SHRI K. SHANMUGAM, PUDUKKOTTAI V. ITO, WARD-1, , PUDUKKOTTAI

ITA 462/CHNY/2020

AI Insights

The case involves K. Shanmugam, the appellant, who contested the assessment of his income for the year 2013-14, which included a significant long-term capital gain and business income. The initial assessment was revised under section 263 of the Income Tax Act by the Principal Commissioner of Income Tax, directing a reassessment considering the guideline value for capital gains and examining the sources of bank deposits. The reassessment led to a higher assessed income, which the appellant challenged. The CIT(A) upheld the reassessment, leading to the current appeal before the Tribunal, which also dismissed the appeal, agreeing with the lower authorities' assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135124 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-08-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 23-02-2020
• Other Referred Cases: Sakthi & Co. vs. Desigachary 2006 (2) CTC 433 (Madras High Court)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S. ASHOK SUNDARESAN
• Keywords: Business income; Revision of order; Reasonable cause; Fair market value; Condonation of delay; Set aside
• Section: 263; 28; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.462/Chny/2020 िनधाŊरण वषŊ/Assessment Year: 2013-14 K. Shanmugam, 76-77, Sathya Sai Illam, Charles Nagar, Pudukkottai 622 001. [PAN:AAMPS8456Q] Vs. The Income Tax Officer, Ward 1, Pudukkottai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri S. Ashok Sundaresan, C.A. ŮȑथŎ की ओर से/Respondent by : Shri P. Sajit Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 10.08.2023 घोषणा की तारीख /Date of Pronouncement : 30.08.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Trichy, dated 10.12.2019 relevant to the assessment year 2013-14. 2. The appeal of the assessee is filed with a delay of 14 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay in the form of an affidavit mentioning the reasons for delay in filing the appeal. By referring to the above affidavit, the ld. Counsel for the assessee has submitted that there is reasonable cause I.T.A. No. 462/Chny/20 2 for the delay and the delay in filing the appeal is neither wilful nor wanton and prayed for condonation of delay and to admit the appeal for adjudication. Against the above submissions, the ld. DR has not raised any serious objection. Considering the affidavit filed for condonation of delay, we hereby condone the delay in filing the appeal and admit the appeal for adjudication. 3. Brief facts of the case are that the assessee has filed return of income for the assessment year 2013-14 admitting net income of ₹.72,73,120/- which includes a long term capital gain of ₹.63,82,125/-. The return filed by the assessee was selected for scrutiny under CASS to examine large cash deposits and low capital gain with respect to sales consideration. The Assessing Officer has completed the assessment under section 143(3) of the Income Tax Act, 1961[“Act” in short] dated 04.12.2015 determining the total income at ₹.80,23,603/- accepting the capital gain of ₹.63,82,125/- returned by the assessee as such. 4. Under section 263 of the Act, vide order dated 27.03.2018, the ld. PCIT set aside the assessment order under section 143(3) of the Act dated 04.12.2015 and directed the Assessing Officer to frame the assessment afresh after taking into account the guideline value/fair market value for the purpose of computation of long term capital gain and I.T.A. No. 462/Chny/20 3 examine the sources of deposits in the bank account. Accordingly, after following due procedures and considering the submissions of the assessee, the Assessing Officer completed the assessment under section 143(3) r.w.s. 263 of the Act dated 27.12.2018 assessing total income of the assessee at ₹.8,09,02,005/- by determining net business income under section 28 of the Act at ₹.7,97,79,654/-, long term capital gain at ₹.4,85,540/- and income under the head ‘other source at ₹.6,46,841/-. 5. The assessee carried the matter in appeal before the ld. CIT(A) and challenged determination of fair market value of the property towards earning of business income. After considering the submissions of the assessee, the ld. CIT(A) sustained the additions made on account of business income and dismissed the appeal of the assessee. 6. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the Assessing Officer has ascertained the fair market value by considering guideline value of the State Government is erroneous and ought to have been considered gold value as on 01.04.1981. 7. On the other hand, the ld. DR strongly supported the order passed by the ld. CIT(A) and also submitted that the ground raised by the I.T.A. No. 462/Chny/20 4 assessee to adopt fair market value by taking the value of the gold was not supported by any facts or any case law. 8. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The only issue involved in this appeal relates to ascertain fair market value of the property. The Assessing Officer has ascertained the fair market value by considering guideline value of the State Government, whereas, the contention of the assessee was that the Assessing Officer ought to have been considered gold value to ascertain fair market value of the property. On appeal before the ld. CIT(A), the assessee has also contended to value the land at gold rates. The observations of the ld. CIT(A) are reproduced as under: Decision: 10. Remand report which submitted copy of order u/s 263 as well as copies of returns of income of assessee has furnished to this office by letter dated 27.05.2019. It was noticed that assessee had not furnished even the Power of Attorney and hence this fact was intimated by letter dated 26.06.2019 and the remand report submitted to assessee for his comments by this office letter dated 06.08.2019 with the reminder dated 08.08.2019 following which the assessee has furnished Power of Attorney in favour of Shri S. Ashok Sundaresan, C.A. by his letter dated 07.12.2019. 11. Case was fixed for hearing on 11.09.2019 and assessee sought adjournment and case was fixed for hearing on 18.09.2019 and there was no attendance, no request for adjournment on this date also. Case was again fixed for hearing on 18.11.2019 when assessee again sought adjournment on account of Eye Surgery of CA. by his letter dated 14.11.2019. Following this final notice sent to assessee dated 04.12.2019 as per which case was fixed for hearing on 09.12.2019 when Shri S. Ashok Sundaresan, CA and Shri K. I.T.A. No. 462/Chny/20 5 Shanmugam, assessee are appeared and matter was discussed with them in detail. 12. It was pointed out the despite making argument that the land should be valued as per Wealth Tax Rates given for gold AR has not furnished one single case law Supporting this method of valuation. AR was pointed out that this "novel argument of valuing land at gold rates was not supported any single instance of reported case law. Assessee has despite availing so much time had failed to furnish any comparative land sale to justify his argument that Guide Line Value was inadequate measure to compute fair market value. AR was at complete loss and could not furnish any details or case law even before this office other than certain that reference may be made to the case of Sakthi & Co. vs. Desigachary 2006 (2) CTC 433 (Madras High Court). That land value could be found out by gold values seems to be a "fetish" of the A/R, unsupported by any facts or any case law. 13. It has already been pointed out in the assessment order that the case of Sakthi & Co. vs. Desigachary 2006 (2) CTC 433 (Madras High Court) was under Tamilnadu Lease and Control Act and not under Income Tax Act. Any comments made in this judgment pertain only to computation of fixation of fair rental value under the Land Control Act. In case any comments of Hon'ble Madras High Court pertain only this limited perspective. Merely repetition that the comments in case leading to Rent Control Act should impact issue of determination of fair market value of land under Income Tax Act does not confirm any legitimacy or validity to argument of the assessee. Both the acts operate in different spheres and in wholly separate areas, and comments of the court cannot be plucked "out of context" to fit in with the Income Tax proceedings. Decision: 14. On the basis of above mentioned case the facts and circumstance of the appeal of assessee for AY 2013-14 is found to be totally devoid on merit. Appeal of assessee is hence DISMISSED and additions made on account of business income are sustained. 9. Before the Tribunal, the assessee has relied on the decision in the case of Sakthi & Co. vs. Desigachary 2006 (2) CTC 433 (Madras High Court) as was relied on by the assessee before the ld. CIT(A). We also find that the above judgement of the Hon’ble Madras High Court has been rendered under Tamilnadu Lease and Control Act and not under Income I.T.A. No. 462/Chny/20 6 Tax Act. No relevant case law was filed by the assessee to value the land at gold rates. Moreover, the assessee has not filed any appeal against the revision order passed by the ld. PCIT under section 263 of the Act. Thus, we find no reason to interfere with the order passed by the ld. CIT(A). Accordingly, the ground raised by the assessee is dismissed. 10. In the result, the appeal filed by the assessee is dismissed. Order pronounced on 30 th August, 2023 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 30.08.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.