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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
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.
The relevant facts as culled out from the material on record are as under :-
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.
The learned Commissioner of Income Tax (Appeals), Kolhapur erred on facts and in law in confirming the disallowance of expenses of Rs.84,299/- without appreciating that the assessee company has paid FBT under the provisions of the Income Tax Act, 1961.”
Before us, at the outset, Ld AR submitted that assessee does
not wish to press ground no 2. In view of the submission of Ld AR,
the ground No.2 is dismissed as not pressed.
Ground No.1 is with respect to addition of Rs. 1.59 crore.
ITA No.437/PUN/2014
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.
Before us, Ld AR reiterated the submissions made before
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.
We have heard the rival submissions and perused the
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.
In the result, the appeal of assessee is partly 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 :
अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A), Kolhapur. 4. The CIT-I/II, Kolhapur / CIT(Central), Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार/ BY ORDER
// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.