ITO, Coimbatore V. Shri V. Dhanapal, Coimbatore

ITA 2360/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4837 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2016
• Court: TRIBUNAL
• Department Lawyers: NATARAJA
• Keywords: Gift; Competent authority
• Section: 143(3); 142(1); 148; 56

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2360 /MDS/201 6 / ASSESSMENT YEAR :20 0 9 - 1 0 THE INCOME TAX OFFICER , NON CORPORATE WARD 4 (2 ) , 63 A, RACE COURSE ROAD, COIMBATORE. VS. SHRI V. DHANAPAL, 408, RANGA GOUNDER STREET, 2 ND FLOOR, KANTHA SAMY SHOPPING COMPLEX, COIMBATORE 641 001. [PAN:A F UPD5729C ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI NATARAJA , J CIT / RESPONDENT BY : NONE / DATE OF HEARING : 13 . 0 2 .201 7 / DATE OF P RONOUNCEMENT : 27 . 0 4 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 3 , C OIMBATORE DATED 27 .0 5 .2016 RELEVANT TO THE ASSESSMENT YEAR 20 0 9 - 1 0 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(A) - 3, COIMBATORE IS AGAINST LAW, FACTS AND C IRCUMSTANCES OF THE CASE. I.T.A. NO . 2360 /M/ 16 2 2. THE L D.CIT(A) - 3 ERRED IN NOT CONSIDERING THE EVI DENCE GATHERED DURING THE ASSESSMENT PROCEEDING. 3. THE LD. CIT(A) - 3 HAS FAILED TO APPRECIATE THAT IN HIS RETURN OF INCOME SHRI. NATARAJ GANESH (A.Y.2009 - 10 /PAN:AIEPN2466R) HAS CLAIMED AN EXPENDITURE OF RS.1,48,00,000/ - TOWARDS THE PURCHASE AND SALE OF LAND TRANSACTIONS. OUT OF ABOVE AMOUNT, RS.60,00,000/ - WAS RECEIVED BY THE ASSESSEE DURING THE ASST. YEAR 2009 - 10 AS PART OF ARRANGEMENT OF PURCHASE AND SALE OF LAND SITUATED AT POLLACHI TALUK AND THUS IT SHOULD BE CONSIDERED AS HIS INCOME. 4. THE ID.CI T(A) ERRED IN RELYING ON THE ASSESSEE'S CLAIM THAT THE SAID SUM OF RS.60 LAKHS WAS ADVANCED FOR PURCHASE OF AGRICULTURAL LAND WHICH HAS NOT BEEN SUBSTANTIATED BY THE ASSESSEE BY WAY OF AGREEMENT/CONFIRMATION. RATHER, NATARAJ GANESH HAS AFFIRMED THAT THE SA ID PAYMENT WAS ONLY TOWARDS JOINT VENTURE AGREEMENT WITH MR. SHANMUGANATHAN, BROTHER IN LAW OF ASSESSEE. 5. THE L D.CIT (A) ERRED IN RELYING ON THE SUBMISSION MADE BY THE ASSESSEE THAT THE CESSATION OF LIABILITY ENDS IN THE A.Y.2015 - 16. THE ASSESSEE HAS ADMITTED RS.60 LAKHS AS INCOME FOR THE A.Y.2015 - 16 IN ORDER TO AVOID PENAL INTEREST. 6. THE LD.CIT(A) ERRED IN HOLDING THAT RECEIPT BY THE ASSESSEE IS A LIABILITY OF THE ASSESSEE AND ALSO ERRED IN ACCEPTING THE SAID SUM AS INCOME OF THE ASSESSEE FOR THE A.Y. 2015 - 16 AS CESSATION OF LIABILITY RATHER THAN INCOME FOR THE A.Y.2009 - 10. 7. THE L D. CIT (A) ERRED IN RELYING ON THE SUBMISSION MADE BY THE APPELLANT FATHER SHRI.VISWALINGAM UDAYAR THAT THE GIFT WAS GIVEN FROM THE INCOME OF AGRICULTURAL ACTIVITIES , WHEREIN IT IS CLEAR FROM THE PARTITION DEED THAT THERE WERE NO AGRICULTURAL ACTIVITIES ON THE LAND OWNED BY THE APPELLANT'S FATHER. 8. IN THE CIRCUMSTANCES, IT IS PRAYED THAT THE ORDER PASSED BY THE CIT (A) MAY BE QUASHED AND THAT OF THE ASSESSING OFF ICER MAY BE RESTORED. 9. THE HON'BLE ITAT IS REQUESTED LEAVE TO ADD, AMEND OR MODIFY THE GROUNDS OF APPEAL, IF NECESSARY, IN FUTURE. I.T.A. NO . 2360 /M/ 16 3 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING HIS INCOME FROM PARTNERSHIP FIRM AND FRO M OTHER SOURCE. THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.03.2011 ADMITTING A TOTAL INCOME OF .3,16,400/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. BASED ON THE INFORMATION DURING THE COURSE OF SCRUTINY OF ANOTHER ASSESSEE SHRI NATARAJ GANESH FOR THE ASSESSMENT YEAR 2009 - 10 T HAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF .1,48,00,000/ - IN THE PURCHASE AND SALE OF LAND AND THIS SUM WAS GIVEN AS A PART OF ARRANGEMENT OF PURCHASE AND SALE BY SHRI SHANMUGANATHAN. SHRI NATARAJ GANESH STATED THAT HE HAS AUTHORIZED MR. SAKTHIVEL TO DEA L AND DISPOSAL OF THE PROPERTY SITUATED AT POLLACHI TALUK, NALLATTIPALAYAM, KINATHUKADAVU, COIMBATORE. THE LAND WAS SOLD TO THE TUNE OF .3,58,14,000 AND THE MONEY WAS DEPOSITED IN MR. SAKTHIVEL S BANK ACCOUNT . MR. SAKTHIVEL IN HIS AFFIDAVIT STATED THAT HE HAS TAKEN DD IN THE NAME OF SHRI SHANMUGANATHAN AND MR. DHANAPAL [PRESENT ASSESSEE] FOR .70.00 LAKHS AND .60.00 LAKHS RESPECTIVELY AS PER THE INSTRUCTION GIVEN BY SHRI NATARAJ GANESH. THIS AMOUNT WAS GIVEN AS A PART OF ARRANGEMENT OF PURCHASE AND SALE B Y SHRI SHANMUGANATHAN AND THE ASSESSEE . UNDER THE ABOVE CIRCUMSTANCES, AFTER OBTAINING APPROVAL FROM THE COMPETENT AUTHORITY, NOTICE UNDER SECTION 148 OF THE ACT WAS SERVED ON THE ASSESSEE ON 01.03.2014. NOTICE UNDER SECTION 143(2) OF THE ACT DATED 08.12.2 014 WAS SERVED ON THE ASSESSEE ON 10.12.2014. SUBSEQUENTLY, NOTICE UNDER SECTION 142(1) OF THE I.T.A. NO . 2360 /M/ 16 4 ACT WAS ALSO ISSUED ON 16.01.2015. IN RESPONSE THERETO, THE ASSESSEE FILED ALL DETAILS AND CONFIRMATION TO THE CLAIMS MADE BY HIM. AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT WAS COMPLETED ON 18.03.2015 BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .68,66,400/ - AFTER MAKING DISALLOWANCES TOWARDS UNSECURED LOAN OF .60.00 LAKHS AND CLAIM OF GIFT OF .5,50,000/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) DELETED BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APP EAL BEFORE THE TRIBUNAL AND CHALLENGED DELETION OF BOTH THE DISALLOWANCES. 5. WHEN THE APPEAL WAS TAKEN UP FOR HEARING ON 31.01.2017, AT THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE, THE HEARING WAS ADJOURNED TO 13.02.2017 AND THE LD. COUNSEL HAS END ORSED THE DATE OF HEARING IN THE ORDER SHEET. WHEN THE APPEAL WAS TAKEN UP FOR HEARING ON 13.02.2017, NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE, WE PROCEEDED TO DECIDE THE APPEAL ON MERITS AFTER HEARING THE LD. DR. 6 . WE HAVE HEARD THE LD. DR , PERUS ED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO THE ADDITION OF .60.00 LAKHS, THE AMOUNT WAS RECEIVED FROM S/SHRI NATARAJ GANESH/ I.T.A. NO . 2360 /M/ 16 5 SAKTHIVEL AND THE EXPLANATION OFFERED BY THE ASSESSEE WAS THAT ASSESSEE S BROTHER - IN - LAW SHRI G. SHANMUGANATHAN PURCHASED AGRICULTURAL LAND NEAR SENDRAMPALAYAM VILLAGE, COIMBATORE OF 16.07 ACRES [OUT OF 50.25 ACRES). SINCE SHRI G. SHANMUGANATHAN COULD NOT PURCHASE LAND ABOVE, IT WAS PURCHASED JOINTLY WITH FOUR OTHERS. WHILE S ELLING THE LAND, THE PROFIT WAS AMOUNT AND THOSE WHO GOT PROFIT INCLUDE SHRI NATARAJ GANESH/SAKTHIVEL. SHRI NATARAJ GANESH/SAKTHIVEL GAVE .130 LAKHS TO SHRI G. SHANMUGANATHAN AND THE ASSESSEE AMOUNTING TO .70.00 LAKHS AND .60 LAKHS RESPECTIVELY. SHRI NATARAJ GANESH IS AN NRI AND WHEN HE CAME TO KNOW THE LEGAL OBLIGATIONS OF NRIS INVESTING IN AGRICULTURAL LAND, HE DISOWNED THOUGH HE HAD PA ID MONEY TO THE ASSESSEE. BASED ON THE STRENGTH OF AFFIDAVIT, THE ASSESSING OFFICER HAS MADE THE AD DITION OF .60.00 LAKHS. BEFORE THE LD. CIT(A), THE AR OF THE ASSESSEE HAS SUBMITTED THAT SHRI NATARAJ GANESH HAS GIVEN THE MONEY OF .60 LAKHS TO THE ASSESS EE, BUT, CONSEQUENTLY DISOWNED THE TRANSACTION ON THE STRENGTH OF A NOTARIZED AFFIDAVIT. THE ASSESSEE CONSIDERED THE LIABILITY, WHICH WAS CEASED AFTER WAITING FOR A REASONABLE TIME AND THEREAFTER, OFFERED IT AS INCOME UNDER SECTION 56 OF THE ACT FOR THE AS SESSMENT YEAR 2015 - 16. SINCE THE AMOUNT HAS BEEN OFFERED AS INCOME UPON CESSATION OF LIABILITY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT CALLED FOR AND ACCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION. I.T.A. NO . 2360 /M/ 16 6 7. ADMITTEDLY, SHRI NATARAJ GANESH HAS GIVEN .60.00 LAKHS TO THE ASSESSEE BY WAY OF DD DRAWN ON 08.07.2008 . THIS FACT WAS NOT DISPUTED BY SHRI NATARAJ GANESH OR THE ASSESSEE . HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON ACCOUNT OF THE RECEIPT OF THE ABOVE AMOUNT IN HIS BOOKS OF ACCOUNT OF RELEVANT ASSESSMENT YEAR AS INCOME . IN THE COURSE OF SCRUTINY ASSESSMENT OF SHRI NATARAJ GANESH FOR THE ASSESSMENT YEAR 2009 - 10 , HE CLAIMED THE SAID AMOUNT AS EXPENDITURE TOWARDS PURCHASE AND SALE OF LAND, WHICH SHOULD BE INCOME OF THE ASSESSEE IN THAT PARTICULAR ASSESSMENT YEAR OF 2009 - 10. HOWEVER, IN THE BALANCE SHEET, THE ASSESSEE HAS TREATED THE SAID AMOUNT AS UNSECURED LOAN. IF THE ASSESSEE OBTAINED UNSECURED LOAN, THE ASSESSEE SHOULD HAVE FILED CONFIRMATION FOR OBTAINING TH E UNSECURED LOAN FROM SHRI NATARAJ GANESH IN THE ASSESSMENT YEAR 2009 - 10 ITSELF. SINCE , SHRI NATARAJ GAN E SH HAS DECLARED THE SAID AMOUNT AS EXPENDITURE IN HIS BOOKS IN THE ASSESSMENT YEAR 2009 - 10 ITSELF , WITHOUT ANY EVIDENCE, THE SAID AMOUNT CANNOT BE HELD AS UNSECURED LOAN IN THE HANDS OF THE ASSESSEE. MOREOVER, VIDE LETTER DATED 15.01.2015, SHRI NATARAJ GANESH HAS SUBMITTED THAT HE HAS NOT GIVEN ANY UNSECURED LOAN TO THE ASSESSEE. THE ASSESSEE SHOULD HAVE FILED ANY PIECE OF EVIDENCE TO TREAT THE ABOVE AMO UNT AS A LIABILITY. WHEN THERE IS NO LIABILITY IN THE HANDS OF THE ASSESSEE, THE QUESTION OF ITS CESSATION DOES NOT ARISE. THE RECEIPT OF THE ABOVE AMOUNT ACCRUED IN THE ASSESSMENT YEAR 2009 - 10 AND THE PAYEE HAS CLAIMED IT AS EXPENDITURE IN THAT RELEVANT A SSESSMENT YEAR, BUT THE RECIPIENT (ASSESSEE) HAS NOT DISCLOSED THE SAME I.T.A. NO . 2360 /M/ 16 7 AS INCOME OF THE ASSESSEE IN THAT ASSESSMENT YEAR . UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY BROUGHT THE SUM TO T AX IN THE ASSESSMENT YEAR 2009 - 10 . THUS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND ALLOW THE GROUND RAISED BY THE REVENUE . 8 . THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF .5.5 LAKHS CLAIMED AS GIFT. THE ASSESSEE CLAIMED TO HAVE RECEIVED GIFT FROM HIS FATHER SHRI VISWALINGAM UDAYAR OUT OF INCOME THAT HE DERIVES FROM THE AGRICULTURAL ACTIVITIES. THROUGH AN AFFIDAVIT, SHRI VISWALINGAM UDAYAR HAS STATED THAT HIS FAMILY OWN ED A ROUND 8.88 ACRES OF AGRICULTURAL LAND AT SALEM AND HE WAS IN - CHARGE OF THE CULTIVATION PADDY AS WELL AS MAINTAINING 200 COCONUT TREES. IT MAY BE A FACT THAT THE ABOVE SAID LAND WAS PARTITIONED AND PARENTS OF THE ASSESSEE OWN 4.43 ACRES OF LAND. .5.5 LAKHS IS NOT A HUGE AMOUNT THAT CANNOT BE EARNED OUT OF DOING AGRICULTURE EITHER HIS LAND OR OTHERS LAND OR HE COULD NOT SAVE THAT MONEY AND OFFER TO HIS OWN SON. IN THIS CASE, THE IDENTITY HAS BEEN PROVED AND CONFIRMATION BY WAY OF AFFIDAVIT HAS BEEN FILED BEF ORE THE ASSESSING OFFICER. THUS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS NOT SHOWN ANY VALID REASON FOR MAKING DISALLOWANCE OF THE GIFT RECEIVED BY THE ASSESSEE FROM HIS FATHER AND THE LD. CIT(A) HAS I.T.A. NO . 2360 /M/ 16 8 RIGHTLY DELETED THE A DDITION MADE ON THIS ACCOUNT. THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED . ORDER PRONOUNCED ON THE 27 TH APRIL , 201 7 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBE R ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 27 . 0 4 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.