ACIT CC 2 (1), Chennai V. V DWARAKANATHAN, SALEM

ITA 3100/CHNY/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4334 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: G BASKAR
• Keywords: Capital asset; Gift; Share purchase agreement; Additional evidence; Cost of acquisition
• Section: 147; 148; 132

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.3100/CHNY/2017 / ASSESSMENT YEAR: 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), ROOM NO. 122, FIRST FLOOR, INVESTIGATION WING, 46, NUNGAMBAKKAM HIGH ROAD, CHENNAI. VS. SHRI V. DWARAKANATHAN, NO. 256, GREEN LANDS, NAGARAMALAI ROAD, SALEM 636 016. [PAN: ACAPD5443J] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL. CIT / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE / DATE OF HEARING : 23.01.2019 /DATE OF PRONOUNCEMENT : 12.02.2019 / 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) 18, CHENNAI DATED 21.09.2017 RELEVANT TO THE ASSESSMENT YEAR 2019-10. THE EFFECTIVE GROUNDS RAISED IN THE APPEAL OF THE REVENUE ARE (I) THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAINS, (II) THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE DEDUCTION CLAIMED UNDER CHAPTER VI-A AND (III) THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE CLAIM OF AGRICULTURAL INCOME BY ACCEPTING ADDITIONAL EVIDENCES. I.T.A. NO. 3100/CHNY/17 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 09.11.2009 ADMITTING INCOME OF .3,88,430/-. A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] WAS CONDUCTED IN THE GROUP OF DR. A.M. ARUN AND OTHERS ON 01.12.2015 AND THE ASSESSEE IS ONE AMONGST THEM. DURING THE FINANCIAL YEAR 2008-09, THE ASSESSEE SOLD SHARES TO THE TUNE OF .1.5 CRORES WHICH WAS RECEIVED AS A GIFT FROM HIS DAUGHTER SMT. MEERA ARUN. AS CAPITAL GAIN WAS NOT OFFERED IN THE RETURN OF INCOME, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE GIFT, WHERE LEGAL OBLIGATION INVOLVES, SHOULD BE REGISTERED, OTHERWISE, THE TITLE OF SUCH GIFT CANNOT BE TRANSFERRED BY WAY OF SALE TO THIRD PERSON BY THE DONE WITHOUT CONSENT AND SIGNATURE OF THE DONOR. MOREOVER, THE ASSESSEE DID NOT FURNISH COPY OF SHARE PURCHASE AGREEMENT ENTERED BETWEEN SHRI DWARKANATHAN AND M/S. ADVANTAGE STRATEGIC CONSULTING PVT. LTD. FURTHER THE ASSESSING OFFICER HAS OBSERVED THAT THE TOTAL NUMBER OF 3,00,000 EQUITY SHARE WAS ALLOTTED TO SMT. MEERA ARUN FOR NOMINAL VALUE OF .100/- PER SHARE. HOWEVER, ON VERIFICATION OF RECORDS OF SMT. MEERA ARUN, THE ASSESSING OFFICER NOTICED THAT SHE DOES NOT HAVE SUFFICIENT SOURCE FOR CASH DURING THE ASSESSMENT YEAR 2009-10 TO INVEST SUCH HUGE CASH IN EQUITY SHARES. FURTHER, SINCE THE FACTS OF SALES OF SHARES WAS NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME AND IT CAME INTO LIGHT ONLY DURING THE COURSE OF I.T.A. NO. 3100/CHNY/17 3 SEARCH OF THE RESIDENTIAL PREMISES OF THE ASSESSEE AND OFFERED TO TAX DURING SEARCH PROCEEDINGS, THE ASSESSING OFFICER BROUGHT THE ENTIRE AMOUNT OF .1,50,00,000/- TO TAX. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY CONSIDERING THE PROVISIONS OF SECTION 49 OF THE ACT, WHICH SPECIFIES THAT THE COST OF ACQUISITION OF THE ASSET WILL HAVE TO BE RECKONED ON THE BASIS OF COST OF ACQUISITION TO THE PREVIOUS OWNER, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO MODIFY THE COMPUTATION AND ALLOWED THE GROUND RAISED BY THE ASSESSEE. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR SUBMITTED THAT FIRST OF ALL THE ASSESSEE DID NOT DISCLOSED THE RECEIPT OF THE GIFT IN THE ORIGINAL RETURN OF INCOME FILED AND LATER ON CLAIMED A LOSS OF .1.5 CRORES ON SALE OF SHARES IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. SECONDLY, THE ORIGINAL DONOR SMT. MEERA ARUN DOES NOT HAVE SUFFICIENT SOURCE FOR CASH DURING THE ASSESSMENT YEAR 2009-10 TO INVEST SUCH HUGE CASH IN 3,00,000 EQUITY SHARES. THIRDLY, THE ASSESSEE DID NOT SUBMIT ANY REGISTERED DEED DOCUMENT HAVING REGISTERED THE GIFT IN HIS NAME. THE PROVISIONS OF SECTION 49 OF THE ACT APPLY ONLY WHEN THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE. IN VIEW OF THE ABOVE, I.T.A. NO. 3100/CHNY/17 4 THE LD. DR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY HELD THE ENTIRE TRANSACTION AS BOGUS AND PLEADED TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE ASSESSEE HAS NOT DISCLOSED THE RECEIPT OF THE GIFT IN THE ORIGINAL RETURN OF INCOME FILED AND LATER ON CLAIMED A LOSS OF .1.5 CRORES ON SALE OF SHARES IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT AND MOREOVER, THE ASSESSEE HAS NOT FILED ANY SUBMITTED ANY REGISTERED DEED DOCUMENT OF THE GIFT EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A), WHICH MEANS, THE ASSESSEE HAS NOT OWNED THE SAID GIFT DONATED BY HIS DAUGHTER SMT. MEERA ARUN. OTHERWISE ALSO, THE ASSESSEE HAS NOT PRODUCED ANY CONSENT AND SIGNATURE OF THE DONOR FOR TRANSFERRING THE SAID GIFT BY WAY OF SALE TO THIRD PERSON. THUS, IT IS AMPLY CLEAR THAT THE PROVISIONS OF SECTION 49 OF THE ACT DO NOT APPLY IN THE CASE IN HAND, BECAUSE THE SAID PROVISION ENVISAGES ONLY WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE THEN THE COST OF ACQUISITION OF THE ASSET WILL HAVE TO BE RECKONED ON THE BASIS OF COST OF ACQUISITION TO THE PREVIOUS OWNER AND OTHERWISE, NO. SINCE THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE EITHER BEFORE THE I.T.A. NO. 3100/CHNY/17 5 ASSESSING OFFICER OR BEFORE THE LD. CIT(A) OR EVEN BEFORE THE TRIBUNAL, THAT THE ASSESSEE HELD THE GIFT BY WAY OF ANY REGISTERED DEED DOCUMENT. MOREOVER, DONOR SMT. MEERA ARUN DID NOT HAVE SUFFICIENT SOURCE FOR CASH DURING THE ASSESSMENT YEAR 2009-10 TO INVEST SUCH HUGE CASH IN 3,00,000 EQUITY SHARES, WHICH SHOWS THAT THE ENTIRE TRANSACTION APPEARS TO BE BOGUS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. THUS, THE GROUND RAISED BY THE REVENUE STANDS ALLOWED. 6. THE NEXT GROUNDS RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ACCEPT THE CLAIM OF AGRICULTURAL INCOME AMOUNTING TO .92,500/- FOR THE ASSESSMENT YEAR 2009- 10 AS WELL AS THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER CHAPTER VI-A AMOUNTING TO .1,00,000/-. THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME TO THE TUNE OF .92,500/-. SINCE THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE LIKE QUANTUM OF LAND CULTIVATION, DETAILS OF CROPS CULTIVATION, CHITTA/ADANGAL, PURCHASE OF SEEDS, SALES VOUCHER, ETC., THE ASSESSING OFFICER DISALLOWED THE SAME AND TREATED AS INCOME FROM OTHER SOURCES AND BROUGHT TO TAX. SIMILARLY, WITH REGARD TO THE CLAIM OF DEDUCTION UNDER CHAPTER VI-A, THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE. ON APPEAL, FOR CLAIM OF AGRICULTURAL INCOME, BY CONSIDERING THE EXTRACTS OF REVENUE RECORDS SUCH AS CHITTA/ADANGAL, ETC. ISSUED BY THE GOVT. AUTHORITIES, AS WELL AS CONSIDERING THE PROOF OF PAYMENT OF LIP, HOUSING LOAN I.T.A. NO. 3100/CHNY/17 6 REPAYMENT, ETC. FOR THE CLAIM OF DEDUCTION UNDER CHAPTER VI-A, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ACCEPT THE CLAIM OF AGRICULTURAL INCOME AS WELL AS THE CLAIM OF DEDUCTION UNDER CHAPTER VI-A. SINCE THE LD. CIT(A) HAS NOT OBTAINED ANY REMAND REPORT ON THE FRESH/ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE FROM THE ASSESSING OFFICER, WE REMIT THE MATTERS BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE BOTH THE ISSUES AFRESH AFTER CONSIDERING THE DOCUMENTARY EVIDENCES AS MAY BE FILED BY THE ASSESSEE. THUS, BOTH THE GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 12 TH FEBRUARY, 2019 AT CHENNAI. SD/ - SD/ - (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 12.02.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.