THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(4),, AHMEDABAD vs. SHRI MANISHABEN VIRENDRA THAKER, BARODA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA RAGHUNATH KAMBLE, JUDICAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T(SS).A. No. 15/Ahd/2018 A/W. CROSS OBJECTION No. 50/Ahd/2019 (िनधा�रण वष� िनधा�रण वष� िनधा�रण वष� / Assessment Year : 2011-12) िनधा�रण वष� Deputy Commissioner of Manishaben Virendra बनाम बनाम/ बनाम बनाम Income Tax Thaker Vs. Central Circle-2(4), C/21, Ambica Duplex, Ahmedabad Inside Vrindavan Township Makarand Desai Road, Race Course Circle Baroda, Gujarat 380007 & Manishaben Virendra Deputy Commissioner of Thaker Income Tax C/21, Ambica Duplex, Central Circle-2(4), Inside Vrindavan Ahmedabad Township Makarand Desai Road, Race Course Circle Baroda, Gujarat 380007 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ADMPT0470E (Appellant/Cross Objector) .. (Respondent) Shri Sunil Maloo, A.R. Assessee by : Shri H. Phani Raju, CIT.DR Revenue by : 25/06/2024 Date of Hearing Date of Pronouncement 08/07/2024 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals), Gandhinagar, (in short

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‘the CIT(A)’) dated 27.10.2017 arising in the order of the Assessing Officer (in short ‘the AO’) passed under Section 143(3)/144 r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the A.Y. 2011-12. The assessee has also filed a cross objection in this case.

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“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the facts brought about by the Assessing Officer in his assessment order as well as the objections raised in the remand report and has admitted the additional evidences. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in restricting the addition made on account of unexplained investment in immovable property of Rs.2,58,82,312/- to Rs. 12,97,958/- 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.Ο. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.”

“1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming addition to the extent of Rs.7,80,312 on the alleged ground of unexplained payment towards land. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in further directing the Assessing Officer to make addition of Rs.5,17,646 on the assumption that the Respondent must have earned commission at the rate of 2% on the land value. 3. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of cross objections either before or during the course of hearing of the same.”

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“The Assessing Officer erred in passing the Assessment Order u/s 143(3)/144 r.w.s. 153A of the Income Tax Act, 1961 on 17.02.2015 for the Assessment Year 2010-11 as no notice if any has ever been issued or to have been served u/s 143(2) of the Income Tax Act, 1961” 8. Shri H. Phani Raju, CIT-DR appearing for the Revenue submitted that the Ld. CIT(A) was not correct in restricting the addition of Rs.2,58,82,312/- made by the AO on account of unexplained investment to Rs.12,97,958/- only on the basis of additional evidences admitted in the course of appeal proceeding. The Ld. CIT-DR raised strong objection to the admission of additional evidence and contended that the assessee had not explained as to why this additional evidence could not be submitted before the AO in the course of assessment proceedings. He explained that addition was made on the basis of the seized documents, which was copy of ‘banakhat’ and sale deed and was rightly made in the hands of the assessee as she was the buyer of the property. According to the Ld. DR, the Ld. CIT(A) had grossly erred in merely relying on the contention of the assessee that all the funds for purchase of property was provided by India Green Realty Pvt. Ltd. (‘IGRPL’)

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agricultural property can be purchased by the company. He explained that entire payment for the acquisition of the property was made by IGRPL and the land was also handed over to the company for development thereof. Further that the cash payment made by the company for purchase of this land was also added in the hands of the company.

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CIT.DR also relied upon the decision of ITAT Allahabad in the case of ACIT vs. Sunshine Infraestate (P) Ltd. [139 taxmann.com 60 (Allahabad - Trib.) (TM)] in support of his contention that no notice in Section 143(2) of the Act was required to be issued in the proceedings under Section 153A of the Act and more so in the case where the return was not filed in response to 153A notice.

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This banakhat was duly signed by all the concerned parties and also notarized with Government notary.

ii. During search, another banakhat dated 10.02.2011 was found for the sale of same land and between the same parties. As per this document, an amount of Rs.1,41,51,000/- was paid by the purchaser till the date of this banakhat i.e. by 10.02.2011 (including an amount of Rs.11,51,000/- through demand draft dated 04.02.2011) and balance amount of Rs.1,17,31,312/- was to be paid by 15.02.2011. iii. A copy of sale deed dated 14.02.2011 in respect of above land was also found during search. The sale deed was made between Shri Jitenderkumar S. Mehta as seller and Smt. Manishaben Virender Thaker (sister-in-law of Shri Virender Thaker) as buyer for a consideration of Rs.11,51,000/-. iv. On the basis of above documents, the AO concluded that the actual purchase price of the property was Rs.2,58,82,312/- as mentioned in the two banakhats. As the purchase price of Rs.11,51,000/- as mentioned in the sale deed was paid through demand draft, which matched with the demand draft payment as mentioned in the banakhat, the AO concluded that the balance amount of Rs.2,47,31,312/- was paid in cash for acquisition of this

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property. As the assessee was unable to explain the source of investment in the purchase of this land, the AO treated the entire investment of Rs.2,58,82,312/- as unexplained and accordingly made the addition in the hands of the assessee. v. The assessee furnished additional evidences before the Ld. CIT(A), which was forwarded to the AO for the remand report. It was explained that the agricultural land was acquired by the assessee at the instance of IGRPL and the entire funds were provided by the said company because IGRPL being company couldn’t have acquired the agricultural land in its own name. It was submitted that the demand draft amount for this property was also given by IGRPL and the entire transaction was recorded in the books of account of IGRPL. The assessee further submitted that the possession of the land was already given to IGRPL to develop the land as per their requirement. It was further submitted that similar other transactions were carried out for IGRPL and total addition of Rs.32.90 crore on account of acquisition of land was made in the hands of the IGRPL. It was contended that since the entire transaction was owned up by IGRPL, no addition was called for in the hands of the assessee.

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vi. In the remand report, the AO objected to the admission of additional evidences and contended that the evidences produced by the assessee were not reliable. The Ld. CIT(A), however, admitted the additional evidences on the ground that those were relevant to compute the real income of the assessee.

“12.1 It is pertinent to note that during the course of search at the premises of IGRPL, details of acquisition of land at various places were found in laptop and it was observed that aggregate cash payment made by IGRPL towards acquisition of such land is Rs 32.90 crore and such details are also part of assessment orders of said company. The AO has already made separate addition of Rs 32.90 crore towards land in the hands of IGRPL It is observed that in the case of IGRPL, appellant has explained that sources of such payment is out of booking amount received in cash and cash received from shroff and on that basis, IGRPL has also submitted cash flow statement. During the course of appellate hearing. ARs of appellant have drawn attention that said details of Rs 32.90 crore as found in laptop includes payment of Ra 2,39,51,000 towards four survey numbers of land at Sasan which are subject matter of present assessment order and such amount as reflected in loose sheet found during the course of search is Rs 2,39,51.000. Since this payment has already been added by the AO in the assessment of IGRPL, the same cannot be made in the hands of the appellant especially when it has been accepted that the money for these investments have come from IGRPL Even cash flow statement submitted by appellant in the case of IGRPL includes above land transactions and during the course of appellate proceedings, appellant has submitted extracted fund flow statement containing survey number, amount, date

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etc pertaining to land acquired by appellant at the instance of IGRPL in current assessment year and same is already reproduced herein above. The said details clearly support the contention of appellant that payment towards acquisition of land are made by IGRPL and such payment is already subject matter of addition in the case of IGRPL& Shri Vinod Thakkar, his husband. It has further been explained by the appellant that an amount of Rs 11,51,000 being cheque payment was made by the IGRPL on 04/02/11 which is duly reflected in the books of accounts of the IGRPL. Even AO has made the addition on account of Rs. 11,51,000/- of cheque payment made by IGRPL However, since the payments to the extent of Rs. 2,51,02,000/- (2,39,51,000+ 11,51,000) has already been explained by IGRPL, the addition for the same cannot be made in the hands of the appellant. However, even after giving the benefit of these two entries, still there is a balancing figure le shortfall in the amount by Rs. 7,80,312/-which remains unexplained by the appellant. Therefore, the unexplained investment to the extent of Rs 7,80,312/-is confirmed and the balance amount of Rs. 2,51,02.000/- is deleted. The appellant gets the relief to this extent. However, it is observed that appellant has acted at the instances of appellant and it is not possible to appellant would not have earned any commission towards such transaction hence reasonable commission or remuneration need to be estimated in present case It is pertinent to note that in the case of Amitava D. Samanta, one of the group cases, it was found that said person has acquired agricultural land on behalf of IGRPL in A.Y. 2012-13 for Rs 2,44,80,200. The documents relating to such purchase were found during survey proceedings in the case of IGRPL, Calcutta It is also observed that statement of said person was recorded under Section 132 on 5th April, 2013 wherein in reply to question No. 10 he has stated that source of investment in property is by IGRPL for which he has received Rs. 4 to 5 lakhs as remuneration which works out to approximately 2% of total land value hence reasonable commission of 2% of land value is estimated in present case based upon seized material found during the course of search. Thus, commission income is estimated at Rs. 5,17,646 being 2% of total payment of Rs 2.58.82.312. Thus, aggregate addition made by AO for Rs 2,58,82,312 is restricted to Rs. 12,97,958(5,17,645 being commission receipt+ 7,80,312 being unexplained payment towards land). The related ground of appeal is partly allowed.”

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not been disputed. Thus, from the documents as available on record, there cannot be any doubt that the assessee Smt. Manishaben Virendra Thaker was only a ‘benamidar’ or ‘name- lender’ of the property and the actual investment was made by the Company IGRPL. This fact has been admitted by the assessee as well as by IGRPL. Therefore, this was a fit case to initiate proceeding under “THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988”.

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of search. The Ld. CIT(A) after considering the cash and demand draft payment made by IGRPL has confirmed the addition of balance difference amount of Rs.7,80,312/- in the hands of the assessee. We do not find anything wrong with the order of the Ld. CIT(A). Looking into the totality of the facts and the evidences on record, the addition of Rs.7,80,312/- restricted in the hands of the assessee is upheld and the grounds taken in this regard by the Revenue as well as by the assessee in the CO, are dismissed.

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such activity of name-lending without deriving any income or consideration. Therefore, the estimation of commission income as made by the Ld. CIT(A) is confirmed and the ground taken by the assessee in the CO against this addition is rejected. It will not be out of place to mention that identical issue was involved in the case of DCIT vs. Hetalben Patel, which was decided by the Co- ordinate Bench of Tribunal in IT(SS)A No. 6/Ahd/2018 dated 22.03.2023, wherein this Tribunal while confirming the deletion of addition on account of unexplained investment towards acquisition of land, had upheld the estimation of commission income @ 2%. In that case also the property was acquired on behalf of the same company, IGRPL.

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section 143(2) was not a mandatory jurisdictional requirement for making assessment under section 153A. To reproduce from the said order:

6.2 Section 153A of the Act, at the relevant time, opens with a non- obstante clause, inter alia, qua section 147 and provides that when a person is searched after the specified date, the AO shall: "(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b) ….. and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139". Section 153A(1)(b) states that the AO shall: "assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made". The first proviso to section 153A(1) also says that "the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years". On going through the mandate of section 153A, it gets clear that once a notice is issued to the assessee requiring him to furnish his return in respect of each assessment year falling within six assessment years referred to in clause (b), the assessment has to mandatorily take place. The position can be compared with a regular assessment u/s 143(3) etc., which takes place in both the circumstances of the assessee having furnished or not furnished its return of income. If a return is already filed, the assessment can be espoused straight away and completed. On the other hand, if no return has been filed, then firstly, a return has to be called for by issuing notice u/s 142(2)(i). It is only when the return is either suo motu filed or in response to notice u/s 142(1)(i) that the case becomes ripe for undergoing assessment. Thereafter, a notice u/s 143(2) is required to be issued if the AO 'considers it necessary or expedient to ensure that the assessee has not understated the income' in the return. The point to be noted is that making assessment of all the returns filed is not necessary. It is only in some of the returns where the AO considers it necessary or expedient to ensure that the assessee has not understated the income, that he takes up the assessment after first, acquiring jurisdiction by issuing notice u/s 143(2). It, therefore, follows that whereas the filing of return by the assessees having income chargeable to tax etc. is essential, but making the assessment of such returns is not essential under law. Only in such cases where the AO considers it necessary to ensure that the assessee has not understated his income etc. that he takes up assessment, which is done by firstly acquiring jurisdiction on issuing notice u/s 143(2) of the Act. If the AO does not consider necessary or expedient etc., he need not make an assessment, in which case no notice u/s 143(2) would

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be required. Thus, it follows that notice u/s 143(2) gives jurisdiction to the AO to take up assessment. On the other hand, section 153A gets triggered for making assessment in case of search or requisition. Such assessments have to be mandatorily made by the AO whether or not he considers necessary to expedient to ensure that the assessee has not understated the income. There is no choice with the AO except to make the assessments of the prescribed six assessment years. Once the assessments are to be mandatorily made in search cases, unlike the regular cases giving choice to the AO to make assessment only on considering it necessary or expedient, there is no requirement of acquiring any jurisdiction to do so by firstly issuing notice u/s 143(2). The very factum of search confers jurisdiction on the AO to make assessment under section 153A of the Act.

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This Order pronounced on 08/07/2024

Sd/- Sd/- (SUCHITRA RAGHUNATH KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 08/07/2024 S. K. SINHA True Copy आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार

उप/सहायक पंजीकार उप सहायक पंजीकार (Dy./Asstt. Registrar) उप उप सहायक पंजीकार सहायक पंजीकार आयकर अपीलीय आयकर अपीलीय अिधकरण आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद