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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HONBLE KUL BHARAT & AND HONBLE MANISH BORAD
आदेश / O R D E R PER KUL BHARAT, J.M: These two appeals by the assessee in quantum and penalty proceedings respectively, pertaining to the A.Y. 2009-10, and are directed against two different orders of the Commissioner of Income Tax (Appeals)-II, Indore both dated 27.03.2017. Both appeals were taken up together and are being disposed of by way this consolidated order.
Shri Rajyavardhan Singh
First, we take up assessee’s appeal in ITA No.421/Ind/2017 pertaining to quantum proceedings The assessee has raised following grounds of appeal: 1.“On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the sale price of the Appellant's land at Narsingharh Kothi, 1, Kanadia Road, Indore at Rs. 3,86,10,000/- merely on the basis of the original statement given by Mr. Navin Malde. 2.On the facts and in the circumstances of the case, the Ld. CIT (A) grossly erred in relying on the original statement of broker Mr. Navin Malde who claimed to have dealt with the sale as broker and in not considering statement of the cross examination by the Appellant Counsel. 3.On the facts and circumstances of the case, the Ld. CIT (A) erred in holding that Shri Navin Malde has reconfirmed during cross examination that he has received Rs. 20 Lakhs out of Rs. 27 lakshs which was @ 2% of the actual sales consideration and in confirming the alleged sale price at Rs. 27 crores as adopted by the Ld. A.O. 4.On the facts and circumstances of the case, the Ld. CIT (A) grossly erred in not considering the statement of Shri Navin Malde during his cross examination by the Appellant's Counsel where in he has confirmed/ statement as under :- i)that he has studied upto class s" only which proves that he cannot arithmetically extrapolate a percentage of brokerage in to the total sale price. ii) that he confirms that the takes 2% brokerage from the seller for himself alone on the sale price as per the sale deed and that similar brokerage was also taken by Shri Sanjay Badjatiya. iii) that e did not know the purchaser Shri Sharad Doshi and he has not met him at any time. iv) that the deal of Narsingarh Kothi was actually done by Shri Sanjay Badjatiya, broker. v)that he was not present when Shri Sharad Doshi was shown around the Narsingharh Kothi which was done by Shri Sanjay Badjatiya.
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vi) that he did not know whether the property was sold as 'plot with the Building' or as 'plot only' after demolishing the building which shows his ignorance about the sale price.
vii) that he did not know what were the shares of Smt. Laxmi kumari and the Appellant in the sale price which shows that he was unaware of the sale price received by the Appellant. viii) that he was not aware of the area of the property which he thought was 55000 sq.ft. whereas actually it was 84,438 sq.ft which showed his complete ignorance about the property. ix) that he was not aware about the sale deed and was not present at the time of the registration. x)that he was not present at the finalization of the deal as only Mr. Sanjay Badjatiya was aware of that. xi) that he was not present when the purchaser made the payment to the seller that his only function that of a 'informer', to the real broker for which he was received 2 % commission- which proves that the real broker Shri Sanjay Badjatiya was also paid 2 % commission for the entire deal don through him. 5.On the Facts and circumstances of the case, the Ld. CIT (A) failed to appreciate and overlooked the fact that since there were two brokers, both of them were paid 2 % commission in round figures totaling Rs. 40 lakhs which was claimed by the Smt. Laxmi Kumari in her assessment and allowed by the A.a. in her assessment. 6.On the Facts and circumstances of the case, the total sale price confirmed by the Hon'ble CIT (A) was wrong and was Rs. 12,39,95,000/- as per Regd. Sale deed, for which the Appellant also relies on the provisions of Section 91 & 92 of the Indian Evidence Act. 7.On the Facts and circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 1,17,16,400/- on account of disallowance of Section 54F, Rs. l1.11lakhs on account of 50 C and Rs. 28.73 on account of section 68 as per his predessor's order in Appeal nO.IT /783/11-12 dated 28.02.2014, against which the Appellant's appeal bearing No. ITA/379/IND/2014 is pending before the Hon'ble Tribunal. 8.On the Facts and circumstances of the case, the Ld. CIT (A)
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erred in not making a speaking order in view of his ignoring the revelation made in the statement of Shri Navin Malde during his cross examination. 9.On the Facts and circumstances of the case, the Ld. CIT (A) erred in not following the proviso to sub-section 4 of section 54 F as per which, on the facts of the case, the assessment of Long Term Capital gain has to be made in the assessment year 2012-13. 10.The Appellant prays to alter, to amend, to delete the above grounds as and when occasion arises.”
Brief facts, giving rise to present appeal are that the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was framed vide order dated 05.12.2011. Thereby, the assessing officer (in short ‘AO’) assessed income at Rs. 98,08,670/-. Thereafter, the assessment was reopened and the assessment u/s 143(3) r.w.s 147 of the Act was framed vide order dated 18.03.2016. The assessing officer assessed income at Rs.4,21,48,020/- against the returned income at Rs.9,70,275/-. The assessing officer made addition by computing long term capital gain at Rs.3,83,04,740/- further made addition as per the order of the Ld. CIT(A) of Rs.28,73,000/-. 3. Against this the assessee preferred an appeal before the Ld. CIT(A) who after considering the submissions, confirmed the assessment order. Now the assessee is in further appeal before this Tribunal. 4. At the outset, Ld. counsel for the assessee reiterated the submissions as made in the written brief submissions. The submissions of the assessee are as under; 1. The original assessment was subject matter of appeals before 4
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the CIT{A) and the ITAT. The points involved were: (i) Claim for Exemption u/s. 54F , (ii) Whether the amount paid to the contractor/builder was utilization of sale proceeds (iii) Whether capital gains were assessable in a.y. 2009-1O'or 2012-13. (iv) Whether the CIT(A) was right in enhancing the income u/s. 251(2). (v) Applicability of Sex. 50 to sale of leasehold property. (vi) Cash deposited in bank a/c total: Rs. 28.73 lakhs. 1.2. The Hon'ble Tribunal set aside most of the above points vide its Order in ITA No. 379/IND/17 t. 23-03-2018, and restored it to the CIT(A). The CIT{A) has now fixed the hearing on 11-01-2019. 2. ITA No. 421/ITA/17 is against the C1T(A)'s order in appeal No. IT- 12/16-17/355 dt. 27-03-2017 dt. 18-03-2016. The assessment was re-opened u/s. 147 by notice u/s. 148 which was issued in the basis of the statement of one Shri Navin Malde, a property broker, u/s. 132 during the search proceedings against Shri Sharad Doshi, Builder, and his group, recoded by the ADI on 28-02-2014. The reason recorded is at page 08-09 of PB. 3. Thus, admittedly, the re-opening of assessment was made on the statement of a third party. The 1st ground of appeal No. 421/IND/2017 on this point. Among other points, the Witness has arithmetically extrapolated his brokerage commission 2% to an absolute figure of sale price of Rs. 27.00 crs. In respect of the immovable property. 4. During the re-assessment proceedings, the Appellant's counsel was permitted to cross-examine Shri Navin Malde. Copy of his statement is at pp. 25-29 of the PB. He denied and contradicted the averments made by him at the statement recorded on 28-02-2014. 5.The A.O., how-ever, rejected the witness' statement at cross examination and termed it as his 're-confirmation' of his old statement. He made an addition on the basis of statement on 28-02- 2014. 7. The CIT(A) has, without evening through the two statements, mechanically confirmed the 'reconfirmation and the whole re- assessment, particularly, that Shri Malde being a s" class drop out, is not expected to possess the skill of arithmetic extrapolation. 8. The specific points of Shri Malde's denials and revelations are stated in Gr. NO.4. 9. During the proceedings before the Settlement Commission, Shri Sharad Doshi's group produced an affidavit sworn by Shri Navin
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Malde, in which he retracted his original statement and maintained his statement at the cross-examination. Copy of the affidavit has been submitted with Application u/R. 29 on 27-07-2018. 10. The Settlement Commission has passed its order on 29-09- 2017. The relevant extracts as applicable to the Appellant's se have been submitted in the Synopsis filed on 30-07-2015. (Page 244). 11. The Appellant pleads that the re-opening of the assessment on the basis of the statement by Shri Navin Malde, a Third Party, is not good in law and the addition made on that basis deserves to be deleted. 12. The Appellant relies on the following case-laws: (1) Sharad U. Mishra vs. DClT (Jp.) PB: 128-134 @ 132. (2) Parshwanath Construction vs. ITO (24 ITJ 409 (Ind.) PB: 231-243 13. Appellant also relies on the provisions of Secs. 91 & 92 of the Indian Evidence Act. (PB 140-146)
The assessee has also made an application for producing additional evidence. The additional evidence sought to be admitted is an affidavit on behalf of the Shri Navin Malde which is duly notarized. 6. Ld. CIT-DR opposed the submissions and admission of the additional evidence. However, admittedly Ld. DR could not controvert the fact that the appeal against the original order is pending before the Ld. CIT(A). 7. We have heard the rival contentions, perused the material available on record. The contention of the Ld. Counsel for the assessee is that all the issues related to the reopening of the assessment were also subject matter of the original assessment proceedings. The matter related to original assessment travelled up to the stage of this Tribunal and the Tribunal was pleased to restore the issues to the file of the Ld. CIT(A). Ld. counsel submitted that the Ld. CIT(A) has fixed hearing of appeal on 11th January 2019.
Shri Rajyavardhan Singh
After considering totality of the facts and the fact that order in the original assessment was set aside to the file of the Ld. CIT(A) for decision afresh. And also in view of the fact that the assessee has filed an affidavit of the broker on the basis of his statement the AO had made addition. We, therefore, set aside the impugned order and restore the issues to the file of the Ld. CIT(A) to decide afresh. Grounds raised in this appeal are allowed for statistical purposes. Now we take, assessee’s appeal in ITANo.420/Ind/2017 The assessee has raised following grounds of appeal: 1.On the facts and circumstances of the case, The Ld. CIT (A) erred in agreeing with the findings of the Ld. predecessor and in holding that: i)that the amount of Rs. 80 lakhs given by the Appellant as advance for construction and as no other amount was deposited by him either before the financial year or before the due date of filing the return as mandated by the provision of section 54 F. ii) that the amount of Rs. 80 lakhs was merely transferred to the bank account of M/s . iii) that the penalty is completely justifiable on the amount added by the A.O. and enhanced by the Ld. predessor of CIT (A). D.S. Enterprises and it was merely lying in their bank account and thus could not be considered as utilization towards construction of new house. 2.On the facts and circumstances of the case, The Ld. CIT (A) erred in holding that the difference of Rs. 11.11. lakhs was added in the hands of the Appellant as difference between sale price shown by the Appellant and the Valuation adopted by the Stamp valuation authority was clearly " furnishing of inaccurate particulars of income" as mandatory by section 50 C and that the penalty so imposed on this amount is completely justifiable. 3.On the facts and circumstance of the case, The Ld. CIT (A) erred in holding:- i)the cash deposited on difference dates allegedly explained in 7
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para 3 of P.No. 2 of the penalty order were not found to be true and correct by the Ld. predessor for which he was explained the full reason. ii) that he is in complete conformity with the order passed by the CIT (A) and in holding that the penalty u/s. 271 (1) ( C) is completely justified on account of this addition. 4. On the facts and circumstances of the case, The Ld. CIT (A) erred in holding as under: i)as CIT (A), my power to not only co-terminus with that of the AO but I also have the power to remove any deficiency occurred at the stage of AO. Therefore I have the option either to separately impose a penalty on the amount of enhancement done by my Ld. Predecessor or based on the above discussion in which I have justified the imposition of penalty on every addition made by either the AO or by the Ld. CIT (A) confirm the penalty so imposed by the AO. I choose late and hereby confirm the penalty so imposed by the Rs. 60 Lacs by the A.O. Thus. the penalty imposed is hereby confirmed under the powers granted to the undersigned by the Income Tax Act 1961. ii) The Appellant order passed by the CIT (A) dismiss the appeal and confirming the order passed by the Ld.AO u/s. 271 (1) (C) of the Act, is grossly erroneous, bad in law and without jurisdiction. 5. On the facts and circumstances of the case, the ld. CIT(A) ought to have held that the order u/s 271(1)(c) passed by the ld. AO is without jurisdiction, as he has no authority to deal with the alleged additions made by the Ld. CIT(A) under the provision of section 251(2) of the I.T. Act 1961.”
Since, we have set aside the impugned order in quantum proceedings for a decision afresh to the Ld. CIT(A), therefore, the impugned order in the penalty proceedings is also set aside and the grounds are restored to the file of Ld. CIT(A) to decide afresh. Grounds raised in this appeal are allowed for statistical purposes.
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In the result, both the appeal of assessee in ITANo.420 & /Ind/2017 & ITANo.421/Ind/2017 are allowed for statistical purposes only. Order was pronounced in the open court on 22 .01.2019.
Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; �दनांक Dated : 22 /01/2019 ctàxÄ? P.S/.�न.स.
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore