BALAJI FOUNDATION,ARUPPUKOTTAI vs. ITO, WARD-1, VIRUDHUNAGAR

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -1, Madurai, dated 04.12.2018 and pertains to assessment year 2007-08.

Shri N. Arjun Raj, the Ld. representative for the assessee, submitted that the Assessing Officer made an addition of ₹2,04,000/- being the difference between actual sale value and admitted value. According to the Ld. representative, the assessee engaged local intermediaries for removing obstruction from canvassing and taking necessary precautions to avoid obstruction from local VIPs for registration of plots. The excess amount stated in the agreement was specifically intended to meet the extra expenditure for removing obstruction. In fact, according to the Ld. representative, this amount was collected in advance through sale agreement. Therefore, the difference occurred between the actual sale and sale value admitted in the return of income. Hence, according to the Ld. representative, to verify the facts, the matter may be remitted back to the file of the Assessing Officer.

On the contrary, Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the sale agreement was found during the course of survey operation and the same was impounded. According to the Ld. D.R., the actual sale value of plots sold during the year under consideration was ₹41,09,078/-, whereas, the assessee admitted the sale value at ₹39,05,078/-. When the Assessing Officer requested the assessee to explain the difference of ₹2,04,000/-, according to the Ld. D.R., the assessee could not explain properly, therefore, the addition was made.

Having heard the Ld. representative for the assessee and the Ld. D.R., this Tribunal finds that admittedly there was difference between the actual sale value and admitted sale value. The assessee claims that extra money was obtained for canvassing and taking precaution for avoiding obstruction from local VIPs. It is not known what kind of obstruction would come from local VIPs for selling the plots. Even it is assumed that there is obstruction from local VIPs and the assessee had to pay extra money to avoid this obstruction, this would amount to illegal payment. Therefore, such a payment cannot be allowed as expenditure. In other words, the money collected over and above the sale consideration disclosed in the return of income has also necessarily to be taken as sale consideration. Therefore, the difference of ₹2,04,000/- has to be necessarily consider as income of the assessee. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal filed by the assessee stands dismissed.