YHEYYAMMA PAUL vs. ST.COMMR.OF INCOME TAX INVESTIGATION

ITA/196/2000HC KeralaKLHC01015277200004 December 2006Author: HONOURABLE MR.JUSTICE P.R.RAMAN,HONOURABLE MR.JUSTICE K.P.BALACHANDRAN6 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the assessee's contention that the entire business was transferred as a going concern was rejected. The Tribunal observed that the partnership deed indicated the assessee was entitled to 2% profit from the business and was also liable to share losses, implying she retained an interest in the business. The Tribunal found no evidence other than the assessee's statement at the time of search to support the claim that the Rs. 15 lakhs was for movable properties or the business. The Tribunal noted that if the Rs. 15 lakhs was for movable properties not part of the sale deed, it could have been shown separately or as capital contribution to the firm, which was not done. The Tribunal concluded that the sale consideration received by the assessee was Rs. 40 lakhs, not Rs. 25 lakhs as stated in the registered deed, and the Rs. 15 lakhs was part of this undisclosed sale consideration. The appeal was dismissed.

What were the facts?

The assessee, Mrs. Theyyamma Paul, is appealing an order from the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The ITAT had confirmed an assessment made by the Assistant Commissioner of Income Tax under Section 158 BC of the Income Tax Act for the block period 1.4.1986 to 12.12.1986. A search under Section 132 of the Income Tax Act at the assessee's residence revealed unaccounted investments in benami names. The assessee admitted in a sworn statement to receiving Rs. 15 lakhs over and above the registered sale consideration of Rs. 40 lakhs for a land and building, which she deposited in the names of relatives. The Assessing Officer treated this Rs. 15 lakhs as undisclosed income, a view upheld by the ITAT.

What were the issues?

1. Whether the amount of Rs. 15 lakhs received by the assessee can be attributed towards consideration for immovable properties and be subject to capital gains, or if it represents consideration for the sale of a business as a going concern. (Section 158 BC of the Income Tax Act) Assessee's Contention: The assessee argued that not only immovable properties but the entire business as a going concern was transferred. Therefore, the Rs. 15 lakhs should not be treated as consideration for immovable properties and subject to capital gains. Reliance was placed on a partnership deed executed on the same day. Revenue's Contention: The revenue's position, as reflected in the Assessing Officer's and ITAT's orders, was that the Rs. 15 lakhs was undisclosed income from the sale of immovable properties.

Which sections of the Income-tax Act were involved?

Section 158 BC,Section 132

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN MONDAY, THE 4TH DECEMBER 2006 / 13TH AGRAHAYANA 1928 ITA.No. 196 of 2000() --------------------- ITA.4COCH/1998 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT -------------- MRS.THEYYAMMA PAUL, TRICHUR BY ADV. SRI.KMV.PANDALAI SRI.P.J.JACOB RESPONDENT: ---------------- THE ASSISTANT COMMISSIONER OF INCOME TAX, INVESTIGATIONCIRCLE I, DIVISION I, TRICHUR. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04/12/2006, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

P.R. RAMAN & K.P. BALACHANDRAN, JJ. ================================== I.T.A. NO. 196

The order continues below.

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