9911796707
TMI Blog2025 (4) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... te shortly are as follows: The assessee has filed his return of income for assessment year 2012-13, on 17.12.2012, declaring total income of Rs. 8,76,410/-, and agricultural income of Rs. 15,13,000/-. The assessee`s return of income was processed under section 143(1) of the Income tax Act 1961, without any modification. Thereafter the assessing officer noticed that in the assessee`s case, the income chargeable to tax has escaped assessment for the assessment year (A.Y.) 2012-13, within the meaning of section 147 of the I.T. Act, 1961. In view of these facts, the assessee`s case was re-opened u/s. 147 of the I.T. Act, after recording the reasons and obtaining the requisite approval of the Pr. Commissioner of Income-tax-3, Rajkot. Accordingly, notice u/s 148 of the I.T. Act, dated 29/03/2019, was issued by the I.T.O., Ward-2, Junagadh, which was duly served upon the assessee through electronic mode. The assessee in response to the e-notice issued u/s. 148 of the I.T. Act, 1961, filed e-return of income on 15.04.2019, declaring income of Rs. 8,76,410/- and agriculture income of Rs. 15,13,000/-. The assessee has requested to supply the signed copies of reason recorded, the documents fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade unaccounted cash investment of Rs. 6,00,52,600/- (Rs.8,90,52,600/- (-) Rs. 2,90,00,000/-) for purchase of the aforesaid piece of land. The snap shot of Page no. 96 of Annexure A-463 and the another evidence found from the digital data seized from the back office of the K -star group is reproduced by the assessing officer on page no.3 of the assessment order. 5. The assessing officer, therefore issued a show- cause notice dated 09.12.2019 to the assessee, to explain the transaction. In the show-cause notice, the assessing officer mentioned that a Search Action u/s. 132 of the I.T. Act was conducted at the residential and office premises of K. Star Group of Surat on 17.08.2015. During the course of search, many incriminating documents were found and seized. The Land Bearing F.P No. 95. T.P-26. R.S. No. 131 of Sineanpor Village, Taluka: Katargam, Surat. During analyzing the seized documents, it was evident that a land admeasuring 2727.46 sq. mts (3262 sq. yards) bearing F.P. No. 96 of T.P.-26 (Singanpor), R.S. No. 131 of Singanpor Village, Taluka: Katargam, District: Surat, was purchased by the assesseegroup of K. Star i.e. Shri Kishorbhai B. Koshiya, Shri Gagjibhai B. Koshiya an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and also, no cross examination of the witness has been availed. Therefore, in absence of such prime documents / procedure, alleged document seized from the premises of third party cannot be made binding on the assessee and on that basis, addition proposed in assessee`s case was strongly objected. The relevant part of the written submission, on merit, submitted by the assessee, before the assessing officer, is reproduced below: "Without prejudice to the above, on para-3 of the show-cause notice, your good self has mentioned that "During analyzing the seized documents, it was evident that a land admeasuring 2727.46 sq. mts (3262 sq. yards) bearing F.P. No. 96 of T.P.-26 (Singanpor), R.S. No. 131 of Singanpor Village, Taluka: Katargam, District: Surat, was purchased by the assessee group of K. Star i.e. Shri Kishorbhai B. Koshiya, Shri Gagjibhai B. Koshiya and Shri Swintu Arvind Mavani from the seller Shri Jagmal Maldevbhai Bhatu..." In this connection, it is to submit that said observation is totally incorrect in as much as that I had sold the Agricultural Land wherein there cannot be any reference of FP No. or TP No. etc. Therefore, it is clear that so-called incrim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein, it was held that no addition could be made, on the basis of presumption raised by section 132(4A), in the hands of the assessee where in the books of another firm, certain figures were found showing the purchase made by the assessee. vi. Reliance also placed on following decisions: Hon'ble Apex Court in the case of Kishanchand Chellaram held that any addition made on the basis of statement by a Third Party without affording an opportunity for rebuttal or cross examination to the assessee is perverse. It was therefore the obligation of the A.O. to allow the assessee to cross examine in the interest of natural justice before embarking on a final view in this matter. Hon'ble Apex Court in the judgement dated 02.03.1998 in the case of CBI vs. V. C. Shukla &Ors. held that - Entries in books being admission can be used only against the maker or the person under whose authority they were made and not others. Hon'ble ITAT Chandigarh Bench in the case of Abhay Kumar Jain vs. ITO 13 TTJ (CHD) 388, wherein it has been held that "Inference of concealed income from the entries in certain diary found with a third party in a raid could not give valid reason to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from sale of land is strongly objected. xi. Furthermore, your good self may appreciate that the transaction value recorded in the registered sale deed had been called for and examined by Deputy Collector, Stamp Valuation Department, Surat for assessment of stamp duty. In the order passed by Hon. Deputy Collector dated 29.03.2012, he had applied the market rate (Jantri) of developed open plot of land (though, the land sold was agricultural land, which market rate tends to be lower) and at that rate too, he was satisfied with the transaction value at which the transaction has been carried out. Therefore, addition proposed on the basis of arbitrary / imaginary value of land stated to have depicted in unsigned / un-confronted / un-authenticated stated to have been seized from the premises of third party is strongly objected." 8. However, the assessing officer rejected the contention of the assessing and held that assessee had failed to furnish any documentary evidence in support of the unaccounted cash receipts of Rs. 6,00,52,600/- (i.e, Sale of land Rs. 8,90,52,600 (-) Rs. 2,90,00,000), therefore, assessing officer added the same to the total income of the assessee as unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cond document submitted into the record is Form No 6 of Gam Namuno (Haq Patrak), dated 09.07.2013, which denotes the Revenue Department of Gujarat's official notation of the transition of the land in question from agricultural to non-agricultural use. Refer page no 24. d. The third document, Form No 6 of Gam Namuno (Haq Patrak) dated 09.10.2013, evidences the inclusion of M/s Silverstone Enterprise into the records pursuant to the Partnership Deed executed by Shri Kishorbhai B Koshiya, Shri Gagjibhai B Koshiya, Swintu Arvind Mavani, and Shri Bharatbhai B Gadhiya.Refer page no 25. e. In addition, a title history search was conducted using the Anyror portal (https://anyror.gujarat.gov.in), which confirms that the land was introduced into the partnership firm M/s Silverstone by the three partners only, who were the original buyers of the land under consideration. A relevant excerpt from the search is attached for kind perusal. Refer page no 26. iii. From the perusal of the above documents, it can be observed that no subsequent sale transaction has taken place following the transaction made by the Assessee. To substantiate this assertion, the undersigned wishes to submit on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s Silverstone Enterprise with the independent buyer of the flat in the scheme named "Silverstone Homes", which was developed on the same land by M/s Silverstone Enterprise. In this document, history of ownership of land is narrated on page no.5 which again proves beyond doubt that following the sale transaction entered into between the Assessee and the original partners of M/s Silverstone Enterprise, no other transactions occurred, and the purchasers remained the sole owners until the allotment of flats to the buyers in the "Silverstone Homes" scheme. vi. Therefore, the assertion by the Assessee that he had not conducted a sale to the K. Star Group is factually incorrect. The CIT(A) has also acknowledged in his order that the "on money" received by the actual seller of the land to the K. Star Group should be taxed. Based on the factual submissions provided above, the Assessee is the sole seller. Consequently, the valuation of the land recorded in the seized material pertains to the Assessee. Hence, addition made by Ld. AO in the hands of the Assessee should be sustained. 12. On the other hand, learned Counsel for the assessee submitted that the land has been sold by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits, remuneration, interest on capital, capital gain on sale of land and also earning agriculture income. The assessee has been declaring Substantial agriculture income from several years. The assessee has submitted before the assessing officer that he was holding agricultural land at village Kumbharia, District Surat and at Village Singalpor, District Surat. The land at Village Kumbharia was purchased and also sold during the Financial Year 2011-12 (the year under consideration) resulting into short term capital gain of Rs. 1,14,501/-,which was duly offered to tax. The land at Village Singalpor was purchased during the Financial Year 2006-07 at Rs. 5,68,230/- and was sold during the Financial Year 2011-12 to certain other agriculturists, namely, Shri Kishorbhai B. Koshiya, Shri Gagjibhai B. Koshiya and Shri Swintu Arvind Mavani for a sale consideration of Rs. 2.90 Crores. The resulting long term capital gain from sale of said agricultural land was Rs. 2,81,02,494/-, after taking the indexed cost of acquisition at Rs. 8,97,506/-. The assessee is stated to have purchased another agricultural land for Rs. 2.91 Crores and claimed exemption from capital gains under section 54B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said piece of land has been sold subsequently by those three purchasers to some entity of the K. Star Group, either directly or after another intermediary sale transaction, and the said entity in turn has obtained the conversion of land use from agriculture to non-agriculture, and has undertaken other necessary formalities for development of residential project on the said land. In that event, the rate of purchase of Rs. 27,300/-per square yard, which is evidenced by the document seized from the premises of K. Star Group, would apply to such subsequent sale transaction, by way of which these three purchasers, or the further intermediary purchasers, have sold the said land finally to the K. Star Group- entity. In other words, the assessee cannot be made liable on account of any presumption of payment of on-money in cash, by the K. Star Group in connection with acquisition of the land for developing the residential project, which may even be a valid presumption based on the incriminating seized documents; for the simple reason that the assessee has not sold the land to the K. Star Group entity. It follows therefore that the liability arising out of payment of on-money by the K. Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present case, we have already held that initiation of the proceedings under Section 147 of the Act was based on the borrowed satisfaction. Thus, it is implied that the Assessing Officer has not applied his mind to arrive at the conclusion that there was of failure on the part of the assessee to disclose fully and truly all the material facts. In other words, mentioning by the Assessing Officer that the assessee has failed to disclose all material facts in the reasons recorded is not sufficient enough. Rather the Assessing Officer is under the obligation to arrive at such conclusion that the assessee failed to disclose all material facts necessary for the assessment after applying his mind and verification of the facts. But the Assessing Officer has not done so. The entire basis for reopening the assessment is on the premise that there was a cash transaction of a huge amount, and having regard to the same, there was no true and full disclosure. We have already explained that this issue of cash transaction is nothing but a mere guess, and at the cost of repetition, the transaction of sale was not with K. Star Corporation. M/s. K. Star Corporation, in the present case, is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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