A.Ebanezer JeyaAnbu, Ramanathapuram V. DCIT Central Circle 1, Madurai

ITA 1519/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6190 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 12-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS RU GEORGE IRS
• Assessee Lawyers: B RAMAKRISHNAN
• Section: 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ITA NO.1519/MDS/2017 / ASSESSMENT YEAR : 20132014. A. EBANEZER JEYA ANBU, 1/1045-1, SETHUPATHY NAGAR, 3 RD RING ROAD, RAMANATHAPURAM. [PAN AACPE 4020G] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI I.T.A. NO.1520/MDS/2017 / ASSESSMENT YEAR : 20132014. D.S. SOLOMON RAJA, 9A/1, GANESH NAGAR, 3 RD STREET, TUTICORIN. [PAN BJVPS 9135H] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI I.T.A. NO.1521/MDS/2017 / ASSESSMENT YEAR : 20132014. P. PANCHAVARNAM, NO.112/27/1, GOMATHIBAI COLONY, TUTICORIN. [PAN AEWPP 9938E] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI ITA 1519 TO 152 3/MDS/2017. :- 2 -: I.T.A. NO.1522/MDS/2017 / ASSESSMENT YEAR : 20132014. CHANDRA GNANA SIRONMANI, 3-C, 2 ND STREET, CHANDRA HOUSE, INNASIYARPURAM TUTICORIN. [PAN ACLPC 4055C] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI I.T.A. NO.1523/MDS/2017 / ASSESSMENT YEAR : 20132014. D. GNANOOPASUGRITHAM NO.13A/5D, 1 ST STREET, INNASIYARPURAM TUTICORIN. [PAN ADQPG 8897A] ( () / APPELLANT) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI ( RESPONDENT ) ASSESSEE BY : SHRI. B. RAMAKRISHNAN C.A DEPARTMENT BY : MRS. RUBY GEORGE, IRS, CIT !' / DATE OF HEARING : 30.08.2017 #$ !' / DATE OF PRONOUNCEMENT : 14.09.2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE ASSESSEES DIRECTED AGAINST ORDERS DATED 12.05.2017 OF COMMISSIONER OF INCOME TAX (APP EALS)-19, CHENNAI. ITA 1519 TO 152 3/MDS/2017. :- 3 -: 2. THE FACTS LEADING TO ALL THESE APPEALS LIE WITHIN THE SAME COMPASS. ASSESSEES WERE PARTNERS/DIRECTORS IN A GR OUP OF CONCERNS KNOWN AS DIAMOND SEA FOODS (IN SHORT DSF GROUP ) ENGAGED IN THE BUSINESS OF PROCURING, PROCESSING AND EXPORTING SEA FOOD ITEMS. THERE WAS A SEARCH OPERATIONS U/S. 132 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN THE PREMISES OF THE SAID GROU P AS WELL AS RESIDENTIAL PREMISES OF THE ASSESSEES ON 17.12.201 3. DURING THE COURSE OF THIS SEARCH, COPY OF A SALE AGREEMENT DA TED 02.08.2012 ENTERED BY THESE ASSESSES AND FIVE OTHERS WITH ONE SHRI. N. RATHINAVEL S/O. K.S.P. NATARAJAN, WHO WAS ACTING IN THE CAPAC ITY AS THE MANAGING DIRECTOR OF ONE M/S. SAHAGAYMATHA SALTERS PVT. LTD WAS FOUND. THIS AGREEMENT WAS FOR SALE OF 383.42 ACRE S OF LAND AT OPPILAN, PERIYAKULAM VILLAGE, KADALADI S.R.O. RAMAN ATHAPURAM DISTRICT HELD BY THESE TEN PERSONS, OF WHICH FIVE ALONE ARE APPELLANTS HERE. THE CONSIDERATION AGREED AS PER THE SAID AGREEMENT WAS F10,92,74,700/- VIZ @ F2,85,000/- PER ACRE. AS PER THIS AGREEMENT, A SUM OF F3.06 CRORES, CHANGED HANDS FROM SHRI. N. RA THINAVEL TO THE DSF GROUP. THE SHARE OF SMT.A. EBENESAR JEYA ANBU I N THE LAND CAME TO 23.38 ACRES THAT OF SHRI. D.S. SOLOMON RAJA CAM E TO 23.88S ACRES, THAT OF SHRI. P. PANCHAVARNA CAME TO 27.80 ACRES, THAT OF SHRI.CHANDRA GNANA SIRONMANI CAME TO 24.145 ACRES AND THAT OF SH RI. D. ITA 1519 TO 152 3/MDS/2017. :- 4 -: GNANOOPASUGRITHAM CAME TO 25.835 ACRES. BALANCE LAND WERE HELD BY THE OTHER FIVE PERSONS WHO ARE NOT APPELLANT BE FORE US. 3. IN THE RETURNS FILED BY THE RESPECTIVE ASSESSEES PU RSUANT TO NOTICES ISSUED U/S. 153C R.W.S. 153A(A) OF THE ACT , RECEIPTS FROM SALE OF LAND WERE SHOWN AS UNDER:- NAME OF THE SELLER SHARE OF CONSIDERATION AS PER SALE DEED (RS) T. GNANAPOO SUGIRTHAM 19,96,440 P. PANCHAVARNAM 21,96,810 D.S. SOLAMAN RAJA 18,97,208 CHANDRA GNANA SIRONMANI 18,83,970 A. EBANEZER JEYA ANBU 18,74,010 ASSESSEES CLAIMED SUCH RECEIPTS TO BE NOT EXIGIBLE TO CAPITAL GAINS SINCE ACCORDING TO THEM, WHAT WAS SOLD WERE AGRICU LTURAL LANDS SITUATED FAR AWAY FROM THE LIMITS OF THE OPPILAN V ILLAGE. LD. ASSESSING OFFICER PUT THE ASSESSEES ON NOTICE AS TO WHY TH E SURPLUS RECEIPTS ON SALE OF LANDS SHOULD NOT BE TREATED AS CAPITAL GAIN S AND ALSO WHY THE CONSIDERATION AS MENTIONED IN THE AGREEMENT FOR SAL E DATED 02.08.2012 SHOULD NOT BE ADOPTED FOR THE PURPOSE O F WORKING OUT SUCH CAPITAL GAINS. THEREUPON THE ASSESSEES CONTEN DED THAT THE LAND WAS PURCHASED ORIGINALLY ON 05.03.2003 FROM VARIOUS PERSONS AND WAS INTENDED FOR STARTING A AQUA FARM. AS PER THE ASS ESSEES, IN THE CLASSIFICATION OF THE LAND GIVEN BY THE TAHSILDAR, KADALADI TALUK, IT WAS THARISU OR BARREN AND HENCE CONSTRUED AS AGRICULTURAL LAND. ITA 1519 TO 152 3/MDS/2017. :- 5 -: CONTENTION OF THE ASSESSEES WAS THAT VALUE ADMITTED IN FINANCIAL STATEMENT FURNISHED ALONGWITH RETURNS WAS THE ACTU AL AMOUNT RECEIVED. CONTENTION OF THE ASSESSEE WAS THAT THE ORIGINAL AGREEMENT DATED 02.08.2012 WAS ENTERED ONLY WITH AN INTENTION OF ENABLING THE PURCHASER TO GET FINANCIAL ASSISTANCE FROM THE BANK AND WAS NEVER ACTED UPON. CLASSIFICATION OF THE LAND WAS AGRICU LTURAL, AND, ACCORDING TO ASSESSEES THERE WAS NO ATTEMPT TO CONVERT THE L AND TO A NON AGRICULTURAL ONE. ASSESSEE ALSO FILED AN AFFIDAVIT FROM THE BUYER TO SUBSTANTIATE ITS CONTENTION THAT AGREEMENT DATED 02 .08.2012 WAS NOT ACTED UPON AND NO CASH WAS PAID AT THE TIME OF ENTE RING INTO THAT AGREEMENT. 4. HOWEVER, LD. ASSESSING OFFICER WAS NOT IMPRESSED BY THE ABOVE ARGUMENTS. ACCORDING TO HIM, THE SALE AGREEM ENT DATED 02.08.2012 SEIZED DURING THE COURSE OF SEARCH WAS S IGNED BY TEN MEMBERS OF THE DSP GROUP AND THE PRICE WAS CLEARLY MENTIONED AS F10,92,74,700/- DETERMINED @ F2,85,000/- PER ACRE. AS PER LD. ASSESSING OFFICER, RECEIPT OF F3.06 CRORES IN CASH WAS ALSO CLEARLY MENTIONED IN THE SAID AGREEMENT. FURTHER, AS PER L D. ASSESSING OFFICER ASSESSEES COULD NOT PRODUCE ANY EVIDENCE TO SHOW TH AT THE AGREEMENT WAS SHAM. LD. ASSESSING OFFICER ALSO NOTED THAT AC TUAL REGISTRATION OF THE LAND WAS DONE IN THE MONTHS OF FEB, MARCH AND A PRIL, 2013, WHICH WAS WITHIN SIX MONTHS FROM THE DATE OF AGREEMENT. FURTHER, AS PER LD. ITA 1519 TO 152 3/MDS/2017. :- 6 -: ASSESSING OFFICER, THE CERTIFICATE PRODUCED BY THE ASSESSEES DID NOT SPECIFY THE AGRICULTURAL CROP. LD. ASSESSING OFFI CER ALSO RELIED ON LOCAL ENQUIRES WHICH ACCORDING TO HIM SHOWED THE PRESEN CE OF KATTUKARUVELAM TREES WHICH WERE SPONTANEOUS IN NATU RE. AGAIN ACCORDING TO LD. ASSESSING OFFICER ASSESSEES THEMSE LVES HAD ADMITTED THAT THERE WERE NO AGRICULTURAL OPERATIONS CARRIED ON. RELYING ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIDDHARTH J. DESAI 139 ITR 628, LD. ASSESSING OFFICER HELD THAT THE LAND IN QUESTION COULD NOT BE CONSIDERED AS AGRICUL TURAL. HE COMPUTED THE CAPITAL GAINS ADOPTING THE RATE MENTIONED IN TH E AGREEMENT FOR SALE DATED 02.08.2012 FOUND AT THE TIME OF SEARCH. 5. AGGRIEVED, ASSESSEES MOVED IN APPEALS BEFORE THE LD . COMMISSIONER OF INCOME TAX (APPEALS). ASSESSEES BR OUGHT TO THE ATTENTION OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) THAT THE OTHER FIVE OWNERS WHO WERE ALSO SIGNATORIES TO THE AGREEMENT HAD MOVED BEFORE THE SETTLEMENT COMMISSION. HOWEVER, A S PER ASSESSEES, ORDER OF THE SETTLEMENT COMMISSION DID NOT HAVE ANY BEARING ON THE APPEALS, SINCE SETTLEMENT COMMISSION HAD CLEARLY STATED THAT THE VIEW TAKEN BY THEM WOULD NOT ADV ERSELY AFFECT THE CASE OF THE ASSESSEES. ITA 1519 TO 152 3/MDS/2017. :- 7 -: 6. ON THE NATURE OF THE LAND, SUBMISSION OF THE ASSESS EED WAS THAT NOT CONDUCTING ANY AGRICULTURAL OPERATIONS WOULD NO T CONVERT AN AGRICULTURAL LAND TO A NON AGRICULTURAL ONE. AS PER ASSESSEES, TAHSILDAR HAD CERTIFIED THE LAND AS AGRICULTURAL WITH AGRI CULTURAL INCOME AND THIS COULD NOT BE DISBELIEVED. FURTHER, AS PER THE ASSESSEES, NOTHING MORE THAN WHAT WERE MENTIONED IN THE REGISTERED CON VEYANCE DEEDS WERE RECEIVED. 7. HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT IMPRESSED BY THE ABOVE ARGUMENTS OF THE ASSESSEE. AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS), UNLESS AGRIC ULTURAL ACTIVITIES WERE CARRIED OUT, THE LAND COULD NOT BE CONSIDERED AS AGRICULTURAL. FURTHER, AS PER LD. COMMISSIONER OF INCOME TAX (APP EALS) ONCE THE LAND WAS SOLD FOR A NON AGRICULTURAL PURPOSE IT CO ULD NOT DEEMED AS AGRICULTURAL LAND. IN THE OPINION OF THE LD. COMM ISSIONER OF INCOME TAX (APPEALS), THE TESTS LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIDDHARTH J. DESAI (SUPRA) STOOD SATISFIED. AS TO THE QUESTION ON SALE PRICE BEING SUBSTITUTED WITH CONSI DERATION MENTIONED IN THE AGREEMENT FOR SALE, LD. COMMISSIONER OF INC OME TAX (APPEALS) WAS OF THE OPINION THAT EXCESS CONSIDERATION ABOVE WHAT WAS STATED IN THE CONVEYANCE DEED HAD TO BE CONSIDERED AS ON-MO NEY AND OUGHT TO HAVE BEEN TAXED U/S. 68 OF THE ACT AND NOT AS LO NG TERM CAPITAL GAINS. ASSESSEE WHEN IT WAS PUT ON NOTICE, ON THIS OPINION OF THE LD. ITA 1519 TO 152 3/MDS/2017. :- 8 -: COMMISSIONER OF INCOME TAX (APPEALS), ITS REPLY WA S THAT EVEN IF ANY EXCESS WAS PRESUMED TO HAVE BEEN RECEIVED, LAND BEI NG AGRICULTURAL SURPLUS WAS NOT EXIGIBLE TO CAPITAL GAINS TAX. LD . COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THESE CONTENTIONS AND HELD THAT IF CONSIDERATION RECEIVED WAS HELD BY ANY APPELLATE FO RUM AS NOT GIVING RISE TO ANY LONG TERM CAPITAL GAINS, THEN THE SURP LUS SHOULD BE CONSIDERED AS INCOME UNDER THE HEAD INCOME FROM OT HER SOURCES. WITH THESE OBSERVATIONS, THE LD. COMMISSIONER OF IN COME TAX (APPEALS) DISMISSED THE APPEALS OF THE ASSESSEES. 8. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STR ONGLY ASSAILING THE ORDERS OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) SUBMITTED THAT AGREEMENT FOR SALE DATED 02.08.2012 WAS NEVER ACTED UPON BY THE CONCERNED PARTIES. ACCORDING TO HIM, T HERE WAS A CONFIRMATION IN THE FORM OF AN AFFIDAVIT DATED 18. 