ACIT, CHENNAI V. NDR Warehousing P Ltd., CHENNAI

ITA 2822/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7880 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 14-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: MRS PUSHYA SITARAMAN SENIOR; MRS SREE VIDYA A
• Keywords: Unexplained investment
• Section: 143(3); 69; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2822/MDS/2014 ( / ASSESSMENT YEAR: 2005-06) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-IV(4) 4 TH FLOOR, MAIN BUILDING, CHENNAI-34. VS M/S. NDR WAREHOUSING P.LTD. 5, ERRABALU CHETTY STREET, CHENNAI-600 001. PAN:AAACN2816J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : DR.B.NISCHAL, JCIT /RESPONDENT BY : MRS.PUSHYA SITARAMAN, SENIOR ADVOCATE & MRS. SREE VIDYA, ADVOCATE /DATE OF HEARING : 28 TH DECEMBER, 2015 /DATE OF PRONOUNCEMENT : 2 ND MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- IV, CHENNAI DATED 01.08.2014 IN ITA NO.164/13-14 PASSED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APP EAL IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN DELETING THE PENALTY OF ` 29,02,524/- LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 271(1)(C) O F THE ACT. 2 ITA NO.2822/MDS/2014 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WAREHOUSING, HANDLING AND TRANSP ORT, FILED ITS RETURN OF INCOME ON 31.10.2005 FOR THE ASSESSME NT YEAR 2005-06. THEREAFTER ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 20.12.2007. HOWEVER, SUBSEQUENTLY IT WAS REVEALED THAT THE ASSESSEE HAD MADE UNACCOUNTED INVESTMENT IN AN AGRICULTURAL LAND MEAS URING 3.79 ACRES AT NO.40, MATHUR VILLAGE, PUZHAL PANCHAY AT, AMBATTUR TALUK, TIRUVALLUR DIST., DURING THE RELEVA NT ASSESSMENT YEAR. THEREFORE, THE ASSESSMENT WAS REOP ENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT ON 28.01.2010 AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143( 3) R.W.S 147 OF THE ACT ON 28.12.2010, WHEREIN THE LEA RNED ASSESSING OFFICER MADE ADDITION OF RS. 79,32,016/- UNDER SECTION 69 OF THE ACT BEING THE DIFFERENCE IN SALE CONSIDERATION DISCLOSED IN THE RETURN OF INCOME/SAL E DEED AND THE ACTUAL SALE CONSIDERATION PAID. SUBSEQUENTLY PE NALTY PROCEEDINGS WERE ALSO INITIATED. DURING THE COURSE OF SEARCH & SEIZURE OPERATION UNDER SECTION 132 OF THE ACT ON 10.01.2008 IN THE RESIDENTIAL PREMISES OF MR. ADHI KESAVALU REDDY, WHO IS ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY, 3 ITA NO.2822/MDS/2014 CERTAIN DOCUMENTS WERE FOUND RELATING TO THE PURCHA SE OF THE AFORESAID AGRICULTURAL LAND, AMONGST THEM WAS A SAL E AGREEMENT DATED 15.03.2004 FOR THE PURCHASE OF THE AFORESAID 3.79 ACRES OF AGRICULTURAL LAND WHEREIN T HE AGREED SALE PRICE WAS STATED AS RS.1,28,86,000/- AGAINST W HICH AN ADVANCE OF RS.45.00 LAKHS WAS PAID. HOWEVER, THE AS SESSEE IN HIS SALE DEED HAD REVEALED THE TOTAL CONSIDERATI ON AS RS.49,53,978/-, THEREFORE THE DIFFERENCE BETWEEN RS.1,28,86,000 AND RS.49,53,978/- WAS TREATED AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT FOR RS.79,32,016/-. SUBSEQUENTLY, THE ASSESSEE ACCEPTED THE ADDITION OF RS.79,32,016/- BECAUSE THE ASSESSEE CO ULD NOT PRODUCE THE VENDORS AND EMPLOYEES WHO ASSISTED THE COMPANY IN PURCHASING THE LAND. BECAUSE OF THE AFO RESAID REASONS, THE LEARNED ASSESSING OFFICER LEVIED MINIM UM PENALTY WORKED AT 100% TAX SOUGHT TO BE EVADED AMOU NTING TO RS.29,02,524/- UNDER SECTION 271(1)(C) OF THE A CT FOR FURNISHING INACCURATE PARTICULARS OF THE INCOME AND THEREBY CONCEALING THE INCOME. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PE NALTY BY OBSERVING AS UNDER:- 4 ITA NO.2822/MDS/2014 5.1. I HAVE CAREFULLY GONE THROUGH THE ORDER OF PENALTY, SUBMISSIONS MADE BY THE APPELLANT AND PERUSED THE MATERIAL ON RECORD. THE CASE LAW RELIED UPON BY THE AR VIZ., M/S.GEM GRANITES CITES THE HON'BLE SUPREME COURT IN A RECENT DECISION IN THE CASE OF MAK DATA (P) LTD. V. CIT II (CIVIL APPEAL NO.9772/13 DATED 30.10.2013) WHEREIN THE HON'BLE APEX COURT HAS RULED AFTER CONSIDERING THE EXPLANATION TO SECTION 271(1)(C) AN D HELD THAT THE QUESTION WOULD BE WHETHER THE ASSESSEE HAD OFFERED AN EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND THE EXPLANATION TO SECTIO N 271(1)(C) RAISES A PRESUMPTION OF CONCEALMENT AND I F A DIFFERENCE IS NOTICED BY THE AO BETWEEN THE REPORTED AND THE ASSESSED INCOME, THE BURDEN WAS THEN ON THE ASSESSEE TO SHOW OTHERWISE BY COGENT AND RELIABLE EVIDENCE AND WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION HAD BEEN DISCHARGED BY THE ASSESSEE, THE ONUS SHIFTS TO THE REVENUE TO SHO W . THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE. 5.2. IN THE CASE OF THE INSTANT ASSESSEE, IT HAS BE EN STATED THAT THE DIFFERENCE BETWEEN THE AMOUNT MENTIONED AS PER THE SALE AGREEMENT AND THE REGISTERED DEED WAS ON THE GROUND THAT THE CONSIDERATION AS PER THE AGREEMENT INCLUDED FUTURE COMMITMENTS FOR CERTAIN ADDITIONAL SERVICES SUCH AS ENABLING THE PURCHASE OF AN ADDITIONAL PIECE OF LAN D APPURTENANT TO THE SUBJECT LAND, WHICH THE VENDORS FAILED TO CARRY OUT AND HENCE NO ADDITIONAL AMOUNT WAS ACTUALLY PAID. FURTHER IT HAS BEEN MENTIONED TH AT THE AGREEMENT DATED 15.4.2004 WHEREIN THE CASH PAYMENT OF RS.30,00,000/- WAS SEEN WAS PAYMENT MADE RELATING TO F.Y. 2003-04 RELEVANT TO THE A.Y. 2004-05 AND THE AR SUBMITTED THAT THEREFORE IT CANN OT BE THE SUBJECT MATTER OF ASSESSMENT OR PENALTY FOR THE PRESENT A.Y. 2005-06 UNDER CONSIDERATION. 5.3. I AGREE WITH THE REASONING OF THE AR THAT AS C ASH 5 ITA NO.2822/MDS/2014 PAYMENT WAS ALLEGEDLY MADE AS PER THE AGREEMENT DATED 15.3.2004, THE PENALTY, IF ANY, SHOULD BE RELATING TO THE F.Y. RELATING TO THE ASSESSMENT YEA R 2004-05 AND SINCE EACH ASSESSMENT YEAR IS A SEPARATE YEAR, PENALTY THEREFORE CANNOT BE FASTENED ON TO THE INSTANT ASSESSEE FOR THE SUCCEEDING A.Y. 2005-06 FOR ALLEGED RECEIPT OF 'ON-MONEY' FOR THE IMMEDIATELY PRECEDING A.Y. 5.3. FURTHER, THERE IS CONSIDERABLE MERIT IN THE AR 'S CONTENTION THAT ONCE THE ONUS CAST ON THE ASSESSEE HAD BEEN DISCHARGED AS IN THE INSTANT CASE, BY WAY OF GIVING COGENT EXPLANATION WHICH AS STATED EARLIER, WAS THAT THE AGREEMENT TO SELL INCLUDED FUTURE COMMITMENTS FOR CERTAIN ADDITIONAL SERVICES SUCH AS ENABLING THE PURCHASE OF AN ADDITIONAL PIECE OF LAN D APPURTENANT TO THE SUBJECT LAND, WHICH THE VENDORS FAILED TO CARRY OUT AND HENCE NO ADDITIONAL AMOUNT WAS ACTUALLY PAID OVER AND ABOVE WHAT WAS SHOWN IN THE REGISTERED DEED, THE ONUS CAST UPON THE ASSESSE E HAD BEEN DISCHARGED BY THE ASSESSEE. 5.4. IT HAS ALSO BEEN OBSERVED IN THE DECISION IN T HE CASE OF MAK DATA (P) LTD. CITED SUPRA THAT IF THE DEPARTMENT DID NOT AGREE WITH THE EXPLANATION GIVEN BY THE ASSESSEE AS MENTIONED ABOVE, THEN THE ONUS WAS ON THE DEPARTMENT TO PROVE THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 5.5. THERE IS AGAIN CONSIDERABLE MERIT IN THE AR'S CONTENTION THAT BEYOND THE CONTENTS OF THE REGISTER ED DEED NO PROOF OF ACTUAL PAYMENT WAS BROUGHT ON RECORD BY THE AO BY WAY OF SUMMONING THE VENDORS OR RECORDING THEIR STATEMENT TO VERIFY WHETHER THEY HA D ACTUALLY RECEIVED ANY UNACCOUNTED CONSIDERATION. FURTHER IT IS SEEN THAT THE AO HAD ALSO NOT PROVED THE POSSIBLE ENHANCED PAYMENT BY WAY OF 'ON MONEY' RECEIVED RECORDED IN THE AGREEMENT OF SALE, BY VERIFICATION OF SALE INSTANCES OF COMPARATIVE LANDS IN THE VICINITY TO THE SALE OF THE LANDS IN THE INSTAN T CASE, WHICH WOULD HAVE GIVEN AN INDICATION OF THE PREVAIL ING MARKET PRICE OF SUCH LANDS AND IN CASE IT WAS 6 ITA NO.2822/MDS/2014 ASCERTAINED THAT THE ASSESSEE'S LANDS WERE SOLD AT A LESSER REGISTERED VALUE THAN THE PREVAILING MARKET RATE OF SURROUNDING LANDS STRONGLY SUGGESTING THEREBY TH AT THE DIFFERENTIAL BETWEEN THE MARKET PRICE AND THE REGISTERED VALUE WAS ON ACCOUNT OF 'ON MONEY' PAID BY THE APPELLANT FOR PURCHASE OF THE SAID LANDS. 5.6. THEREFORE IT CAN BE SAID THAT THE ONUS, WHICH HAD SHIFTED ON THE DEPARTMENT, AFTER THE ASSESSEE HAD GIVEN AN EXPLANATION FOR THE DIFFERENCE BETWEEN THE AMOUNT MENTIONED IN THE REGISTERED DEED AND THE SAL E AGREEMENT, HAD I NOT BEEN ADEQUATELY DISCHARGED BY THE AO IN CONCLUSIVELY PROVING THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREFORE THE PENALTY IMPOSED ON THE APPELLANT IS HEREBY DIRECTED TO BE DELETED. 4. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE SUBMITTED THAT IT WAS EVIDENT FROM THE SALE AGREEME NT DATED 15.3.2004 THAT THE SALE CONSIDERATION AGREED TO BE PAID WAS RS.1,28,26,000/-. THEREFORE, IT WAS APPARENT THAT T HE ASSESSEE WOULD HAVE PAID ON-MONEY OF RS.79,32,020/- BECAUSE THE REGISTERED SALE DEED REFLECTED ONLY PAY MENT OF RS.49,53,978/- . FROM THESE FACTS IT IS CLEAR THAT THE ASSESSEE HAS MADE INVESTMENT BEYOND THAT WAS DISCLOSED IN TH E RETURN OF INCOME AND HENCE THE PENALTY LEVIED BY THE LEARN ED ASSESSING OFFICER MAY BE CONFIRMED. 7 ITA NO.2822/MDS/2014 5. LEARNED AUTHORIZED REPRESENTATIVE ON THE OTHER H AND, RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND ARGUED IN SUPPORT OF THE SAME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM T HE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAS AGREE D TO PURCHASE THE LAND AT RS.1,28,86,000/- AS PER SALE AGREEMENT DATED 15.03.2004. SUBSEQUENTLY, IN THE SALE DEED ON LY RS.49,53,978/- IS MENTIONED AS THE SALE CONSIDERATI ON. THE ASSESSEE HAS EXPLAINED BEFORE THE REVENUE THAT THE DIFFERENCE BETWEEN THE AMOUNT IE., AS PER THE SALE AGREEMENT AND THE REGISTERED DEED, WAS DUE TO CERTAIN CONSIDE RATIONS FOR FUTURE COMMITMENTS SUCH AS TO ASSIST THE ASSESS EE IN PURCHASING ADDITIONAL LAND ADJACENT TO THE LAND PUR CHASED. IT WAS FURTHER EXPLAINED THAT, SINCE THE VENDORS FAILE D TO CARRY OUT THEIR COMMITMENTS, NO ADDITIONAL AMOUNT WAS PAI D. WE DO NOT FIND THIS REASON SUBMITTED BY THE ASSESSEE T O BE GENUINE WHICH IS NEITHER BASED ON ANY EVIDENCE OR ADMISSIONS OF THE VENDORS. HENCE, WE DO NOT FIND AN Y MERIT IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX 8 ITA NO.2822/MDS/2014 (APPEALS) FOR DELETING THE PENALTY. IT IS APPARENT FROM THE TRANSACTION THAT THE ASSESSEE HAS PAID ON-MONEY OF RS.79,32,020/-. THE ASSESSEE HAS NOT COME OUT WITH ANY REASONABLE EXPLANATION WITH COGENT EVIDENCE TO PROV E HIS CASE OTHERWISE. HENCE, IT IS EVIDENT FROM THE TRAN SACTION THAT ADDITIONAL INVESTMENT MADE BY THE ASSESSEE AMOUNTIN G TO RS.79,32,020/- HAS BEEN CONCEALED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THEREFORE, WE HEREBY REINST ATE THE ORDER OF THE LEARNED ASSESSING OFFICER BY CONFIRMIN G THE PENALTY LEVIED BY HIM AND THEREBY SET ASIDE THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 2 ND MARCH, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 2 ND MARCH, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .