Mr. Durai Sathyamurthy, CHENNAI V. DCIT, CHENNAI

ITA 3028/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7635 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-10-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Revised return
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , ! '#.. $ %!& , ( )* BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ! ./ ITA NO.3028/MDS/2016 + ,+ /ASSESSMENT YEAR: 2012-13 MR. DURAI SATHYAMURTHY, 37, OLD NO.44, SUBRAMANIYAN STREET, ABHIRAMAPURAM, CHENNAI-600 018. VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-6(2), CHENNAI-600 034. [PAN: AAMPS 6003 R ] ( -. /APPELLANT) ( /0-. /RESPONDENT) -. 1 2 / APPELLANT BY : MR.V.S.JAYAKUMAR, ADV. /0-. 1 2 /RESPONDENT BY : MR.SUPRIYO PAL, JCIT $ 1 3( /DATE OF HEARING : 23.01.2017 45, 1 3( /DATE OF PRONOUNCEMENT : 09.03.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 29.08.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 15, CHENNAI, IN ITA NO.153/CIT(A)-15/2015-16 FOR THE AY 2012-13 AND RAI SED THE FOLLOWING GROUNDS: ITA NO.3028/MDS/2016 :- 2 -: 1. THE ORDER OF THE CIT(A) IS CONTRARY TO THE LAW, FAC TS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE DCI T IN SUSTAINING THE ADDITION OF RS.25.00 LAKHS BEING THE LAND DEVELOPMENT COST CLAIMED BY TH E APPELLANT WHILE COMPUTING THE CAPITAL GAINS. 3. THE LOWER AUTHORITIES ERRED IN IGNORING THE CONTENT S OF THE MEMORANDUM OF UNDERSTANDING FOR DEVELOPMENT OF LAND WHICH WAS RELIED ON BY THE APPELLANT TO JUSTIFY THE INCURRING OF THE EXPENDITURE IN QUESTION. 4. THE LOWER AUTHORITIES FAILED TO NOTE THAT THE MEMOR ANDUM OF UNDERSTANDING IN QUESTION CARRIED THE PAN NO. OF THE POWER AGENT AND FROM THA T, IT COULD BE ASCERTAINED BY THE TAX AUTHORITIES THAT THE MOU WAS SIGNED BY A PERSON WHO IS TRACEABLE AND THAT THE MOU IS NOT AN INVALID DOCUMENT. 5. THE CIT(A) FAILED TO NOTE THE VARIOUS ARGUMENTS ADV ANCED BY THE APPELLANT TO JUSTIFY HIS CLAIM. 6. THE APPELLANT SUBMITS THAT THE ADDITION IS NOT SUST AINABLE IN LAW. 7. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GRO UNDS OF APPEAL AT THE TIME OF HEARING. 2.0 DURING THE APPEAL HEARING THE ASSESSE HAS FILED AD DITIONAL GROUNDS OF APPEAL ON 23.01.2017 FOR CARRY FORWARD OF CAPITA L LOSS. AFTER HEARING BOTH THE PARTIES THE ADDITIONAL GROUNDS OF APPEALS ARE ADMITTED. 2.1 ALL THE GROUNDS OF APPEAL ARE RELATED TO THE AD DITION OF RS.25 LAKHS BEING LAND DEVELOPMENT COST. THE ASSESSEE HAS FILE D THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.60,59,744/- ON 14.09.2 012. THIS CASE WAS SELECTED FOR SCRUTINY AND NOTICES WERE ISSUED BY TH E AO U/S.143(2) AND DURING THE PENDENCY OF SCRUTINY THE AO CONDUCTED SU RVEY U/S.133A. THE ASSESSEE FILED THE REVISED RETURN OF INCOME ON 29.0 3.2014 REVISING THE TOTAL INCOME TO RS.52,66,950/-. DURING THE SURVEY, IT WAS NOTICED BY THE AO THAT A SUM OF RS.25.00 LAKHS WAS CLAIMED AS DEDU CTION BEING THE DEVELOPMENT COST WHILE COMPUTING THE CAPITAL GAINS. THE ASSESSE SOLD THE PROPERTY OF LAND LOCATED AT NO.36, MUTTUKADU VILLAG E, CHENGALPET TALUK, ITA NO.3028/MDS/2016 :- 3 -: KANCHEEPURAM DISTRICT FOR CONSIDERATION OF RS.90 LA KHS AND CLAIMED THE DEDUCTION OF RS.61.00 LAKHS TOWARDS THE COST OF THE LAND. SUBSEQUENTLY, A CLAIM WAS MADE BY THE ASSESSEE FOR DEDUCTION OF RS. 25.00 LAKHS AS DEVELOPMENT COST AND THE ASSESSEE HAS FURNISHED A M EMORANDUM WITH THE VENDOR FOR DEVELOPMENT COST. AS PER THE MOU, THE VENDOR HAS TO CONSTRUCT THE COMPOUND WALL RAISING THE LEVEL OF PL OT TO ROAD LEVEL AND GRILL GATE, ETC. THE MOU WAS UNDATED AND IN THE LAST PARA GRAPH OF THE SAME MOU, AO NOTICED THAT THE WORKS MENTIONED IN THE MOU WERE ALREADY COMPLETED AND INSPECTED BY THE ASSESSEE. THEREFORE , THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS PURCHASED THE DEVELOPED LAND AND NO DEVELOPMENT COST WAS INCURRED SUBSEQUENT TO PURCHAS E OF LAND AND ACCORDINGLY REJECTED THE CLAIM AND MADE THE ADDITIO N OF RS.25.00 LAKHS TO THE RETURNED INCOME. 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) CONFIRMED TH E ADDITION MADE BY THE AO AND HELD THAT THERE WAS NO EVIDENCE TO PROVE THAT THE ASSESSE HAS MADE ANY DEVELOPMENT TO THE IMPUGNED LAND. AGGRIEV ED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED APPEAL BEFORE THI S TRIBUNAL AND REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND REQUESTE D FOR ADMISSION OF ADDITIONAL GROUNDS. ITA NO.3028/MDS/2016 :- 4 -: 4.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. THE ASSESSEE HAS CLAIMED THE DEVELOPMENT COST OF R S.25.00 LAKHS, SUBSEQUENT TO FILING THE RETURN OF INCOME. ACCORDI NG TO THE ASSESSE, THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF IMPROVE MENT OF LAND I.E FOR RAISING THE LEVEL OF PLOT AND CONSTRUCTING THE COMP OUND WALL AND GATE ETC.. HOWEVER IT WAS NOTICED BY THE AO FROM THE PURCHASE DEED THAT THE ABOVE WORKS IN MOU WERE ALREADY COMPLETED AT THE TIME OF ENTERING INTO THE MOU AND AGREEMENT WAS ONLY MAKE BELIEVE AGREEMENT A ND NO FURTHER EXPENDITURE WAS INCURRED BY THE ASSESSEE AFTER THE PURCHASE OF THE LAND AND THE AGREEMENT WAS EXECUTED ONLY FOR THE PURPOSE OF EVADING THE CAPITAL GAINS TAX. THE ASSESSE HAS NOT SUBMITTED AN Y EVIDENCE TO PROVE THAT SUBSEQUENT TO THE PURCHASE OF THE LAND THE ASS ESSEE HAS MADE ANY IMPROVEMENT OR DEVELOPMENT AND THE PAYMENT TO THE V ENDOR ALSO WAS NOT PAID BY CHEQUE. IT IS THE DUTY OF THE ASSESSEE TO PROVE WITH THE DOCUMENTARY EVIDENCE THAT THE ASSESSEE HAS MADE IMP ROVEMENTS TO THE LAND SUBSEQUENT TO THE PURCHASE. THE MOU PRODUCED BY THE ASSESSEE WAS UNDATED AND UNREGISTERED. THE PAYMENT WAS ALSO NO T MADE BY CHEQUE AND HENCE WE ARE UNABLE TO ACCEPT THE MOU WITHOUT S UPPORTING DOCUMENTS AS VALID EVIDENCE. SINCE, THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE ASSESSE HAS MADE ANY IMPROVEMENTS TO THE LAND SUBSE QUENT TO PURCHASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD .CIT(A) AND THE ITA NO.3028/MDS/2016 :- 5 -: LD.CIT(A) ORDER IS UPHELD AND THE GROUNDS OF APPEAL IN GROUND NOS. 1 TO 7 ARE DISMISSED. 5.0 THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: A. THE LOWER AUTHORITIES ERRED IN NOT CONSIDERING THE CLAIM OF CARRY FORWARD CAPITAL LOSS STATED IN THE REVISED RETURN FILED BY THE ASSESSEE BEFORE THE AO. THE AO HAS NOT EVEN MENTIONED THE FILING OF THE REVISED RETURN IN THE A SSESSMENT ORDER PASSED U/S. 143(3) DATED 24.03.2015. B. THE LOWER AUTHORITIES HAVING NOTICED THAT THE ISSUE RELATING TO THE DEVELOPMENT COST AMOUNTING TO RS.25.00 LAKHS IS FORMING PART OF HIS SHARE OF 50% CAPITAL LOSS CLAIMED BY THE APPELLANT, ADDED RS.25.00 LAKHS BUT DID NOT ALL OW THE CARRY FORWARD OF THE CAPITAL LOSS CLAIMED IN THE REVISED RETURN OF INCOME. 6.0 ADDITIONAL GROUNDS OF APPEAL ARE RELATED TO THE CA RRY FORWARD OF CAPITAL LOSS AND DISALLOWANCE OF WHOLE AMOUNT IN TH E HANDS OF THE ASSESSEE INSTEAD OF 50% BEING THE ASSESSEE WAS 50% SHAREHOLDER. THE ASSESSEE ASSAILED THE GROUND RELATING TO CARRY FORW ARD OF LOSS BEFORE THE LD.CIT(A) BUT THE LD.CIT(A) HAS NOT ADJUDICATED THI S GROUND. WE HAVE GONE THROUGH THE GROUNDS OF APPEAL FILED BEFORE THE LD.CIT(A) AND IN GROUND NO.4 IN FORM NO.35, THE ASSESSEE HAS RAISED THE ISSUE RELATING TO CARRY FORWARD OF CAPITAL LOSS AND THE LD.CIT(A) DI D NOT ADJUDICATE THE GROUND. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF LD.CIT(A) TO ADJUDICATE THE GROUNDS RELATING TO CARRY FORWARD OF CAPITAL LOSS AND RESTRICTION OF DISALLOWANCE TO 50% OF RS.25.00 LAKH S AS PER LAW. THE ADDITIONAL GROUNDS RELATING TO CARRY FORWARD OF CAP ITAL LOSS AND RESTRICTION OF DISALLOWANCE TO 50% IS ALLOWED FOR STATISTICAL P URPOSES. ITA NO.3028/MDS/2016 :- 6 -: 7.0 IN THE RESULT, THE APPEAL OF THE ASSESSE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( '# . . $ %!& ) (D.S.SUNDER SINGH) ( /ACCOUNTANT MEMBER /CHENNAI, 6! /DATED: 9 TH MARCH, 2017. TLN 1 /3%7 87,3 /COPY TO: 1. -. /APPELLANT 4. $ 93 /CIT 2. /0-. /RESPONDENT 5. 7 : /3 /DR 3. $ 93 ( ) /CIT(A) 6. #+ = /GF