ACIT, COIMBATORE vs. T.R.NATARAJ GANESH, COIMBATORE

आयकर अपील�य अ�धकरण, ‘‘ए’’ �यायपीठ, चे�नई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी अ�ाहम पी. जॉज�, लेखा सद�य एवं �ी धु�वु� आर.एल रे�डी, �या�यक सद�य के सम� Before Shri Abraham P. George, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member आयकर अपील सं./I T.A. No. 2539/Mds/2014 �नधा�रण वष�/Assessment Year:2009-10 The Assistant Commissioner of Shri T.R. Nataraj Ganesh, Income Tax, Circle II, Vs. No. 6, Appusamy Layout, Red Fields, Coimbatore. Coimbatore 641 045. [PAN:AIEPN2466R] (Appellant) (Respondent) अपीलाथ� क� ओर से / Appellant by : Shri AR. V. Sreenivasan, JCIT ��यथ� क� ओर से/Respondent by : Shri S. Sridhar, Advocate सुनवाई क� तार�ख/ Date of hearing : 31.08.2017 घोषणा क� तार�ख /Date of Pronouncement : 27.09.2017 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:

This appeal preferred by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Coimbatore dated 09.07.2014 relevant to the assessment year 2009-10. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in deleting the addition made on account of payment made by the assessee to Shri Dhanabal (brother-in-law) of Shri Shanmuganathan), which was treated as unsecured loan by him.

2.1 The assessee Shri Nataraj Ganesh, Shri T. Murugesan, Shri V. Palanisamy and Shri Shanmuganathan had jointly carried out real estate venture at Kinathukadavu, Coimbatore. A survey was conducted and as per survey report, Shri Shanmuganathan, led the venture of purchase and sale of immovable properties on his own behalf and also on behalf of others, as mentioned above. Based on the survey, an enquiry was conducted from Shri K.K. Sakthivel, who was the power holder for the assessee Shri Nataraj Ganesh. The assessee has paid a sum of ₹.25.52 lakhs for purchase of 15.24 acres and sold the same property to Almaco Properties P. Ltd. for a sum of ₹.3,58,14,000/- and offered ₹.1,84,77,483/- as short term capital gain. The assessee has taken ₹.1,73,36,517/- as the cost of acquisition, whereas, he had paid ₹.25.52 lakhs only for the purchase of land which should be only his cost of acquisition. On an enquiry by the survey wing, Shri Sakthivel has deposed on 03.11.2008 that out of total sale consideration received, ₹.1,48,00,000/- was paid back to Shri Shanmuganathan as required by him, who was enabled the venture of purchase and sale of the said property along with others. Pending completion of assessment in the case of Shri Shanmuganathan, the cost of acquisition should be only ₹.25.52 lakhs instead of assessee’s claim of ₹.1,73,36,517/-. Accordingly, the assessment was reopened and notice under section 148 of the Act was issued to the assessee on 30.03.2012. Notice under section 143(2) of the Act was also issued and served on the assessee. After considering the submissions of the assessee and verification of details filed by the assessee, the assessment under section 143(3) r.w.s. 147 of the Act was completed assessing total income of the assessee at ₹.2,63,42,259/- after making protective assessment of ₹.60,00,000/- in the hands of the assessee, which was stated to have paid to Shri Dhanabal and ₹.18,00,000/- was added since the assessee could not file any evidence having paid the sum to Shri Shanmuganathan.

5.1 It also emanates from the order of the Tribunal in the case of Shri Shanmuganathan at page 22 that the assessee (Shri Shanmuganathan) acknowledges that Shri Nataraj Ganesh had paid only ₹.70.00 lakhs to the assessee [Shri Shanmuganathan] and ₹. 60.00 lakhs to Shri Dhanapal, the brother-in-law of Shri Shanmuganathan and denied receipt of ₹.17.00 lakhs in cash. Since no confirmation towards the payment of ₹.17.00 lakhs to Shri Shanmuganathan is available with the authorities below, the addition of ₹.17.00 lakhs in the hands of the assessee stands confirmed.

5.2 With regard to the payment of ₹.60.00 lakhs through DD to Shri Dhanabal, the Assessing Officer having jurisdiction, summoned to file balance sheet, bank statement, etc. In the balance sheet Shri Dhanabal has treated the amount of ₹.60.00 lakhs received from the assessee [Shri Nataraj Ganesh] under the category of ‘unsecured loan’. As per bank statement of Bank of Indian of Shri Dhanabal, the Assessing Officer noticed that the amount received from Shri Nataraj Ganesh was diverted to M/s. Lakshmi Exports, but the assessee has not filed any deed of the partnership and other partners name, etc. Shri Dhanabal neither produced any evidence to show that the sum paid was to be treated as unsecured loan/land purchase advance nor submitted any evidence for the liability outstanding status. As per the communication of the Assessing Officer having jurisdiction over Shri Dhanabal, Shri Dhanabal has not denied the receipt of ₹.60.00 lakhs from the assessee and moreover, he has not accepted that the said amount was paid towards land purchase advance or joint venture as claimed by power agent Shri Shakthivel and the assessee. If the assessee claims that the amount was paid towards joint venture, then, the said amount has to be assessed in the hands of Shri Dhanabal as income or, if it is to be treated as loan given by the assessee, then, it has to be assessed in the hands of the assessee. However, the assessment in the case of Shri Dhanabal is not available on record to decide the issue. With the above observations, we remit the matter back to the file of the Assessing Officer to verify the books of all the assessees and decide the issue in accordance with law after allowing opportunity of hearing to the assessee.

Order pronounced on the 27th September, 2017 at Chennai.