PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-1 vs. SHAILESHKUMAR RAMESHCHANDRA SHAH

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TAXAP/871/2019HC GujaratGJHC24074456201920 January 2020Author: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MR. JUSTICE BHARGAV D. KARIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that none of the questions proposed by the Revenue could be termed as substantial questions of law. The Court noted the ITAT's findings, which stated that a soft copy of an agreement to sell found in a computer hard disc was neither signed, dated, nor stamped, thus lacking evidentiary value. The ITAT also observed that the land in question was not purchased by the assessee, but by the assessee's brother, as per a purchase agreement dated January 2, 2013. The ITAT concluded that additions made by the AO were without basis, corroborating evidence, and without allowing due opportunity for cross-examination, making them unsustainable. The ITAT found no infirmity in the CIT(A)'s order and upheld it, dismissing the Revenue's appeal. The High Court, agreeing with the ITAT's assessment that the issues were primarily factual, dismissed the Tax Appeal.

What were the facts?

The Revenue, Principal Commissioner of Income Tax, Surat-1, filed a Tax Appeal before the High Court of Gujarat at Ahmedabad against an order passed by the Income Tax Appellate Tribunal (ITAT), Surat Bench. The ITAT's order, dated June 24, 2019, pertained to ITA No. 2026/Ahd/2016 for Assessment Year 2013-2014. The appeal challenges the ITAT's decision to uphold the deletion of additions made by the Assessing Officer (AO) under Sections 68 and 69 of the Income-tax Act, 1961. The total disputed amount was Rs. 2,51,75,891/- under Section 68 and Rs. 1,25,87,945/- under Section 69, along with an additional Rs. 23,00,000/- under Section 68. The Revenue argued that the ITAT failed to appreciate the evidentiary value of an agreement to sell and other corroborative evidence.

What were the issues?

The Tribunal was asked to decide the following substantial questions of law: 1. Whether the ITAT was correct in upholding the deletion of an addition of Rs. 2,51,75,891/- made under Section 68 of the Income-tax Act, 1961, without appreciating the evidentiary value of the agreement to sell. 2. Whether the ITAT was correct in upholding the deletion of an addition of Rs. 1,25,87,945/- made under Section 69 of the Income-tax Act, 1961, without appreciating the corroborative evidence establishing the authenticity of the agreement to sell. 3. Whether the ITAT was correct in upholding the deletion of additions made under Sections 68 and 69 of the Income-tax Act, 1961, without appreciating that the assessee had raised contradictory and unclear stands. 4. Whether the ITAT was correct in upholding the deletion of an addition of Rs. 23,00,000/- on account of unexplained cash credit under Section 68 of the Income-tax Act, 1961, without appreciating that the assessee had neither submitted any reply nor provided details regarding the source of cash deposited in the bank account during assessment proceedings. Assessee's Contentions: The judgment does not explicitly record the assessee's arguments. However, the ITAT's findings suggest the assessee relied on case laws supporting the deletion of additions. The ITAT's reasoning indicates the assessee's defense involved challenging the evidentiary value of documents presented by the Revenue and highlighting procedural infirmities. Revenue's Contentions: The Revenue argued that the ITAT erred in upholding the deletion of additions made under Sections 68 and 69 by not appreciating the evidentiary value of the agreement to sell and corroborative evidence. They also contended that the assessee's contradictory stands and lack of response regarding cash deposits were not properly considered.

Which sections of the Income-tax Act were involved?

Section 68,Section 69,Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/871/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 871 of 2019 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-1 Versus SHAILESHKUMAR RAMESHCHANDRA SHAH ========================================================== Appearance: MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 20/01/2020

ORAL ORDER

(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)

1.

This Tax Appeal, under Section 260A of the Income-tax Act, 1961, is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Surat Bench dated 24.06.2019 in ITA No.2026/Ahd/2016 for A.Y.2013-2014. 2. The Revenue has proposed the following questions as substantial questions of law, arising in this Tax Appeal, which reads thus: “(i) Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is right in upholding the decision of Ld.CIT(A) deleting the addition made u/s. 68 of the Act amounting to Rs.2,51,75,891/- without appreciating the evidentiary value of the agreement to sell? C/TAXAP/871/2019 ORDER (ii) Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is right in upholding the decision of Ld. CIT(A) deleting the addition made u/s. 69 of the Act amounting to Rs.1,25,87,945/- without appreciating the corroborative evidence establishing the authenticity of the agreement to sell? (iii) Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is right in upholding the decision of Ld. CIT(A) deleting the addition made u/s. 68 and 69 of the Act without appreciating the fact that the assesssee had raised contradictory and unclear stands? (iv) Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is right in upholding the decision of Ld. CIT(A) deleting the addition of Rs.23,00,000/- on account of unexplained cash credit u/s. 68 of the Act without appreciating that during the course of assessment proceedings assessee has neither submitted any reply nor given any details regarding source of cash deposited in bank account?”

3.

The findings recorded by the Tribunal, as regards the case of Shri Rajubhai Zalabhai Bhadidyadara, are in paragraph No.10 of the impugned order, which reads thus:

“10. We

have heard

the rival submissions and perused the relevant material on record. We find that the soft copy found in computer-hard disc of Shri Turmish B. Kaniya, was neither signed, dated nor stamped. Therefore, such document has no evidentiary value in the eyes of law. It is also valid that Shri Turmish B. Kaniya is also not advocate of the assessee nor the land shown in computer printout Satakhat obtained from Shri Turmish B. Kaniya was purchased by the assessee. The original purchase deed filed in respect of said land Revenue Survey No.R.S.No. was actually purchased by Shri Karambhai, brother of the C/TAXAP/871/2019 ORDER assessee as per purchase agreement dated 02.01.2013 filed before the AO. Therefore, no addition can be made in respect

of un-signed,

unstamped, Satakhat, which has not been registered and is found from CD of computer of a person who is not connected with the assessee. In view of these facts and circumstances and in law, the addition so made by the AO is without any basis, without any corroborating evidences and without allowing due opportunity of cross-examination to the assessee and is therefore, unsustainable in law. The case laws led by the learned Authorized Representative of the assessee are also supports findings of Ld.ICIT(A). In such circumstances, we do not find any infirmity in the order of CIT(A), accordingly, same is upheld. Accordingly, appeal of Revenue is therefore, dismissed.”

4.

It has been fairly pointed out that no appeal has been preferred by the Revenue in the case of Shri Rajubhai Zalabhai Bhadidyadara. It has been further pointed out very fairly that even otherwise, the issues are more factual in nature.

5.

Having heard the learned counsel appearing for the Revenue and having gone through the materials on record, we are convinced that none of the questions, as proposed by the Tribunal, could be termed as the substantial question of law.

6.

In the result, this Tax Appeal fails and is hereby, dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) PALAK

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