TMI Blog2022 (10) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... . 223 to 225 at Vesu, Surat, in holding that none of the dates, which were shown to be the dates of transactions tallied with the dates on which the consideration in the land was received. Commission observed that no evidence was brought on record by Baldevbhai B Patel to establish his proximity with Hitesh Savani (assessee) and that the order of the ITSC has been affirmed by Jurisdictional High Court, therefore, we find merit in the submissions of the ld AR for the assessee that there is no evidence to connect the assessee with the sized material except the statement of third party. We find that the statement of Baldevbhai P Patel is not accepted by Principal Commissioner, on the basis of which the settlement petition of Baldevbhai P Patel was not allowed. On the basis of aforesaid factual discussion, we are of the view that the addition on account of alleged cash investment in the land at survey No. 223 to 225 Vesu, Surat by assessing officer was not justified. Hence, we direct the assessing officer to delete the addition. In the result, the ground of the appeal is allowed. - ITA No. 347/Srt/2017 - - - Dated:- 30-9-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oose paper file, there was a transaction related to purchase of land at survey No. 223, 224 and 225 by Shri Hitesh Himmatlal Savani (assessee) pertains to F.Y. 2006-07 relevant to assessment year 2007-08. To examine the transaction, the case of assessee was reopened after recording reasons by the Assessing officer that he has reason to believe that the assessee failed to disclose fully and truly all material facts of assessment for A.Y. 2007-08. In response to notice under Section 148, the assessee filed reply stating therein that the return filed on 29/01/2008 be treated as return in response to notice under Section 148 of the Act. During the reassessment, the Assessing Officer issued show cause notice to assessee, the contents of which is recorded in para 6 of assessment order. 3. In the show cause notice, the Assessing Officer noted that a Survey proceeding was conducted at premises of Shri Baldevbhai Bhikhabhai Patel wherein certain evidence was found regarding transaction of such land, which show transactions between Baldevbhai, Ravjibhai K Suthariya and assessee. The statement of Baldevbhai Bhikhabhai Patel was recorded under section 131, which corroborates the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y No. 223, 224 and 225 at Vesu, Surat. The transaction was conducted by Baldevbhai Bhikhabhai Patel who is active partner amongst the two, who had admitted in his statement under Section 131 as well. Though the name of assessee is not mentioned in the purchase deed of land but it cannot be denied that he is only a cash partner whose role was to invest money in cash and part away with sale proceed which is in direct corroboration with the fact of his signature on the sale proceeds as mentioned in Annexure-BFI-16. As the document bear the signature of assessee which shows his involvement in the sale of land, thus, his nexus in purchase of land is automatically proved. The payment of sale of land took place in F.Y. 2009-10 onwards which is recorded in document as Annexure BFI-16. The Assessing Officer also took his view that Ravjibhai Suthariya in his capacity as Karta of Ravjibhai Suthariya (HUF) one of the persons in the transaction also disclosed in the statement under Section 131 the name of assessee as a cash partner with Baldevbhai Bhikhabhai Patel. The stand of assessee in denying the statement as a partner in the sale of land is simply an afterthought. The assessee has made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the name of assessee is shown as cash partner at the time of sale of said land in 2009-10 but no such sale deed was provided to the assessee. The Assessing Officer considered the assessee as dormant partner in the deal or cash partner but there is no such evidence like copy of partnership deed or written agreement between the assessee or the said party. The addition is made only on the basis of statement of Shri Baldevbhai Bhikhabhai Patel and on the basis of his diary. The Assessing Officer failed to appreciate that the seized papers were found from the possession of third party, the seized paper are not in the handwriting of assessee. The at the time of recording statement, the assessee explained that he never purchased such land nor know Shri Baldevbhai Bhikhabhai Patel and Ravjibhai Suthariya. Neither the statement of third person was provided nor the assessee was allowed to cross examine such parties. The assessment was completed in full violation of principles of natural justice. The assessee also relied on certain case laws. The submissions of assessee was forwarded to the Assessing Officer for his remand report, the Assessing Officer was also directed to provide copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A) despite accepting the fact that reasons recorded are based on wrong incriminating material has not upheld the objection of assessee. Thus, the basis of reasons recorded itself was wrong therefore, the assessment order is void ab initio. On merit of the addition, the ld. AR for the assessee submits that assessee has no relationship with the seized material, seized from the premises of third person. There is no signature of assessee on seized material. The Assessing Officer merely relied on the statement of third party without any corroborative evidence to connect the assessee with the seized material. No independent investigation to connect the assessee with the seized material, was carried out by Assessing Officer. Neither the assessee has any relationship nor any transaction with Baldevbhai Bhikhabhai Patel. The Assessing Officer recorded the statement of assessee wherein, the assessee clearly denied his relationship or any contract with the Baldevbhai B Patel. 10. The ld AR for the assessee finally submits that Baldevbhai Bhikhabhai Patel on whom survey under section 133A was carried out by the investigation team filed Petition before Income Tax Settlement Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition is liable to be sustained against the assessee. 12. The assessee filed following documents on record; (1) Seized Material BF1-16 (2) Seized Material BF1-35 (3) Reason recorded for reopening u/s 147 of the Act. (4) Statement of Hitesh Himmatlal Savani recorded u/s 131 of the Act. (5) Copy of passports of Hitesh Himmatlal Savani 13. To support his various other submissions, the ld AR for the assessee relied on the following case laws; 1. Baldevbhai Bhikhabhai Patel Vs Income Tax Settlement Commission Additional Bench (2017) 85 taxmann.com 250 (Gujarat) 2. Shirishbhai Hargovandas Sanjanwala Vs ACIT (2017) 88 taxman.com 578(Gujarat) 3. ACIT Vs Resham Petrotech Ltd. (2012) 21 taxmann.com 161 (Ahd. Trib) 4. Pavan Morarka Vs ACIT (2022) 136 taxmann.com 2 (Bombay) 5. CIT Vs S. Goyanka Lime Chemical Ltd. (2015) 64 taxmann.com 313 (SC) 6. CIT Vs. S. Goyanka Lime chemical Ltd. (2015) 56 taxmann.com 390 (MP) 7. Jaysekhbhai Nanubhai Dudhat Vs ITO ITA No. 2677 2871/Ahd/2013 (ITAT Surat) 8. Shri Vimalchand M Jain Vs ITO ITA No. 1460/Ahd/2017 (ITAT, Surat) 9. Central India Electric Supply Co. Ltd. Vs ITO, company circle-X, New Delhi ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hai Suthariya (HUF) one of the persons in the transaction also disclosed in the statement under Section 131 the name of assessee as a cash partner with Baldevbhai Bhikhabhai Patel. The stand of assessee in denying the statement as a partner in the sale of land is simply an afterthought. 16. As recorded above, before ld CIT(A) the assessee filed very detailed written submissions. The ld CIT(A) after considering the submissions of the assessee, despite taking view that that Assessing Officer has not done the required investigation or conducted enquiries to ascertain exact identity of the Hitesh Savani mentioned in the seized material BF1-16, held that tax effect for A.Y. 2007-08 may not be much but tax effect for A.Y. 2010- 11/2011-12 is very much high, when the land was sold and the facts ascertained in assessment order are applicable for A.Y. 2010-11/2011-12. The ld CIT(A) further held that on his careful examination, he finds that the Assessing Officer missed two points that names mentioned on BSI-16, name of Hitesh Savani and Himmatbhai Savani, so it is likely that either they are siblings or father-son duo. The assessees father s name is Himmatbhai Savani hence there is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission proceeded further. Rule 9 report was filed on 15.07.2016. 5. It was the case of the assessee that in view of the pending assessment proceedings he intended to make full and true disclosure of income by way of the application before the Settlement Commission. It was such purpose that, for the assessment years 2007-08 to 2013-14 the applicant disclosed the income of Rs. 32.60 crores (rounded off). 6. From the Rule 9 report filed by the authorities, it was found that, amongst other things, the assessee had, in a statement admitted that he had received unaccounted cash of Rs. 26.33 crores from various dealings pertaining to land from October 2010 to December 2011. This was in respect to the dealings in land bearing land Survey Nos. 223, 224 and 225 at Vesu, Surat. It was the case of the assessee that he along with one Hitesh Savani had made unaccounted investment in the plot to the tune of 14.18%. The land was sold at a price of Rs. 37.42 crores (rounded off). He alongwith Hitesh Savani had received a sum of Rs. 53 crores. 50% of the share of the applicant would therefore come to Rs. 26.50 crores (rounded off). The transactions with regard to the sale of land were denie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 Rs.3,55,59,570/- 2011-12 Rs.27,85,64,155/- 2012-13 Rs.3,35,56,000/- 2013-14 Rs.3,03,56,500/- Total Rs.85,77,39,982/- 9. To the Rule 9 report dated 15.07.2016, the petitioner submitted his comments dated 31.08.2016.The same were filed before the Commission on 09.09.2016. Based on the Rule 9 report and on the submissions so filed, a hearing was held by the Commission. The applicant requested for an opportunity to file copies of documents based on the Rule 9 report which he received on 18.07.2016. The hearing before the Commission was then adjourned to 23.08.2016. The documents were filed. The Principal Commissioner of Income Tax/AO was directed to examine the details and furnish comments. On 09.09.2016 comments of the AO were filed. The applicant furnished paper book of supplying requisite details. The assessee was asked to furnish details and evidence to support the transaction and substantiate his claim that there was dealing in land on behalf of third party. Rejoinder comments were filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the entire income due to the unaccounted cash of Rs. 53 crores be added to the assessee's income was not just. 14. With regard to the second observation under Rule 9 report on the manner of disclosure of income vis-a-vis buying and selling of movable property for and on behalf of others in the name of third parties, it was suggested that in fact the assessee had dealt on behalf of one Shri Vince Patel who was a resident in USA. That the identity of Shri Vince was established by furnishing his address and also the details of ledger entries showing details of transactions with Mr. Vince Patel. 15. On this account, Mr. Divetia invited our attention to the loose paper extracts which were annexed to the petition to suggest that in fact there were dealings between Mr. Patel. Cash transactions suggesting that the amount was received on his behalf by the assessee and that the amount was returned was evident from the notings in these entries. 16. In other words, according to Mr. Divetiya, the order of the Settlement Commission rejecting the application of the petitioner on the ground that it did not disclose full and true particulars, which were a prerequisite for an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Including LTCG 2012-13 13,000/- 2013-14 18,99,400/- Total 3,26,14,940/- 22. The Principal Commissioner of Income Tax on 15.07.2016 submitted a report under Rule 9 of the Settlement Commission Procedure Rules, 1987. It was the case of the assessee that he had earned unaccounted income as a result of dealing in plots comprising of Survey Nos. 223, 224 and 225 at Vesu. These dealings, according to the assessee, were in association with Shri Hitesh Savani. From the total earning of Rs 53.00 Crores (rounded off) each of them had a share of Rs.26.50 Crores. 23. Shri Hitesh Savani, in a statement on 11.03.2015, denied having entered into such a transaction. In fact, he denied knowing the assessee. In order to establish the genuineness of the claim, the assessee was asked to furnish complete details of the persons in connected with such dealings. No justification came forth. Except for relying on entries in the cash book and ledger accounts in the paper book no other material was placed before the Set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I 35-page 12 (discussed above) is not. In para no. 14 of PB-V submitted by applicant on 26.09.2016, reference has been made to notings in the diaries at BFI 16 page 3. These notings have reference to Baldevbhai + Himmatbhai Savani (father of Hitesh) as well as Baldevhai diary and Himmatbhai (diary) . The notings do not therefore support the applicant's contention of 50% share of Shri Hiteshbhai Savani. The detail of joint