ACIT NON CORPORATE CIRCLE 1, COIMBATORE vs. P.ELANGO, COIMBATORE

This appeal filed by the revenue and cross objection filed by the assessee are directed against the order passed by the learned Commissioner of Income Tax (Appeals)-2, Chennai, dated 18.12.2017 and pertains to assessment year 2007-08. Since, facts are identical and issues are common, for the sake of convenience, the appeal filed by the revenue and the cross :-2-: ITA. No:772/Chny/2018 & CO No: 83/Chny/2018 objection filed by the assessee are being heard together and are being disposed off, by this consolidated order.

The revenue has raised the following grounds of appeal: “1. The Ld CIT(A) erred in re-computing the income of the assessee.

The ld. CIT-DR, Dr. R. Mohan Reddy, submits that the ld. CIT(A) erred in estimating 3% brokerage on total sale consideration of the property without appreciating fact that the assessee name is appearing in the sale deed as confirming party and further there is no material on record to prove that the money withdrawn from the bank accounts was given to the sellers. He further submits that, although the Tribunal has given an opportunity to the assessee to appear before the Assessing Officer and to file necessary evidences, but the assessee could not appear in spite of the Assessing Officer had given sufficient opportunity and also for cross examination of the various parties including the seller of the property, power agent and other persons. The ld. CIT(A) without appreciating relevant facts simply estimated 3% brokerage and deleted additions made by the Assessing Officer.

We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The facts with regard to the impugned dispute are that Mr. R. Ramalingam and Mr. Palanisamy represented their power of attorney agent Mr. M.P. Shamsudeen had sold an immovable property by way of sale deed dated 27.02.2017 to M/s. Commercial Buildwell Pvt Ltd for a consideration of Rs. 15,27,00,000/-. In the said sale deed, the assessee was referred to as confirming party. Further, as per said sale deed, out of total consideration of Rs. 15.27 crores, a sum of Rs. 12 :-6-: ITA. No:772/Chny/2018 & CO No: 83/Chny/2018 crores has been paid to the appellant. Further, remaining sum of Rs. 3.27 crores has been paid to Mr. M.P. Shamsudeen, power agent of the seller. The Assessing Officer assessed total sum received by the assessee from purchaser amounting to Rs. 12 crores in the hands of the assessee, because the assessee could not adduce any evidence as to why he has acted as an confirming agent. Further, during second round of litigation in pursuant to directions of the ITAT, when the Assessing Officer called upon the assessee to explain the transactions, the assessee could not appear and furnish necessary details. Further, the Assessing Officer summoned and recorded statement of Mr. Ramalingam and Mr. Palanisamy and in the sworn statement, they have admitted that they have received a sum of Rs. 8.5 crores for the sale of total land of 13 acres through their power of attorney Mr. M.P. Shamsudeen. Further, M.P. Shamsudeen, power agent of the land owners in his sworn statement stated that 6.9 acres of land was sold to M/s. Commercial Buildwell Pvt Ltd, through a facilitator Mr. Arulmudi of Chennai to whom the assessee Mr. Elango is an associate, for a sum of Rs. 3.27 crores. Further, the Assessing Officer called upon the assessee to cross examine the seller and the power agent, but the assessee did not utilize the opportunity. From :-7-: ITA. No:772/Chny/2018 & CO No: 83/Chny/2018 the above facts, it is clear that the assessee had received a sum of Rs. 12 crores from purchaser, even though he is neither owner of the property not power agent, except as a confirming party there is relationship with the seller of the land or the power agent, which is evident from the fact that the power agent clearly stated in his sworn statement that he does not know Mr. Elango. We further noted that the total sale consideration of the property as per sale deed is 15.27 crores. The land owner claims that they have received Rs. 8.5 crores through their power of attorney holder. The power of attorney Mr. M.P. Shamsudeen claimed, he has received a sum of Rs. 3.27 crores out of 15.27 crores. If we exclude 8.5 crores plus 3.27 crores, a total of Rs. 11.77 crores has been owned up and admitted by seller of land and power of attorney Mr. M.P. Shamsudeen. From the above, it is clear that although the assessee has received a sum of Rs. 12 crores, but as per admission of the land owners and power of attorney holder only a sum of Rs. 3.5 crores is left with assessee. However, the Assessing Officer has made additions of Rs. 12 crores . From the above it is very clear that there is something beyond what was stated by land owners, power of attorney holder and the assessee and it needs to be probed further. Further, although :-8-: ITA. No:772/Chny/2018 & CO No: 83/Chny/2018 assessee claims to have paid back sale consideration to the land owner in cash, except oral statement, there is no proof with assessee to prove his claim. Therefore, we are of the considered view that the issue needs to be verified by the Assessing Officer in light of these facts and to ascertain the real beneficiary of sale consideration of land, whether it is land owner, power of attorney, or confirming party, the assessee. Thus, we set aside the order of the CIT(A) and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to reexamine the issue in light of facts and if necessary, call the assessee to ascertain correct facts and also to cross examine all the parties. Needless to say, the assessee shall appear before the Assessing Officer without seeking any adjournment and file necessary explanation with regard to the transactions on sale of land and amount received from the buyer.

In the result, appeal filed by the revenue is allowed for statistical purposes.