RAJU SENTHIL KUMAR,ERODE vs. ITO, WARD 1(4), ERODE, ERODE

The order passed by the Learned Commissioner of Income tax (Appeals) is against the facts of the case and in error and without application of mind.

The Learned Commissioner of Income tax (Appeals) ought to have understood the fact that, the appellant neither passed the Purchase consideration to the seller of the immovable properties nor taken possession of the properties except the spending of the Registration charges and owning only the Legal title. 3. The Learned Commissioner of Income tax (Appeals) erred in adjudicating the order without considering the submissions made by the appellant and also without applying his mind on whether the purchase consideration has been passed or not. Also he presumes that the monies purported to be paid would have been from the unaccounted sources. 4. The Learned Commissioner of Income tax (Appeals) also erred in stating that the appellant peacefully enjoying the properties, without finding the facts that the properties are still with the seller except the legal title in the name of the appellant. 5. The Learned Commissioner of Income tax (Appeals) ought to have understood the submissions made by the appellant, wherein he had clearly stated that he had given sworn statement in which he himself accepts that except the Registration charges, no further Purchase consideration has been passed on to the seller and the appellant facing consequential criminal action taken by the seller before the court of law. 6. The Learned Commissioner of Income tax (Appeals) ought to have applied his mind in verifying whether the cheques given by the appellant have been honored or not. Also the department has every right to check and inspect the properties and its possession and its status before passing the order. 7. For these and other grounds that may be adduced at the time of hearing, the appellant prays that the order passed by the Commissioner of Income tax (Appeals) is not in order and the order may kindly be dismissed and the appeal may be allowed in favour of the appellant.

The brief facts of the case are that the assessee is an individual and Ex-Managing Director of M/s A-Team Information Technology Ltd., a company which was engaged in the business of purchase and sale of Computers and allied accessories in Erode now under liquidation. Assessee filed his return of income for the AY 2013-14 on 28-01-2015 returning the total income of Rs.5,92,000/-. A survey was conducted in the premises of M/s. A Team Information Technology Ltd. on 19-03-2014. During the course of survey, it was noticed that the following three lands near Chennai were purchased by the assessee during the financial year 2012-13 for a consideration of Rs. 6,10,36,800/- i.e., 1) 2,05,845 square feet in the Rainbow Nagar, GCS Kandilgal, Tiruvallur District vide document No. 4890/12 for Rs.2,05,84,500/-, 2) 56,656 square feet located at Rainbow Nagar, GCS Kandilgal, Tiruvallur District vide document No. 4892/2012 for Rs. 1,13,31,200/- and 3) 2,91,211 square feet located at Rainbow VIP Nagar, GCS Kandilgai, Tiruvallur District vide document No.16/13 for Rs. 2,91,21,100/-.

During the survey proceedings, the assessee admitted that the lands were purchased in his name and an amount of Rs.70 Lacs was 4 -: paid from the company. However, Ld. AO alleged that the assessee made payment of Rs.70 Lacs from unexplained sources of income.

During first appeal, the assessee submitted that he was trying to obtain loans from banks for his company so that the company could clear its debts. It was also submitted that the bank agreed to lend the loan to the company on collateral security given by the assessee individual. For this reason, the assessee acquired three parcels of land for Rs.610.36 Lacs. It was also submitted that cheque issued by the company to the seller for Rs.382.36 Lacs got dishonored too. The assessee finally submitted that it did not make any payment except initial payment of Rs.70 Lacs. However, Ld. CIT(A) rejected the same on the ground that the assessee was having legal title over the properties and enjoying peaceful possession of the same and accordingly, impugned additions were confirmed. Aggrieved, the 5 -: assessee is in further appeal before us. The Ld. Sr. DR submitted that the assessee did not file any sale deeds etc. to substantiate its submissions. The Ld. AR, on the other hand, pleaded for another opportunity of hearing before lower authorities.

It is true that the assessee has legal title over the properties and enjoying peaceful possession of the same. However, the assessee has not placed on record copies of sale deed which would be crucial to ascertain true nature of the transactions. It could also be seen that the onus to prove the source of investment was on assessee but the assessee failed to discharge the same. Considering the entirety of facts of the case, we deem it fit to set aside the impugned order and restore the appeal back to the file of Ld. CIT(A) for de novo adjudication with a direction to the assessee to substantiate its case by producing sale deeds etc. or any other document in support of its claim. All the issues are kept open.

In the result, the appeal stand allowed for statistical purposes. Order pronounced on 2nd April, 2024.