C/TAXAP/838/2019 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 838 of 2019 With R/TAX APPEAL NO. 840 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J. B. PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA 1 Whether Reporters of Local Papers may be allowed to NO see judgment? 2 To be referred to Reporter or not? NO 3 Whether their Lordships wish to see fair copy of NO judgment? 4 Whether this case involves substantial question of law NO as to interpretation of Constitution of India or any order made thereunder? PRINCIPAL COMMISSIONER OF INCOME TAX-4 Versus MUKESH KESHAVLAL PATEL Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE MR. JUSTICE J. B. PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 25/02/2020 COMMON ORAL JUDGMENT Page 1 of 6 Downloaded on : Tue Mar 03 15:59:37 IST 2020 C/TAXAP/838/2019 JUDGMENT (PER : HONOURABLE MR. JUSTICE J. B. PARDIWALA) 1. Since question of law as proposed by Revenue in both captioned tax appeals are common, those were heard analogously and are being disposed of by this common judgment and order. 2. For sake of convenience, Tax Appeal No.838 of 2019 is treated as lead appeal. 3. This tax appeal under Section 260A of Income Tax Act, 1961 [for short 'The Act, 1961'] is at instance of Revenue and is directed against order passed by Income Tax Appellate Tribunal, Ahmeabad 'C' Bench, Ahmedabad dated 26th June, 2019 in ITA No.963/AHD/2016 for A.Y. 2006 07. 4. facts giving rise to captioned Tax Appeal may be summarized as under: 4.1 assessee filed his return of income for Assessment Year 2006 07 declaring total income to tune of Rs.3,24,920/. It appears that search was carried out under Section 132 of Act in case of one Shri Bhikhubhai Padsala. In course of search, few documents were recovered and seized by Investigation Wing. documents seized by officials of Investigation Wing indicated certain notings of cash payments made on various dates with respect to certain parcels of land situated at Village Jagatpur. Shri Bhikhubhai Padsala furnished cash flow statement before Settlement Commission. Shri Bhikhubhai Padsala made statement before Settlement Commission that particular amount in cash was received by him from Page 2 of 6 Downloaded on : Tue Mar 03 15:59:37 IST 2020 C/TAXAP/838/2019 JUDGMENT assessee and one another person viz. Shri Kamlesh A. Patel. said cash flow statement was accepted by Settlement Commission. On basis of aforesaid information, case of assessee herein was reopened and was completed by passing assessment order under Section 143(3) read with Section 147 of Act. Assessing Officer treated certain amount as unexplained and added same to total income of assessee. 4.2 assessee herein being dissatisfied with addition made by Assessing Officer preferred appeal before CIT(A). CIT(A) allowed appeal and deleted addition. 4.3 Revenue being dissatisfied with order passed by CIT(A) went in appeal before Appellate Tribunal. Appellate Tribunal concurred with findings recorded by CIT(A) and dismissed appeal preferred by Revenue. 4.4 Being dissatisfied with order passed by Appellate Tribunal, Revenue is here before this Court with present appeal. 5. Revenue has proposed following question of law for consideration of this Court. Whether Appellate Tribunal has erred in law and on facts by deleting addition made for various Assessment Years on account of unexplained by income without appreciating facts of case in its entirety? 6. We take notice of following findings recorded by Assessing Officer in impugned order. From above description, it become clear that amount of total Page 3 of 6 Downloaded on : Tue Mar 03 15:59:37 IST 2020 C/TAXAP/838/2019 JUDGMENT transaction involves Rs.10,46,72,668/ out of which Rs.4,01,00,001/ was paid in cash during year under consideration. assessee has further argued that he has not purchased any land at Jagatpur from B.N. Padsala or M/s. B. Nanji Group. This argument is also not found acceptable. From description of above pages and cash flow statement submitted by Shri Bhikhubhai Padsala before Hon'ble Settlement Commission it become clear that cash was paid by assessee but it is possible that sale deed may not have been executed till date. Hon'ble Settlement Commission has accepted cash flow statement submitted by Shri Bhikhubhai Padsala and hence it is established that assessee paid Rs.4,01,00,001/ in cash for purchase of land. Since, assessee has not explained any source of payment made in cash for purchase of land situated at Jagatpur cash of Rs.4,01,00,001/ is stated as unexplained income and accordingly added to total income of assessee. Penalty proceeding u/s. 271(1)(c) is hereby initiated for concealment of income and furnishing of inaccurate particular of income. 7. aforesaid findings recorded by Assessing Officer did not find favour with CIT(A) for following reasons as recorded in order passed by CIT(A). (i) documents on basis of which additions have been made were not found at premises of appellant but at premises of third party Shri Bhikhubhai Padsala. (ii) documents found during course of search at premises of Shri Bhikhubhai Padsala are not in hand writings of appellant. (iii) Name of appellant was no where mentioned in documents relied upon for making additions. (iv) documents relied upon are not signed by appellant. (v) appellant did not enter into land transaction with Shri Bhikhubhai Padsala. If payment in cash would have been made, sale deed of land would have been registered after that. But even after search, land has not been found registered having name of appellant as purchaser of Jagatpur land. (vi) Apart from documents found during course of search & cash flow statement submitted by Shri Bhikhubhai Padsala before Hon'ble Settlement Commission, no other independent inquiry was made by AO to find out correct facts. Page 4 of 6 Downloaded on : Tue Mar 03 15:59:37 IST 2020 C/TAXAP/838/2019 JUDGMENT 8. aforesaid findings recorded by CIT(A) ultimately came to be affirmed by tribunal. 9. entire edifice of revenue's case is statement made by Bhikhubhai Padsala before Settlement Commission. Shri Bhikhubhai Padsala stated before Settlement Commission that he had received amount in cash from assessee for purpose of purchase of land at Village Jagatpur. According to Assessing Officer, same was sufficient for purpose of addition under Section 68 of Act. 10. In aforesaid context, many decisions of Supreme Court as well as this High Court and other High Courts have been relied upon by CIT(A). One common principle in all said decisions is that assessee need not to be asked to explain entries or notings in books of third party. In absence of any other independent material to corroborate statement of Shri Bhikhubhai Padsala made before Settlement Commission, it would not be prudent to take view that there was transaction between assessee and Shri Bhikhubhai Padsala in cash with regard to purchase of certain parcels of land. 11. It appears that CIT(A) relied upon decision of Delhi High Court in case of CIT Vs. Vineeta Gupta (2014) 46 taxman.com 439 (Delhi), wherein, view taken is that declaration made by another party before Settlement Commission is not binding upon assessee, therefore, no additions can be made in absence of any independent material. 12. In view of concurrent findings of fact recorded by two authorities, we are of view that question of law as proposed by Page 5 of 6 Downloaded on : Tue Mar 03 15:59:37 IST 2020 C/TAXAP/838/2019 JUDGMENT Revenue cannot be termed as substantial question of law. 13. In result, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) aruna Page 6 of 6 Downloaded on : Tue Mar 03 15:59:37 IST 2020 Principal Commissioner of Income-tax-4 v. Mukesh Keshavlal Patel