investments in Vesu land (para 15 of the applicant's PB-V filed on 26.09.2016) show receipts from a number of persons including the applicant and the name of Hitesh appears to be for only one amount. In view of these facts, the applicant's contention regarding 50% share of Shri Hitesh Himmatbhai Savani in the joint share of 14.18% relating to plot no. 223, 224 and 225 at Vesu Surat is not correct. The applicant's claim that the presumption u/s 292 C(1)(ii) of the Act is available to the applicant regarding his claim of 50% share of Shri Hitesh Himmatbhai Savani can not therefore be accepted. The contents of the impounded documents do not lead to the conclusion that Shri Hitesh Savani had 50% share. It is therefore, respectfully submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of R.S. No 223, 224 and 225 Vesu, Surat and upon sale of the land, had taken their share of the sale proceeds and that in reply thereof, Shri Hitesh Himmatbhai Savani stated that he had read the statement shown to him but he did not know any person by the name of Shri Ravjibhai Karamsingh Sutharia or Shri Baldevbhai Bhikhabhai Patel and had no share in any transactions relating to the stated Vesu land. The applicant has referred to the statement of Shri Parbatbhai one of the co-owner of Vesu land, but has not given the details of the applicant's submissions/Department's submissions in which the copy of the statement is available. 25. The Settlement Commission in its order vis-a-vis land dealings at Vesu categorically observed that none of the dates, which were shown to be the dates of transactions tallied with the dates on which the consideration in the land was received. The Commission further observed that no evidence was brought on record by the applicant to establish his proximity with Shri Savani. In fact Shri Savani had denied his association with the assessee in a statement recorded on 11.03.2015. Based on such facts, backed by a Rule 9 Report the Commission cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhai is noted. The claim of noting of returning of Rs 10 lacs plus Rs 20 lac by transaction through angadia to Mr. Vinci Patel is not supported by any details of the angadia or the mode of remittance to Mr. Vince Patel. As regards Sanjay, the transaction details available at page 215 and 216 of Rule 9 report are compatible with purchase of the flat in Vaishnu Devi property by the applicant and sale thereof. The applicant has worked out profit of Rs. 13,00,000/- in respect of this property and the sale is also offered to tax. It is concluded that for none of the transactions claimed to be made for third parties, the entries in the impounded documents show that these transactions relate to the third parties. It is therefore respectfully submitted that as discussed with relation to property at RS No 223, 224 and 225 Vesu Surat, the judgment of CIT v. Indeo Airways P Ltd 349 ITR 85 (Delhi) is distinguishable. No confirmations or any other evidence has been furnished by the applicant to prove that the transactions actually relate to third parties. 27. Based on such findings that even with regard to dealings of land in question no sufficient details were available suggesting full and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Settlement Commission (ITSC) in its order vis-a-vis land of survey No. 223 to 225 at Vesu, Surat, in holding that none of the dates, which were shown to be the dates of transactions tallied with the dates on which the consideration in the land was received. The Commission further observed that no evidence was brought on record by Baldevbhai B Patel to establish his proximity with Hitesh Savani (assessee) and that the order of the ITSC has been affirmed by Jurisdictional High Court, therefore, we find merit in the submissions of the ld AR for the assessee that there is no evidence to connect the assessee with the sized material except the statement of third party. We find that the statement of Baldevbhai P Patel is not accepted by ld. Principal Commissioner, on the basis of which the settlement petition of Baldevbhai P Patel was not allowed. On the basis of aforesaid factual discussion, we are of the view that the addition of Rs. 34,85,466/- on account of alleged cash investment in the land at survey No. 223 to 225 Vesu, Surat by assessing officer was not justified. Hence, we direct the assessing officer to delete the addition. In the result, the ground No. 2 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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