PRINCIPAL COMMISSIONER OF INCOME TAX -2 vs. ROHIT PRAHLADBHAI MODI

C/TAXAP/478/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 478 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX -2 Versus ROHIT PRAHLADBHAI MODI ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 09/05/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   28.06.2017 raising following questions for our consideration: “[A] Whether the order of Appellate Tribunal is   perverse   since   it   has   relied   on irrelevant material and ignored the relevant material [B] Whether   the   Appellate   Tribunal   has erred in law and on facts in deleting the addition on account of ON­Money on sale of 65704 Sq feet by holding that such area was sold to the relatives and friends ? [C] Whether   the   Appellate   Tribunal   has erred   in   not   giving   due   import   to   the provisions of Section 292C of the Act and the provisions of Section 16 and Clause (f) of Section 114 of Evidence Act? [D] Whether the Appellate Tribunal and the Page 1 of 5

C/TAXAP/478/2018 ORDER CIT(A) had been right in shifting the burden of proof on the department when the assessee himself had accepted the fact of receipt of ON­money on similarly placed units” 2. In   Tax   Appeal   No.360   of   2018,   similar   issues concerning   the   same   assessee   came   up   for consideration   before   this   Court.     Tax   Appeal   was dismissed making following observations: “9. With respect to the first issue we may notice   that   the   Assessing   Officer   mainly proceeded on the following basis : 1)       That  loose  documents  were  found   from the   premises   of   Dasrath   Patni.   These handwritten loose documents tallied with the typewritten   copies   found   from   the   same premises. 2) The   assessees   owned   up   to   their involvement in the land deals referred to in such documents. 3)   The assessees agreed that reference to 'PD' and 'KM' was of their dummies. 4)     In   the   land   dealings   in   which   the assessees   had   admitted   receiving   on­money consideration,   similar   transactions   were found  from  the  same  set  of  papers.    There was no material difference between two sets of papers. The assessees' defence that sales eventually   did   not   take   place   cannot   be accepted. 10. CIT(Appeals)   reexamined   the   issue   by giving   independent   reasons.   However   on similar factors, he confirmed the additions, upon   which,   the   assessee   went   in   further appeal   before   the   Tribunal.   The   Tribunal deleted   the   additions.   The   principal consideration which weighed to the Tribunal Page 2 of 5

C/TAXAP/478/2018 ORDER were as under : 1)  Documents were dumb documents. 2) They were not found from the premises of the   assessee   but   from   that   of     Dasrath Patni. 3) The   typewritten   copies   of   the handwritten   documents   carried   a   title “PROJECTIONS”. 4)   The assessees' contention that the land deals referred to in such documents did not materialise   and,   therefore,   the   projected income was not generated. 5)   The Assessing Officer did not dislodge the   evidence   produced   by   the   assessees   in the   form   of   affidavit   of   the   proposed sellers of the land that eventually the land deals fell through. 11. As noted,  the assessees themselves  did not   dispute   their   involvement   in   the   land deals   referred   to   in   the   documents   found from the premises of  Dasrath Patni nor did they   disown   the   reference   to   two   persons 'PD'   and   'KM'.   In   fact,   they   pointed   out that these two dummies whose names would be used   for   registration   of   documents   since they had status of agriculturist and in the State   of   Gujarat,   agricultural   lands   could be   brought   only   by   an   agriculturist. Thereafter however, the assessees sought to bifurcate two sets of deals. One where the land   deals   were   completed   and   sales executed.   In   such   set   of   cases,   the assessees   accepted   receipt   of   on­money   in the   eventual   transactions.   However,   with respect   to   the   rest   of   the   deals,   the assessees pointed out that they were merely proposed   deals   and   documents   themselves suggested   that   figures   were   on   projected basis.   There   was   nothing   on   record   to suggest that the sale itself did eventually Page 3 of 5

C/TAXAP/478/2018 ORDER materialise. 12. We may take the case of Vejalpur land as a test case. CIT(Appeals) has also recorded that for such land, the assessees had paid through

cheques

total

sum

of Rs.22,02,100/­   to one Sherin Co. Op. Hsg. Soc.   Ltd. during   the   period   between 28.7.2003   to   31.1.2005.   CIT(Appeals)   also noted   that   entire   amount   was   repaid   by Sherin Co. Op. Hsg. Soc. Ltd. in different cheques   during the period between 2.6.2005 to 5.12.2005. The Revenue did not have any further material to suggest that though the assessee   might   have   exited   from   the   land deal,   Sherin   Co.   Op.   Hsg.   Soc.   Ltd.   had eventually sold the land to third party and in  the  process,  the  assessee   had  extracted its share of profit. The Tribunal therefore, accepted the assessees' contention that the loose documents did not refer to the actual receipt   of   on­money   since   the   documents itself   carried   a   title   “PROJECTIONS”   and further   that   the   Assessing   Officer   had nothing   to   discard   the   assessees'   theory that   these   land   deals   did   not   eventually materialise. 13. Essentially the Tribunal having referred to   the   materials   on   record   and   come   to factual   conclusion,   in   our   opinion,   no question of law arises. 14. The   second   issue,   we   may   recall, pertains   to   the   Assessing   Officer   making addition   of   projected   on­money   receipts   by the  assessee   in sale   of 49,929  sq.  ft.  of carpet area of Himalaya mall. The Assessing Officer had projected the on­money received by the assessee and duly admitted during the course   of   assessment   proceedings   for   the remaining carpet area of commercial property in   the   Himalaya   mall   on   the   basis   of documents

found

during

search.

The assessees' defence was that not necessarily in   all   sales,   premium   would   be   available. Page 4 of 5

C/TAXAP/478/2018 ORDER 49,929  sq.  ft.  carpet  area  represented  the shops which did not command prime location. These shops were sold to the family members and   in   some   cases   to   outsiders   without charging any premium. The assessees pointed out   that   many   of   these   shops   were   not tenanted thereby suggesting that these shops did   not   have   ready   income   generating potential.   CIT(Appeals)   and   the   Tribunal both   accepted   the   assessees'   viewpoint. There   was   no   concrete   material   suggesting that   in   the   sale   of   remaining   shops   also, the   assessees   had   accepted   the   on­money. Merely   because   in   rest   of   the   sales,   the assessees   had   admitted   having   received   on­ money,   such   admission   cannot   be   projected for   the   remaining   area   where   there   was   no such   matching   material   found   or   admission made by the assessees. This was the view of the   Tribunal.   Significantly,   the   seized material   did   not   include   any   reference   of on­money   with   respect   to   these   remaining shops. 15. This   issue   therefore,   is   virtually factual.   CIT(Appeals)   and   Tribunal   having concurrently   held   in   favour   of   the assessees, we do not entertain this issue. 16. In the result  all the tax appeals  are dismissed. ” 3. In   the   result,   this   Tax   Appeal   is   also dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 5 of 5