03.2016 OF THE BUYERS, WHEREIN IT WAS CLEARLY STATED THAT THE SAID AGREEMENT WAS NOT ACTED UPON AND HIGHER CONSIDERATION MENTIONED THERE IN WAS ONLY FOR THE PURPOSE OF OBTAINING FINANCIAL ASSISTANCE. AS PER THE LD. AUTHORISED REPRESENTATIVE, LOWER AUTHORITIES PLACED UNDUE RELIANCE ON THE AGREEMENT FOR SALE, WHEN THE CONVEYANCE DEED EXECUTED IN FAVOUR OF THE BUYER AND HIS NOMINEES IN THE MONTH S OF FEBRUARY, MARCH AND APRIL, 2013 REFLECTED THE ACTUAL AND COR RECT FIGURE. FURTHER, ACCORDING TO HIM, BY VIRTUE OF THE JUDGMENT OF H ONBLE JURISDICTIONAL ITA 1519 TO 152 3/MDS/2017. :- 9 -: HIGH COURT IN THE CASE OF MRS. SAKUNTHALA VEDACHALAM VS. ACIT, (2015) 369 ITR 558, CLASSIFICATION OF AGRICULTURAL LAND AS PER REVENUE RECORD WAS THE ONLY REQUIREMENT TO BE MET, FOR PROV ING THE AGRICULTURAL NATURE OF THE LAND SOLD. LD. AUTHORISED REPRESENTA TIVE POINTED OUT THAT THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SIDDHARTH J. DESAI (SUPRA) WAS DULY CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE CASE. IN A NY CASE, ACCORDING TO HIM, WHEN NO PAYMENT OF ON-MONEY WAS PROVED TO HAVE BEEN MADE OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE R EGISTERED CONVEYANCE DEEDS, SUBSTITUTION OF THE LATTER WITH A HYPOTHETICAL FIGURE WAS UNCALLED FOR. ALTERNATIVELY, ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, THE LAND IN QUESTION, ONCE CONSIDE RED AS AGRICULTURAL, THE QUESTION OF EXIGIBLITY TO CAPITAL GAINS TAX DID NOT ARISE. ARGUMENT OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT EVEN ACCEPTING FOR A MOMENT RECEIPT OF ANY ON-MONEY, THE SURPLUS RETAI NED THE CHARACTER OF CONSIDERATION ON SALE OF AGRICULTURAL LAND. 9. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRON GLY SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW SUBM ITTED THAT THE TIME GAP BETWEEN THE AGREEMENT FOR SALE AND REGISTRATION OF CONVEYANCE DEEDS WAS ONLY ABOUT SIX MONTHS AND THEREFORE THE CONSIDERATION MENTIONED IN THE AGREEMENT WOULD NOT HAVE BEEN NEGO TIATED DOWN SO DRASTICALLY WITHIN SUCH AN INSIGNIFICANT TIME GAP. ON THE CLAIM OF THE ITA 1519 TO 152 3/MDS/2017. :- 10 -: ASSESSEES THAT THE LAND WAS AGRICULTURAL IN NATU RE, CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT THE LAND ABUTTED THE SEA AND THERE WAS NO SCOPE FOR AN AGRICULTURAL OPERATIO NS. ACCORDING TO HIM, ONLY KATTUKARUVELAM TREES WERE FOUND IN THE LAND, AND THIS PROVED THAT IT WAS NOT FIT FOR ANY AGRICULTURAL OPE RATIONS. THE LAND ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE WA S BARREN SINCE LAST TEN YEARS. FURTHER, ACCORDING TO LD. DEPARTME NTAL REPRESENTATIVE, CONSIDERATION FOR SALE WAS RIGHTLY TAKEN AS PER TH E AGREEMENT FOR SALE ENTERED ON 2 ND AUGUST, 2012. ACCORDING TO HIM, ASSESSEES COULD NOT SHOW ANY EVIDENCE, AS TO WHY AND HOW THE AGREED CO NSIDERATION WENT DOWN DRASTICALLY WITHIN A PERIOD OF SIX MONTHS. 10. AD LIBITUM REPLY OF THE LD. AUTHORISED REPRESENTAT IVE WAS THAT NO EVIDENCE WAS SHOWN BY THE REVENUE FOR ANY ON-MO NEY RECEIPTS OR ANY CONSIDERATION IN EXCESS OF WHAT WAS STATED IN THE CONVEYANCE DEEDS. AS PER THE LD. AUTHORISED REPRESENTATIVE P RESENCE OF KATTUKARUVELAM TREES ITSELF PROVED THAT AGRICULTURA L OPERATIONS WERE POSSIBLE. THUS, ACCORDING TO HIM, THE LOWER AUTHORI TIES FELL IN ERROR IN TREATING THE LAND AS NON AGRICULTURAL LAND AND IN SUBSTITUTING THE ACTUAL CONSIDERATION WITH THE ONE MENTIONED IN AN AGREEMENT WHICH WAS NEVER ACTED UPON. ITA 1519 TO 152 3/MDS/2017. :- 11 -: 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THE FIRST QUESTION IS TO BE ANSWERED IS WHETHER THE LAND SOLD WAS AGRICULTURAL IN NATURE O R NOT. ASSESSEES HAVE PLACED CONSIDERABLE RELIANCE ON A CERTIFICATE DATED 22.09.2015 ISSUED BY THE VILLAGE ADMINISTRATIVE OFFICER, PERI YAKULAM TALUK PLACED AT PAPER BOOK PAGE NO.33. CERTIFICATES ISSUED TO TH E ASSESSEES ARE SIMILARLY WORDED EXCEPT FOR EXTEND OF LAND AREA. O NE SUCH CERTIFICATE IS REPRODUCED HEREUNDER FOR BREVITY:- THIS IS TO CERTIFY THAT SMT.CHANDRA GNANASIRONMANI, RESIDING IN 2 ND STREET, NO. 3C, INNASIYAPURAM, TUTICORIN TOWN, TUTICORIN DISTRICT, HAS 23.485 ACRES OF DRY LAND AT RAMANATHAPURAMDISTRICT, KALADITALUK, PERIYAKULAM GROUP, OPILAAN VILLAGE WITH THE SURVEY NUMBERS GIVEN BELOW, AND THAT THE ABOVE LAND YIELDS AN INCOME OF RS.4000 PER ANNUM, PER ONE ACRE OF LAND AND SO A TOTAL INCOME OF APPROXIMATELY RS.1,00,000(ONE LAKH) IS RECEIVED. DETAILS OF SURVEY NUMBER 448/1-3.52 ACRE, 448/2-1.00, 448/3-0.49, 448/4- 2.59, 448/5-0.58, 448/6-3.51AC, 448/7-2.17, 449/1A-1.43, 449/1B-4.405, 449/2-1.07, 449/3/A-1.53, 449/3B -1.19 ACRE(TOTAL 23.485 ACRES) NO DOUBT THE CERTIFICATE DOES MENTION THAT THE L AND WAS DRY IN NATURE. HOWEVER, THE CERTIFICATE DOES NOT SAY THAT THE LAND WAS AGRICULTURAL IN NATURE. ALL DRY LAND NECESSARILY NE ED NOT BE AGRICULTURAL. ITA 1519 TO 152 3/MDS/2017. :- 12 -: THE YIELD FROM THE LAND IS MENTIONED AS F4,000/- F OR ONE ACRE. HOWEVER, WHETHER SUCH YIELD IS FROM AGRICULTURAL O PERATIONS OR FROM ANY OTHER ACTIVITY LIKE SALT MINING IS NOT CLEAR. THAT APART, IN THE SUBMISSIONS MADE BY THE ASSESSEES BEFORE THE LD. AS SESSING OFFICER, IT HAS BEEN STATED THAT THE TRANSACTION RELATING TO T HE SALE OF THE SUBJECT LAND WAS DONE THROUGH ONE SHRI. D. PAULPANDI A C LOSE RELATIVE OF ONE OF THE ASSESSEES. WHAT WAS MENTIONED BY SHRI. PAUL PANDI WHEN A STATEMENT WAS RECORDED FROM HIM IS REPRODUCED HEREU NDER:- (I) THE LAND AT OPPILAN WAS INITIALLY PURCHASED ON 05.02.2003 BY M/S MARVEL AQUA FARMS (PARTNERSHIP FIRM OF ALL THE 5 BROTHERS OF DSF GROUP) FROM VARIO US PERSONS AND CONSOLIDATED TO THE TOTAL EXTENT OF 383 .42 ACRES WITH THE INTENTION OF STARTING AN AQUA FARM, MAINLY FOR PRAWN CULTURE. (II) HOWEVER, AS THE AQUA FARM COULD NOT BE STARTED , FEARING ACQUISITION BY THE GOVERNMENT AUTHORITIES, IN THE YEAR 2010 THE LANDS WERE SOLD/REGISTERED IN FAV OUR OF THE FIVE PARTNERS / BROTHERS AND THEIR FAMILY MEMBERS. THE PURCHASE WAS DULY REFLECTED IN THE FINANCIAL STATEMENTS OF THE RESPECTIVE MEMBER OF DS F GROUP. (III) NO AGRICULTURAL ACTIVITY WAS EVER CARRIED IN IT AND THE LAND WAS KEPT IDLE. (IV) SUBSEQUENTLY, AS THE DSF GROUP REQUIRED FUNDS FOR ITS POLYTECHNIC COLLEGE AND THE 3 STAR HOTEL DSF GRAND PLAZA, ON FINDING A PROSPECTIVE BUYER OF THE ENTIRE EXTENT OF 383.42 ACRES OF LAND, A SALE AGREEMENT WAS ENTERED ON 02.08.2012. (V) FURTHER THE ABOVE AGREEMENT WAS ENTERED FOR THE SAKE OF PURCHASER M/S SAHAYAMATHA SALTERS PVT. LTD. AND NO ADVANCE WAS ACTUALLY RECEIVED. ALSO THE CONSIDERATION MENTIONED IN THE _ ABOVE AGREEMENT ITA 1519 TO 152 3/MDS/2017. :- 13 -: WAS NOT ACTUALLY RECEIVED. (VI) THE VALUE ADMITTED IN THE FINANCIAL STATEMENT S IS THE ACTUAL VALUE RECEIVED. WHEN WE READ THE CERTIFICATE ISSUED BY THE VILLAGE ADMINISTRATIVE OFFICER ALONGWITH THE STATEMENT GIVEN BY SHRI. PA ULPANDI, IT IS CLEAR THAT THE LAND SOLD WAS NON-AGRICULTURAL. PRESENCE OF KATTUKARUVELAM TREES WILL NOT CHANGE THE NATURE OF A LAND WHERE AD MITTEDLY NO AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE ASSESS EES ON SUCH LAND. IN OUR OPINION, THE JUDGMENT OF JURISDICTIONAL HIGH CO URT IN THE CASE OF MRS. SAKUNTHALA VEDACHALAM (SUPRA) STRONGLY RELIED ON BY THE LD. AUTHORISED REPRESENTATIVE WAS ON AN ENTIRELY DIFFE RENT SET OF FACTS. IN THE SAID CASE, THE LAND WAS CLASSIFIED AS AGRICULT URAL IN THE ADANGAL RECORDS AND ASSESSEE CONCERNED HAD PAID REVENUE KI ST. THESE ESSENTIAL FEATURES ARE ABSENT IN THE CASE BEFORE US . ADMITTEDLY, ASSESSEES HERE HAD ACQUIRED THE LAND WITH AN INTEN TION TO START AN AQUA FARM AND THERE WAS NO DESIRE TO DO ANY AGRICU LTURAL ACTIVITIES. CONSIDERING ALL THESE, WE CANNOT FIND ANY FAULT IN THE FINDINGS OF THE LOWER AUTHORITIES THAT THE LAND SOLD WAS NOT AGRIC ULTURAL IN NATURE. 12. THE SECOND QUESTION TO BE ANSWERED IS WHETHER THE CONSIDERATION RECEIVED ON SALE OF LAND SHOULD HAVE BEEN TAKEN ON THE BASIS OF WHAT WAS MENTIONED IN THE EVENTUAL CONVEY ANCE DEEDS OR WHAT WAS MENTIONED IN THE AGREEMENT FOR SALE DATED 02.08.2012. ITA 1519 TO 152 3/MDS/2017. :- 14 -: ASSESSMENT ORDERS OF THE ASSESSEES SHOW THAT THE C ONSIDERATION SHOWN IN THE REGISTERED CONVEYANCE DEEDS, EXECUTED IN FAVOUR OF THE BUYERS, WERE AS PER THE LIST GIVEN AT PARA 3 ABOVE . HOWEVER, THE SALE CONSIDERATION WORKED OUT BY THE LD. ASSESSING OFFIC ER FOR COMPUTING THE CAPITAL GAINS WAS TAKEN FROM AGREEMENT FOR SAL E DATED 02.08.2012, SEIZED DURING THE COURSE OF SEARCH. SAI D AGREEMENT MENTIONED F2,85,000/- PER ACRE AS THE CONSIDERATION . THIS AGREEMENT IS REPRODUCED HEREUNDER:- THIS SALE AGREEMENT EXECUTED AT TUTICORIN DISTRIC T, TUTICORIN TALUK, TUTICORIN TOWN THIS 2 ND DAY OF AUGUST 2012 BY SAHAYAMATHA SALTERS PRIVATE LIMITED, CHAIRMAN MR . N. RATHNAVEL, SON OF LATE MR. K.S.P. NADARAJAN, LEVEL 1, RESIDING IN NO 9A HOUSE, MEENAKSHIPURAM, TUTICORIN TOWN, AND CHAIRMAN OF SAHAYAMATHA SALTERS PRIVATE LIMITED , EXISTING IN NO. 13A/L, WEST MEENAKSHIPURAM, TUTICOR IN TOWN, TUTICORIN TALUK, TUTICORIN DISTRICT, MANAGING DIRECTOR OF THE ABOVE LIMITED, MR. MICHEL MEHTA, SON OF MR. JOHNTON BOSCO MOTHA, RESIDING IN NO.67 , 2 ND STREET, TOVIPURAM, TUTICORIN TOWN, AND MANAGING DIR ECTOR OF THE ABOVE M/S. SAHAYAMATHA SALTERS PRIVATE LIMIT ED, LEVEL 2, BEING CONSIDERED AS THE 1 ST PARTY MR. D. SATHYANATHAN 1, SON OF MR. DEVANESAM, RESIDI NG IN NO.9A/L, 3 RD STREET, GANESH NAGAR, TUTICORIN-8, TUTICORINTALUK, D. PALPANDY 2, SON OF MR. THEVANESA M, RESIDING IN NO. 3/52, KRISHNARAJAPURAM, TUTICORIN 2 , MR. D. DURAIRAJ 3, SON OF MR. DEVANESAM, RESIDING IN NO 13 A/5D, 2 ND STREET, INNASIYAARPURAM, TUTICORIN-2, MR. D. MANOH ARAN 4, SON OF MR. DEVANESAM, RESIDING IN NO 3C, 2 ND STREET, INNASIYAARPURAM, TUTICORIN-2, MR. D. ANBAZHAGAN 5, SON OF MR. DEVANESAM, RESIDING IN NO.L/L045-1D, 2 ND BLOCK STREET, SETHUPATHY NAGAR, RAMANATHAPURAM TOWN, RAMANATHAPURAMDISTRICT, MRS. PANCHAVARNAM 6, WIFE O F MR. D. PALPANDY, RESIDING IN NO 112/27/1 HOUSE, ITA 1519 TO 152 3/MDS/2017. :- 15 -: GOMATHIBAI COLONY, BOLPET, TUTICORIN 2, MRS. D. GNYANAPOSUKEERTHAM 7, WIFE OF MR. D. DURAIRAJ, RESI DING IN 13A/5D HOUSE, 2 ND STREET, INNSAIYARRPURAM, TUTICORIN -2 MRS. M. CHANDRA NYANASIRONMANI 8, WIFE OF MR. O. MANOHARAN, RESIDING IN NO 3C, INNASIYAPURAM 2 ND STREET, TUTICORIN-2, MRS. A. EBANESAR JEYAANBU 9, WIFE OF M R. O. ANBALAGAN, RESIDING IN NO 1/1045-10 HOUSE, 2 ND BLOCK STREET, SETHUPATHY NAGAR, RAMANAATHAPURAM TOWN, MR. D. S. SOLOMONRAJA 10, SON OF MR. D. SATHYANATHAN, RESIDING IN NO 9A/L, 3 RD STREET, GANESH NAGAR, TUTICORIN -8, HAVING THEM AS THE 2 ND PARTY, THE SALE AGREEMENT DOCUMENT STATES AS BELOW, AMONG THE SECOND PARTIES FROM 1 TO 10, THE PROPERTI ES THAT WE SEE IN THE SCHEDULE OF PROPERTIES, FOR WHICH AF TER HAVING GOT THE PRICE SEPARATELY AND HAVE PAID THE R EVENUE LEVIED ,THEY ARE ENJOYING AND SHALL BE GIVEN FOR OU R 1 ST PARTY, SAHAYAMATHA SALTERS PRIVATE LIMITED. AND THR OUGH THE ABOVE SAHAYAMATHA SALTERS PRIVATE LIMITED'S CHA IRMAN SHRI N. RATHNAVEL AND MANAGING DIRECTOR MR. MICHEL MOTHA, THE 2 ND PARTIES HAVE AGREED FOR SALE ON THE BASIS THAT RS. 2,85,OOO/-{RUPEES TWO LAKHS EIGHTY FIVE THOUSAND ONLY) FOR ONE ACRE AND SO FOR THE TOTAL 38 3 ACRES AND 42CENTS, THE TOTAL SALE CONSIDERATION WILL BE R S. 10,92,74,700 (RUPEES TEN CRORE NINETY TWO LAKHS SEVENTY FOUR THOUSAND AND SEVEN HUNDRED ONLY) IN THAT RESPECT AS THE 2 ND PARTY HAS RECEIVED AN AMOUNT OF RS. 3,06,00,000/- (RUPEES THREE CRORES AND SIX LAKH S ONLY) AS ADVANCE CASH FROM THE 1 ST PARTY, ON 31ST JANUARY, 2013, THE 2 ND PARTIES WOULD GET SEPARATE COMPUTERIZES PATTA FOR THEIR RESPECTIVE LAND AND HAND IT OVER TO THE 1 ST PARTY, AND ON THAT BASIS, IT CAN BE MADE IN THE NAM E OF SAHAYAMATHA SALTERS PRIVATE LIMITED, OR AS ABOVE CHAIRMAN AND DIRECTORS DIRECT, SHALL TRANSFER IT IN THE NAMES OF THOSE LIKE, VEPPALODAI SALT CORPORATION, VEPALOD AI CHEMICALS, BAGAPPIRIYAAL COMPANY, SOUTH INDIA BROMI NE AND ALLIED CHEMICALS, SEPARATELY IN THE INDIVIDUAL NAME OR THE 2 ND PARTIES MAY JOINTLY OR SEPARATELY AS AN INDIVIDUAL' S, PREPARE THE SALE AGREEMENT, AND SHALL CALCULATE THE AMOUNT TO BE RECEIVED AS MENTIONED ABOVE, THAT IS R UPEES TWO LAKHS EIGHTY FIVE THOUSAND PER ACRE AND ACCORDINGLY CALCULATE THE TOTAL AMOUNT AND DEDUCT RUPEES THREE CRORE SIX LAKHS AMOUNT RECEIVED AS ITA 1519 TO 152 3/MDS/2017. :- 16 -: ADVANCEBY THE 2 ND PARTIES FROM THE 1 ST PARTY AND BOTH THE PARTIES SHALL COMPLETE THE FORMALITIES OF REGISTRAT ION OF THE SALE DOCUMENTS WHEREAS THE PROPERTY MORE FULLY DESCRIBED IN THE SCHEDULE HEREUNDER IS THE SELF ACQUIRED PROPERTY OF THE 2 ND PARTIES AND THEY ARE ABSOLUTE OWNER OF THE PROPERTY AND THEY HAVE BEEN ENJOYING THE SAME WITH ABSOLUTE RIGH T AND THEY HAVE CLEAR AND MARKETABLE TITLE TO THE SCHEDUL E PROPERTY. THE 2ND PARTY HEREBY ASSURES THE I' PARTY THAT HAS ABSOLUTE POWER TO CONVEY THE SAME AND THERE ARE NO ENCUMBRANCES, LIENS, CHARGES, GOVERNMENT DUES, ATTACHMENTS, ACQUISITION, OR REQUISITION, PROCEEDIN GS ETC. THIS AGREEMENT WILL BE PREPARED IN DUPLICATE AND BO TH THE PARTIES WILL SIGN THE AGREEMENT AND KEEP ONE COPY E ACH. NO DOUBT IT IS MENTIONED THAT F3.06 CRORES WAS PAI D BY THE BUYER ON 31 ST JANUARY, 2013. HOWEVER, THE AGREEMENT FAILS TO IN DICATE WHAT EXACT AMOUNT WAS PAID TO EACH OF THE SELLER IF IT A LL IT WAS PAID, OR IN WHAT PROPORTION, THE AMOUNT WAS GIVEN TO THEM. WE ALSO FIND THAT THE BUYER M/S. SAHAGAYMATHA SALTERS PVT. LTD VIDE AFFIDAVIT DATED 18.03.2016 HAD CATEGORICALLY DENIED PAYMENT OF AN Y AMOUNT AS PER THE AGREEMENT DATED 02.08.20012, AND CONFIRMED THAT THE AGREEMENT WAS ENTERED ONLY WITH AN INTENTION OF RAISING FIN ANCIAL ASSISTANCE. WHEN BOTH THE PARTIES TO THE AGREEMENT STATE THAT T HE AGREEMENT WAS NOT ACTED UPON, IN MY OPINION LOWER AUTHORITIES OUG HT HAVE BROUGHT IN CORROBORATING EVIDENCE TO SHOW PASSING OF CONSIDERA TION, IN EXCESS OF WHAT WERE MENTIONED IN THE REGISTERED CONVEYANCE DE EDS. 13 . WE ARE ALIVE TO THE FACT THAT OUT THE TEN PE RSONS WHO HELD THE LAND FIVE HAD MOVED THE SETTLEMENT COMMISSION AND HAD AGREED ITA 1519 TO 152 3/MDS/2017. :- 17 -: TO OFFER CAPITAL GAINS ON THE CONSIDERATION INCLUDI NG THE ALLEGED ON- MONEY. WHAT THE SETTLEMENT COMMISSION OBSERVED IN THIS REGARD IS REPRODUCED HEREUNDER:- WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES. THE APPLICANTS HAVE DISCLOSED THE FACTS NECESSARY (OR ADJUDICATION. THE APPLICANT HAS ALSO OFFERED ADDITIONAL INCOME WHICH WAS IN DISPUTE, TO BRING MATTERS TO A FINALITY. THE AFFIDAVIT OF PURCHASER M/S.SAHAYAMATHA SALTERS PVT. LTD.) IS NOT IN FAVOUR OF THE DEPARTMENT. THERE IS NO EVIDENCE TO STATE THAT ADVANCE OF F.3.06 CRORES WAS RECEIVED OR THAT THE AGREEM.ENT WAS ACTED UPON. THE MAIN PERSON LATE SRI D,MANOHARAN WHO DEALT WITH THIS TRANSACTION IS NO M ORE. IT IS THE PLEA OF THE APPLICANT THAT SINCE HE IS OF FERING TOTAL SALE CONSIDERATION INCLUDING EXCESS CONSIDERA TION AND WITHDRAWING THE CLAIM OF CAPITAL GAINS EXEMPTIO N ON ACCOUNT OF AGRICULTURAL LAND TO BRING MATTERS TO A QUIETUS, IMMUNITY FROM PENALTY AND PROSECUTION MAY BE GRANTED. JT IS ALSO STATED BY THEM THAT THE SURRENDER OF ADDITIONAL INCOME IS MADE UNDER THIS HEAD IN HE CAS E OF THESE FIVE APPLICANTS BASICALLY BECAUSE THE SETTLEM ENT APPLICATIONS ARE TO BE GOT DISPOSED OF BEFORE THE T IME BARRING DATE AND THERE ARE OTHER MATTERS IN THE APPLICATION THAT ARE ALSO TO BE DECIDED UPON. THIS SHOULD NOT BE VIEWED ADVERSELY IN THE CASE OF THE OTHER ASSESSEES IN THEIR GROUP WHO ARE IN APPEAL. CONSIDE RING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS F ELT THAT IF ADDITIONAL CONSIDERATION IS BROUGHT TO TAX WITHOUT ALLOWING CAPITALISATION THE ENDS OF JUSTICE WOULD BE MET. HE NCE THE SETTLEMENT OFFER IN THIS REGARD IS ACCEPTED AND THE CAPITAL GAINS WORKED OUT AS PER THE TABLE ABOVE IS BROUGHT T O TAX AS ADDITIONAL INCOME. SETTLEMENT COMMISSION HAS CLEARLY OBSERVED THAT THE RE WAS NO EVIDENCE TO SAY THAT ANY ADVANCE OF F3.06 CRORES WA S RECEIVED OR TO ITA 1519 TO 152 3/MDS/2017. :- 18 -: SHOW THAT AGREEMENT DATED 02.08.2012 WAS ACTED UPON . IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT LOWER AU THORIZES FELL IN ERROR IN SUBSTITUTING THE VALUE SHOWN IN THE CONVEYANCE D EED WITHIN THE AMOUNT MENTIONED IN THE AGREEMENT FOR SALE DATED 02 .08.2012. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORI TIES IN THIS REGARD AND DIRECT THE LD. ASSESSING OFFICER TO RECOMPUTE T HE CAPITAL GAINS IN THE HANDS OF EACH OF THE ASSESSEES, CONSIDERING THE VALUE SHOWN IN RESPECTIVE CONVEYANCE DEEDS AS THE FULL VALUE OF TH E CONSIDERATION. IN VIEW OF THIS DIRECTION, THE QUESTION WHETHER ALLEGE D ON-MONEY SHOULD HAVE BEEN TAXED UNDER THE HEAD INCOME FROM OTHER S OURCE HAS BECOME REDUNDANT. 14. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 14TH DAY OF SEPT EMBER, 2017, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER &'( / CHENNAI )*+ / DATED: 14TH SEPTEMBER, 2017 KV ,*'- . /012 34'1 / COPY TO: 1 . 325067 / APPELLANT 3. ,8 ,8 9 (3250) / CIT(A) 5. 1;<58 . = / DR 2. .>867 / RESPONDENT 4. ,8 ,8 9 / CIT 6.