ITO, Pondicherry V. V.Mohene, Pondicherry

ITA 1788/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95983 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN IRS
• Keywords: Business expenditure; Income from undisclosed sources; Opportunity of being heard; Valuation report
• Section: 133A; 131; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NOS.1788 & 1796/MDS/2014 ( / ASSESSMENT YEARS : 2008-2009 & 2009-2010) THE INCOME TAX OFFICER, WARD I(1), PUDUCHERRY 605 003. ( &' /APPELLANT) VS SHRI. V.MOHENE, NO.50A, ESWARAN KOIL STREET, PONDICHERRY 605 003. [PAN: ADMPM 1875A] ( '(&' /RESPONDENT) / APPELLANT BY : SHRI. N. MADHAVAN, IRS, JCIT. / RESPONDENT BY : SHRI. PHILIP GEORGE, ADVOCATE /DATE OF HEARING : 22.06.2015 ! /DATE OF PRONOUNCEMENT : 28.08.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS BY REVENUE ARE DIR ECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- VI, CHENNAI, DATED 30.03.2014 FOR THE ABOVE ASSESSMENT YEARS. FI RST, WE TAKE UP ITA NO.1788/MDS/2014, ASSESSMENT YEAR 2008-2009 FOR ADJUDICATION. I.T.A.NOS.1788 &1796/MDS/2014 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 01. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAIL ED TO CONSIDER THE REMAND REPORT SUBMITTED BY ASSESSING O FFICER ON 13.01.2013 WHEREIN IT WAS ELABORATELY DISCUSSED THAT HOW INCOME FROM REAL ESTATE BUSINESS WAS ARRIVED AT . 02. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO NOTE THAT THE ASSESSEE PURCHASED 156816 SQ.FEET OF LAND AT THATTANCHAVADY IN HIS SISTER-IN-LAW NAME FOR A CONSIDERATION OF 1,93,49,398/- WHICH COMES TO 123/- PER SQ. FEET AS COST. 03. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO NOTE THAT THE COST PER SQ.FEET AFTER DEVELOPMENT OF SITE WORKS OUT TO 139/- PER SQ.FEET, WHEREAS THE ASSESSEE HAS SHOWN SALE PRICE @RS.140/- PER SQ.FEET AS PER GUIDE LINE VALUE, HOWEVER ORIGINAL SELLING PRICE WAS 400/- TO 600/- INITIALLY. 04. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO NOTE THE MAIN ISSUE OF SUPPRESSION OF REAL SALE PRI CE IN THE PLOT SIZE. 05. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THERE WAS HUGE DIFFERENCE IN SALE P RICE SHOWN BY ASSESSEE AS PER GUIDELINE VALUE AND REAL M ARKET PRICE OF PLOT. 06. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO CONSIDER THAT THE ASSESSING OFFICER HAS SUMMONED 53 BUYERS OF THE PLOTS AND RECORDED STATEMENT ON OATH FROM 23 PERSONS WHO WERE APPEARED AND CREATED CONCRETE EVID ENCE THAT SALE VALUE OF THE PLOTS AT MARKET PRICE IS MUC H HIGHER THAN THE GUIDELINE VALUE, WHICH THE ASSESSEE HAS AD MITTED. 07. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDE D THE CASE ON THE BASIS OF CASH FLOW STATEMENT FILED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APP EALS) RATHER BY DECIDING ON THE SALE PRICE OF PLOTS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008- 2009 ON 18.09.2009 ADMITTING A TAXABLE INCOME OF F2,08,948/ - AND AGRICULTURAL INCOME OF F65,000/-. THE ASSESSEE IS A PROPRIETOR OF M/S. GREEN LAND I.T.A.NOS.1788 &1796/MDS/2014 :- 3 -: TRADING COMPANY WHICH WAS A CONSIGNMENT AGENT FOR P NEUMATIC SPARES. THE ASSESSEE ALSO DID BUSINESS IN THE REAL ESTATE. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUE OF NOTICE U/S.14 3(3) OF THE ACT DATED 24.08.2010. THE ASSESSMENT U/S.143(3) OF THE ACT W AS COMPLETED AND ASSESSING TOTAL INCOME AT F3,73,80,010/- AND AGRICU LTURAL INCOME OF F65,000/-. AGGRIEVED, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED T HAT A SURVEY ACTION WAS CARRIED OUT BY THE DEPARTMENT U/S 133A OF THE I.T. ACT ON 06.12.2010 IN THE BUSINESS PREMISES OF THE ASSESSEE, WHERE IN IT WAS NOTICED THAT THE ASSESSEE WAS FOUND TO BE CARRYING UNACCOUNTED BUSINESS IN THE REAL ESTATE AC TIVITY. IT WAS FOUND THAT THE ASSESSEE HAS PURCHASED LANDS IN THE MONTHS OF APRIL & MAY 2007 FROM M/S.RVP ASSOCIATES AND SOLD AS PLOTS AFTER DEVELOPMENT IN THE PROJECT NAME V.M.NAGAR THATTANCHAVADY IMMEDIATELY AFTER PURCHASE FROM RVP ASSOCIATES. THE ENTIRE BUSINESS OF DEVELOPMENT OF P LOTS AND SELLING THE SAME WAS DONE IN THE NAME OF SMT. GANDH IMATHI, HIS SISTER-IN-LAW. IN THE RETURN OF INCOME FILED BY HIM , THE ASSESSEE HAS NOT DISCLOSED ANY INCOME OUT OF REAL ESTATE ACTIVITY. I T WAS THE STAND OF THE ASSESSEE THAT HE HAD SOLD THE LAND OF 5 ACRES I.T.A.NOS.1788 &1796/MDS/2014 :- 4 -: AT THATTANCHAVADY ON BEHALF OF RVP ASSOCIATES FOR W HICH HE HAD RECEIVED COMMISSION OF F11,00,000/- DURING THE F.Y. 2007- 08 WHICH HE ADMITTED NOT SHOWING IN HIS RETURN OF I NCOME FOR THE A.Y.2008-2009. THE ENTIRE TRANSACTIONS WERE MAD E IN MRS. GANDHIMATHI'S NAME BY THE ASSESSEE HIMSELF. IT WAS ALSO FOUND DURING THE COURSE OF SURVEY ACTION THAT THE CASH WA S RECEIVED OVER AND ABOVE THE REGISTERED PRICE IN RESPECT OF T HE SALE OF PROPERTIES. SUBSEQUENTLY, THE ASSESSING OFFICER ISS UED SUMMONS U/S 131 OF THE IT ACT TO 53 PERSONS. OUT OF THEM 23 PERSONS, APPEARED BEFORE THE ASSESSING OFFICER AND HAVE GIVE N A STATEMENT UNDER OATH REGARDING THE PURCHASE PRICE P AID BY THEM, THE MODE OF PAYMENTS AND THE PERSON TO WHOM T HEY HAVE PAID THE MONEY. IT WAS STATED BY THE ASSESSING OFFICER THAT THE SALE PRICE OF THE PLOTS PER SQ FT VARIED F ROM F400 IN APR 2007 TO F600 IN JUNE 2007. THE A.O HAS ESTIMATED TH E SALES CONSIDERATION AT F5,68,02,885/- FOR THE SALE OF 124 697 SQ FT AREA OF THE PLOT ON THE BASIS OF THE STATEMENTS GIV EN BY FEW PURCHASERS OF THE PLOTS. ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE PROFIT FROM SALE OF PLOTS AT F3,72,36 ,760/- AS PER INCOME METHOD AS UNDER:- SALE CONSIDERATION AS PER CALCULATION SHEET : F5,68 ,02,885/- I.T.A.NOS.1788 &1796/MDS/2014 :- 5 -: LESS: PURCHASE PRICE, INCLUDING REGISTRATION CHARGES : F1,93,49,308/- BALANCE : F3,74,53,577/- LESS: VALUE OF UNSOLD PLOTS : F 2,16,817/- PROFIT FROM SALE OF PLOTS : F3,72,36,760/- 4.1 THE ASSESSING OFFICER ALSO COMPUTED THE INCOME OF THE ASSESSEE BY INVESTMENT METHOD AT F2,36,85,707/- ON THE BASIS OF THE TOTAL AMOUNTS DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE, HIS WIFE AND MRS.GANDHIMATHI. THE ASSESSI NG OFFICER HAS COMPUTED THE PROFIT BY INVESTMENT METHOD AT F2,36,85,707/- BY FOLLOWING COMPUTATION METHOD. TOTAL SALE PROCEEDS AS PER BANK ACCOUNTS : F3,36,26 ,000/- INVESTMENT MADE BY THE ASSESSEE : F 47,22,880/- TOTAL : F3,83,48,880/- LESS: PAYMENT MADE TO RVP ASSOCIATES : F1,82,47,68 0/- ADD: REGISTRATION CHARGES NOT : F 13,69,672/- PAID OUT OF BANK ADD: LOANS TAKEN CONSIDERED AS DOUBTFUL : F 12,5 0,000/- ADD: CASH IN HAND : F 9,64,835/- PROFIT FROM SALE OF PLOTS : F2,36,85,707/- BY INVESTMENT METHOD 4.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERV ED THE ASSESSEE HAS DISCLOSED F40,00,000/- AS UNACCOUNTED INCOME I.T.A.NOS.1788 &1796/MDS/2014 :- 6 -: UNDER THE HEAD ADHAYAM RECEIPTS IN THE COURSE OF AS SESSMENT PROCEEDINGS VIDE HIS LETTER DATED 27.12.2010. AS TH E INCOME COMPUTED BY THE ASSESSING OFFICER BY ESTIMATION MET HOD AT F.3,72,36,760/- IS HIGHER THAN THE INCOME COMPUTED BY INVESTMENT METHOD AT F.2,36,85,707/- AND ALSO BY OF FER OF INCOME BY THE ASSESSEE AT F40,00,000/-, IN THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS T AKEN HIGHER AMOUNT I.E. THE INCOME ESTIMATED AT F3,72,36,760/-A ND MADE ADDITION OF F3,72,36,760/- AS THE INCOME OVER AND ABOVE RETURNED INCOME. 4.3 THE COMMISSIONER OF INCOME TAX (APPEALS) FURTH ER OBSERVED THAT IT WAS THE CONTENTION OF THE LD. AUTH ORISED REPRESENTATIVE FOR ASSESSEE THAT 13 PERSONS HAVE GI VEN A DECLARATION BEFORE ASSESSING OFFICER WHEREIN THEY H AVE STATED THAT THE AMOUNTS AS PER SALE DEED WAS THE CORRECT A MOUNT PAID AND THEY HAVE MISTAKENLY STATED THE AMOUNTS PAID IN THE SWORN STATEMENTS GIVEN BY THEM BEFORE THE ASSESSING OFFIC ER. IT WAS THE CONTENTION OF THE THE LD. AUTHORISED REPRESENTA TIVE FOR ASSESSEE THAT THE PURCHASERS HAVE CLARIFIED BEFORE ASSESSING OFFICER THAT THE ADDITIONAL AMOUNT PAID IN SOME CAS ES INCLUDED I.T.A.NOS.1788 &1796/MDS/2014 :- 7 -: FOR CONSTRUCTION OF THE COMPOUND WALL AND CHARGES F OR OBTAINING APPROVAL FOR CONVERTING THE INDUSTRIAL LAND AS FOR RESIDENTIAL USE. DURING THE COURSE OF APPELLATE PROCEEDINGS, T HE COMMISSIONER OF INCOME TAX CALLED FOR A REMAND REP ORT AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN RESPONSE TO THE QUERY, THE ASSESSING OFFICER HAS GIVEN HIS INTERIM REMAND REPORT VIDE LETTER DT. 31.10.2012 ALONG WITH THE COPIES OF THE SWORN STATEMENTS RECORDED FROM THE PURCHASER S, COPY OF THE VALUATION REPORT DT. 06.09.2012 FURNISHED BY DISTRICT VALUATION OFFICER FOR VALUING THE THREE STOREY BUIL DING AT PONDICHERRY REGISTERED IN THE NAME OF SMT.M.JEYANTH I W/O OF V.MOHENE, VALUING THE CONSTRUCTION COST OF THE PROP ERTY FOR THE PERIOD FY 2004-05 AT F35,55,000/- AND FOR THE P ERIOD FY 2011-12 (3RD FLOOR) AT F13,25,000/- TOTALING TO F.45,80,000/- AND ALSO FINAL REMAND REPORT DT. 15.01.2013. 4.4 THE COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER OBSERVED THAT HE HAD CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER GIVEN IN THE ASSESSMENT ORDER, REMAND REPOR T AND THE SUBMISSIONS MADE BY THE LD. AUTHORISED REPRESENTATI VE FOR ASSESSEE CAREFULLY AND ALSO PERUSED THE COPIES OF T HE SWORN I.T.A.NOS.1788 &1796/MDS/2014 :- 8 -: STATEMENTS GIVEN BY THE PURCHASERS OF THE PLOTS, TH E DECLARATIONS MADE BY THEM GIVING CLARIFICATIONS/EXPLA NATIONS ABOUT THE PURCHASE PRICE OF THE PLOTS AND ALSO THE LOAN CONFIRMATIONS OR AFFIDAVITS MADE BY THE PARTIES WHI CH WERE PLACED IN THE CASE RECORDS. THE MAIN ARGUMENT OF TH E LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE WAS THAT TH E ASSESSEE DID NOT MAKE HUGE PROFITS AS DETERMINED BY THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER. THE OTHER ARGUMENT WAS THAT HE HAD ONLY EARNED A COMMISSION @ RS.50/- PER SQ FT ON THE LAND SOLD. HE HAS FURTHER STATED THAT THE 'ON MONEY ' ALONG WITH THE DOCUMENT PRICE WHICH HE HAS TAKEN FROM THE PROS PECTIVE BUYERS OF THE PLOTS WAS TAKEN ON BEHALF OF THE LAND OWNERS M/S RVP ASSOCIATES AND THE ENTIRE MONEY WAS DEPOSITED I N THE BANK ACCOUNT WHICH WAS AGAIN TRANSFERRED TO M/S RVP ASSO CIATES BY WAY OF CASH AND ALSO BY WAY OF DEMAND DRAFTS ETC. S OME OF THE PLOTS WERE PURCHASED AND SOLD ON THE SAME DAY. MAJO RITY OF THE PLOTS WERE SOLD WITHIN 3 MONTHS FROM THE DATE OF PU RCHASE. THE SEQUENCE OF PURCHASE AND SALE INDICATED THAT THE LA ND WAS SOLD IMMEDIATELY AFTER THE PURCHASE FROM RVP ASSOCIATES. THE ASSESSING OFFICER HIMSELF INDICATES IN THE ASSESSME NT ORDER THAT THE ASSESSEE HAS NOT RECEIVED ANY UNIFORM PRICE FROM SALE OF I.T.A.NOS.1788 &1796/MDS/2014 :- 9 -: PLOTS. SOME OF THE PLOT PURCHASER'S WHO HAVE PAID M ONEY IN CASH OVER AND ABOVE THE DOCUMENT PRICE HAVE DENIED TH E PAYMENT OF CASH AS 'ON MONEY' IN THE SUBSEQUENT DECL ARATIONS MADE BEFORE THE ASSESSING OFFICER. HOWEVER THE TOTAL RECEIPTS INCLUDING CASH DEPOSITED IN THE BANK ACCOUNTS WAS MUCH MORE THAN THE TOTAL SALE PRICE OF THE PLOTS. JUST BEFORE 2 DAYS FROM THE DATE OF THE ASSESSMENT ORDER, I.E. ON 29.12.2010, T HE ASSESSEE, HAS HIMSELF GIVEN A VOLUNTARY STATEMENT BEFORE THE ASSESSING OFFICER THAT THE TOTAL RECEIPTS FROM PLOT SALES WAS F2,71,16 ,000/- AFTER DEDUCTING THE TRANSFER ENTRIES BETWEEN ACCOUNTS TO THE TUNE OF F93,00,000/-, LOAN AMOUNTS F44,50,000/-, VA RIOUS RE- DEPOSITS F30,00,000/-, AGRICULTURAL INCOME F2,50,000 /-, SALE OF SUGARCANE F1,25,000/-, PLOT SOLD BY HIS WIFE JAYANT HI F1,50,000/. THE STATEMENT GIVEN BY THE ASSESSEE COMPUTING THE TO TAL RECEIPTS FROM PLOT SALES AT F2,71,16,000/- WAS ACKNOW LEDGED BY THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT AS WELL AS IN THE REMAND PROCEEDINGS. 4.5 THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHE R OBSERVED THAT THE PURCHASE PRICE OF THE LAND AT F1,93,49,398/- WA S ALSO ACKNOWLEDGED BY THE ASSESSING OFFICER IN THE REMAN D REPORT. I.T.A.NOS.1788 &1796/MDS/2014 :- 10 -: THE SALE PRICE RECEIVED AS PER THE DOCUMENT VALUE W AS ONLY F1,73,01,780/- AS PER THE FIGURE MENTIONED IN THE A SSESSMENT ORDER. THAT MEANS, THE ENTIRE 'ON MONEY' RECEIVED BY THE ASSESSEE WAS DEPOSITED IN THE BANK ACCOUNT BY THE AS SESSEE. THEREFORE, THE EXACT QUANTUM OF SALE CONSIDERATION OF F5,68,02,885/- ESTIMATED BY THE A.O HAS NO BASIS. T HE DETERMINATION/ESTIMATION OF THE SALE CONSIDERATION O F RS.5,68,02,885/- WAS NOT BASED ON ANY VALID EVIDENCE . HOWEVER THE SALE CONSIDERATION AT F2,71,16,000/- COMPUTED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS WAS BASED ON INVESTMENT METHOD I.E. THE TOTAL CREDIT ENTRIES MADE IN THE BANK ACCOUNTS. HOWEVER, WHILE WORKING THE PROFIT AS PER I NVESTMENT METHOD, THE ASSESSING OFFICER PROCEEDED TO TAKE THE SALE PROCEEDS AS PER BANK ACCOUNTS AT F3,36,26,000/- WITH OUT GIVING CREDIT TO THE RE-DEPOSITS MADE IN THE BANK ACCOUNT AT F30,00,000/- AND ALSO WITHOUT LOOKING INTO THE CLAIM OF THE ASSESSEE THAT LOANS OF F44,50,000/- WAS RECEIVED FROM 6 PERSONS. FROM THE PERUSAL OF THE ASS ESSMENT RECORDS AND DETAILS FURNISHED BY THE ASSESSEE REVEAL ED THAT THE ASSESSEE HAS RECEIVED A LOAN OF F10,00,000/- IN CASH FROM J.VIDHYACHAND, A LOAN OF F7,50,000/-- FROM R.SEKAR, A LOAN OF I.T.A.NOS.1788 &1796/MDS/2014 :- 11 -: F5,00,000/- FROM R.MUTHURAJU WHICH WERE SUPPORTED B Y AFFIDAVITS, INDICATING THEIR PAN NOS AND COMPLETE AD DRESSES. REGARDING THE AMOUNTS RECEIVED FROM SUN PHARMACY OF F14,00,000/- AND POONGAVANAM OF F3,00,000/- AND SWARAMOORTHY OF F5,00,000/- IT WAS STATED BY THE LD . AUTHORISED REPRESENTATIVE FOR ASSESSEE THAT THESE WERE THE AD VANCES RECEIVED FROM THE PARTIES AND SAME WAS ADJUSTED AGAI NST THE LANDS ALLOTTED TO THEM SUBSEQUENTLY. THE LD. AUTHO RISED REPRESENTATIVE FOR ASSESSEE ALSO FURNISHED THE COPI ES OF THE AFFIDAVITS MADE BY THESE 3 PARTIES FROM WHOM' THE C ASH ADVANCE WAS TAKEN AGAINST PURCHASE OF THE LAND. IT WAS THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE S TATED THAT THE AFFIDAVITS FROM THESE 3 PARTIES WERE ALREADY FU RNISHED BEFORE A.O DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. THE ASSESSEE RELIED ON THE RATIO OF THE DECISION OF THE SUPREME COURT OF INDIA IN THE CASE OF ORISSA CORPORATION LTD REPORTED IN 159 ITR 78 TO PROVE THAT THE LOANS ARE GENUINE AND THE ASSESSEE HAS DISCHARGED ONUS OF PROOF FURNISHING TH E DETAILS OF THE LOAN CREDITORS, ADDRESSES OF THE CREDITORS, PAN NOS. AND CONFIRMATIONS. CONSIDERING THE EVIDENCES FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AS WELL I.T.A.NOS.1788 &1796/MDS/2014 :- 12 -: AS REMAND PROCEEDINGS AND LEGAL POSITION AS CITED ABOVE, THE ENTIRE LOAN OF F44,50,000/- OBTAINED FROM 6 PARTIES SHOULD NOT BE AGAIN INCLUDED IN THE COMPUTATION OF PROFIT ON S ALE OF PLOTS. THEREFORE THE ACTION OF THE ASSESSING OFFICER TO IN CLUDE THE LOAN OF F44,50,000/-- IN THE COMPUTATION OF PROFIT REQUI RES TO BE DELETED. SIMILARLY, THE RE-DEPOSITS OF F30,00,000/- OUT OF THE CASH WITHDRAWAL FROM THE BANK ACCOUNT IN WHICH THE SALE PROCEEDS WERE CREDITED ALSO NEEDS TO BE REMOVED FRO M THE COMPUTATION OF PROFIT MADE BY THE A.O. IN OTHER WO RDS, THE TOTAL RECEIPTS FROM PLOT SALES OF F2,71,16,000/-ADM ITTED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS VI DE HIS LETTER DATED 29.12.2010 NEEDS TO BE TAKEN INTO CONSIDERATI ON FOR THE PURPOSE OF COMPUTING THE GROSS RECEIPTS RECEIVED FR OM THE SALE OF PLOTS BY THE ASSESSEE. FURTHER THE ASSESSING OFF ICER HAD AGAIN ADDED THE INVESTMENTS MADE BY THE ASSESSEE OF F47,22,880/- TO THE TOTAL SALE PROCEEDS WITHOUT ANY LEGAL BASIS AS THE ASSESSEE HAD ACQUIRED THE PROPERTIES WORTH O F F44,22,880/- THROUGH CASH OR CHEQUE OUT OF THE INCO ME GENERATED IN THE REAL ESTATE BUSINESS. THE SOURCE OF THE PURCHASE CONSIDERATION PAID IN THE NAME OF THE ASSE SSEES WIFE SMT. JAYANTHI WAS OUT OF HER OWN INCOME. SMT. JAYA NTHI ALSO I.T.A.NOS.1788 &1796/MDS/2014 :- 13 -: SATED TO HAVE SOLD THE PROPERTY FOR A CONSIDERATION OF F1,90,000/-. HENCE, THE SOURCE OF THE PURCHASE CONS IDERATION PAID BY SMT. JAYANTHI SHOULD NOT BE AGAIN INCLUDED IN THE COMPUTATION OF INCOME OF THE ASSESSEE. THEREFORE, THE ENTIRE INVESTMENT OF F47,22,880/- MADE BY THE ASSESSEE IN HIS NAME ALSO IN THE NAME OF HIS WIFE SHOULD NOT BE AGAIN IN CLUDED IN THE COMPUTATION OF THE PROFIT FOR TAX PURPOSES. FURTHE R, THE ASSESSING OFFICER HAD INCLUDED REGISTRATION CHARGES OF F13,69,672/- AND CASH IN HAND OF F9,64,835/- IN THE COMPUTATION OF THE PROFIT OUT OF REAL ESTATE BUSINE SS WITHOUT ANY LEGAL BASIS AS THE ASSESSEE WAS FOUND TO BE WITHDRAWING CASH FROM THE BANK ACCOUNT FOR MAKING PAYMENTS WHIC H CAN BE SEEN FROM THE WITHDRAWALS APPEARING IN THE BANK ACC OUNTS ON VARIOUS DATES. HOWEVER, THERE WAS NO EVIDENCE IN RE SPECT OF THE AGRICULTURAL INCOME OF F3,15,000/- WHICH CONSIST OF F2,50,000/- ON ACCOUNT OF AGRICULTURAL INCOME AND F1,25,000/- O N ACCOUNT OF SALE OF SUGAR. EVEN DURING THE APPELLATE PROCEEDING S, THE ASSESSEE HAS COME FORWARD TO ADMIT ON 31.01.2014 THA T HE HAD EARNED PROFIT @ F50/- PER SQFT ON SALE OF LAND MEASURING F1,24,679/- WHICH COMES TO F62,33,950/-. DURING THE COURSE OF APPELLATE PROCEEDINGS, AR OF THE ASSESSEE, WAS QUES TIONED I.T.A.NOS.1788 &1796/MDS/2014 :- 14 -: ABOUT THE ACTUAL PROFIT EARNED BY THE ASSESSEE AND ALSO REQUIRED TO GIVE THE EXPLANATION OR CLARIFICATION W.R.T THE A CTUAL INCOME EARNED BY THE ASSESSEEK BASED ON THE INVESTMENT MET HOD. IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE FURNIS HED THE CASH FLOW STATEMENT FOR THE AY 2008-09 AND FOR AY 2009-1 0 GIVING THE DETAILS OF THE RECEIPTS AND PAYMENTS FOR INVEST MENT PURPOSES AND THE CASH FLOW SUBMITTED BY THE ASSESSE E FOR ASSESSMENT YEARS 2008-09 AND 2009-10. 4.6 THE CASH FLOW ARRIVED BY THE ASSESSEE WAS BASE D ON THE GROSS SALE VALUE OF PROPERTIES SOLD BY THE ASSESSEE ADMITTED IN HIS REPLY FURNISHED BEFORE ASSESSING OFFICER DT.29. 12.2010 AFTER CONSIDERING ALL THE OUTGOINGS LIKE TRANSFER ENTRIES , RE- DEPOSITS, LOANS FROM VARIOUS PARTIES ETC. THEREFORE, THE GROS S INCOME OF F2,71,16,000/- EXCEPT TO THE EXTENT OF THE AGRICULT URAL INCOME OF F3,00,000/-) ADMITTED AS PER THE CASH FLOW STATEMEN T SUBMITTED DURING THE APPELLATE PROCEEDINGS WAS TREATED AS CORR ECT AND GENUINE FIGURE. AS THE ASSESSEE DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE IN RESPECT OF THE AGRICULTURAL ACTIVITIES GENUINENESS OF THE CLAIM OF INCOME EARNED FROM AGRIC ULTURAL ACTIVITIES WAS NOT ACCEPTED AND THE SAME WAS HELD A S INCOME I.T.A.NOS.1788 &1796/MDS/2014 :- 15 -: FROM OTHER SOURCES. THE REDUCTION IN RESPECT OF STA MP DUTY CHARGES PAID OF EARLIER YEARS WAS ALSO NOT GIVEN FO R COMPUTATION OF THE NET PROFIT EARNED BY THE ASSESSEE AS IT PERT AIN TO EARLIER YEARS AND INCLUDED IN THE GROSS PAYMENT MADE TO RVP ASSOCIATES AS PER CASH FLOW STATEMENT. AS THE ASSES SEE MADE NET OF CASH DEPOSITS IN THE BANK ACCOUNTS AFTER INC URRING ALL NORMAL BUSINESS EXPENDITURE LIKE PAYMENT OF STAMP D UTY, GENERAL MAINTENANCE EXPENDITURE, OFFICE EXPENDITURE , ETC., THE SEPARATE DEDUCTIONS IN RESPECT OF ALL THE BUSINESS EXPENSES IS ALSO NOT GIVEN WHILE COMPUTING THE REAL INCOME EARN ED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE R EDUCTION IN RESPECT OF THE PAYMENT MADE TO RVP ASSOCIATES IS GIV EN FOR THE PURPOSE OF COMPUTATION OF NET PROFIT AS THE ASSESSE E PAID THE MONEY TO RVP ASSOCIATES OUT OF THE DEPOSITS MADE IN THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE IN HIS NAME AND IN THE NAME OF MRS.GANDHIMATHI. THEREFORE, THE NET PROFIT EARNED BY THE ASSESSEE IN THE REAL ESTATE BUSINESS AND OTHER ACTIVITIES DURING THE YEAR UNDER CONSIDERATION WAS COMPUTED AS UNDER:- GROSS INCOME FROM SALE OF PROPERTIES : F2, 71,16,000/- LESS: PAYMENTS MADE TO RVP ASSOCIATES INCLUDING STAMP DUTY (AS PER CASH FLOW STATEMENT) F1,93,49,308/- I.T.A.NOS.1788 &1796/MDS/2014 :- 16 -: LESS: STAMP DUTY CHARGES IN EARLIER YEARS (AS PER CASH FLOW STATEMENT TO BE REDUCED FROM PAYMENT MADE F 6,42,447/- TO RVP ASSOCIATION ) ----------------------- F1 ,87,06,861/- NET PROFIT F 84,09,139/- ADD: AGRICUTLURAL INCOME TREATED AS UNEXPLAINED F 3,15,000/- ----------------- F 87,24,139/- ----------------- 4.7 THE COMMISSIONER OF INCOME TAX (APPEALS) DIRE CTED THE ASSESSING OFFICER TO ADOPT THE PROFIT OF 87,24,139/- AS THE PROFIT FROM REAL ESTATE BUSINESS AND OTHER ACTIVITIES WHIC H REMAIN TO BE ACCOUNTED IN THE BOOKS OF ACCOUNTS AND RESTRICT THE ADDITION TO 87,24,139/- INSTEAD OF 3,72,36,760/-. HENCE, THE ASSESSING OFFICER WAS DIRECTED TO DELETE THE BALANCE ADDITION OF .2,85,12,621/- ( 3,72,36,760 87,24,139). AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THE ASSESSMENT YEAR 2008-2009, THE ASSE SSEE SOLD PROPERTY MEASURING ABOUT 124679 SQ.FT OUT OF TOTAL LAND PURC HASED BY ASSESSEE AT 156816 SQ.FT. THE ASSESSEE INCURRED PURCHASE CO ST TOWARDS THIS AT F1,93,49,308/-. THE ASSESSEE DECLARED THE SALE CON SIDERATION AS PER THE DOCUMENT VALUE AT F1,73,01,780/- AS AGAINST THE ASSESSING OFFICER ESTIMATED THE SALE CONSIDERATION OF THE PROPERTY TO WARDS 124679 SQ.FT I.T.A.NOS.1788 &1796/MDS/2014 :- 17 -: AT F5,68,02,885/- AND COMPUTED TOTAL PROFIT FROM TH IS TRANSACTION AS FOLLOWS:- SALE CONSIDERATION AS PER CALCULATION SHEET : 5,68, 02,885/- LESS: PURCHASE PRICE, INCLUDING REGISTRATION : 1,93 ,49,308/- CHARGES. BALANCE : 3,74,53,577/- LESS: VALUE OF UNSOLD PLOTS : 2,16,817/- PROFIT FROM SALE OF PLOTS : 3,72,36,760/- THE CONTENTION OF THE ASSESSEE COUNSEL IS THAT THER E IS NO UNACCOUNTED SALE OF PROPERTY AND THE ENTIRE MONEY WAS DEPOSITED IN THE BANK ACCOUNT AT F4,44,31,000/- WHICH INCLUDES LOAN FROM VARIOUS PARTIES AND THE ASSESSEE EXPLAINED THE SAME AS FOLLOWS:- MY DEPOSITS WITH ICICI BANK 16,15,000/- DEPOSIT WITH GREEN LAND A/C. WITH ICICI : 26,86,00 0/- DEPOSITS WITH ING VYSYA : 2,51,51,000/- DEPOSITS WITH GANDHI MATHI ACCOUNT : 1,49,79,000/ - TOTAL RECEIPTS IN BANK ACCOUNTS : 4,44,31,000/- OUT OF THIS, THE FOLLOWING RECEIPTS ARE FROM THE LA ND SALES AND THE ASSESSEE HAD FURNISHED THE DETAILS OF RECEIPTS AS UNDER: LOAN : 44,50,000/- VIDYACHAND : 10,00,000/- SEKAR : 7,50,000/- MUTHURAJ : 5,00,000/- SUN PHARMACY : 14,00,000/- POONGAVANAM : 3,00,000/- ESWARAMURTHY : 5,00,000/- TRANSFER FORM ASSESSEE ACCOUNT TO GANDHI : 93,00, 000/- MATHI ACCOUNT PLOT SOLD BY MY WIFE JAYANTHI : 1,90,000/- SALE OF SUGARCANE : 1,25,000/- AGRICULTURAL INCOME : 2,50,000/- I.T.A.NOS.1788 &1796/MDS/2014 :- 18 -: VARIOUS RE DEPOSIT : 30,00,000/- TOTAL RECEIPTS FROM VARIOUS ACTIVITIES : 1,28,65, 000/- TOTAL RECEIPTS FROM THE PLOT SALE : 2,71,16,000/-. THUS, THE ASSESSEES TOTAL RECEIPT FROM THE SALE OF PLOT AT F2,71,16,000/- AND COMPUTED PROFITS ON THE SALE OF THESE LAND TRANSACTION AS FOLLOWS:- GROSS INCOME FROM SALE OF PROPERTIES : F2, 71,16,000/- LESS: PAYMENTS MADE TO RVP ASSOCIATES INCLUDING STAMP DUTY (AS PER CASH FLOW STATEMENT) F1,93,49,308/- LESS: STAMP DUTY CHARGES IN EARLIER YEARS (AS PER CASH FLOW STATEMENT TO BE REDUCED FROM PAYMENT MADE F 6,42,447/- TO RVP ASSOCIATION ) --------------- 1,87,06,8 61/- NET PROFIT F 84,09,139/- ADD: AGRICUTLURAL INCOME TREATED AS UNEXPLAINED F 3,15,000/- ----------------- F 87,24,139/- ----------------- IN OUR OPINION, THE ABOVE COMPUTATION OF THE INCOME OF THE ASSESSEE IS BASED ON SUBSTANTIAL EVIDENCE PROVIDED BY THE ASSES SEE AND EXPLANATION GIVEN FOR THE SAME. THE ASSESSING OFFI CER IN THE REMAND REPORT HAS NO MATERIAL TO SUGGEST THE GROSS INCOME FROM THE SALE OF PLOT AT F5,68,02,885/- AND CONTRARY TO THIS, THE AS SESSING OFFICER ESTIMATED THE SALE VALUE OF THE PROPERTY WITHOUT AN Y SUPPORTIVE I.T.A.NOS.1788 &1796/MDS/2014 :- 19 -: MATERIAL ON HIS HAND. IN OUR OPINION, THE ASSESSEE S VERSION OF GROSS RECEIPT FROM THE SALE OF PROPERTY IS BASED ON EVIDE NCE BROUGHT ON RECORD AND FURTHER LOAN AMOUNT CONSIDERED BY THE ASSESSING OFFICER AS UNEXPLAINED INCOME TO THE TUNE OF F44,50,000/- WAS CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THERE IS N O REASON TO DOUBT THE SAME AND IT IS TO BE CONSIDERED AS EXPLAI NED CREDIT ONLY. FURTHER, IT IS NOTED THAT THE ASSESSING OFFICER EVE N AT THE ASSESSMENT STAGE ACCEPTED THE TOTAL RECEIPT OF THE PLOT AT F2, 71,16,000/-. HOWEVER, THE ASSESSING OFFICER WAS NOT READY TO COM PUTE THE INCOME ON THE BASIS OF INVESTMENT METHOD INSTEAD HE ADOPT ED THE INCOME ON THE ESTIMATION BASIS. IN OUR OPINION, WHEN THE MATE RIAL BROUGHT ON RECORD SUGGESTS THE CORRECT STATE OF AFFAIRS OF THE ASSESSEE, IT IS NOT APPROPRIATE TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF IRRELEVANT CONSIDERATION. THE ASSESSING OFFICER CO ULD ESTIMATE THE INCOME OF THE ASSESSEE ONLY WHEN THE FOLLOWING COND ITION FULFILLED. (1) FAILURE TO MAKE RETURN OF INCOME U/S.139(1) OR 139 (4) OF THE ACT. (2) FAILURE TO PRODUCE THE BOOKS OF ACCOUNTS IN TERMS O F NOTICE ISSUED U/S.142(1) OF THE ACT. (3) FAILURE TO FOLLOW THE DIRECTION OF THE ASSESSING OF FICER U/S.142(2) OF THE ACT. (4) FAILURE TO COMPLY TO THE TERMS IN NOTICE ISSUED U/S .143(2) OF THE ACT. I.T.A.NOS.1788 &1796/MDS/2014 :- 20 -: IN THE PRESENT CASE, THERE IS NO ALLEGATION BY THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO COMPLY WITH THE ABOVE REQUIR EMENTS. HENCE, THE ASSESSING OFFICER CANNOT SUBSTITUTE HIS OWN VIE W TO THE RESULTS SHOW IN THE BOOKS OF ACCOUNTS. 6. ACCORDINGLY, WE HAVE NO HESITATION IN CONFIRMING TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND THE SAME IS CONFIRMED. THE APPEAL OF THE REVENUE IN ITA NO.1 788/MDS/2014 IS DISMISSED. 7. COMING TO THE ITA NO.1796/MDS/2014 FOR THE ASSESSME NT YEAR 2009-2010, THE FIRST GRIEVANCE OF THE REVENUE IN TH IS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ALLOWING FRESH EVIDENCE IN VIOLENCE OF RULE 46A BY ADMITTING THE A SSESSEE TO FILE RECEIPT FOR PAYMENT OF SCRAP SALES AMOUNT OF F57,00 ,000/- TO MRS. VIJAYALAKSHMI. 8. THE FACTS OF THE CASE ARE THAT ASSESSEE HAS ENTERE D INTO AN AGREEMENT WITH ONE SMT. VIJAYALAKSHMI FOR SALE OF H ER SHARES IN COMPANY M/S. STANDARD STEEL ROLLING MILLS FOR A CON SIDERATION OF F1,57,50,000/- ON 03.05.2008. AN ADVANCE OF F54,00 ,000/- WAS PAID ON THE SAME DAY BY THE ASSESSEE. ON 06.03.2009, AN OTHER I.T.A.NOS.1788 &1796/MDS/2014 :- 21 -: F3,00,000/- WAS PAID BY THE ASSESSEE, THE ASSESSEE HAS NOT DISCLOSED THE PURCHASE OF SHARES IN THE RETURN OF INCOME. THE ASSESSING OFFICER ADDED A SUM OF F57,00,00/- TO THE INCOME RETURNED. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS). 9. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THERE WAS NO DISPUTE THAT THE ASSESSEE HAD PAID A S UM OF F57,00,000/- OUT OF UNACCOUNTED SOURCES DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. REGARDING THE SOURCE OF THE P AYMENT, THE ASSESSEE HAD ACCEPTED THAT THE ADVANCE OF F57,00,00 0/- WAS PAID OUT OF THE INCOME GENERATED IN THE REAL ESTATE BUSINESS IN THE YEAR ENDED 31.03.2008. THE INCOME OUT OF REAL ESTATE ACTIVITY IN THE ASSESSMENT YEAR 2008- 2009 WAS CONFIRMED AT F87,24,139/-. THE DUE CREDIT NEEDS TO BE GIVEN TO THE ASSESSEE ON THIS ISSUE AS THE AS SESSEE HAD FURNISHED DETAILED CASH FLOW STATEMENT IN THE COURSE OF APPEL LATE PROCEEDINGS ACCEPTING GENERATION OF UNACCOUNTED INCOME OF F87,2 4,139/- IN THE ASSESSMENT YEAR 2008-2009 AND ITS APPLICATION IN TH E SUBSEQUENT YEARS. HENCE, THE COMMISSIONER OF INCOME TAX (APPE ALS) DIRECTED TO DELETE THE ADDITION OF F57,00,000/-. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. I.T.A.NOS.1788 &1796/MDS/2014 :- 22 -: 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD. IN THIS CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION OF F57,00,000/- ON THE REASON THAT IT WAS PAID OUT OF UNACCOUNTED INCOME GENERATED AND SUCH INCOME WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESS MENT YEAR 2008-2009 AT F87,24,139/-. THUS, THE COMMISSIONER OF INCOME TAX (APPEALS) GAVE A TELESCOPIC BENEFIT OUT OF THE ADDI TION MADE IN THE EARLIER ASSESSMENT YEAR TOWARDS UNEXPLAINED INVESTM ENT OF F57,00,000/-. BEING SO, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS IS SUE AND THE GROUND OF THE REVENUE IS DISMISSED. 11. THE NEXT GROUND RAISED BY THE REVENUE IN THIS APP EAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER IS E RRONEOUS WHERE IN THE CASH FLOW STATEMENT FILED BEFORE COMMISSIONE R OF INCOME TAX (APPEALS) THE ASSESSEE HAS ADMITTED RECEIVING OF F6 7,25,000/- TOWARDS SALE PROCEEDS OF SCRAP FROM SRI MAHENDRAN TO BUILD UP SOURCE. HOWEVER, IN THE ORDER, THE COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED ONLY F1,27,000/- AS COMMISSION FROM SCRAP SALES. 12. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY U/S.133A, COPY OF DOCUMENTS IMPOUNDED. AN AGREEMENT BETWEEN MR. I.T.A.NOS.1788 &1796/MDS/2014 :- 23 -: MAHENDRAN AND THE ASSESSEE WAS ALSO IMPOUNDED, WHER EIN SCARPS OF STANDARD ROLLING MILLS WAS SOLD FOR AN AMOUNT OF F6 7,25,000/- ON 12.02.2009. THE ASSESSEE, AFTER OBTAINING THE POWE R OF ATTORNEY FROM THE PARTNER OF STANDARD ROLLING MILLS SMT. VIJAYALA KSHMI AN AGREEMENT WAS REACHED FOR SALE OF SCRAPS. THE FACTS WAS CONF IRMED BY THE ASSESSEE IN THE SWORN STATEMENT TAKEN DURING THE SU RVEY U/S.133A ON 06.12.2010. IN THE RETURN OF INCOME FILED THE ASSE SSEE DIDNT DISCLOSE THE INCOME IN THE RETURN. THE ASSESSEE WAS DIRECTE D TO EXPLAIN WHY THE AMOUNT WAS NOT DECLARED IN THE RETURN OF INCOME . THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE HAS STATED T HAT THE ASSESSEE HAS RECEIVED A SUM OF F10,00,000/- ONLY. A PERUSAL OF COPY OF DOCUMENT IT WAS AGREED BY THE PARTIES THAT A SUM OF F10,00,000/- SHOULD BE PAID IMMEDIATELY I.E ON 12.02.2009 AND T HE BALANCE AMOUNT SHOULD BE SETTLED BEFORE CLEARING THE SCRAPS. IT WA S STATED IN THE AGREEMENT ON 31.03.2009 THAT THE ENTIRE SCRAPS WERE CLEARED AFTER PAYING THE BALANCE OF F57,25,000/-. HENCE, IT WAS CLEAR THAT THE ASSESSEE HAS RECEIVED A SUM OF F67,25,000/- FOR SAL E OF SCRAPS, WHICH IS LIABLE TO TAX UNDER THE HEAD INCOME FROM OTHER S OURCES U/S.56 OF THE ACT, AND IS ADDED TO THE INCOME RETURNED. AGGRIEVE D, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). I.T.A.NOS.1788 &1796/MDS/2014 :- 24 -: 13. THE CONTENTION OF THE ASSESSEE BEFORE THE COMMISSIO NER OF INCOME TAX (APPEALS) THAT THE ASSESSEE WAS NOT THE OWNER OF THE SCRAP AND HE HAD OBTAINED SPECIAL POWR OF ATTORNEY DATED 21.05.2008 FROM MRS. VIJAYALAKSHMI W/O. LATE RAJENDRAN, TO DIS POSE OFF THE SCRAP ON BEHALF OF VIJAYALAKSHMI. THE COMMISSIONER OF INC OME TAX (APPEALS) HAD PERUSED THE SPECIAL POWER OF ATTORNE Y DATED 21.05.2008 PRODUCED BY THE LD. AUTHORISED REPRESENT ATIVE FOR ASSESSEE, WHEREIN IT WAS STATED THAT THE ASSESSEE W AS AGENT TO MANAGE THE SHARE OF VIJAYALAKSHMIS PROPERTIES IN T HE SAID M/S. STANDARD STEEL ROLLING MILLS, A PARTNERSHIP FIRM WI THOUT HAVING ANY RIGHT OF ALIENATION. THE SCRAP WAS SOLD ON 12.02.2 009 FOR A CONSIDERATION OF F67,25,000/-. THE SPECIAL POWER OF ATTORNEY PRODUCED BY THE ASSESSEE DO REVEAL ABOUT THE FACT OF SELLING OF SCRAP ON BEHALF OF MRS. VIJAYALAKSHMI. THE ASSESSEE ALSO CONTESTED ON THE ALTERNATIVE GROUND THAT IT AT ALL THE INCOME ON SALE OF SCARP W AS TO BE TAXED, SAME WAS TO BE ASSESSED IN THE HANDS OF PARTNERSHIP FIRM , M/S. STANDARD STEEL ROLLING MILLS WHEREIN THE ASSESSEE WAS HOLDIN G A SHARE TO THE EXTENT OF THE 36.842% AS PER THE SALE AGREEMENT DAT ED 03.05.2008 SIGNED BETWEEN ASSESSEE AND MRS. VIJAYALAKSHMI. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE FURTHER CONTENDED THAT THE AGREEMENT DATED 03.05.2008 CONTAINING THE PURCHASE OF SHARES OF 36.842% IN I.T.A.NOS.1788 &1796/MDS/2014 :- 25 -: THE SHARE OF VIJAYALAKSHMI IN WHICH SHE WAS A PARTN ER IN STANDARD STEEL ROLLING MILLS WAS ALREADY MADE AVAILABLE BEF ORE THE ASSESSING OFFICER IN THE COURSE OF SURVEY PROCEEDINGS. THE A SSESSEE ALSO PRODUCED THE COPY OF CASH RECEIPT GIVEN BY SMT. VIJ AYALAKSHMI AUTHORIZING THE ASSESSEE AS POWER OF AGENT FOR THE PURPOSE OF SELLING SCRAP AND OTHER ACCESSORIES OF STANDARD STEEL ROLLI NG MILLS AND ALSO GIVING THE DETAILS OF THE SALE PRICE OF THE SCRAP A T F67,25,000/- TO SHRI. T. MAHENDRAN. THE CASH RECEIPT PRODUCED BY THE ASS ESSEE GIVES THE DETAILS OF COMMISSION OF F1,27,000/- PAID TO ASSESS EE FOR SELLING THE SCRAP. THE COMMISSIONER OF INCOME TAX (APPEALS) AGR EED WITH THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE THAT THE ASSESSEE HAS CARRIED OUT TRANSACTION FOR SALE OF TH E SCRAP ON BEHALF OF MRS. VIJAYALAKSHMI. THE NATURE OF THE SCARP WAS TH E MATERIAL BELONGING TO M/S. STEEL ROLLING MILLS WHEREIN MRS. VIJAYALAKSHMI WAS A PARTNER IN THE ASSESSED STEEL ROLLING MILLS. THE PR OFIT ARISING OUT OF SALE OF SCRAP IF ANY BELONGS TO MRS. VIJAYALAKSHMI. THE ASSESSEE HAD EARNED A COMMISSION OF F,1,27,000/-. HENCE, THE COM MISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION TO THE EXTENT OF F1,27,000/- AND DELETED THE BALANCE ADDITION. AGAI NST THIS, THE REVENUE IS IN APPEAL BEFORE US. I.T.A.NOS.1788 &1796/MDS/2014 :- 26 -: 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE H AD OBTAINED POWER OF ATTORNEY FROM MRS. VIJAYALAKSHMI AND THE ASSESSEE W AS THEREBY AUTHORIZED TO DISPOSE THE SCRAP ON BEHALF OF MRS. V IJAYALAKSHMI. THE SPECIAL POWER OF ATTORNEY DATED 21.05.2008 SPECIFIC ALLY STATING THAT THE ASSESSEE WAS AGENT TO MANAGE THE SHARE OF VIJAYALAK SHMIS PROPERTIES IN M/S. STANDARD STEEL ROLLING MILLS, A PARTNERSHI P FIRM. CONSEQUENT TO THE POWER OF ATTORNEY THE ASSESSEE SOLD SCRAP ON 12 .02.2009 AT F67,25,000/-. THIS FACT IS NOT DISPUTED BY THE RE VENUE AUTHORITIES. THE ASSESSEE IS ENTITLED TO RECEIVE COMMISSION AT F 1,27,000/- FROM THIS TRANSACTION AND THE SAME WAS OFFERED TO TAX. CONSI DERING THESE FACTS THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED TH E ADDITION MADE BY THE ASSESSING OFFICER TO THE TUNE OF F67,25,000/ -. THE CONTENTION OF THE DEPARTMENT IS THAT CASH FLOW STATEMENT SHOWS F.67,25,000/- AS RECEIPT. THE ASSESSEE ADMITTED TO HAVE RECEIVED THI S MONEY ON BEHALF OF MRS. VIJAYALAKSHMI, IT SHOULD BE SHOWN AS RECEIPTS AND NOT TO BE SHOWN AS APPLICATION OF MONEY IN THE CASH FLOW STAT EMENT. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE APPEAL OF THE REVENUE IS DISMISSE D. I.T.A.NOS.1788 &1796/MDS/2014 :- 27 -: 15. IN THE RESULT, THE APPEALS OF THE REVENUE IN ITA NO S.1788 & 1796/MDS/2014 ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH DAY OF AUGUST, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED:28.08.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF.