SHRI RATILAL KHUSHALDAS MALI,,NA vs. ARIVS.THE ACIT, NAVSARI CIRCLE,, NAVSARI

आदेश /O R D E R PER O. P. MEENA AM: 1. The above four appeals filed by the Assessee are directed against the separate orders of learned Commissioner of Income tax (Appeals)-Valsad, (in short “the CIT (A)”) all dated 17.04.2014 for the Assessment Year 1994-95, 1995-96,1996-97 and 1997-98 passed by the Assistant Commissioner of Income Tax, Navsari Circle- Navsari (hereinafter referred as “the AO”). All these appeals were heard together and consolidated order is being passed for the sake of convenience and brevity.

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I.T.A.No.1637/AHD/2014/A.Y.1994-95:- 2. Additional ground : The assessee has raised an additional ground during appellate proceeding before tribunal which reads as us under:- “The assessment order is required to be quashed as no addition has been made on the basis of reasons for re-opening.” 3. The learned counsel for the assessee submitted that additional ground be admitted as being purely legal ground does not require investigation of facts in view of decision in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) : [1999] 157 CTR 249 (SC). 4. The learned D.R. objected to admission of the additional ground as the present appeal has arisen from second round of set-aside proceedings as per direction of the Tribunal in which ground of reopening of assessment was set at rest as it was not pressed by the assessee and this ground was never raised even though assessment has been made twice. 5. We have heard the rival submissions and perused the relevant material on record. We find that that the present appeal is outcome of set-aside proceedings and fresh order passed as per specific direction of tribunal in its order dated 27.08.2010 in I.T.A.No. 1781/AHD/2007 for the assessment year 1994-95 as Ground No. 1

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regarding reopening of assessment u/s.147/148 was dismissed by the Tribunal as not pressed, therefore, this ground having been attained the finality, and same being not challenged by the assessee before the higher forum. We find that this appeal is against the order dated 26.12.2011of the AO passed under section 143 (3) read with section 254 of the Act in pursuance of specific direction in respect of remaining three grounds of appeal as given by the Tribunal in para 7 of its order dated 27.08.2010. Before that, the original assessment was made under section 143 (3) on 07.03.1997 by accepting the returned income at Rs.1,18,432/- (PB-Anx-B). First Reassessment under section 143 (3) read with section 147 of the Act was made on 12.01.2000 by assessing returned income of Rs.1,18,432/- to Rs.1,03,68,138/- (PB- Anx-C). Further, afresh re-assessment order under section 143 (3) read with section 254 was passed on 16.10.2006(PB-Anx-F) in pursuance of direction of tribunal order dated 20.05.2005 in I.T.A.No. 1436,1437, 1736, 1737/ Ahd/ 2003, and second fresh assessment order passed on 26.12.2011 under section 143 (3) read with section 254 in pursuance of specific direction of tribunal vide order dated 27.08.2010 in I.T.A.No.1781,1782,1783,1784/Ahd/2007 that the AO should obtained order of Settlement Commission in the case of three person namely Shri Madhubhai Patel, Shri Maganbhai

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Patel and M/s. Vijay Enterprise and re-adjudicate. The controversy involved in three grounds of appeal, which is impugned order under consideration. This ground was never raised and in set-aside proceedings, the issue is limited to the ground which were set-aside for reconsideration as per direction. In view of these facts and circumstances, this additional ground raised at this stage after having dismissed by the tribunal as not pressed is not admissible. If the assessee was aggrieved with the order of tribunal, he could have challenged the said order before higher forum. Having not done so, the assessee has lost his right to raise the same issue, which has been settled by the order of tribunal and attained the finality. Accordingly, we hold that this ground of reopening of assessment is non- maintainable at this stage hence; same is dismissed as not admitted. Further, even on merit we find that the assessment has been reopened u/s.147, of the Act and as per Explanation-3 to section 147 the AO may reassess the income in respect of any income which has escaped assessment and on such issue which comes to his notice subsequently in the course of proceedings u/s.147 of the Act, notwithstanding with the reasons record under sub section (2) of section 148. Therefore, even on merit this ground is not sustainable in law. Accordingly, it is dismissed.

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1997-1998 dated 27.08.2010, by which Ground No.(I) relating to reopening of assessment was dismissed as not pressed and only remaining three grounds of appeal were set-aside to the file of the AO as per direction contained in Para 7 of Tribunal order. Since, the assessee having not pressed these grounds of appeal and same was adjudicated by the tribunal same cannot be taken afresh in set-aside proceedings. Further, the CIT (A) having directed the AO to supply reasons and same having been duly supplied. The requisite procedure has been duly followed as laid down by Hon`ble Supreme Court in the case of GKN Driveshaft (India) Ltd v ITO [2002] 259 ITR 19(SC)/ 125 Taxman 963 (SC). The learned Sr. D.R. also relied in the case of CIT v. Safetag International India (P) Ltd. [2012] 20 taxmann.com 215 (Delhi), wherein it was held that Tribunal cannot restored matter back to the AO to provide reasons to the assessee when the assessee has not asked for reasons and participated in reassessment proceedings. The Hon`ble Delhi High Court has also considered this decision of Hon`ble Supreme Court in the case of GKN Driveshaft (India) Ltd v ITO [2002] 259 ITR 19(SC)/ 125 Taxman 963 (SC). The ld. Sr. D.R. further, relied on the decision of Hon`ble Madras High Court in the case of Home Finders Housing Ltd. v. ITO [2018] 93 taxmann.com 371 (Mad) wherein Non-compliance of direction of Supreme Court in GKN

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Driveshafts (India) Ltd. v. Income Tax Officer [2002] 125 Taxman 963 that on receipt of objection given by assessee to notice under section 148, Assessing Officer is bound to dispose of objections by passing a speaking order, would not make reassessment order void ab initio. 9. We have heard the rival submissions and perused the relevant material on record. We find that the present appeal proceedings are outcome of assessment made under section 143 (3) read with section 254 in pursuance of specific direction of Tribunal order in I.T.A.No. 1781,1782,1783 & 1784/AHD/2007 for the assessment year 1994- 95,1995-96, 1996-97 & 1997-1998 dated 27.08.2010, by which Ground No.(I) regarding reopening of assessment under section 147/148 of Income Tax Act,1961 for the assessment year 1994-95 was dismissed as not pressed by the ld. counsel of the assessee at the time of hearing before Tribunal. Therefore, the same has been stood as dismissed as not passed, and thus, only remaining three ground No. (II), (III) & (IV) of appeals which were common with each other raised by the assessee in assessment year 1994-95 to 1996-97, except difference in figures were only set-aside to the file of the AO on direction to make fresh. We find that the Tribunal vide para 7 has given specific direction, which are reproduced as follows : “Keeping in view of direction of the Tribunal, on the basis of which original assessment were set-aside, subsequent assessment made , in our opinion, it

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will meet the end of justice if the order of Learned Commissioner of Income-tax (Appeals) on which controversy involved in the aforesaid three grounds of appeals for all the assessment years under appeals , is set-aside and matter is restored to the file of Assessing Officer with direction that he should obtain the order of Settlement Commission in the case of three persons namely Shri Madhubhai Patel , Shri Maganbhai Patel and M/s. Vijay Enterprise and re-adjudicate the controversy involved in aforesaid three grounds of appeal afresh after giving opportunity of being heard to the assessee.” 10. Thus, the ground on reopening of assessment has been already adjudicated by the Tribunal in the case of the assessee and therefore, in set-aside assessment proceeding no fresh grounds of appeal again can be taken as the set-aside assessment proceedings are restricted to grounds of appeal, which have been directed to be re-adjudicated. Reliance is placed on the decision of Hon`ble Supreme Court in the case of Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618 (SC), in which it was held that in a set-aside assessment , the AO derives jurisdiction from the order of tribunal, and thus, the AO cannot introduce a new source of income, nor can he deal with any point which was not the subject matter of appeal before the Tribunal, in such set-aside assessment proceedings. Therefore, when the powers of the Tribunal are limited to the subject matter of appeal, the powers of the AO in reassessment cannot extend beyond the same. We are therefore, of the considered opinion that considering the ratio laid down by the Hon`ble Supreme Court in above case and on same analogy, the assessee is also precluded from taking the settled

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grounds of appeal, which has been duly dismissed by the Tribunal and which was not subject matter of appeal before the AO in set-aside assessment proceedings. Since, the assessee as having not pressed these grounds of appeal and same were adjudicated by the tribunal and accordingly, dismissed, the same cannot be taken afresh in second round of proceeding before the lower authorities or even before Tribunal. Therefore, this grounds of appeal is not emanating from set- aside proceeding and hence this not maintainable at this stage. Accordingly, this ground of appeal is therefore in not admitted and therefore, dismissed. We further, note that the ld. Sr. D.R. has relied in the case of CIT v. Safetag International India (P) Ltd. [2012] 20 taxmann.com 215 (Delhi) wherein it was held that Tribunal cannot restored matter back to the AO to provide reasons to the assessee when the assessee has not asked for reasons and participated in reassessment proceedings. Further, Hon`ble Madras High Court in the case of Home Finders Housing Ltd. v. ITO [2018] 93 taxmann.com 371 (Mad) held as under: In the instant case, the assessee did not ask for these 'reasons to believe'. The assessee rather participated in the reassessment proceedings. When the reassessment orders were passed and the assessee felt aggrieved there against, the assessee filed appeal before the Commissioner (Appeals). In this appeal, he

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challenged the validity of reassessment proceedings, which was the course of action available to the assessee. The Commissioner (Appeals), thus, could examine the issue as to whether the assessment reopened was valid or not. Once the Commissioner (Appeals) also dismissed the appeal of the assessee and against that the second appeal was also preferred before the Tribunal, the Tribunal could not have restored the matter back to the file of the Assessing Officer, and give another opportunity to the assessee to raise objections to 'reasons to believe' recorded by the Assessing Officer. Reassessment order passed by the Assessing Officer in both the assessment years was even upheld by the Commissioner (Appeals). It was the assessee's own creation that it did not ask for the reasons or raise objection thereto. Merely because the assessee was oblivious of such a right would not mean that the Tribunal should have granted this right to the assessee, that too, at the stage when the matter was before the Tribunal and travelled much beyond the Assessing Officer's jurisdiction. It is trite that what cannot be done directly, it is not allowed indirectly as well. This novel and in genuineness method adopted by the Tribunal in setting aside the reassessment orders on merits could not be accepted. Even otherwise, the assessee had not supplied any purchase in as much as it

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was still open to the assessee to challenge the validity of reassessment notice before the Commissioner (Appeals) and in fact, the assessee did so for availing that opportunity. [Para 7]. 11. In view of above discussion, we held that the reopening of assessment ground is s not maintainable at this stage as already stands decided and cannot be re-visited, nor there is any anomaly in following the due procedure, hence, this ground of appeal is accordingly, dismissed. 12. Ground No. (II) Treating capital gains as business income: (1) On the facts and circumstances of the case and as per law, the learned Commissioner of Income-tax (Appeals) held Rs.17,83,657 as business income. (2) The Appellant submits that the learned Commissioner of Income-tax(Appeals) had not considered the judgements cited in coming to the above conclusion. (3) On the facts and circumstances of the case an as per law, the income should be treated as capital gain. 13. Succinct facts are that the assessee is a non-resident settled in United Kingdom and his affairs in India are being looked after by his brother, Shri Vithaldas K. Mali, through general power of attorney given by the assessee to him. A search and seizure action was carried out at the residence of Shri Vithaldas K Mali on 10.02.1995, in consequence of search carried out in the case of Shri Madhubhai P

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Patel, Shri Maganbhai P Patel partners of Vijay Enterprise Navsari on 23.01.1995. The assessee along with his brother has a land at Mankodia, Navsari admeasuring 41684 sq. meters. Both brothers have equal share. The assessee has disclosed sale proceeds of Rs. 17,83,657 on sale of plot of land admeasuring 50,915 sq. ft. during the on which long-term capital gain of Rs. 87,671 after claiming cost of acquisition of Rs.16,95 986 as on 01.04.1981 has been shown. However, the AO noted that the assessee has entered in to an oral agreement with M/s. Vijay Enterprise for development and sale of land after plotting and agreed to give commission @ 2% per sq. ft. to Vijay Enterprise. The land was bifurcated into 112 plots as per plan and project was named as VISHAKHA PARK PROJECT. During financial year under consideration, the assessee has sold plots admeasuring 50,915 Sq. Ft. These plots were sold between Rs. 35 per Sq. Ft. to Rs. 44 per Sq. Ft. In the statement under section 132(4) dated 10.02.1995, Shri Vithaldas K Mali has stated that he has sold land to M/s. Vijay Enterprise @ 47 per Sq. Ft. but the document were prepared between Rs. 35 to 44 per Sq. Ft. Therefore, Shri V. K. Mali has disclosed Rs. 30 lakhs as on- money as income for the assessment year 1995-96, out of which Rs.15 lakhs were in respect of plot of land belonging to the assessee being ½ share. Therefore, assessee opined

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that the assessee was doing the activity as adventure in nature of trade. Accordingly, the sale proceeds were treated as business income. Therefore, the claim of cost of acquisition of Rs.16,95,986 be deducted from sale value was rejected and sale proceeds of Rs. 17,83,657 was assessed as business income. 14. Being, aggrieved, the assessee filed an appeal before the Ld. CIT(A), who had confirmed the action of the AO. Still dissatisfied, the assessee carried matter before tribunal. However, Tribunal had set- aside the issue to the file of the assessee. However, the AO again repeated the same addition, which was again sustained by the CIT (A). 15. Being, aggrieved the assessee filed this appeal before the Tribunal. This is the second round of proceedings before this Tribunal. The learned counsel for the assessee submitted that the assessee along with his brother have received this land as gift from their maternal uncle on 09.08.1962 i.e. more than 40 years before the sale. These lands were used as agricultural land for growing flowers thereon and this land was held as capital asset. The assessee has never done any activity of buying and selling land before this transaction or after this transaction. The assessee has decided to sell this land in plots with a view to get better appreciation of its capital asset as the Navsari city grew and become closure to the city and

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there was fear of encroachment. The assessee has developed the land to earn better gains and sold them after making plots with the help of Shri Madhubhai Patel and Shri Maganbhai Patel. Thus, the assessee has not carried out any business activity, hence, capital gains has been rightly disclosed. The learned counsel for the assessee relying on decision of Hon`ble Madhya Pradesh High Court in the case of CIT v. Suresh Chand Goyal [2008] 298 ITR 277 (MP) where in identical situation where agricultural land was given to the assessee as gift. Assessee developed the land, and sold it as plots just as what the assessee has done. It was held that activity was not in the adventure in nature of trade but assessable as capital gains. The assessee has also acquired land in similar fashion and not purchased the land. Similarly, the Delhi Tribunal in the case of Ramswaroop Saini 15 SOT 470 (Delhi-Trib) held that agricultural land inherited and sold apart from that making plots in smaller denomination does not amounts the transaction as adventure in nature of trade and was assessable as long- term capital gain. The learned counsel for the assessee also relied in the case of Raja Malwinder Singh, 40 DTR 273 (P&H), wherein it was held that the assessee sold ancestral land which was capital asset and the Tribunal has not found that same was converted in stock-in trade, the profit on sale of such property is rightly held to be

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assessable as capital gains. The learned counsel for the assessee further, relied in the case of CIT v. Sushila Devi Jain [2003] 259 ITR 671 (P&H) wherein it was held:- “It is true that even a single venture could be regarded as a trade or business but there have to be circumstances which should give rise to such a conclusion. There were no such circumstances existing in the instant case. What is necessary is to find out the intention of the assessee at the time of the purchase of the land. In the instant case, the land was never purchased by the assessee. She acquired the same on the basis of a Will on the death of her husband. She sold the same in parcels because the huge area could not be sold in one go. Such an activity could not amount to trade or business within the meaning of the Act. Both the Commissioner (Appeals) and Tribunal had followed the correct principle of law and no factual or legal error could be pointed out by the department. [Para 2].” 16. In view of these facts and circumstances, and relying on various case laws as per his case laws Paper Book, the learned Counsel contended the AO was not right in taxing the sale of agricultural land as business income. The learned counsel for the assessee further submitted that since, the assessee was residing out of India and entire transaction of sale on behalf of him was handled by his brother in India, therefore, he cannot be expected to adventure in nature of trade,- hence, the income earned from sale of land, is not taxable in his case as business income and has to be treated as capital gains. In support of this view, the learned counsel for the assessee has placed reliance on the decision of Hon’ble Gujarat High Court in the case of D. S. Virani v. CIT [1973] 90 ITR 255 (Gujarat), wherein head notes reads as under:-

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'V' and his three brother jointly purchased a non-agricultural land - 'V' was residing in India while his brothers resided outside India and entire transaction of purchase was handled on their behalf by 'V' - After a few years, assessees entered into agreement with one 'B' for sale of land 'B' after laying roads divided lands into plots and sold them - Assesses received diverse amounts towards payment of price of land sold. - There was no material on record to show that sole and exclusive intention of V's brothers at time of purchase was to resell their respective shares in land at profit - Whether V's brothers purchased their shares by way of investment and not by way of adventure in nature of trade and, hence surplus from said transaction was not taxable in their hands as business income - Held, yes –. The learned counsel for the assessee further submitted that.

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the decision in the case of CIT v. R Ramaiah, [1984] 17 Taxman 164 (Kar.) held where assessee purchased agricultural land individually, used them for few years and almost simultaneously formed layouts and sold sites over a period of some years, surplus arising out of sales of sites was chargeable to tax as business income. The ld. Sr. D.R. also relied in the case of ITO v. Ajit Vikram Singh [1988] 24 ITD 365 (Delhi) and Smt. Anita Singh v. ACIT 2(1) Indore [I.T.A.No. 261/Ind/ 2016, dated 28.08.2018] in support of her contentions. 18. We have heard the rival submissions and perused the relevant material on record. We notice that the assessee along with his brother have received impugned land as gift from their maternal uncle on 09.08.1962 i.e. more than 40 years before the sale. These lands was being as agricultural land for growing flowers thereon and was held as capital asset. The assessee never done any activity of buying and selling land before this transaction or after this transaction. The assessee has decided to sell this land in plots with a view to get better appreciation of its capital asset as the Navsari city grew and become closure to the city and there was fear of encroachment. The assessee has developed the land to earn better gains and sold them after making plots with the help of Shri Madhubhai Patel and

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Shri Maganbhai Patel and M/s. Vijay Enterprises. Thus, the assessee has not carried out any business activity hence, capital gains has been rightly disclosed. The learned counsel has relied on decision of Hon`ble Madhya Pradesh High Court in the case of CIT v. Suresh Chand Goyal [2008] 298 ITR 277 (MP), wherein in identical situation where agricultural land was given to the assessee as gift. In the present case, also the assessee has developed the land, and sold it as plots just. Therefore, such activity cannot be considered as the adventure in nature of trade but assessable as capital gains. The Co-ordinate Bench of Tribunal in the case of Ramswroop Saini 15 SOT 470 (Delhi-Trib) held that agricultural land inherited and sold apart from that making plots in smaller denomination does not amounts the transaction as adventure in nature of trade and was assessable as long-term capital gain. In the case of Raja Malwinder Singh 40 DTR 273 (P&H) the Hon`ble High Court of Punjab held that the assessee sold ancestral land which was capital asset and the Tribunal has not found that same was converted in stock-in trade , the profit on sale of such property is rightly held to be assessable as capital gains. The Learned Counsel relied in the case of CIT v. Sushila Devi Jain [2003] 259 ITR 671 (P&H) It is true that even a single venture could be regarded as a trade or business but

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there have to be circumstances which should give rise to such a conclusion. There were no such circumstances existing in the instant case. What is necessary is to find out the intention of the assessee at the time of the purchase of the land. In the instant case, the land was never purchased by the assessee. She acquired the same on the basis of a Will on the death of her husband. She sold the same in parcels because the huge area could not be sold in one go. Such an activity could not amount to trade or business within the meaning of the Act. Both the Commissioner (Appeals) and Tribunal had followed the correct principle of law and no factual or legal error could be pointed out by the department. [Para 2]. In view of these facts and circumstances, and relying on various case laws as per his case laws Paper Book, The learned Counsel contended the AO was not right in taxing the sale of agricultural land as business income. We, further, find that the assessee was residing out of India and entire transaction of sale on behalf of him was handled by his brother in India, therefore, he cannot be expected to adventure in nature of trade, hence, the income earned from sale of land is not taxable in his case as business income and has to be treated as capital gains as by the Hon’ble Gujarat High Court in the case of D. S. Virani v. CIT [1973] 90 ITR 255 (Gujarat) held as under: In so far as the three

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assessee other than 'V' were concerned, they were throughout the relevant period residing out of India. None of them had entered into any transaction of purchase or sale of land either prior or subsequent to the purchase of the land in the instant case. It was not the business of any of these assessees to trade in land and dealing in land was not in the line of business of any of them. The transaction of purchase and sale of the land was an isolated transaction in their cases. It is true that there was no immediate prospect of earning return on the amount invested, but the possibility of earning return, if the area developed in the future, could not be ruled out. Moreover, the amount that was being invested by each of the three assessees was a trifling amount, having regard to the large wealth possessed by each of them and even if there was no possibility of obtaining return, that would not be a circumstance, which would suggest that the intention of the three assessees was not to purchase the land by way of investment but to purchase it only with a view to trading in it. There was absolutely no material on record to show that the sole and exclusive intention of the three assessees at the time of purchase was to resell their respective 1/4th shares in the land at profit. Thus, the three assessees purchased their respective 1/4th shares in the land by way of investment and even if they hoped to be able to make profit

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by selling a large part of it, if a suitable opportunity came, that would not make the transaction any the less a transaction by way of realisation of the enhanced value of the investment. The Tribunal was, therefore, in error in taking the view that the transaction of purchase and sale of his 1/4th share in the land by each of the three assessees was an adventure in the nature of trade. Therefore, considering these facts and land being received more than 40 years ago, the sales of same after plotting cannot be considered as adventure in nature of trade. 19. In the light of above facts and circumstances, we are of the considered opinion that the assessee has inherited agricultural land as gift before 40 years and there was no intention to carry out any business. The agricultural land was used for growing of flower. The assessee has never don any land dealing before this solitary land and not engaged, thereafter also. Thus, with a view to get better appreciation the assessee has sold the land after plotting with help of person who are engaged in real estate. Further, the assessee has was residing outside India in UK and cannot be expected to do any adventure in nature of trade. Therefore, considering the ratio laid down in above discussed judicial pronouncements, it cannot be said that the assessee has carried out any adventure in nature of trade.

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Therefore, the capital gains as long-term capital gain has been rightly disclosed by the assessee in his return of income. So far reliance on the decision by the ld. Sr. D.R is concerned as mentioned in above part of this order, we find that all decisions are distinguishable on facts, as in all the cases relied by the Sr. D.R. The land was purchased with the intention to sale, and not remain as gift, will or inheritance. In some case it was continued into stock in trade hence on distinctly. In view of this matter, the AO was not justified in treating the capital gains as business income. Accordingly, the AO is directed to treat the sale consideration as long-term capital gain. Accordingly, this grounds of appeal is allowed for all the assessment years 1994-95, 1995-96, 1996- 97 and 1997-98. 20. Ground No. (III) On-money 3,56,405 The learned Commissioner of Income-tax (Appeals) erred in confirming the above addition when there was no evidence to indicate the appellant had received such money except on the basis of statement made by Shri Madhubhai Patel and Shri Maganbhai Patel before Settlement Commission.

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consequence of search in the case of Shri Madhubhai P Patel, Shri Maganbhai P Patel partners of Vijay Enterprise Navsari on 23.01.1995. The assessee along with his brother has a land at Mankodia, Navsari admeasuring 41684 sq. meters. Both brothers have equal share. The assessee has entered in to an oral agreement with M/s. Vijay Enterprise for development and sale of land after plotting and agreed to give commission @ 2% per sq. ft. to Vijay Enterprise. The land was bifurcated into 112 plots as per plan and project was named as VISHAKHA PARK PROJECT. During financial year under consideration, the assessee has sold plots admeasuring 50,915 Sq. Ft. These plots were sold between Rs.35 per Sq. Ft. to Rs.44 per Sq. Ft. Therefore, average of documentary price comes to Rs. 40 [35+44/2]. In the statement under section 132(4) dated 10.02.1995, Shri Vithaldas K Mali has stated that he has sold land to M/s. Vijay Enterprise @ 47 per Sq. Ft. but the document were prepared between Rs. 35 to 44 per Sq. Ft. Therefore, Shri V. K. Mali has disclosed Rs. 30 lakhs as on-money as income for the assessment year 1995-96, out of which Rs. 15 lakhs were in respect of plot of land belonging to the assessee being ½ share. The AO worked out on-money beyond documentary price @ 47 per Sq. Ft. and worked out total sale consideration at Rs. 23,93,005[ 50915x Rs. 47= 23,93,005] and considered average documentary price

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at Rs. 40 and worked out documentary value at Rs. 20,36,600 [ 50915x Rs. 40= 20,36,600]. Thus, the AO made addition of Rs.3,56,405 [ 23,93,005- 20,36,600] being on-money received during the year under consideration. 22. Being, aggrieved, the assessee filed an appeal before the Ld. CIT(A). However, without any success. 23. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the assessee has not admitted any such amount having been received and even if the amount is added, it should be treated as capital gains. The learned counsel for the assessee further submitted that Shri Madhubhai Patel in his statement recorded on 14.02.1995 u/s.132(4) in question 19 has admitted that they have taken excess money and retained them and not given to the assessee and his brother, who were not at all aware of any on-money being collected has been earned on sale of land at Vishakhanagar. The learned counsel for the assessee further contended that the brother of the assessee in his statement dated 10.02.1995 in reply to question 18 has made voluntary declaration of Rs.30 Lakh as his unaccounted income. Accordingly, both brothers have disclosed Rs.15 lakhs each in therein assessment for A.Y. 1995-96 and were assessed to tax thereon. Out of

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which Rs. 15 Lakhs has been offered in the case of the assessee and same stands taxed in his case for the assessment year 1995-96. Therefore, there is no justification to tax the same income twice on account of on-money in the year under consideration. 24. Per contra, the ld. Sr. D.R. supported the order of lower authorities and submitted that the assessee has admitted the on- money receipt during search and same is also corroborated by the statement of Madhubhai Patel and Maganbhai Patel. Therefore, the AO has rightly made addition on this account. 25. We have heard the rival submissions and perused the relevant material on record. We find that the brother of the assessee has admitted receipt of on-money over the documentary price, hence, the AO has a rightly made addition on account of on-money. However, we find that the assessee has already offered undisclosed income of Rs. 15 Lakhs for the assessment year 1995-96. Further, the total addition made on account of on-money comes to Rs.8,29,761 [3,56,406 in A.Y. 94-95 + 2,35,568 in A.Y. 96-97 + 2,37,787 in A.Y. 97-98 + 8,29,761], as against which the assessee has disclosed a sum of Rs.15 lakhs income during A.Y. 1995-96 and same has been assessed in the case of the assessee, which is more than the total addition made by the AO. Therefore, we are of the considered opinion that the addition made

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on account of on-money is covered by said disclosure of income. Therefore, no separate addition is required. Accordingly, the addition made of Rs.8,29,761 in A.Y. 94-95, 96-97 and 97-98 is deleted. Thus, Ground No. (III) of A.Y. 1994-95 relating to on-money addition of Rs.3,56,405 , Ground No. (III) of A.Y. 1996-97 in relation to addition on account of on-money of Rs.2,35,568 and Ground No. (IV) of A.Y. 1997-98 on account of addition of Rs.1,00,854 is allowed. 26. Ground No. (IV): Relating to charging of interest under section 234B, is concerned, we are of the view that charging of interest is mandatory as held by the Hon`ble Supreme Court in the case of CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC), therefore, we upheld the same. However, we held that the assessee is entitled to consequential relief if any as arise out on giving effect to this order if any. This ground is therefore, disposed-off accordingly. 27. In the result, the appeal of the assessee for A.Y. 1994-95 is partly allowed. I.T.A.No. 2123/AHD/2014/A.Y. 1995-97/ by the assessee:-

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appeal are covered by Ground No. (II) of appeal for assessment year 1994-95 hence, same is allowed in favour of the assessee. 35. Ground No. (II) relates to addition of on-money of Rs.2,35,568. 36. We have heard the rival submissions and perused the relevant material on record. We find that facts are identical as in assessment year 1994-95. Therefore, our findings as given in A.Y. 1994-95 would mutatis mutandis apply to this ground. Accordingly, this grounds of appeal is covered by Ground No. (III) of appeal for assessment year 1994-95 hence, same is allowed in favour of the assessee. 37. Ground No. (III) relates to charging of interest u/s.234B. 38. We hold that our findings given in assessment year 1994-95 would apply. These grounds of appeal therefore, dismissed. However, consequential relief would be allowed to the assessee after appeal effect. 39. In the result, the appeal of the assessee for A.Y. 1996-97, is partly allowed. I.T.A.No. 2127/AHD/2014/A.Y. 1997-98/by the assessee:- 40. Ground No. (I) relates to reopening of assessment. 41. We have heard the rival submissions and perused the relevant material on record. We find that facts are identical as in assessment year 1994-95. Therefore, our findings as given in A.Y. 1994-95 would

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mutatis mutandis apply to this ground. Accordingly, this ground of appeal is covered by Ground No. (I) of appeal for assessment year 1994-95 hence, same is dismissed. 42. Ground No. (II) relates to treating capital gains of Rs.12,19,328 as business income. 43. We have heard the rival submissions and perused the relevant material on record. We find that facts are identical as in assessment year 1994-95. Therefore, our findings as given in A.Y. 1994-95 would mutatis mutandis apply to this ground. Accordingly, this ground of appeal is covered by Ground No. (II) of appeal for assessment year 1994-95 hence, same is allowed in favour of the assessee. 44. Ground No. (III) states that Ld. CIT (A) has erred in confirming the addition of on-money of Rs. 32,86,396 when there is no evidence to indicate that the appellant has received such on-money except on the basis of statement made by Shri Madhubhai Patel and Shri Maganbhai Patel before the Settlement Commission. 45. Short facts are that the AO noted that the assessee has sold land directly @208 admeasuring 19561.88 sq. ft., as against the documented price at Rs.40 per Sq. ft. Hence, At the outset, worked out on-money being difference of Rs.168 [ 208-40=168 per Sq. Ft.] to

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land sold at Rs.32,86,396 ( 19561.88X 168) and made addition on this account . This was based on the statement of Shri Madhubhai Patel and Shri Maganbhai Patel before Settlement Commission. 46. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). However, CIT (A) has confirmed the addition so made. 47. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the addition is not justified as it is made based submissions made by the M/s. Vijay Enterprise having calculated on-money, when the assessee has not made any statement in this regard. The AO has not brought on record any evidence to show that any on-money has been received. Further, the AO has relied on the papers of which no opportunity was given to the assessee for examination. Shri Madhubhai and Maganbhai Patel have gone to Settlement Commission of which the assessee is not aware as to what they have disclosed. The assessee has no given copy of settlement petition. The assessee has obtained confirmation in form of affidavits of all the buyers in which they have stated that they have not paid any money over and above the document price. The AO has chosen not to examine them and therefore, what is mentioned in the affidavit has to be accepted as laid down by the Hon’ble Gujarat High Court in the case of Glass Line Equipment 253

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ITR 454 (Gujarat) the jurisdiction has followed the decision of Hon`ble Supreme Court in the case of Mehta Parikh & Co. 30 ITR 181 (SC). Further, such identical issue had arisen in the case of Ratan Corporation where the assessee had declared Rs. 1 crores as on- money. The Department did not make inquiry with shopkeepers who alleged to have paid on-money. The Tribunal by its order dated 12.11.2003 allowed appeals of the assessee. Department appeals were dismissed by Gujarat High Court in its order dated 21.03.2005 on various grounds one of them being failure of the Department to make inquiry with buyers viz. shopkeepers. That was a case of disclosure whereas the assessee has not made any disclosure of receipt of Rs.208 per Sq. ft. On contrary, he himself has obtained confirmation of sellers. The assessee has not given any opportunity to cross examination of partners of M/s. Vijay Enterprise. 48. On the other hand, the ld. Sr. D.R. submitted that the addition is based on statement recorded under section 132(4) from Shri Maganbhai and Shri Madhubhai Patel and their settlement petition. Therefore, lower authorities were justified in making addition. 49. We have heard the rival submissions and perused the relevant material on record. We find that the addition is based on third party statement and petition filed before Settlement Commission. However,

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the copy of which has not been supplied to the assessee. Further, the assessee has never confronted with their statement nor allowed cross- examination. The assessee has not made any such admission. Since the assessee has not been allowed opportunity of cross-examination. The assessee has had filed copy of affidavit from buyers who were not examined before the AO. Thus, the AO neither allowed any of cross- examination of Shri Madhubhai Patel or Shri Maganbhai Patel, nor examined the buyers whose affidavits were filed before him sellers. Therefore, the addition is not tenable in law as held by the Hon`ble Supreme Court in the case of Andaman Timber Industries v. Commissioner of Central Excise Kolkata-II [2015] 13 STD 805 (SC) [2015] 281 CTR 241 (SC), wherein it was held that not allowing the assessee to cross examine witnesses by Adjudicating Authority, though statements of those witnesses were made basis of impugned order, amounted to serious flaw which makes impugned order nullity as it amounted to violation of principle of natural justice. Therefore, the addition is made without bringing any evidence of record to support the finding as given by the AO. Further, the AO has not examined the affidavit therefore, such addition cannot be made as held by the Hon’ble Gujarat High Court In the circumstances The AO has chosen not to examine them and therefore, what is mentioned in the affidavit

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has to be accepted as laid down by the Hon’ble Gujarat High Court in the case of Glass Line Equipment 253 ITR 454 (Gujarat) the jurisdiction has followed the decision of Hon`ble Supreme Court, in the case of Mehta Parikh & Co. 30 ITR 181 (SC), In such circumstances, such addition is not tenable in law. Accordingly, this ground of appeal is allowed in favour of the assessee. 50. Ground No. (IV) relates to addition of on-money of Rs.1,00,854. 51. We have heard the rival submissions and perused the relevant material on record. We find that facts are identical as in assessment year 1994-95. Therefore, our findings as given in A.Y. 1994-95 would mutatis mutandis apply to this ground. Accordingly, this ground of appeal is covered by Ground No. (III) of appeal for assessment year 1994-95 hence, same is allowed in favour of the assessee. 52. Ground No. (V) related to charging of interest u/s.234B. 53. We hold that our findings given in assessment year 1994-95 would apply. This ground of appeal therefore, dismissed. However, consequential relief would be allowed to the assessee after appeal effect. 54. In the result, the appeal of the assessee for A.Y. 1997-98, is partly allowed.

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Sd/- Sd/- (SANDEEP GOSAIN) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat: Dated: 11th December, 2019/opm Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/ Guard file of ITAT. By order // TRUE COPY // Assistant Registrar, Surat