DCIT, CHENNAI V. S.Yogarathanam rep by Legal Heirs, CHENNAI

ITA 986/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7502 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2016
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Capital receipt
• Section: 142(1); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L REDDY, JUDICIAL MEMBER ./ ITA NOS.:985 TO 988, 1037& 1038/MDS/2016 / ASSESSMENT YEARS : 2006-07 & 2010-11 & 2012-13 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), NUNGAMBAKKAM HIGH ROAD, CHENNAI-34. V. SHRI S. YOGARATHANAM REPRESENTATIVE BY LEGAL HEIRS NO.14, RANGANATHAN STREET, T.NAGAR, CHENNAI 600 017. PAN: AAKPY9845P ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI SRINIVASA RAO, CIT /RESPONDENT BY : SHRI S. SATYANARAYANAN, ADVOC ATE /DATE OF HEARING : 05.01.2017 /DATE OF PRONOUNCEMENT : 15.03.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : ALL THESE APPEALS ARE FILED BY THE REVENUE ARE DI RECTED AGAINST DIFFERENT ORDERS OF LD.CIT(A) FOR THE ABOVE ASSESSMENT YEARS. 2. FIRST, WE TAKE UP THE REVENUES APPEALS IN ITA NOS.985, 986, 987 & 988/MDS/16 FOR ASSESSMENT YEARS 2006-07, 2007-08, 2008-09 & 2009-10 RESPECTIVELY. 2 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 3. THE GRIEVANCE OF THE REVENUE IN THIS APPEALS IS WITH REGARD TO ANNULLING THE ASSESSMENT ORDER FOR THESE ASSESSM ENT YEARS BY LD.CIT(A) BY FOLLOWING THE DECISION OF SPECIAL BEN CH OF MUMBAI IN THE CASE OF M/S.ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT REPORTED IN [2012] 137 ITD 287 (MUM.)(SB). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND IS A PARTNER IN CERTAIN CONCERNS OF SARAVANA STORES GROUP. THE SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT WAS TAKEN PLACE ON THE PLACE OF BUSINESS AND ALSO AT THE RESI DENCE ON 18/8/2011. ACCORDINGLY THE PROCEEDING UNDER SECTION 132 OF THE IT ACT WAS INITIATED. ON THAT CONSEQUENCE, THE AO HAD ISSUED THE NOTICE U/S. 153C OF THE ACT. NOTICES WERE ALSO ISSU ED UNDER SECTION 143(2) AND 142(1) OF THE ACT FOR SCRUTINY OF ACCOUN TS AND FOR FURTHER PROCEEDINGS. DURING THE COURSE OF SEARCH, BOOKS OF ACCOUNT AND DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED. A FTER ISSUING STATUTORY NOTICES, THE AO COMPLETED THE ASSESSMENTS U/S.153C R.WS.153A R.W.S.143(3) OF THE ACT FOR ASSESSMENT YE ARS 2006-07, 2007-08, 2008-09 & 2009-10 AND MADE CERTAIN ADDITI ONS TOWARDS DEEMED RENT AND LONG TERM CAPITAL GAINS AGGRIEVED BY THE ACTION OF AO, THE ASSESSEE CARRIED THE APPEALS BEFORE THE LD. CIT(A). 3 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 4. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT AS ON THE DATE OF INITIATION OF SEARCH, NO ASS ESSMENT OR RE-ASSESSMENT WAS PENDING FOR THE ASSESSMENT YEARS UNDER CONSIDERATION WHICH COULD BE ABATED IN VIEW OF THE SECOND PROVISO TO CLAUSE (B) OF SUB-SECTION 1 OF SEC.153A OF THE A CT. THE ASSESSEE PLACED RELIANCE IN THE JUDGEMENT OF SPECIAL BENCH O F MUMBAI IN THE CASE OF M/S.ALL CARGO GLOBAL LOGISTICS LTD. VS. DCI T REPORTED IN [2012] 137 ITD 287 (MUM.)(SB). ON APPEAL, THE LD.CI T(A) OBSERVED THAT AS SEEN FROM ASSESSMENT ORDER, ANY INCRIMINATI NG MATERIAL WAS FOUND DURING THE SEARCH OPERATIONS SO AS TO DISALLO W EXPENDITURE AND RELYING IN THE DECISION OF SPECIAL BENCH OF MUM BAI IN THE CASE OF M/S.ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT REP ORTED IN [2012] 137 ITD 287 (MUM.)(SB), LD.CIT(A) ALLOWED ALL THE A PPEALS OF ASSESSEE. AGAINST THIS, THE REVENUE IS IN APPEAL B EFORE US. 5. BEFORE US, LD.A.R SUBMITTED THAT IN THE ASSESSM ENT ORDER AO OBSERVED THAT THERE WAS A SEARCH CONDUCTED IN THE B USINESS PREMISES OF SARAVANA STORES (TEX) SITUATED AT 45, RANGANATHAN STREET, T.NAGAR, CHENNAI-17 AND SARAVANA STORES (BR AMMANDMAI) AT 129, USMAN ROAD, T.NAGAR, CHENNAI. DURING THE CO URSE OF SEARCH AT THE ABOVE PREMISES, THE BOOKS OF ACCOUNTS AND DOCUMENTS BELONGED TO THE PRESENT ASSESSEE , SHRI YOGARATHINAM 4 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 WERE FOUND AND SEIZED AS PER ANNEXURE ANN/SSK/LS/S DATED 15.09.2011, ANN/NP/B&D/SSB/S-10(A) & 10(B) DATED 19 .08.2011. IT WAS ALSO FOUND DURING THE COURSE OF SEARCH THAT THERE WAS NON- COMPLIANCE TO THE PROVISIONS OF THE SECTION 195 OF THE ACT AND CESSATION OF LOAN LIABILITY WAS INVOLVED. IN VIEW O F THIS, NOTICE U/S.153C WAS ISSUED TO THE ASSESSEE TO FILE A RETU RN OF INCOME FOR THESE ASSESSMENT YEARS. CONSEQUENT TO THIS, THE ASS ESSEE FILED A LETTER DATED 22.10.2013 STATING THAT THE RETURN FIL ED ORIGINALLY MAY BE TREATED AS RETUN FILED IN RESPONSE TO NOTICE U/S.15 3C OF THE ACT. LATER, THE ASSESSMENT WAS COMPLETED IN THESE CASES U/S.153C R.W.S.153A R.W.S.143(3) OF THE ACT AND VARIOUS ADDI TIONS ARE MADE. THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A ) STATING THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. AS SUCH THE CONCLUDED ASSESSMENT CANNOT BE REOPENE D TO FRAME ASSESSMENT U/S.153C OF THE ACT R.W.S.153A R.W.S.14 3(3) OF THE ACT. THE LD.CIT(A) AGREED WITH THE ARGUMENT OF THE ASSE SSEE AND ALLOWED THE APPEAL OF ASSESSEE. 6. BEFORE US, LD.D.R SUBMITTED THAT THE SEIZED MA TERIAL REFERRED IN EARLIER PARAS OF THE LD.CIT(A) HAS NOT GIVEN ANY FINDINGS HOW THOSE SEIZED MATERIALS WERE NOT RELEVANT FOR THE PU RPOSE OF FRAMING 5 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 THESE IMPUGNED ASSESSMENTS AND LD.CIT(A) STRAIGHT WAY PLACED RELIANCE IN THE DECISION OF SPECIAL BENCH OF MUMBA I IN THE CASE OF M/S.ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT REPORT ED IN [2012] 137 ITD 287 (MUM.)