ACIT, Erode V. SAM Developers, Erode

ITA 602/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68872 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Section: 143(3); 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI (BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ) .. I.T.A. NO.602/MDS/13 ASSESSMENT YEAR : 2009-10 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, ERODE. (APPELLANT) V. M/S.SAM DEVELOPERS, 101,PARK ROAD, FIRST FLOOR, ERODE 638 003. PAN: AAEAS 3407 J (RESPONDENT) APPELLANT BY : SHRI S.DAS GUPTA, JCIT D.R RESPONDENT BY : SHRI S.SRIDHAR, ADVOCATE DATE OF HEARING : 19.11.13 DATE OF PRONOUNCEMENT : 02.12.13 O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A) DATED 11. 01.2013 IN ITA NO.602/MDS/13 2 APPEAL NO.311/11-12 PASSED U/S 143(3) READ WITH SEC TIONS 147 & 250 OF THE ACT. 2. THE REVENUE HAS RAISED SIX GROUNDS IN ITS APPEA L, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIE VED BY THE ORDER OF LD. CIT(A) FOR HAVING DELETED THE ADDITION OF `. 83,LAKHS MADE BY THE LD.AO TOWARDS UNDISCLOSED PROFIT DERIVED FROM THE S ALE OF LAND WHICH WAS DECLARED IN THE SWORN STATEMENT BY MR. MOHAMMED ALI DURING THE COURSE OF SURVEY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN AOP, ENGAGED IN THE BUSINESS OF REAL ESTATE, FILED ITS R ETURN OF INCOME ON 29.12.2009 FOR THE ASSESSMENT YEAR 2009-10. PURSUA NT TO THE SURVEY CONDUCTED UNDER SECTION 133 OF THE ACT IN THE PREMI SES OF M/S.COMMANDER VEG OIL INDUSTRY ON 16.10.2008, WHICH WAS MANAGED BY MR.S.MOHAMMED ALI, IT CAME TO LIGHT THAT MR.S.MOHAMMED ALI ALONG WITH MR.ABDUL HAQUE AND SHR I SAMEEM BAI HAD PURCHASED 1.49 ACRES OF LAND AT CHINNAVED AMPATTI VILLAGE COIMBATORE ON 11.12.2006 FOR A SUM OF `. 1.20CRORES. MR.S.MOHAMMED ALI IN HIS SWORN STATEMENT DATED 29.0 6.2009 HAD ITA NO.602/MDS/13 3 STATED THAT THE AFORESAID LAND WAS SOLD TO SHRI T. SATHISH KRISHNAKUMAR FOR A SUM OF `. 2.12 CRORES AND ALL OF THEM HAD INDIVIDUALLY EARNED PROFIT OF `. 33 LAKHS EACH. HOWEVER, IT WAS NOTICED BY LD.AO, THAT THE ASSESSEE AOP CONSISTING OF MR.S. MOHAMMED ALI, MR.ABDUL HAQUE & MR.SAMEEM BAI, IN ITS RETURN OF INCOME FILED ON 29.12.2009, HAD DECLARED THE PROFIT OF ONLY `. 7,54,500/-. THEREFORE, NOTICE UNDER SECTION 148 WAS ISSUED AND THE ASSESSM ENT WAS COMPLETED UNDER SECTION 143(3) R.W.S 147 OF THE AC T ON 30.12.2011 WHEREIN THE LD.AO MADE AN ADDITION OF `. 83 LAKHS BY OBSERVING AS UNDER:- ON A PERUSAL OF THE DETAILS FILED, IT IS FOUND THAT THE ASSESSEE HAS PURCHASED LAND FOR RS.1,21,45,596/- THROUGH ON- MONEY AS STATED IN THE SWORN IN STATEMENT GIVEN DURING THE SURVEY UNDE R SECTION 133A DATED 16.10.2008, AT CHINNAVEDAMPATTI ON 11.12.2006 OF ABOUT 1.49 ACRES PURCHASED AND ALSO SALES OF THIS LAND ON 27.0 6.2008 TO M/S.JSSRK HOLDING (I) (P) LTD FOR RS.2.12 CRORES AS STATED IN THE SWORN IN STATEMENT UNDER SECTION 133A DATED 16.10.2008 AN D ADMITTING OF PROFIT OF RS.33,00,000/- EACH FOR THREE MEMBERS OF THE AOP ALSO THIS STATEMENT IS REITERATED ON SUBSEQUENT STATEMENT GIV EN ON 29.06.2009 RECORDED BY THE INVESTIGATION WING. BUT IN THE RET URN FILED ONLY RS.1,30,00,000/- AS SALE AMOUNT RECEIVED FROM THE C HINNAVEDAMPATTI LAND SALES FROM M/S.JSSRK HOLDINGS (P) LTD. IS SHOW N AND NOT AS RS.2.12 CRORES AS GIVEN IN SWORN STATEMENT AS SALE RECEIPT. SINCE THE LAND AT CHINNAVEDAMAPTTI IS LOCATED TO THE SUB-URBA N OF COIMBATORE ITA NO.602/MDS/13 4 AND THE LOCATION OF INFORMATION OF TECHNOLOGY COMPA NIES, VARIOUS MANUFACTURING CONCERNS, COLLEGES AND EDUCATIONAL I NSTITUTES HAS MADE HIS AREA A HAPPENING PLACE. ALSO IN THE SWORN INSTA TEMENT GIVEN BY MR.S.MOHAMMED ALI ON 16.10.2008 HAS MENTIONED THAT ON-MONEY TRANSACTION HAS TAKEN PLACE DURING PURCHASE OF THIS LAND. SO IT IS EVIDENT THAT THE MARKET VALUE IS SURE MORE THAN THE TRANSACTION VALUE. HENCE, THE DIFFERENCE OF RS.82,00,000/- BEING INCOM E DERIVED THROUGH THE SALE OF LAND AT CHINNAVEDAMPATTI AS DECLARED IN THE SWORN-IN- STATEMENT DATED 16.10.2008 & 29.06.2009 IS ADDED TO THE TOTAL INCOME RETURNED. FURTHER, IT IS SEEN THAT THE ASSESSEE HAS CLAIMED S ELLING EXPENSES FOR THE ABOVE MENTIONED LAND OF RS.1,00,000/- FOR WHICH PROPER VOUCHERS/BILLS ARE NOT MAINTAINED. HENCE, THE SAME IS DISALLOWED AND ADDED TO THE TOTAL INCOME RETURNED. THE ASSESSMENT IS COMPLETED ASUNDER: RS. INCOME RETURNED 7,54,400 ADD: 1) PROFIT DERIVED ON SALE FO LAND AS DECLARED IN THE SWORN-IN-STATEMENT 82,00,000 2) SELLING EXPENSES DISALLOWED 1,00,000 83,00,000 ASSESSED INCOME 90,54,400 4. THE ASSESSEE MADE EXTENSIVE SUBMISSIONS BEFORE THE LD. CIT(A), AND THE LD. CIT(A), AFTER CONSIDERING THE ARGUMENTS OF THE LD.A.R, DELETED THE ADDITION MADE BY THE AO. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREIN BELOW FOR REFEREN CE:- ITA NO.602/MDS/13 5 5.2. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY TH E APPELLANT AND THE ORDER OF THE AO. THE ASSESSING OFFICER WHILE F RAMING THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147, HAS MAD E AN ADDITION OF RS.83 LACS ON ACCOUNT OF DIFFERENCE IN SALE CONSIDE RATION OF RS.82 LACS. THE AR SUBMITTED THAT THE ENTIRE ADDITION WAS BASED ON THE STATEMENT GIVEN DURING THE COURSE OF SURVEY UNDER SECTION 133 A BUT NOT CORROBORATED BY ANY EVIDENCE. AS SEEN FROM THE FAC TS OF THE CASE AND ALSO ON EXAMINATION OF THE SWORN STATEMENT FROM THE APPELLANT, IT IS CLEAR THAT THE APPELLANT HAS ADMITTED THE RECEIPT O F RS.2,12,00,000/- FOR SALE OF THE PROPERTY AT RS.2,12,00,000/- AT CHINNAV EDAMPATTI VILLAGE COIMBATORE. THE SURVEY WAS DONE BY THE ADIT(INVN) UNIT-I, COIMBATORE ON 16.10.2008. IN THE STATEMENT GIVEN TO THE ADIT, THE APPELLANT HAS ADMITTED TO HAVE RECEIVED THE SUM OF RS.2,12,00,000/- FROM M/S.JSSRK HOLDINGS (P) LTD., COIMBATORE ALONG WITH TWO OTHERS SHRI ABDUL HAQ COIMBATORE AND SHRI SHAMEEM BAI OF G UDALUR. 5.3. SUBSEQUENTLY SUMMONS WAS ISSUED BY THE ADIT TO MR.S.MOHAMMED ALI UNDER SECTION 131(1) OF THE INCOM E TAX ACT AND STATEMENT WAS RECORDED ON 29.06.2009. IN REPLY TO QUESTION NO.4 OF THE STATEMENTS, THE APPELLANT HAS CONFIRMED HIS AD MISSION MADE ON 16.10.2008 STATING THAT AN AMOUNT OF RS.33 LACS WAS EARNED AS PROFIT BY EACH OF THE PERSONS WHO SOLD THE PROPERTY. IN REPL Y TO QUESTION NO.6, THE APPELLANT STATED THAT THE PROFIT EARNED BY THE THREE OF US IN THE CHINNAVEDAMPATTI LAND TRANSACTION SHALL BE ADMITTED AND FILED IN AOP. HOWEVER, AFTER ISSUING NOTICE UNDER SECTION 148, TH E APPELLANT HAS NOT ADMITTED THE INCOME. THE ASSESSING OFFICER ISSUED SUMMONS TO THE DIRECTORS OF THE COMPANY AND AR APPEARED ON BEHALF OF THE DIRECTOR FO THE COMPANY AND PRODUCED THE RETURN OF INCOME AND T HE BALANCE SHEET OF THE 5 PERSONS WHO HAVE PURCHASED THE PROPERTY FR OM THE ASSESSEE WHEREIN THE PURCHASE TRANSACTION WAS REFLECTED. AS SEEN FROM THE ITA NO.602/MDS/13 6 DETAILS FILED BY M/S.JSSRK HOLDINGS (P) LTD., DATED 26.08.2009, IT WAS STATED THAT THE PROPERTY WAS PURCHASED AS PER THE A GREEMENT DATED 15.5.2008 FOR RS.130 LACS ONLY. IT WAS ALSO SUBMIT TED BY THIS COMPANY THAT AN AMOUNT OF RS.30 LACS OUT OF THE TOTAL CONSI DERATION OF RS.140 LACS WAS RETAINED SINCE THE PROPERTY WAS UNDER LITI GATION AS PER OPENIGN STOCK NO.342/2007 AND 749/2007 IN THE ADM COURT, COIMBATORE. THE COMPANY WHICH PURCHASED THE PROPER TY HAS ALSO CONFIRMED THAT THEY HAVE PURCHASED THE PROPERTY FOR RS.130 LACS. 5.4. THE ASSESSING OFFICER HAS ALSO EXAMINED THE RETURNS OF THE DIRECTORS OF THE COMPANY WHEREIN THE PURCHASE OF TH E PROPERTY WAS REFLECTED AT RS.1,30,00,000/- ONLY. THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED THE DETAILS SHOWIN G THE SALE OF THE PROPERTY AT RS.1,30,00,000/- THE ASSESSING OFFICER COULD NOT BRING ON RECORD ANY FACT TO PROVE THAT THE CONSIDERATION REC