PAZHANIVEL THANGARASU,CUDDALORE V. ITO, WARD-1, CUDDALORE

ITA 2633/CHNY/2024

AI Insights

The case involves an appeal by Shri Pazhanivel Thangarasu against the orders of the Commissioner of Income Tax (Appeals), which confirmed the additions made by the Assessing Officer under section 69A of the Income Tax Act, 1961, for unexplained money amounting to Rs.36,75,250. The additions were based on a cash deposit of Rs.40,00,250 in the assessee's bank account, which the Assessing Officer believed to be unexplained. The assessee contended that the deposit was from the sale of immovable property, supported by a notarized sale agreement, whereas the sale deed registered showed a significantly lower amount. The Tribunal, after considering the arguments and evidence, partly allowed the appeal, accepting the explanation for part of the deposit but sustaining the addition for a smaller unexplained amount.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107937 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: Ponnusamy Lakshmi vs. ITO, DCIT vs. A P Sridhar (HUF), Shri Anthiah Pancras vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CLEMENT RAMESH KUMAR
• Assessee Lawyers: SAMYUKTHA BANUSEKAR; SUBMITTING
• Keywords: Reassessment proceedings; Capital Gains; Principle of natural justice
• Section: 148; 142(1); 69A; 234B

Judgement Text

"आयकर अपीलीय अिधकरण,‘सी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ᮰ी एबी टी वक᳹, ᭠याियक सद᭭य एवं ᮰ी एस. आर.रघुनाथा, लेखा सद᭭य के समᭃ BEFORE SHRI ABY T VARKEY, HON’BLE JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, HON’BLE ACCOUNTANT MEMBER आयकर अपीलसं/.ITA No.: 2633/CHNY/2024 िनधाᭅरण वषᭅ / Assessment Year: 2012-13 Shri Pazhanivel Thangarasu, 24/41, Sankaran Street, Cuddalore OT, Cuddalore – 607 003. PAN: APRPT6985K v. The Income Tax Officer, Ward-1, Cuddalore – 607 002. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Ms. Samyuktha Banusekar, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri Clement Ramesh Kumar, CIT सुनवाई की तारीख/Date of Hearing : 12.02.2025 घोषणा की तारीख/Date of Pronouncement : 17.02.2025 आदेश/ O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against separate orders passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 26.09.2024 and pertains to assessment year 2012-13. 2. The grounds of appeal raised by the assessee are as under: :-2-: ITA. No:2633/CHNY/2024 1. For that the order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case and prejudicial to the interest of the appellant and at any rate is opposed to the principles of equity, natural justice and fair play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the order of the Assessing Officer is without jurisdiction. Legal grounds - Reopening 3. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the assessment completed u/s.143(3) r.w.s.147 is bad in law. 4. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the order of reassessment passed u/s.143(3) r.w.s. 147 is barred by limitation. 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the reassessment has been completed without complying with the statutory requirements of law. Addition of Rs.36,75,250/- as unexplained money u/s.69A 6. For that the Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs.36,75,250/- as unexplained money u/s.69A of the Income Tax Act made by the Assessing Officer. 7. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the provisions of section 69A are not invocable in the facts and circumstances of the case. 8. For that the Commissioner of Income Tax (Appeals) erred in not appreciating the explanation along with evidences furnished by the appellant regarding the source of cash deposit to the tune of Rs.40,00,250/-. 9. For that the Commissioner of Income Tax (Appeals) failed to consider the sale agreement in respect of sale of immovable property and also failed to appreciate the fact that the appellant had adopted the value of sale consideration reflected in the sale agreement for the purposes of computing Long Term Capital Gains as against the lower value reflected in the sale deed. :-3-: ITA. No:2633/CHNY/2024 10. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer erred in not considering the Long Term Capital Gains admitted by the appellant arising on account of sale of immovable property and the consequent exemption claimed u/s.54F of the Income Tax Act. 11.For that the the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer erred in making the above addition on mere conjectures, surmises and suspicions. Levy of interest uls.234A, 234B and 234C of the Income Tax Act 12. For that the appellant objects to the levy of interest u/s.234A, 234B and 234C of the Income Tax Act, 1961. 