ITO, Ramanathapuram V. Shri M.Shanmugam, Ramanathapuram

ITA 1670/CHNY/2010

• Counselvise Citation: 167021714 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Keywords: Capital asset; Gift; Income from undisclosed sources; Cost of acquisition; Agreed addition
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . , . . ! , ' # [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1670/MDS/2010 / ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER WARD I(2) RAMANATHAPURAM VS. SHRI M. SHANMUGAM D.NO.98, AGRAHARAM ROAD RAMANATHAPURAM 623 501 [PAN BOCPS 7918 Q ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : SHRI N. MADHAVAN, JCIT /RESPONDENT BY : SHRI N. DEVANATHAN FOR SHRI R.MEENAKSHISUNDARAM / DATE OF HEARING : 10-02-2014 ! / DATE OF PRONOUNCEMENT : 13-02-2014 ( / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE FOR ASSESSMENT Y EAR 2007-08, IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME- TAX(APPEALS)-II MADURAI, DATED 5.7.2010, PASSED IN APPEAL NO.145/ 2009-10, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S 147 OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT). I.T.A.NO. 1670/10 :- 2 -: 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPE AL: 1. THE DECISION OF THE CIT(A) IS CONTRA RY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSEE RECEIVED THE LAND BYWAY GIFT FROM HIS EMPLOYER DURING THE YEAR 1996-97. IN THE GIFT DEED REGISTERED, THE LAND VALUE WAS MENTIONED BY THE DONOR AT 50,000/-. SECTION 49(1)SAYS THAT WHERE THE CAPITAL ASSET BECOME THE P ROPERTY OF THE ASSESSEE UNDER A GIFT OR WILL, THE COST OF ACQUISIT ION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWN ER OF THE PROPERTY ACQUIRED IT. IN THIS CASE, THE PREVIOUS OW NER RECEIVED THE LAND FROM HER MOTHER RANI R. MUTHATHAL NACHIAR WHO IS PALAYAMPATTI JAMEENTHARINI. AS THE PROPERTY IN QUES TION ORIGINALLY BELONGED TOJAMEEN FAMILY, THE COST OF THE PROPERTY WAS NOT ASCERTAINED FROM ANYWHERE AND HENCE THE VALUE OF TH E PROPERTY STATED IN THE GIFT DEED BY THE DONOR WAS TAKEN AS C OST OF LAND OF PREVIOUS OWNER BY THE AO. FURTHER, THE CIT(A) OUGHT TO HAVE SEEN THAT THE GUIDELINE VALUE OF THE PROPERTY IN QUESTIO N FOR THE PERIOD 01.04.1994 TO 31.03.1997 STATED BY THE REGISTRATION AUTHORITY VIDE LETTER DATED 14.06.2010, RS.294000/- ( RS. 13.50 PE R SQ. FT. X 21800 SQ.FT )IS ENTIRELY DIFFERENT FROM THE GUIDELINE VAL UE MENTIONED IN THE GIFT DEED REGISTERED IN THE OFFICE OF THE SUB-REGIS TRAR, VELIPATTANAM ON 17.10.1996, RS. 196200/-. HENCE COST OF LAND ADO PTED BY THE CIT(A) BASED ON THE INCORRECT VALUE REPORTED BY THE REGISTRATION AUTHORITY IS NOT CORRECT. 2. THE CIT(A) ERRED IN DELETING THE ADDITION TO THE EXTENT OF RS.454257/-MADE ON ACCOUNT OF INADEQUATE DRAWING/UN ACCOUNTED INCOME FROM REAL ESTATE. THE CIT(A) OMITTED TO CONS IDER THE FACT THAT IT IS EVIDENT FROM ORDER SHEET NOTE DATED 09.0 4.2009, THE INCOME FROM REAL ESTATE BUSINESS WAS ASCERTAINED BY ASSESSING OFFICER FROM THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND PRODUCED BY THE ASSESSEE'S REPRESENTATIVE ON 09.04. 2009. ALSO, THE EXPENDITURE INCURRED DURING THE YEAR WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT WAS WORKED OUT BY THE ASSESSING OF FICER BASED ON THE MEDICAL BILLS/VOUCHERS PRODUCED BY THE ASSESSEE WHICH WAS EVIDENCED FROM THE ORDER SHEET NOTE DATED 29.10.09. THE AUTHORIZED REPRESENTATIVE WHO APPEARED BEFORE THE LD. CIT(A) H IMSELF SIGNED ON THE ORDER SHEET NOTE FOR ACCEPTANCE OF FACT RECORDE D. I.T.A.NO. 1670/10 :- 3 -: 3. IN THE COURSE OF HEARING, THE REVENUE VEHEMENTLY RE ITERATES THE AFORESAID GROUNDS AND ARGUES THAT THE CIT(A) OU GHT TO HAVE AFFIRMED THE FINDINGS OF THE ASSESSING OFFICER IN A DDING CAPITAL GAINS OF ` 3,50,950/- AND LOW DRAWINGS OF ` 4,54,257/-. IN THIS MANNER, ACCEPTANCE OF THE APPEAL HAS BEEN PRAYED FOR. 4. THE ASSESSEE SUPPORTS THE ORDER PASSED BY THE CIT( A) IN DELETING THE FORMER ADDITION IN FULL AND LATTER ONE IN PART AND PRAYS FOR CONFIRMING THE SAME. 5. THE ASSESSEE IS AN INDIVIDUAL HAVING SALARY INCO ME AND THE ONE ARISING FROM INTEREST FROM BANK FIXED DEPOSITS. APART FROM THIS, HE IS ALSO ENGAGED IN THE BUSINESSES OF MONEY LENDING, COMMISSION ON SALE OF LANDS AND CIVIL CONTRACTS ETC. FOR THE IMP UGNED ASSESSMENT YEAR, THE ASSESSEE HAD NOT FILED RETURN TILL 3.4.2 008. ON THE SAID DATE, THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 OF THE ACT. IN RESPONSE, THE ASSESSEE FILED HIS RETURN ON 30.5.2008 WHICH W AS REGULARIZED. 6. IN THE COURSE OF SCRUTINY, THE ASSESSING OFFICER NOTICED THE ASSESSEE TO HAVE CREDITED A SUM OF ` 6,54,000/- IN HIS CAPITAL ACCOUNT UNDER THE HEAD TRANSFER OF LAND TO BUSINESS. TH E ASSESSEE PLEADED TO HAVE OWNED AGRICULTURAL LAND MEASURING 21,800 SQ FT ALLEGEDLY TO HAVE BEEN RECEIVED FROM HIS EMPLOYER ON 17.10.1996 IN LIEU OF HIS LONG I.T.A.NO. 1670/10 :- 4 -: TIME ASSOCIATION AND SERVICE. HE HAD TAKEN ITS COS T OF ACQUISITION AS `2 LAKHS. A PERUSAL OF THE ASSESSMENT ORDER DATED 23.11.200 9 MAKES IT CLEAR THAT THE ASSESSING OFFICER FOUND THE SAME TO BE EXAGGERATED. IN HIS VIEW, THE APPROPRIATE COST AT THE TIME OF AC QUISITION WAS ONLY ` 50,000/-. THE ASSESSEE HAD COMPUTED CAPITAL GAINS OF ` 95,672/- BY TREATING THE COST OF LAND AS ` 2 LAKHS FOR THE YEAR. SINCE THE ASSESSING OFFICER HAD TAKEN THE COST AS ` 50,000/- ONLY, HE COMPUTED CAPITAL GAINS IN QUESTION AS ` 3,50,950/- AND MADE NECESSARY ADDITION. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. WE FIND THAT IN LOWER APPELLATE PROCEEDINGS, THE CIT(A) SOUGHT FOR ASSESSING OFFICERS RESPONSE QUA THE ACQUISITION COST OF THE PROPERTY. IT IS TO BE SEEN THAT THE CIT(A) TAKES NOTICE OF A LETTER DATED 15.6.2010 ADDRESSED TO HIM FROM THE ASSESSING AUTHORITY FINDING THE COST OF TH E LAND AT ` 2,00,000/- AS REASONABLE. THEREFORE, THE CIT(A) HA S DELETED THE ADDITION. THAT BEING THE CASE, WE SEE NO REASON A S TO HOW THE REVENUE IN ANY WAY IS AGGRIEVED AGAINST THE FINDIN GS OF THE CIT(A). IN THESE FACTS, WE DISMISS THE FIRST GROUND OF THE REVENUE FOR WANT OF CAUSE OF ACTION. I.T.A.NO. 1670/10 :- 5 -: 8. THE NEXT GROUND IN REVENUES APPEAL IS ABOUT THE AD DITION OF ` 4,54,257/- MADE ON ACCOUNT OF INADEQUATE DRAWING/U NACCOUNTED INCOME FROM REAL ESTATE BUSINESS. 9. IN THE COURSE OF SCRUTINY, THE ASSESSING OFFICER CONSIDERED ASSESSEES SOCIO-ECONOMIC STATUS AND CAME TO THE CO NCLUSION THAT HIS DRAWINGS WERE VERY LOW IN THE FINANCIAL YEAR RELEVA NT TO THE IMPUGNED ASSESSMENT YEAR AND ALSO THAT HE HAD ACTED AS A MID DLEMAN IN VARIOUS LAND DEALS. HE ALSO NOTICED THE ASSESSEE TO HAVE INCURRED MEDICAL EXPENSES AND SUBAMANGALAM EXPENDITURE. THEREAFTER, THE ASSESSING OFFICER CONCLUDED THAT THE FAMILY EXPENSES DURING T HE RELEVANT PREVIOUS WORKED OUT TO BE ` 4,79,257/- WHICH WAS NOT RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT. ACCORDINGLY, HE MADE ALLEGED AGREED ADDITION OF THE SAID AMOUNT IN ASSESSEES INCOME. 10. IN LOWER APPELLATE PROCEEDINGS, THE CIT(A) FIRST CO NSIDERED THE ASSESSEES ARGUMENTS ABOUT THE ASSESSEES CHI LDREN WITH THEIR DATES OF MARRIAGES. THEREAFTER, HE SOUGHT RESPON SE OF THE ASSESSING OFFICER ON VARIOUS PLEAS OF NOT HAVING INCURRED ANY SUBAMANGALAM EXPENDITURE INCURRED BY THE ASSESSEE. WE FIND FR OM THE ORDER UNDER CHALLENGE THAT IN RESPONSE, THE ASSESSING OFFICER A LLEGEDLY SUBMITTED A VERY VAGUE REPLY WITHOUT BRINGING OUT ANY EVIDENCE FOR SUBAMANGALAM EXPENDITURE. THIS MADE THE CIT(A) TO CONFIRM ONLY A PART OF THE I.T.A.NO. 1670/10 :- 6 -: ADDITION OF ` 4,79,257/- TO THE EXTENT OF ` 25,000/- AND DELETE THE BALANCE ADDITION OF ` 4,54,257/-. 11. IN THE COURSE OF HEARING, THE REVENUE REFERS TO VAR IOUS DOCUMENTS PLACED ON RECORD TO CONTEND THAT THE AFO RESAID ADDITION OF LOW DRAWINGS WAS ONLY AFTER POINTING OUT THE SAME T O THE ASSESSEES REPRESENTATIVE IN THE COURSE OF SCRUTINY HELD ON 9.4.2009 AND 29.10.2009. PER REVENUE, ONCE THE ASSESSEES AUTHOR IZED REPRESENTATIVE HAD AGREED TO LOW DRAWINGS AND UNACC OUNTED INCOME NOT RECORDED IN THE ACCOUNT BOOKS, HE IS PRECLUDED FROM CHALLENGING THE VALIDITY OF THE ADDITION. 12. WE HAVE CONSIDERED THIS ARGUMENT OF THE REVENUE AND ALSO GONE THROUGH THE RELEVANT CONTENTS OF THE PAPER BOO K AVAILABLE IN THE CASE FILE. AT THE FIRST INSTANCE, WHAT THE REVENUE STATES IS FOUND TO BE CORRECT. THERE ARE SIGNATURES OF ASSESSEES REPRE SENTATIVE SHRI S. BALAJI IN THE RELEVANT SCRUTINY PROCEEDINGS ALLEGED LY FINDING UNACCOUNTED INCOME AS PER DRAWINGS PERTAINING TO TH E RELEVANT PREVIOUS YEAR. HOWEVER, THERE IS NO MATERIAL OR AN Y METHOD OF COMPUTATION IN THE SAID PROCEEDINGS. ONCE THAT IS SO, WHAT TURNS OUT IS THAT THESE ARE MERE OBSERVATIONS AND SIGNATURES OF THE ASSESSEES REPRESENTATIVE. IN OUR VIEW, NO ADDITION COULD HAV E BEEN MADE IN THE ABSENCE OF ANY FURTHER SUBSTANTIATION BY WAY OF DOC UMENTARY I.T.A.NO. 1670/10 :- 7 -: EVIDENCE. WE MAKE IT CLEAR THAT WE ARE DEALING WIT H A FISCAL STATUTE WHERE THESE HYPER TECHNICALITIES IN MAKING ADDITIO NS IN THE ABSENCE OF RELEVANT RECORD AND COMPUTATION DO NOT MATTER. THE REVENUE HAS ALSO FAILED TO POINT OUT ANY ERROR IN THE FINDINGS OF TH E CIT(A) STATING THAT REPLY OF THE ASSESSING OFFICER IN THE LOWER APPELLA TE PROCEEDINGS WAS VERY VAGUE. THUS, QUA THIS ADDITION AS WELL, WE HO LD THAT THE CIT(A), BEING THE FIRST APPELLATE AUTHORITY AS WELL AS VES TED WITH ALL POWERS OF THE ASSESSING AUTHORITY, HAS RIGHTLY EXERCISED HIS JURISDICTION IN PARTLY CONFIRMING THE IMPUGNED ADDITION. THIS GROUND OF R EVENUES ALSO FAILS. 13. THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 13 TH OF FEBRUARY, 2014, AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S. S. GODARA) JUDICIAL MEMBER DATED: 13 TH FEBRUARY, 2014 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR