The DCIT, Central Circle-1,, RAJKOT-GUJARAT v. Shri Pravinchandra C. Savalia,, RAJKOT-GUJARAT

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.995/RJT/2009 (ASSESSMENT YEAR 2006-07) DY.CIT CENT.CIR.1 VS SHRI PRAVINCHANDRA C SAVAL IA RAJKOT SHYAM 3-CHITRAKUTDHAM AKSHAR MARG OFF KALAVAD ROAD RAJKOT PAN : AEXPS2451M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI I VIJAY KUMAR RESPONDENT BY : SHRI JC RANPURA O R D E R PER AL GEHLOT AM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT(A)-IV AHMEDABAD DATED 04-03-2009 FOR THE ASSESSMENT YEAR 2006-07. THE FOLLOWING ARE THE EFFECTIVE GROUNDS RAISED BY THE REVENUE: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING HE ADDITION O F RS.9 03 185/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN 1 ST PROPERTY WORKED OUT ON THE BASIS OF ADDITIONAL STAM P DUTY PAID. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.9 03 185/- (NOT REPEATED BY SEPARATE) ON ACCOUNT OF UNEXPLAINED INVESTMEN5T IN 2 ND PROPERTY WORKED OUT ON THE BASIS OF ADDITIONAL STAMP DUTY PAID. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.8 76 334/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN 3 RD PROPERTY WORKED OUT ON THE BASIS OF ADDITIONAL STAM P DUTY PAID. ITA NO.995/RJT/2009 2 4. THE LD.CIT(A) HAS ERRED IN LAW AND N FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1 00 000/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE TO EARN AGRICULTURAL INCOME M ET FROM UNDISCLOSED INCOME. 2. THE BRIEF FACTS OF THE GROUNDS 1 & 2 ARE THAT TH E ASSESSEE PURCHASED A PROPERTY AT REVENUE SURVEY NO.436 & 437 IN RAJKOT C ITY FROM BAULAL MANHARLAL PARSANA OF 4 MANHAR PLOTS RAJKOT AS PER THE SALE DEED REGISTERED ON 27-04- 2005. THE PURCHASE COST OF THE PROPERTY WAS SHOWN AT RS.16 LAKHS. THE SHARE OF THE ASSESSEE IN THIS PROPERTY WAS 25% AND 25% TO HIS WIFE. THE REMAINING 50% SHARE WAS HELD BY SHRI BHAVESH D CHOVATIA AND S MT. VRUSHALI KARTIK CHOVATIA. THE ASSESSEE OWNED UP THE TAX LIABILITY IN THE CASE OF SMT. MEETABEN P SAVALIA WIFE OF THE ASSESSEE. THUS THE ASSESSE ES SHARE IN THE PROPERTY WAS 50%. THE ASSESSING OFFICER NOTICED THAT AS PER THE STAMP DUTY AUTHORITIES THE TOTAL COST OF THE LAND WAS WORKED OUT AT RS. 34 06 370 (RS.16 LAKHS AS PER SALE DEED + RS.18 06 370 BEING THE FURTHER VALUE ADOPTED FOR THE PURPOSE OF ADDITIONAL STAMP DUTY). THUS THE ADDITIONAL COST TO THE ASSESSEE ON THE BASIS OF STAMP DUTY AUTHORITIES WAS WORKED OUT BY THE ASSESS ING OFFICER AT RS.9 03 185 BEING 50% OF ASSESSEES SHARE. ON THE BASIS OF THA T COST SHOWN BEFORE THE STAMP DUTY AUTHORITIES THE ASSESSING OFFICER ADOPT ED THE SAME COST AND MADE THE ADDITION OF RS.9 03 185 BEING 50% OF SHARE OF A SSESSEE AND HER WIFE. THE ASSESSING OFFICER ALSO MADE ANOTHER 50% SHARE IN TH E HANDS OF THE ASSESSEE ON THE GROUND THAT THOUGH THE ASSESSEE WAS ASKED TO PR ODUCE THE REMAINING TWO PARTIES VIZ. SHRI BHAVESH D CHOVATIA AND SMT. VRUS HALI K CHOVATIA BUT THE ASSESSEE DID NOT PRODUCE EITHER OF THEM. THEREFORE THE ASSESSING OFFICER ALSO CONSIDERED ANOTHER 50% SHARE OF ADDITIONAL COST OF THE PROPERTY ON THE BASIS OF VALUE ADOPTED BY THE STAMP DUTY AUTHORITY AND MADE ANOTHER ADDITION OF RS.9 03 185. THE CIT(A) DELETED BOTH THE ADDITIONS ON THE GROUND THAT THE ASSESSING OFFICER MADE ADDITION ONLY ON THE BASIS O F VALUE ADOPTED BY STAMP DUTY AUTHORITIES AND THAT THERE WAS NO OTHER EVIDENCE IN THE POSSESSION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD ACTUALLY PA ID MORE THAN THE CONSIDERATION SHOWN IN THE SALE DEED. THE CIT(A) W AS OF THE VIEW THAT SECTION ITA NO.995/RJT/2009 3 50C IS NOT APPLICABLE ON PURCHASE PRICE OF PROPERTY . HE HAS RELIED UPON THE FOLLOWING JUDGMENTS IN ARRIVING AT HIS CONCLUSION: DINESH KUMAR MITTAL VS ITO 193 ITR 770 (ALL) ACIT VS SWAMI COMPLEX (P) LTD 111 TTJ 531 (JPUR) ITO V OPTEE DISC MANUFACTURING 11 DTR 264 (CHD)(TR IB) KRISHNA KUMAR RAWAT VS UOI 214 ITR 610 (RAJ) HINDUSTAN MOTORS LTDVSMEMBERS APPROPRIATE AUTHORIT Y 249 ITR 424(MAD) 3. AT THE OUTSET THE LD.AR SUBMITTED THAT THIS ISS UE IS COVERED BY VARIOUS DECISIONS INCLUDING THE DECISION OF THE ITAT RAJKO T BENCH WHEREIN IT HAS BEEN HELD THAT SECTION 50C IS NOT APPLICABLE IN RESPECT OF PURCHASERS OF THE PROPERTY. HE FURTHER RELIED UPON THE FOLLOWING DECISIONS: CIT VS CHANDNI BHUCHAR 323 ITR 510 (P&H) DCIT VS SMT. MEENABEN H LAKHANI ITA NO.125/RJT/200 8 DCIT VS BALAJI WAFERS PVT LTD ITA NO.471&484/RJT/2 008 ACIT VS SWAMI COMPLEX (P) LTD 111 TTJ (JP) 531 CIT VS FITWELL LOGIC SYSTEM (P) LTD 11 DTR 286 (DE L)(TRIB) ITO VS VENU PROTEINS INDUSTRIES 4 ITR (TRIB) 602 ( AHD) 3. THE LD.DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER MADE THE ADDITION ONLY ON THE BASIS OF PURCHASE PRICE ADOPTED BY THE STAMP DUTY AUTHORITIES. THERE IS NO OTHER MATERIAL OR EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE PAID MORE THAN WHAT IS STATED IN THE SALE DEED. THE ITAT RA JKOT BENCH HAS TAKEN A VIEW THAT UNDER SUCH CIRCUMSTANCES THE ASSESSING OFFICE R CANNOT MAKE ADDITION. FOR THIS PURPOSE WE RELY UPON THE ORDER OF ITAT IN THE CASE OF BALAJI WAFERS PVT LTD ITA NO.995/RJT/2009 4 ITA NO.471 & 484/RJT/2008 ORDER DATED 02-06-2010. FOLLOWING THE ABOVE ORDER OF THE ITAT WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE CIT(A). GROUNDS 1 & 2 OF THE REVENUE FAIL. 6. AS REGARDS GROUND.3 AT THE OUTSET THE LD.AR SU BMITTED THAT THIS ISSUE HAS NOT BEEN DECIDED BY THE CIT(A) THOUGH THE ASSESSEE HAD RAISED A SPECIFIC GROUND ON THIS ISSUE BEFORE THE CIT(A) VIDE GROUND NO.5. THE LD.DR DID NOT CONTROVERT TO THE FACTS POINTED OUT BY THE LD.AR. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES WE RESTORE THIS ISS UE TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THIS GROUND OF APPEAL IN AC CORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 7. THE FOURTH GROUND IS IN RESPECT OF ADDITION OF R S.1 LAKH. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.3 41 909. THE ASSE SSEE WAS ASKED TO FURNISH THE DETAILS OF AGRICULTURAL EXPENDITURE BUT THE SAM E COULD NOT BE FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE WAS ASKED AS TO WH Y THE EXPENDITURE TO THE EXTENT OF RS.1 LAKH SHOULD NOT BE TREATED AS AGRICU LTURAL EXPENDITURE INCURRED OUT OF THE UNACCOUNTED BUSINESS INCOME. AFTER CONSIDER ING THE ASSESSEES SUBMISSION THE ASSESSING OFFICER MADE THE ADDITION OF RS.1 LAKH TREATING IT AS ASSESSEES AGRICULTURAL EXPENSES MADE FROM HIS UNAC COUNTED BUSINESS INCOME. THE CIT(A) DELETED THE SAID ADDITION AFTER ACCEPTIN G THE ASSESSEES SUBMISSION THAT DURING THE PREVIOUS YEAR THE SALE PROCEEDS OF AGRICULTURAL PRODUCES WERE RS.5 62 136 AND AGRICULTURAL EXPENSES WERE RS.2 20 227 WHICH COMES TO 39%. THE CIT(A) HAS ALSO NOTED THAT THE ADDITION MADE ON ADHOC BASIS APPEARS TO BE HYPOTHETICAL AS THE ASSESSING OFFICER DID NOT POINT OUT ANY INSTANCE TO SHOW THAT THE ASSESSEE HAD BEEN MEETING HIS AGRICULTURAL EXPE NSES FROM UNACCOUNTED INCOME. THE CIT(A) HAS ALSO OBSERVED THAT 39% EXPE NSES SHOWN BY THE ASSESSEE IS REASONABLE IN THE LIGHT OF THE RATIOS L AID DOWN BY VARIOUS COURTS. ITA NO.995/RJT/2009 5 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. WE FIND THAT THE ASSESSEE HAS SHOWN 39% EXPENSES AG AINST THE AGRICULTURAL INCOME RECEIPT OF RS.5 62 136. THE ITAT RAJKOT BE NCH WAS CONSISTENTLY HOLDING THAT THE EXPENDITURE TOWARDS THE AGRICULTURAL RECEI PTS IS BETWEEN 25% TO 30%. IN ITA NO.420/RJT/2006 ORDER DATED 28-02-2007 AND IN T HE CASE OF SHRI MAGANBHAI P PATEL (HUF) ITA NO.1352/RJT/2010 DATED 11-02-2011 THE RAJKOT BENCH OF THE TRIBUNAL HELD THAT THE AGRICULTURAL EXPENSES AT 30% IS REASONABLE. AND WHEREAS IN THE INSTANT CASE THE LD.CIT(A) FOUND THAT THE A GRICULTURAL EXPENSES IN ASSESSEES CASE STOOD AT 39%. THEREFORE FOLLOWING THE DECISIONS OF THE TRIBUNAL CITED SUPRA THERE IS LITTLE SCOPE FOR ANY ADDITION IN ASSESSEES CASE ON ACCOUNT OF EXPENSES AGAINST AGRICULTURAL INCOME SHOWN. IN THI S VIEW OF THE MATTER WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDIT ION OF RS.1 LAKH. HIS ORDER ON THIS ISSUE IS UPHELD. GROUND NO.4 FAILS. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25-02-2011. SD/- SD/- (N.R.S. GANESAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 25 TH FEBRUARY 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-IV AHMEDABAD 4. THE CIT CENTRAL-II AHMEDABAD 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT ITA NO.995/RJT/2009 6