T.T.Dhevanathan, CHENNAI V. ACIT, CHENNAI

ITSSA 19/CHNY/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1315 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-06-2015
• Assessment Year: misc
• Appeal Filed On: 01-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEKANANDAN
• Assessee Lawyers: N DEVANATHAN
• Keywords: Block assessment
• Section: 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.(SS) A. NO.19/MDS/2013 BLOCK ASSESSMENT PERIOD: 1.4.1996 TO 5.12.2002 SHRI T.T. DHEVANATHAN, NO.3, DHEENADAYALU STREET, CHENNAI - 600 017. PAN : AACPD 9566 C V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(5), CHENNAI - 600 034. ('(/ APPELLANT) (*+'(/ RESPONDENT) '( , - / APPELLANT BY : SH. N. DEVANATHAN, ADVOCATE *+'( , - / RESPONDENT BY : SH. VIVEKANANDAN, CIT . , /$ / DATE OF HEARING : 06.11.2015 0!1 , /$ / DATE OF PRONOUNCEMENT : 11.12.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE WAS DISPOSED OF EARL IER BY AN ORDER DATED 14.08.2015 ALONG WITH OTHER CONNECTED A PPEALS. HOWEVER, THE ASSESSEE FILED A MISCELLANEOUS PETITIO N IN M.P. NO.141/MDS/2015 ON THE GROUND THAT THE TRANSACTION IN RESPECT OF PUZHAL PROPERTY, WHICH WAS RAISED AS GROUND NO.3, W AS NOT DISPOSE OF. ACCORDINGLY, AFTER HEARING THE LD. DEP ARTMENTAL 2 I.T.(SS) A. NO.19/MDS /13 REPRESENTATIVE, THIS TRIBUNAL REOPENED THE APPEAL B Y AN ORDER DATED 30.10.2015 ONLY FOR THE PURPOSE OF DISPOSAL O F GROUND NO.3 WITH REGARD TO PUZHAL PROPERTY. 2. SH. N. DEVANATHAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSEE PURCHASED 8.98 ACRES OF LAND IN SURVEY NO.454 OF PUZHAL VILLAGE FOR A CONSIDERATION OF ` 1,36,00,000/- FROM M/S M.P. NARAYANAN & CO. THE ABOVE PAYMENT WAS MAD E FROM THE BANK ACCOUNTS OF M/S TELESYSTEMS INTERNATIONAL MAIN TAINED WITH LAKSHMI VILAS BANK, CHENNAI AND CITY UNION BANK, NE W DELHI. THE ASSESSING OFFICER COMPUTED THE PROFIT ON SALE OF TH E LAND AT ` 2,16,21,000/-. ACCORDING TO THE LD. COUNSEL, THE S UBJECT LAND WAS PURCHASED BY THE ASSESSEE FOR A SALE CONSIDERATION OF ` 1,36,00,000/- AND THE ASSESSEE HAS INCURRED AN EXPE NDITURE OF ` 25,00,000/- TOWARDS DEVELOPMENT CHARGES. THE TOTAL COST OF LAND WAS ` 1.61 CRORES. THE LAND WAS SOLD BY MEANS OF REGISTE RED DOCUMENT FOR A CONSIDERATION OF ` 1,26,52,000/-. THEREFORE, THERE WAS A LOSS OF ` 34,48,000/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER MADE ADDITION ON THE BASIS OF STA TEMENT RECORDED FROM THIRD PARTIES, IGNORING THE REGISTERED DOCUMEN T AVAILABLE ON RECORD. 3 I.T.(SS) A. NO.19/MDS /13 3. SH. N. DEVANATHAN, THE LD.COUNSEL FOR THE ASSESS EE, FURTHER SUBMITTED THAT THE PURCHASE OF LAND WAS REFLECTED I N THE INCOME-TAX RETURN FILED FOR THE YEAR ENDING 31.03.1998. THE S OURCE FOR PURCHASING THE LAND WAS ALSO EXPLAINED. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE SOLD ONLY 8.39 ACRES OF LAND OUT OF 8.98 ACRES OF LAND. ACCORDING TO THE LD. COUNSEL, THE REMAINI NG LAND WAS ENCROACHED BY LOCAL VILLAGERS AND THE SAME WAS USED BY LOCAL PEOPLE AS CREMATION GROUND WHICH COULD NEVER BE RET RIEVED. REFERRING TO THE ASSESSMENT ORDER, THE LD.COUNSEL S UBMITTED THAT BY MEANS OF SIX REGISTERED SALE DEEDS, 8.39 ACRES WERE SOLD AS DISCLOSED, FOR A TOTAL CONSIDERATION OF ` 1,26,52,000/-. ACCORDING TO THE LD. COUNSEL, NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS RECEIVED ANY MONEY OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE REGISTERED SALE DEED . IN THE ABSENCE OF ANY MATERIAL, ACCORDING TO THE LD. COUNS EL, THE ASSESSING OFFICER CANNOT IGNORE THE REGISTERED SALE DEED. THE ASSESSING OFFICER BY PLACING RELIANCE ON THE STATEM ENT OF ONE SHRI S. SUBRAMANYAM, FOUND THAT THE LAND WAS SOLD FOR ` 39 LAKHS PER ACRE. ACCORDING TO THE LD. COUNSEL, 2.77 ACRES OF LAND WAS SOLD ON 11.12.2002, WHICH WAS BEYOND THE BLOCK PERIOD ASSES SMENT. THE 4 I.T.(SS) A. NO.19/MDS /13 EARLIER ADVANCE RECEIVED BY THE ASSESSEE OF ` 25 LAKHS WAS ALSO TREATED AS INCOME OF THE ASSESSEE. ACCORDING TO TH E LD. COUNSEL, THE LIABILITY TO REFUND THE ADVANCE OF ` 25 LAKHS IS NOT CEASED, THEREFORE, THE SAME CANNOT BE TAKEN AS INCOME OF TH E ASSESSEE. OTHER THAN THE STATEMENT OF SHRI S. SUBRAMANYAM, NO OTHER MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS SOLD THE LAND AT ` 39 LAKHS PER ACRE. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THE CIT(APPEALS) INSTEAD OF ALLOWING ENTIRE CLAIM O F THE ASSESSEE, RESTRICTED THE UNDISCLOSED INCOME TO ` 95,48,000/-. ACCORDING TO THE LD. COUNSEL, IT IS A BLOCK ASSESSMENT. IN THE ABSE NCE OF ANY MATERIAL, THERE CANNOT BE ANY ADDITION. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASS ESSING OFFICER TO THE EXTENT OF ` 95,48,000/-. 4. ON THE CONTRARY, SHRI VIVEKANANDAN, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT ADMITTEDLY ASSESSEE PURCHASED 8.98 ACRES OF LAND AT PUZHAL VILLAGE, FOR A TOTAL CONSID ERATION OF ` 1,36,00,000/-. THE ASSESSEE ALSO CLAIMED THAT A SU M OF ` 25 LAKHS WAS INCURRED FOR DEVELOPING THE LAND. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER EXAMINED ONE SHRI S. SUBRAMANYAM. THE SAID 5 I.T.(SS) A. NO.19/MDS /13 SHRI SUBRAMANYAM ENTERED INTO AN AGREEMENT WITH THE ASSESSEE ON 07.04.2002. THE ASSESSEE HAS ALSO ENTERED INTO ANO THER AGREEMENT WITH SHRI SARAVANAN AND OTHERS ON 02.09.2 002. SHRI SUBRAMANYAM CLARIFIED THAT THE LAND WAS SOLD FOR ` 39 LAKHS PER ACRE. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. IN THE ABSENCE OF ANY DOCUME NTARY EVIDENCE, THE ASSESSING OFFICER BY PLACING RELIANCE ON THE CIRCUMSTANTIAL EVIDENCE AVAILABLE ON RECORD, FOUND THAT THE LAND WAS SOLD FOR ` 39 LAKHS PER ACRE. 5. REFERRING TO THE ASSESSMENT ORDER, THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, THE REVENUE AUTHORITIES FOUND A FILE C ONTAINING VARIOUS AGREEMENTS. IN FACT, THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF 5 ACRES OF LAND ON 07.04.2002 WITH ONE SHRI S. SUBRAMANYAM. THE LD. D.R. FURTHER POINTED OUT ANOT HER AGREEMENT DATED 02.09.2002 BETWEEN THE ASSESSEE AND SHRI M. V AIGAISELVAN. AS PER THIS AGREEMENT, THE ASSESSEE AGREED TO SELL HIS LAND AT PUZHAL VILLAGE TO THE EXTENT OF 5.04 ACRES FOR A TO TAL SUM OF ` 1,80,00,000/-. THE ASSESSEE HAS ALSO RECEIVED A SU M OF ` 10 LAKHS ON THE DATE OF AGREEMENT AS ADVANCE. REFERRING TO THE STATEMENT 6 I.T.(SS) A. NO.19/MDS /13 RECORDED FROM SHRI MAHAVIR CHAND, THE VENDOR OF THE LAND, THE LD.COUNSEL CLARIFIED THAT THE LAND WAS SOLD FOR A S UM OF ` 1.36 CRORES ONLY AND SHRI MAHAVIR CHAND HAS NOT RECEIVED ANY AM OUNT OTHER THAN WHAT WAS DISCLOSED IN THE SALE DEED. THE LD. D.R. FURTHER SUBMITTED THAT ANOTHER AGREEMENT DATED 14.03.2001 W AS ALSO FOUND BETWEEN THE ASSESSEE AND ONE SHRI NARESH CHAND. 3 ACRES OF LAND WAS AGREED TO BE SOLD FOR A SUM OF ` 10 LAKHS. THE ASSESSING OFFICER ULTIMATELY FOUND THAT THE ASSESSEE HAS SOLD 8.39 ACRES OF LAND OUT OF 8.98 ACRES, FOR A TOTAL CONSIDERATION O F ` 1,26,52,000/-. BASED UPON THE STATEMENT RECODED FROM SHRI SUBRAMAN YAM, THE ASSESSING OFFICER COMPUTED THE PROFIT ON SALE OF TH E LAND AT ` 1,66,21,000/-. DISALLOWING THE CLAIM OF THE ASSESS EE TOWARDS DEVELOPMENT CHARGES AND THE ADVANCE SAID TO BE RECE IVED FROM SHRI SUBRAMANYAN AND SHRI SARAVANAN, THE ASSESSING OFFICER COMPUTED THE INCOME AT ` 2,16,00,000/-. HOWEVER, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS SOLD THE LAND AT ` 39 LAKHS PER ACRE. AFTER TAKING INTO CONSIDERATION THE ADVANCE RECEIVE D BY THE ASSESSEE FROM SHRI SUBRAMANYAN AND SHRI SARAVANAN T O THE EXTENT OF ` 25 LAKHS, THE CIT(APPEALS) DIRECTED THE ASSESSING O FFICER TO ADOPT THE SALE CONSIDERATION OF PUZHAL PROPERTY AT ` 2.02 CRORES AS 7 I.T.(SS) A. NO.19/MDS /13 AGAINST ` 3,27,21,000/- ADOPTED BY THE ASSESSING OFFICER. AF TER REDUCING ` 1,06,52,000/- BEING THE COST OF THE LAND AND DEVELO PMENT CHARGES, THE CIT(APPEALS) CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 95,48,000/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS SEARCH IN THE PREMISES OF THE ASSESSEE AND DURI NG THE SEARCH OPERATION, THE REVENUE AUTHORITIES FOUND CERTAIN AG REEMENTS FOR SALE EXECUTED BY THE ASSESSEE. THE ASSESSEE CLAIME D BEFORE THE ASSESSING OFFICER THAT THE PROPERTY AT PUZHAL WAS S OLD FOR A TOTAL CONSIDERATION OF ` 1,26,52,000/-. HOWEVER, THE ASSESSING OFFICER ON THE BASIS OF THE STATEMENT RECORDED FROM SHRI SUBRA MANYAN, FOUND THAT THE SALE CONSIDERATION WAS ` 3,27,21,000/-. THE MAIN CONTENTION OF THE ASSESSEE BEFORE THIS TRIBUNAL IS THAT NO SEARCH MATERIAL WAS FOUND TO INDICATE THAT THE ASSESSEE HA S RECEIVED ANY MONEY OVER AND ABOVE THE SALE CONSIDERATION DISCLOS ED IN THE SALE DEED. WE HAVE CAREFULLY GONE THROUGH THE PROVISION S OF SECTION 158BB(1) OF THE ACT. UNDER THE BLOCK ASSESSMENT SC HEME, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO TH E MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND THE INFOR MATION WHICH IS 8 I.T.(SS) A. NO.19/MDS /13 RELATABLE TO MATERIAL FOUND DURING THE COURSE OF SE ARCH OPERATION. FOR THE PURPOSE OF COMPUTING SALE CONSIDERATION AT ` 3,27,21,000/-, THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE STATEMENT MADE BY SHRI SUBRAMANYAM. OTHER THAN THE STATEMENT OF SHRI SUBRAMANYAM, THE LAND WAS SOLD FOR ` 39 LAKHS PER ACRE, NO OTHER MATERIAL IS AVAILABLE ON RECORD. THE CIT(APPEALS) EXTRACTED DETAILS OF THE SALE DEED AT PARA 7 OF HIS ORDER. THE VENDO R OF THE LAND SHRI M.N. MEENAKSHI SUNDARAM WAS ALSO EXAMINED AND HE EX PLAINED BEFORE THE ASSESSING OFFICER THAT THE LAND WAS SOLD FOR A CONSIDERATION OF ` 1.36 CRORES ONLY AND HE DID NOT RECEIVE ANY MONEY OTHER THAN WHAT WAS DISCLOSED IN THE SALE DEE D. THEREFORE, THE ASSESSING OFFICER HAS TAKEN THE COST OF LAND AT ` 1.36 CRORES AND THE EXPENDITURE FOR DEVELOPMENT SAID TO BE MADE BY THE ASSESSEE IS ` 25 LAKHS WAS ALSO ACCEPTED BY THE ASSESSING OFFICER . HOWEVER, HE DISBELIEVED THE SOURCE FOR MAKING THE EXPENDITUR E FOR DEVELOPMENT CHARGES. WHEN THE ASSESSING OFFICER AC CEPTED THAT THE ASSESSEE HAS INCURRED EXPENDITURE FOR DEVELOPME NT TO THE EXTENT OF ` 25 LAKHS, IN THE ABSENCE OF ANY OTHER MATERIAL FOUN D DURING THE SEARCH OPERATION, THERE IS NO REASON FOR DISBELIEVING THE SOURCE FOR MAKING THE INVESTMENT. IN OTHER WORDS, IN THE ABSENCE OF 9 I.T.(SS) A. NO.19/MDS /13 ANY SEARCH MATERIAL WITH REGARD TO SOURCE OF ` 25 LAKHS, THERE CANNOT BE ANY ASSESSMENT AS UNDISCLOSED INCOME FOR THE BLO CK PERIOD. AT THE BEST, AN ADDITION CAN BE MADE ONLY IN THE REGUL AR ASSESSMENT. 7. THE ASSESSING OFFICER HAS ALSO MADE AN ADDITION OF ` 25 LAKHS TOWARDS ADVANCE SAID TO BE RECEIVED FROM SHRI SUBRAMANYAM AND SHRI SARAVANAN. THE FACT REMAINS THAT THE ASSE SSEE HAS RECEIVED ` 25 LAKHS AS ADVANCE. EVEN IF THE SAME WAS NOT RETU RNED TO THE RESPECTIVE PERSONS, THE LIABILITY OF THE ASS ESSEE TO REFUND THE AMOUNT CONTINUES, THEREFORE, THE ADVANCE WILL NOT A CCRUE TO THE ASSESSEE UNLESS IT IS FOREGONE BY THE PERSON WHO PA ID THE ADVANCE. IT IS NOBODYS CASE THAT SHRI SUBRAMANYAM AND SHRI SARAVANAN HAD WRITTEN OFF THE ADVANCE. IF SHRI SUBRAMANYAM AND S HRI SARAVANAN HAVE NOT WRITTEN OFF THE ADVANCE AND THE LIABILITY OF THE ASSESSEE CONTINUES, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THERE CANNOT BE ANY ADDITION AS UNDISCLOSED INCOME FOR TH E BLOCK PERIOD IN RESPECT OF THE SO-CALLED ADVANCE. FOR ANY REASO N, THE SAID SHRI SUBRAMANYAM AND SHRI SARAVANAN WRITE OFF THEIR ADVA NCE, THEN AT THE BEST THE SAME MAY GO TO REDUCE THE COST OF THE LAND WHILE COMPUTING THE CAPITAL GAIN. THEREFORE, SEPARATE AD DITION MADE BY THE ASSESSING OFFICER TO THAT EXTENT IS NOT JUSTIFI ED. THE 10 I.T.(SS) A. NO.19/MD S/13 CIT(APPEALS) BY PLACING RELIANCE ON THE STATEMENT S AID TO BE MADE BY ONE SHRI SUNDARRAJAN, THE REPRESENTATIVE OF THE ASSESSEE, DETERMINED THE SALE CONSIDERATION AT ` 2.02 CRORES. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF AN Y SEARCH MATERIAL, THE STATEMENT MADE BY SHRI SUNDARRAJAN CA NNOT BE A BASIS FOR MAKING ADDITION IN THE BLOCK ASSESSMENT. AS AL READY OBSERVED, UNDISCLOSED INCOME FOR THE BLOCK PERIOD HAS TO BE C OMPUTED ONLY ON THE BASIS OF MATERIAL FOUND DURING SEARCH OPERATION . THE STATEMENT OF THE REPRESENTATIVE OF THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS CANNOT FORM PART OF MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. MOREOVER, IT IS NO T CLEAR FROM THE MATERIAL AVAILABLE ON RECORD WHETHER THE ABOVE SAID SHRI SUNDARRAJAN HAS BEEN AUTHORIZED BY THE ASSESSEE TO MAKE SUCH STATEMENT BEFORE THE ASSESSING OFFICER. IN THE ABS ENCE OF ANY SUCH MATERIAL, THE STATEMENT RECORDED FROM SHRI SUNDARRA JAN CANNOT BE RELIED UPON BY THE ASSESSING OFFICER OR BY CIT(APPE ALS) TO COMPUTE THE SALE CONSIDERATION. THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT IN THE ABSENCE OF ANY OTHER MATERIAL OTHER THA N THE STATEMENT OF SHRI SUNDARRAJAN, THE SALE CONSIDERATION DISCLOSED IN THE SALE DEED HAS TO BE ACCEPTED. ACCORDINGLY, THE ASSESSING OFF ICER IS DIRECTED 11 I.T.(SS) A. NO.19/MD S/13 TO TAKE THE SALE CONSIDERATION AT ` 1,26,52,000/-. IN VIEW OF THE ABOVE DISCUSSION, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ADDITION MADE BY THE A SSESSING OFFICER IS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 11 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 3 /DATED, THE 11 TH DECEMBER, 2015. KRI. , */45 651/ /COPY TO: 1. '( /APPELLANT 2. *+'( /RESPONDENT 3. . 7/ () /CIT(A)-II, CHENNAI 4. . 7/ /CIT, CENTRAL-II, CHENNAI 5. 58 */ /DR 6. 9: ; /GF.