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Facts
The Assessing Officer (AO) reopened the assessee's case for AY 2012-13 based on documents found during a survey related to a real estate group. The AO alleged an 'on-money' payment of Rs. 19,58,875/- for land purchase, considering the registered sale deed value lower than the 'Satakhat' (agreement to sell). The assessee denied any knowledge of the 'Satakhat' and requested a copy, which was allegedly not provided properly.
Held
The Tribunal held that the issue was covered by a co-ordinate bench decision in Rajeshkumar Shantilal Patel vs. ITO. This decision stated that if similar capital gains were accepted for co-owners, the assessee should receive similar relief. Therefore, the addition made by the AO should be deleted.
Key Issues
Whether the addition of 'on-money' payment for land purchase is valid when the assessee denies knowledge of the underlying agreement, and if the case law regarding similar treatment for co-owners applies.
Sections Cited
250, 143(3), 147, 69, 148, 142(1), 143(2), 132, 151, 153C, 153A, 153B
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Income Tax Appellate Tribunal, Rajkot Bench, Rajkot
Before: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha
आदेश /ORDER Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year 2012-13, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, dated 18.08.2023, which, in turn, arises out of an assessment order passed by the Assessing Officer, u/s 143(3) r.w.s. 147 of the Act, dated 04.12.2019.
2. The grounds of appeal raised by the assessee are as under:
1. 1. 1. 1. (AY 2012-13) Kiran Harubhai Dangar vs. Assessing Officer “1. Learned assessing officer has erred in law as well as on facts in making addition on account of unexplained investment made by purchase of land amounting to Rs.19,58,875/-, u/s 69. The addition should be deleted.
The Assessee reserves the right to add, modify or delete any ground of appeal during the course of appeal.”
3. The assessee has raised two additional legal grounds, which are reproduced below: "(i). The order of assessment passed u/s 143(3) r.w.s. 147 of the Act is without jurisdiction and therefore bad in law in the light of reasons recorded and because it is not passed as per special provisions contained in section 153C r.w.s. 153A and section 153B of the Act. (ii). The order of assessment passed u/s 143(3) r.w.s. 147 of the Act and the order u/s 250 of the Act are bad in law as they are passed without Document Identification Number (DIN) mentioning therein and hence they are to be treated as invalid in view of CBDT Circular No. 19/2019 dated 14-08-2019"
4. Succinctly, the factual panorama of the case is that assessee before us is an individual. The assessee’s case was reopened by taking "approval for reopening" from the Pr.CIT(Central), Ahmedabad. After that, notice u/s 148 of the Act, has been issued on 27.03.2019 and duly served upon the assessee, on 28.03.2019. The assessee has filed the return of income of Rs. 2,77,070/-, on 10.10.2019, in response to notice u/s 148 of the I.T. Act. After that notice u/s 142(1) of the I.T. Act along with detailed questionnaire and notice u/s 143(2) of the I.T. Act were issued on 22.10.2019 and 19.11.2019. The reasons leading to reopening of the case are as under:
"Reasons for reopening of assessment :
1.
The assessee Shri Kiranbhal Honubhel Dongar is the resident of Junagadh. Certain documents related to the assessee were found and impounded in the survey conducted as part of the searc action named "Operation Narsimha" u/s 132 which was conducted on 30/5/2012 on Jasubhai A Vaghasia Group and others of Junagad and Rajkot. The group was engaged in the business of real estate i.e sale/purchase of land, plotting of land and construction of flats/row house/tenements/shops etc. The assessee has filed return of income for AY 2012-13 on 10/01/2013 declaring income of Rs 2,77,070/-. No regular assessment has been made in the case of the assessee for the year under consideration.
2. The search related assessment was completed in the case of the group in March 2015 in Central Circle-2 Rajkot. Thereafter intimation in the case of the Page 2 of 8 assessee was received from Central Circle-2 Rajkot vide letter dated 7/9/2015. As per the intimation during the course of survey at the premise of Shri Jayantilal Jachamol Ramchandani, M/s. Jayshri Cinema, Jayshri Road, Police HQ, Junagadh, the photocopy of signed and notorized Satakhat deed dated 25/11/2011 in respect of land situated at S No. 136/Paik-6 admeasuring Vigha 07-08 guntha for Rs.43,68,750/- at Village. Barwala, Tot Vanthali, Distt. Junagadh (Purchaser: Kiranbhal Harubhai Dangor, Seller: Naim Rafiqbhoi Kherani ond Manoj Tarachand Ramchandani) was impounded as Page No. 138 to 142 of Annexure A-
1. 1.
3. As per the above Satakhat, per vigha price of the said land is Rs 5,82,500/-, thereby totalling Rs.43,68,750/- for 07 Vigha & 08 guntha land. As per the above Satakhat(English Translation). "initially the land was in the name of Sanatkuar Kiritkuar Pandya. After that he sold the land to Naim Rafiqbhai Kherani and Manoj Tarachand Ramchandani through Satakhat and the land was not registered." 4.It means the whole transaction is not registered. As per the Satokhat, later Naim Rofiqchal Kherani and Manoj Tarachand Ramchandani further sold it to Kiranbhal Harubhai Dongar, Further, as per the Sotakhot, Shri Manoj Tarachand Ramchandani has already been paid Rs 13,11,000/- on 26/11/2011 out of the total amount of Rs.43,68,750/-. As per the above Sotakhat, the final installment of the deal consideration was to be paid on 24/01/2012.
5. Inquiry was conducted from the office of the mamlatdar and it was found that as per revenue records available in the office of mamlatdar, the land was earlier in the name of Sanatkuar Kiritkumar Pandya and has been transferred on 20/01/2012 in the name of Kiranbhal Harubhol Dangor & Sadgunaben Kiritbhai Bhutaiya for a sum of Rs. 4,51,000/- only. Therefore, all the details given in Satakhat has been found correct from records of revenue officials. Hence, this is abundantly clear that the details written in Satakhat are correct and hence the whole transaction amount of Rs 43,68,750/-has infoct happened between the transacting parties.
6. Further, the lost purchaser of the lond i.e. Kiranbhal Harubhal Dangar & Sadgunaben Kiritbhal Bhutaiyo have registered the deal for Rs 4,51,000/- only, while the actual consideration was Rs. 43,68,750/-(as given in impounded Satakhat). Hence the unaccounted part is Rs 39,17,750/-, which is required to be taxed in the hands of the transacting parties. As the assessee is one of the purchaser having 50% share the amount of Rs 19,58,875/- being on-money, was paid by him for the purchase of the said survey number.
7. The return of income filed by the assessee for the 4 years was analyzed. 2009-10 2010-11 2011-12 2012-13 Total Income Rs.1,49,730/- Rs.1,49,680/- NIL Rs 2,77,070 Exempted NIL NIL NIL NIL Income The payment of Rs. 19,58,875/- for the purchase of the said land doesn't commensurate with the return of income filed by the assessee. As the amount has been paid in cash and is over and above the documented price, I have reason to believe that this amount is unexplained investment and need to the brought to tax in the hands of the assessee for the AY 2012-13.
8. The assessee has filed the return of income for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was mode. Accordingly in this case the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above. It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.
9. In this case more than four years have elapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Principal Commissioner of Income Tax as per the provisions of section 151 of the Income-tax Act.” 5. During the assessment proceedings, in response to the notice of the assessing officer, the assessee submitted its reply before the assessing officer, which is reproduced below:
I was not aware about the SATAKHAT upon which you wish to add the amount. Hence, I had requested your good self to provide me a copy of that Satakhat vide my letter dated 12th November, 2019. In reply, your office had replied with a file which is corrupt and non openable. To have copy in physical form my Authorized Representative CA Hiren Thakker visited your office on 20th November, 2019 and 25th November, 2019. However, you could not supply the copy of SATAKHAT to him also. To sum up, I wish to state that I oppose your proposed addition of the amount on the basis that, I was and I am totally unaware about the “SATAKHAT upon which you wish to add the amount. I never entered any such ‘SATAKHAT’ which you are referring to and never paid any ON Amount as described by you. Hence, I request you Sir, not to add the amount. And Still If you are not convinced then before any addition, I wish to have a copy of that SATAKHAT on the basis of which you wish to add the amount. Please provide it vide non corrupt easily openable file.”
However, the assessing officer rejected the above contention of the assessee and held that the assessee has made “on-money” payment on account of purchase of land for the A.Y. 2012-13, therefore, the amount of Rs. 19,58,875/- was added in the hands of the assessee for A.Y. 2012-13.
Page 4 of 8 (AY 2012-13) Kiran Harubhai Dangar vs. Assessing Officer 7. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the assessing officer. The Ld. CIT(A), after considering the facts of the assessment order, confirmed the addition on merits. Therefore, the assessee is in further appeal before us.
8. Shri D. M. Rindani, Ld. Counsel for the assessee, at the outset, submitted that the issue under consideration is squarely covered, in favour of the assessee, by the judgment of the Co-ordinate Bench of the ITAT, Surat in the case of Rajeshkumar Shantilal Patel vs. ITO, [2021] 127 taxmann.com 342 (Surat- Trib.), wherein it was held that where the assessee and his co-owner sold agricultural land and short term capital gain on transfer of land had been accepted by revenue in co-owners’ case, in that circumstances, assessee could not be treated indifferently, hence assessee would also be entitled for similar relief and therefore, addition made by the assessing officer should be deleted.
9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
We have heard both the parties. We see no reason to taken any other view of the matter, then the view so taken by the Division Bench of the ITAT, Surat in the case of Rajeshkumar Shantilal Patel (supra), vide order dated 12th February, 2021. In this order, the Tribunal has inter alia observed as follows:
“12. We have considered the rival submission of the parties and have gone through the order of authorities below. We have also deliberated on various case laws relied by learned AR for the assessee and the lower authorities. The assessing officer reopened the case on the basis of information received from Sub-Registrar Office, Surat about determining the value of consideration for the purpose of payment of additional stamp duty, on the instrument of registration by Stamp Valuation Authority, in addition to sale consideration shown in sale deed dated 19-2-2008. The assessing officer made addition solely on the basis of information received from Sub-Registrar Office for charging the additional stamp value for transfer of land as per Jantri rate of Stamp Valuation Authority. We have further noted that during re-assessment the assessee vide his
Page 5 of 8 application dated 22-12-2011 stated that the assessee was joint-owner with Shri Dipakbhai Dalpatbhai Rana being 50% shareholder and 50% of sale consideration was received by him/Rana. The assessee has placed on record copy of application dated 22- 12-2011 along with the copy of return of income with computation of total income for AY 2008-09 of his co-sharer. No finding for accepting the similar capital gain in co- owners case, and treating the assessee indifferently, is given either by the assessing officer or by the ld.CIT(A). Though, during the first appellate stage, the ld CIT(A0 referred the matter to the DVO, however the addition based on deeming provision under section 50C of the Act was upheld.
Before us, the AR of the assessee vehemently submitted that once the similar capital gain as offered by the assessee on transfer of same asset has been accepted by the Revenue in assessee's co-owners case, the assessee cannot be treated indifferently and relied on various case laws as noted (supra). The learned AR of the assessee also relied on the decision of Coordinate Bench in M.Ambalal Desai (supra), Ramanbhai Ukabhai Patel (HUF) (supra). We have noted this combination of almost similar set of facts in case of Late Mohanlal Ambalal Desai (supra) passed the following order: “"7. We have considered the submission of both the parties and gone through the orders of Lower Authorities carefully. We have also deliberated on various case laws relied by the AR of the assessee. Before us, the AR of the assessee vehemently submitted that in assessee's co-owner case, the revenue has accepted similar Long Term Capital Gain in the scrutiny assessment. Copy of the assessment order in respect of two co-owners is placed on record. We have noted that no counter to the submission of the assessee, was made by DR that similar Long Term Capital Gain was accepted in case of co-owner.
The Hon'ble Madras High Court in ICT v. Kumararani Meenakshi Achi (supra) held that during the same assessment year same quantity of wealth in possession of co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. 11 such an action on the part of the assessing authorities is sanctioned it would militate against the principle of equality of laws enshrined in Article 14 of the Constitution. By following the same principle, the Co ordinate Bench of this Tribunal in Chetanbhai Prahladbhai Gami v. ITO in dated 19-7-2019, the Tribunal granted relief to the assessee holding that while making the assessment of the same property the similar treatment should be granted.
We have noted that in assessee's co-owner's case with respect to the property against the sale of which the assessee claimed Long Term Capital Gain, the assessing officer in assessee's co-owner case in Prabhodhchandra Ambelal Desai allowed the similar Long Term Capital Gain by passing the following order : "3. On perusal of records and details submitted by the assessee it was found that the assessee was co-owner having share of 6.25% in the property sold for Rs. 2,00,00,001/- on 19-1-2009 situated at Survey No. 86, Lunsikui, Navsari. Value of property as per stamp duty valuation was determined at Rs. 4,09,01,000/-. The assessee has not declared capital gain as he has not filed Return of Income for AY 2009-10 . The said property was inherited by the assessee. The assessee has submitted valuation report of the property from Govt. Approved Valuer who has arrived value of property at Rs. 66,61,020 as on 1-4-1981. The value of the assessee's share comes to Rs. 4,16,314. Indexed cost as per section 48 of the Act is Page 6 of 8 worked out at Rs. 24,22,947/-. As per stamp duty authority the assessee's share being 6.25% of sale value in the property comes to Rs. 25,56,310/-. Thus capital gain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capital gain of Rs. 1,33,363 has now been shown by the assessee in the Return of Income filed in response to notice u/s 148 of the Act. However, the assessee has not declared suo moto Long Term Capital Gain as he has not filed return of Income. The assessee has consciously not filed return of income to avoid payment of tax. Therefore, Penalty proceedings u/s. 271(1)(c) of the Act are initiated on this issue for concealment of income."
10. We have noted that identical worded assessment order was passed in other co- owner case i.e. Smt. Prabhaben Harshadrai Desai, relevant part of the assessment order is extracted below;: "3. On perusal of records and details submitted by the assessee it was found that the assessee was co-owner having share of 6.25% in the property sold for Rs. 2,00,00,001/- on 19-1-2009 situated at Survey No. 86, Lunsikui, Navsari. Value of property as per stamp duty valuation was determined at Rs. 4,09,01,000/-. The assessee has not declared capital gain as he has not filed Return of Income for AY 2009-10. The said property was inherited by the assessee. The assessee has submitted valuation report of the property from Govt. Approved Valuer who has arrived value of property at Rs. 66,61,020 as on 1-4-1981. The value of the assessee's share comes to Rs. 4,16,314. Indexed cost as per section 48 of the Act is worked out at Rs. 24,22,947/-. As per stamp duty authority the assessee's share being 6.25% of sale value in the property comes to Rs. 25,56,310/-. Thus capital gain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capital gain of Rs. 1,33,363 has now been shown by the assessee in the Return of Income filed in response to notice u/s 148 of the Act. However, the assessee has not declared suo moto Long Term Capital Gain as he has not filed return of Income. The assessee has consciously not filed return of income to avoid payment of tax. Therefore, Penalty proceedings u/s. 271(1)(c) of the Act are initiated on this issue for concealment of income."
In view of the above aforesaid factual and legal discussion and respectfully following the decision of Madras High Court in Kumararani Meenakshi Achi (supra) and decision of Co-ordinate Bench in Prabhodhchandra Ambelal Desai (supra), the revenue cannot treat the assessee in different way, therefore, the addition to the Long Term Capital Gain added by the assessing officer, confirmed by ld.CIT(A) is deleted. In the result the grounds of appeal
raised by the assessee are allowed."
14. Considering the aforesaid factual and legal discussion, we accept the contention of ld. AR for the assessee that once, the similar STCG offered by the co-owner has been accepted by the revenue, and the assessee is also entitled for similar relief. We find convincing force in the submissions learned AR for the assessee. Hence, the appeal of the assessee is allowed. So far as the objection of learned DR for the Revenue is that the case of co-owner of Shri Dipakbhai Dalpatbhai Rana, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co- owner and thereby accepted the similar STCG on same transaction, therefore, in our
Page 7 of 8 (AY 2012-13) Kiran Harubhai Dangar vs. Assessing Officer view, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised by the learned DR for the revenue is not acceptable to us. 15. Considering the fact, we have allowed the appeal of assessee on preliminary submission of the learned AR of the assessee, therefore, adjudication other ground of appeal raised by assessee have become academic.”
11. As the issue is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench in the case of Rajeshkumar Shantilal Patel (supra) and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Co-ordinate Bench. We find no reason to interfere in the said order of the Co-ordinate Bench, therefore, respectfully following the binding judgment of the Co-ordinate Bench in the case of Rajeshkumar Shantilal Patel (supra), we delete the addition made by the assessing officer and allow the appeal of the assessee.
12. Since, we have allowed the appeal of the assessee on merit, therefore, legal grounds raised by the assessee become academic and infructuous, hence, did not require adjudication.
13. In the result, appeal filed by the assessee is allowed.