PARESH ISHWARBHAI DESAI,,AHMEDABAD vs. THE ITO, WARD-2(2)(4),, AHMEDABAD

आदेश/O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER:

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.

3. 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.

4. 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).

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.

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 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.

8. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.

9. The AR before us filed a paper book running form pages 1 to 86 and reiterated the submissions made before the authorities below.

10. 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.

11. 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

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.

Order pronounced in the Court on 11/11/2022 at Ahmedabad.