M.Sathya Rao, Chennai vs Department Of Income Tax

This appeal of the Revenue is directed against the order of

the Commissioner of Income Tax (Appeals)-II, Chennai, dated

22.05.2014 and pertains to assessment year 2008-09. The only 2 I.T.A. No.2624/Mds/14

issue arises for consideration is with regard to assessment of

`1,68,63,000/- towards income from other sources.

2. Sh. Pathlavath Peerya, the Ld. Departmental

Representative, submitted that the assessee has sold 30.66 acres

of agricultural lands at Thomur Village, Thiruvallur, on 14.06.2007 to

one Smt. Mahalakshmi, daughter of Shri R. Rangarajan, the

Founder-Chairman of Veltech Group of Educational Institutions.

The total sale consideration as per the registered sale deed was

only `45,99,000/-. During the course of enquiry, it was found that

the assessee had received `2,14,62,000/- on sale of such lands.

On further enquiry, the Assessing Officer found that the assessee

sold the above property jointly with six other co-owners/co-vendors.

On examination, two of the co-vendors told the Investigation Wing

that they did not know about the actual sale consideration. The

other co-vendors did not appear before the Assessing Officer even

after issue of summons. According to the Ld. D.R., though the

assessee claims that the total sale consideration was `2,14,62,000/-

there is no material on record to show that the assessee has

received `1,68,63,000/- on sale of the agricultural lands. As per the

registered sale deed, the sale consideration was `45,99,000/-.

Therefore, the balance amount of `1,68,63,000/- was added as 3 I.T.A. No.2624/Mds/14

income from other sources. The CIT(Appeals) allowed the claim of

the assessee without any justifiable cause.

3. On the contrary, Shri M. Narayanan, the Ld. representative

for the assessee, submitted that admittedly the assessee sold 30.66

acres of agricultural lands along with other co-owners to Smt.

Mahalakshmi, daughter of Shri R. Rangarajan. The total sale

consideration was `2,14,62,000/-. However, the sale consideration

disclosed in the registered sale deed was only `45,99,000/-. The

balance amount of `1,68,63,000/- was received by the assessee in

cash. The Assessing Officer herself found that the money received

by the assessee is on sale of agricultural lands at Thomur Village,

therefore, it is exempted from taxation. Since the entire sale

consideration of `1,68,63,000/- is only for wale of 30.66 acres of

land, the entire receipt is not subjected to taxation under the

Income-tax Act.

4. The Ld. representative for the assessee further submitted

that during the course of examination by Addl. Director of Income

Tax (Investigation), Shri M. Sathya Rao, in his statement dated

24.11.2008 had admitted that the total sale consideration of 30.66

acres of agricultural lands was `2,14,62,000/-. The Ld.

representative further submitted that the purchaser of the lands 4 I.T.A. No.2624/Mds/14

Smt. Mahalakshmi admitted in her return of income filed under

Section 153C of the Income-tax Act, 1961 (in short 'the Act') that the

total consideration was `2,14,62,000/-. When the purchaser admits

that the total consideration was `2,14,62,000/-, the Assessing

Officer may not be correct in saying that the sale consideration was

only `45,99,000/-. In fact, according to the Ld. representative,

`45,99,000/- was received through cheque and balance amount of

`1,68,63,000/- was received in cash. Since the entire sale

consideration of `2,14,62,000/- was only for sale of 30.66 acres of

land at Thomur Village, according to the Ld. representative, the

entire profit on sale of such lands is exempted from taxation.

5. We have considered the rival submissions on either side and

perused the relevant material on record. From the orders of the

lower authorities it appears that there was a search and seizure

operation in the case of Vel Tech Group of Educational Institutions.

During the course of search operation, the revenue authorities

found that Smt. Mahalakshmi purchased 30.66 acres of agricultural

lands from the assessee and other co-vendors for a total

consideration of `2,14,62,000/-. However, the registered document

disclosed the sale consideration at `45,99,000/-. On further

investigation, the revenue authorities found that as per the 5 I.T.A. No.2624/Mds/14

registered sale deed dated 12.06.2007, the sale consideration

disclosed was only `45,99,000/- which was received by way of

Demand Draft from the purchaser. Therefore, only to the extent of

`45,99,000/- alone does not come under the purview of capital gain

for taxation. There is no material available on record to suggest that

the assessee has not received any money over and above the sale

consideration disclosed in the sale deed. In fact, when the

assessee was examined on 24.11.2008 by the Addl. Director of

Income Tax (Investigation), he admitted that he received entire

money towards sale consideration on the above said agricultural

lands. The assessee has admitted that the amount disclosed in the

sale deed to the extent of `45,99,000/- was received by Demand

Draft and the balance amount of `1,68,63,000/- was received in

cash. The assessee admitted that the cash was received after

coming out of Sub-Registrar's Office by the assessee on behalf of

the co-vendors.

6. One Smt. Suryakantham was also admitted before the Addl.

Director of Income Tax (Inv.) by his statement dated 24.11.2008

that the total sale consideration for the sale of agricultural lands was

`2,14,62,000/-. The purchaser Smt. Mahalakshmi also filed her

return of income in pursuance of notice issued by the Department 6 I.T.A. No.2624/Mds/14

under Section 153C of the Act. In the said return, Smt.

Mahalakshmi admitted that the total sale consideration was

`2,14,62,000/-. Therefore, it is obvious that assessee being one of

the vendors and the purchaser Smt. Mahalakshmi admitted that the

sale consideration of `45,99,000/- was paid by cash which was

disclosed in the sale deed and over and above the sale

consideration Smt. Mahalakshmi also paid a sum of `1,68,63,000/-

for purchase of the lands from the assessee and other vendors.

Therefore, it would not be right to say that there is no evidence to

show tha the sale consideration received over and above the

consideration disclosed in the sale deed is not for sale of the

property. As rightly found by the CIT(Appeals), the sale

consideration was `2,14,62,000/- and the sale consideration

disclosed in the sale deed was `45,99,000/-. The assessee has

received `1,68,63,000/- in cash. Therefore, the entire sale

consideration of `2,14,62,000/- is for sale of 30.66 acres of

agricultural lands at Thomur Village. Admittedly, The sale

consideration of the agricultural lands at Thomur Village is

exempted from taxation. In fact, the Assessing Officer herself

admitted in the assessment order that the sale consideration

disclosed in the sale deed is exempted from taxation. This Tribunal

is of the considered opinion that the entire sale consideration is 7 I.T.A. No.2624/Mds/14

exempted from taxation. Therefore, this Tribunal do not find any

infirmity in the order of the CIT(Appeals) and accordingly the same

is confirmed.

7. In the result, the appeal of the Revenue is dismissed.

Order pronounced on 29th May, 2015 at Chennai.

sd/- sd/- (A.Mohan Alankamony) (N.R.S. Ganesan) (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) लेखा सद य/Accountant Member या यक सद य/Judicial Member

चे नई/Chennai, th 5दनांक/Dated, the 29 May, 2015.

Kri.

आदे श क/ - त6ल7प अ8े7षत/Copy to: 1. अपीलाथ,/Appellant 2. -.यथ,/Respondent 3. आयकर आयु9त (अपील)/CIT(A)-II, Chennai 4. आयकर आय9 ु त/CIT-II, Chennai 5. 7वभागीय - त न ध/DR 6. गाड( फाईल/GF.