D.Senthil Kumar, CHENNAI V. ACIT, Coimbatore

ITA 1210/CHNY/2017

AI Insights

The case involves Shri D. Senthil Kumar, a managing partner of M/s. Senthil Constructions, who was assessed for additional income of Rs. 1,55,40,000 for the assessment year 2011-12. This amount was alleged to be on-money paid for the purchase of agricultural land at Moopperipalayam, Coimbatore, over and above the registered value. The Income Tax Department conducted a survey under section 133A of the Act, during which the assessee admitted to the payment of on-money. Despite subsequent attempts to explain the source of this payment through bank withdrawals and other legitimate income, the authorities and the appellate tribunal found these explanations unconvincing and upheld the addition to the assessee's income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135250 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-09-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2017
• Other Referred Cases: CIT vs. Durga Prasad More, Sumati Dayal vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Document seized; Principle of natural justice; Documents seized

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 1210/CHNY/2017 िनधाᭅरण वषᭅ/Assessment Year: 2011-12 Shri D. Senthil Kumar, No.25, Rathinasabapathy Street, Co-operative A Colony, K.K. Pudur, Coimbatore – 641 038. PAN: AJUPS 1904Q Vs. The ACIT, Circle-II, Coimbatore. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri S. Sridhar, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri P. Sajit Kumar, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 25.09.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 27.09.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-2, Coimbatore in ITA No.18/14-15 dated 31.03.2017. The assessment was framed by the Assistant Commissioner of Income-tax, Circle-II, Coimbatore u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2011-12 vide order dated 10.03.2014. - 2 - ITA No.1210/Chny/2017 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in assessing a sum of Rs.1,55,40,000/- as part of purchase consideration paid during the year rejecting the explanation offered by assessee for source for making such consideration to the vendors. For this, assessee has raised ground Nos. 2 to 6, which are argumentative, exhaustive and need not be reproduced. 3. Brief facts are that the assessee an individual did not file his return of income originally. The assessee is also managing partner of M/s. Senthil Constructions which is engaged in construction and sale of apartments. A survey u/s.133A of the Act was conducted in the business premises of M/s. Senthil Constructions on 14.06.2012. Consequently, a notice u/s.148 of the Act was issued to assessee on 04.04.2013 and in response to the same, the assessee filed return of income on 03.06.2013. Subsequently, notice u/s.143(2) of the Act was issued dated 12.09.2013. During the course of assessment proceedings, the AO required the assessee to file copy of title deed for purchase of agricultural land, house property tax receipt, bank statement, credit card payments, ledger account copy of the contract receipts and reason for amount payable for purchase of agricultural land shown as credit balance in the balance sheet, - 3 - ITA No.1210/Chny/2017 details of miscellaneous credit in capital account and other requisite details. The AO during the course of assessment proceedings noticed that a statement of the assessee was recorded u/s.133A of the Act during the course of survey on 14.06.2012, wherein the assessee admitted vide question No.6 that on-money payment of Rs.1,55,40,000/- was made for purchase of agricultural land at Moopperipalayam over and above the registered value of Rs.47,12,500/-. The assessee admitted during the course of survey that he has purchased 9.42 acres of agricultural land at Moopperipalayam from one Shri C. Duraisamy and his son and daughter for an agreed purchase consideration of Rs.2,02,52,500/- but the guideline value of the property was Rs.47,12,500/-. The assessee during the course of assessment proceedings stated that at the time of registration of sale deed dated 09.06.2010, he paid only the guideline value of Rs.47,12,500/- and got the agricultural land registered in his name and balance amount of Rs.1,55,40,000/- was not paid till the end of relevant financial year and therefore, the same was declared as payable in the balance sheet in the name of Shri C. Duraisamy. This balance sheet was filed along with the return of income for the relevant year. The assessee claimed that this amount was paid in cash to Shri C. Duraisamy and his son and daughter on 11.02.2012 out of withdrawals from bank FD maturity - 4 - ITA No.1210/Chny/2017 and drawing from the firm, wherein he was a partner and cash balance available in his other contract business. But the AO was not convinced and noted the explained manner in which these payments were made as noted as per diary impounded by the Income-tax Department during survey vide Annexure ST/B&D/Imp-3 whereby the payments are noted against the dates 16 th , 17 th & 18 th March, 2009. He admitted these payments when the seized documents were confronted in his statement recorded on 14.06.2012 during the course of survey and vide question & answer – 6, he admitted these payment of Rs.1,55,40,000/- as unaccounted and on-money payment and offered for taxation as unaccounted income for the relevant assessment year 2011-12. Subsequently, during the course of assessment proceedings, the assessee filed letter dated 17.07.2012 and 19.07.2012 stating that the payments were not made on staggered basis and it was paid before registration in one lumpsum and the denominations of Rs.500 notes are available in the diary seized from me for Rs.1.4 crores. He also stated in the same letter that the entire money was paid out of sale of agricultural land at Chinnavedampatty, for which sale deed was registered in January, 2010. The assessee explained that the Chinnavedampatty land was sold for a consideration of Rs.1.36 crores and out of the same, assessee invested Rs.82 lakhs in fixed deposits and balance amount - 5 - ITA No.1210/Chny/2017 was used for purchase of Moopperipalayam land, which is evident from the bank statements. But the AO going through the facts in entirety to the contradicting statements vide letter dated 17.07.2012 and statement recorded during the course of survey u/s.133A of the Act, whereby the assessee admitted this payment as per impounded documents that the same is on-money amounting to Rs.1,55,40,000/-. The AO assessed the same as on-money payment and assessment was completed u/s.143(3) of the Act. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) after considering in detail, confirmed the addition by observing in para 4 & 4.1 as under:- 4.0 I have considered the facts, circumstances of the case, grounds, written submissions of the appellant and AR. I have also gone through the letters stated to have been filed before the A0 subsequent to survey and during assessment proceedings and ledger accounts and bank statement copies produced before me. It is an admitted fact that the appellant purchased Moopiripalayam land from Shri C. Duraisamy for a total consideration of Rs. 2,02,52,500/- and the same was registered vide sale deed dated 09.06.2010. At the same time, it is also a fact that the appellant admitted to have made on-money payment of Rs. 1,55,40,000/- for purchase of this land over and above the registered value as per the notings mentioned in the dairy impounded during survey. As on date of survey, no books of accounts were prepared, therefore preparation of books and drawing Balance sheet showing the above on-money as payable were subsequent actions of the appellant. According to the submissions made by the appellant now, he paid only guideline value of Rs.47, 12,500/- and balance of Rs.1,55,40,000/- was not paid till the end of this year whereas it was actually paid to the sellers on 11.02.2012 out of bank FD withdrawals and drawings from Senthil constructions and some cash balance lying with him. However, It is noted from the letter dated 17.07.2012 filed after the survey that the appellant - 6 - ITA No.1210/Chny/2017 claimed to have paid entire on-money out of sale of agricultural land at Chinnavedampatty which was registered in Jan 2010 and that he had given a wrong statement during survey out of confusion and anxiety because he was an engineering graduate who had recently started business and not having much commercial knowledge. It is important to note that in this letter filed almost a month after survey, it was nowhere mentioned that on- money payment was paid only in Feb 2012 and it was outstanding as on 31.03.2011. Moreover he himself stated that entire on- money was paid out of sale proceeds from sale of agricultural land on Chinnavedampatty in Jan 2010 and amounts earned on Contracts. The appellant cannot claim that this submission was made under pressure and anxiety as it was filed after one month after survey. Therefore, it is clear that when he was not in a position to prove the on-money receipt from the buyer M/s Martin Multi project Pvt Ltd, the appellant had obviously no source for explaining on-money payment of Rs. 1,55,40,000/- for Moopiripalayam land, it was shown as payable at the year end and later by roughly matching with the withdrawals, he somehow tried to explain that it was payment made out of accounted incomes. 4.1 The appellant had informed that the balance consideration was paid to the seller Shri.Duraisamy on 11.02.2012 only at the fag end of the assessment proceedings and by then the sellers have already- expired and daughter of the seller had left the place and could not be traced. Further, through letter dated 27.08.2012 also, the appellant had never informed that this amount was paid in Feb 2012 out of withdrawals from bank deposit maturity proceeds. It was a letter wherein he explained his activities and that he cooperated with the Department by working out the tax liability based on all his bank transactions and investments in his firm and his personal self for the relevant period. As per that enclosed statement to that letter, the incomes offered by him and his firm were only shown but there was no mention about the payment of on money in Feb 2012. In the given circumstances, it can only be inferred that the appellant tried to show the amount of on-money as payable as on 31.03.2011 and somehow explained the payment through withdrawals made subsequently. If these withdrawals were made in February 2012 and payments were made to the seller in February 2012, he could have very well stated the same during the survey itself on 15.06.2012 or in the letters filed subsequent to survey. Therefore, I am unable to get convinced with the appellant's submissions that amount was outstanding as on 31.03.2011. Further it is hard to believe that a seller can register the document of sale even before receipt of full consideration and that too without receiving an amount which is almost three times that of - 7 - ITA No.1210/Chny/2017 the registered sale value. There would not have been any urgency on the part of the seller to register the document much before receipt of entire consideration and wait for more than year till February 2012 to get the balance consideration. Therefore, it can only be logically concluded that the said on-money was paid on registering the property on 09.06.2010 i.e., during relevant year itself from out of unaccounted income as initially admitted during survey and the liability shown against purchase of this land is not real. In the light of the above discussion, I am unable to agree with the submissions of the appellant and AR and accordingly uphold the addition. The grounds are therefore, rejected. Aggrieved, now assessee is in appeal before the Tribunal. 5. We have heard rival contentions and gone through facts and circumstances of the case. The assessee before us filed complete paper-book consisting of pages 1 to 78. Admittedly, the assessee has purchased this land for agreed consideration ofRs.2,02,52,500/- i.e., agricultural land admeasuring 9.42 acres at Moopperipalayam from Shri C. Duraisamy and his son & daughter. Admittedly, the assessee got this property registered through sale deed dated 09.06.2010 and registration was done at the guideline value of Rs.47,12,500/-. The assessee admitted during the course of survey conducted on the business premises of M/s. Senthil Constructions, wherein assessee is a managing partner, admitting on-money payment of Rs.1,55,40,000/- when the impounded documents were confronted. The assessee while answering question No.6 admitted this fact and the relevant question & answer reads as under:- - 8 - ITA No.1210/Chny/2017 “Q. 6 I am showing you the impounded material numbering ST/B&D/IMP- 3 which is a blue colour daily diary for the year 2009 having the logo of Builders Association of India. Please go through the pages dated 16 th , 17 th and 18 th March, 2009 and offer your explanation? I have gone through the said pages of ST/B&D/IMP-3 in the diary impounded from my business premises today during the survey action. In the page dated 16 th March, 2009, I have written the details of property purchased at Moopperipalayam in 2009 to the extent of 9.42 acres for a registered value of Rs.4712500/-. This propery was purchased from three persons, namely Sh C. Duraiswamy, Sh. D. Satishkumar and Smt. D. Roopa. Out of Rs.4712500/-, I have given Rs.1572500/- to Sh C. Duraiswamy and Rs.1570000/- each to the other two vendors. I have also written the value of 8% stamp duty and 1 % registration fees. In the page dated 17 th March, 2009 I have written the actual sale value of the above said property for which on-money of Rs.15540000/- was paid by me in the form of cash to the sellers of the property. The registered value of Rs.4712500/- was paid by me through DD. A broker commission of Rs.300000/- was given by me. In the page dated 18 th March, 2009, the details of on-money cash paid was written by me. As I have not filed the Return of income for the A.Ys.2010-11 & 2011-12, these transactions were not furnished to the department. I will offer this amount of Rs.15540000/- as my unaccounted income for the A.Y. 2011-2012 and pay the due taxes. The assessee subsequently appeared before the AO during the course of assessment proceedings on 15.06.2012 and the AO recorded the statement u/s.131(1) of the Act and while answering the question No.2, the assessee stated “these on-money payments were made on a staggered basis and the source for these payments was from labour contract receipts and closure of fixed deposits”. Subsequently, again the assessee vide letters dated 17.07.2012 & 19.07.2012 wherein he admitted that these payments are not made on staggered basis and the same was paid before registration and - 9 - ITA No.1210/Chny/2017 the relevant statements are reproduced in the assessment order from where the same is being reproduced as under:- 5. Further, the assessee has filed letter dated 17.07.2012 on 19.07.2012 through the ASK and stated that “the payment was not made on staggered basis. It was paid before registration in one lumpsum and the denominations of Rs.500/- notes are available in the diary seized from me for Rs.1.4 crores”. He also stated in the letter that “Now, I hererby inform you that the entire on money payment was made out of sale of my agricultural land at Chinnavedampatty which was registered on January, 2010”. The assessee has enclosed the seized diary in assessee’s paper- book, pages relating to this purchase of land and the relevant page in assessee’s paper-book at page 74, is enclosed to this order as Annexure ‘A’. From this page, it can be easily inferred that the total consideration of the property was Rs.2,02,53,000/- and out of this guideline value rate for registration of sale deed fixed was Rs.47,12,500/- which was paid by assessee as per sale deed and on- money as admitted by assessee was paid at Rs.1,55,40,000/-, which is recorded in the seized documents. The assessee explaining that the payment was made subsequently in 2012 on encashment of FDRs and explaining the source is of no consequence because the assessee himself admitted during the course of survey and in subsequent letters as noted above that the assessee has made on- money payment in this year. Human probabilities also indicate that no buyer will receive the payment after registration of sale deed and - 10 - ITA No.1210/Chny/2017 that also after one year or two years. The assessee is unable to prove that the payment was made one year after by producing the purchasers or their confirmations that they received payment after one year from the date of registration of sale deed. As laid down by Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More, (1971) 82 ITR 540 (SC), wherein it is held that the apparent must be considered real until it is shown that there are reasons to disbelieve that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. Similarly, the Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT, (1955) 214 ITR 801, has reiterated the same principle. Hence in the present case considering the surrounding circumstances and human probabilities, we are of the view that on-money paid by assessee and admitted in sworn statement u/s.133(6) of the Act that this amount of Rs.1,55,40,000/- is on-money payment and paid at the time of registration of sale deed. Even the impounded document indicates so, which is part of this order. Hence, we affirm the order of CIT(A) and that of the AO and dismiss this issue of assessee’s appeal. - 11 - ITA No.1210/Chny/2017 6. The next issue raised in this appeal is regarding violation of principles of natural justice vide ground Nos.7 & 8. The ld.counsel for the assessee fairly made statement at bar that he is not pressing these two grounds and hence, the same is dismissed as not-pressed. 7. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 27 th September, 2023 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 27 th September, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF. - 12 - ITA No.1210/Chny/2017 ANNEXURE ‘A’