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O/TAXAP/95/2001 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 95 of 2001 With TAX APPEAL NO. 96 of 2001 TO TAX APPEAL NO. 102 of 2001
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and HONOURABLE MR.JUSTICE K.J.THAKER
================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ SMT. SHAMABEN ALIAS SMITA VARMA....Appellant(s) Versus ASSTT. C I T....Opponent(s) ================================================================ Appearance: MR SN DIVATIA, ADVOCATE for the Appellant(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Opponent(s) No. 1 ================================================================ Page 1 of 8
O/TAXAP/95/2001 JUDGMENT CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER
Date : 03/12/2014
ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE K.J.THAKER) 1. By way of these Tax Appeals, the appellant-assessee, being the same in all these Tax Appeals, has challenged the judgment and order dated 20.9.2000 passed by the Income Tax Appellate Tribunal in ITA No. 2477/Ahd/92 for AY 1981-82, 2478/Ahd/92 for AY 1982-83, 2473/Ahd/92 for AY 1981-82, 2474/Ahd/92 for AY 1982-83, 2479/Ahd/92 for AY 1983-84, 2475/Ahd/92 for AY 1983-84, 2476/Ahd/92 for Ay 1986-87 and 2472/Ahd/92 for AY 1986-87. 2. While admitting these appeals, this Court has framed the following substantial questions of law: 1. Whether on the facts and circumstances of the case, the Tribunal could have arrived at the conclusion to restore the addition by way of “on money” on sale of land at Nanded on the basis of seized material and the assessment order in case of Shri K.B.Verma, HUF, which did not Page 2 of 8
O/TAXAP/95/2001 JUDGMENT pertain to the appellant ? 2. Whether the Tribunal has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts formed are such that no person acting judiciously and properly instructed as to the relevant law could have found ? 3. The facts of the present appeals are that the assessee has filed return of income for the respective assessment year. The assessee is daughter of Shri K.B. Verma and staying with her father at No. 7,Krishna Society, Ellisbridge, Ahmedabad. On 2.12.1982 the residential and business premises of Varma Group was raided at Ahmedabad and Bombay and lot of incriminating materials showing substantial amount of tax evasion were seized, so much so Varma Group decided to file petition before the Settlement Commission and the assessee is one of them to file Settlement petition for AY 81-82 to 83-84 of income tax. The Settlement Commission at Bombay has rejected the petition of assessee. In response to notice issued u/s. 143(2) in the initial stage, the father and brother of the assessee along with their C.A. have attended the proceedings. It may be pointed out that on 18.4.70 M/s. S.K. & Co. of Nanded, Maharashtra Page 3 of 8
O/TAXAP/95/2001 JUDGMENT bought agriculture land jointly in the name of seven ladies, three ladies belonging to the branch of Shri K.B. Varma including assessee and three ladies belonging to the branch of Sumeshchandra K. Varma of Nanded and only lady is Nandaben, wife of Rasiklal. In this connection, it may be pointed out that during the course of search u/s. 132 of the Act on 2.12.82 a bank pass book was found in the name of Rasiklal Mohanlal Shah of Bank of Baroda, Naroda Branch. Credit of Rs. 84,000/- was not explained by Shri K.B. Varma and this amount of Rs.84,000/- was added in the total income of Shri K.B.Varma, individual in AY 1981-82. It is, therefore, clear that Nandaben is the wife of Shri Rasiklal whose book account was added in the case of Shri K.B. Varma. In the purchase deed all the seven ladies had described themselves as agriculturists. It is also a fact that purchase consideration was paid by M/s. S.K. & Co., a firm which deals in mainly purchase and sale of land, building. It may be pointed out that M/s. S.K. & Co.,is always indulged in buying land in the individual name of family members including ladies, pay purchase consideration by passing havala entries, sell that land when prices are quite high and deals with sale proceeds in the accounts of those ladies or persons. The land was converted into non-agricultural land, on 21.1.71. it is surprising to note that within Page 4 of 8
O/TAXAP/95/2001 JUDGMENT ten months, all the ladies become non- agriculturist by converting the land into non- agriculture. It is, therefore, clear that description of occupation of the seven ladies given in the purchase deed dated 18.4.70 as agriculturist was deliberately given wrong by them because agriculture land cannot be sold to a non-agriculturists. The act of converting the land into non-agriculture clearly shows the intention of the assessee to earn profit out of the sale of land and not to hold it as capital assets. During the assessment proceedings, vide order sheet entry dated 30.1.89 the assessee was requested to show- cause as to why surplus arising out of sale of land should not be treated as business profit or profit arising out of adventure in the nature of trade on account of detailed reasons given in the case of K.B. Varma, HUF. After considering the material on record, the Assessing Officer has passed the said assessment order. Against the said order of assessment, the assessee has preferred an appeal before the CIT(A) which came to be partly allowed. Against the said order of CIT(A), the Revenue has preferred an appeal before the ITAT. The Tribunal reversed the finding of the CIT(A) mainly on the fact that father of the uncle of the appellant was engaged in such kind of ‘on money’ transactions. Page 5 of 8
O/TAXAP/95/2001 JUDGMENT 4. Heard the learned advocates appearing for the parties and considered the submissions. Learned advocate Mr. Divatia has taken us through the reasoning given by the CIT(A) and has contended that section 52(2) would not be applicable in the present case in light of the decision of this Court in the case of Commissioner of Income Tax v. Smt. Nitiben Chamanlal Parekh, reported in (1994) 209 ITR 527 (Guj.). He has further relied on the facts also and has submitted that this case is governed by the decision of this Court in the case of Udyan Gajjar v. Commissioner of Income Tax reported in (1993) 203 ITR 224. Mr. Divatia learned advocate has further relied on the decision of the Punjab & Haryana High Court in the case of Prem Narain v. Commissioner of Income Tax reported in (2006) 287 ITR 56 (P&H). However, Mr. Bhatt learned advocate appearing for the Revenue has taken us through the decision of the Tribunal and submitted that this Court should not interfere with the finding recorded by the Tribunal as they are based on evaluation of the evidence. Unfortunately, on going through the decision of the Tribunal, it appears that the Tribunal has merely relied on a statement of Shri K.B. Varma. The Tribunal in para-12 and 13 observed as under: Page 6 of 8
O/TAXAP/95/2001 JUDGMENT “12. The
learned
Departmental Representative, assailing the deletion of ‘on-money’ by the ld. CIT(A) argued that Shri KB Varma HUF is a key member of the Varma Group and charging of ‘on-money’ 15 times of the apparent consideration has been duly accepted and acknowledged by Shri K.B. Verma. Settlement petitions had been filed and taxes on the basis of receipt of ‘on-money have been paid by Shri K.B. Varma. The learned DR,referring to the seized documents placed at page 8 of the paper-book as well as the statement of Shri K.B. Varma dated 2.12.1982 argued that there is substantial evidence on record in support of the conclusion that the assesses of the group have been receiving ‘on-money’ on sale of lands. The ld. DR pointedly referred to the sale rates shown in the various transactions and argued that the ridiculous consideration reflected in the sale deeds, coupled with the categorical admission of the key member of the group as well as the seized document supporting charging of ‘on-money’ afford adequate evidence in support of the additions on account of ‘on-money’ made by the AO. 5. Having given our considered opinion, we feel that the Tribunal has fallen in error while appreciating the facts as the parcel of land for which the allegation was made and the parcel of the land for which the assessee has been assessed are different parcels of land, Page 7 of 8
O/TAXAP/95/2001 JUDGMENT and there is no whisper regarding parcel of land for which CIT(A) has given detailed and cogent reasons. In this factual matrix, it will be better if the Tribunal again delve into the issue regarding the factual matrix and come to the conclusion after evaluating the decision of CIT(A) which is well reasoned decision considering all the years in question. 6. In that view of the matter, all these matters are remitted back to the Tribunal for a fresh consideration. All these Tax Appeals are allowed to the aforesaid extent. It goes without saying that we have not opined or decided question no. 1. However, question no. 2 appears that the Tribunal has quashed and set aside the order of CIT(A) without appreciating proper evidence, and therefore, question no. 2 is answered in favour of the assessee and against the Revenue. However, without expressing anything on merits, on factual matrix and legal matrix, the matters are remitted back to the Tribunal for a fresh consideration. (K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 8 of 8