VALLABHBHAI DUDABHAI CHHATRALA,SURAT vs. ITO, WARD-3(3) (1), SURAT

Asst. Year : 2011-12 - 3– 4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A). However, the Ld. CIT(A) confirmed the action of the Assessing Officer on the presumption that the difference between the consideration mentioned in the earlier agreement and the registered sale deed represented cash payment (on-money) made by the purchasers, including the assessee.

We have considered the rival submission of both the parties and perused the 1. materials available on record carefully. We have also deliberate on various case law relied on by Ld. AR for the assessee. We find that the Assessing Officer made addition in his assessment order by taking view that Department is in possession of a satakhat in respect of the same piece of land, which is duly signed by all the purchasers and sellers and is notarized. It was also held that the assessee has not denied that satakhat was not signed by her or the figure mentioned in the satakhat are true. The Assessing Officer on the basis of language of show cause notice made addition of Rs.65,40,750/-. We find that the assessee right from the beginning demanded the copy of the impugned satakat and denied her involvement in execution of such satakat. We find that the ld CIT(A) confirmed the addition by taking view that assessee along 2. with other co-owners purchased the land and there was satakhat executed between owners of the said plot with Shankar Chaganlal Shah and Govind K. Bhadiyadra for a consideration of Rs.6.28 crores and said satakhat was notarized on 16.08.2010. The land was purchased by assessee with other co-owners from Smt. Laxmiben Maganbhai Nathubahai and Sri Balwantbhai Maganbhai Patel and sale deed was executed on 21.10.2011. The sale deed was executed after 10 months from the date of satakhat. The Stamp Valuation Authority valued the said property at Rs.6.32 crores for the purpose of stamp duty. The Ld. CIT(A) was of the view that it is not necessary that assessee should know the satakhat, the important point is that market value of the land was assessed at Rs.6.32 crores by Stamp Valuation Authority for the purpose of registration of sale deed. The Ld. CIT(A) by referring the provision of Section 69 of the Act held that initial burden lies upon the assessee to offer the explanation in respect of unexplained investment which suitable proof. Further, he was of the view that it is the right of Assessing Officer to frame the opinion whether explanation offered by the assessee acceptable or otherwise. The assessee has not filed any explanation of the source of her investment detected by the Department and assessee failed to reply show cause notice except demanding copy of satakhat. The ld CIT(A) also recorded that provision under section Asst. Year : 2011-12 - 4– 56(2)(x)(b) is attracted as the stamp value of such property exceed the sale consideration. Though, neither the impugned addition was converted from Section 69 to 56(2)(x)(b) of the Act or any direction was given. We find that the provisions of section 56(2)(x)(b) was inserted in the statue book from AY 2014-15, thus, no such provisions are applicable on the transaction of assessee. Even otherwise, there is no finding of ld CIT(A) to make addition under section 56(2) (x)(b). So far as finding of lower authorities that they are in possession of a satakat 3. executed by the original owners with Shankar Chaganlal Shah and Govind K. Bhadiyadra for a consideration of Rs.6.28 crores and said satakhat was notarized on 16.08.2010, is concerned, the assessee right form the initial stage at the time of filing objection against the reopening demanded the copy of such satakat. The copy of said satakat is neither provided to the assessee, nor the contents thereof was recorded in the assessment order. The assessing officer has not proved the nexus or connection of the assessee with Shankar Chaganlal Shah and Govind K. Bhadiyadra who are the purchaser in the alleged satakat.

So far as other observation of ld CIT(A) that the assessee has not proved the source 4. of investment in the land. We find that the assessee in his reply filed before assessing officer vide reply dated 14th May 2018 clearly mentioned that assessee jointly purchased immovable property for sale consideration of Rs.1.05 crores. The assessee’s share is 12.5% and paid on sale consideration of Rs.13,12,500/- through account payee cheque and same is reflected in the bank statement of assessee with “The Surat People’s Co-Op. Bank Ltd.” It was also categorically submitted that the assessee or any other co-owners who purchased the said property has not paid any amount over and above the purchase consideration mentioned in the sale deed. Thus, the observation of ld CIT(A) is contrary to the facts available on record. We are conscious of the facts that no such question about the source of investment in the property was raised as no such averment was recorded by the assessing officer in the entire assessment order, yet the assessee while filing her initial reply has already explained the source of her investment in the land. We find that no evidence whatsoever was brought on record to substantiate the 5. allegation that assessee made any on-money or additional money in addition to sale consideration to the seller. Neither the assessing officer examined the seller nor any evidence brought any material on record to substantiate the allegation of additional money / unexplained investment in the land. The Hon’ble Gujarat High Court in PCIT Vs Ganesh Plantation Ltd (supra) held that when the assessing officer initiated reassessment on basis of information that search in case of Venus Group showed that amount of Rs. 4.00 crores had been received by assessee from Builders of Venus Group through banking channel against corresponding payment of unaccounted cash by assessee to Builders, and considered this as accommodation entry and made addition under section 68, since no live link/proximate nexus of alleged dubious transactions between searched person and assessee had been brought on record, said addition was to be deleted. Now again adverting the facts of the case, when no live nexus or link or relation was proved by the assessing officer or the ld CIT(A) that the assessee or other shareholder who purchased the land with assessee has any relation or are the nominee of the original purchaser allegedly shown in the satakat, the addition is merely on the basis of imagination that the assessee has purchased the land at the same price. It is settled position in the law that suspicion however strong may be cannot take place the position of evidence. Thus, in view of the above factual and legal discussion, the ground No. 2 & 3 are allowed.

Asst. Year : 2011-12 - 5– Considering the facts that we have allowed the grounds of appeal which relates to 6. merits of the appeal, hence, adjudication on all remaining grounds of appeal has become academic. In the result, the grounds of appeal raised by the assessee is allowed. 7.

6. In view of the above facts and respectfully following the decision of the Co- ordinate Bench (supra), we hold that the Revenue has failed to bring on record any cogent material or evidence to establish that the assessee had made any payment over and above the consideration recorded in the registered sale deed. In the absence of any change in the factual matrix or the legal position brought to our notice, the appeal of the assessee is allowed.

The order is pronounced in the open Court on 17.02.2026.