S.PANNERSELVAM,CHENNAI vs. DCIT NON CORPORATE CIRCLE 10(1), CHENNAI

These three appeals filed by the assessee are directed against the orders of the learned Commissioner of Income Tax (Appeals)-12, Chennai dated 13.07.2018 and pertain to assessment years 2009-10, 2011-12 & 2012-13 respectively.

During the course of the assessment proceedings, when the Assessing Officer had asked the assessee to explain in respect of the amount of Rs. 93,75,000/-, the assessee submitted a letter dated 13.03.2015, as available in the Assessment Order which is reproduced as under: “I have made an agreement with SICAL COMPANY a sister concern of SPIC GROUP for buying 7 Acres of land in puzhal. I have given Rs. 1.5 crores as an advance in the year 2009 and I have agreed to register the above mentioned property by within six months. But unfortunately, 1 am unable to buy the entire land. Out of 7 acres, we informed the Sical company that 1 am able to take around 4 Acres only So, they have arranged one of their friend Mrs. Valliammal trustee of “The Umiyal aachi trust”. She wanted to buy the balance land with huge frontage in road side and willing to give more rate than we accepted the rate with Sical Company. After made a long discussion with Sical people and Umiyal aachi trust people The price was revised and fixed little more rate to (Jmaial aachi Trust and less rate for me. But, the Sical people told that they have decided the price for the entire 7 acres in the board of directors meeting So, If we revised the price in board meeting, they will cancel the agreement due to long delay. Finally, the umiyai aachi trust advocates said that the difference amount of Rs.1.25 crores will make it as a agreement benefit to me. This is the only reason for made this agreement. This is purely a price reduction for me due to short frontage of my Land („only 130 feetfrontaefor4 acres)” , 2670 & 2671/Chny/2018 :- 3 -:

The Assessing Officer after considering the explanation of the assessee, is of the opinion that the explanation is vague upon the proposed addition and accordingly the addition was made and brought to tax.

On appeal the Ld. CIT(A) confirmed the order of AO. On being aggrieved, the assessee carried the matter before this Tribunal.

The ld. counsel for the assessee has submitted that all the details about the cancellation fee of Rs. 93,75,000/- has been filed before the AO. The AO without considering any documents simply rejected the explanation of the assessee by observing that the explanation made by the assessee is vague and the same is confirmed by the Ld. CIT(A). The prayer of the assessee is submitted that all the details filed by me are directed to be considered.

On the other hand, the learned Departmental Representative has strongly supported the order passed by the lower authorities.

We have heard both the sides through Video-Conferencing, perused the materials available on record and gone through the orders of the authorities below. , 2670 & 2671/Chny/2018 :- 4 -: 9. The only issue involved in this appeal is in respect of an amount of Rs. 93,75,000/- received by the assessee relating to cancellation of transaction of immovable property. The case of the assessee is that it is only an arrangement between the parties and that he has not received any amount. To substantiate his case, he has filed paper book consisting of 1-43 pages and he has submitted that the AO has not considered agreement filed by the assessee. We have gone through the order of the Ld. CIT(A) and we found that the AO simply made an addition by observing that the explanation is vague. By considering the above, we are of the opinion that the AO has to pass an order by considering the relevant documents. Thus, we set aside the order passed by the Ld. CIT(A) and remit the matter back to the file of AO to decide the issue denovo in accordance with law.

In the result, appeal filed by the assessee in is allowed for statistical purpose. & 2671/Chny/2018: 11. The only issue involved in these two appeals in respect of deemed dividend. In the assessment orders, the AO has noted that on perusal of the bank statement furnished by the AR during the assessment proceedings, it was noticed by the AO that the assessee has received a sum of Rs. 3,00,000/- on 27.08.2011 and Rs. 3,00,000/- on 16.09.2011 , 2670 & 2671/Chny/2018 :- 5 -: from M/s. Velmuragan Properties Pvt. Ltd. The assessee is a beneficiary shareholder of this company as per section 2(22)(e). The assessee was asked to explain that the amount received by him should not be treated as deemed dividend. No explanation is given by the assessee therefore, the addition is made and the same was confirmed by Ld. CIT(A).

Before us, the assessee has submitted that all the details are with the assessee but he could not file before the AO due to circumstances beyond his control. During the course of the appeal proceedings, the assessee pleaded that he may be given one more opportunity to substantiate his case before the AO.

We have heard both the sides through Video-Conferencing, perused the materials available on record and gone through the orders of the authorities below.

From the assessment order, we find that the AO simply made an addition u/s. 2(22)(e) on the ground that the assessee has not given any explanation. In our considered opinion, one more opportunity to the assessee has been given to substantiate his case. Thus, the order passed by the Ld. CIT(A) is set aside and we remit the matter back to the file of AO to decide the appeal denovo in accordance with law.

In the result, all the three appeals filed by the assessee are allowed for statistical purpose.