GHATGE PATIL AUTOMOBILES LTD.,KOLHAPUR vs. DEPUTY COMMISSIONER OF INCOME-TAX,

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the 1. order of Commissioner of Income Tax (A) – Kolhapur, dt.20.12.2013 for the assessment year 2008-09.

Assessee is a company stated to be engaged in the business of Automobiles, Trading of Cummins parts etc. Assessee electronically filed return of income for A.Y. 2008-09 on 10.10.2008 declaring total income of Rs.2,85,97,458/-. A search & seizure

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action u/s 132 of the Act was conducted in Nitin Jayakumar Patil

Group on 11.09.2008. Assessee being part of the group was also

covered under the search operation. Consequently, notice u/s 153A

of the Act was issued and served on the assessee and in response to

which assessee submitted that the return of income filed by it on

10.10.2008 be considered in response to notice u/s 153A of the

Act. Thereafter, the case was taken up for scrutiny and assessment

was framed under Sec.143(3) rws 153 of the Act vide order dated

28.12.2010 and the total income was determined at Rs.

4,83,61,223/-. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A), who vide order dated 20.12.2013 (in

appeal no.KOP/431/10-11) dismissed the appeal of the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us and has raised the following grounds :

“1. The learned Commissioner of Income Tax (Appeals), Kolhapur erred on facts and in law in confirming the additions of Rs.1,59,62,325/- under the head capital gains without appreciating properly that the assessee company has not received the sale consideration at all and that the assessee has produced proper evidence in support of its contention. The learned CIT(A) failed to appreciate contentions of the assessee and arguments advanced.

not wish to press ground no 2. In view of the submission of Ld AR,

the ground No.2 is dismissed as not pressed.

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4.1. It was noticed that assessee was holding a plot of land

bearing city survey No.E517/A/1 admeasuring 321981 sq mtrs.

Out of the aforesaid land, assessee had sold 8141.67 sq mtrs to

Topaz Investments P. Ltd for which the sale deed was executed on

31.12.2007 and the sale consideration as per the agreement was

Rs.4.11 crore. During the course of search, certain loose papers

were found. In one of the loose papers that were found, there was

complete working of capital gains, wherein the assessee had

computed capital gains after considering the total sales

consideration at Rs. 6,80,68,308/-, MAT credit with the company

for A.Ys. 06-07 & 07-08, advance tax paid on 15.03.2008 and the

amount of refund claimed. The statement of Shri Nitin Patil,

Managing Director of the company was recorded u/s 132(4) of the

Act wherein he submitted that assessee had received sale

consideration of Rs.4.11 crore and had no idea of the amount

reflected in the seized document. Thereafter, before Investigating

Officer, the statement of Shri Nitin Patil on 03.10.2008 was

recorded wherein he submitted that the working found on the

seized paper was done in connection with the notice of acquisition

received from Kolhapur Municipal Corporation (KMC) and the

amount in the seized paper was the amount that the company was

supposed to receive from KMC. The submissions of Shri Nitin Patil

was not found acceptable to AO, as according to him, notice of KMC

was a general notice, it did not mention the consideration payable

except stating that the acquisition may be affected at the market

rate, the transaction of the land had taken place on 31.12.2007 and

it did not has any link with the notice of 2004 issued by KMC. AO

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therefore concluded that the figures mentioned in the seized paper

were not imaginary as the figure of consideration was in exact

figure. AO therefore held that assessee had received

Rs.6,80,68,308/- as against the agreement value of Rs.

4,11,00,000/-. AO noted that since assessee had already offered

capital gains taking into account the provision of Sec.50C of the Act

considering the market price of Rs.5,21,05,983/-, he held that

assessee had shown less capital gains to the extent of Rs.

1,59,62,352/- (Rs.6,80,68,308/- – Rs.5,21,05,983/-) and thus

made addition of Rs.1,59,62,325/- as long term capital gains.

Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), who confirmed the order of AO by observing as under:

“4. During the appellate proceedings same explanation had been advanced on behalf of the appellant. It has also filed copy of a letter dated 22/03/2004 written to Commissioner, Kolhapur Municipal Corporation. On going through the assessee's submission and the assessment order I find that on the given facts the assessing officer was justified in arriving at the conclusion that appellant has evaded tax by understating income from capital gains. In the statement recorded during the survey under section 132(4) he has expressed his inability to explain the difference. No mention was made to the notice received from KMC or to the letter dated 22/03/2004 written by the company. Statement under section 132(4) has evidentiary value. The explanation of the assessee regarding receipt of notice is an afterthought, a strategy to evade taxation. Notice of the KMC is a general notice and it does not mention any rate for which the land will be acquired. Further, the figures used in the computation of capital gain in the seized pages are not rounded figures but are in exact digits. All these facts show that the workings are the actual working on the amount of sale proceeds received by the appellant. Therefore, the assessing officer was justified in making addition of Rs.1,59,62,325/- as additional capital gains not offered by the appellant.”

Aggrieved by the order of Ld.CIT(A), assessee is now in

appeal before us.

lower authorities and further submitted the said plot of land was

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subject matter of acquisition by KMC and the proceedings for

acquisition were going on since 2003-04. A lot of correspondence

had taken place during the intervening period regarding the price at

which the acquisition was to take place. The assessee had written a

letter to KMC in which it had stated that the acquisition should be

at a price of 30% over the ruling market price. He submitted that

the figure of Rs.6.80 crore was arrived after addition of 30%

solatrium as demanded by the assessee (which works out to Rs.

179/sq.ft to the market price of Rs.595/sq ft (which was already

mentioned in the seized computation of total income). He submitted

that as against the aggregate of Rs.774/sq ft worked out, assessee

had demanded Rs.777 per Sq.ft and thus for the total area of 87604

sq ft, the total consideration was Rs.6,80,68,308/-. Ld AR further

submitted that apart from the seized document, there was no

evidence with the Revenue department to show that assessee had

received consideration in excess of Rs. 4.11 crore. He therefore

submitted that the addition made by the AO and confirmed by

CIT(A) be deleted. Ld DR on the other hand took us through the

findings of AO and supported the order of lower authorities.

material on record. The issue in the present case is with respect to

addition of Rs. 1.59 crore. It is Revenue’s contention that assessee

has received Rs. 6.80 crore (rounded off) as against the assessee’s

contention of having received Rs. 4.11 crore (rounded off) and had

considered Rs.5.21 crore u/s 50C of the Act. The basis for

considering the figure of Rs.6.80 crore by Revenue was the

document seized during the course of search. We find that during

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the course of search in the statement recorded u/s 132(4) of the

Act, Shri Nitin Patil, the M.D. of the Company had categorically

stated that the land has been sold for a consideration of Rs. 4.11

crore and it has received the consideration of Rs. 4.11 crore. Before

us, LD AR submitted that the consideration of Rs. 6.80 crore was

for the purpose of negotiation and had also demonstrated its

working. The aforesaid working furnished by the Ld.A.R. has not

been demonstrated by the Revenue to be false. We further find that

apart from the seized document, which has been relied upon by the

Revenue to make addition, no other evidence has been found by the

Revenue which could demonstrate that assessee has received

consideration in excess of Rs. 4.11 crore. Considering the totality

of the aforesaid facts, we are of the view that AO has erred in

making the addition. We therefore direct its deletion. Thus, the

ground of assessee is allowed.

Order pronounced on 11th day of January, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 11th January, 2019. Yamini

ITA No.437/PUN/2014

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.