9911796707
TMI Blog2013 (2) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... il of bank in his confirmation letter from which the above payments were made to the assessee. In favour of assessee Addition u/s 40A(3) – Purchase of land in cash - Payment made in cash above Rs. 20,000 – A.O. treating the assessee to have been engaged in the business of purchase and sale of land – Held that:- A.O. has not been able to make out a case that the lands purchased were shown by the assessee as stock in trade. Said amount not included in P&L account of assessee, shown in asset side in balance sheet. Therefore decides in favour of assessee Capital Gain or business income – Long Term capital gain from sale of land - A.O. argued that the assessee used to get the agricultural land converted in the non-agricultural land and small pieces of plots of land and then used to sale the plots to the customers – Held that:- Assessee has shown the long term capital gain in respect of sale of land which was purchased in March, 1994. It is also not in dispute that this land was shown by the assessee under the head fixed assets. The assessee sold this land during the year under consideration i.e. almost after 13 years. Therefore, the profit arising on account of sale of such land h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the deposits. However, as per the A.O., no confirmation and any evidence as to identity and creditworthiness of the depositors were furnished by the assessee in respect of these deposits despite various opportunities accorded to him. In view of these facts the A.O. held these deposits as unexplained deposits u/s 68 of the Act and accordingly, added the same to the total income of the assessee. Aggrieved by this order of the A.O. the assessee went in appeal before ld. CIT(A) who deleted these additions after obtaining remand report of the A.O. on the submissions of the assessee. 4. Aggrieved by this order of ld. CIT(A) now the Revenue is in appeal before us. After hearing both the parties, we find that before ld. CIT(A) the assessee in its written submissions dated 27.03.2011 stated that the A.O. has neither issued any show cause notice for these additions nor it accorded reasonable opportunity of being heard to him for submitting cogent proofs and evidence. The submission of the assessee before ld. CIT(A) was as under:- i) Advance received of Rs.11,10,000/- The A.O. discussed and has verified the advance received. It is current liability which has to be sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of Shri B.G. Patel is established and he, therefore, rightly deleted the addition of Rs.1,00,000/- made by the A.O. u/s 68 of the Act. 6. In respect of deposit of Rs.10,10,000/- taken by the assessee from Shri Jigar A. Patel, the A.O. in his remand report submitted that no confirmation was furnished in respect of such depositors. There was only given confirmation of Shri B. A. Patel who is the power attorney holder of Shri Jigar A. Patel. During the remand proceedings the A.O. asked the assessee to produce Shri J.A. Patel for examination u/s 131 of the Act but he was not produced on the ground that he is out of India. Shri Balendra A. Patel, the power of attorney holder of the depositor of Jigar A Patel was produced for examination but as per the A.O. since the examination of the depositor u/s 131 of the Act was being personal and also the power of attorney was dated 06.05.2009 relevant to financial year 2009-10, he declined to examine Shri B.A. Patel. The A.O. further found that copy of the sale deed dated 3rd June, 2009 produced in respect of sale of plot to Shri Jigar A. Patel and Kartik Patel was found to have been made by Shri Balendra A. Patel as a power of attorney ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned that details of cheque number through which the above amounts were paid to the assessee for purchase of above plots. Shri Jigar A. Patel has also given the detail of bank in his confirmation letter from which the above payments were made to the assessee. On the basis of these evidences and details ld. CIT(A) was of the view that it cannot be said that the above amount of Rs.10,10,000/- which was paid by Shri Jigar A. Patel to the assessee was unexplained cash deposit and based on this addition cannot be made u/s 68 of the I.T. Act. He, therefore, rightly held that the A.O. was not correct in making addition of Rs.10,10,000/- u/s 68 of the Act to the total income of the assessee treating the same as unexplained deposits. The order passed by him is hereby upheld. This ground of the Revenue is dismissed. 7. Ground No.2 relates to addition of Rs.21,80,000/- made u/s 40A(3) of the Act which has been deleted by ld. CIT(A). 8. Brief facts of the case are that the A.O., during the assessment proceedings, found that assessee had purchased a land at S.N. 4/13 4/17 situated at Ghansimaiguda (V), Samsabad Mandal, R.R. District, A.P. on 27.12.2007 from Shri P. Bairaj, s/o L/Shri P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions were sent by ld. CIT(A) to the A.O. for his comments. The A.O. in his remand report in respect of disallowance of Rs.21,80,000/- as made by him u/s 40A(3) of the Act submitted that during the course of assessment proceedings the assessee was requested to produce Shri B. Balraj and Smt. P. Balamani, wife of Shri Balraj, the persons from who the lands were purchased and payments were made in cash, personally for examination u/s 131 of the Act. None of them were produced by the assessee for examination. During the assessment proceedings the assessee was found to have been regularly engaged in purchase of agricultural as well as non-agricultural land and other immovable property. Thus the A.O. in his remand report repeated the stand taken by him during assessment proceedings and justified the addition made u/s 40A(3) of the Act. Ld. CIT(A), however, deleted this addition by observing as under:- As per the A.O. the appellant derives income from business of land development and from purchases and sale of land. But all these facts as mentioned by the A.O. are of general nature and there is no specific findings of the A.O. so far as this particular transaction of purchase of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Balaraj has confirmed that he has sold agricultural land bearing Survey No:4/13 and 4/17 situated at Ghansimiyaguda to Shri Harishbhai. In the said confirmation letter, Shri B. Balaraj has further stated that he is residing in a small village having no bank facility. Aggrieved by this order, now the Revenue is in appeal before us. 10. At the time of hearing, ld. D.R. relied on the order of the A.O. on the other hand, ld. A.R. relied on the order of ld. CIT(A). 11. After hearing both the parties and perusing the record we find that the A.O. has made disallowance of Rs.21,80,000/- by invoking the provisions of Section 40A(3) by treating the assessee to have been engaged in the business of purchase and sale of land. The assessee s contention has been that this disallowance was not called for as payment of Rs.21,80,000/- was not debited to the profit and loss account for the year under consideration and this payment was made for purchase of land and hence there is no question of making disallowance u/s 40A(3) of the Act. Ld. CIT(A) has given relief to the assessee by accepting this plea of the assessee as he found that the land purchased by the assessee have been shown by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. himself in his above remand report has stated that on verification of copies of sale deeds, copy of balance sheet as on 31.3.2003, statement of income and copy of receipt of return for A.Y. 2003-04 as produced by the appellant, it was found that the land under reference was purchased in March 1994 and the same was shown under the head fixed assets-sub head agricultural and non agricultural land. The A.O. has submitted in his remand report that the appellant had income from other source only in A.Y. 2003-04. Thus finally the A.O. has submitted that the matter may kindly be decided on merits. In view of the facts as mentioned above the basis on which the above amount of Rs.9,38,176/- has been treated as business income is not justified at all. The appellant has shown the Long term capital gain on this amount of Rs.9,38,176/- in respect of sales of the land which was purchased in March 1994 as is admitted by the A.O. himself. Further this land was shown by the appellant under the head fixed asset and this fact has also been admitted by the A.O. From these facts, it is obvious that there cannot be business income on the sale of land which was purchased by the appellant in March ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
