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Income Tax Appellate Tribunal, ‘’ SMC” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-10, Ahmedabad, dated 27/03/2018 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2014-15.
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The assessee has raised the following grounds of appeal: 1. The Learned CIT(A) erred in law and on facts in confirming addition of 8,92,000/- made by the learned A.O. by disallowing assessee's claim of Mattipuran & Leveling Expenses. The addition confirmed by the learned CIT(A) deserves to be deleted. The same be deleted now, 2. The Learned CIT(A) erred in law and on facts in passing the order on the date on which notice of further hearing was given and adjournment was also granted and submission were made which were not considered. 3. The Learned CIT(A) has erred in not properly appreciating the facts, various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. 4. The order passed by the Learned CIT(A) is illegal, invalid and bad in law. It be so held now. 5. The assessee craves leave to add, amend, alter, delete, change or modify any or all grounds of appeal before or at the time of the hearing.
The only issue raised by the assessee is that the learned CIT(A) erred in sustaining the addition of Rs. 8,92,000/- on account of disallowances of Mattipuran & land leveling expenses.
The brief facts are that the assessee is an individual and partner in partnership firm namely GDP Associates and GDP Infra World. In the return of income for the year under consideration, the assessee declared an income of Rs. 9,21,387/- only. The return of the assessee was selected for limited scrutiny under CASS vide notice dated 1-09-2015 under section 143(2) of the Act. The assessee was holding non- agricultural land at Block No. 573/2 and 574/2 along with Shri Gaurang Ravindra Kumar Vyas (also partner in GDP Infra World) in equal proportion. The impugned land was purchased for Rs. 60 Lakh vide deed dated 28-03-2013. Subsequently, the property was transferred to partnership firm namely GDP Infra World for consideration of Rs. 82.85 lakh. The assessee declared short term capital gain of Rs. 73,340/- only after claiming deduction of cost of acquisition and expenses which included expenses of Rs. 8.92 lakh claimed to be incurred in connection with mattipuran & leveling of land paid to one Shri Koradia Natubhai karsanbhai (here after Shri Natubhai).
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The AO to verify the genuineness of impugned land leveling expenses issued notice under section 133(6) of the Act to Shri Natubhai but no reply was received from him. However the AO found that in case of co-owner, the statement of Shri Natubhai was recorded under section 131(1) of the Act on oath, where he admitted that he is a “mason’ and do labour work of plastering. During the year, he has also done plastering work for GDP Infra World but never done work of land leveling or earth filing work. He further stated that the letter head of the bill belongs to him but he never issued any bill with respect to land leveling & earth filing. Likewise, he also stated that signature on bill has been forged. The AO to provide opportunity to the assessee fixed cross examination date as on 18-11-2016 but on appointed date Shri Natubhai did not turn up. However, the assessee turned up and in support of his claim furnished copy of bill dated 09-01-2014 along with copy of bank statement showing payment of Rs. 4 lakh and 4.92 lakh dated 15-05-2014 and 21-05-2015.
5.1 However the AO disagreed with the contention of the assessee by holding that the so called payee has denied to have done any land leveling work. The AO further found that assessee before issuing cheque in favour of Shri Natubhai received amount from firm GDP Infra world. Therefore, the AO was of the view that the M/s GDP Infra World to evade from TDS compliance for plastering work contract given the color of mattipuran and routed the payment through partner’s account. Thus, the AO disallowed the assessee’s claim of mattipran & leveling expenses and added to the short term capital gain.
The aggrieved assessee preferred an appeal before the learned CIT-A. The assessee before the ld. CIT-A submitted that disallowance was made merely on the basis of statement of Shri Natubhai which was recorded in connection with partnership firm GDP Infra World. In case of co-owner, the opportunity of cross examination of Shri Natubhai was provided by the learned CIT-A, where Shri Natubhai has clarified that at the earlier occasion he has given statement in
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connection GDP Infra world for which he has not carried the work of mattipuran. He further clarified that he has carried out the work of mattipuran for the assessee’s co-owner and issued bill for the same. Thus in view of the above and after considering the facts that payment was made through banking channel, the disallowances made by the AO should be deleted.
However, the learned CIT-A after consideration the submission of the assessee confirmed the finding of the AO by observing as under:
2.6 In view of the above discussion, it is seen that Shri Koradiya Natubhai in reply recorded on oath u/s.131 of the Act on 26/07/2016 before ITO Ward-2, Gandhinagar in the case of Shri Gaurang Ravindrakumar Vyas one of the Co owners, to questions regarding his business activities stated thatr he is basically a Mason by profession and does labour-work of plastering only. He has also stated that the knew GDP Infraworld and done plotting and plastering work for them and never done Earth filling work. On a specific question showing the original Bill dated 09/01/2014 for Rs. 8,92,000/- alleged to have been issued by the above person in respect of the so called earth filling work, he has stated that the letter head belonged to him, but he has never issued such a bill nor the signature shown in the bill is made by him nor any earth filling work done by him. Shri Natubhai Koradia has also stated that the bill was not signed by him and the same is forged. The assessee had furnished forged and bogus bill for the alleged expenses of Rs. 892000/- and when such work or payment was denied by the so- called payee. As stated above, carrying out such work was already denied by him. When Shri Natubhai Koradia was given opportunities for cross examination to attend on 18.11.2016, but Shri Natubhai Koradia did not present. Even the assessee was given opportunity to convince Shri Kotadiya to attend office, but he did not come before the A.O. 2.7. The statement of account of the assessee with HDFC bank, Memnagar was obtained by the A.O. also prove that is a pre- planned exercise to defraud the revenue by taking double benefits by GDP Infraworld, assessee's Partnership firm, by not deducting the Tax at Source from the payment of contract payment paid to the mason for the work of plotting and plastering after the purchase of the land on 29/01/2014 and also give the colour of "Matti Puran " work and to claim deduction of the amount to that extent from the Capital Gain in the case of Partners. Similar amount of Rs. 8,92,000/-was also claimed as deduction by the other co-owner of the land and partner of GDP Infraword, Shri Gaurang R. Vyas, under the head "Renovation Expenses" from his share of Capital Gain. (PAN: AATPV5186H ITO, Ward- 2. Gandhinagar). Thus, both owners of the land in question, had together claimed deduction of Rs.17,84,000/-towards the expenses for Matti puran (Earth filling/Renovation expenses). The same modus operand! is adopted in the case of other partner Shri Gaurang Ravindrakumar Vyas also. 2.8. From the above discussion, it is clear that The assessee has wrongly claimed earth filling charges by forged as deposed by Shri Natubhai K. Koradia in his statement u/s. 131 of the Act. The appellant has prepared bogus receipts for payment of Shri Koradia by giving contradictory dates for the issue of cheques. The entire amount was shown as paid after five months of execution of work by a Mason of small means who had denied having done any such work for the appellant. This is also to be noted that a mason who himself is deposing that he can work only as labour-work of plastering and not filling of land as claimed
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by the appellant. The claim by the appellant is not genuine. In view of the above facts and discussion, the addition made by the AO is confirmed in toto. The ground of the appellant is dismissed.
Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.
The AR before us filed a paper book running form pages 1 to 86 and reiterated the submissions made before the authorities below.
On the other hand, the learned DR before us vehemently supported the stand of the authorities below by reiterating the findings contained in the respective orders which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity.
I have heard the rival contentions of both the parties and perused the materials available on record. The AO, computed the amount of short term capital gain by disallowing mattipuran expenses or the land filing expenses for Rs. 8.92 Lakh only for the reason that the alleged payee namely Shri Natubhai denied to have carried land filling work. I note that the impugned property was joint property held by the assessee with Shri Gayrang Vayas being 50% shareholder. Both the assessee and co-owner have claimed mattipuran expenses of Rs. 8.92 lakh in their respective computation of short term capital gain. The AO of the co-owner while farming assessment under section 143(3) of the Act disallowed the same on basis of statement of Shri Natubahi. However during the appellate proceeding in the case of co-owner, the opportunity of cross examination was provided where Shri Natubahi accepted the fact that he has carried out the work of mattipuran for a consideration of 8.92 lakh. On the basis of the same the learned CIT(A) in case of co-owner deleted the disallowances made by the AO. The relevant finding of the ld. CIT(A) in case of co-owner reads as under: I have considered the facts of the case, assessment order, submission made by the appellant, remand report and the rejoinder filed by the appellant. In this case, the AO during assessment proceedings had made an addition of Rs.8,92,000/- on account of SYCG since
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the appellant could not establish the genuineness of mattipuram i.e earth filling expense claimed. The AO had recorded a statement of Sh Koradia, a mason, in this regard who said he had not carried out any earth-filling work for GDP Infraworld for the period under consideration. However, during the remand proceedings, the AO gave an opportunity of cross examination of Sh Koradia to the appellant. He also stated that during the assessment proceedings he was asked whether he had carried out any such work for GDP Infraworld, to which he had answered in the negative.
11.1 Form the above there is no ambiguity to the fact that the genuineness of the land filling expenses has been accepted by the learned CIT(A) in the case of co- owner. Therefore, in my considered view when, the short term capital gain and expenses claimed by the co-owner has been accepted, then the assessee cannot be treated indifferently. In this regard I find support and guidance from the order of coordinate bench of this tribunal in case of M. Ambalal Desai v. ITO [IT Appeal No. 1870 (AHD.) of 2015, dated 7-1-2021 wherein it was held as under:
"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. 8. 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. If 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 ITA No. 2082/AHD/2013 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. 9. We have noted that in assessee's co-owner'scase with respect to the property against the sale of which the assessee claimed Long Term Capital Gain, the AO in assessee's co-owner case in Prabhodhchandra Ambelal Desai allowed the similar Long Term CapitalGain 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 capitalgain 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
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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 capitalgain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capitalgain 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 CapitalGain 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- ownercasei.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 capitalgain 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 capitalgain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capitalgain 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 CapitalGain 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." 11. 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 CapitalGain added by the AO, confirmed by ld.CIT(A) is deleted. In the result the grounds of appeal raised by the assessee are allowed." 11.2 In view of the above elaborated factual and legal discussion, and respectfully following the finding of coordinate bench of this tribunal in aforesaid case, I 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, then the assessee is also entitled for similar relief. I find convincing force in the submissions of the learned
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AR for the assessee. Hence, the appeal of the assessee is allowed. Hence, the ground of appeal of the assessee is hereby allowed.
In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the Court on 11/11/2022 at Ahmedabad.
Sd/- (SUCHITRA KAMBLE) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) (True Copy) Ahmedabad; Dated 11/11/2022 Manish