3. The assessee is an individual and is assessed to tax by the National e-Assessment Centre. It is stated in the assessment order that as per AIR information available with the Department, the assessee had made a cash deposit of Rs.40,00,750/- into his savings bank account maintained with the Corporation Bank during the AY 2012-13. Based on the above information, the AO had reasons to believe that income to the extent of Rs.40,00,750/- has escaped assessment for the AY 2012-13 and therefore, initiated reassessment proceedings u/s.147 of the Income Tax Act, 1961 (hereinafter the ‘Act’). In response to notice u/s.148 of the Act, the assessee filed return of income on 10.04.2019 admitting total income of Rs.99,682/- including the Long Term Capital Gains to the tune of Rs.27,682/-. During the re-assessment proceedings, the assessee explained that the source of cash deposit was from sale of :-4-: ITA. No:2633/CHNY/2024 immovable property vide agreement of sale dated 06.12.2011 for a consideration of Rs.34,90,060/- despite the fact that said immovable property was ultimately registered on 14.03.2012 for a consideration of Rs.3,25,000/-. Further the assessee also explained that the said sale consideration has been utilized for purchasing a site in the name of his wife and also for construction of residential house on the said site and claimed deduction u/s.54F of the Act. However, the AO was not convinced with the explanation furnished by the assessee and made addition of Rs.36,75,250/- u/s.69A of the Act as unexplained money by holding as under:- “6. Furthermore, a show cause notice dated 09.04.2021 was issued to the assessee to furnish the reply on or before 16.04.2021, which was duly served upon the assessee on 09.04.2021, which is as under: \"As per bank account statement of the year under consideration you have deposited Rs. 40, 00,250 in cash on 15.03.2012. In response of the notices u/s 142(1) 09.02.2021 & 18.03.2021, you have furnished replies online. 2. You have submitted that an immovable property was sold by you at the consideration of Rs. 34,90,060/- but from the sale deed dated 14.03.2012, it is clear that it was transferred at Rs. 3,25,000/- and stamp duty paid thereon. 3. Further you have submitted an agreement dated 06.12. 2011, by which you have received Rs. 7,00,000/- but the said amount and agreement is not mentioned in the sale deed dated 14.03.2012. The furnished agreement is not registered agreement, it is just notary attested. Therefore, the genuineness of the agreement is proven when it is mentioned in the sale deed and all the terms are followed. :-5-: ITA. No:2633/CHNY/2024 4. You are required to show cause as to why the total amount of Rs. 3675250/-(4000250-325000) be not added to the total income of the A. Y. 2012-13 under section 69A of the I.T. Act, 1961 on account of unexplained money in the bank account.\" In response to the same, the assessee filed reply on 16.04.2021, the contentions of the assessee to the addition proposed are rejected and the cash deposit of Rs. 3675250/-(4000250-325000) is added to the total income under section 69A of the I.T. Act, 1961 on account of unexplained money in the bank account. 4. Aggrieved by the order of the AO, the assessee filed appeal before the CIT(A). On perusal of the documents and details furnished by the assessee, the Ld.CIT(A) confirmed the additions made by the AO by holding as under:- “10.1 These grounds of appeal are in regard to the addition made by the AO of Rs.36,75,250/- as unexplained money u/s.69A of the IT Act being the cash deposit in the bank account. The appellant has again claimed that the said cash was out of the sale consideration received on sale of immovable property. The appellant has again submitted that even though the sale value is shown at Rs.3,25,000/- in sale deed dated 14.03.2012, however the same was actually sold at Rs.34,09,060/- vide agreement dated 34,90,060/-. The same details were provided before the AO as well. 10.2 Both the documents have been perused carefully. As noticed from the agreement, the document is not registered but only notarized. Whereas for the same property, the appellant has submitted the sale deed claiming to be the sale consideration of Rs.3,25,000/-. The appellant has failed to submit any concrete clarification for the difference amount in the sale consideration as per the sale deed and self claimed agreement (huge difference as the sale value as per the agreement is more than 10 times as of sale deed). In the case of such doubts, reliance can only he made upon the document which carries the genuineness. In the instant case, only sale deed has been registered with the Sub Registrar Office, Kurunchipadi, :-6-: ITA. No:2633/CHNY/2024 Tamil Nadu. Therefore the sale consideration taken at Rs. 3,25.000/- by the AO is found to correct and per the law. 10.3 Apart from the above, the appellant had failed to produce any clarification/documentary evidence in support of the balance cash deposit in the bank account. Therefore, the AO had no other option but to add back the balance amount unexplained money in the hands of the appellant. 10.4 In regard to the appellant's contention that the AO completed the without considering the details submitted at the assessment order is also not correct as the AO has recorded the same in the assessment order and the addition was made after considering the same (such as sale consideration of Rs. 3,25,000/- was allowed by the AO). The appellant has raised these contentions just because the AO has rejected the appellant's claim and added back the unexplained cash deposit in the bank account. 10.5 In regard to the appellant's contention that the AO has not considered the sale value as per the agreement., the detailed discussion has already been made in the above paras wherein it was concluded that the sale consideration as per the sale deed can only be relied as the same was registered with the SRO. 10.6 In view of the above discussion, the balance amount of cash deposit remained unexplained and the AO's addition invoking the provision of section 69A of the IT Act is found to be correct and as per the law and the appellant's contention can not be accepted. Accordingly, these grounds of appeal are hereby dismissed.” Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 5. The Ld.AR for the assessee stated that the Ld.CIT(A) has erred in confirming the impugned additions in spite of explaining the source of cash deposit was from an agreement to sale of :-7-: ITA. No:2633/CHNY/2024 immovable property to the tune of Rs.34,90,060/-. The Ld.AR submitted a paper-book consisting of 30 pages as detailed below:- S.No. PARTICULARS PAGE No. 1 Declaration by Authorized Representative 1 2 Return of income along with statement of computation of total income of the appellant for the assessment year 2012- 13 2-4 3 Sale agreement dated 06.12.2011 in connection with sale of impugned property in Tamil language 5 – 8 4 English translation of the sale agreement mentioned in S.No.3 above 9-12 5 Sale deed dated 14.03.2012 in connection with sale of impugned property in Tamil language 13 – 24 6 English translation of the sale deed mentioned in S.No.5 above along with certificate of translation 25 – 29 7 Bank statement of the appellant for the period starting from 01.01.2012 to 31.03.2012 in respect of account maintained with Corporation Bank 30 5.1 Further the Ld.AR stated that the assessee has received an advance of Rs.7,00,000/- on 06.12.2011, Rs.3,00,000/- on 28.12.2011 and Rs.4,00,000/- on 09.01.2012 from the prospective buyer Thakshanamoorthy and the balance amount of Rs.20,90,060/- on the date of registering the sale deed on 14.03.2012 (refer page Nos.13 to 24 of PB). 5.2 The Ld.AR for the assessee further stated that the cash deposit of Rs.40,00,000/- made to his bank account on 16.03.2012 from sale of immovable property to the tune of Rs.34,90,060/- and balance Rs.5,09,940/- was out of his savings from earlier years and :-8-: ITA. No:2633/CHNY/2024 hence, prayed for deleting the addition which is confirmed by the Ld.CIT(A). 6. Per contra, the Ld.CIT-DR stated that the document of agreement to sale is not registered and also only notarized. The Ld.DR further stated as stated by the assessee the amounts have been received in the month of December and January as advance from the prospective buyer. However, the whole amount of Rs.40,00,000/- was deposited on 16.03.2012. Therefore, there is no nexus of the document shown which is not registered and the date of deposits made into the assessee’s bank account. In light of the above arguments, the Ld.DR prayed for confirming the addition by upholding the order of the Ld.CIT(A). 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. It is an admitted fact that the assessee has sold an immovable property on 14.03.2012 to Shri A.G.Thakshanamoorthy at Cuddalore District during the impugned assessment year through a registered sale deed for sale consideration of Rs.3,25,000/-. However, the assessee has brought to the notice of the assessing authority that a ‘sale agreement’ dated 06.12.2011 has been entered with a :-9-: ITA. No:2633/CHNY/2024 prospective buyer Shri Thakshanamoorthy for an agreed sale consideration of Rs.34,90,060/- for the above said immovable property and has received advance in cash as detailed below:- Amount Date Rs.7,00,000/- 06.12.2011 Rs.3,00,000/- 28.12.2011 Rs.4,00,000/- 09.01.2012 Further the assessee stated that he has received the balance consideration of Rs.20,90,060/- on the date of registration of sale deed i.e., on 14.03.2012. We note that the assessee has stated before the AO that the amount of Rs.40,00,000/- which has been deposited on 16.03.2012 was out of the sale consideration received as per the ‘agreement to sale’ entered with the prospective buyer for the sale of immovable property and the balance amount of Rs.5,09,940/- was out of his accumulated earnings from past 25 years. However, the AO was not convinced with the explanations and rejected the document of ‘sale agreement’ by making an addition of Rs.36,75,250/- as the difference between cash deposited of Rs.40,00,750/- (minus) – Rs.3,25,000/- sale consideration shown in the registered sale deed. The same has been confirmed by the Ld.CIT(A). :-10-: ITA. No:2633/CHNY/2024 7.1 We have observed that the assessee has entered into an sale agreement dated 06.12.2011 with a prospective buyer for a total consideration of Rs.34,90,060/- for sale of immovable property held at Cuddalore District measuring around 2000 sq.ft. The said document clearly shows that the assessee has received Rs.14,00,000/- as an advance on various dates as mentioned supra and the balance amount of Rs.20,09,060/- has been received on the date of registering the sale deed i.e., 14.03.2012 in favour of the buyer. Therefore, the assessee has discharged the onus by explaining the source to the tune of Rs.34,90,060/- out of Rs.40,00,750/- of cash deposit made into his bank account during the impugned assessment year. We also note that in the instant case the AO while framing the assessment order by making an addition as unexplained money could not disprove the source of cash deposit which was explained by the assessee by submitting the document ‘agreement to sale’ for sale of immovable property by making further investigation by issuing a summon to the buyer. Further, the AO has failed to establish that the assessee had any other source of income during the impugned assessment year for making such cash deposits into his bank account or could not prove that the advances received from the buyer of the immovable :-11-: ITA. No:2633/CHNY/2024 property was used by the assessee for some other investments or expenditure. 7.2 Further, we take note of the decisions of Chennai Bench of the Tribunal in the following cases in support of the claim of the assessee:- i) Ponnusamy Lakshmi vs. ITO in ITA No.49/CHNY/2024 ii) DCIT vs. A P Sridhar (HUF) in ITA No.2735/CHNY/2016 iii) Shri Anthiah Pancras vs. ITO in ITA Nos.27 & 28/CHNY/2017 In the case of Ponnusamy Lakshmi (supra), the Tribunal has held that sale consideration as per the ‘agreement to sale’ cannot be rejected merely the registered value shown in the sale deed is less than the agreed sale consideration by holding as under:- “6. We have heard the rival contentions, and perused the materials available on record. The assessee is a house wife aged about 74 years and has never filed her return of income. In response to notice u/s. 148 of the Act, she has filed her return of income showing total income of Rs. 67,88,216/-. The assessee in the return of income has shown sale consideration of Rs. 74,50,000/- on sale of land on 21.02.2011. The assessee has explained that she has received Rs.16,50,000/- on 29.10.2010 and the balance of Rs.50,00,000/- on 17.02.2011 on the date of registration as sale consideration and deposited the cash receipt in the bank account. However, the A.O has not accepted the assessee’s contention as the purchasers in the statement have stated that they have only paid Rs.3,18,000/- for purchase of the land. The Ld. CIT(A) has also confirmed the addition stating that the assessee has not furnished any evidence and material in support of her contention. The assessee has explained the source of cash deposit in the bank account as sale proceeds which have been received on two installments, one as advance and balance on date of registration. The land sold is registered as agriculture land by the :-12-: ITA. No:2633/CHNY/2024 Registrar, but the land is falling in Ward-A, Block-3, TS No.51/2 as per the Town Survey records. As per sale document, the land sold is situated in Kottuveerampalayam Main Road near Sathyamangalam Bus Stand. The A.O has not accepted the assessee’s explanation merely because, the purchasers have denied that they have not paid more than the registered value at Rs. 3,18,000/-. The land is situated within the municipal limit. We are aware of the ground situation that lands are sold much above the registered value. The date of cash deposited matches with the date of sale transaction. The principles of preponderance of property, human behavior and circumstantial evidence as laid down by the Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More 82 ITR 540 (SC) are to be considered to evaluate the evidences. Assessee has already shown the sales consideration in the return of income and has paid the tax. . We therefore, hold that the A.O and Ld CIT(A) were not justified to reject the assessee’s explanation of cash deposit in bank account. We accordingly, delete the addition made by A.O.” 7.3 Therefore, in the present facts and circumstances of the case and respectfully following the Tribunal’s decisions (supra), we are of the considered view that the Ld.CIT(A) has erred in confirming the addition without considering the sale consideration of Rs.34,90,060/- shown in the ‘agreement to sale’ as explained source of cash deposits made into assessee’s bank account during the impugned assessment year. Further, we are of the view that the assessee has failed to explain the source for balance cash deposit of Rs.5,01,950/- made to his bank account, therefore, we direct the AO to delete the addition to the tune of Rs.34,90,060/- as explained source of cash deposit and to sustain the addition of Rs.5,01,950/- as unexplained money. :-13-: ITA. No:2633/CHNY/2024 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 17th February, 2025 at Chennai. Sd/- (एबी टी वकŎ) (ABY T VARKEY) Ɋाियक सद˟/Judicial Member Sd/- (एस. आर.रघुनाथा) (S. R. RAGHUNATHA) लेखासद˟/Accountant Member चे᳖ई/Chennai, ᳰदनांक/Dated, the 17th February, 2025 RSR आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT, Chennai 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "