ACIT, Salem v. Sri P.Madhurajan, Salem

ITA 374/CHNY/2009 | 2004-2005
Pronouncement Date: 21-10-2013 | Result: Allowed

Appeal Details

RSA Number 37421714 RSA 2009
Assessee PAN AAFHM7760L
Bench Chennai
Appeal Number ITA 374/CHNY/2009
Duration Of Justice 4 year(s) 6 month(s) 29 day(s)
Appellant ACIT, Salem
Respondent Sri P.Madhurajan, Salem
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 21-10-2013
Date Of Final Hearing 22-08-2013
Next Hearing Date 22-08-2013
Assessment Year 2004-2005
Appeal Filed On 23-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI BEFORE DR. O.K. NARAYANAN VICE PRESIDENT & SHRI VIKAS AWASTHY JUDICIAL MEMBER I.T.A. NO. 258/MDS/2009 ASSESSMENT YEAR : 2004-05 P. MADHURAJAN (HUF) PROP: BAALAJI PROCESS G.T. GARDEN KALIAMMAN KOIL THOTTAM MAGUDANCHAVADI VIA GUDALUR PO SALEM DISTRICT [PAN: AAFHM 7760 L] VS THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE SALEM I.T.A. NO. 374/MDS/2009 ASSESSMENT YEAR : 2004-05 THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE SALEM (APPELLANT) VS P. MADHURAJAN PROP: BAALAJI PROCESS G.T. GARDEN KALIAMMAN KOIL THOTTAM MAGUDANCHAVADI VIA GUDALUR PO SALEM DISTRICT [PAN: AAFHM 7760 L] (RESPONDENT) REVENUE BY : SHRI ARUN C. BHARAT CIT ASSESSEE BY : SHRI G. BASKAR ADVOCATE DATE OF HEARING : 22-08-2013 DATE OF PRONOUNCEMENT : 21-10-2013 O R D E R PER VIKAS AWASTHY JUDICIAL MEMBER: THE CROSS-APPEALS HAVE BEEN FILED BY THE ASSESSEE A ND THE REVENUE IMPUGNING THE ORDER OF THE COMMISSIONER OF INCOME I.T.A. NOS. 258 & 374/MDS/2009 2 TAX(APPEALS) SALEM DATED 02-12-2008 PASSED U/S. 1 53A R.W.S. 143(3) OF THE INCOME TAX ACT 1961 (HEREIN AFTER RE FERRED TO AS THE ACT) RELEVANT TO THE ASSESSMENT YEAR (AY) 2004-05. IN ITA NO. 258/2009 THE ASSESSEE HAS ASSAILED THE ORDER OF TH E CIT(APPEALS) CONFIRMING THE ADDITION OF ` 5 63 263/- TOWARDS INVESTMENT MADE IN SIDCO LAND. ON THE OTHER HAND THE REVENUE HAS ASSAILED THE ORDER OF CIT(APPEALS) FOR DELETING ` 32 51 872/- AS UN-DISCLOSED INVESTMENT IN LAND AT ARIYANOOR. 2. THE FACTS IN BRIEF ARE: A SEARCH WAS CONDUCTED I N THE CASE OF SHRI P. MADHURAJAN IN HIS INDIVIDUAL CAPACITY ON 1 0-08-2004 AT HIS RESIDENCE AND BUSINESS PREMISES. DURING SEARCH CE RTAIN DOCUMENTS BELONGING TO HUF OF WHICH SHRI P. MADHURA JAN IS THE KARTA WERE SEIZED. THE ASSESSEE [HUF] IS PRIMARI LY ENGAGED IN THE BUSINESS OF MONEY LENDING AND TEXTILE PROCESSIN G UNDER THE NAME AND STYLE OF M/S. BALAJI PROCESS GUDALUR. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE AY. 2004-05 ON 2 4-03-2005 DECLARING ITS INCOME AS ` 44 930/- AND AGRICULTURAL INCOME OF ` 3.00 LAKHS. CONSEQUENT TO SEARCH NOTICE U/S. 153C R.W. S. 153A(A) WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSES SMENT PROCEEDINGS U/S. 153A R.W.S. 143(3) OF THE ACT THE ASSESSING OFFICER MADE ADDITIONS IN THE INCOME RETURNED BY TH E ASSESSEE I.T.A. NOS. 258 & 374/MDS/2009 3 INTER-ALIA ON ACCOUNT OF UN-EXPLAINED INVESTMENT IN PURCHASE OF LAND MEASURING 92 CENTS AT ARIYANOOR - ` 42 70 072/- AND INVESTMENT IN SIDCO LAND - ` 5 63 263/-. AGGRIEVED AGAINST THE ASSESSMENT ORDER THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE C IT(APPEALS) VIDE IMPUGNED ORDER DATED 02-12-2008 DELETED THE A DDITION TO THE EXTENT OF ` 32 51 872/- IN RESPECT OF PURCHASE OF LAND AT ARIYA NOOR BUT UPHELD THE ADDITION MADE WITH REGARD TO INVESTM ENT IN SIDCO LAND. AGGRIEVED BY THE ORDER THE CIT(APPEALS) BOTH THE A SSESSEE AND THE REVENUE HAVE COME IN APPEAL BEFORE THE TRIB UNAL. 3. SHRI ARUN C. BHARAT APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT DURING THE ASSESSMENT YEAR UNDER CON SIDERATION THE ASSESSEE HAD PURCHASED A LAND MEASURING 92 CENT S AT ARIYANOOR VILLAGE AT SEERAGAPADY. THE ASSESSEE HAD PURCHASED THE LAND IN QUESTION ON 17-03-2004 VIDE REGISTERED DOCUMENT NO. 913/2004 FOR ALLEGED SALE CONSIDERATION OF ` 2.00 LAKHS ONLY. DURING THE COURSE OF SEARCH AN AGREEMENT FOR SALE OF THE SAME LAND WAS SEIZED. ACCORDING TO THE SEIZED AGREEMENT DATED 07-02- I.T.A. NOS. 258 & 374/MDS/2009 4 2001 THE SALE CONSIDERATION FOR 15000 SQ. FT. LAND WAS FIXED AT ` 106 PER SQ. FT. AS PER THE ENDORSEMENT MADE ON THE BACK OF THE AGREEMENT SHRI C. BALAN (VENDOR) HAD RECEIVED ` 2 60 100/- ON 09-01-2001AND ANOTHER SUM OF ` 9.00 LAKHS FROM SMT. K. VANAJA (VENDEE) ON 10-08-2004. AS PER AGREEMENT ` 4.00 LAKHS WAS PAID AT THE TIME OF EXECUTION OF AGREEMENT. SUBSEQ UENTLY THE AGREEMENT WAS CANCELLED ON 22-04-2002 AND SMT. VANA JA HAD ACKNOWLEDGED THAT SHE HAS RECEIVED THE ENTIRE SUM O F ` 15 60 100/- AS THE RE-PAYMENT OF THE ADVANCE AMOUNT PAID BY HER TO THE VENDORS. THE DR HAS PLACED ON RECORD A TRA NSLATED COPY OF THE AGREEMENT DATED 07-02-2001. THE LD. DR SUBMIT TED THAT IT IS HIGHLY IMPROBABLE THAT THE SAME LAND WHICH WAS SOLD AT SUCH CONSIDERABLE PRICE IN THE YEAR 2001 IS SOLD IN THE YEAR 2004 FOR A MEAGER VALUE OF ` 2.00 LAKHS. THE ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY VALID REASON FOR HUGE REDUCTION IN THE SAL E PRICE OF THE LAND. THE EXPLANATION FURNISHED BY THE ASSESSEE TH AT OWING TO FALL IN PRICES OF REAL ESTATE IT WAS DISTRESS SALE CA NNOT BE ACCEPTED. THE ASSESSEE HAD PURCHASED ANOTHER PROPERTY OF DEV ABALA GROUP FOR ` 43.00 LAKHS AROUND THE SAME TIME AND SUBSEQUENTLY SOLD IT FOR ` 77.25 LAKHS SHOW THAT THERE WAS NO FALL IN REAL EST ATE PRICES. THUS THE THEORY OF DISTRESS SALE PURPO RTED BY THE ASSESSEE DOES NOT HOLD THE GROUND. THE LD. DR FURT HER CONTENDED I.T.A. NOS. 258 & 374/MDS/2009 5 THAT A PERUSAL OF THE ASSESSMENT ORDER WOULD CLEARL Y SHOW THAT THE VENDORS AND THE VENDEE HAVE BEEN TAKING CONTRADICTO RY STAND WITH REGARD TO THE SALE OF LAND. THE VENDORS HAVE NOT S UPPORTED THE VERSION OF THE ASSESSEE THEREFORE NO RELIANCE CAN BE PLACED ON THE SUBMISSIONS MADE BY THE ASSESSEE. THE LD. DR S UBMITTED THAT THE CIT(APPEALS) HAS ACCEPTED IN PRINCIPLE THAT ON MONEY WAS RECEIVED BUT HAS ERRED IN COMING TO THE CONCLUSION THAT THE ADVANCE