Smt. S. Manimegalai, CHENNAI V. ITO, Coimbatore

ITA 1976/CHNY/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4597 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 05-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2013
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Business income; Tax effect
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI , . ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1976/MDS./2013 & 1730/MDS./2010 / ASSESSMENT YEAR : 2007-08 SMT.S.MANIMEGALAI , NO.4-A,KONGU NAGAR, RAMANATHAPURAM, COIMBATORE 641 045. VS. THE ITO, WARD II(5), COIMBATORE. [PAN AHUPM 3170 E ] ( $% / APPELLANT) ( &'$% /RESPONDENT) ./ I.T.A.NO.2133/MDS./2013 / ASSESSMENT YEAR : 2007-08 THE ITO, WARD II(5), COIMBATORE. VS. SMT.S.MANIMEGALAI , NO.4-A,KONGU NAGAR, RAMANATHAPURAM, COIMBATORE 641 045. [PAN AHUPM 3170 E ] ( $% / APPELLANT) ( &'$% /RESPONDENT) ASSESSEE BY : MR.S.SRIDHAR, ADVOCATE REVENUE BY : MR.SUPRIYA PAL, JCIT, D.R / DATE OF HEARING : 0 5 .04 .2017 / DATE OF PRONOUNCEMENT : 05 .05 .2017 ITA NOS.1976 & 2133 /MDS./2013 :- 2 -: ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE CROSS APPEALS FILED BY THE ASSESSEE & THE REVENUE AND THE APPEAL OF REVENUE ARE DIRECTED AGAINST THE DI FFERENT ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, COIMBATORE DATED 24.09.2013 PASSED U/S.271(1)(C) OF THE ACT AND DATE D 12.08.2010 PASSED U/S.143(3) OF THE ACT RESPECTIVELY PERTAININ G TO ASSESSMENT YEAR 2007-08. FIRST WE TAKE UP ITA NO.1730/MDS./2010 2. THE FIRST GROUND IS WITH REGARD TO CONFIRMING T HE ADDITION OF ` 1,75,000/- OUT OF ` 2,47,000/- MADE BY THE LD. ASSESSING OFFICER TOWARDS UNEXPLAINED DEPOSIT INTO BANK ACCOUNT. 3. THE FACTS OF THE ISSUE ARE THAT THE AO NOTED TH AT THE ASSESSEE HAS DEPOSITED A SUM OF ` 3,07,000/- INTO HER BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH INDIAN BANK ON 03.0 4.2006. THE ASSESSEE EXPLAINED BEFORE THE LD.CIT(A) THAT THE AS SESSEE AVAILED THE LOAN FROM THE COIMBATORE CITY CO-OPERATIVE BANK LTD ., COIMBATORE IN THE NAME OF HER HUSBAND, MR. K.SIVASANKAR AS FOLLOW S:- NAME LOAN NO. DATE AMOUNT (RS.) S.MANIMEGALAI JL/31816/2006 03.04.2006 30,000 S.MANIMEGALAI JL/31817/2006 03.04.2006 30,000 K.SIVASHANKAR JL/31815/2006 03.04.2006 26,000 JL/31814/2006 03.04.2006 49,000 JL/ 31774/2006 30.04.2006 55,000 JL/31773/2006 30.04.2006 45,000 TOTAL 2,35,000 ITA NOS.1976 & 2133 /MDS./2013 :- 3 -: FURTHER, IT WAS SUBMITTED THAT THE ASSESSEE RECEIVE D A RETURN OF LOAN OF ` 50,000/- FROM MR.BABU AND ` 35,000/- FROM MR.CHINNASAMY. THE AO CONSIDERED ONLY JEWELLERY LOAN IN THE NAME OF ASSES SEE TO THE TUNE OF ` 60,000/- ( 30,000/- + 30,000/-). OUT OF THE ABOVE, CONSIDERED BALANCE OF ` 2,47,000/- AS UNEXPLAINED DEPOSIT IN THE HANDS OF ASSESSEE AND MADE ADDITION. ON APPEAL, LD.CIT(A) C ONSIDERED THE LOAN REPAYMENT FROM MR. BABU ( ` 35,000/-) AND FROM MR.CHINNASAMY ( ` 85,000/-) TOTALING OF ` 85,000/- AS SOURCE OF DEPOSIT INTO BANK ACCOUNT AND HAD GIVEN RELIEF TO THE ASSESSEE TO THE TUNE OF ` 85,000/- OUT OF ` 2,47,000/- AND SUSTAINED THE BALANCE AMOUNT OF ` 1,75,000/- ( ACTUALLY IT SHOULD BE ` 1,62,000/- INSTEAD OF ` 1,75,000/-). THUS, THE LD.CIT(A) HAD GIVEN A RELIEF OF ` 85,000/-. ONCE AGAIN, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R SUBMITTED THAT ASSESSEES HU SBAND MR. K.SIVASANKAR AVAILED FOUR JEWELLERY LOAN AS TABULAT ED ABOVE TOTALING OF ` 1,75,000/- AND DEPOSITED THE SAME TO THE ASSESSEES BANK ACCOUNT ON 03.04.2006 AND IT IS TO BE CONSIDERED AS SOURCE OF DEPOSIT INTO BANK ACCOUNT. 4.1 ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER OF CLITA. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE REGARDING AVAILING OF JEWELLERY LOAN AT ` 1,75,000/- BY ASSESSEES HUSBAND ON 30.04.2006. THE LD.A.R TOOK A ITA NOS.1976 & 2133 /MDS./2013 :- 4 -: PLEA THAT THIS AMOUNT WAS USED TO DEPOSIT INTO ASSE SSEES BANK ACCOUNT WITH INDIAN BANK ON 03.04.2006 AND THE DEP ARTMENT HAVE NO EVIDENCE TO SHOW THAT THE HUSBAND USED THE SAID JEW ELLERY LOAN AMOUNT FOR ANY PURPOSES OTHER THAN LENDING TO ASSES SEE. IN OUR OPINION, IT IS APPROPRIATE TO EXAMINE THE ISSUE WHE THER THE JEWELLARY LOAN WAS DIRECTLY RELEASED TO ASSESSEES HUSBAND IN THE FORM OF CASH OR BY CHEQUE SO AS TO DEPOSIT THE SAME TO ASSESSEES INDIAN BANK ACCOUNT AND THEREUPON TO DECIDE WHETHER THE JEWELLE RY LOAN AVAILED BY ASSESSEES HUSBAND WAS ACTUALLY USED TO DEPOSIT INT O ASSESSEES ACCOUNT. WITH THIS OBSERVATION, WE REMIT THE ISSUE IN DISPUTE TO THE FILE OF AO FOR FRESH CONSIDERATION. 6. THE SECOND ISSUE IS WITH REGARD TO NOT ACCEPTIN G THE LOAN AVAILED THROUGH HER HUSBAND AT ` 1 LAKHS BY PLEDGING ASSESSEES JEWELS ON 10.10.2006 FOR DEPOSITING ` 4 LAKHS IN THE BANK ALONG WITH OTHER FUNDS. 6.1 THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE HA S DEPOSITED ` 4 LAKHS ON 10.10.2006 TO ASSESSEES BANK ACCOUNT. THE ASSESSEE EXPLAINED THAT SOURCE OF SAID DEPOSITS AS FOLLOWS:- FAMILY DRAWINGS 1,30,000 AGRICULTURAL INCOME 1,00,000 RENTAL INCOME 70,000 JEWEL LOAN 1,00,000 ITA NOS.1976 & 2133 /MDS./2013 :- 5 -: THE AO HAD NOT ACCEPTED THE ABOVE MENTIONED AMOUN T AND ACCEPTED THE FOLLOWING AMOUNT FROM THE FOLLOWING SO URCES. FAMILY DRAWINGS 1,30,000 AS THERE IS NO EVIDENCE AGRICULTURAL INCOME 1,00,000 RENTAL INCOME 54,000- 16,000 NOT ACCEPTED JEWEL LOAN 1,00,000 NOT ACCEPTED THUS, THE AO ACCEPTED ONLY ` 54,000/- TOWARDS RENTAL INCOME AS SOURCE FOR DEPOSIT. AS SOURCE FOR DEPOSIT OF ` 4 LAKHS, BALANCE MADE ADDITION OF ` 3,44,000/-. 6.2 ON APPEAL, LD.CIT(A) ACCEPTED THE FAMILY DRAWI NGS AVAILABLE TO THE ASSESSEE TO DEPOSIT INTO BANK ACCOUNT AT ` 1,30,000/- AND HAD GIVEN A RELIEF AS A SOURCE OF DEPOSIT INTO BANK AC COUNT. TOWARDS AGRICULTURAL INCOME OF ` 1 LAKH, THE CIT(A) HAD GIVEN A CREDIT AS SOURCE AVAILABLE TO DEPOSIT INTO THE BANK ACCOUNT ON THE R EASON THAT THE AGRICULTURAL INCOME OF ` 1,28,000/- WAS CONSIDERED AS INCOME. REGARDING RENTAL INCOME, LD.CIT(A) ACCEPTED ` 70,000/- AND HAD GIVEN A RELIEF. HOWEVER, IN RESPECT OF JEWEL LOAN AVAILED BY ASSESSEES HUSBAND ` 1 LAKHS WAS NOT ACCEPTED BY THE LD.CIT(A) AS A SOUR CE TO BE DEPOSITED INTO BANK ACCOUNT AND ADDITION WAS SUS TAINED. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US REGARDING THIS ADDITION OF ` 1 LAKH. 7. AS DISCUSSED IN EARLIER PARA, WE REMIT THIS ISS UE TO THE FILE OF AO TO CARRY ON NECESSARY ENQUIRY REGARDING JEWEL LO AN AVAILED BY THE ITA NOS.1976 & 2133 /MDS./2013 :- 6 -: ASSESSEES HUSBAND TO DEPOSIT INTO THE ASSESSEES A CCOUNT AND DECIDE THEREUPON. THIS ISSUE IS REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATION. 8. THE THIRD ISSUE IS WITH REGARD TO NOT ACCEPTING THE AMOUNT OF ` 4 RECEIVED AS ADVANCE TOWARDS SALE OF LAND AT ORA TTUKUPPAI BY EXECUTING THE POWER OF ATTORNEY ON 28.09.2006. THE ASSESSEE MADE A DEPOSIT OF ` 4 LAKHS ON 28.09.2006. THE ASSESSEE EXPLAINED THA T THIS AMOUNT WAS RECEIVED FROM MR.KRISHNASAMY - ` 2 LAKHS AND MR.VADUGANATHAN - ` 2 LAKHS FOR THE POWER EXECUTED FOR THE LAND OF S.F NO.10/1B OF ORATTUKUPPAI. THE AO OBSERVED THAT THE SAID TRANSACTION HAS BEEN TAKEN PLACE ON 23.03.2007 AND THE SAID AM OUNT WAS RECEIVED BY CASH ON 23.03.2007 IN THE PRESENCE TO I NDEPENDENT WITNESSES. HENCE, THE ASSESSEE CANNOT CLAIM THAT THE MONEY WAS RECEIVED BY THE ASSESSEE ON 23.03.2007 WAS DEPOSITE D ON BANK ACCOUNT ON 28.09.2006, WHICH WAS PRIOR TO THE STATE D DATE OF RECEIPT. ACCORDINGLY, THE AO REJECTED THE SAME. ON APPEAL, T HE LD.CIT(A) CONFIRMED THE ACTION OF THE LD. ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE MADE THE SAME PLEA BEFORE US THAT SALE DEED WAS A MISTAKE THAT IT WAS A NORMAL PRACTICE TO NOTE IN SUCH A MANNER IN SALE DEED. THE AO SHOULD BE GIVEN A CREDIT TO TH E AMOUNT RECEIVED ITA NOS.1976 & 2133 /MDS./2013 :- 7 -: FROM THOSE PARTIES. AS RIGHTLY POINTED OUT BY THE L D. ASSESSING OFFICER THAT THE TRANSACTION TOOK PLACE ON 23.03.2007 AND T HE ASSESSEE RECEIVED THE AMOUNT OF ` 5 LAKHS BY CASH ON 23.03.2007 AND THE AMOUNT WAS DEPOSITED ON 28.09.06 WHICH WAS PRIOR TO THE RECEIPT OF MONEY AND THE EXPLANATION OF ASSESSEE THAT THE SAME MONEY WAS DEPOSITED EARLIER TO RECEIPT OF THE AMOUNT, WHICH I S IMPOSSIBLE AND IMPRACTICABLE. ACCORDINGLY, THIS GROUND RAISED BY T HE ASSESSEE IS REJECTED. 10. THE FOURTH ISSUE RELATING TO GROUND NOS. 5, 6 , 7 & 8 IS WITH REGARD TO INVOKING THE PROVISIONS OF THE SECTION 50 C OF THE ACT. 10.1 THE CONTENTION OF THE ASSESSEE IS THAT THE AS SESSEE IS IN REAL ESTATE BUSINESS AND AS SUCH INCOME OF ASSESSEE TO B E CONSIDERED AS BUSINESS INCOME AND NOT UNDER THE HEAD CAPITAL GAIN S. AS SUCH, THERE IS NO APPLICATION OF SEC.50C OF THE ACT 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS BEEN OFFERED THE INCOME U NDER THE HEAD CAPITAL GAINS FROM THE ASSESSMENT YEAR 2006-07. I N THE ASSESSMENT YEAR UNDER CONSIDERATION 2007-08, THE ASSESSEE OFFE RED ONLY SHORT TERM CAPITAL GAINS AMOUNTING TO ` 1,67,655/- AND THE PROPERTY/ASSET WAS NOT SHOWN AS STOCK-IN-TRADE. BEING SO, THE LOWE R AUTHORITIES RIGHTLY ASSESSED THE INCOME OF ASSESSEE UNDER THE HEAD CAP ITAL GAINS IN THE ITA NOS.1976 & 2133 /MDS./2013 :- 8 -: ASSESSMENT YEAR UNDER CONSIDERATION. JUDICIAL DISCI PLINE REQUIRES CONSISTENCY IN ITS PROCEEDINGS, WE ARE INCLINED TO CONFIRM THE INVOKING OF PROVISIONS OF THE SECTION 50C OF THE ACT IN RESP ECT OF SALE OF PROPERTIES SO AS TO COMPUTE CAPITAL GAINS. THIS GRO UND RAISED BY ASSESSEE STANDS REJECTED. 12. THE FIFTH ISSUE IS WITH REGARD TO NON ALLOWING OF EXPENDITURE INCURRED BY THE ASSESSEE AS COMMISSION TOWARDS PUR CHASE AND SALE OF LAND AT ` 2,15,000/-. 12.1 ACCORDING TO ASSESSEE, PAID COMMISSION OF 2% ON SALE VALUE OF PROPERTY AND IT IS TO BE ALLOWED. THE CLAIM OF A SSESSEE WAS REJECTED ON THE REASON THAT ASSESSEE HAS NOT PRODUCED REQUIS ITE EVIDENCE FOR ALLOWING THAT EXPENDITURE. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE PARTIES, WE DIRECT THE AO TO ALLOW COMMISSION S UPPORTED BY THE PROPER VOUCHERS AND RECEIPTS FROM THE CONCERNED PAR TIES. THIS GROUND IS REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATI ON. 13. THE SIXTH GROUND IS WITH REGARD TO NON CONSIDE RATION OF AGRICULTURAL INCOME OF ASSESSEE AT ` 1,28,000/-. 13.1 BEFORE US, LD.A.R SUBMITTED THAT THE ASSESSEE IS OWNING 1.24.5 HECTARES OF LAND AT ORATTUKUPPAI, COIMBATORE . THE CULTIVATGED LAND WAS 1.20 HECTARES WHEREIN THE ASSESSEE CULTIVA TED HORTICULTURE CROPS SUCH AS CHILLY, TOMATO, BRINJAL, BANANA, ONIO N, PAPAYA ETC. LD.A.R ITA NOS.1976 & 2133 /MDS./2013 :- 9 -: ALSO SUBMITTED THAT THERE WAS EVIDENCE IN THE FORM OF ADANGAL FROM VAO PRODUCED BEFORE THE AO. 14. AFTER HEARING BOTH THE PARTIES, WE ARE INCLINE D TO DIRECT THE AO TO GIVE CREDIT TO THE EXTENT OF AGRICULTURAL INC OME ACCEPTED BY THE AO IN EARLIER ASSESSMENT YEAR 2006-07 AFTER DUE VER IFICATION. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 14.1. IN THE RESULT, THE APPEAL OF ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. 15. THE CROSS APPEALS IS WITH REGARD TO DELETION/S USTENANCE OF PENALTY U/S.271(1)(C) OF THE ACT. AT THE TIME OF HE ARING, BOTH THE PARTIES CONSIDERED THAT THE TAX EFFECT IN THE CASE OF REVENUES APPEAL IS LESS THAN ` 10 LAKHS AND IT MAY BE DISMISSED. 16. AFTER HEARING BOTH THE PARTIES, SINCE THE ISSU E INVOLVED IN QUANTUM, THE ADDITION IS REMITTED TO THE FILE OF A O FOR FRESH CONSIDERATION AND THERE IS NO SURVIVAL OF ORDER OF LOWER AUTHORITIES. AT THIS STAGE, WE SET ASIDE THE PENALTY ORDER WITH LIB ERTY TO AO TO INVOKE THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT T O THE EXTENT OF ADDITION SUSTAINED BY HIM WHILE PASSING THE CONSEQU ENT ORDER. WITH ITA NOS.1976 & 2133 /MDS./2013 :- 10 - : THIS OBSERVATION, THE CROSS APPEALS RELATING TO THE PENALTY U/S.271(1)(C) OF THE ACT ARE DISMISSED. 17. IN THE RESULT, THE APPEAL OF ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES AND CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 05 TH MAY, 2017, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI ! / DATED: 05 TH MAY, 2017. K S SUNDARAM !' $%& '& / COPY TO: 1 . () / APPELLANT 3. * ( ) / CIT(A) 5. &-. $/ / DR 2. $0 () / RESPONDENT 4. * / CIT 6. .1 2 / GF