ITO, CHENNAI V. Smt. Abdullah Babidha, CHENNAI

ITA 2120/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77370 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: G SEETHARAMAN
• Keywords: Gift; Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 2120/MDS/2013 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER, BUSINESS WARD-III(2), 4 TH FLOOR, ANNEXE BUILDING CHENNAI-600 034. VS SMT. ABDULLAH BABIDHA 69A, ANNA ENCLAVE INJAMBAKKAM, EAST COAST ROAD CHENNAI-600 041. PAN: AJPPB6114J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. GURU BHASHYAM, JCIT /RESPONDENT BY : MR. G.SEETHARAMAN, C.A. / DATE OF HEARING : 8 TH MAY, 2014 /DATE OF PRONOUNCEMENT : 27 TH JUNE, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)V, CHENNAI DATED 28.08.2013 FOR THE ASSESSMENT YEAR 2009-10 IN DELETING PENALTY LEVIED UNDER SECTION 271D OF THE A CT. 2. BRIEF FACTS ARE THAT ASSESSING OFFICER WHILE COM PLETING ASSESSMENT NOTICED THAT ASSESSEE ALONG WITH HER HUS BAND MADE INVESTMENT IN PROPERTY. WHEN ASKED SOURCES FO R 2 ITA NO. 2120/MDS/2 013 INVESTMENT, ASSESSEE SUBMITTED THAT SHE HAS RECEIVE D ` 30,00,000/- AS GIFT FROM HER MOTHER AND ` 5,00,000/- EACH FROM FOUR MATERNAL UNCLES BY CASH. THE ASSESSEE ALS O FILED CONFIRMATIONS TO THAT EFFECT. ASSESSING OFFICER COM PLETED THE ASSESSMENT ACCEPTING SOURCES FOR INVESTMENTS MADE B Y THE ASSESSEE. HOWEVER, LATER NOTICE UNDER SECTION 271D WAS ISSUED TO THE ASSESSEE FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT AS THE ASSESSEE RECEIVED ` 5,00,000/- EACH FROM HER FOUR MATERNAL UNCLES AS LOAN IN CASH. IN T HE COURSE OF PENALTY PROCEEDINGS, ASSESSEE SUBMITTED THAT AN AMOUNT OF ` 5,00,000/- EACH RECEIVED IN CASH FROM HER FOUR M ATERNAL UNCLES IS NOT A LOAN BUT IT IS AN AMOUNT INVESTED B Y THEM ALONG WITH HER IN THE PROPERTY FOR JOINT DEVELOPMEN T. THE ASSESSEE PRODUCED COPIES OF JOINT DEVELOPMENT AGREE MENT DATED 6.4.2008 BEFORE THE ASSESSING OFFICER. THE A SSESSEE FURNISHED COPY OF CANCELLATION AGREEMENT DATED 12.4 .2010 ALSO AND SUBMITTED THAT JOINT DEVELOPMENT AGREEMENT WAS LATER CANCELLED, AS THE PROPERTY INTENDED FOR JOINT DEVELOPMENT IS NOT CLEAR FROM TITLE AND ALSO COULD NOT OBTAIN THE REQUIRED PLAN FOR CONSTRUCTION OF SIX FLATS IN THE SAID PROPERTY, ONE EACH FOR FOUR MATERNAL UNCLES AND ONE EACH FOR 3 ITA NO. 2120/MDS/2 013 HER AND HUSBAND. THE ASSESSEE CONTENDED THAT ON CANCELLATION OF THE JOINT DEVELOPMENT AGREEMENT, AS SESSEE COULD NOT REPAY THE AMOUNT INVESTED BY THE FOUR MAT ERNAL UNCLES IN THE PROPERTY, THEREFORE ASSESSEE AGREED T O REPAY THE INVESTMENT AS AND WHEN ISSUES ARE SETTLED. HOW EVER, SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEPTED BY T HE ASSESSING OFFICER AND AN ORDER UNDER SECTION 271D WAS PASSED ON 29.10.2012 LEVYING PENALTY OF ` 20,00,000/- STATING THAT SUBMISSION OF THE ASSESSEE THAT THESE FOUR MAT ERNAL UNCLES HAVE GIVEN MONEY TO THE ASSESSEE FOR INVEST MENT AS PART OF JOINT VENTURE IS ONLY AN AFTERTHOUGHT. IN T HE COURSE OF ASSESSMENT PROCEEDINGS, THESE FOUR MATERNAL UNCLES CONFIRMED THAT THEY HAVE ADVANCED LOAN TO THE ASSES SEE. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELET ED PENALTY ACCEPTING THE SUBMISSIONS OF THE ASSESSEE A GAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271D OF THE ACT AND SUBMITS THAT JOINT DEV ELOPMENT AGREEMENT IS DATED PRIOR TO THE SALE AGREEMENT AND THERE IS 4 ITA NO. 2120/MDS/2 013 NO REASONABLE CAUSE FOR OBTAINING CASH LOAN FROM TH ESE FOUR PERSONS. THEREFORE DEPARTMENTAL REPRESENTATIVE PLE ADS THAT PENALTY ORDER BE SUSTAINED. 4. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 5 OF THE PAPER BOOK FILED BEFORE US SUBMITS THAT JOINT DEVEL OPMENT AGREEMENT WAS ENTERED INTO BY THE ASSESSEE, HER HU SBAND AND HER FOUR MATERNAL UNCLES FOR DEVELOPING PROPERT Y MENTIONING THE SHARE OF INVESTMENT TO BE MADE BY AL L THE PARTIES. COUNSEL SUBMITS THAT THE AMOUNTS ADVANCED BY THE MATERNAL UNCLES TO THE ASSESSEE IS ONLY FOR THE PUR POSE OF INVESTMENT IN JOINT DEVELOPMENT OF THE PROPERTY. COUNSEL SUBMITS THAT AS PER JOINT DEVELOPMENT AGREEMENT EAC H ONE WILL GET ONE FLAT AND AS INITIAL PAYMENT ALL OF THE M HAVE TO CONTRIBUTE ` 5,00,000/- . COUNSEL FOR THE ASSESSEE SUBMITS THAT SUBSEQUENT TO THE JOINT DEVELOPMENT AGREEMENT, WHILE PREPARING THE BUILDING PLAN AND GETTING APPROVAL FO R THE BUILDING IT WAS NOTICED THAT PERMISSION WILL NOT BE GRANTED FOR CONSTRUCTION OF SIX FLATS AS IT EXCEEDS THE PERMISS IBLE FLOOR/INDEX. FURTHER ONE MR. S.RAVIKUMAR HAS ALSO D ISPUTED THE TITLE OF THE PROPERTY AND FILED A SUIT IN THE COURT AGAINST 5 ITA NO. 2120/MDS/2 013 THE ASSESSEE AND OTHERS. COUNSEL SUBMITS THAT IN S UCH CIRCUMSTANCES MATERNAL UNCLES OF THE ASSESSEE WANTE D TO WITHDRAW FROM THE JOINT VENTURE AND ACCORDINGLY CAN CELLATION AGREEMENT DATED 12.4.2010 WAS ENTERED INTO, ACCORD ING TO WHICH ASSESSEE SHALL RETURN THE INITIAL PAYMENT MAD E BY THEM WITHIN THREE MONTHS. HOWEVER, AS THE ASSESSEE COULD NOT REPAY THE SAID AMOUNT TO THE MATERNAL UNCLES IT WAS LATER TREATED AS LOAN TILL THE ISSUES WERE SORTED OUT. CO UNSEL FOR THE ASSESSEE SUBMITS THAT AS THE INITIAL PAYMENTS WERE MADE BY JOINT DEVELOPMENT AGREEMENT OF THE PROPERTY AND THE SAID AMOUNT WAS NOT RECEIVED AS LOAN, THE PROVISIONS OF SECTION 269SS ARE NOT ATTRACTED. EVEN OTHERWISE, COUNSEL SU BMITS THAT THERE IS A REASONABLE CAUSE FOR ACCEPTING TH E AMOUNTS IN CASH AND FOR NOT LEVYING PENALTY UNDER SECTION 2 71D OF THE ACT. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES, SUBMISSIONS MADE BEFORE US AND THE PAPER BOOK FILED BY THE ASSESSEE. THE ASSESSING OFFICER WHILE COMPLETING TH E ASSESSMENT REQUIRED THE ASSESSEE TO EXPLAIN SOURCE OF INVESTMENT MADE BY HER IN THE PROPERTY ACQUIRED JOI NTLY ALONG 6 ITA NO. 2120/MDS/2 013 WITH HER HUSBAND. THE ASSESSEE HAS STATED THAT ` 30,00,000/- WAS RECEIVED AS GIFT FROM HER MOTHER AND ` 5,00,000/- EACH BY CASH FROM FOUR MATERNAL UNCLES AND ` 3,75,000/- AS GIFT FROM THEM. THE ASSESSING OFFICER ACCEPTED THE SUBMI SSIONS AND SOURCES EXPLAINED BY THE ASSESSEE FOR ACQUIRING THE PROPERTY JOINTLY WITH HER HUSBAND AND COMPLETED THE ASSESSMENT ON 26.9.2011. HOWEVER, ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271D OF THE ACT FOR RECEIVING CASH LOANS FROM HER FOUR MATERNAL UNCLES ON THE GROUND THAT ASSESSEE HAS RECEIVED CASH LOANS AND AS THE SUBMISS ION OF THE ASSESSEE THAT THE SAID AMOUNT RECEIVED FROM FO UR MATERNAL UNCLES WAS FOR THE PURPOSE OF INVESTMENT BY THEM IN THE PROPERTY TO BE DEVELOPED JOINTLY AS PER JOI NT DEVELOPMENT AGREEMENT DATED 6.4.2008 IS ONLY AN AFTERTHOUGHT. ON A PERUSAL OF THE JOINT DEVELOPMENT AGREEMENT DATED 6.4.2008 , CANCELLATION AGREEMENT D ATED 12.4.2010, THE CONTENTION OF THE ASSESSING OFFICER THAT IT IS ONLY AN AFTERTHOUGHT APPEARS TO BE MISPLACED, SINCE ALL THESE TRANSACTIONS HAD HAPPENED BEFORE COMPLETION OF ASS ESSMENT UNDER SECTION 143(3) OF THE ACT ON 26.9.2011. THE A SSESSING OFFICER IS NOT QUESTIONING THE GENUINENESS OF THESE 7 ITA NO. 2120/MDS/2 013 DOCUMENTS NAMELY JOINT DEVELOPMENT AGREEMENT AND CANCELLATION AGREEMENT . COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PAGE 14 OF THE PAPER BOOK WHICH CONTAI NS LEGAL NOTICE ISSUED BY ONE MR. S.RAVIKUMAR TO VACATE THE LAND PURCHASED BY THE ASSESSEE AS HE IS CLAIMING TITLE O VER THE PROPERTY. THE LEGAL NOTICE ALSO STATES THAT MR. S.R AVIKUMAR HAS ALREADY FILED A SUIT IN O.S.NO.157 OF 2012 ON T HE FILE OF THE DISTRICT MUNSIFF COURT, ALANDUR FOR THE RELIEF OF DECLARATION THAT SALE DEEDS IN FAVOUR OF THE PURCHASERS ARE NUL L AND VOID. ALL THESE TRANSACTIONS GO TO SHOW THAT THE SUBMISSI ON OF THE ASSESSEE THAT AMOUNTS TAKEN FROM MATERNAL UNCLES B Y WAY OF CASH FOR JOINT DEVELOPMENT OF THE PROPERTY IS NOT AN AFTERTHOUGHT. NO DOUBT, ASSESSEE HAS FURNISHED CONF IRMATIONS FROM HER FOUR MATERNAL UNCLES THAT SHE HAS RECEIVED ` 5,00,000/- EACH FROM THEM AS CASH LOAN AND THIS WO ULD BE ONLY FOR THE PURPOSE OF SHOWING SOURCES FOR INVESTM ENT WHEN THE ASSESSMENT WAS COMPLETED. BASED ON THE CONFIRM ATION LETTERS ALONE, IT IS DIFFICULT TO COME TO A CONCLUS ION THAT ASSESSEE HAS RECEIVED CASH LOAN IN CASH FROM HER FO UR MATERNAL UNCLES BY COMPLETELY BRUSHING ASIDE THE SUBMISSIONS AND EVIDENCES BEFORE US TO SUBSTANTIATE THE 8 ITA NO. 2120/MDS/2 013 CLAIM OF THE ASSESSEE THAT AMOUNTS OF ` 5,00,000/- EACH GIVEN BY FOUR MATERNAL UNCLES OF THE ASSESSEE ON CA SH ON THE DAY WHEN THE PROPERTY WAS PURCHASED ON 15.4.2008 IS NOT AN AFTERTHOUGHT. IT IS ALSO A FINDING OF THE COMMIS SIONER OF INCOME TAX (APPEALS) THAT ASSESSEE IN HER RETURN FI LED HAS NOWHERE SHOWN CAPITAL OF INVESTMENT AS LOAN, AS LIA BILITY IN HER ACCOUNTS NOR PAID ANY INTEREST ON THE AMOUNTS T AKEN AS PER THE JOINT DEVELOPMENT AGREEMENT TOTALLING TO ` 20,00,000/-. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SINCE THE INITIAL INVESTMENT MADE BY FOUR MATERNAL UNCLES OF THE ASSESSEE FOR JOINT DEVELOPMENT PROPERTY CANNOT BE T REATED AS LOAN TRANSACTION TAKEN IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT WARRANTING LEVY OF PENALTY UNDER SECTION 271D OF THE ACT. IN THE CIRCUMSTANCES EXPLA INED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO CASE FOR LEVY OF PENALTY UNDER SECTION 271D OF THE ACT AND THERE IS A REASONABLE CAUSE FOR ACCEPTING THE CASH BY THE ASSE SSEE AND THUS WE SUSTAIN THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS) IN DELETING THE PENALTY. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REJECTED. 9 ITA NO. 2120/MDS/2 013 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY THE 27 TH DAY OF JUNE, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) . ( ' )* ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 27 TH JUNE, 2014 SOMU /0 10 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .