IT(SS)A No. 78/Rjt/2010 and C.O. No. 15/Rjt/2011, (Assessment Year: 2007-08). Case: 1. ACIT, 2. Shri Desar Murji Danicha Vs 1. Shri Desar Murji Danicha, [Alongwith IT(SS)A No. 79/Rjt/2010 (Assessment Year: 2008-09)], 2. ACIT, [Alongwith C.O. No. 16/Rjt/2011 (Assessment Year: 2008-09)]. ITAT (Income Tax Appellate Tribunal)
| Case Number | IT(SS)A No. 78/Rjt/2010 and C.O. No. 15/Rjt/2011, (Assessment Year: 2007-08) |
| Judges | T.K. Sharma, Member (J) and D.K. Srivastava, Member (A) |
| Issue | Income Tax Act, 1961 - Sections 131(1A), 132, 132(4), 132(4A), 153A, 2(14), 292C, 68, 69, 69A, 69B, 69C; Indian Evidence Act, 1872 - Sections 114, 58; Motor Vehicles Act, 1988 - Section 69 |
| Judgement Date | September 13, 2013 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
(ITAT Rajkot Bench)
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Appeals bearing IT(SS)A Nos. 78/Rjt/2010 and 79/Rjt/2010 filed by the Revenue are directed against two separate orders passed by the CIT(A) on 7th October 2010 in the cases of Shri Desar Murji Danicha and Shri Murji Daya Danicha, being son and father respectively. Both the assessees have also filed cross-objections bearing CO Nos. 15/Rjt/2011 and 16/Rjt/2011 in support of the orders passed by the CIT(A). Facts, issues and grounds of appeal in all the appeals and cross-objections are common. All the appeals and cross-objections are, therefore, being disposed of by a consolidated order. Search and seizure operations u/s. 132 of the Income-tax Act were carried out at the premises of both the assessees on 01.08.2007 during which various documents/records were found and seized. Cash of Rs. 19.50 lakhs was also found and seized in the case of Shri Murji Daya Danicha. A satakhat/sata-karar (i.e., agreement to sell) dated 06.03.2006 for sale of land bearing Revenue Survey No. 83/1 admeasuring 1-29-50 hectares and Revenue Survey No. 83/2 admeasuring 1-92-23 hectares located at Baroi Village of Mundra Taluka of Kachcha District of Gujarat was also found. The said agreement to sell revealed that both the assessees had agreed to sell the aforesaid land to Shri Shyam Rameshbhai Pathak, Taluka Mundra, District Kutch for a sum of Rs. 1,07,00,000/- out of which a sum of Rs. 1,50,000/- only, according to the said agreement, was received by both the assessees as token amount of sale consideration on the date of agreement to sell. The aforesaid agreement to sell has been executed on non-judicial stamp paper of Rs. 20/-. However, both the pieces of land were not sold as per agreement to sell. The land bearing survey No. 83/2 was ultimately sold by Shri Desar Murji on 09.02.2007 to Shri Narendrasinh Gulabsinh Jadeja on agreed consideration of Rs. 1,45,000/-. Clause 5 of the sale deed dated 09.02.2007 between Shri Desar Murji Danicha and Shri Narendrasinh Gulabsinh Jadeja shows that a sum of Rs. 1,45,000/- alone was paid by the buyer towards sale consideration to the seller, namely, Shri Desar Murji Danicha. Another sale deed was executed on the same date, i.e., 09.02.2007 between Shri Murji Daya Danicha and Shri Narendrasinh Gulabsinh Jadeja by which land bearing survey No. 83/1 was transferred in favour of the purchaser on payment of Rs. 98,000/-. The signatures of witnesses on both the sale deed are illegible. Total consideration received from the purchaser of both the properties, as per sale deed, aggregates to Rs. 1,45,000/- + Rs. 98,000/- = Rs. 2,43,000/-.
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Incriminating documents found at the time of search were analyzed by the AO. It was found that Shri Desar Murji Danicha had made investments aggregating to Rs. 63,01,176/- in the months of February and March in the year under appeal. There is no dispute with regard to the aforesaid quantification of investments made by Shri Desar Murji Danicha in the year under appeal. There is also no dispute with regard to the amount of cash (Rs. 90,50,000/-) found at the time of search at the premises of Shri Murji Daya Danicha. The dispute however is with regard to the nature and source of the aforesaid investments as also cash found at the time of search.
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Pursuant to search operations u/s. 132 of the Income-tax Act at the premises of both the assessees, notices were issued on 29.1.2009 u/s. 153A requiring both the assessees to file their return of income. Return of income was filed by Shri Desar Murji Danicha on 5.11.2009 returning Nil income and agricultural income amounting to Rs. 67,250/-. Return of income was filed by Shri Murji Daya Danicha on 5.11.2009 returning total income at Rs. 17,390/-.
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Shri Desar Murji Danicha was called upon by the Assessing Officer to explain the nature and source of investments aggregating to Rs. 63,01,176/- made by him in February and March in the year under appeal while Shri Murji Daya Danicha was called upon to explain the nature and source of cash amounting to Rs. 19,50,000/- found from his premises at the time of search. In reply, both the assessees relied upon the agreement to sell dated 06.03.2006 and submitted that a sum of Rs. 1,07,00,000/- was actually received by them on sale of land. In other words, the nature and source of investments made by Shri Desar Murji Danicha and cash found at the time of search at the premises of Shri Murji Daya Danicha were claimed to have come out of the sum of Rs. 1,07,00,000/- mentioned in the agreement to sell. It was submitted that the said property was actually sold to Shri Naranbhai P. Gadhavi, Advocate for a sum of Rs. 1,07,00,000/- in the names of persons given by him in the agreement to sell and sale deed. The Assessing Officer however did not consider the aforesaid explanation given by both the assessees as satisfactory. He treated the investment of Rs. 63,01,176/- as unexplained investment in the hands of Shri Desar Murji Danicha with the following observations:-
(6.0) The assessee was thus asked to explain the cash found as also other documents as enumerated above. The AR of the assessee submitted that the source of cash is the sale proceeds of land situated at survey No. 83/1 and 83/2 situated at village Baroi and the other seized materials found which indicate expenditure and investments made by the assessee and his father, were from the sale proceeds.
(6.1) As per the assessee, he along with his father Shri Murji Danicha had sold a plot of land and total sale consideration received on account of the sale of the land was Rs. 1,07,00,000/-. Out of which Rs. 64.00 lac was the sale consideration received by the assessee and the balance amount was received by his father. They had submitted that, since the land sold was agricultural land and as it was beyond 8 km of a municipality having population of more than 10000 as per the latest census, it was not a capital asset as per the IT Act and therefore no capital gain has been offered for taxation. The assessee was asked to prove the source of receipt and evidence of receipt of Rs. 1,07,00,000/- on account of sale of agricultural land since the same has been claimed as exempt from the IT Act being not a capital asset as per reasoning discussed earlier. In response, it was submitted that as per Satakhat dated 6.3.2006, land at survey No. 83/1 and 83/2 at Village Broi, Tal. Mundra was purchased by one Shyam Ramesh Pathak from the assessee. As per the same satakhat, it is seen that payment of only Rs. 1,50,000/- has been received on the date of Satakhat. Further, the assessee has submitted another sale deed dated 9.2.07 wherein the above mentioned land was sold by the assessee to one Shri Narendra Gulabrai Jadeja for a total consideration of Rs. 145000, the assessee was asked to explain why the Satakhat was prepared in the name of one person and the land has been sold to another person as mentioned above. In response to this question the assessee could not furnish any reply.
(6.2) The assessee was asked to explain why the sale deed has been made about one year after the Satakhat was prepared. No satisfactory explanation in the matter could be given. The assessee was further asked to explain if the sale consideration was as large as Rs. 1,07,00,000/- then why Satakhat was prepared by taking a paltry amount of Rs. 1,50,000 only. There also the assessee could not furnish any satisfactory explanation.
(6.3) During the course of search, the assessee was asked to explain the source of receipt of the cash along with supporting evidences. In the statement on 1.8.2007, u/s. 132(4) of the IT Act, in reply to Q. No. 2 and 3, the assessee has stated that Rs. 1,07,00,000 has been received from one Shri Naran Gadhvi and possession of the land was given around one year back to Shri Naran Gadhvi.
(6.4.) Statement of Shri Naran Gadhvi was recorded on 7.8.2007 u/s. 131(1A) of the IT Act wherein in response to Q. No. 31 he has denied to have made any payment to the assessee or his father for purchase of any land.
(6.5) The statement of the assessee that he has received Rs. 1,07,00,000/- on account of sale of the land cannot be accepted because of the following discrepancies.
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Vide Satakhat dated 6.3.2007 the land as purportedly sold to Shyam Ramesh Pathak for Rs. 1,07,00,000/- for which advance of only Rs. 1,50,000 has been received.
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In the statement, the assessee has mentioned that money was received from Naranbhai and possession was given around 1 year back from the date of statement and thus possession of land would have been given Naran Gadhvi in or around august 2006 as has been stated by the assessee.
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The sale deed for this land has been executed only on 9.2.2007 in the name of Narendra Jadeja.
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Shri Naran Gadhvi in the statement recorded has denied payment of any cash for purchase of any land.
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The assessee has not furnished any evidence to prove that cash of Rs. 1,07,00,000/- has been received and if at all it has been received, it has been received from whom. Here the actual beneficiary is the purchaser, the final purchaser of the land, who is Narendra Jadeja. Nowhere the assessee submitted that he has received any cash from the actual beneficiary.
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The version of the assessee is not acceptable also for the reason that if total payment of Rs. 1,07,00,000 has been made in August 2006, as has been claimed by the assessee and possession of land has been handed over in August 2006 then no prudent person will wait upto February 2007 to prepare a sale deed for the land in question. Therefore it appears that the statement made by the assessee that the cash has been recd on account of sale of land is not proved by any evidence.
(7.0) During the course of search, Annexure A-2 which is a small diary has been seized. In this annexure, there is recording of financial transactions to the tune of Rs. 54.50 lacs in the month of February and March 2007. The assessee was asked to explain the source of this payment. In...
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