auto-driver. They have no other source of income except sale of land. Thus, after evaluating their social background, the ld.AO has rightly arrived at a conclusion that whatever money came to their possession, it came by virtue of sale of agriculture land. The ld.AO has rightly drawn a strong inference of the payments of on-money in cash by the vendees to the vendors. 10. I have duly considered rival contentions and gone through the reco .....

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But, before drawing such clinching inference, the ld.AO failed to appreciate the overall circumstances. The ld.CIT(A) has made reference to the statement of five persons made under section 132(4) of the Income Tax Act. These persons are Shri Gandaji Ambaram Thakor, Ranjitbhai Vechatji Thjakor, Dineshji V. Thakor, Sajjanben V. Thakor and Jayantibhai G. Thakor. Their statements have been recorded on 15.10.2008. It is also pertinent to mention that in the sale deed executed on 11.8.2008, Shri Gand .....

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a confirming parties. Then, out of five persons, whose statements have been referred, one is vendor viz. Shri Gandaji A. Thakor and other one Shri Jayantibhai G. Thakor who had acted on behalf of Gandaji Thakor. He is the son of Gandaji s sister. Now let us evaluate their statement reproduced by the ld.CIT(A) in the case of Sendhabhai M. Desai. Q.1 Give introduction about yourself A.1 My name is Shri Jayantibhai G. Thakore and I study till S.S.C. I am 42 years old. I live at Adalaj Q.2 What you .....

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hich amount that and was sold ? A.5 That Land was sold in amount ₹ 2,10,00,000 Q.6 How this payment was done of ₹ 2,10,00,000 and to whom this land you sold ? A.6 Gandabhai Amajibhai Thakore sold the land of Kalol Gandhinagar Approach Road to Bhavansinh Jalamsinh Champat. My name was taken for this transaction and I got commission for that. Particulars Amount Banakhat cash 7,00,000 Cash at the time of Dastavej 35,00,000 Given by 6 (six) cheques 53,00,000 Balance Cash 1,15,00,00 These .....

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How Gandabhai Thakore spent this amount of ₹ 2,10,00,000. Do you know about it ? A.8 Yes I know about it. This amount is as following: LIC investment by market plant scheme of 4 person 1,12,00,000 13 vigha land purchased by gandabhai from Khushaldasbhai 13,00,000 Post Office a/c byname of 4 person (sendhaji, minaben, rajitbhai) 10,95,000 Build New house and two temple 11,00,000 Given to two Daughter 2,00,000 One cheque return from 6 check 8,97,920/- Statement of Gandabhai A. Thakore Q.1 G .....

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hich amount you sold that land ? & How the payment was made ? A.4 Yes. In the year 2008, I sold land of Kalol- Gandhiangar Approach Road to Mr. Bhavansingh Jalamsinh Champavat at an amount of ₹ 210,00,000/- And the payment made as following: Banakhat cash 700,000 Cash at the time of Dastavej 35,00,000 Given by 6 (six) cheques 53,50,000 Balance cash 114,50,000 These six cheques were given by Bhavansinh to the person to whom the land has sold. Each cheque amount to ₹ 891,920/-. The .....

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ter Rs.2,00,000 5. 1 check was returned from the 6 cheque Rs.8,91,920/- 6. Bank balance Rs.32,59,000/- Total 1,90,45,920/- The remaining amount I don t know where I spent. Q.6 Do you file Income Tax Return ? Have you paid the I.T. return of ₹ 2,10,00,000/- ? A.6 No, I haven t paid any I.T. Return. I haven t paid return on ₹ 2,10,00,000/- Q.7 If you haven t pay any return on the amount 2,10,00,000/- then amount should not be unaccounted income ? A.7. I haven t pay return on ₹ 2, .....

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payment is made ? A.10 Yes, I sold this land even before through Abbasbhai and for this I got cash ₹ 7,00,000 Q.11 Mr.Hemendrabhai shah to whom sold the land through Mr.Abbasbhai. He (Mr.Hemendrabhai shah) told in his statement that he paid in cash ₹ 57,00,000/- in the present of Mr.Abbasbhai and Mr.Prajapati. What you want say about this statement ? A.11 I have given Power of Attorney to Mr.Abbasbhai. He (Mr.Abbasbhai) given me only 7,00,000 cash and the remaining amount 50,00,000 .....

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hat he paid in cash ₹ 57,00,000 and if you don t accept then it may be happen that you have to go jail. What you want to say about this ? A.13 I got only ₹ 7,00,000 only. Remaining 50,00,000 I don t et yet. I declare this 7,00,000 unaccounted income. So I declare 2,17,00,000 unaccounted income and I ready to I.T. return on it. Q.14 I see you Annexure 1 (page no 1 to 102), see tht and tell me what is it ? A.14 Page no.24 asset sale deed in respect of land sold to G.K. Patel. Page no.2 .....

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e no.1 & 2 Give details to the contractor about allotting money Page no.3, 4, 5 &6,7,8, page no.9 & 10 New house s exp. details Page no.11 & 12 New house s exp. Details Page no.13 to 15 New house s exp. Details Annexure A-3 (page no.1 to 10) Page no.1 Details about given payment to the parties. Page no.2 Details about the payment which get by seeling land Page no.3 Page no.4 & 5 I don t know Page no.6 Details of money taken by sajanben and sendhaji from amount of selling land .....

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this very land was sold at three occasions. First on 27.9.2007 to one Shri Hemendra Lilabhai Shah vide registration no. 12062 which was sold for a consideration of ₹ 57,28,350/-. The next sale deed dated 29.5.2008 for ₹ 35 lakhs and the next sale deed is dated 8.10.2007 for a consideration of ₹ 61 lakhs. All these sale deeds are within one year of the transaction done with the assessees. The ld.AO has not prepared a flow chart indicating the date of investment made by these per .....

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receipt of cash was also alleged at that stage. All these facts have not been considered by the AO. He simply took the statement of Gadaji A. Thakor as a gospel truth. That can be starting point of an inquiry, but all other corroborative evidences ought to have been collected by the AO. Apart from this, the assessee in the case of Sendhabhai Desai filed written submissions before the ld.CIT(A) and highlighted that he has asked for an opportunity to cross-examine. That was not given to him. The l .....

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ellants. The inference drawn by the AO is based on assumption. In view of the above, this evidence ought to be excluded at least in the case of Shri Sendhabhai Desai. Thus, in the totality of the facts and circumstances, I am of the view that no doubt the Revenue was able to collect information for initiating inquiry but failed to bring clinching evidence on record demonstrating the fact that vendees have paid more amounts in cash to the vendor for purchase of land. This fact may be appreciated .....

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