ITO, CHENNAI V. G.Lakshmanan, CHENNAI

ITA 592/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57852 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: R VISWANATHAN
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 592/MDS/2011 ASSESSMENT YEAR: 2007-08 THE INCOME TAX OFFICER, BUSINESS WARD XIII(3), 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600034. VS. G. LAKSHMANAN, NO. 10, 44 TH STREET, KORATTUR, CHENNAI 600 080. [PAN: ABRPL4832B] (APPELLANT) (RESPONDENT) REVENUE BY : DR. I. VIJAYAKUMAR, CIT DR ASSESSEE BY : SHRI R. VISWANATHAN, C.A. DATE OF HEARING : 17 . 0 1.201 2 DATE OF PRONOUNCEMENT : 17.01.2012 ORDER PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) XII, CHENNAI DATED 27.01.2011 PASSED IN ITA NO. 237/2009-10 FOR THE ASSESSMENT YEAR 2007-08. DR. I. VIJAYAKUMAR, CI T-DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI R. VISWANATHAN, C.A. REPRESENTED ON BEHALF OF THE ASSESSEE. 2. THE REVENUE HAS TAKEN 8 GROUNDS OF APPEAL AND T HE ONLY GRIEVANCE OF THE REVENUE IN ALL THE GROUNDS OF APPEAL IS THAT TH E LD. CIT(A) ERRED IN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.592 592592 592/ // /M/ M/M/ M/11 1111 11 2 DELETING THE ADDITION OF ` .23.00 LAKHS MADE BY THE ASSESSING OFFICER FOR UNEXPLAINED INVESTMENT MADE IN THE IMMOVABLE PROPER TIES. 3. THE LD. DR, DURING THE COURSE OF HEARING ARGUED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCES FOR INVESTMENT IN THREE PROPERTIES AND THE ASSESSEE REPLIED THAT THE PROPERTY AT 14, BRAHMIN STREET, KORATTUR, CHENNAI WAS PURCHA SED BY TAKING A LOAN OF ` .18.00 LAKHS FROM HSBC BANK AND THAT THE MARKET VAL UE OF THE PROPERTY WAS ADOPTED AT ` .23.00 LAKHS IN 9/2006. FURTHER THE PROPERTY AT 18/ 20, BRAHMIN STREET, KORATTUR, CHENNAI WAS PURCHASED BY CASH PAYMENT OF ` .12.00 LAKHS AFTER PLEDGING IT WITH MANSI FINANCE, CHENNAI OF WHICH LOAN OF ` .10.00 LAKHS WAS RAISED AND BUILDING WAS CONSTRUCTE D AND THE PROPERTY AT 30, BRAHMIN STREET, KORATTUR, CHENNAI WAS PURCHASED FOR ` .8.00 LAKHS AND SOLD THE SAME FOR ` .8.50 LAKHS. THE ASSESSEE ALSO STATED BEFORE THE ASSESSING OFFICER THAT HE DID NOT HAVE ANY HOUSE IN HIS NAME AND THE LOAN WAS RAISED IN HIS WIFES NAME AND THAT THE INTEREST AND PRINCIPLE WAS REPAID BY HIS WIFE SMT. L. VITTABAI AND THE ASSESSEE ALSO ADMITTED THAT HE HAD PURCHASE THE PROPERTY FOR ` .8.00 LAKHS AND SOLD THE SAME FOR ` .8.50 LAKHS AND ADMITTED THAT CAPITAL GAIN OF ` .30,000/- AFTER DEDUCTING COMMISSION OF ` .20,000/- PAID WILL BE SHOWN IN THE RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE FURTHER SUBMITTED THE IN COME STATEMENT OF HIS WIFE ALONG WITH DECLARATION FROM SHRI A. THUKKARAM RAO STATING THAT ` .20.00 LAKHS WAS GIVEN BY HIM TO SMT. VITTABAI AND A DECLA RATION FROM L. VITTABAI HIS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.592 592592 592/ // /M/ M/M/ M/11 1111 11 3 WIFE REGARDING RECEIPT OF ` .20.00 LAKHS FROM HER FATHER. THE ASSESSING OFFICER FOUND THAT IN THE INCOME TAX STATEMENT OF A SSESSEES WIFE, SHE DID NOT DECLARED ANY INCOME FROM HOUSE PROPERTY NOR ANY DEDUCTION UNDER THE HEAD IS CLAIMED. THE ASSESSING OFFICER, THEREFORE C ONCLUDED THAT THIS WAS A PROOF THAT THE ASSESSEE WAS A REAL OWNER OF THE PRO PERTY PURCHASED BY HIM IN THE NAME OF HIS WIFE AND THAT THE DECLARATION FI LED WAS AN AFTERTHOUGHT OF THE ASSESSEE TO DEVIATE THE REAL NATURE OF THE SOUR CE OF THE RECEIPT FOR THE INVESTMENT HE HAS MADE DURING THE YEAR. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF ` .25 LAKHS ON ACCOUNT OF UNDISCLOSED INVESTMENT AS U NDER: INVESTMENT IN PROPERTY AT NO. 1. 14, BRAHMIN STREET, KORATTUR, CHENNAI ` . 5 LAKHS 2. SURVEY NO. 18/20, BRAHMIN STREET, KORATTUR `. 12 LAKHS 3. AT 30, BRAHMIN STREET, KORATTUR `. 8 LAKHS TOTAL UNDISCLOSED INVESTMENTS MADE `. 25 LAKHS 4. THE LD. DR FURTHER SUBMITTED THAT THE LD. CIT(A) DELETED THE ADDITION OF ` .5.00 LAKHS MADE ON ACCOUNT OF PROPERTY AT 14, BRAH MIN STREET, KORATTUR, CHENNAI HOLDING THAT FROM THE RECORDS AVAILABLE FRO M THE DEPARTMENT IT COULD BE SEEN THAT THE ASSESSEE HAD ADMITTED THIS PROPERT Y IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 AND HAD SHOWN THE S AME AS SELF-OCCUPIED AND THEREFORE DELETED THE ADDITION ON THE GROUND TH AT THE IMPUGNED YEAR WAS NOT RIGHT. HE SUBMITTED THAT THIS WAS NOT THE SUBMI SSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AND NO SUCH EVIDENCE W AS FILED BEFORE THE ASSESSING OFFICER. THEREFORE, THE LD. CIT(A) WAS NO T JUSTIFIED IN DELETING THIS ADDITION. THE LD. DR FURTHER ARGUED THAT THE LD. CI T(A) DELETED THE ADDITION OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.592 592592 592/ // /M/ M/M/ M/11 1111 11 4 ` .12 LAKHS FOR THE PROPERTY IN SURVEY NO. 16/21, BRA HMIN STREET, KORATTUR, CHENNAI ON THE GROUND THAT FROM THE REGISTERED DOCU MENT NO. 1861 /2007 DATED 27.04.2007, IT IS SEEN THAT THE PROPERTY WAS PURCHASED IN THE NAME OF ASSESSEES WIFE AND THEREFORE, DIRECTED THE ASSESSI NG OFFICER TO DELETE THE ADDITION. HE SUBMITTED THAT THIS DOCUMENT WAS NEVER FILED BEFORE THE ASSESSING OFFICER AND THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. LASTLY, HE SUBMITTED THAT THE ADDITIO N OF ` .8 LAKHS FOR THE PROPERTY AT 30, BRAHMIN STREET, KORATTUR, CHENNAI, THE LD. CIT(A) HAD DELETED THE ADDITION ON THE GROUND THAT THE PROPERTY WAS SU BSEQUENTLY SOLD ON 26.04.2007 FOR A CONSIDERATION OF ` .1,68,700/-, WHICH WAS REGISTERED BY THE BUYER FOR THAT VALUE, WHICH SHOWS THAT FOR A PROPER TY WORTH ` .8.00 LAKHS, AS HELD BY THE ASSESSING OFFICER IN THE IMPUGNED ORDER , THE ASSESSEE COULD GET ` .1.68 LAKHS ON SALE AS PER STAMP VALUING AUTHORITY. THE LD. CIT(A) HELD THAT AS PER THE EXPLANATION 2 TO SECTION 50C, THE EXPRES SION ASSESSABLE MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSE OF THE PAYMENT OF STAMP DUTY, DIRECTED THE ASSESSING OFFICER TO ADOPT THE VALUE OF ` .2.00 LAKHS AS ADOPTED BY THE STAMP VALUING AUTHORI TY AND DELETED THE BALANCE AMOUNT OF ADDITION. THE LD. DR SUBMITTED THAT SECTION 50C WAS APPLICABLE IN CASE OF SALE OF PROPE RTY AND NOT IN THE CASE OF PURCHASE OF PROPERTY. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.592 592592 592/ // /M/ M/M/ M/11 1111 11 5 5. THE LD. AR OF THE ASSESSEE FULLY JUSTIFIED THE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IT IS AN UNDISPUTED FACT THAT THE ASSESSEE DID NOT FILE THE REGISTERED SALE DEED FOR THE PROPERTY AT 14, BRAHMIN STREET, KORATTUR, CHENNAI DATED 01.08.2003 BEFORE THE ASSESSING OFFICER TO EVIDENCE THAT THIS PROPERTY WAS PURCHASE D BY THE ASSESSEE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2004-05. THIS DOCUMENT WAS FILED FOR THE FIRST TIME BEFORE THE LD. CIT(A), WHO WITHOUT PUTTING IT TO THE ASSESSING OFFICER AND RELYING ON THE SAME, DELETED THE ADDITION. FURTHER, REGARDING THE ADDITION IN RESPECT OF PROPERTY AT 16 /21 [WRONGLY MENTIONED BY THE ASSESSING OFFICER AS 18/20 AS MENTIONED BY TH E LD. CIT(A) AT PAGE 3], BRAHMIN STREET, KORATTUR, CHENNAI ALSO, THE ASSESSE E FILED REGISTERED DOCUMENT NO. 1861 OF 2007 DATED 27.04.2007 EVIDENCI NG THE PURCHASE OF PROPERTY IN THE NAME OF ASSESSEES WIFE. THIS DOCUM ENT WAS NOT FILED BEFORE THE ASSESSING OFFICER. THE LD. CIT(A), WITHOUT PUTT ING IT TO THE ASSESSING OFFICER, HAS DELETED THE ADDITION RELYING ON THE SA ME. THUS, IT IS SEEN THAT THE LD. CIT(A) HAS VIOLATED RULE 46A OF INCOME TAX RULES, 1962. HENCE, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR AND ARE OF THE VIEW THAT THESE TWO ISSUES SHOULD BE RESTORED BACK TO THE FILE OF THE A SSESSING OFFICER FOR READJUDICATION AFTER FULL VERIFICATION OF THE FACTS AND THEN DECIDE THE SAME AS PER LAW. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL THE DOCUMENTS IN SUPPORT OF THE ABOVE TWO PROPERTIES BEFORE THE ASSESSING OFFIC ER ON WHICH IT WISHES TO I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.592 592592 592/ // /M/ M/M/ M/11 1111 11 6 RELY UPON. THUS, WE RESTORE THE ISSUE OF ABOVE TWO ADDITIONS TO THE FILE OF THE ASSESSING OFFICER AND ALLOW THESE PARTS OF THE GROU NDS OF THE APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES. 7. REGARDING THE THIRD PROPERTY AT 30, BRAHMIN STR EET, KORATTUR, CHENNAI, IT IS OBSERVED THAT THE ASSESSEE HIMSELF ADMITTED B EFORE THE ASSESSING OFFICER THAT HE HAS PURCHASED THIS PROPERTY FOR ` .8.00 LAKHS AND SOLD THE SAME FOR ` .8.50 LAKHS AND THAT THE CAPITAL GAINS OF ` .30,000/- AFTER DEDUCTING ` .20,000/- PAID AS COMMISSION WOULD BE OFFERED TO TA X IN THE ASSESSMENT YEAR 2008-09. WE FIND THAT THE LD. CIT(A), BY APPLY ING THE EXPLANATION 2 TO SECTION 50C, HAS DELETED THE ADDITION FOR ` .6.00 LAKHS ON THE GROUND THAT THE PROPERTY WAS SUBSEQUENTLY SOLD BY THE ASSESSEE AT ` .1.68 LAKHS AS PER THE REGISTERED DOCUMENT BY THE STAMP DUTY AUTHORITIES. IN OUR CONSIDERED OPINION, THE PROVISIONS OF SECTION 50C ARE NOT APPL ICABLE IN THE CASE OF PURCHASING OF A PROPERTY AND THAT IT IS APPLICABLE IN THE CASE OF A SELLER OF THE PROPERTY. THEREFORE, THE LD. CIT(A) HAS ERRED IN AP PLYING THE SAID PROVISION IN THE INSTANT CASE. THE LD. AR OF THE ASSESSEE COULD NOT DISPUTE THIS SUBMISSION OF THE LD. DR DURING THE COURSE OF HEARI NG. WE FIND THAT IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE PROPERT Y IN QUESTION WAS PURCHASED FOR ` .8.00 LAKHS BY THE ASSESSEE BY MAKING PAYMENT OF TH E SAME IN CASH DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE A LSO EXPLAINED THE SOURCE OF THE SAME AS GIVEN BY HIS WIFE, WHO IN TUR N RECEIVED THE SAME FROM HER FATHER. THE ABOVE EXPLANATION OF THE ASSESSEE S HOWS THAT IT IS NOT IN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.592 592592 592/ // /M/ M/M/ M/11 1111 11 7 DISPUTE THAT THE ASSESSEE HAS PURCHASED THE AFORESA ID PROPERTY FOR ` .8.00 LAKHS BY MAKING THE PAYMENT OF THE SAME IN CASH. TH E EXPLANATION OF THE ASSESSEE, REGARDING THE SOURCE OF ` .8.00 LAKHS, WAS REJECTED BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY SATISFACTOR Y EVIDENCE THEREOF. WE FIND THAT BEFORE THE LD. CIT(A) OR BEFORE US ALSO, THE ASSESSEE COULD NOT BRING ON RECORD ANY EVIDENCE TO SHOW THAT THE WIFE OF THE ASSESSEE DECLARED THE RECEIPT OF THE MONEY FROM HER FATHER OR THE ADVANCI NG OF THE MONEY BY HER TO THE ASSESSEE IN HER RETURN OF INCOME. IN THE ABSENC E OF SATISFACTORY DOCUMENTARY EVIDENCE, IN OUR CONSIDERED VIEW, THE L OWER AUTHORITIES WERE JUSTIFIED IN NOT ACCEPTING THE SAID EXPLANATION OF THE ASSESSEE. WE, THEREFORE, MODIFY THE ORDER OF THE LD. CIT(A) IN RE SPECT OF QUANTUM IN THE ADDITION MADE IN RESPECT OF INVESTMENT IN THE PROPE RTY IN QUESTION AND RESTORE THE ORDER OF THE ASSESSING OFFICER ON THE I SSUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED IN THE MANNER INDICATED ABOVE. ORDER PRONOUNCED AT THE CLOSE OF THE HEARING IN TH E PRESENCE OF THE PARTIES ON 17.01.2012. SD/ - SD/ - (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 17.01.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.