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TMI Blog2022 (8) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of expenses is to be allowed. Since the assessee has claimed expenses of Rs.43 lacs, the balance, i.e Rs.19 lacs is only liable to be disallowed for want of substantiation. The disallowance of expenses accordingly is directed to be restricted to the extent of Rs.19 lacs. Addition made to the sale consideration on account of deposits in the bank account of the assessee not included as part of sale consideration to this extent - onus on the legal heir post assessee death - HELD THAT:- As the assessee had expired, suspected to be murdered by his family and his daughter was his only legal heir. The daughter claimed to be totally unaware of the financial transactions of her father, the assessee, and it was only his caretaker, Ms.Ritaben, who was constantly with him and claimed to be in know of the facts of the transaction. Revenue has at no point controverted or disputed these facts. Also it was on the basis of the caretakers admissions that the sale consideration received for the sale of impugned two lands was increased from the registered value including therein all cash deposits in bank, both of the assessee and the caretaker, attributable to this transaction, gold biscui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of acquisition being taken from F.Y 1981-82 as done by the assessee as opposed to from 08-09 taken by the A.O. - HELD THAT:- D.R. was unable to controvert the factual findings of the ld. CIT(A) that the assessee had acquired the land from his late brother on succession, who in turn had owned it since 1966. This fact has not been disputed by the A.O. also. We have noted that the Ld.CIT(A) has relied upon the decision of the jurisdictional High Court in the case of Rajesh Vithalbhai Patel [ 2013 (7) TMI 413 - GUJARAT HIGH COURT ] for the proposition that on succession, as per law, the cost of acquisition is to be taken as that to the previous owner and holding of the property also accordingly to be taken from the date when held by the previous owner.The Ld.DR was unable to distinguish the said decision before us nor did he point out any contrary decision of the Hon ble jurisdictional High Court or the Hon ble apex court on the issue - no reason to interfere in the order of the ld. CIT(A) allowing indexation of cost of acquisition from 1981-82. Fair market value of the land in question as computed by the D.V.O - determination of the cost of acquisition of the asset sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zure made by the Police. But, the same could not be requisitioned then as proceedings were pending before the Court at Jamnagar. However, enquiries were made by the ADIT(Inv.), Jamnagar from the concerned persons. Later on, the Court vide its order dated 30-03-2013 allowed the Income-tax Department to seize the assets and directed the Department to complete the assessment within two months from the seizure. The department went in appeal to the High Court against the decision of lower court to complete the assessment in two months. The Hon'ble Gujarat High Court directed the Department to complete the assessment on or before 31-07-2014 vide their order dated 20-03-2014. The assessment proceedings were accordingly taken up immediately so as to complete it within the time frame directed by the Hon'ble High Court although the time barring date to complete the assessment as per section 153A of the Act was 31-03-2016. As requisition u/s. 132A of the Act was made in the case of the assessee from the Jamnagar Police on 11.4.2013. Consequently, proceedings u/s. 153A of the Act were initiated by issuing notice dated 18.2.2014 which was duly served upon the legal heir of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Sale Consideration (B) 65,362,045 (-)Purchase cost of land 2,472,735 indexed cost of acquisition (C) 2472735*785 100 19,410,970 Expense for sale (D) 4,300,000 Total Purchase cost (E=C-D) 23,710,970 Net Capital gain chargeable to tax (F=B-E) 41,651,075 4. On verification of the details of capital gain given in the computation of income, it was noticed that the assessee had taken the cost of acquisition of Rs. 24,72,735 as on 1-04-1981 and arrived at the indexed cost of acquisition at Rs. 1, 94,10, 970/- by applying cost index of the year 1981-82 and 2011-12. After claiming further deduction of Rs. 43,00,000/- as expenses, net long term capital gain was shown at Rs. 4,16,51, 075/-. On verification of the copy of sale deed fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.43 lacs on account of Brokerage,legal fees and other expenses was denied for want of evidence vii) Assessees was allowed claim of expenses of Rs.8 Lacs being amount of advance received from Mr.Iqbal Arandia refunded on account of an earlier agreement to sell entered into with him being canceled. Accordingly the capital gain of the assessee was recomputed by the A.O. to Rs. 11,20,01,490/-, as opposed to Rs. 4,16,51,075/- declared by the assessee, after making the above adjustments as under: Sale consideration as shown by the assessee Rs 6,53,62,045 Add:- Additional consideration (as discussed in para 7.2 above) Rs 5,00,00,000 Add:- Cash consideration received (para 8.2) Rs 5,00,000 Total full value of sale consideration Rs 11,58,62,045 Less:- Cost of acquisition (para 5.5) Rs 22,69,1007- Indexed cost of acquisition (para 5.7) 22,69,100 x 785 / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s actually deposited from the earlier withdrawal made from the same Bank account. 5. The learned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) -11, Ahmedabad has erred in law as well as on facts while not considering the fact that the appellant has made withdrawal in cash of Rs. 2 Lacs out of balance available, in bank account on various dates deposited thereafter Rs. 12 Lacs cash in his Saving Bank account of Canara Bank on 23/06/2011 and thus offered Net cash deposited as income of Rs. 10 Lacs. Similarly, the appellant has made withdrawal of Rs. 3 Lacs from Canara saving bank account in cash on 24/06/2011 out of fund available with him thereafter made deposit of Rs. 5 Lacs in cash his HDFC saving bank account on 07/07/2011. Thus, the net deposit of Rs. 2 Lacs is offered as income. Thus, while assessing the income, the 'earned Assistant Commissioner of Income Tax, Central Circle-1, Rajkot as well as the learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad has erred in law as well as on facts in not considering the netting off effect of cash deposited as Income of the assessee. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drew our attention to paper book page no. 7 giving the break up the sale consideration returned by the asessee, of Rs.6,53,62,045/-, as under: Sr. No. Particulars Amount 1. Sale of land situated at T.P. Scheme No. 1, P.P. No. 31, Jamnagar 1,26,82,000/- 1,35,00,000/- 2. Cash Deposits into Bank Accounts on various dates 34,33,000/- 3. Cash Deposit into Ritaben Patel Account 12,00,000/- 4. Cash seized during search conducted 2,01,47,045/- 5. Value of Gold Biscuits seized during search 1,20,00,000/- 6. Expenses incurred in connection with the transfer of Asset offered for income 24,00,000/- Total Full Value of Consideration as per Return of Income 6,53,62,045/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O., we have noted that the sales consideration has been taken at Rs. 6,53,62,045/- which as per the A.O. himself includes 24 lakhs of the expenses claimed by the Assessee. Thus the inclusion of the assessee of Rs.24 lakhs of expenses, as part of sales consideration is admission of the fact of having incurred such expenses out of undisclosed sources, and the sale consideration, including these expenses, being accepted by the Revenue, the fact of incurring expenses also stands accepted. The Revenue is therefore precluded from denying the claim of expenses for want of substantiation. We hold therefore that to the extent of expenses incurred which are included as part of sale consideration and which is accepted by the Revenue also, amounting to Rs.24 lacs, the assesses claim of expenses is to be allowed. Since the assessee has claimed expenses of Rs.43 lacs, the balance, i.e Rs.19 lacs is only liable to be disallowed for want of substantiation. The disallowance of expenses accordingly is directed to be restricted to the extent of Rs.19 lacs.. 18. This ground of appeal of the assessee is therefore partly allowed. 19. Ground no. 4 5 it was common ground related to the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of these facts and circumstances, deposits to the extent of Rs 2.00 lac into Canara Bank and Rs 3.00 lac into HDFC bank is treated as unexplained cash and added to the assessee's total income. Since the source of cash is the sale proceeds of land, the amount of Rs 5.00 is treated as sale consideration and the same is added to the capital gain. As the assesses has concealed the particulars of its income of Rs. 5,00,000/-, penalty proceedings under section 271(l)(c) are being initiated for concealment of particulars of income. 21. The same was confirmed by the ld. CIT(A). 22. We have heard both the parties. A perusal of the contents of the total sale consideration shown by the assessee of Rs. 6.53 crores, as reproduced above, reveals that the assessee had disclosed an amount of Rs. 34,33,000/- as attributable to cash deposit in bank on various dates. The findings of the AO while making addition of Rs.5 lacs on account of unexplained cash deposits, we find, are very vague and general. We find that he has given no specifics as to how he arrived at the findings of the impugned cash deposit in bank not accounted for in sales consideration. What he only states is that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden with the onus of evidencing transactions which she was totally unaware of. Moreover considering the fact that the amount sought to be added by the Revenue on account of unexplained cash deposit of Rs.5 lacs, is too paltry a sum in comparison to the total sale consideration shown by the assessee of Rs.6.53 crores,in our view no addition of the said unexplained cash deposit of Rs.5 lacs is warranted on account of non substantiation. The addition of Rs.5 Lacs is accordingly directed to be deleted. 25. In view of the above, ground of appeal no. 4 5 is allowed. 26. In effect, appeal of the assessee is partly allowed in above terms. ITA No. 365/Rjt/2015- Revenue s appeal. 27. Ground no. 1 reads as under: 1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.5 crore solely relying on the statement of Ms. Reetaben Vaishnav. 28. Ground no. 1 raised by the Revenue is in relation to the deletion of addition of Rs. 5 crore made to the sale consideration received by the assessee which addition was made on account of the said amount stated to have been paid by the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was no record of the quantum of the money paid by the assessee out of court settlement except the statement of Miss Ritaben Patel who was handling the affairs of the assessee. She confirmed in her statements that the sum of Rs.5.00 crore was paid for settlement of the case. Therefore, he held that this payment also represented unaccounted portion of the sale consideration of the land over and above the consideration disclosed by the assessee. 30. The Ld.CIT(A) deleted the addition holding at Para 6.6 of his order as under: 6.6 The findings of the A.O. for making addition on the ground of payment made for out of court settlement and the material he relied upon to justify his action were carefully examined. The contents of the statements of Ritaben Patel recorded by the Police Department, by the Officer of the Investigation of the Department during the course of search and by the Assessing Officer were factually self-contradictory. Admittedly, the payment was not made in her presence and she did not know the persons involved in the transactions in issue. The Police did not seize the diary which Ritaben Patel stated in her statement before the A.O. Her statement that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed facts to the effect that her statement in this regard was not reliable. He noted that the payment was neither made in her presence nor was she aware of the parties involved in it. Her statement that the transaction was recorded in a diary maintained by her and which diary was seized by the Police was found to be false as there was no mention of any diary in the panchnama of the Police. Ld.CIT(A) also noted that even the AO did not refer to any diary while making the addition and that in fact when the assessee asked the AO to confirm whether he had examined any such diary seized by the Police, the AO did not respond. 33. These factual findings of the Ld.CIT(A) have not been controverted by the ld. D.R. before us. 34. We have also noted that Mr.Adjania who was the alleged recipient of the settlement amount as per the caretaker, denied receiving any such amount though he admitted to the existence of the dispute and stated that he had only been refunded his advance of Rs.8 lacs, given to the assessee for purchasing the land. 35. The Ld.CIT(A), we hold has rightly held that except for the statement of the caretaker there was no other evidence with the AO to corroborate the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from his late brother who was the owner of the land since 1966. 7.1 The appellant submitted that the land was received by the assessee from his elder brother in succession. His late brother owned this land since 1966 which was evident from the sale deed. He furnished copy of the sale deed from Page 113 to 170 in the paper book. As per provisions of section 49 of the Act, the cost with reference to certain modes of acquisition of assets shall be deemed to be the cost for which the previous owner of the property acquired it as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee as the case may be. The appellant relied upon the decisions of Gautam Manubhai Amin, 218,Taxman 319(Guj.),Rajesh Vitthalbhai Patel 218 Taxman 301 (Guj.) and scores of other decisions in support of his claim. 7.2 The A.O., it appears from his findings, did not consider the relevant provisions of the Act on the issue and also ignored the ratio of the decisions relied by the assessee. Admittedly, the assessee inherited the land from his late brother Shri Prabhat Sinh who was the owner of the land since 1966,. The A.O. did not dispute these fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the difference in the valuation determined by- the valuers was only of 8.24% which was very negligible as both the valuations were based on estimate only. 8.1 After considering the fact that there was no substantial difference in the valuation arrived at by the valuer of the appellant and that of the DVO, in my consider opinion, the assessee should be given the benefit of quantum of difference which was less than 10% with that of the DVO. Accordingly, the A.O. is directed to adopt the value of the land as determined by the valuer of the appellant. Thus, appeal on this ground is allowed. 45. We have perused the contents of the ld. CIT(A) and have noted that he affirmed the claim of the assessee noting that the difference in the two valuations, one by the Registered valuer and the other by the DVO, was only 8% of the cost. The ld. CIT(A) therefore noted that the same was immaterial so as require any substitution of the valuation of the Registered valuer with that by the DVO. We do not find any infirmity in the order of the L.d CIT(A). Valuation undeniably is only a fair estimation of the value of land as on a particular date. And the same is determined by various di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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