PAID IS THE TOTAL CONSIDERATION. THE LD. D R FURTHER CONTENDED THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE BOOKS OF ACCOUNT DESPITE REPEATED NOTICES DURING ASSESSMENT PROCEEDINGS. THE FACT THAT THE ASSESSEE IS NOT MAINTAINING PROPE R BOOKS HAS BEEN ADMITTED BY THE ASSESSEE DURING SEARCH PROCEED INGS. 4. ON THE OTHER HAND SHRI G. BASKAR ADVOCATE APP EARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTING THE ORDE R OF THE CIT(APPEALS) ON THIS ISSUE SUBMITTED THAT THE ADDIT IONS HAVE BEEN MADE BY THE ASSESSING OFFICER ONLY ON THE BASIS OF PRESUMPTIONS. THE LD. COUNSEL SUBMITTED THAT SHRI C. BALAN IS A L AND BROKER AND HAND ENTERED INTO AN AGREEMENT WITH MR. PACHIAPPAN AND OTHERS WITH RESPECT TO 92 CENTS OF AGRICULTURAL LAND IN QU ESTION. SHRI C. BALAN HAD PROPOSED TO CONVERT THE LAND IN TO A RESI DENTIAL COLONY AND SELL IT IN SMALLER PLOTS. SHRI C. BALAN HAD EN TERED INTO AN I.T.A. NOS. 258 & 374/MDS/2009 6 AGREEMENT DATED 07-02-2001 WITH SMT. VANAJA FOR SAL E OF 15000 SQ. FT. DEVELOPED HOUSING PLOTS ABUTTING NATIONAL H IGHWAY @ 106 PER SQ. FT. FOR THIS VENTURE SHRI C. BALAN HAD BOR ROWED ` 10.00 LAKHS FROM TWO FIRMS IN WHICH ASSESSEE WAS PARTNER/ MANAGER. SINCE MR. BALAN COULD NOT START THE PROJECT HE DE CIDED TO SELL THE LAND AS IT IS. THE ASSESSEE PURCHASED THE SAID LAN D FROM C. BALAN. THE SUM OF ` 10.00 LAKHS GIVEN TO HIM AS LOAN WAS TREATED AS SALE CONSIDERATION AND FURTHER A SUM OF ` 2.00 LAKHS WAS ALSO PAID TO HIM. THE ASSESSEE PAID ANOTHER SU M OF ` 46 000/- FOR GETTING THE SALE DEED REGISTERED IN HI S NAME. THUS THE TOTAL COST INCURRED BY ASSESSEE FOR ACQUIRING T HE LAND IS `1 2 46 000/-. THE LD. COUNSEL FURTHER SUBMITTED THA T THE LAND PURCHASED BY THE ASSESSEE IS AGRICULTURAL LAND WHIC H CANNOT BE COMPARED WITH FULLY DEVELOPED RESIDENTIAL PLOTS WHI CH WERE INTENDED TO BE SOLD VIDE AGREEMENT DATED 07-02-2001 . THE LD. COUNSEL FURTHER SUBMITTED THAT THERE IS NO EVIDENCE TO SHOW THAT THE ASEESSEE PAID MORE THAN ` 12 46 000/- AS SALE CONSIDERATION AND IT IS ALSO A FACT THAT THE ASSESSEE SOLD THE S AID LAND ON 27-10- 2004 FOR ` 5 71 000/- WHICH WAS DISCLOSED BY THE ASSESSEE IN H IS RETURN OF INCOME FOR THE PERIOD RELEVANT TO THE AY. 2005-06. I.T.A. NOS. 258 & 374/MDS/2009 7 AS REGARDS THE GROUNDS RAISED IN APPEAL OF THE ASSE SSEE IMPUGNING THE ORDER OF CIT(APPEALS) THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE WITH REGARD TO INVESTMENT MADE IN SIDCO LAND. THE LD. COUNSEL FURTHER CONTENDED THAT THERE IS NO DISPUTE THAT BORROWINGS WERE MADE BY THE ASSESSEE BY CHEQUES FRO M TWO FIRMS AND THE ASSESSEE WAS ABLE TO EXPLAIN THE ENTIRE SOU RCE OF FUNDS FOR INVESTMENT IN SIDCO. THE LD. DR CONTROVERTING THE SUBMISSIONS MADE BY THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT A PERUSAL OF PARA NO.15 OF THE ORDER OF THE CIT(APPEALS) WOULD S HOW THAT THE ASSESSEE HAD ADMITTED THE FACT THAT THE INVESTMENT IN SIDCO LAND IS UN-EXPLAINED. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE CROSS-APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE REVENUE IMPUGNING THE ORDER OF THE CIT(APPEALS). 6. IN ITA NO. 258/2009 THE ASSESSEE HAD ASSAILED T HE ADDITION CONFIRMED BY THE CIT(APPEALS) WITH REGARD TO THE IN VESTMENT OF ` 5 63 263/- MADE IN SIDCO LAND. THE LD. COUNSEL FOR THE I.T.A. NOS. 258 & 374/MDS/2009 8 ASSESSEE HAS SUBMITTED THAT THE ENTIRE INVESTMENT I N PURCHASE OF SIDCO LAND HAS BEEN EXPLAINED. A SUM OF ` 1.00 LAKH WAS WITHDRAWN FROM ALLAHABAD BANK ON 10-11-2013 FROM TH E INDIVIDUAL ACCOUNT OF SHRI P. MADHURAJAN ANOTHER SUM OF ` 4.00 LAKHS WAS WITHDRAWN FROM CANARA BANK ON 06-12-2003. OUT OF T HE AFORESAID ` 5.00 LAKHS A SUM OF ` 4 50 000/- WAS DEPOSITED INTO ASSESSEES ACCOUNT WITH ALLAHABAD BANK ON 08-12-2003. ANOTHER SUM OF ` 1 20 000/- WAS RECEIVED THROUGH CHEQUE IN FAVOUR OF M/S. BALAJI PROCESSORS. THUS SUFFICIENT FUNDS WERE AVAILABLE WITH THE ASSESSEE FOR TAKING OUT A DEMAND DRAFT OF ` 5 63 263/-. 7. WE FIND THAT THE ABOVE DETAILS WERE NEVER GIVEN BY ASSESSEE EITHER BEFORE ASSESSING OFFICER OR THE CIT(APPEALS) . NO REASON WHATSOEVER IS GIVEN BY THE LD. COUNSEL AS TO WHAT PREVENTED THE ASSESSEE TO FURNISH THE DETAILS BEFORE LOWER AUTHOR ITIES. THE ASSESSING OFFICER IN HIS ORDER HAS CATEGORICALLY ST ATED THAT VIDE LETTER DATED 19-11-2004 THE ASSESSEE HAD SUBMITTED THAT HE WOULD ADMIT THE WHOLE AMOUNT OF ` 35.00 LAKHS FOR PURCHASING LAND FROM SIDCO AS UN-EXPLAINED INVESTMENT AS THE LOAN TAKEN FOR THE ABOVE INVESTMENT IS UN-EXPLAINABLE. SUBSEQUENTLY THE AS SESSEE CHANGED ITS STANCE AND AFTER FABRICATION OF ACCOUNT S CLAIMED THAT THE AMOUNTS WERE CREDITS FOR INVESTMENT. THE CIT(A PPEALS) IN HIS I.T.A. NOS. 258 & 374/MDS/2009 9 ORDER HAS CATEGORICALLY STATED THAT THE ASSESSEE HA D NOT PRODUCED ANY ADDITIONAL EVIDENCE TO SHOW THAT THE ASSESSEE H AD BORROWED ANY FUNDS FROM M/S. NEW ASHOK FINANCE ELLAMPILLAI OR ELLAMPILLAI ASHOK CORPORATION FOR UTILIZING THE SAME FOR INVEST MENT IN SIDCO. 8. WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS MAD E BY THE LD. COUNSEL FOR THE ASSESSEE. NO RELIABILITY CAN BE PL ACED ON THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE. THE AS SESSEE HAS BEEN TAKING DIFFERENT STAND BEFORE THE AUTHORITIES BELOW AND BEFORE US TO COVER UP THE INVESTMENTS MADE IN SIDCO LAND. THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE THEREFORE THE SAME IS DISMISSED. 9. IN ITA NO. 374/2009 THE REVENUE HAS IMPUGNED TH E ORDER OF THE CIT(APPEALS) WITH REGARD TO PARTLY DELETING THE ADDITION IN RESPECT OF INVESTMENTS MADE IN LAND AT ARIYANOOR. IT IS NOT DISPUTED THAT WITH REGARD TO THE LAND IN QUESTION THERE WAS EARLIER SALE AGREEMENT DATED 07-02-2001 BETWEEN SHRI C. BAL AN & OTHERS AND SMT. K. VANAJA FOR SALE OF LAND MEASURING 15000 SQ. FT. @ ` 106 PER SQ. FT. AND A SUM OF ` 4.00 LAKHS WAS PAID AT THE TIME OF EXECUTION OF AGREEMENT AND ANOTHER SUM OF ` 11 60 000/- WERE PAID ON DIFFERENT DATES. SUBSEQUENTLY ON 22 ND APRIL 2002 THE I.T.A. NOS. 258 & 374/MDS/2009 10 AGREEMENT WAS CANCELLED AND THE ENTIRE AMOUNT OF ` 15 60 000/- WAS RE-PAID TO SMT. VANAJA. THREE YEARS THEREAFTER THE SAME LAND WAS PURCHASED BY THE ASSESSEE VIDE REGISTERED DOCUM ENT DATED 17-03-2004 FOR ` 2.00 LAKHS ONLY. THE LD. COUNSEL FOR THE ASSESSEE HAS TRIED TO EXPLAIN THAT THE PRICES OF RE AL ESTATE HAD COME DOWN CONSIDERABLY THEREFORE THE LAND WAS SOL D AS DISTRESS SALE. THE LD. COUNSEL HAS ALSO SUBMITTED THAT THE AGREEMENT DATED 07-02-2001 WAS IN RESPECT OF DEVELOPED HOUSIN G PLOTS WHEREAS AS SUBSEQUENT AGREEMENT DATED 17-03-2004 IS IN RESPECT OF AGRICULTURAL LAND. THE CIT(APPEALS) HAS SUSTAIN ED THE ADDITION OF ` 10 18 200/- ON THE GROUND THAT THERE IS EVIDENCE TH AT THE ASSESSEE HAD ADVANCED A SUM OF ` 10.00 LAKHS TO SHRI C. BALAN AND THE REMAINING AMOUNT OF ` 18 200/- TOWARDS STAMP DUTY AND REGISTRATION CHARGES. THE CIT(APPEALS) DELETED THE BALANCE ADDITION OF ` 32 51 872/-. 10. WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A PPEALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER. THE CIT(APPEALS) HAS FAILED TO TAKE INTO CONSIDERATION THE FACT THAT NO PLAUSIBLE EXPLANATION WAS FURNISHED BY THE ASSESSEE TO SHOW THAT THERE WAS FALL IN THE REAL ESTATE PRICES DURING THE PAST YEARS. ON THE CONTRARY VALUE OF ANOTHER PIECE OF LAND WHICH WAS PURCHASED I.T.A. NOS. 258 & 374/MDS/2009 11 BY THE ASSESSEE FROM DEVABALA GROUP AROUND SAME T IME HAD APPRECIATED. THIS FACT HAS NOT BEEN DISPUTED BY TH E ASSESSEE. THE CIT(APPEALS) HAS ONLY TAKEN INTO CONSIDERATION THE AMOUNT OF ` 10.00 LAKHS ADVANCED BY THE ASSESSEE TO SHRI C. BAL AN. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS ADMITTED T HAT THE COST PAID BY THE ASSESSEE IN RESPECT OF LAND IN QUESTION IS ` 12 46 000/- (BORROWINGS BY C. BALAN RS. ` 10 00 000/- + ADDITIONAL AMOUNT PAID RS. ` 2 00 000/- + STAMP DUTY RS. ` 46 000/-). THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN ANOTHER PLEA THAT THE EARLIE R AGREEMENT DATED 07-02-2001 WAS IN RESPECT OF DEVELOPED HOUSIN G PLOT. THE DR HAS PLACED ON RECORD TRANSLATED COPY OF THE SAID AGREEMENT. A PERUSAL OF THE SAME SHOWS THAT NO WHERE IT HAS BEEN MENTIONED IN THE AGREEMENT THAT THE AGREEMENT IS IN RESPECT OF D EVELOPED RESIDENTIAL PLOTS. THEREFORE THIS CONTENTION OF T HE COUNSEL FOR THE ASSESSEE IS NOT SUSTAINABLE. 11. WE FIND THAT THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE IS WELL REASONED AND DETAILED. THEREFORE WE SET A SIDE THE FINDINGS OF THE CIT(APPEALS) ON THIS ISSUE AND RESTORE THE F INDINGS OF THE ASSESSING OFFICER. ACCORDINGLY THE APPEAL OF THE REVENUE IS ALLOWED. I.T.A. NOS. 258 & 374/MDS/2009 12 TO CONCLUDE ITA NO. 258/MDS/2009 FILED BY THE ASS ESSEE IS DISMISSED AND ITA NO. 374/MDS/2009 FILED BY THE REV ENUE IS ALLOWED. ORDER PRONOUNCED ON MONDAY THE 21 ST OCTOBER 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 21 ST OCTOBER 2013 TNMM COPY TO: ASSESSEE/AO/CIT(A)/CIT/DR