EIVED BY THE PART PERFORMANCE WAS IN EXCESS OF RS.1,30,00,000/- AS SHOWN IN THE REGISTERED DOCUMENT. THE ASSESSING OFFICER EVEN A FTER EXAMINING THE DIRECTORS OF THE COMPANY COULD NOT BRING ANY EVIDEN CE ON RECORD THAT ON MONEY PAYMENT WAS MADE BY THE COMPANY/DIRECTORS WHO PURCHASED THE PROPERTY. AS SEEN FROM THE ASSESSMEN T ORDER, THE ASSESSING OFFICER WAS RELYING ONLY ON THE STATEMEN TS MADE BEFORE THE ASSISTANT DIRECTOR BY THE APPELLANT. EVEN DURING TH E COURSE OF SURVEY PROCEEDINGS BY THE ADIT AND SUBSEQUENT INVESTIGATIO N, NO EVIDENCE WAS COLLECTED REGARDING THE ON MONEY PAYMENTS. IN THE ABSENCE OF ANY CONCLUSIVE EVIDENCE RELATING TO THE ON MONEY PAYMEN T, IN MY OPINION, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING T HE ADDITION OF RS.82 LACS. IN VIEW OF THIS, THE ASSESSING OFFICER IS DI RECTED TO DELETE THE ADDITION. THESE GROUNDS OF APPEAL ARE ALLOWED. ITA NO.602/MDS/13 7 5. LD.D.R VEHEMENTLY ARGUED BEFORE US IN SUPPORT O F THE ORDER OF THE LD.AO WHILE AS LD.A.R RELIED ON THE ORDER OF L D. CIT(A) AND THE DECISION RENDERED IN THE CASE OF CIT VS. S.KHADAR K HAN SONS REPORTED IN 352 ITR 480. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS EVIDENT THAT THE LD.AO HAD MADE ADDITIONS ONLY BASED ON THE SWORN ST ATEMENT OF MR.S.MOHAMMED ALI DURING THE PROCEEDINGS OF SURVEY CONDUCTED IN THE PREMISES OF HIS EMPLOYER. NO OTHER CORROBORATI VE EVIDENCE WAS BROUGHT FORTH BY THE LD.AO WHILE MAKING THE ADDITIO N OF `. 83 LAKHS. THEREFORE, WE FIND MERIT IN THE SUBMISSIONS OF LD.A .R AND WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). FURTHER THE RATIO LAID DOWN IN THE CASE CITED BY TH E LD.AR CIT VS. S.KHADAR KHAN SONS REPORTED IN 352 ITR 480 ALSO SU PPORTS THE CASE OF THE ASSESSEE WHEREIN IT WAS HELD THAT IN VIEW OF THE SCOPE AND AMBIT OF THE MATERIALS COL LECTED DURING THE COURSE OF SURVEY, THE ACTION UNDER SECTI ON133A WOULD NOT HAVE ANY EVIDENTIARY VALUE AND THAT IT CO ULD NOT BE SAID SOLELY ON THE BASIS OF THE STATEMENT GIVEN BY ONE OF THE ITA NO.602/MDS/13 8 PARTNERS OF THE ASSESSEE-FIRM THAT THE DISCLOSED IN COME WAS ASSESSABLE AS LAWFUL INCOME OF THE ASSESSEE. ON APPEAL TO THE SUPREME COURT: THE SUPREME COURT DISMISSED THE APPEAL IN VIEW OF THE CONCURRENT FINDINGS OF FACT. FOR THE AFORESAID REASONS AND DISCUSSIONS, WE HER EBY CONFIRM THE ORDER OF THE LD. CIT(A), WHICH IS DECIDED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 2 ND DECEMBER, 2013 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 2 ND DECEMBER, 2013. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE