SHRI DHAVAL RAJKUMAR JAIN,DAMAN vs. INCOME TAX OFFICER, DAMAN WARD, DAMAN

The Ld. CIT(A) after considering the submission of assessee held that notice issued under section 148 was served upon assessee and returned of income was not filed by assessee thereafter assessment was completed under section 144 of the Act. The assessee purchased immovable property during the year under consideration and transaction was registered before Sub- Registrar, Daman on 24.04.2010 and total sale consideration of Rs.70.00 lakhs, stamp duty of Rs.4,20,000/-, registration charges of Rs. 35,025/- was incurred. Hence, total investment for purchasing said property is Rs.74,55,025/- and property was purchased by assessee with six other co-owners and no share about investment is mentioned in the sale deed. Accordingly, total shares were treated as “equal”. On the above observation, the addition of unexplained investment was upheld as it is. However, the other additions made by Assessing Officer was deleted by Ld. CIT(A). However, he has not expressed any (A.Y 11-12) Sh. Dhaval R. Jain thing in his finding whether additional evidence was admitted or any whether remand report was called from Assessing Officer. Further aggrieved, assessee has filed present appeal before Tribunal.

I have considered the submission of Ld. Authorized Representative (Ld. AR) for the assessee and Ld. Senior Departmental-Representative (Ld. Sr-DR) for the Revenue and the orders of lower authorities carefully. The Ld. AR for the assessee submits that assessee is an individual and residing in Daman. Besides running three proprietary concerns, he is doing other activities. In the month of August, 2008, Maharashtra State Financial Corporation (MSFC) issued publication for sale by Auction of industrial units / plots, possession, which was taken under section 29 of State Financial Corporation Act, 1951, total area of land was 1400 square meters. A copy of publication of newspaper is filed at page 23 of paper book. The assessee along with other six co-owner including Shir Prakash M. Lunawat (HUF) acquired / purchased such land. The assessee along with other six co-owner made representation to MSFC that they have made the payment of Rs.70.00 lakh for against the purchase cost of plot No.21 & 22 at Survey No.261/1,(21) 61/1(22) Kesar Industrial Estate, Bhimpore. The assessee alongwith other co-owners also informed the (A.Y 11-12) Sh. Dhaval R. Jain shareholding pattern of all purchasers. The proposal of assessee and their other co-owners were accepted of MSFC. The assessee made payment through demand draft which was drawn on Oriental Bank of Commerce on 05.11.2028 for a consideration of Rs.7,01,966/- on account of consideration of his share in respect of said plots. The possession of said plots were handed over on 11.11.2008. The assessee has shown investment in his audited books of account in financial year 2009-10. The MSFC executed sale deed in favour of assessee and other six co- owners, however, by due to inadvertence, the ratio of share of all the owners are not fully explained in the sale deed. The Ld. AR for the assessee submits that fact remain that same share of assessee is only 10%, and all the details of history about auction sale is mentioned in the sale deed dated 24.04.2010. The sale deed also contains the reference that possession of the property was handed over to the purchaser on 11.11.2008. The Ld. AR for the assessee submits that the said land was sold by assessee along with other six co-owners to Suresh Ranchhod Tandel and Naresh Ranchod Tandel in the current assessment year and on sale of plot / land the assessee and other six co- owner earned a profit of Rs.4,62,502/-only and as per shareholding @ 10%, the assessee earned only Rs.46,250/-, which has correctly shown in the working of profit sharing at (A.Y 11-12) Sh. Dhaval R. Jain page 65 of paper book. Such share profit sharing was furnished by other co-owners, namely, Suresh Tandel, Naresh Tandel, Smt. Puspa P Lunawal, P.M. Lunawat (HUF), Shri R. Merchant, Shri Milined R Jain to their respective Assessing Officer on 27.11.2013, in response to query issued by their Assessing Officer vide notice dated 15.11.2023, as the cases of all other co-owners were also reopened by department. On furnishing such details, their case was closed.

The Ld. AR for the assessee submits that Ld. CIT(A) though on considering the additional evidence deleted other addition, however, on the main addition of unexplained investment, has not considered the submissions as well as evidence produced. The Ld. CIT(A) simply uphold the order of Assessing Officer by holding that the assessee along with other six co-owner purchased the property without considering the fact that the assessee owned only 1/10th share and has paid 1/10th consideration of the land, which is clearly evident from his bank account (copy of which filed at page 21 of paper book). The Assessing Officer treated the gain as STCG instead of LTCG, in fact, capital gains are to be considered from the date of substantial / entire payment made in the month of November, 2008 and on taking possession on 11.11.2008 and not from the (A.Y 11-12) Sh. Dhaval R. Jain date of registration of sale deed which was made only in the month of April, 2010.

On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities and submits that as has not filed complete details in order to any return of income in response to notice issued under section 148. The Assessing Officer in absence of detailed complete assessment under section 144 and Ld. CIT(A) while passing appellate order has not considered such evidence. The assessee has not relied on such evidences, which is filed by assessee as additional evidence under Rule 46A. the ld Sr DR submits that the assessee cannot be allowed relief at this stage. In the alternative submission, the ld SR DR for the revenue submits that in case the Bench is of the view that the evidence filed by the assessee required consideration, the issue may be set aside/ restored back to the file of Assessing Officer for considering such evidence. On the shareholding of assessee, Ld. Sr-DR for the Revenue submits that neither any submission was made for explanation of such shareholding nor any evidence was filed, therefore lower authorities have no option but to expect to decide assessee’s case on the basis of material available on record.

I have considered the submission of both the partis and perused the order of lower authorities carefully. I find that the Assessing 8 (A.Y 11-12) Sh. Dhaval R. Jain Officer made the addition of unexplained investment by taking view that assessee has not filed any detailed before lower authorities I find that before NFAC/Ld. CIT(A) assessee filed detailed written submission along with application for additional evidence under Rule 46A. The assessee also furnished various evidence including copy of notice of auction for sale of impugned plot. I find that assessee furnished acceptance of auction purchased by MSFC and copy of possession letter dated 11.11.2008. On perusal of such evidence, I find that assessee has paid Rs.7,01,966/- and total value of auction purchased was Rs.70.00 lakh as has been mentioned in the sale deed, thus, assessee has paid only 1/10th of the value of land, which is 1/10 share of the total sale consideration. The investment of assessee is duly reflected in his audited balance-sheet, copy of which is available on record. I find that before Ld. CIT(A) assessee in para-5 of his submission has clearly stated that his shareholding is 10% and he has incurred cost of Rs.7,72,750/- and such expenses are duly disclosed in his books of account of earlier year. All such fact was not considered by Ld. CIT(A) despite taking such facts on record. The NFAC/Ld. CIT(A) candidly ignored all the facts and upheld the action of Assessing Officer. I am of the considered view the order of Ld. CIT(A) is not justified in not considering the material evidence. Further the ld (A.Y 11-12) Sh. Dhaval R. Jain CIT(A) has not given express finding that additional evidence is not being considered or was considered. In my considered view, evidence furnished by assessee was having direct relevance with issues in appeal before Ld. CIT(A). I further find that assessee has made specific prayer in application under Rule 46A that he has no option to file evidence as the order of Assessing Officer under section 144.

On appreciation of evidence on record, I also find that assessee having 1/10th share in the impugned plot / land and the date of acquisition for the purpose of working of capital gains be considered as on 11.11.2008, which is the date when possession was obtained by assessee and other six co-owners and entire consideration was paid by them. Hence, I direct the Assessing Officer to delete the addition of Rs.10,65,003/- and to consider the share of assessee as 1/10th instead of 1/7th and workout taxable capital gains accordingly.

In the result, the appeal of the assessee is allowed. Order pronounced in open court on 14th August,2023.