C.K.Natarajan, Coimbatore V. ITO, Coimbatore

ITA 2480/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90422 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR NISCHAL
• Assessee Lawyers: G RAMASWAMY
• Keywords: Principle of natural justice
• Section: 143(3); 133A; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 2480/MDS/2014 ( / ASSESSMENT YEAR: 2009-10) MR. C.K.NATARAJAN, 27, PONNUSAMY ROAD, R.S.PURAM, COIMBATORE-641 002. VS INCOME TAX OFFICER, WARD-II(3) COIMBATORE. PAN:ABCPN6435B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.G.RAMASWAMY, C.A. /RESPONDENT BY : DR.NISCHAL, JCIT /DATE OF HEARING : 15 TH APRIL, 2015 /DATE OF PRONOUNCEMENT : 29 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBA TORE DATED 13.8.2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN HIS APPEAL:- 1. THE ORDER PASSED BY COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE, LAW AND FACTS OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) IS ERRED IN LAW BY IGNORING ` 90,00,000/- SPECIFIED IN THE LOOSE SHEET FOUND DURING SURVEY. 2 ITA NO.3480/MDS/2014 3. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO FOLLOW THE CIRCULAR ISSUED BY THE CBDT WITH REFERENCE TO THE STATEMENTS RECORDED DURING THE SURVEY AND THE EVIDENTIARY VALUE ON THE MATERIALS SEIZED DURING THE SURVEY. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ACCEPTED THE FACTS THAT NO EVIDENTIARY VALUE ARISING OUT OF THE LOOSE PAPER FOUND DURING SURVEY. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE TAKEN THE AMOUNT OF ` 1,50,00,000/- AS PER THE DOCUMENT AS CORRECT VALUE FOR THE CALCULATION OF CAPITAL GAINS. 3. BRIEF FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL F ILED RETURN OF INCOME ON 29.07.2009 ADMITTING INCOME OF ` 21,32,010/-. A SURVEY UNDER SECTION 133A WAS CONDUCTED ON 6.1.201 1 BY THE INVESTIGATION WING AND A REPORT TO THAT EFFECT WAS SENT TO JURISDICTIONAL ASSESSING OFFICER . NOTICE UNDER SEC TION 148 WAS ISSUED TO THE ASSESSEE ON 18.08.2011 AND IN RES PONSE TO THE SAID NOTICE, ASSESSEE FILED RETURN ON 2.8.2 012 ADMITTING INCOME OF ` 1,18,97,590/- AS INCOME. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 29.03.2013 DETERMINING TH E INCOME OF THE ASSESSEE AT ` 2,08,97,590/-. WHILE COMPLETING THE ASSESSMENT ASSESSING OFFICER DID NOT CONSIDER COMMI SSION OF ` 90,00,000/- SAID TO HAVE BEEN PAID BY THE ASSESSEE IN 3 ITA NO.3480/MDS/2014 CONNECTION WITH SALE OF PROPERTY FOR COMPUTING CAP ITAL GAINS. IN THE COURSE OF SURVEY, A NOTE BOOK WAS IMPOUNDED FROM THE ASSESSEE WHICH CONTAINS DETAILS OF SALE OF PROPERTY MADE BY THE ASSESSEE. FROM THE SAID LOOSE SHEET, IT IS FOU ND THAT ASSESSEE HAS SOLD THE PROPERTY FOR ` 3,12,70,431/-. THE ASSESSEE WHILE COMPUTING THE CAPITAL GAINS REDUCED ` 90,00,000/- SAID TO HAVE BEEN PAID AS COMMISSION FR OM THE SAID SALE VALUE ALONG WITH THE OTHER EXPENSES AND C OMPUTED THE CAPITAL GAINS AT ` 86,27,941/-. HOWEVER, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IGNORED THE PAYMENT OF ` 90,00,000/- TO THE MEDIATOR AND COMPUTED THE INC OME BY ADDING BACK THE SAID ` 90,00,000/- . THE ASSESSING OFFICER HELD THAT AT THE TIME OF SURVEY, IT WAS NOT CONTEND ED THAT COMMISSION WAS PAID BY THE ASSESSEE AND IT WAS ONLY AT THE TIME OF ASSESSMENT, THE ASSESSEE WAS SUBMITTING THA T ` 90,00,000/- WAS PAID TOWARDS COMMISSION. THE ASSES SING OFFICER FURTHER OBSERVED THAT ASSESSEE HAS NEVER GI VEN ANY DETAILS OF THE PERSONS TO WHOM THE SAID COMMISSION WAS PAID, NO NAME AND ADDRESSES HAVE BEEN FURNISHED AND THEREFORE ASSESSING OFFICER DID NOT ALLOW THE SAID COMMISSION WHILE COMPUTING CAPITAL GAINS. THE ASSESSEE PREFER RED 4 ITA NO.3480/MDS/2014 APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS) CONTENDING THAT ASSESSING OFFICER ERRED IN IGNORING ` 90,00,000/- FOUND IN THE LOOSE SHEETS IN COMPUTING CAPITAL GAINS OF THE ASSESSEE. IT WAS ALSO THE CONTENTION OF THE ASSESSEE THAT ASSESSING OFFICER SHOULD HAVE TAKEN ` 1.5 CRORES AS PER DOCUMENT AS THE CORRECT VALUE OF SA LE FOR CALCULATION OF CAPITAL GAINS. THE COMMISSIONER OF I NCOME TAX (APPEALS) SUSTAINED THE ORDER OF THE ASSESSING OFFI CER IN NOT CONSIDERING ` 90,00,000/- AS COMMISSION PAID BY THE ASSESSEE TO MEDIATOR FOR THE REASON THAT ASSESSEE C OULD NOT PRODUCE ANY EXPLANATION REGARDING ENTRIES IN THE IM POUNDED MATERIAL WITH REGARD TO ` 90,00,000/-. THE ASSESSEE FAILED TO PRODUCE THE MEDIATOR OR GIVEN ANY EVIDENCE I.E. CO NTACT NUMBER, ADDRESS ETC. OF THE MEDIATOR AND THEREFORE IT WAS HELD THAT DISALLOWANCE OF ` 90,00,000/- MADE BY THE ASSESSING OFFICER IS IN ORDER. 4. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSI ONS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER SUB MITS THAT ASSESSING OFFICER IS NOT JUSTIFIED IN NOT ALLOWING DEDUCTION FOR THE COMMISSION PAID WHILE COMPUTING INCOME. THE DISALLOWANCE WAS MADE BASED ON LOOSE SHEET IMPOUNDE D 5 ITA NO.3480/MDS/2014 DURING THE SURVEY AND THE STATEMENT RECORDED. THE L OOSE SHEET FOUND IN THE COURSE OF SURVEY HAS NO EVIDENTI ARY VALUE AND IT CANNOT BE RELIED UPON IN THE ABSENCE OF ANY OTHER MATERIAL TO SUGGEST THAT PROPERTY WAS SOLD AT ` 3.12 CRORES AND COMMISSION OF ` 90,00,000/- WAS NOT PAID. HE PLACES RELIANCE ON THE DECISION OF MADRAS HIGH COURT IN TH E CASE OF CIT VS.KHADER KHAN & SONS (300 ITR 157). HE FURTHER SUBMITS THAT WHEN THE ASSESSING OFFICER IS ASSESSIN G THE INCOME BASED ON THE LOOSE SHEET NOTINGS, ALL THE NO TINGS HAVE TO BE CONSIDERED INCLUDING THE COMMISSION PAID . 5. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTS TH E ORDERS OF LOWER AUTHORITIES AND SUBMITS THAT ASSESS EE NEVER SUBMITTED ANY DETAILS REGARDING PAYMENT OF ` 90,00,000/- TO ANY MEDIATOR. DEPARTMENTAL REPRESENTATIVE SUBMITS T HAT ASSESSEE HAS NEITHER GIVEN THE NAME AND ADDRESS NOR ANY EVIDENCE TO SHOW THAT THE SAID AMOUNT OF ` 90,00,000/- WAS PAID TO MEDIATOR AS COMMISSION IN RESPECT OF SALE OF PROPERTY AND THEREFORE THE ASSESSING OFFICER HAS RIGHTLY DIS ALLOWED THE SAID EXPENSES. 6 ITA NO.3480/MDS/2014 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE LOOSE SHEET IMPOUNDED IN THE COURSE OF SURV EY AND THE DECISION RELIED ON BY THE ASSESSEE. INSOFAR AS THE CONTENTION OF THE ASSESSEE THAT ADDITION WAS MADE B ASED ONLY ON THE LOOSE SHEET AND THE SURVEY STATEMENT WH ICH HAVE TO BE IGNORED AS THESE LOOSE SHEETS HAVE NO EVIDENT IARY VALUE, WE FIND THAT THE VERY BASIS FOR THE ASSESSEE FOR REVISING THE RETURN OF INCOME AND DECLARING INCOME AT ` 1,18,97,590/- IS BASED ON THE LOOSE SHEET WHEREIN THE ASSESSEE HA S REPORTED SALE CONSIDERATION AT ` 3,12,70,431/-. THE ASSESSEE HAS COMPUTED CAPITAL GAINS IN RESPECT OF SALE OF PR OPERTY BASED ON THE NOTINGS IN THE LOOSE SHEET AND FILED R EVISED RETURN ADMITTING THE INCOME OF ` 1,18,97,590/-. THEREFORE IN SUCH CIRCUMSTANCES, THE CONTENTION RAISED BY THE AS SESSEE THAT LOOSE SHEETS HAVE NO EVIDENTIARY VALUE AND HAV E TO BE IGNORED HAS NO RELEVANCE AT ALL. IT IS THE FINDING OF THE ASSESSING OFFICER THAT ASSESSEE WAS ASKED TO PRODUC E MEDIATOR OR AT LEAST TO GIVE NAME AND ADDRESS AND C ONTACT NUMBER OF THAT PERSON. HOWEVER, IT APPEARS THAT ASS ESSEE HAS STATED THAT THE PERSON WAS NOT KNOWN TO HIM EA RLIER AND HE HAS DONE THIS SINGLE TRANSACTION WITH HIM. THE A SSESSEE 7 ITA NO.3480/MDS/2014 HAS NEVER GIVEN ANY DETAILS REGARDING MEDIATOR TO W HOM THE COMMISSION WAS PAID. IT IS VERY SURPRISING THAT ASS ESSEE IS MAKING A PAYMENT OF ` 90,00,000/- WHICH IS A SUBSTANTIAL AMOUNT WHICH IS ALMOST 1/3 RD OF THE SALE CONSIDERATION AND ASSESSEE DID NOT KNOW THE MEDIATORS NAME AND HIS WHEREABOUTS. IN THE ABSENCE OF ANY EVIDENCE FURNISH ED BY THE ASSESSEE THAT HE HAS PAID ` 90,00,000/- TO MEDIATOR WHO ARRANGED PURCHASER FOR SALE OF PROPERTY TO THE ASSE SSEE, THE ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THAT ` 90,00,000/- SAID TO HAVE BEEN PAID TO THE MEDIATOR CANNOT BE ALLOWED. IT WAS ALS O THE FINDING OF THE LOWER AUTHORITIES THAT THE ISSUE OF PAYMENT OF ` 90,00,000/- TO ANY MEDIATOR WAS NOT RAISED AT THE T IME OF SURVEY. THEREFORE, IN THE ABSENCE OF ANY CONCRETE E VIDENCE PRODUCED BY THE ASSESSEE TO ESTABLISH THAT THE SAID AMOUNT PAID WAS TOWARDS COMMISSION, THE ACTION OF THE LOWE R AUTHORITIES IN NOT CONSIDERING THE SAID AMOUNT WHIL E COMPUTING CAPITAL GAINS IS PERFECTLY JUSTIFIED. TH E DECISION RELIED ON BY THE COUNSEL FOR THE ASSESSEE IN THE CA SE OF CIT VS. S.KHADER KHAN (SUPRA) HAS NO RELEVANCE TO THE F ACTS OF THE CASE IN VIEW OF THE FACT THAT ASSESSEE HIMSELF ACTED 8 ITA NO.3480/MDS/2014 UPON THE LOOSE SHEET BY FILING THE RETURN OFFERING CAPITAL GAINS BASED ON SUCH LOOSE SHEET. 7. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT S ALE CONSIDERATION SHOULD HAVE BEEN TAKEN AT ` 1.5 CRORES AS REPORTED IN THE SALE DEED AS THE CORRECT VALUE OF S ALE FOR THE PURPOSE OF CAPITAL GAINS, THIS CONTENTION HAS NO FO RCE IN VIEW OF THE FACT THAT ASSESSEE HIMSELF HAS ACTED UPON TH E LOOSE SHEET IN WHICH SALE CONSIDERATION WAS RECORDED AT ` 3.12 CRORES AND THUS IT IS REJECTED. THEREFORE, WE UPHO LD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REJ ECT THE GROUNDS RAISED BY THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 29 TH MAY, 2015 SOMU 9 ITA NO.3480/MDS/2014 ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .