P K MOHAMMED, CHENNAI V. ACIT, NC7(1), CHENNAI

ITA 3169/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0060 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 22-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MATHIVANNAN C A
• Assessee Lawyers: M V GANGADHARAN
• Keywords: Principle of natural justice; Cost of acquisition; TDS; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NO.3169/CHNY/2018. #$% &$ / ASSESSMENT YEAR : 2013-2014. SHRI. P.K.MOHAMMED, SP-47A, AMBATTUR INDUSTRIAL ESTATE, AMBATTUR, CHENNAI 600 058. [PAN AACPM 7837R] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 7(1) CHENNAI. ( / APPELLANT) ( /RESPONDENT) !' '( ) * / APPELLANT BY : SHRI. M.V. GANGADHARAN, C.A. +,'( ) * /RESPONDENT BY : SHRI. MATHIVANNAN, C.A. # - ) . /DATE OF HEARING : 07-05-2019 /0&% ) . /DATE OF PRONOUNCEMENT : 30-05-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-7, CHENNAI (CIT(A) FOR SHORT) DATED 23.08.2018 FOR THE AS SESSMENT YEAR (AY) 2013 -2014. ITA NO.3169 /2018 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE C.L.T APPEALS IS AGAINST THE PRIN CIPLES OF CONSISTENCY AND HENCE TO BE DISMISSED. 2. THE IMPUGNED ORDER IS AGAINST THE PRINCIPLES OF EQU ITY AND NATURAL JUSTICE AND HENCE OUGHT TO BE DISMISSED. 3. THE ORDER OF THE C.L.T APPEALS IS AGAINST ESTABLISH ED CANONS OF LAW AND ESTABLISHED JUDICIAL PRONOUNCEMENTS. 4. THE C.I.T APPEALS ASSESSED THE APPELLANT FOR A.Y 2012-13 UNDER THE HEAD CAPITAL GAINS. THE SAME APPROACH SHOULD HA VE BEEN FOLLOWED BY THE A/O/C.I.TAPPEALS FOR A.Y 2013-14. THERE HAS BEE N DEVIATION IN A.Y 2013-14. HENCE, THE C.I.T APPEAL ORDERS TO BE SET ASIDE. 5. THE C.I.T APPEALS (7) ALLOWED THE APPEAL OF THE AP PELLANT DELETING HIS LIABILITY TO TAX BECAUSE HE IS A POA HOLDER. THE SAME SITUATION PREVAILS FOR THE A.Y 2013-14 ALSO. HENCE, THE ORDER OF THE C.I.T APPEALS (7) UPHOLDING THE A.O ORDER, TAXING THE APPEL LANT IS TO BE ANNULLED ON THE BASIS OF CONSISTENCY. 6. THE C.I.T APPEALS (7) AND THE A.O HAVE ASSESSED A SUM OF RS 16,59,818/- AS NET PROFIT NOT OFFERED. THIS IS TOTALLY D ISPUTED AS THE PROFORMA LAND ACCOUNT FOR A.Y 2013-14 SUBMITTED SH OWED A NET LOSS OF RS 8,40,182/- AND NOT PROFIT. FURTHER THE T RANSACTIONS ON THE POA LAND BUSINESS AS PER THE AUDITED BALANCE SHEET SHOWS A CREDIT BALANCE OF RS 6,83,150/- WHICH IS OWED BY THE A PPELLANT TO THE LAND OWNERS. 7. ON THE GROUND THAT THE ENTIRE POA TRANSACTIONS AR E OUTSIDE THE TAX AMBIT, THE ENTIRE DISALLOWANCES ARE TO BE DELETE D NAMELY 1. DISCOUNTS RS 77,58,200/- 2. COMMISSION RS 5, 00,000/- 3. DEVELOPMENT COST RS19,72,951/- THEREFORE, THE ENTIRE TRANSACTIONS AND DISALLOWANCE S ARE TO BE VOIDED TOTALLY. ITA NO.3169 /2018 :- 3 -: 8. THEREFORE IT IS PRAYED THAT THE CIT APPEALS (7) OR DER UPHOLDING THE ASSESSMENT BE SET ASIDE AND JUSTICE AND EQUITY RENDERED. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL ENGAGED IN THE BUSIN ESS OF EXECUTING CIVIL AND STRUCTURAL STEEL CONTRACTS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 WAS FILED DISCLOSING T OTAL INCOME OF RS.55,46,350/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE ASSISTANT COMMISSIONER OF INCOME T AX, NON CORPORATE CIRCLE 7(1), CHENNAI (HEREIN AFTER REFER RED AS AO') VIDE ORDER DATED 31.03.2016 PASSED U/S. 143(3) OF THE IN COME TAX ACT, 1961 (FOR SHORT THE ACT) AT TOTAL INCOME OF RS.1, 78,43,133/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER FOUND THAT ASSESSEE HAD SOLD A PROPERTY FOR A CONSIDERATI ON OF E4,42,47,900/- AGAINST WHICH HE CLAIMED E77,58,200/- AS DISCOUNT, E85,00,000/- AS DEVELOPMENT COST AND E5,00,000/- AS COMMISSION EXPE NDITURE. OUT OF THESE, THE ASSESSING OFFICER DISALLOWED DISCOUNT CL AIM OF E77,58,200/- FOR WANT OF DETAILS, DISALLOWED COMMISSION PAYMENT OF E5,00,000/- FOR NON DEDUCTION OF TDS AND IN RESPECT OF DEVELOP MENT CHARGES AT E85,00,000/-, A SUM OF E19,72,951/- WAS FOUND TO BE NON VERIFIABLE, ACCORDINGLY, BROUGHT TO TAX. THE ASSESSING OFFICE R ALSO BROUGHT TO TAX DIFFERENCE BETWEEN SALE CONSIDERATION AND PURCHASE COST OF ITA NO.3169 /2018 :- 4 -: E16,59,818/-, ACCORDINGLY MADE AN ADDITION OF E1,1 8,90,969/-. IN RESPECT OF SALE OF PROPERTY. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF E4,05,814/- U/S.14A OF THE ACT. 4. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEAL W AS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDE R CONFIRMED THE ADDITIONS IN RESPECT OF SALE OF PROPERTY, DISCOUNT, DEVELOPMENT EXPENDITURE, COMMISSION PAID AND DELETED THE ADDI TION MADE U/S.14A OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE LD. COMMISSIONER OF I NCOME TAX (APPEALS), ASSESSEE IS IN APPEAL BEFORE US. IT IS CONTENDED THAT THE PROFIT CANNOT BE BROUGHT TO TAX SINCE THE PROPE RTY WAS SOLD IN THE CAPACITY OF HOLDING POWER OF ATTORNEY. IN RESPECT OF THE CLAIM FOR DEDUCTION OF DISCOUNT, DEVELOPMENT EXPENDITURE A ND COMMISSION PAID, COPIES OF LEDGER ABSTRACT WERE FILED. 6. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE CONTENTION THAT PROFIT ARISING ON ACCOU NT OF SALE OF PROPERTY CANNOT BE BROUGHT TO TAX AS THE LAND WAS S OLD IN THE CAPACITY OF HOLDING POWER OF ATTORNEY CANNOT BE ACCEPTED, SI NCE THE PROFITS ITA NO.3169 /2018 :- 5 -: WERE ASSESSED UNDER THE HEAD PROFIT AND GAIN OF B USINESS. AS REGARDS TO THE ALLOWANCES OF DISCOUNT, COMMISSION AND DEVELOPMENT EXPENDITURE, NO EVIDENCE WERE FILED BEFORE US ESTAB LISHING THE GENUINENESS OF THE EXPENDITURE. MERE ENTRIES IN TH E BOOKS OF ACCOUNTS DOES NOT ESTABLISH THE GENUINENESS OF THE EXPENDITU RE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE GROUNDS OF APPEAL ARE DISMISSED AGAINST THE APPELLANT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 30TH DAY OF MAY, 2019, AT CHE NNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' # /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED:30TH MAY, 2019. KV 3 ) +.4 5' !6 5&. / COPY TO: 1 . !' '( / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; +.#< / DR 2. +,'( / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF