Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (10) TMI 971 - ITAT AHMEDABAD

2016 (10) TMI 971 - ITAT AHMEDABAD - TMI - Reopening of assessment - unexplained investment - Held that:- There was no material with the Revenue to say that unexplained investment was made by the assessee in his individual cases. The ADIT who has investigated the assessee has suggested for obtaining DVO’s report. The ld.AO ought to have first obtained report, then visualize in the light of that report. Thus, at the time when he has recorded reasons for reopening of the assessment he was not poss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has paid taxes on account of alleged unexplained investment by way of revised computation. All these steps were taken by the assessee three years prior to the recording of reasons by the AO. Once the alleged land was shown in the balance sheet of HUF, taxes were paid in the hands of HUF, and then how that very alleged unexplained investment can be considered in the hands of the individual ? The AO has not verified any facts from the record, and he simply reproduced information came from the ADI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sment. On overall evaluation of the material available on record, we are of the view that a live link is totally missing between the material available with the AO for formation of a belief that income chargeable to tax has escaped. Therefore, we allow this ground of appeal in both the years and quash re-assessment orders. - Decided in favour of assessee - ITA. No. 2011 and 2012/Ahd/2013 - Dated:- 13-10-2016 - Shri Rajpal Yadav, Judicial Member And Shri Manish Borad, Accountant Member Assessee b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d an application under sub-section 5 of Section 253 of the Income Tax Act, 1961. It is pleaded in the application that Shri Sapnesh Sheth was partner with M.s.Rasesh Shah & Associates. He has represented the assessee before the ld.CIT(A). He received copy of the CIT(A) s order on 1.2.2013. However, he did not instruct the assessee to file appeal. Even he did not inform the assessee. He retired from the firm w.e.f. 30.4.2013, but he was not attending office in the month of April, as he has to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t delay in filing the appeal be condoned. 3. The ld.DR, on the other hand, contended that except affidavit by the assessee, there is no other supporting evidence in support of the alleged pleading. The assessee should be vigilant in prosecuting its income tax proceedings. He should be aware that the ld.CIT(A) decided the appeal and it has decided against the assessee, and the assessee should have filed the appeal well in time. 4. We have duly considered rival contentions and gone through the rec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

allen for consideration before the Hon ble High Courts as well as before the Hon ble Supreme Court, and the Hon ble Courts are unanimous in observing that whenever such issue fallen for consideration before adjudicating authority, then alleged sufficient cause is to be considered with justice oriented approach. We deem it appropriate to make reference to the decision of Hon ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353. The relevant part .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer perso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to adv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his has made the appeal time barred. Since the appeal in the Asstt.Year 2006-07 is not time barred and both issues are interconnected, therefore, considering the hardship of the assessee, and explanation given by him, we deem it appropriate to condone the delay and decide the appeal for the Asstt.Year 2004-05 also on merit. 7. On merit, the assessee has challenged reopening of assessments in both the years. 8. Brief facts of the case are that Shri Karsanbhai Dahyabhai Kakadia HUF had purchased a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

registration charges and stamp duty and other expenses. These pieces of land were purchased from one Smt.Hetalben. It appears that DDIT(Investment) had received a tax evasion petition and he conducted an inquiry. Statement of the assessee was recorded under section 131 by DDIT (Investigation) on 2.11.2007. During this statement, the assessee has admitted an investment of ₹ 50 lakhs over and above amounts stated in the sale deed. The assessee agreed that he has paid on-money of ₹ 38 l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vidual capacity on 12.9.2005 for the Asst.Year 2004-05 declaring total income at ₹ 48,200/-. After this inquiry at the end of the DDIT, assessee has filed revised computation of total income for the Asstt.Years 2004-05 and 2006-07 in the case of HUF. He has also paid cheque of ₹ 4.70 lakhs in four instalments. In other words, the assessee has owned up declaration made during the course of statement recorded by the DDIT. According to the assessee, it was statement in the capacity as k .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

31- 8-2010. The TEP was regarding an allegation that two pieces of land (at Survey No.559B, Block 559B admeasuring 31,869 sq.mtr. and Survey No.51, Block 42, admeasuring 9915 sq.m.) together worth ₹ 7 crores sold was sold at very low • prices by one Mrs. Hetalben R Desai to some individuals .The report states that the sale of the said land by Hetalben and subsequent holders resulted in transfer of unaccounted money which was accepted under oath before the ADIT. The amount of disclosu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

i Patel ADGPP3559G 27.75 06-07 Total 161.00 As per the report the assessee individual Shri. Karsanbhai D. Kakadia had made unaccounted investment of ₹ 38 lakhs in cash for the purchase of land (on 15-04-2004) at Survey No.51, Block 559B admeasuring 31,869 sq.mtr. and Survey No.51, Block 42, admeasuring 9915 sq.m. Block 559B admeasuring 31,869 sq.mtr . The assessee has admitted that he had paid ₹ 38,00,000/- in cash to the seller Mrs. Hetalben R Desai/The assessment for A.Y.2004-05 is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

214 per sq mtr. [Rs.12,75,000 + 55.5 lakh/31,869= 68,25,000/31869] (b) land at Survey No.51, Block 42; 9915 sq.mtr. to Shri. Narayanbhai Parshottambhai Mayani on 27-06-2005 for a documented price of ₹ 2,00,000/- @ ₹ 20 per sq mtr which is less than the jantry value. The addition as per section 50C on this transaction comes to ₹ 3,04,732/-.No disclosure was made on this transaction . The two pieces of land were worth ₹ 7 crores @ of ₹ 1675 per sq mtr [ 7 cr/(31869+9 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

377; 20 per sq mtr (no disclosure). Both of which are less than the value of land as alleged to be ₹ 1675 per sq mtr .Therefore the ADIT(Inv.) has suggested that the exact value of the two pieces of land should be determined by a Valuer to determine quantum of unaccounted investment and income of the assessee . The table below shows the assessee's transactions .for A.Y.2006-07 from the report:- Karsanbhai D. Kakdia sells to Narayanbhai Parshottambhai Mayani-9915 sq.m.; Binpiyat Agri la .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

51, Block 559/B; ₹ 12, 75, 000/-15-10- 2005 1,07,100 + Unknown @ 8.4 % Rs.50 per sq m. Rs.15,93,45 0 Rs.3,18,450(assesse e has accepted that it has received Rs. 55.5 lakhs cash for land only at block no. 559B block) *Disclosure of ₹ 55.5 lakhs was made on the land at Block 559B admeasuring 31,869 sq.mtr. Therefore the Rate of land sold = (Rs. 12,75,000+55.5 lakhs /31869=68,25,000/31869 = Rs.l84 per sq. mtr - In view of the above, I am of the opinion that the assessee's unaccounte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he TEP was regarding an allegation that two pieces of land (at Survey No.51, Block 559B admeasuring 31,869 sq.mtr. and Survey No.51, Block 42, admeasuring 9915 sq.m.) together worth ₹ 7 crores sold was sold at very low • prices by one Mrs. Hetalben R Desai to some individuals .The report states that the sale of the said land by Hetalben and subsequent holders resulted in transfer of unaccounted money which was accepted under oath before the ADIT. The amount of disclosures of unaccount .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

9G 27.75 06-07 Total 161.00 As per the report the assessee individual Shri. Karsanbhai D. Kakadia had made unaccounted investment of ₹ 38 lakhs in cash for the purchase of land (on 15-04-2004) at Survey No.51, Block 42, Survey No.51, Block 559B admeasuring 31,869 sq.mtr. and Survey No.51, Block 42, admeasuring 9915 sq.m. Block 559B admeasuring 31,869 sq.mtr . The assessee has admitted that he had paid ₹ 38,00,000/- in cash to the seller Mrs. Hetalben R Desai. The two pieces of land w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t is much more than what he has admitted for A.Y. 2004-05. Hence, the case needs re- opening u/s. 147 of the I.T. Act, 1961. Sd/- Place: Surat (Sanjay V. Deshmukh) Date : 12.10.2010 Dy. Commissioner of Income-Tax Circle-9, Surat Accordingly, the ld.AO has reopened the assessment and initiated assessment proceedings. The ld.AO thereafter passed assessment order on 22.12.2011 in the Asstt.Years 2004-05 and 2006-07 respectively under section 143(3) r.w.s 147 of the Income Tax Act. 9. Dissatisfied w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r 2004-05. The assessee has shown both pieces of the land in the balance sheet. The DDIT has conducted an inquiry on 22.3.2007. The assessee agreed on unaccounted investment in this land. The assessee has filed revised computation in HUF and also paid taxes of ₹ 4.70 lakhs in four instalments. This tax was paid in HUF. All these things have been happened prior to recording of reasons for reopening of the assessment. The ld.counsel for the assessee took us through copies of reasons availabl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion of the ADIT that exact value of two pieces of land is not determinable, and therefore, it should be referred to the DVO for determination of quantum of unaccounted investment. The AO reopened the assessment without making any reference to the DVO and without pointing out how much is the unexplained investment. During the course of assessment proceedings, the ld.DVO has submitted report, and according to him, value of the land was ₹ 19.12 lakhs for block no.559 at the time of purchase i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pened on the allegation that value of the land was more than ₹ 7 crores. After appraising us the above factual position, the ld.counsel for the assessee submitted that the AO was not possessing any material to harbor a belief that income chargeable to tax has escaped the assessment. He has not applied independent mind on the material available with him, rather, he proceed with suggestion of the ADIT which was mere an information. Thus, there was no satisfaction at the end of the AO. It is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

information, he relied upon following decisions: i) Rasalika Trading & Investment Co. P.Ltd. Vs. DCIT & Anr. (2014) 365 ITR 447 (Del.) ii) IT Vs. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del) iii) Signature Hotels P.Ltd. Vs. ITO, & Another (20111) 338 ITR 51 (Del) iv) Sarthak Securities Co.Ltd. Vs. ITO (2010) 329 ITR 110 (Del) v) ITO Vs. On Exim Pvt.Ltd. - ITA No.1116/del/2011 12. In his next proposition, he contended that assessment was sought to be reopened on the premises that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on, if no addition has been made on the basis of his reasons. In support of his conclusions, he relied upon the decision of the Bombay High Court I the case of CIT Vs. Jet Airways (I) Ltd., 331 ITR 236 (Bom) and CIT Vs. Mohmed Juned Dadani, 214 taxmann 0038 (Guj). On the strength of these decisions, it was contended that expression and also has been employed in section 147 which requires that if during the course of re- assessment proceedings, any other information came to the possession of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t is not sustainable, and the reassessments are deserved to be quashed in both the years. 13. On the other hand, the ld.DR contended that at the time of recording his statement by the DDIT, assessee has not disclosed that the investment was made in the hands of the HUF. Therefore, the AO was justified to reopen the assessment. The AO has made analysis of the information submitted by the DDIT, and thereafter, arrived at a conclusion that income chargeable to tax has escaped assessment, and the AO .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ections have not been dealt with by the AO. 15. We have duly considered rival contentions and gone through the record carefully. It is seen that the notice under section 148 was issued on 12.10.2010 which was served upon the assessee on 14.10.2010. The assessee did not file return in response to the notice. The AO has put assessment machinery in motion by issuance of notice under section 143(2) and 142(1) of the Act. These notices were issued in the month of August, 2011. Thereafter, the assesse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he verge of completion of the assessment order. In this case, we do not see any irregularity for not disposing of that objection filed by the assessee against the reopening of the assessment. On this reason, the proceeding cannot be quashed. 16. A bare perusal of section 147 would indicate that this section contemplates that if the AO has reasons to believe any income chargeable to tax has escaped assessment for any assessment year … Meaning of the above would be that there should be reas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f any material, if a prudent man or trained income-tax officials could believe about existence of fact that income has escaped, then, he would be authorized to issue notice under section 148 of the Income Tax Act. Let us make an analysis of the reason recorded by the AO and extracted supra. As far as first page of the reason are concerned, it is verbatim same in both the years. It contained details of land, and how such land was purchased by the assessee in the Asstt.Year 2004-05 and sold in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unaccounted investment at ₹ 105 per sq mtr,[(9915+31869)41,784sq.m. = (Rs.1,48,725+38lakhs+Rs.4,78,035)/41784= 44,26,760/41784=Rs.121]. Thus there is huge difference of 1569 per sq mtr.( ₹ 1675-105) in investment. In view of the above, I am of the opinion that the assessee's unaccounted investment is much more than what he has admitted for A.Y. 2004-05. Hence, the case needs re- opening u/s. 147 of the I.T. Act, 1961. 17. In this line, the ADIT was not confirmed about value of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his individual cases. The ADIT who has investigated the assessee has suggested for obtaining DVO s report. The ld.AO ought to have first obtained report, then visualize in the light of that report. Thus, at the time when he has recorded reasons for reopening of the assessment he was not possessing any material in the individual cases of the assessee. The DVO has submitted his report on 5.12.2011 and valued the land at ₹ 19.12 lakhs for Block No.559/B at the time of purchases and ₹ 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version