TMI Blog2021 (8) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... categorical findings of the ITSC in the assessees own cases, the alleged unaccounted investment could not have been taxed in the hands of the present assessee. These observations of the ITSC have been accepted by the PCIT/Assessing Officer in so far as the order of ITSC has not been challenged. The Assessing Officer failed to bring any evidence suggesting that the alleged on-money for purchase of the land was paid by the assessees out of their personal resources. There is no reference of any enquiry having been conducted from the firm. Thus, the addition has been made only on surmises and conjectures. Thus, we have no doubt in our mind that the investment in land purchase by the said firm as well as the profit arising on sale of land by the firm is required to be taxed in the hands of the firm and not in the hands of the partner i.e. present assessees. - Decided against revenue. - C.O No.02/Ind/2019, 03/Ind/2019& IT(SS)A No.194/Ind/2017, 195/Ind/2017 - - - Dated:- 16-8-2021 - HON BLE RAJPAL YADAV, VICE PRESIDENT AND HON BLE MANISH BORAD, ACCOUNTANT MEMBER Revenue by Shri Rajib Jain, CIT-DR Assessee by Shri Ajay Tulsiyan Miss Shalini Mehta Ars ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.02.2012 to one M/s Vee Kay Infracom Pvt. Ltd. for Rs. 2,35,80,000/-. The resultant profit of Rs. 74,24,668/- on this sale was offered to tax in the hands of the firm for AY 2012-13. On 31.03.2012 two more persons namely ShriNareshKakwani and Shri Jai Narayan Kakwani were admitted as partners. Eventually vide retirement deed dated 25.07.2012 the assessees retired from the said partnership firm. During the course of search proceedings, certain pen drive was seized from the residential premises of one Shri Ashok Vaishnav who was the accountant of M/s CHL Hospital Ltd., wherein certain notings were found. On the basis of these notings, during the course of assessment proceedings, vide communication dated 15.01.2016 referring to the document seized during the search operation from the premises of CHL and the data recovered from the pen drive of Shri Ashok Vaishnav accountant, CHL Hospital Indore, the Assessing Officer observed that the bypass land was purchased at Rs. 13.06 crores out of which 3.81 crores (3.5 Cr. as per registry deed plus 31 Lacs for stamp) was shown in FY 2009-10. It is further mentioned by the Assessing Officer that the payment schedule of the same can be found fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit of income tax. The appellant has placed on record copy of the Report under Rule 9 (of Settlement Commission Procedure Rules, 1997) submitted by the Pr. CIT (Central), Bhopal before ITSC. The copy of the order of the Hon'ble ITSC passed in the appellant's case is also placed on record. 5.1 It is seen that the Pr. CIT (Central) Bhopal in the report filed under Rule 9 of Settlement Commission Procedure Rules, 1997 before lTSC has discussed the above issue in respect of the unaccounted investment made in the purchase of the land in detail and finally concluded at page 14 of the said report as under: - In 'the light of above discussion, I am to hold the amount of undisclosed income in the hands of the firm and partners has to computed as per provisions of the Income tax Act as under Unaccounted investment in 'Bypass Land'- Land has been purchased during F. Y.2009-10. Total actual purchase amount is Rs.13. 06 crores, out of which Rs.3.81 crores have been shown in the books (3.5 crore as per registry deed + 31 lacs as Stamp expenses). Thus, rest of the amount of Rs.9,25,32,000/- needs to be treated as unaccounted investment in the hands of M/ s. RNR Devcon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts by the applicant (accounted as well as unaccounted) in lieu of foregoing their partnership shares to Kakwani family would be capital receipts and not revenue receipts. Even the applicant in his SOF states that legally such income belongs to the firm. However, he had offered only a part of such income at Rs.52,91,374/- on the ground that he had no control and authority over the firm and the offer of additional income was in order to buy peace of mind and to avoid litigation . 18.2 We therefore hold that the applicant by offering income of Rs.52,91,374/- in his own hainds, even though the same admittedly belongs to the firm, has not made a full and true disclosure of his income. Further if the amount of Rs. 52, 91,3741 - which a6t.Up.lly belongs to the firm is taken out, the offer of additional income made by the dppfjcant, would fail on the technical requirements prescribed ul s 245C regarding re, Shold limit of income tax. 6. Charge of Income Tax as per section 4 is prescribed in respect of total income of the previous year of every 'person'. The expression 'person' is defined in section 2(31) wherein a firm is separately included. Thus, a partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing the said income under section 69 in the hands of the appellant is not justified, not only because of the above stated views of the higher authorities but also in view of the position of law as discussed above. 6.2 In view of the discussions in the preceding paragraphs I am of the opinion that the Assessing Officer was not justified in making the addition of Rs. 4,62,66,000/ - on account of unexplained investment in the hands of the appellant. The same is therefore deleted and Ground No.1 is allowed. 6. Being aggrieved, the Revenue filed appeals before this Tribunal and assessees have also filed cross-objections as reproduced above. Before us, ld. CIT-DR relied on the orders and submitted that the bypass land was purchased at Rs. 13.06 crores, out of which 3.81 crores was shown in the year under consideration and the payment schedule of the same is clear from the perusal of excel sheet TH-1 found from the pen drive of Shri Ashok Vaishnav which also indicates that the payment to the tune of 10.56 crores was made, therefore, 50% of the amount of Rs. 9,25,32,000/- i.e. Rs. 4,62,66,000/- was rightly treated as unaccounted investments in the hands of the assessees. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court of Gauhati (1997) 223 ITR 544. 7. We have heard rival contentions of both the parties and perused material available on record. We find that the assessees entered into a partnership on 10.03.2010 under the name and style of M/s RNR Devcon with 50% share each and this firm purchased a plot of land at Bypass Indore for a consideration of Rs. 3.5 crores measuring 3.93 hectares through sale deed registered on 18.03.2010, which was duly reflected in the books of accounts of the firm. Later on, the firm sold a part of the land i.e. 1.62 hectare of the said land on 14.02.2012 to one M/s Vee Kay Infracom Pvt. Ltd. for Rs. 2,35,80,000/-. The resultant profit of Rs. 74,24,668/- on this sale was offered to tax in the hands of the firm for AY 2012-13. The Assessing Officer on the basis of certain notings as narrated above was of the view that the said land was purchased for Rs. 13.06 crores, out of which, an amount of Rs. 9.25 crores was paid as on-money out of the books. Accordingly, the Assessing Officer made an addition @50% of this amount amounting to Rs. 4,62,66,000/- each in the hands of the assessees. However, we do not find any justification of the action of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s report filed under rule 9, before ITSC has categorically stated that the amount of Rs. 9,25,32,000/- was required to be treated as unaccounted investment in the hands of the firm M/s RNR Devcon in AY 2010-11. Therefore, even as per the report of the PCIT Central, the addition could not have been made in the hands of the present assessees. This fact could not be controverted by the ld. CIT-DR by bringing any contrary material on record. We find that the addition made by the Assessing Officer is contrary to the findings and the decision of the ITSC in the assessees own cases as the ITSC, while dealing with the application of the assessees has discussed the facts and after considering the report of the PCIT under rule 9, has also rendered a categorical finding stating that we have no doubt in our mind that both the unaccounted investment in land purchased by the firm M/s RNR Devcon as well as the profit arising on sale of land by the firm are required to be taxed in the hands of the firm. The receipts of the applicants (accounted as well as unaccounted) in lieu of forgoing their partnership share to Kakwani family would be capital receipts and not revenue receipts. Therefore, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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