S.Pannerselvam, CHENNAI V. DCIT Non Corporate Circle 10(1), CHENNAI

ITA 2670/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5594 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , , & BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NOS.2669, 2670 & 2671/CHNY/2018 ' ' /ASSESSMENT YEARS: 2009-10, 2011-12 & 2012-13 SHRI S.PANNEERSELVAM, NO.11, VIVEK NAGAR, KOLATHUR, CHENNAI-600 099. VS. THE DY. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-10(1), CHENNAI-34. [PAN: AINPP 3051 B ] ( * /APPELLANT) ( +,* /RESPONDENT) * - / APPELLANT BY : NONE +,* - /RESPONDENT BY : MR.AR.V.SREENIVASAN, JCIT - /DATE OF HEARING : 17.01.2019 - /DATE OF PRONOUNCEMENT : 30.01.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER: THESE ARE DIFFERENT APPEALS FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-12, CHENNAI, DATED 13.07.2017, FOR THE AYS 2009-10, 201 1-12 & 2012-13. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE AP PEALS, WE PROCEED TO DISPOSE OF THE SAME BY THIS COMMON ORDER. ITA NOS.2669-2671/CHNY/2018 :- 2 -: 3. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. LEARNED CIT (A) ERRED IN CONFIRMING AN ADDITION O F RS.93,75,000/- TOWARDS CANCELLATION FEE FOR SURRENDER OF RIGHTS OVER A PORTION OF LAND, OUT OF LARGER EXTENT OF LAND AGREED TO BE PURCHASED BY APPELLANT AND ANOTHER FROM M/S. SICAL L TD., IN FAVOUR OF MR.OMAYAL ACHI MR. ARUNACHALAM TRUST, CHENNAI, WHICH IS ALLEGED TO HAV E BEEN RECEIVED BY APPELLANT FROM THE TRUST. 1.2. AUTHORITIES BELOW FAILED TO APPRECIATE THAT TH E ABOVE REPRESENT PRICE REDUCTION FOR THE BALANCE PORTION OF LAND AGREED TO BE PURCHASED BY A PPELLANT FROM M/S.SICAL LTD., AND THAT THERE IS NO MONEY OR CASH TRANSACTION INVOLVED HERE . 1.3. LEARNED CIT (A) ERRED IN NOT ACCEDING TO THE R EQUEST OF THE APPELLANT TO SUMMON THE TRUST AND PA HOLDER TO CHECK THE VERACITY OF THE TR USTS CONFIRMATION - VIDE LETTER DT.4-5- 2018 -OF ALLEGED PAYMENT OF RS.93,75,000/- THROUGH RENOWNED ENGINEERS PVT LTD, P.A HOLDER, TO APPELLANT. 1.4 WITHOUT PREJUDICE TO THE ABOVE, AS PER THE AGRE EMENT DT.4-9-2008, SINCE THE APPELLANT AND ANOTHER PERSON HAD EQUAL RIGHTS OVER THE PROPER TY AGREED TO BE PURCHASED, AT BEST ONLY 50% OF THE ABOVE ALLEGED CANCELLATION FEE ALON E CAN BE BROUGHT IN THE HANDS OF THE APPELLANT. 2. LEARNED CIT (A) ERRED IN CONFIRMING CASH DEPOSIT OF RS.1 LAKH IN HIS BANK A/C AS UNEXPLAINED, FOR WANT OF PROOF, INSPITE OF APPELLAN T FILED HIS STATEMENT OF TOTAL INCOME DISCLOSING SALARY OF RS.1,80,000/-; RENTAL INCOME O F RS.1,08,841/- AND BUSINESS INCOME OF RS.7,47,168/- DURING THIS AY. FOR THE REASONS STATED ABOVE AND THOSE THAT MAY BE ADDUCED AT THE TIME OF HEARING APPELLANT PRAYS THAT HONBLE ITAT BE PLEASED TO DEL ETE THE ADDITIONS AND RENDER JUSTICE. APPELLANT CRAVES LEAVE OF THE ITAT TO FILE ADDITION GROUNDS/EVIDENCE AT THE TIME OF HEARING. 4. THE FACTS RELEVANT TO THE AY 2009-10 IN APPEAL N O.2669/CHNY/2018 ARE STATED HEREUNDER: BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DERIVED INCOME UNDER THE HEAD INCOME FROM HOUSE PR OPERTY. THE RETURN OF INCOME FOR THE AY 2009-10 WAS FILED ON 29.09.200 9 DISCLOSING TOTAL INCOME OF RS.9,36,010/-. SUBSEQUENTLY, THE ASSESSM ENT WAS RE-OPENED U/S.147, CONSEQUENT UPON THE SURVEY OPERATIONS IN T HE ASSESSEE PREMISES. THE ASSESSMENT WAS COMPLETED BY THE AO VIDE ORDER D ATED 28.03.2015 PASSED U/S143 R.W.S.147 OF INCOME TAX ACT, 1961 AT A TOTAL INCOME OF RS.1,04,11,010/-. WHILE DOING SO, THE AO BROUGHT T O TAX THE CANCELLATION ITA NOS.2669-2671/CHNY/2018 :- 3 -: OF FEE OF RS.93,75,000/- RECEIVED FROM M/S.OMAYAL A CHI ARUNACHALAM TRUST IN TERMS OF THE AGREEMENT DATED 04.09.2008 FO R THE CANCELLATION OF TRANSACTION OF IMMOVABLE PROPERTY AND ALSO THE AO B ROUGHT TO TAX A SUM OF RS.1,00,000/- AS UNEXPLAINED CASH CREDITS IN BAN K ACCOUNTS. 5. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER HAS CONFIRMED THE ADDITION. THE REL EVANT PARAGRAPHS OF THE LD.CIT(A) ARE EXTRACTED HEREUNDER: ADJUDICATION : 5 IN THIS CASE, THE ASSESSMENT WAS REOPENED U/S.147 ON THE BASIS OF VALID REASONS RECORDED BY THE ASSESSING OFFICER FOLLOWING DUE PROCEDURE. TH E ADDITIONS MADE BY THE ASSESSING OFFICER ARE DISCUSSED BELOW:- 5.1. THE APPELLANT HAD RECEIVED A SUM OF RS.93,75,0 00/- AS CANCELLATION FEES BEING 75% OF SHARE OF RS.1.25 CRORES RECEIVED FROM OMAYAL ACHI AR UNACHALAM TRUST, AS PER AGREEMENT DATED 4-9-2008, FOR CANCELLATION OF TRANSACTION OF IMMOVABLE PROPERTY. THE ASSESSEE DID NOT DISCLOSE THIS AMOUNT AS INCOME IN THE RETURN OF INCOME. IN THE GROUNDS OF APPEAL, THE APPELLANT HAS SUBMITTED THAT THE ABOVE AGREEMENT WA S ONLY AN UNDERSTANDING BETWEEN THE OMAYAL ACHI ARUNACHALAM TRUST, THE COMPANY WHICH PUR CHASED THE LAND (WHERE THE ASSESSEE IS A DIRECTOR) AND M/S.SICAL LIMITED. IT WA S ARGUED THAT THE AGREEMENT WAS DONE ONLY TO REDUCE THE PRICE FOR THE PURCHASER AND THER E IS NO CASH OR MONEY TRANSACTION. 5.2 I HAVE GONE THROUGH THE FACTS OF THE CASE AND T HE RELATED DOCUMENTS OF THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE. AS PER T HE AGREEMENT DATED 4 TH SEPTEMBER 2008, BETWEEN V BAMABASS AND S PANEERSELVAM (FIRST PARTY) AND OMAYAL ACHI ARUNACHALAM TRUST (SECOND PARTY), THE SECOND PARTY HAS AGREED TO PAY THE CANCELLATION FEE OF RS.1 CRORE 25 LAKHS TO THE FIRST PARTIES. THE AB OVE PAYMENT WAS FOR SURRENDER AND EXTINGUISHMENT BY THE FIRST PARTIES TO ENABLE THE S ECOND PARTY TO DIRECTLY PURCHASE THE PROPERTIES TO THE EXTENT OF 2.05 ACRES, 0.30 ACRES AND 0.18 ACRES AT PUZHAL VILLAGE, AMBATTUR TALUK, TIRUVALLUR DISTRICT. IT WAS ALSO ME NTIONED IN THE AGREEMENT THAT THE PARTIES SPECIFICALLY AGREE THAT THE SECOND PARTY SHALL NOT DISCLOSE THE QUANTUM OF CANCELLATION FEE TO SICAL LOGISTICS LIMITED. THE SECOND PARTY WAS EN TITLED TO DISCLOSE TO SICAL LOGISTICS LTD. THAT THE FIRST PARTIES HAVE AGREED TO SURRENDER/EXTI NGUISH ALL THEIR RIGHTS IN THE PROPERTIES. THE RELEVANT PORTION OF THE AGREEMENT IS GIVEN BELO W: NON-DISCLOSURE: 9. THE PARTIES HERETO SPECIFICALLY AGREE THAT WHILE THE SECOND PARTY WILL TREAT THE AGGREGATE OF THE CONSIDERATION OF RS.4,04,34,510/- AND THE CANCELLATION FEE OF RS.1,25,00,000/- AS THE COST OF ACQUISITION OF THE SCHEDULE B LAND, THE SECOND PARTY SHALL NOT DISCLOSE THE QUANTUM OF THE CANCELL ATION FEE TO SICAL LOGISTICS LTD. THE SECOND PARTY SHALL HOWEVER TO ENTITLED TO DISCL OSE TO SICAL LOGISTICS THAT THE FIRST PARTIES HAVE AGREED TO SURRENDER/EXTINGUISHMEN T SPECIFIED HEREIN. 5.3 THE ABOVE CLAUSE OF NON-DISCLOSURE MAY HAVE P ROMPTED THE ASSESSEE NOT TO DISCLOSE HIS SHARE OF INCOME OUT OF THE CANCELLATION FEE OF RS. 1.25 CRORES. SUBSEQUENTLY, THE REGISTRATIONS WERE EFFECTED ON THE BASIS OF THE ABO VE AGREEMENTS BETWEEN THE PARTIES WHO ULTIMATELY TRANSACTED THE SALE OF PROPERTIES BELONG ING TO SICAL PRIVATE LTD. REPRESENTED BY ITA NOS.2669-2671/CHNY/2018 :- 4 -: ITS POWER AGENT RENOWNED ENGINEERS PRIVATE LTD. THE ASSESSING OFFICER HAS RIGHTLY ASSESSED RS.93,75,000/- RECEIVED BY THE ASSESSEE AS CANCELLA TION FEE AND THE ABOVE ADDITION IS CONFIRMED. 6. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 1 LAKH BEING UNEXPLAINED CASH DEPOSITS IN THE HANDS OF THE ASSESSEE. THOUGH THE ASSESSEE H AS CLAIMED IN APPEAL PROCEEDINGS THAT THE ASSESSEE HAS SOURCES FROM RENTAL INCOME, HE HAS NOT SUBMITTED ANY DOCUMENTARY PROOF TO SHOW THE CASH FLOW SO AS TO CREDIT THE ADDITION MADE OF RS.1 LAKH. THEREFORE, THE ADDITION OF RS.1 LAKH ON THIS ACCOUNT IS CONFIRMED. 6. BEING AGGRIEVED BY THE LD.CIT(A), THE ASSESSEE I S BEFORE US IN THE PRESENT APPEAL. ON THE DATE OF HEARING NONE APPEAR ED ON BEHALF OF THE ASSESSEE DESPITE DUE SERVICE OF NOTICE OF HEARING O N PERUSAL OF ORDER OF THE LD.CIT(A), WE DO NOT FIND ANY FALLACY IN THE RE ASONING OF THE LD.CIT(A). HENCE, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 7. AS THE IDENTICAL FACTS ARE INVOLVED IN ITA NOS.2 670 & 2671/CHNY/2018 FOR THE AYS 2011-12 & 2012-13, FOR T HE REASONS STATED BY US IN ITA NO.2669/CHNY/2018 FOR THE AY 2009-10 ( SUPRA), THE APPEALS FILED BY THE ASSESSEE STANDS DISMISSED. 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E IN ITA NOS.2669- 2671/CHNY/2018 ARE DISMISSED. ORDER PRONOUNCED ON THE 30 TH JANUARY, 2019, IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER ITA NOS.2669-2671/CHNY/2018 :- 5 -: /CHENNAI, 3 /DATED: 30 TH JANUARY, 2019. TLN - +45 6 5 /COPY TO: 1. * /APPELLANT 4. 7 /CIT 2. +,* /RESPONDENT 5. 5 + /DR 3. 7 ( ) /CIT(A) 6. ' /GF