ACIT, Madurai V. Deccan Construction Company, Madurai

ITA 1074/CHNY/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5021 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained investment; Gift
• Section: 143(3); 142(1); 195; 69; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1074/CHNY/2017 ( / ASSESSMENT YEAR: 2013-14) THE ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE -2, MADURAI. VS M/S. DECCAN CONSTRUCTION COMPANY, 64, NEW PANKAJAM COLONY, MADURAI 625 009. PAN: AACFD1541P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT / RESPONDENT BY : SHRI T. BANUSEKAR, CA /DATE OF HEARING : 28.03.2019 /DATE OF PRONOUNCEMENT : 27.05.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-2, MADURAI, DATED 10.01.2017 IN ITA NO.20/2016-17 PASSED U/S. 250(6) R.W.S. 143(3) OF THE ACT, FOR THE ASSESSMENT YEAR 2013-14. 2. THE REVENUE HAS RAISED THREE ELABORATE GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE LD.AO AMOUNTING TO 2 ITA NO.1074/CHNY/2017 RS.1,60,51,200/- U/S.69 OF THE ACT TOWARDS UNEXPLAINED INVESTMENT IN FOUR IMMOVABLE PROPERTIES REGISTERED WITH SUB-REGISTRAR, MELAPALAYAM, TIRUNELVELI. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACT CARRYING ON CONSTRUCTION WORK FOR ESTABLISHED BUSINESS CONCERNS AND EDUCATIONAL INSTITUTIONS, FILED ITS RETURN OF INCOME ELECTRONICALLY FOR THE ASSESSMENT YEAR 2013-14 ON 05.10.2013 ADMITTING TOTAL INCOME OF RS.1,04,62,826/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) OF THE ACT WAS ISSUED. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 29.03.2016 WHEREIN THE LD.AO MADE ADDITION OF RS.1,60,51,200/- U/S.69 OF THE ACT TOWARDS UNEXPLAINED INVESTMENT IN FOUR IMMOVABLE PROPERTIES REGISTERED WITH SUB-REGISTRAR, MELAPALAYAM, TIRUNELVELI. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING, IT WAS OBSERVED BY THE LD.AO THE ASSESSEE-FIRM HAD PURCHASED LAND AT KULAVANIGAPURAM VILLAGE ON 28.01.2013 REGISTERED AS DOCUMENT NO.680, 677, 679, 678 /2013 FOR AN AGGREGATE SALE CONSIDERATION OF RS.1,60,51,200/-, WHEREAS, THE VALUE FOR THE PURPOSE OF STAMP DUTY 3 ITA NO.1074/CHNY/2017 WAS RS.3,97,84,148/-. IT WAS FURTHER OBSERVED BY THE LD.AO THAT THE ASSESSEE FIRM HAD NOT ADMITTED THESE TRANSACTIONS IN ITS BOOKS OF ACCOUNTS. ON QUERY, IT WAS EXPLAINED AS FOLLOWS:- (1). DURING THE RELEVANT ASSESSMENT YEAR, THE LAND WAS REGISTERED IN THE ASSESSEES NAME; HOWEVER, NO SALE CONSIDERATION WAS PAID TO THE LAND OWNERS. (2). THE LAND WAS REGISTERED IN THE NAME OF THE ASSESSEE BY THE POWER OF ATTORNEY HOLDERS MR. T. RAVINDRAN AND MRS. R. PURNIMA. (3). THE 13 INDIVIDUALS WHO OWN THE LANDS GAVE POWER OF ATTORNEY TO MR. T. RAVINDRAN AND MRS. R. PURNIMA IN THE YEAR 2007 IN ORDER TO SELL THE LAND. HOWEVER, FOR FIVE LONG YEARS, THE LAND COULD NOT BE SOLD. (4). THE ASSESSEE FIRM INTENDING TO DEAL WITH THE PROPERTY ENTERED INTO AN AGREEMENT WITH THE POWER OF ATTORNEY HOLDERS ON 21.01.2013 TO SETTLE THE ENTIRE SALE CONSIDERATION WITHIN A PERIOD OF TWO YEARS SUBJECT TO THE CONDITION THAT THE LAND IS TRANSFERRED IN THE NAME OF THE ASSESSEE FIRM IMMEDIATELY WITHOUT THE PAYMENT OF SALE CONSIDERATION AT THE TIME OF EXECUTION OF SALE 4 ITA NO.1074/CHNY/2017 DEED. ACCORDINGLY, THE LAND WAS REGISTERED IN THE NAME OF THE FIRM ON 28.01.2013. (5). THIS CASHLESS TRANSACTION WAS POSSIBLE BECAUSE THE LAND OWNERS, POWER OF ATTORNEY HOLDERS WERE ALL RELATIVES AND THEIR FAMILY CONCERN IS THE ASSESSEE FIRM. (6). THE ENTIRE PAYMENT FOR THE PURCHASE OF THE LAND WAS MADE IN THE SUBSEQUENT TWO YEARS, I.E. DURING THE FINANCIAL YEARS 2013-14 AND 2014-15. (7). AFFIDAVITS FROM EACH OF THE 13 JOINT OWNERS OF THE LAND WERE FILED TO JUSTIFY THE ABOVE TRANSACTION. 5. HOWEVER, THE LD.AO WAS OF THE VIEW THAT THE FACTS MENTIONED IN THE REGISTERED DOCUMENT CANNOT BE IGNORED. THE LD.AO FURTHER OPINED THAT WHEN THERE IS A CONFLICT BETWEEN THE REGISTERED DOCUMENT AND SELF SERVICING AFFIDAVITS, THEN THE CONTENTS MENTIONED IN THE REGISTERED DOCUMENT SHALL OVERRIDE THE CONTENTS MENTIONED IN THE SELF SERVING AFFIDAVITS. RELIANCE WAS PLACED IN THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARAMJIT SINGH V. ITO REPORTED IN 195 TAXMAN 273. ACCORDINGLY, THE LD.AO TREATED THE PURCHASE CONSIDERATION OF THE LAND AMOUNTING TO 5 ITA NO.1074/CHNY/2017 RS.1,60,51,200/- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE U/S 69 OF THE ACT. 6. ON APPEAL, THE LD.CIT(A) AFTER ANALYZING THE FACTS OF THE CASE HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER:- IN VIEW OF THE ABOVE FACTS, THE QUESTION TO BE DECIDED IS WHETHER THE ASSESSING OFFICER IS JUSTIFIED IN ASSESSING THE UNEXPLAINED INVESTMENT REPRESENTING THE ALLEGED MONEY STATED TO HAVE BEEN PAID IN THE REGISTERED SALE DEEDS EVEN THOUGH IT WAS CLAIMED THAT NO MONEY WAS PAID BASED ON AGREEMENTS AND AFFIDAVITS. THE ASSESSING OFFICER HAS RELIED ON THE DECISION OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PARAMJIT SINGH VS ITO 195 TAXMAN 273 IN WHICH SUPPORT IN WHICH SUPPORT WAS DERIVED FROM SECTIONS 91 AND 92 OF THE INDIAN EVIDENCE ACT IN WHICH IT IS STATED THAT NO ORAL EVIDENCE IS ADMISSIBLE AGAINST THE DOCUMENTARY EVIDENCE. HOWEVER, IN THE ABOVE CASE THE CLAIM OF THE ASSESSEE WAS TOTALLY CONTRARY TO WHAT WAS STATED IN THE REGISTERED SALE DEEDS. EVEN THOUGH IT WAS SAID IN THE SALE DEEDS THAT ACTUAL SALE CONSIDERATION WAS PAID, IT WAS CLAIMED THAT NO CONSIDERATION WAS PAID AT ALL AND THE PROPERTY WAS TRANSFERRED AS A GIFT. HOWEVER, THE FACTS ARE DIFFERENT IN THE CASE OF THE APPELLANT. IN THE CASE OF THE APPELLANT, IT IS ONLY CLAIMED THAT THE CONSIDERATION WAS PAID IN THE SUBSEQUENT TWO YEARS FOR WHICH EVIDENCE WERE FILED INCLUDING ACCOUNT COPIES AND AFFIDAVITS FROM THE LAND OWNERS CONFIRMING THAT THE MONEY WAS NOT PAID COPIES AND AFFIDAVITS FROM THE LAND OWNERS CONFIRMING THAT THE MONEY WAS NOT PAID DURING THIS YEAR. IN THE CIRCUMSTANCES, I FIND THAT THE ABOVE DECISION OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT CANNOT BE APPLIED TO THE FACTS OF THIS CASE. THE APPELLANT HAS TREATED THE LAND AS AN ASSET WHEN THE REGISTERED SALE DEEDS WERE ACTUALLY REGISTERED AND RELEASED IN THE NEXT YEAR DETERMINING THE STAMP DUTY TO BE PAID AND, THEREFORE, IT CANNOT BE STATED THAT THE ABOVE DECISION WOULD BE APPLICABLE TO THE FACTS OF THE CASE. EVEN OTHERWISE WHEN THE APPELLANT SUBMITTED REASONABLE AND SATISFACTORY EXPLANATION AS TO WHY THE MONEY WAS NOT PAID DURING THIS YEAR WITH CREDITABLE EVIDENCES IN THE FORM OF AGREEMENTS AND 6 ITA NO.1074/CHNY/2017 AFFIDAVITS, THE SAME WOULD CONSTITUTE SATISFACTORY EXPLANATION AND ADDITION U/S 69 CANNOT BE INVOKED. SECTION 69 READS AS UNDER:- 'WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR.' FROM THE PLAIN LANGUAGE OF THE SECTION, IT IS SEEN THAT MERELY BECAUSE THE APPELLANT HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS NO ADDITION CAN BE MADE. IT IS THE DUTY OF THE ASSESSING OFFICER TO FURTHER EXAMINE AS TO WHETHER THE EXPLANATION GIVEN BY THE ASSESSEE IS SATISFACTORY OR NOT. IN THIS CASE, THE APPELLANT HAS GIVEN THE ENTIRE FACTS WITH NECESSARY EVIDENCES LEADING TO REGISTRATION OF PROPERTY IN THE NAME OF THE FIRM WITHOUT ACTUAL PAYMENT OF SALE CONSIDERATION AND SUCH FACTS ARE NOT DENIED BY THE ASSESSING OFFICER AND FURTHER IT CANNOT BE SAID THAT THE ABOVE EXPLANATION IS UNSATISFACTORY ON FACTS. IN THE CIRCUMSTANCES, THERE IS NO CASE FOR ANY ADDITION U/S 69 AND THE SAME IS DELETED. 7. BEFORE US, THE LD.DR ARGUED IN SUPPORT OF THE ORDER OF THE LD..AO WHEREAS THE LD.AR RELIED ON THE ORDER OF THE LD.CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS PERTINENT TO MENTION THAT IN INCOME-TAX PROCEEDINGS, THE ENTIRE ACTUAL FACTS HAVE TO BE TAKEN INTO CONSIDERATION IN ORDER TO ASSESS THE INCOME OF AN ASSESSEE. DOCUMENTARY EVIDENCE WILL ONLY HAVE A PERSUASIVE VALUE AND THE 7 ITA NO.1074/CHNY/2017 GENUINE EVENTS AND TRANSACTIONS WILL OVERRIDE DOCUMENTARY EVIDENCE. PRECISELY, THE LAW OF EVIDENCE IS NOT STRICTLY APPLICABLE FOR INCOME-TAX PROCEEDINGS. IN THE CASE OF THE ASSESSEE, IT IS NOT IN DISPUTE THAT THE LAND OWNERS, POWER OF ATTORNEY HOLDERS AND THE ASSESSEE FIRM ARE ALL INTER RELATED. IN FACT, ASSESSEE FIRM IS THE CONCERN OF THE LAND OWNERS AND THE POWER OF ATTORNEY HOLDERS AND THESE FACTS ARE NOT IN DISPUTE. IN SUCH SITUATION, CASHLESS TRANSACTION IS QUITE POSSIBLE AS EXPLAINED BY THE ASSESSEE AND FURTHER EVIDENCED BY AFFIDAVITS OF ALL THE CONCERNED PARTIES. FURTHER, IT WAS EXPLAINED BEFORE THE LD.AO THAT THE ASSESSEE COMPANY PAID THE SALE CONSIDERATION TO THE LAND OWNERS DURING THE SUBSEQUENT TWO FINANCIAL YEARS. IT APPEARS THAT NEITHER THE LD.AO HAS VERIFIED THE SAME NOR DISPUTED THE SAME. THE LD.AO HAS ALSO NOT MADE ANY EFFORT TO TRACE THE UNDISCLOSED CASH IN THE TRANSACTIONS. THE LD.AO HAS ARRIVED AT HIS DECISION ONLY BASED ON THE REGISTERED DOCUMENT CLOSING HIS EYES ON ALL OTHER EVENTS AND TRANSACTIONS. FURTHER FROM THE CONDUCT OF THE LD.AO IT APPEARS THAT THE ASSESSEE HAS PAID THE SALE CONSIDERATION IN THE TWO SUBSEQUENT YEARS WHICH THE LD.AO HAS TAKEN NOTE OFF AS IT WAS BROUGHT TO HIS NOTICE BY THE ASSESSEE HOWEVER THE LD.AO HAS RESTRAINED TO ADDRESS OR COMMENT ON THE SAME. IF THE SALE CONSIDERATION IS NOT PAID THEN IT CANNOT BE SAID THAT 8 ITA NO.1074/CHNY/2017 THE SALE HAD TAKEN PLACE. IN THE CASE OF THE ASSESSEE IT APPEARS THAT THE SALE CONSIDERATION IS PAID ONLY IN THE SUBSEQUENT YEARS AND THEREFORE TRANSFER AS PER SECTION 2(47) OF THE ACT SHOULD BE CONSTRUED TO HAVE TAKEN PLACE AT THE MOST WHEN PART CONSIDERATION IS PAID COUPLED WITH HANDING OVER POSSESSION OF THE LAND. CONSIDERING ALL THESE PARTICULARS, THE LD.CIT(A) DISTINGUISHING THE CASE RELIED BY THE LD.AO, GRANTED RELIEF TO THE ASSESSEE BY ACCEPTING THE EXPLANATION TENDERED BY THE ASSESSEE. IN THIS SITUATION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), THEREFORE, WE HEREBY CONFIRM THE ORDER OF THE LD.CIT(A). 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 27 TH MAY, 2019 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 27 TH MAY, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) /ACCOUNTANT MEMBER