SHRI RAMESHBHAI N. SAVALIYA,,AHMEDABAD vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1),, AHMEDABAD

The Learned Commissioner of Income Tax, (Appeals)-11, Ahmedabad has erred in law and on facts of the case in confirming the addition made by the Smt.Lilaben Rameshbhai .Savaliya Legal Heir of Shri Rameshbhai N. Savaliya Asst.Year 2010-11

The Learned Commissioner of Income Tax, (Appeals)-11, Ahmedabad has erred in law and on facts of the case in confirming the disallowance made by the Assessing Officer of Rs.1,06,204/- claimed as expenditure incurred relating to agricultural income.

The Learned Commissioner of Income Tax, (Appeals)-11, Ahmedabad has erred in law and on facts of the case in confirming the disallowance made by the Assessing Officer of Rs.2,01,668/- claimed as deduction for expenditure as shown in the profit and loss account.”

The assessee filed return of income on 28/09/2020 declaring income of Rs.68,490/-. The assessee also declared agricultural income to the tune of Rs.2,65,510/-. The same was processed u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act" for short). During the course of survey proceedings, the case of Shri Paresh Hiralal Modi conducted at his office who was covered during the course of search of survey conducted in the cases of Amrapali Group on 26/10/2012, a loose-paper file inventorized as ‘Annexure A-2’ (Page Nos.1 to 77) was found and impounded. The said file was related to pieces of land in various survey numbers admeasuring total area of 23272 sq.metres situated at Hathijan Village of Daskroi Taluka of Sub-District Ahmedabad (Narol) of Ahmedabad District . Page Nos.16 to 41 of ‘Annexure A-2’ contains registered Banakhat No.3178/2010 dated 26/03/2010 of the land mentioned above between (i) Shri Rameshbhai Nagjibhai Savaliya and (ii) Shri Kanubhai Dhulabhai Patel (buyer) and (i) Shri Rajesh Ramanlal, (ii) Jashuben w/o. Hasmukhbhai Atmaram and others (seller) of Hathijan Village of Daskroi Taluka of Ahmedabad. According to the said Banakhat dated 26/03/2010, the sale consideration of the said land Rs.1,01,45,000/-. Page Nos.43 to 67 of the ‘Annexure A-2’ Smt.Lilaben Rameshbhai .Savaliya Legal Heir of Shri Rameshbhai N. Savaliya Asst.Year 2010-11

After taking cognizance of the assessee, responses as well as the objections against reopening the assessment, the Assessing Officer disposed of the objection. The Assessing Officer made addition of Rs.79,36,580/- on account of unexplained investment in purchase of land u/s.69 of the Act. Smt.Lilaben Rameshbhai .Savaliya Legal Heir of Shri Rameshbhai N. Savaliya Asst.Year 2010-11

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld.AR submitted that search proceedings in cases of Amrapali Group conducted on 26/10/2012. Survey proceedings in case of Shri Paresh Hiralal Modi and loose-paper file was found and impounded. The said file was related to pieces of land in various survey numbers at Hathijan Village. Draft Memorandum of Understanding related to pieces of land at Hathijan Village was found. Accordingly, the sale consideration of the said land is mentioned at Rs.5,29,10,533/-. As per said draft MOU, the part payment of Rs.1,32,27,633/- (25% of total consideration) was already made. Remaining amount of Rs.3,96,82,899/- to be paid in three equal installments of Rs.1,32,27,633/-. Registered Banakhat No.3178/2010 dated 26/03/2010 of the same land was made between (i) Shri Rameshbhai Nagjibhai Savaliya and (ii) Shri Kanubhai Dhulabhai Patel (buyer) and (i) Shri Rajesh Ramanlal, (ii) Jasuben, W/o. Hasmukhbhai Atmaram and others. According to said Banakhat dated 26/03/2010, sale consideration is of Rs.1,01,45,900/-. The assessee, along with the joint-purchaser (Shri Kanubhai D.Patel), had on the basis of Banakhat rights held by them in respect of the said land, joined as a confirming parties in two separate sale- deeds executed in respect of final sale of this land as under: Smt.Lilaben Rameshbhai .Savaliya Legal Heir of Shri Rameshbhai N. Savaliya Asst.Year 2010-11

Accordingly, on final sale to the thirty party, the assessee and the joint- purchaser (Shri Kanubhai D. Patel) has received back the amount paid by them against Banakhat registered at No.3178/2010 dated 26/03/2010. Survey proceedings has been conducted in case of Shri Paresh Hiralal Modi, who is not known to the assessee. The draft of Memorandum of Understanding (MOU) found during the course of survey proceedings cannot be considered as final document for sale of land as the draft itself contains many corrections and instructions to be carried out before preparing final document. Even the statement of Shri Paresh Hiralal Modi taken at the time of survey as well as the papers found and impounded cannot have any evidentiary value as relating to survey proceedings in case of third party. The Ld.Counsel for the assessee relied upon the following decisions:

As regards Ground No.2 related to disallowance of expenditure on agricultural income, the Ld.Counsel for the assessee submitted that the CIT(A) totally ignored that the assessee was incurring these expenditures in the earlier assessment year as well and, therefore, the Assessing Officer should have allowed these agricultural expenses. Smt.Lilaben Rameshbhai .Savaliya Legal Heir of Shri Rameshbhai N. Savaliya Asst.Year 2010-11

As regards Ground No.3, the Ld.AR submitted that the assessee is not pressing this ground.

The Ld.DR submitted that the document found on third party and the final registered documents are on the similar terms and, therefore, the same cannot be treated as done document, but are very much incriminating documents. The Ld.DR further submitted that the notings on page No.42 of ‘Annexure A-2’ clearly reveals that the assessee was part of the said MOU and the transaction has taken in that manner itself. The Ld.DR relied upon the assessment order and the order of the CIT(A).

As regards Ground No.2, the Ld.DR submitted that the assessee has not explained as to how these expenses on agricultural income has incurred.

We have heard both the parties and perused all the relevant material available on record. From the perusal of ‘Annexure A-2’ documents as well as the statement of Shri Paresh Hiralal Modi gives the picture that the MOU was at the drafting stage and was not final and, in fact, the Assessing Officer at no point of time, demonstrated that the amount mentioned in MOU was the actual amount paid by the seller to the buyer, either from the seller’s account or from the buyer’s account (from respective parties’ bank statements). The document found on the third party’s premises and which were not finalized in the eyes of law cannot be assumed that the same have been acted upon by the parties mentioned therein. In fact, in this case, the parties were not fully mentioned or incorporated as an entire document, but was kept blank in certain clauses. Therefore, this document cannot be the sole criteria for making the addition in consonance with the statement of Smt.Lilaben Rameshbhai .Savaliya Legal Heir of Shri Rameshbhai N. Savaliya Asst.Year 2010-11

As regards Ground No.2, the CIT(A) has given a categorical finding that the assessee did not furnish any evidence about the expenses incurred for estimating the agricultural income and from the perusal of the documents of the agricultural land, there is no mention of any crop or any produce for which the assessee should have incurred in that expenses. Hence, Ground No.2 is dismissed.

As regards Ground No.3 is concerned, the same is not pressed, hence dismissed as such.

In the result, the appeal filed by the assessee is partly allowed.

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त ( अपील ) / The CIT(A)-11, Ahmedabad

"वभागीय ""त"न"ध , आयकर अपील"य अ"धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file.