S.A.Gurumurthy, CHENNAI V. ITO, CHENNAI

ITA 408/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8656 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: K BALASUBR AMANIAN
• Section: 131

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL B / SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER !./ ITA NO.408/MDS/2016 # $%# / ASSESSMENT YEAR : 2009-10 SHRI S.A. GURUMURTHY, 23/4, APPARSWAMI KOIL STREET, TIRUVOTTIYUR, CHENNAI - 600 019. PAN : AAEPG 5068 Q V. THE INCOME TAX OFFICER, NON CORPORATE CIRCLE 16(3), CHENNAI - 600 034. ('(/ APPELLANT) ()*'(/ RESPONDENT) '( + , / APPELLANT BY : SH. K. BALASUBRAMANIAN, ADVOCATE )*'( + , / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT - $ + ./ / DATE OF HEARING : 13.06.2016 01% + ./ / DATE OF PRONOUNCEMENT : 18.08.2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5, CHENN AI, DATED 16.12.2015 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SHRI K. BALASUBRAMANIAN, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS INCURRED AN EXPENDI TURE OF ` 19,65,700/- TOWARDS DEMOLITION OF UNAUTHORIZED CONS TRUCTION AND DISMANTLING AND REMOVING DILAPIDATED HUTMENTS, BUIL DING, ETC. THE 2 I.T.A. NO.408/MDS/16 ASSESSEE HAS ALSO INCURRED EXPENDITURE IN LEVELLING THE GROUND WITH SAND WHICH WAS BELOW 10 FT. FROM THE GROUND LEVEL. ACCORDING TO THE LD. COUNSEL, PAYMENTS WERE MADE TO CONTRACTORS THRO UGH CHEQUES. THE RECIPIENTS OF THE AMOUNT, NAMELY, THE CONTRACTO RS WERE SUMMONED UNDER SECTION 131 OF THE INCOME-TAX ACT, 1 961 (IN SHORT 'THE ACT') AND THEY CONFIRMED THE FACT OF CARRYING OUT THE DEVELOPMENT WORK BY WAY OF FILLING AND LEVELLING TH E GROUND WITH SAND. THE CIT(APPEALS) DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE EXISTENCE OF COMPOUND WALL WAS NOT MENTIONED IN THE SALE DEED. ACCORDING TO THE LD. COUNSEL, TH E ASSESSEE HAS ALSO PAID TO THE UNAUTHORIZED OCCUPANTS WHO ENCROAC HED UPON THE PROPERTY AND STAYING THERE FOR SEVERAL YEARS SO THA T THE ASSESSEE CAN GET VACANT POSSESSION OF PROPERTY. REFERRING T O THE COPY OF SALE DEED, WHICH IS AVAILABLE AT PAGE 59 OF THE PAPER-BO OK, THE LD.COUNSEL SUBMITTED THAT AFTER RECEIVING ` 5,00,000/-, THE UNAUTHORIZED OCCUPANTS VACATED THE PREMISES AND EAC H UNAUTHORIZED OCCUPANT CONFIRMED THE RECEIPT OF MONE Y FROM THE ASSESSEE. IN VIEW THIS, ACCORDING TO THE LD. COUNS EL, THE CIT(APPEALS) OUGHT TO HAVE DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER. 3 I.T.A. NO.408/MDS/16 3. ON THE CONTRARY, SH. P. RADHAKRISHNAN, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS ENT ERED INTO A PROPERTY TRANSACTION JOINTLY WITH SHRI R. JAYAPAL A ND SHRI T. JANAKIRAMAN ON 14.07.2008 AND ON 01.09.2008. THE A SSESSEE CLAIMED THAT HE PAID A SUM OF ` 19,72,280/- TOWARDS COMMISSION EXPENSES TO FOUR PERSONS. ON EXAMINATION, THE ASSE SSING OFFICER FOUND THAT THE ASSESSEE APPEARS TO HAVE GIVEN CONTR ACT TO FOUR PERSONS FOR LEVELLING THE GROUND AND CONSTRUCTION O F COMPOUND WALL OF 6 FT. ACCORDING TO THE LD. D.R. WHEN THE FIRST TWO CONTRACTS ITSELF COVERED THE ENTIRE AREA, THE ASSESSEE IS CLAIMING D UPLICATE AMOUNT ON THE GROUND THAT THE VERY SAME WORK WAS ALLOTTED TO OTHER TWO CONTRACTORS. THE SO-CALLED AGREEMENT WAS ONLY AN E STIMATION AND THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THE DEVELOPMENT COST. REFERRING TO THE AMOUNT PAID TO UNAUTHORIZED OCCUPANTS, THE ASSESSEE HAS NOT SUBSTANTIATED THE P AYMENT MADE TO UNAUTHORIZED OCCUPANTS FOR VACATING THE PREMISES . THE ASSESSING OFFICER EXAMINED THE BANK ACCOUNT AND FOU ND THAT A SUM OF ` 12,00,000/- WAS WITHDRAWN ON VARIOUS DATES. THOUGH THE CLAIM OF PAYMENT WAS TO THE EXTENT OF ` 30,00,000/-, THE ASSESSEE HAS SHOWN THE WITHDRAWAL ONLY TO THE EXTENT OF ` 12,00,000/-. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSEES SHARE OF EXPENDITURE WAS 4 I.T.A. NO.408/MDS/16 ` 4,00,000/- BEING 1/3 RD SHARE IN THE PROPERTY. ACCORDINGLY, OUT OF TOTAL CLAIM OF ` 10,00,000/-, THE ASSESSING OFFICER ALLOWED ` 4,00,000/- AND THE BALANCE ` 6,00,000/- WAS DISALLOWED. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A CO-OWNER OF A PROPERTY HOLDING 1/3 RD SHARE. THE ASSESSEE ALONG WITH ONE SHRI R. JAYAPAL AND SHRI T. JANAKIRAMAN EN TERED INTO AN AGREEMENT OF SALE ON 14.07.2008 AND 01.09.2008 RESP ECTIVELY. FOR COMPUTATION OF CAPITAL GAIN, THE ASSESSEE CLAIMS PA YMENT OF ` 19,72,280/- TOWARDS HIS SHARE, NAMELY 1/3 RD SHARE, FOR LEVELLING THE GROUND AND FOR CONSTRUCTION OF 6 FT. HEIGHT COMPOUN D WALL. THE ASSESSING OFFICER FOUND THAT THE CONTRACT WAS GIVEN TO SHRI T. KUMAR AND SHRI T. SANTHAKUMAR. THE VERY SAME WORK WAS ALSO SAID TO BE ENTRUSTED TO ONE SHRI D. JAGANATHAN AND SHRI S. DURARIRAJ. THEREFORE, THE ASSESSING OFFICER FOUND THAT IT IS A DUPLICATE OF AMOUNT CLAIMED. IN THE ABSENCE OF ANY EVIDENCE TO SHOW EXISTENCE OF COMPOUND WALL IN THE SALE DEED AN D FOR LEVELLING THE GROUND, HE DISALLOWED THE ENTIRE CLAIM OF THE A SSESSEE. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE AS SESSEE HAS CONSTRUCTED THE COMPOUND WALL BEFORE THE SALE OF PR OPERTY WHICH IS SAID TO BE 6 FT. HEIGHT FROM THE GROUND LEVEL. THI S TRIBUNAL IS OF THE 5 I.T.A. NO.408/MDS/16 CONSIDERED OPINION THAT THIS FACT NEEDS TO BE EXAMI NED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND ALSO BY SUM MONING THE SO- CALLED CONTRACTORS. THE REVENUE CLAIMS THAT THE WO RK WAS ALLOTTED TO TWO CONTRACTORS AND THE VERY SAME WORK WAS ALLOT TED TO ANOTHER TWO CONTRACTORS. THEREFORE, IT HAS TO BE ESTABLISHE D WHICH CONTRACTORS ACTUALLY PERFORMED THE WORK. HENCE, TH E ASSESSING OFFICER HAS TO EXAMINE ALL THE FOUR SO-CALLED CONTR ACTORS AND FIND OUT WHAT IS THE NATURE OF WORK ACTUALLY PERFORMED BY TH EM. IN THE ABSENCE OF ANY MATERIAL AVAILABLE ON RECORD, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED BY THE ASSESSING OFFICER. THE ORDERS OF THE AUTHORITIES B ELOW ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE OF ` 19,72,280/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL RE- EXAMINE THE ISSUE AS INDICATED ABOVE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABL E OPPORTUNITY TO THE ASSESSEE. 5. NOW COMING TO THE PAYMENT SAID TO BE MADE TO UNA UTHORIZED OCCUPANTS, THE ASSESSEE APPEARS TO HAVE CLAIMED A S UM OF ` 30,00,000/- PAID TO UNAUTHORIZED OCCUPANTS AND THE ASSESSEE BEING THE 1/3 RD SHAREHOLDER, IS CLAIMING ` 10,00,000/- AS EXPENDITURE. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS W ITHDRAWN ONLY 6 I.T.A. NO.408/MDS/16 ` 12,00,000/- FROM THE BANK ACCOUNT. IN THE ABSENCE OF ANY OTHER SOURCE OF INCOME FOR MAKING THE PAYMENT OF ` 10,00,000/-, THE ASSESSING OFFICER RESTRICTED THE SAME TO THE EXTENT TO HIS SHARE, NAMELY, ` 4,00,000/- AND THE BALANCE OF ` 6,00,000/- WAS DISALLOWED. IT IS NOT KNOWN FROM THE ORDER OF THE ASSESSING OFF ICER WHETHER THE BANK ACCOUNT FROM WHICH MONEY WAS WITHDRAWN BELONGI NG TO THE ASSESSEE INDIVIDUAL OR IT WAS JOINT ACCOUNT ALONG W ITH OTHER TWO CO- OWNERS. IF IT WAS JOINT ACCOUNT, THEN WHAT THE ASS ESSING OFFICER SAYS MAY BE CORRECT SINCE THE ASSESSEES SHARE IS O NLY 1/3 RD IN THE PROPERTY. IN THE ABSENCE OF ANY DETAILS WITH REGAR D TO BANK ACCOUNT SAID TO BE EXAMINED BY THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED BY THE ASSESSING OFFICER. THE ORDERS OF THE AUTHORITIES B ELOW ARE SET ASIDE AND THE ISSUE OF PAYMENT MADE BY THE ASSESSEE TO TH E UNAUTHORIZED OCCUPANTS IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE TH E MATTER AND BRING ON RECORD THE NAMES OF THE PERSONS ON WHOSE N AMES THE BANK ACCOUNT STANDS AND WHETHER THE ASSESSEE HAS MA DE PAYMENT FROM ANY OTHER SOURCE AND THEREAFTER, HE SHALL DECI DE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. 7 I.T.A. NO.408/MDS/16 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH AUGUST, 2016 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 3! /DATED, THE 18 TH AUGUST, 2016. KRI. + ).45 65%. /COPY TO: 1. '( /APPELLANT 2. )*'( /RESPONDENT 3. - 7. () /CIT(A)-5, CHENNAI 4. PRINCIPAL CIT-9, CHENNAI 5. 5$8 ). /DR 6. 9# : /GF.