(SB), WITHOUT REFERENCE TO THE FACTS OF THE PRESENT CASE. LD.D.R RELIED ON THE JUDGMENT OF KERALA HIG H COURT IN THE CASE OF CIT VS. DR.P.SASIKUMAR IN [2016] 387 ITR 8 (KERALA) WHEREIN HELD THAT: ON A PLAIN READING OF SECTION 153A, IT IS CLEAR TH AT ONCE SEARCH IS INITIATED UNDER SECTION 132 OR A REQUISITION IS MAD E UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003, THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FOLLOWING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B). IT FURTHER TREATS THE RETURNS SO FILED AS IF SUCH RETURN WERE A RETURN RE QUIRED TO BE FURNISHED UNDER SECTION 139. SO THAT ON A READING O F SECTION 153A(1) IT IS CATEGORICAL AND CLEAR THAT ONCE A NOTICE IS I SSUED AND THE ASSESSING OFFICER HAS REQUIRED THE ASSESSEE TO FURN ISH RETURN FOR A PERIOD OF SIX ASSESSMENT YEARS AS CONTEMPLATED UNDE R CLAUSE (B) THEN THE ASSESSEE HAS TO FURNISH ALL DETAILS WITH R ESPECT TO EACH ASSESSMENT YEAR SINCE THE SAME IS TREATED AS A RETU RN FILED UNDER SECTION 139. IT IS TRUE THAT AS PER THE FIRST PROVI SO, THE ASSESSING OFFICER IS BOUND TO ASSESS OR REASSESS THE TOTAL IN COME WITH RESPECT TO EACH ASSESSMENT YEAR FOLLOWING THE SIX ASSESSMEN T YEARS SPECIFIED IN SUB-CLAUSES (A) AND (B) OF SECTION 153A. HOWEVER , EVEN IF NO DOCUMENTS ARE UNEARTHED OR ANY STATEMENT MADE BY TH E ASSESSEE DURING THE COURSE OF SEARCH UNDER SECTION 132 AND N O MATERIALS ARE RECEIVED FOR THE AFORE SPECIFIED PERIOD OF SIX YEAR S, THE ASSESSEE IS BOUND TO FILE A RETURN, IS THE SCHEME OF THE PRO VI SION. EVEN THOUGH 6 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 THE SECOND PROVISO TO SECTION 153A SPEAKS OF ABATEM ENT OF ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF T HE INITIATION OF SEARCH WITHIN THE PERIOD OF SIX ASSESSMENT YEARS SP ECIFIED UNDER THE PROVISION THAT WILL ALSO NOT ABSOLVE THE ASSESSEE F ROM HIS LIABILITY TO SUBMIT RETURNS AS PROVIDED UNDER SECTION 153A(1)(A) . THIS BEING THE SCHEME OF THE PROVISIONS OF THE ACT, THE APPELLATE TRIBUNAL OUGHT TO HAVE CONSIDERED THE ISSUE WITH SPECIFIC REFERENCE T O THE FACTS INVOLVED IN THE CASE AND AS PROVIDED UNDER SECTION 153A.' IN THE LIGHT OF THE JUDGMENT OF THIS COURT, THE AFO RESAID CONCLUSION OF THE TRIBUNAL CANNOT BE SUSTAINED. ACCORDINGLY, IT WAS SUBMITTED THAT SINCE THE LD.CIT (A) HAD NOT DISCUSSED ANYTHING ABOUT THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WHILE FRAMING THE ASSESSMENT, HE P LACED RELIANCE WRONGLY ON THE ORDER OF THE SPECIAL BENCH IN CASE O F ALL CARGO GLOBAL LOGISTICS LTD.,(SUPRA). HENCE, LD.D.R SUBMIT TED THAT THE LEGAL ISSUE MAY BE DECIDED AGAINST THE ASSESSEE AND ISSUE RELATING THE MERIT OF ADDITION MAY BE REMITTED TO THE FILE OF LD .CIT(A) TO DECIDE AFRESH AS HE FAILED TO ADDRESS THE ISSUE RELATING T O THE ADDITIONS MADE IN THE ASSESSMENT ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND FORCE IN THE ARGUMENT OF THE LD.D.R . AS RIGHTLY 7 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 POINTED OUT BY THE LD.D.R, THE LD.CIT(A) STRAIGHTAW AY PLACED RELIANCE IN THE DECISION OF SPECIAL BENCH OF MUMBA I IN THE CASE OF M/S.ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (SUPRA ), THOUGH THERE WERE SEIZED MATERIALS FOUND DURING THE COURSE OF SE ARCH. THE ORDER IS CRYPTIC AND HE HAS NEVER DISCUSSED ANY RELEVANCE OF THE SEIZED MATERIALS FOUND DURING THE COURSE OF SEARCH TO FRAM ING THE ASSESSMENT . ACCORDINGLY, WE CANCEL THE ORDER OF CI T(A) AND REMIT THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF LD. ASSE SSING OFFICER TO DECIDE AFRESH IN THE LIGHT OF THE JUDGEMENT OF KERA LA HIGH COURT IN THE CASE OF DR.P.SASIKUMAR (SUPRA). IT NEEDLESS TO SAY THAT THE A.O HAS TO GIVE APPROPRIATE OPPORTUNITY OF HEARING TO T HE ASSESSEE TO PUT UP HIS CASE , THEREAFTER LD.A.O DECIDE THE CASE. WI TH THESE OBSERVATIONS, ALL THESE FOUR APPEALS OF REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. NEXT, WE TAKE UP THE REVENUES APPEALS IN ITA NO .1038 /MDS/16 FOR ASSESSMENT YEAR 2012-13. 8. 1 THE MAIN GRIEVANCE OF THE REVENUE IN THIS APPE AL IS WITH REGARD DELETION OF ADDITION OF ` 1,54,61,421/- MADE ON ACCOUNT OF CESSATION OF LIABILITY IN THE NAME OF SHRI S.SELVAR ATHINAM. 8 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 9. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ADDI TION TOWARDS CESSATION OF LIABILITY WAS MADE BY ASSERTING THAT T HE ASSESSEE BALANCE SHEET SHOWS LIABILITY PAYABLE TO SHRI S.SEL VARATHINAM FOR A LONG TIME. DURING THE COURSE OF SEARCH PROCEEDINGS, IT IS FOUND THAT THE ABOVE LIABILITY IS NON-EXISTING IN THE BOOKS OF SHRI S.SELVARATHINAM. HOWEVER, THE ASSESSEE DID NOT CLAI M ANY DEDUCTION OR LOSS IN HIS PERSONAL RETURNS FOR THAT AMOUNT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO E XPLAIN WHY THE SAID LOAN LIABILITY SHOULD NOT BE TREATED AS C ESSATION OF LIABILITY VIDE NOTICE U/S.142(1) DATED 20.02.2014. THE ASSES SEE VIDE HIS SUBMISSIONS DATED 27.02.2014 HAS ADMITTED THAT IN S HRI S.SELVARATHINAM BOOKS THE LIABILITIES AS WELL AS AS SETS MAY NOT FIND PLACE. FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO S UBSTANTIATE THE EXISTENCE OF THE LIABILITY DURING THE SEARCH AND TH E ASSESSMENT PROCEEDINGS. THEREFORE, THE AO MADE ADDITION OF ` 1,54,61,421/- MADE ON ACCOUNT OF CESSATION OF LIABILITY IN THE NA ME OF SHRI S.SELVARATHINAM. AGGRIEVED WITH THE ACTION OF THE A O, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 9 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 9.1 ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE ASS ESSEE SHRI YOGARATNAM, HIS BROTHERS SHRI RAJARATNAM AND SHRI S ELVARATNAM ARE JOINTLY DOING THE BUSINESS. THERE WAS A PARTITI ON AMONG THE BROTHERS IN THE YEAR 2002. SINCE THEN THEY WERE DOI NG THE BUSINESS SEPARATELY. WHEN THEY WERE DOING BUSINESS TOGETHER CERTAIN UNSECURED LOANS WERE GIVEN BY SHRI SELVARATNAM TO H IS BROTHER SHRI YOGARATNAM (ASSESSEE) IN VARIOUS YEARS AND ON VARI OUS DATES. THE ASSESSEE CONTINUED TO SHOW LIABILITY FROM THE YEAR IN WHICH HE OBTAINED LOAN FROM HIS BROTHER. ALL THE LOANS WERE OBTAINED THROUGH CHEQUE EXCEPT SMALL AMOUNTS LIKE ` 10,000/-, ` 30,000 RECEIVED IN CASH. THE APPELLANT, SHRI YOGARATNAM HAD SHOWN THE AMOUNTS BORROWED FROM HIS BROTHER SHRI SELVARATNAM AS LIABI LITY. SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT TOOK PLACE IN THI S GROUP ON 18.8.2011. SUBSEQUENT TO SEARCH AND SEIZURE ACTION, IT WAS FOUND THAT THIS ASSESSEE IS SHOWING LIABILITY TOWARDS SH RI SELVARATNAM AMOUNTING TO ` 1,54,61,421/-. 9.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E AO PROCEEDED TO MAKE ADDITION SOLELY BASED ON SHRI SEL VARATNAMS BOOKS OF ACCOUNT AND NO CORRESPONDING ASSETS OR REC EIVABLES WERE SHOWN BY SHRI SELVARATNAM. ACCORDING TO LD.CIT(A), THE ASSESSEE 10 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 HAS TAKEN ARGUMENT THAT IN ORDER TO MAKE AN ADDITIO N U/S 41(1) OF THE ACT TOWARDS CESSATION OF LIABILITY, THE PRIMARY REQUIREMENT IS THAT THE SO CALLED LIABILITY SHOULD HAVE BEEN ALLOWED AS A DEDUCTION IN THE EARLIER YEARS. FURTHER, LD.CIT(A) OBSERVED THA T THE AO HAS NOT BROUGHT ON RECORD WHAT WAS THE NATURE OF LIABILITY, AND WHETHER IT WAS ALLOWED AS A DEDUCTION IN THE EARLIER YEARS. NO SUCH INFORMATION IS AVAILABLE IN THE ASSESSMENT ORDER. ALSO THE ASSE SSEE COULD PRODUCE ACCOUNT COPIES OF THE EARLIER YEARS LEDGER ACCOUNTS COPIES OF SHRI RAJARATNAM GOES TO PROVE THAT THE LIABILITY IS SHOWN ONLY AS UNSECURED LOANS PAYABLE TO HIS BROTHER. IN OTHER WO RDS WHAT IS SHOWN IS A CAPITAL RECEIPT. THE REASON FOR SHOWING IT AS LIABILITY WAS THOUGH THE PARTITION TOOK PLACE THERE WERE CERTAIN PROPERTIES, WHICH IS SHOWN IN ASSETS SIDE BY THE ASSESSEE, WERE NOT SUBJECT MATTER OF PARTITION. THE APPELLANT HAD CLAIMS OVER PROPERTY. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, THE LD.CIT(A) ARRIVED A T A CONCLUSION THAT THE UNSECURED LOANS WHICH IS A CAPITAL RECEIPT AND WHICH CANNOT BE DISALLOWED AS CESSATION OF LIABILITY SIMPLY BECA USE IN OTHER PARTYS BALANCE SHEET THESE ITEMS WERE NOT SHOWN. S INCER REMISSION OF LIABILITY DOES NOT CONSTITUTE INCOME AS HELD BY VARIOUS JUDICIAL PRONOUNCEMENTS, THE ADDITION MADE ON THIS ACCOUNT C ANNOT BE 11 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 SUSTAINED. AGAINST THE ORDER OF LD.CIT(A), THE REVE NUE IS IN APPEAL BEFORE US. 10. BEFORE US, LD.D.R SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THIS LIABILITY IN THE ASSESSMENT Y EAR UNDER CONSIDERATION AND HE FAILED TO SHOW WHETHER THAT LI ABILITY IS EXISTING ON THE DATE OF BALANCE SHEET OR NOT. IN SUCH CIRCUM STANCES, THE AO TREATED IT AS CESSATION OF LIABILITY. AS IT WAS NOT APPEARING IN THE BOOKS OF ACCOUNTS OF SHRI SELVARATNAM, WHO IS THE CREDITOR. 11. ON THE OTHER HAND, LD.A.R SUBMITTED THAT IT IS NOT A TRADE LIABILITY SO AS TO APPLY THE PROVISIONS OF THE SEC TION 41(1) OF THE ACT. HE SUBMITTED THAT THE ASSESSEE HAS NOT DERIVED ANY BENEFIT ON ACCOUNT OF THIS LIABILITY AND THERE WAS NO DEDUCTIO N TOWARDS THIS LIABILITY IN EARLIER YEARS. BEING SO, IT CANNOT BE TREATED AS CESSATION OF LIABILITY. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. BEFORE THE AO, THE ASSESSEE HAD NOT BROUGHT ON RECORD TO SHOW WHAT WAS NATURE OF LIABILITY WHETHER ANY DEDUC TION WAS ALLOWED TO THE ASSESSEE IN EARLIER YEAR OR NOT. NO SUCH INFORMATION 12 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 MADE AVAILABLE TO THE AO. BEFORE THE LD.CIT(A), THE ASSESSEE PRODUCED THE ACCOUNT COPIES OF EARLIER YEARS AND FR OM THAT LEDGER ACCOUNTS, THE LD.CIT(A) CAME TO A CONCLUSION THAT I T IS ONLY AN UNSECURED LOANS PAYABLE TO ASSESSEES BROTHER SHRI RAJARATNAM AND HE OBSERVED THAT IT IS A CAPITAL LIABILITY. ON THIS REASON, HE DELETED THE ADDITION MADE U/S.41(1) OF THE ACT. IN OUR OPINION, WHENEVER LD.CIT(A) COLLECTED ANY FRESH EVIDENCE IN THE COURSE OF PROCEEDINGS BEFORE HIM, IT IS APPROPRIATE TO CALL F OR COMMENT FROM THE AO AND IN THIS CASE, THE AO WAS DEPRIVED OF COM MENT THE EVIDENCES PRODUCED BEFORE THE LD.CIT(A). HENCE, WE ARE OF THE OPINION THAT THE ISSUE HAS TO BE CONSIDERED BY AO A ND TO DECIDE AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, WE SET ASIDE THE ORDER OF LOWER AUTHORITIES AND REMIT THE ISSUE IN DISPUTE TO THE FILE OF AO FOR FRESH CONSIDERATION. THE AO HAS TO DECIDE THE I SSUE AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 12.1 THE APPEAL OF ASSESSEE IN ITA NO.1038/16 IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. LASTLY WE TAKE UP THE REVENUES APPEALS IN ITA NO.1037 /MDS/16 FOR ASSESSMENT YEAR 2010-11. 13 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 13.1 THE MAIN GRIEVANCE OF THE REVENUE IN THIS APPE AL IS WITH REGARD DELETION OF ADDITION TOWARDS LONG TERM CAPIT AL GAINS OF ` 6,48,31,420/- AND SHORT TERM CAPITAL GAINS OF ` 4,74,82,926/- ARISING FROM THE MUTUAL RELINQUISHMENT OF SHARES IN JOINTLY HELD PROPERTIES IN FAVOUR OF EACH OTHER BY THE ASSESSEE AND HIS BROTHE R. 13. 2. THE FACTS OF THE ISSUE ARE THAT THE ALONG W ITH HIS BROTHER HAVE PURCHASED VARIOUS PROPERTIES JOINTLY. DUE TO FAMILY ARRANGEMENT BOTH HAD AGREED TO PARTITION THE PROPERTIES, WHICH WERE PURCHASED JOINTLY BY WAY OF SETTLEMENT DEED DATED 05.03.2010. THE ASSESSEE RELIEVED FROM THE JOINT HOLDINGS IN CRAIN PROPERTIE S AND SETTLED THE SAME AS GIFT TO HIS BROTHER, MR.S.RAJARATNAM OUT OF HIS OWN FREE WILL AND LOVE & AFFECTION WHILE BEING IN A VERY SOU ND STATE OF MIND AND THAT THERE HAS BEEN NO KIND OF PRESSURE AND COE RCION ON HIM. SIMILAR THINGS HAD ALSO BEEN DONE BY HIS BROTHER IN FAVOUR OF ASSESSEE. THE AO HAS IMPOSED TAX BY ALLEGING THAT T HE SETTLEMENT DEED MADE OUT BY HIS BROTHER IN FAVOUR OF ASSESSEE FALLS UNDER TRANSFER AS PER SEC.2(47) OF THE ACT. THUS, HE I MPOSED SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS ON T HE DIFFERENCE BETWEEN GUIDELINE VALUE AND VALUE SHOWN IN THE BOOK S FOR THE 14 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 PROPERTIES SETTLED IN FAVOUR TO THE ASSESSEE. AGGRI EVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 13.3 ON APPEAL, THE LD.CIT(A) OBSERVED THAT DUE TO FAMILY ARRANGEMENT, BOTH THE BROTHERS AGREED TO PARTITION THE PROPERTIES BY WAY OF SETTLEMENT DEED. THE ASSESSEE BY WAY OF SETT LEMENT DATED 5.2.2010 HAD GIVEN CERTAIN PROPERTIES TO HIS BROTHE R MR.S.RAJARATNAM AS GIFT. SIMILARLY, MR.S.RAJARATNAM HAD ALSO GIVEN CERTAIN PROPERTIES TO THE ASSESSEE. BUT THE AO HAS IMPOSED CAPITAL GAINS TAX BY STATING THAT THE SETTLEMENT DEED MADE OUT BY HIS BROTHER, MR.S.RAJARATNAM IN FAVOUR OF THE ASSESSEE FALLS UNDER TRANSFER AS PER SECTION 2(47) OF THE ACT. ACCORD ING TO LD.CIT(A), IN THE PRESENT CASE, THE FIRST QUESTION TO BE ADDRE SSED IS WHETHER PROPERTY JOINTLY PURCHASED BY BROTHERS PARTITIONED BY WAY OF SETTLEMENT WILL AMOUNT TO TRANSFER WITHIN THE MEANI NG OF SEC.2(47) OF THE ACT OR NOT. LD.CIT(A) FOLLOWING THE DECISIONS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. A.L.RAMANATHAN I N 245 ITR 494(MAD.) AND CIT VS. A.L.RAMANATHAN IN 245 ITR 49 4 (MAD.) AND TRIBUNAL DECISION IN ITA NO.2079/MDS./2008 IN THE C ASE OF M/S.SARAVANA STORES (TEX) FOR ASSESSMENT YEAR 2003- 04 , LD.CIT(A) DELETED THE ADDITION ON TH REASON THIS IS A BONAFIDE ONE 15 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 SO AS TO RESOLVE FAMILY DISPUTES AND RIVAL CLAIMS B Y A FAIR AND EQUITABLE DIVISION OR ALLOTMENT OF PROPERTIES BETWE EN THE VARIOUS MEMBERS OF THE FAMILY. AGGRIEVED, THE REVENUE IS I N APPEAL BEFORE US. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IN OUR OPINION, THE DISTINCTION MADE BY THE LOWER A UTHORITIES BETWEEN GIFT AND SETTLEMENT IS NOT CORRECT. IT IS CATEGORICALLY HELD IN THE CO-ORDINATE BENCH IN THE CASE OF MR.ABDUL HA MEED KHAN MOHAMMED IN ITA NOS.1782/MDS./2015 VIDE ORDER DATED 29.12.2015 FOR ASSESSMENT YEAR 2011-12 THAT TRANSFE R OF PROPERTY MADE VOLUNTARILY AND WITHOUT CONSIDERATION BY WAY O F SETTLEMENT DEED, ALL WITHIN THE DEFINITION OF GIFT AND THERE I S NO DIFFERENCE BETWEEN THE GIFT AND SETTLEMENT U/S.49(1)(II) OF T HE ACT. WHILE ADJUDICATING THIS, THE TRIBUNAL PLACED RELIANCE ON SEC.122 OF THE TRANSFER OF PROPERTY ACT, 1882 AND ALSO FROM THE CO CHIN BENCH OF TRIBUNAL IN THE CASE OF ACIT VS. ANJANA MOHAN (2013 ) 36 CCH 0008(COCHIN) AND ALSO REDINGTON (INDIA) LTD. VS. JC IT REPORTED IN 40 CCH 527 (CHENNAI). 16 I.T.A. NOS. 985 TO 988, 1037 & 1038/MDS/2016 15. IN VIEW OF THIS, IN OUR OPINION THE ARTIFICIAL DISTINCTION MADE BY THE LOWER AUTHORITIES WITH REFERENCE TO THE GIFT AN D SETTLEMENT IS NOT APPROPRIATE AND WE ARE OF THE OPINION THAT FOR THE PURPOSE OF SEC.49(1)(II), THERE IS NO DIFFERENCE BETWEEN THE G IFT AND SETTLEMENT AND IN THE PRESENT CASE, THE SETTLEMENT MADE WITH T HE ASSESSEES BROTHER MR.S.RAJARATNAM AND THERE CANNOT BE ANY CA PITAL GAINS ON THIS COUNT. THE GROUND RAISED BY THE REVENUE IS DIS MISSED. 16. IN THE RESULT, THE APPEALS OF ASSESSEE IN ITA NO.98 5,986, 987 & 988/16 AND THE APPEAL OF REVENUE IN 1038/16 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES, AND THE APPEAL OF REVENUE IN 1037/MDS./16 IS DISMISSED. ORDER PRONOUNCED ON 15 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( (( ( ) )) ) ( ) (DUVVURU R.L REDDY) (CHAN DRA POOJARI) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 15 TH MARCH, 2017. KSSUNDARAM. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A)-2, CHENNAI 4. /CIT 5. /DR 6. /GF.