IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER
AND SHRI T.R. MEENA, ACCOUNTANT MEMBER
IT(ss)A No.59/Ahd/2007
The ACIT, Circle-6, M/s. Master
Ahmedabad. V/s. Entertainment Centre.
5, Vishrut Society,
Subhash Chowk,
Memnagar,
Ahmedabad.
(Appellant) (Respondent)
Revenue by : S/Shri D.C. Patwari and
Shankarlal Meena, D.R.
Assessee(s) by : Shri G.C. Pipara, A.R.
/ Date of Hearing : 19/09/2013
/Date of Pronouncement: 17/12/2013
/O R D E R
PER SHRI MUKUL KUMAR SHRAWAT, J.M.
This is an appeal filed by the Revenue arising from the order
of learned CIT(A)-XII, Ahmedabad, dated 08.12.2006. The
Revenue has raised the following ground:
"The ld. Commissioner of Income Tax (A)-XII, Ahmedabad has erred
in law and on facts in deleting the addition made of Rs.47,23,398/- on
account of unexplained investment in land.
2. Facts in brief as emerged from the corresponding assessment
order passed u/s. 158BD, dated 31.12.2004 were that the assessee
firm is running an entertainment centre. In respect of the impugned
addition the findings of the AO were as under:
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"As per katcha agreement and bana chitti between Shri Ramanbhai
Haribhai Patel and three others with Shri Jivraj Vastabhai Desai, the
land at Survey No.589 of Khoraj has been agreed to be sold at the rate
of Rs.l8,31,0000/- per bigha for which Rs.6,00,000/- has been paid by
Shri Jivrajbhai Vastabhai Desai to Shri Ramanbhai Haribhai Patel
and three others on 1-7-2000,the date of Katcha agreement and bana-
chitti. The payment of Rs.6,00,000/- has not been denied. This has also
been confirmed by Shri Jivrajbhai Vastabhai Desai in his reply dated
24-10-2002 with the copy of the account and balance sheet filed with it
and copy of which is filed by the assessee during the present
proceedings. The said land has been given on lease to the assessee
firm w.e.f. 1-7-2000 as per agreement between Shri Ramanbhai
Haribhai Patel and the assessee-firm.
In para 15 of the partnership deed furnished with the return of income
of the block period and also found in the seized material, it is,
mentioned that the land at survey No.589 of Khoraj is given to the firm
for development of its business. It is owned by Shri Ramanbhai
Haribhai Patel and the amount of the land will remain credited in the
account of the partner. Thus, the assessee firm has become the owner
of the land at Khoraj, which has been transferred by way of lease deed
and by partnership deed executed on21-7-2000 w.e.f. 1-7-2000. Shri
Ramanbhai Haribhai Patel and Shri Ramesh Jivrajbhai Desai are
partners of the assessee firm. The land owned by Shri Ramanbhai
Haribhai Patel has been introduced as a capital with the partnership
firm and has been sold to Shri Jivrajbhai Vastabai Desai on 1-7-2000
and on the same day it is transferred to the assessee firm in which he
himself is a partner by crediting the account with the amount of the
land. There is no evidence with Shri Ramanbhai H. Patel for
acquisition of this land. On specific query in this regard, no evidence
has been submitted. Shri Ramanbhai Haribhai Patel introduced the
land as capital in the firm and thereby it becomes the business asset of
the firm. This asset i.e. the land at Khoraj of Survey No.589 has been
sold as per Katcha agreement and banachitti which was to be
implemented after 9 months and first installment of Rs.6,00,000/- was
already received as confirmed by Shri Ramanbhai Haribhai Patel.
Therefore, the entire sale consideration of the land is considered as
the income of the assessee as undisclosed income.
The actual sale consideration of the land at survey No. 589 is worked
out as under.
The area in sq. mtrs mentioned in the lease agreement in A-34
converted into square yards by applying the conversion factor as
under:
1 Sq. Metre = 1.2 sq. Yard.
5800 Sq. Metre = 5800 x 12 Sq.Yard = 6960 Sq. Yd.
2700 Sq. Yard = 1 bigha as per the agreement
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1 Sq. Yard = 1/2700 Bigha.
6960 Sq. Yard = 6960/2700 = 2.58 bigha
Value of land @ Rs.18.31 lacs per bigha - 2.58 x 1831000 = Rs.
47,23,398/-."
3. It was noted by the AO that there was a bana chitti (kaccha
agreement) in respect of a property at Khoraj. The said agreement
was signed as a purchaser by Sri Jivraj Desai and as a seller by Sri
Ramabhai Haribhai Patel and others. As per the bana chitti
description was noted as under:
"a) Rate of land at Rs.18,31,0000/- per bigha.
b) Rs.6,00,000/- to be paid on 1/7/2000 on bana chitti.
c) Balance payment to be made by 30.4.2001.
d) Document charges to be borne by Jivrajbhai Master.
e) Document value according white money arranged by the
purchaser.
f) 2700 square yard to be one bigha."
g)
3.1 As per Annexure A-34 seized from Vishrut Society a
partnership deed of Master Entertainment Centre of the appellant
was found. According to said partnership deed one Shri Ramabhai
Haribhai Patel and Sri Ramesh Jivrajbhai Desai were the partners
of the Master Entertainment Centre. Because the impugned
agreement was signed by those persons; hence, it was held that the
investment was made by the firm. Accordingly, the impugned
addition was made in the hands of the firm which was challenged
before learned CIT(A).
4. When the matter was carried before learned CIT(A), a
factual finding was recorded by him that the impugned land was
considered as an investment in the hands of Sri J.V. Desai while
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concluding the block assessment in his hand. Once the impugned
investment in Khoraj land had already been considered and taxed
in the hands of Sri Jivraj V. Desai, therefore, learned CIT(A) has
held that no adverse inference is required to be taken in the hands
of the assessee firm, resultantly deleted the addition. Relevant
portion of learned CIT(A) is reproduced below:
"I have carefully considered the facts of the case, observations and
findings of the A.O. and arguments of the Learned A. R. of the
appellant. The evidences furnished by the appellant with the written
submissions in support of its contentions have also been perused by
me. Ongoing through the entire facts, I find that it is an undisputed
fact that the said issue pertaining to land at Survey No.589 of Khoraj,
has already been considered in detail in case of Shri Jivraj V. Desai
while finalizing the block assessment order u/s. 158BC of the Act
passed in his case on 31-10-2002. On perusal of the copy of block
assessment order passed in case of Shri Jivraj V. Desai, it is seen hat
not only the said issue has been elaborately discussed by the A.O., but
an addition of identical amount i.e. Rs.47,23,398/- has been made in
the case of Shri Jivraj V. Desai. The payment of Rs.6,00,000/- as per
the loose sheet also appears to have been made by Shri Jivran V.
Desai -HUF and not the appellant. Further perusal of the evidences in
form of Balance Sheet of Shri Jivraj V. Desai -HUF as at 31-03-2001
and the copy of relevant land account duly reflects the investment in
land at Khoraj in the hands of Shri Jivranm V. Desai -HUF. Thus, in
my opinion the above evidences goes to establish beyond doubt that
the owner of land is Shri Jivraj V. Desai -HUF and not the appellant
firm. To arrive at such a conclusion merely on the basis of lease deed
is incorrect. Coming to the lease deed of the land as discusses by the
A.O., I find that the explanation of the appellant in this respect that the
said lease deed has not been acted upon as no business could be
commenced by the appellant firm appears to be quite reasonable and
plausible. Fro m the above facts, I am of the opinion that the
conclusion reached by the A.O. that the land in question at survey
No.589 at Khoraj belongs to the appellant is grossly incorrect since
the evidences clearly lead to the fact that the same is owned by Shri
Jivraj V. Desai -HUF since the part payment of Rs.6,00,000/- made as
per agreement is duly reflected in his Balance Sheet. Further, the
document referred to by the A.O. A.O. appears to be merely a
banakhat and not the final sale agreement in view of part payment
made. From the submission filed by Shri Jivraj V. Desai in his block
assessment proceedings, the copy of which is filed before me also, it is
seen that the land in question has not been transferred in name of Shri
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Jivraj V. Desai -HUF and is still in the name of the original owner.
This being the case, no adverse inference is warranted in case of the
appellant. Keeping in view the entire facts of the case and the
evidences in support thereof, the addition of Rs.47,23,398/-is hereby
deleted."
5. At present the position is that while deciding ground no.3 in
the case of Jivraj V. Desai in IT(ss) No.99 and 106/Ahd/2004 vide
an order dated 13.12.2013 in ITAT `C' Bench, wherein it was held
as under:
"14. Having heard the submissions of both the sides, we are of the
view that this issue is required to be restored back to the file of AO for
de novo adjudication, mainly because of the reason that the exact
investment up to the end of the block period was required to be taxed
in the hands of the assessee. We are not convinced with that
observation of learned CIT(A) that some balance amount was to be
paid beyond the block period, hence; no amount was required to be
taxed within the block period. The actual investment made with in the
block-period is required to be taxed in the correct hands. We are also
not convinced with the observation of the learned CIT(A) that rest of
the amount was required to be taxed in the hands of the HUF, unless
and until the status of the HUF and the investment made therein has
duly been disclosed by the assessee. The AO is, therefore, directed to
examine the nature of investment disclosed, if any, in the hands of the
HUF and if found correct then the relief according to law deserves to
be allowed. In the result, this ground of the Revenue is allowed only
for statistical purpose."
5.1 Once a view has already been taken in the case of Sri Jivraj
V. Desai that the investment is required to be considered in that
case and the matter was restored back to the file of the AO,
therefore, under the totality of the facts and circumstances of the
case, we hereby hold that the said decision of Sri Jivraj V. Desai
by the AO was mutatis mutandis applied in the hands of this
assessee firm, namely, M/s. Master Entertainment. In consequence
of the said direction of the Tribunal, we deem it proper to revert
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this ground of the Revenue back to AO to be decided as per law
thereafter hence may be treated as allowed for statistical purpose.
6. In the result, this appeal of the Revenue is allowed for
statistical purpose.
Sd/- Sd/-
(T.R. MEENA) (MUKUL Kr. SHRAWAT)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 17/12/2013
Prabhat Kr. Kesarwani, Sr. P.S.
TRUE COPY
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. / Concerned CIT
4. () / The CIT(A)-III, Ahmedabad
5. , , / DR, ITAT, Ahmedabad
6. / Guard file.
/ BY ORDER,
/ (Dy./Asstt.Registrar)
, / ITAT, Ahmedabad
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