THE COMMISSIONER OF INCOME TAX V. M/S.DOMICILE DEVELOPERS

ITA/732/2009

AI Insights

The case involves an appeal by the Revenue against the judgment of the Income Tax Appellate Tribunal, which confirmed the order of the Appellate Commissioner. The dispute centered on the payment of Rs.2,83,01,868/- made by the assessee, M/s Domicile Developers, to Mr Chotu Sab and his family for the purchase of land. The Revenue contended that only Rs.1.27 crores was actually paid, challenging the remaining amount. The Tribunal and the Appellate Commissioner had accepted the entire amount as reflected in the assessee's books. The High Court dismissed the appeal, noting that the Department had previously accepted and assessed the sellers on the full amount claimed by the assessee.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 744401 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-03-2015
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHANKAR
• Assessee Lawyers: K V ARAVIND
• Keywords: Burden of Proof; Income Tax; Land purchase; Payment Dispute
• Section: 260A

Judgement Text

" IN THE HIGH COURT OF KARNATAKA AT BENGALURU Dated this the 6th day of March, 2015 Present THE HON’BLE MR JUSTICE VINEET SARAN & THE HON’BLE MRS JUSTICE S SUJATHA Income Tax Appeal 732 / 2009 Between 1 Commissioner of Income Tax Central Circle, C R Building Queens Road, Bangalore 2 Deputy Commr. Of Income Tax Central Circle – 2(2) C R Building, Queens Road Bangalore Appellants (By Sri K V Aravind, Adv.) And M/s Domicile Developers # 965, IA Main, I Cross Koramangala, Bangalore Respondent (By Sri Shankar, Adv.) Appeal is filed under S.260A of the Income Tax Act, 1961 praying to set aside the order dated 26.6.2009 by the ITAT, Bangalore in Appeal 66/Bangalore/2008 confirming the order of the Appellate 2 Commissioner and confirm the order of the Deputy Commr. Of Income Tax, Bangalore. Appeal coming on for hearing this day, Vineet Saran J, delivered the following: JUDGMENT This appeal has been filed by the Revenue against the judgment of the Income Tax Appellate Tribunal whereby an amount of Rs.2,83,01,868/- though accepted by the Tribunal as well as the Commissioner of Income Tax (Appeals) as the amount which was received by Mr Chotu Sab and his family members for purchase of 3 acres 7 guntas land, but the whole of it has not been accepted to have been paid by the assessee. The dispute in the present appeal is with regard to an amount of Rs.1,56,01,868/- which according to the Revenue, has not been paid by the assessee to the sellers, Mr Chotu Sab and his family members. According to the appellants, only an amount of Rs.1.27 crores has been paid to the sellers and not the whole amount of Rs.2.83 crores and odd which is claimed to have been paid by the assessee - respondent. 3 The appeal was admitted by order dated 15.6.2010 on the following two questions of law:: Whether the appellate authorities were correct in holding that the sum of Rs.2,83,01,868/- reflected in the profit and loss account and the books of accounts of the assessee as payment made to Mr Chotu Sab and his relatives for purchase of land should be accepted in its entirety even though the finding are based on mere conjuncture and surmises when proof of Rs.1,27,00,000/- only was shown and the balance Rs.1,56,01,868/- had not been proved by the assessee by adducing any cogent evidence and consequently recorded a perverse finding. Whether the appellate authorities were correct in holding that the burden of demonstrating that a sum of Rs.1,56,01,868/- and not been paid had to be established by the revenue by adducing cogent evidence. We have heard Sri K V Aravind, learned counsel for the appellants as well as Sri A Shankar, learned counsel for the respondent and perused the record. 4 The submission of the learned counsel for the appellants is that, only an amount of Rs.1.27 crores was paid by the assessee - respondent to the sellers and putting the burden on the Department to show that further amount of Rs.1.56 crores and odd had not been paid by the assessee would be against the established principles as it is for the assessee to prove that the amount had been paid and it is not for the Department to do so. Sri Shankar, learned counsel for the respondent has, on the other hand, submitted that in the account books of the assessee the payment of Rs.2.83 crores and odd is reflected for which evidence was adduced before the authorities below. It has also been submitted that the Department has assessed the sellers Mr Chotu Sab and his family members on the amount of Rs.2.83 crores and odd and the matter relating to the liability of payment of tax on the said amount by the sellers, as to whether the same had been paid to the partnership firm said to have been constituted by the sellers or to the individual family members of Mr Chotu Sab, was considered by this Court in ITA 82-83/2011 and other connected matters in which by judgment and order dated 20.7.2011, this Court has accepted that the 5 sellers Mr Chotu Sab and his family members received the said amount of Rs.2.83 crores and odd on which the tax liability was to be assessed as capital gains. It has also been submitted that the special leave petition challenging the judgment of this Court in the aforesaid case of Mr Chotu Sab and his family members has already been dismissed by the Apex Court on 9.7.2013. The said position that protective assessment against Mr Chotu Sab and his family members for an amount of Rs.2.83 crores and odd was made is not disputed by the learned counsel for the appellants. In view of the fact that the Department itself has accepted the payment of Rs.2.83 crores and odd to the sellers Mr Chotu Sab and his family members and assessed them on the said amount for payment of capital gains, the contention of the learned counsel for the appellants that the burden of proof of payment by the respondent - assessee should not be shifted on the Revenue, is not worthy of acceptance. The respondent has claimed that he made the payment of the said amount to Mr Chotu Sab and his family members which has also been accepted by the Revenue in the returns filed by Mr Chotu Sab and his family members. Once the same has been done, 6 the Department cannot turn around and claim that the respondent assessee should prove to have made such payment of Rs.2.83 crores and odd for purchase of the said land. In view of the aforesaid, we do not find there arises any substantial question of law to be decided by this Court. Accordingly, appeal is dismissed. Sd/- Judge Sd/- Judge An "