Shri V.Prasanna Venkatesh, CHENNAI V. ACIT, CHENNAI

ITA 623/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61215 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K MEENAKSHISUNDHARAM
• Assessee Lawyers: DR S MOHARANA
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Condonation of delay; Revised return
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE -PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.622 & 623/MDS/2011 (ASSESSMENT YEARS: 2007-08 & 2008-09) SHRI V.PRASANNA VENKATESH, C/O. MR. S.SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI-600 020. PAN:AKMPP9894K VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III(2), CHENNAI-34. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. K.MEENAKSHISUNDHARAM, ADVOCATE ASSESSEE BY : DR. S.MOHARANA, CIT DR DATE OF HEARING : 6 TH JUNE ,2012 DATE OF PRONOUNCEMENT : 21 ST JUNE, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT TWO APPEALS I.E. ITA NO.622/MDS/2011 RELEVANT TO THE ASSESSMENT YEAR 2007-08 & ITA NO.623/MDS/2011 RELEVANT TO THE ASSESSMENT YEAR 200 8-09 HAVE BEEN FILED BY THE ASSESSEE IMPUGNING ORDERS OF CIT(A)- II, CHENNAI DATED 20.12.2010. 2. THE PRESENT APPEALS HAVE BEEN FILED WITH A DELAY OF THREE DAYS. AN APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED. AN AFFIDAVIT IN SUPPORT OF THE APPLICATION FOR CONDONATION ITA NO.622 & 623/MDS/11 2 OF DELAY IN FILING OF APPEALS CITING REASONS FOR DELAY IS ALSO FILED. WE HAVE PERUSED THE AFFIDAVIT AND ARE SATISF IED WITH THE REASONS CAUSING DELAY IN FILING OF THE APPEALS. THU S, THE APPLICATION FOR CONDONATION OF DELAY IS ALLOWED. D ELAY OF THREE DAYS IN FILING OF APPEALS IS CONDONED AND THE APPEA LS ARE ADMITTED TO BE HEARD ON MERITS. 3. THE FACTS IN BRIEF ARE THAT ON 6.2.2008 THE ASSE SSEE WAS INTERCEPTED AT CHENNAI AIRPORT WHILE TRAVELLING FRO M COIMBATORE TO CHENNAI. A SEARCH WAS CONDUCTED UNDE R SECTION 132 OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) AND AN AMOUNT OF ` 26.48 LAKHS WAS RECOVERED FROM THE ASSESSEE. THE AMOUNT WAS SEIZED AND NOTICE UNDER SECTION 153A OF THE INCOME TAX ACT WAS ISSUED TO THE ASSESSEE/APPELLANT ON 27.09.2009. THE ASSESSEE/APPELLANT FILED REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 15.10.2009 DISCLOSING HI S TOTAL INCOME TO THE TUNE OF ` 35,44,998/-. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 17.12.2009 MADE THE ASSESSMENT UNDER SECTION 153A READ WITH SECTION 143 (3) OF ITA NO.622 & 623/MDS/11 3 THE ACT ASSESSING TOTAL TAXABLE INCOME OF THE ASSES SEE AT ` 78,73,023/-. 4. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 17.12.2009, THE ASSESSEE FILED APPEALS BEFORE THE C IT(A) ON THE FOLLOWING GROUNDS:- I) ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PLOTS ` 38,11,049/-; II) ADDITION OF BUSINESS INCOME OF ` 2,66,976/-; & III) ADDITION ON ACCOUNT OF UNACCOUNTED INCOME (CAS H DEPOSIT IN BANK) ` 2,50,000/-. THE CIT(A) AFTER HEARING THE ASSESSEE AND PERUSING THE DOCUMENTS ON RECORD, DELETED ADDITION MADE TWICE ON ACCOUNT OF UNACCOUNTED INVESTMENT TO THE TUNE OF ` 34.00 LAKHS AND UNACCOUNTED INCOME THEREBY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. SIMILARLY FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSING OFFICER HAD MADE ADDITION TO THE TUNE OF ` 19,06,975/- BEING THE BUSINESS INCOME OF THE ASSESS EE VIDE ASSESSMENT ORDER DATED 17.12.2009. ASSAILING THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE ITA NO.622 & 623/MDS/11 4 CIT(A). THE CIT(A) AFTER PERUSING THE DOCUMENTS ON RECORD AND TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSEE AFTER DELETING THE DOUBLE ADDITION OF INCO ME UPHELD THE ORDER OF THE ASSESSING OFFICER TREATING INCOME FROM PURCHASE AND SALE OF PLOTS AS BUSINESS INCOME OF TH E ASSESSEE AND NOT AS CAPITAL GAIN AS CLAIMED BY THE ASSESSEE. THE CIT(A) SUSTAINED THE ADDITION OF ` 13,34,223/- MADE BY THE ASSESSING OFFICER. 6. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL IMPUGNING THE ORDERS OF CIT(A) DATED 20.12 .2010 RELEVANT TO THE ASSESSMENT YEAR 2007-08 & 2008-09. SINCE BOTH THE APPEALS INVOLVE SIMILAR QUESTIONS THEY ARE BEING HEARD AND DISPOSED OFF ON MERITS TOGETHER. 7. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HA S IMPUGNED THE ORDER OF THE CIT(A) ON THE GROUND THAT : (I) THE CIT(A) HAS ERRED IN SUSTAINING ` 4,11,049/- BEING UNEXPLAINED INVESTMENT IN THE PLOTS AND (II) THE CIT(A) HAS ER RED IN SUSTAINING THE ADDITION OF INCOME TO THE TUNE OF ` 1,66,778/- AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS. ITA NO.622 & 623/MDS/11 5 FOR THE ASSESSMENT YEAR 2008-09, THE ONLY GROUND O F APPEAL IS ADDITION OF ` 13,34,223/- AS BUSINESS INCOME AS AGAINST CAPITAL GAINS CLAIMED BY THE ASSESSEE. 8. SHRI K.MEENAKSHISUNDHARAM, COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE PROVISIO NS OF SECTION 153A ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS ASSESSEE HAD FILED ALL THE RETURNS BEFORE THE SE ARCH WAS CONDUCTED. HE FURTHER SUBMITTED THAT THE AUTHORITIE S BELOW HAVE ERRED IN HOLDING THAT THE TRANSACTIONS ARE BUS INESS TRANSACTIONS AND HAVE TREATED THE INCOME AS BUSINES S INCOME, WHEREAS, THE PLOTS WERE PURCHASED BY THE A SSESSEE AS INVESTMENT AND THE INCOME OF THE ASSESSEE FROM S ALE OF PLOTS SHOULD HAVE BEEN ASSESSED AS CAPITAL GAINS. H E FURTHER SUBMITTED THAT WHILE CONSIDERING THE SALE OF LAND, THE AUTHORITIES BELOW HAVE ERRED IN NOT TAKING INTO CON SIDERATION THE EXPENDITURE INCURRED BY THE ASSESSEE ON THE DEV ELOPMENT AND IMPROVEMENT MADE ON THE LAND. THE COUNSEL FOR T HE ASSESSEE FURTHER CONTENDED THAT EXPENDITURE INCURRE D AT THE TIME OF SALE OF PLOTS WAS ALSO NOT ALLOWED BY THE ASSESSING OFFICER AS WELL AS THE CIT(A). ITA NO.622 & 623/MDS/11 6 9. ON THE OTHER HAND, DR. S.MOHARANA, DR REPRESENT ING THE DEPARTMENT SUBMITTED THAT THE ORDER PASSED BY T HE CIT(A) IS A WELL-REASONED AND DETAILED ORDER. WHEREVER THE RE WAS DOUBLE ADDITION, THE SAME HAS ALREADY BEEN DELETED BY THE CIT(A). HE SUBMITTED THAT SEQUENCE OF EVENTS CLEARL Y SHOW THAT THE INCOME FROM SALE OF PLOTS IS BUSINESS INCO ME AND NOT CAPITAL GAIN AS CLAIMED BY THE ASSESSEE. AS REGARDS ALLOWABILITY OF THE EXPENDITURE ARE CONCERNED, HE S UBMITTED THAT NO EVIDENCE WHATSOEVER WAS PLACED ON RECORD BY THE ASSESSEE TO CLAIM THE EXPENDITURE. 10. WE HAVE HEARD THE SUBMISSIONS MADE BY RESPECTIV E PARTIES AND HAVE ALSO GONE THROUGH THE ORDERS PASS ED BY THE AUTHORITIES BELOW. A PERUSAL OF THE SAME SHOWS THAT THE ASSESSEE WAS IN THE BUSINESS OF BUYING AND SELLING OF PLOTS. THE ASSESSEE HAD PURCHASED NINE PLOTS AT COIMBATORE ON 6.11.2006 AND HAD SOLD THE SAME AT HIGHER PRICE WIT HIN A SHORT SPAN OF SIX MONTHS THEREBY GENERATING PROFIT. THE REASON GIVEN BY THE ASSESSEE IN THE WRITTEN SUBMISS IONS WHICH ARE AT PAGES 1 TO 5 OF THE PAPER BOOK FOR TRE ATING THE INCOME AS CAPITAL GAINS ARE NOT CONVINCING. THE ASS ESSEE HAS ITA NO.622 & 623/MDS/11 7 CONTENDED THAT THE PLOTS WERE PURCHASED AS INVESTME NT AND NOT TO CARRY ON ANY ORGANIZED ACTIVITY OF PURCHASE AND SALE OF PLOTS. ON THE CONTRARY, THE SEQUENCE OF EVENTS SHOW THAT THE ASSESSEE HAD PURCHASED PLOTS TO EARN PROFIT IN THE COURSE OF BUSINESS. THE FREQUENCY OF PURCHASE AND SALE BELIES THE STAND OF THE ASSESSEE. THUS, THE ASSESSING OFFICER HAS RIGHTLY HELD THAT THE INCOME FROM SALE OF PLOTS AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS. 11. AS REGARDS UNEXPLAINED INVESTMENT OF ` 4,11,049/- IS CONCERNED, THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAI N SOURCE OF INVESTMENT. THUS, THE CIT(A) HAS RIGHTLY UPHELD THE ADDITION OF ` 4,11,049/- AS UNEXPLAINED INVESTMENT AFTER DEDUCTIN G THE AMOUNT ALREADY INCLUDED IN THE INCOME RETURNED BY T HE ASSESSEE. 12. WITH RESPECT TO DISALLOWANCE OF EXPENSES TOWARD S IMPROVEMENT AND DEVELOPMENT OF THE PLOTS IS CONCERN ED, WE HOLD THAT THERE IS NO FORCE IN THE SUBMISSION MADE BY THE ASSESSEE. THE AUTHORIZED REPRESENTATIVE HAS NOT B EEN ABLE TO SUBSTANTIATE HIS CONTENTIONS EITHER BEFORE THE CIT(A) OR ASSESSING OFFICER. EXCEPT FOR THE BALD STATEMENT O F THE ITA NO.622 & 623/MDS/11 8 ASSESSEE, THERE IS NOTHING ON RECORD TO SHOW THAT A NY EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR THE DEVELOPMENT OF PLOTS. EVEN BEFORE THE TRIBUNAL, TH E A.R. WAS NOT ABLE TO SHOW ANY DOCUMENT TO SUBSTANTIATE T HE CLAIM OF THE ASSESSEE THAT, THE ASSESSEE HAD INCURRED EX PENDITURE ON THE IMPROVEMENT OR DEVELOPMENT OF THE LAND/PLOTS . IN OUR VIEW, THE CIT(A) HAS PASSED A WELL REASONED AND DET AILED ORDER. NO INTERFERENCE IN THE ORDER OF THE CIT(A) I S CALLED FOR. THEREFORE, BOTH THE APPEALS OF THE ASSESSEE ARE DIS MISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 21 ST DAY OF JUNE, 2012 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) ( VIKAS AWASTHY ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 21 ST JUNE, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .