Sri K.N.A.Vijayan, CHENNAI V. ITO, Kumbakonam

ITA 540/CHNY/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8354 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2011
• Court: TRIBUNAL
• Department Lawyers: R DURAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , . ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.540/MDS./2011 / ASSESSMENT YEAR :2006-07 MR.K N A VIJAYAN, 236/1,MADRAS MAIN ROAD, K P R NAGAR, KUMBAKONAM. VS. THE INCOME TAX OFFICER, WARD 1(1), KUMBAKONAM. [PAN AAAFHK 4347 D ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : MR.S.SRIDHAR, /RESPONDENT BY : MR.R.DURAI PANDIAN, JCIT,D.R / DATE OF HEARING : 27 - 0 9 - 201 6 !' / DATE OF PRONOUNCEMENT : 05 - 10 - 2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), TIRUCHIR APALLI DATED 08.02.2011 PERTAINING TO ASSESSMENT YEAR 2006-07. ITA NO. 540/MDS./2011 :- 2 -: 2. THE ONLY GROUND IN THIS APPEAL IS WITH REGARD T O SUSTAINING THE ADDITION OF ` 13,55,500/- RELATING TO THE PROPERTY TRANSACTION TREATING IT AS BUSINESS INCOME OF ASSESSEE. 3. THE FACTS OF THE ISSUE ARE THAT THE LD. ASSES SING OFFICER FOUND THAT AS PER AN UNREGISTERED AGREEMENT DATED 27/12/ 2003 ENTERED INTO THE ASSESSEE AND SHRI GOWTHAM CHAND, FATHER OF SHRI G.PRAVEEN KUMAR, THE LATER AGREED TO SELL 9720 SQ. FT. OF LAN D WHICH WAS SOLD BY THE ASSESSEE HIMSELF IN DECEMBER, 2002 FOR A CONSID ERATION OF ` 22 LAKHS. A SUM OF ` 50,000/- WAS ALSO GIVEN BY THE ASSESSEE AS ADVANCE TO GOWTHAM CHAND. HENCE THE ASSESSEE HAS BE COME THE OWNER OF THE LAND AND THE COST TO HIM IS ONLY ` 22 LAKHS. WHEREAS THE ASSESSEE HAS SOLD IT FOR (RS.370 X 9750 SQ.FT) ` 36,07,500/-. THE DIFFERENCE BETWEEN THE SALE PRICE AND THE CAST PRIC E AMOUNTING TO ` 14,07,500/- IS TREATED AS HIS BUSINESS INCOME. HOWE VER, POWER AGENT FEE OF ` 52, 000/- IS ALLOWED AS EXPENDITURE BY THE LD. ASSE SSING OFFICER AND COMPUTED THE INCOME AS FOLLOWS: INCOME FROM SALE OF LAND BELONGING TO G.PRAVEEN KUR NAR, 9750 SQ.FT. SALE PRICE OF LAND 9750 SQ.FT. AT 370 PER SQ.FT 36,07,500/- LESS : AMOUNT PAYABLE TO GPRAVEENKUMAR AS PER AGREEMENT DATED 27/12/2003 22 ,00,000/- LESS: POWER AGENT FEE (200000/37500X9750) RS.52,000 22,52,000/- INCOME FROM BROKERAGE TREATED AS BUSINESS INCOME 13,55,500/- ITA NO. 540/MDS./2011 :- 3 -: AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFIC ER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 3.1 ON APPEAL, THE ASSESSEE PUT FORTH FOLLOWING P OINTS FOR LD.CIT(A) CONSIDERATION. I ) THE APPELLANT CONTENDED THAT THE FINDINGS OF THE ASSESSING OFFICER IN THIS REGARD ARE WRONG, INCORRECT, UNJUST IFIED, ERRONEOUS AND NOT SUSTAINABLE AND THE ASSESSING OFF ICER HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE TO SUBS TANTIATE THE SALE AS PER THE HAND LETTER NARRATED IS COMPLET ED BY THE PARTIES BY WAY OF ANY SALE AGREEMENT SIGNED AND REG ISTERED BY MR.G.PRAVEEN KUMAR. II) NO SALE DEED WAS EXECUTED AND THE STIPULATED DA TE IN THE AND LETTER 05.01.2004 ALSO EXPIRED. (III) THE CHEQUE GIVEN TO GOWTHAM CHAND ALSO WAS NO T PRESENTED FOR PAYMENT; HENCE THE HAND LETTER BECOMES STALE AN D NOT ENFORCEABLE AND BECOMES INOPERATIVE; (IV) MOREOVER, FOR A TRANSACTION OF ( ` 22 LAKHS AS PER HAND LETTER (WHICH ALSO BECAME STALE FOR THE ABOVE REASONS) REL IED BY THE ASSESSING OFFICER, AN ADDITION TO THE EXTENT OF ( ` 13,55,500/- AS INCOME FROM BROKERAGE AND TREATED AS BUSINESS IN COME IS ARBITRARY AND IMAGINARY IN NATURE AND HENCE TO BE D ELETED; (V) IN THIS CONTEXT, IT IS PERTINENT TO NOTE THAT T HE ASSESSING OFFICER HAS ADMITTED IN THE ORDER OF ASSESSMENT UNDER PARA 4 THAT THE LANDS TO EXTENT OF 9750 SQ.FT. SOLD BY THE APPELLAN T IN DECEMBER 2002 TO G.PRAVEEN KUMAR AND ALSO HAS BEEN ASSESSED FOR THE LONG TERM CAPITA] GAINS INVOLVED B Y RE- OPENING THE ASSESSMENT OF THE APPELLANT FOR ASSESSM ENT YEAR - 2003-04 AND COMPLETED THE ASSESSMENT; ITA NO. 540/MDS./2011 :- 4 -: (VI) THUS THE CALCULATION AND ADDITION OF (13,55,50 0/- MADE TO THE APPELLANT S INCOME HAS NO EVIDENTIARY VALUE. 3.2 THE LD. CIT(A) OBSERVED THAT ASSESSEE HAS BEC OME OWNER OF THE LAND AND THE COST TO HIM WAS ` 25 LAKHS WHERE AS HE HAS SOLD IT OUT FOR ` 36,07,500/- THE AO HAS RIGHTLY ASSESSED THIS AMOUNT OF ` 14,07,500/- IN THIS CASE AS BUSINESS INCOME AFTER A LLOWING ` 52,000/- AS EXPENDITURE. HENCE, THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE LD. ASSESSING OFFICER. AGGRIEVED WITH THE ORDE R OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R SUBMITTED THAT FOR ASSESSMENT YEAR 2003-04, THE AO VIDE ASSESSMENT ORDER DATED 08.10.2009 GIVE N A FINDING THAT A SURVEY U/S.133A OF THE ACT WAS CONDUCTED IN THE BUS INESS PREMISES OF THE ASSESSEE ON 25.08.2005. IT WAS FOUND DURING SUR VEY THAT THE ASSESSEE HAS, AS POWER AGENT, SOLD VACANT LAND AT N EW BUS STAND, KUMBAKONAM ON 10.05.2005 MEASURING 15404 SQ.FT. HEL D IN THE NAME SMT.V.VATSALA, WIFE OF THE ASSESSEE. THOUGH THE LAN D SOLD WAS HELD IN THE NAME OF THE ASSESSEES WIFE LTCG WAS ASSESSED I N THE HANDS OF THE HUF, SINCE THE ASSESSEE HAS ADMITTED DURING THE COURSE OF SURVEY, THAT ALL IMMOVABLE PROPERTIES HELD IN HER NAME WAS PURCHASED ONLY OUT OF INCOME FROM THE ASSESSEE AND ANY CAPITAL GAIN AR ISING OF TRANSFER OF PROPERTY SHOULD BE ASSESSED IN THE HANDS OF THE HUF IN WHICH HER ITA NO. 540/MDS./2011 :- 5 -: HUSBAND MR.K.NA.VIJAYAN IS THE KARTHA. FURHTER, L D.A.R SUBMITTED THAT OUT OF 15404 SQ.FT. OF LAND SOLD, 9750 SQ.FT. BELON GS TO MR.G.PRAVEEN KUMAR TO WHOM THE ASSESSEE HAD SOLD IT ON 14.04.02 THROUGH AN UNREGISTERED SALE DEED FOR 4,75,000/- AND ANY CAPIT AL GAINS ARISING ON THIS PARTICULAR SALE HAS TO BE ASSESSED IN THE HAND S OF G.PRAVEENKUMAR ONLY. THEREFORE, LTCG ON THIS TRANSACTION WAS ASSES SED IN THE HANDS OF MR.G.PRAVEEN KUMAR IN THE ASSESSMENT YEAR 2006-07. FURTHER, HE SUBMITTED THAT THE VERY SAME TRANSACTION WAS SUBJEC T TO TAX IN THE ASSESSMENT YEAR 2003-04, IT CANNOT BE TAXED ONCE AG AIN FOR ASSESSMENT YEAR 2006-07. 5. ON THE OTHER HAND, LD.D.R SUBMITTED THAT THE IM PUGNED PROPERTY WAS SOLD TO MR.G.PRAVEEN KUMAR THROUGH POWER OF ATT ORNEY. AFTER THAT THE ASSESSEE ONCE AGAIN PURCHASED THE PROPERTY, AS SUCH IMPUGNED TRANSACTION IS A DIFFERENT TRANSACTION AND ORIGINAL LY CONSIDERED BY THE A.O IS DIFFERENT TRANSACTION. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT LOOKS THAT THE ASSESSEE ORIGINALLY SOLD THE PROPERTY THROUGH POWER OF ATTORNEY TO MR.G.PRAVEEN KUMAR. IT WAS SUB JECT TO TAX IN THE ASSESSMENT YEAR 2003-04. LATER ONCE AGAIN THERE WAS A TRANSACTION WHEREIN THE ASSESSEE IS SAID TO BE SOLD THE PROPERT Y FOR CONSIDERATION OF ` 36,07,500/-. THE DIFFERENCE WAS BROUGHT TO TAX BY THE AO AS INCOME FROM BUSINESS. HOWEVER, THE AO HAD NOT BROUG HT ON RECORD ALL ITA NO. 540/MDS./2011 :- 6 -: THE DOCUMENTS CONCERNED, WHICH RAISED TO BUSINESS I NCOME IN THE HANDS OF ASSESSEE AND WITHOUT GOING THROUGH ALL THE DOCUMENTS, WE ARE NOT IN A POSITION TO APPRECIATE THE FINDINGS OF THE LD.CIT(A). HENCE, THE AO SHALL BRING IN RECORDS ALL THE DOCUME NTS PERTAINED TO THE FIRST SALE OF THE PROPERTY AND THE DOCUMENT FOR ACQ UISITION OF THE SAME PROPERTY BY THE ASSESSEE AFTER-WORDS AND DOCUMENT P ERTAINED TO SUBSEQUENT SALE OF THE SAID PROPERTY, THEN DECIDE T HE ISSUE AFRESH IN ACCORDANCE WITH LAW. FURTHER, WE MAKE IT CLEAR THA T A SINGLE TRANSACTION CANNOT BE SUBJECT TO MULTIPLE TAXATIONS . WITH THIS OBSERVATION, WE REMIT THE ENTIRE ISSUE IN DISPUTE T O THE FILE OF AO FOR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 05 TH OCTOBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 05 TH OCTOBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF