SHRI DHAVAL BHOGILAL VYAS,AHMEDABAD vs. THE ACIT, CIRCLE-11, AHMEDABAD

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ITA 153/AHD/2016Status: DisposedITAT Ahmedabad28 January 2022AY 2011-126 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the identity of the parties was established as they had signed the sale agreement and sale deed, which were registered with the land revenue authorities. Therefore, the disallowance was not justified.

What were the facts?

The assessee claimed a deduction of Rs. 68,15,140/- while calculating long-term capital gains from the sale of land. The Assessing Officer and CIT(A) disallowed this claim, stating the assessee failed to prove the genuineness and identity of the parties to whom payments were made.

What were the issues?

Whether the disallowance of expenses claimed as deduction for long-term capital gains is justified when the identity of the payees is established through registered sale deeds.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD

Before: SHRI WASEEM AHMED & SMT. MADHUMITA ROY

For Respondent: Shri S. S. Shukla, Sr. DR
Pronounced: 28/01/2022

This appeal is filed by an assessee and is arising out of the order of the Commissioner of Income tax, Appeals-5, Ahmedabad for assessment year 2011-12.

2.

The appellant has raised the following grounds: 1. On the facts and circumstances of the case as well as on the subject, the Learned CIT(A) has erred in confirming the Dhavan Bhogilal Vyas vs.ACIT Asst.Year–2011-12 - 2 - disallowance of Rs. 68,15,140/- claimed in calculation of long- term capital gain.

2. On the facts and circumstances of the case as well as on the subject, the Learned CIT(A) has erred in confirming the addition on account of unsecured loan of Rs. 1,90,000/-.

3. It is prayed that above additions/disallowances made by Assessing Officer and confirmed by Commissioner of Income tax (Appeals) may please be deleted.

4. Appellant craves leave to add, alter or delete any grounds(s) either before or in the course of hearing of the appeal.

3. There are two grievances of the assessee. One is relating to an addition to Rs.68,15,140/- made by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals), Ahmedabad-5 and another grievance is for addition of Rs.1,90,000/- being the amount of unsecured loan availed by the assessee.

3.1. During the year, the assessee has sold land of Rs.98,99,000/- which is disputed land and the sum of Rs.68,15,140/- claimed to have been paid to various persons and balance amount is offered as capital gain. There is no dispute by the either party that the land is sold and the amount is chargeable to tax under the head capital gain.

4.

The Authorized Representative Shri Hardik Vora, Advocate on behalf of the assessee argued that the payment claimed to have been made for an amount of Rs.68,15,140/- is to confirming parties. He has drawn our attention that these parties have signed the deed before the land revenue office. He further argued that he has placed

Dhavan Bhogilal Vyas vs.ACIT Asst.Year–2011-12 - 3 - on record the vouchers and reply in response to the summons which were also placed on record. He further argued that there is no final show cause notice which were issued by the assessing officer before making the additions/ disallowance.

5.

On the other hand, the Departmental Representative vehemently argued that there were seven chances given to the appellant to prove the claim of expenditure, which were incurred in cash. The Departmental representative further argued drawing our attention to page numbers 55 & 56 of the English translation filed by the assessee, where in it is stated that the second part seller, as per his own convenience, had got entered the name of the his family members – as confirming party but all the financial investments in respect of the said land was made only by the party of second part seller i.e. by the assessee himself.

5.1. In rejoinder, the AR argued that in addition to the name of family member there are other members who are having interest in the said land and the same is evident from their signature in the Banakhat & Sale deed.

6.

We have heard both the parties in relation to disallowance of Rs.68,15,140/- being the amount claimed as deduction paid to various persons by the appellant against the long-term capital gain. The Assessing Officer was of the view that assessee has failed to prove the genuineness of these transactions and even was not able to Dhavan Bhogilal Vyas vs.ACIT Asst.Year–2011-12 - 4 - establish the identity of the persons, whereas the Commissioner of Income Tax, Appeals-5, Ahmedabad was also of the view that assessee failed to furnish supporting details in respect of payments made by him and, therefore, he has also upheld the action of the Assessing Officer.

6.1. The assessee has submitted the related documents along with the English translation thereof of the property document, it is evident from the document so submitted that the parties to whom the payments were made are also party to the signatory of the either sale agreement or agreement to sale entered by the assessee and both the deeds are registered with the office of the land revenue records.

6.2. Thus, the identity of the persons has already been established as they have appeared before the office of land revenue authority placed their signature and signed before the registrar. The only confusion that is required to be verified by the assessing officer that how much amount is paid out of the total sale consideration to each party and the relevant proof thereof, which the assessee could not place on record even though as much as seven chances were given in the assessment proceedings. Looking to the evidences and going through the property documents placed on record, it is clear that the identity of the person to whom the payments claimed to have been paid is established as they all appeared before the office of the registrar and have signed the documents in their presence and attendance is also recorded. Now, the only thing that is required to Dhavan Bhogilal Vyas vs.ACIT Asst.Year–2011-12 - 5 - be verified that how much amount is paid to each party and the relevant proof thereof is required to be verified by the assessing officer. Accordingly, this matter is restored back to the file of the Assessing Officer and assessee is directed to file all the evidence relating to the payment claimed to have been made to various parties as confirming party against the sale of land for an amount of Rs.68,15,140/-. The AO will make the fresh assessment denovo as per the law.

6.3. As regards the addition of Rs.1,90,000/- the Assessing Officer stated even after granting the ample opportunity the assessee was unable to substantiate his claim of unsecured loans. In the first appeal, the CIT(A) has observed that assessee failed to furnish the name, address of the person, confirmation and PAN and, therefore, the action of the Assessing Officer is upheld.

6.4. The AR of the assessee argued that since the assessee has not taken the said unsecured loan of Rs. 1,90,000/- during the year under consideration the same cannot be added to the income of the assessee. On this point the AR and DR both agree that let this issue be verified by the assessing officer that whether the loan is taken for the year under consideration or not? If the loan is not taken in the year under consideration, then the addition is required to be deleted and if the same is accepted in the year under consideration the assessee is requested to file all the details related to this loan and assessing officer may decide accordingly as per law.

Dhavan Bhogilal Vyas vs.ACIT Asst.Year–2011-12

- 6 - 7. In the result, the appeal of the Assessee is allowed for statistical purposes. This Order pronounced in Open Court on 28/01/2022

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