2019 (1) TMI 534 - AT - Income Tax

Tribunal sets aside assessment increase, citing CIT(Appeals) overreach. High Court's order prevails.

M/s Radiance Realty Developers India Limited, C/o M/s Ramesh & Ramachandran Versus The Deputy Commissioner of Income Tax

The Tribunal allowed the appeal, setting aside the CIT(Appeals)'s order to enhance the assessment by Rs. 11.50 Crores. The Tribunal held that the ... Enhancement of income - assessee has paid only ₹ 1 Crore and it received property to the extent of ₹ 12.5 Crores, therefore, the balance of ₹ 11.5 Crores added as income of the assessee - dispute between the parties in regard to sale of property - compromise order / decree by HC - Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan have to pay ₹ 14.5 Crores to the assessee-company. Out of which, ₹ 12 Crores has to be paid on or before 31st March, 2013 and the balance ₹ 2.5 crores shall be paid in equal monthly instalments Held that:- This Tribunal is of the considered opinion that when the High Court passed an order directing Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan to pay ₹ 14.5 Crores, the CIT(Appeals) or any other officer of the Department cannot go beyond the judgment of Madras High Court. In lieu of payment of ₹ 14.5 Crores, Shri Kamalesh Kumar Sheth executed a sale deed for ₹ 12.5 Crores and the balance has to be paid by Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan. The judgment of Madras High Court clearly says that Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan are jointly or severally liable to pay the money. In compliance with the direction of the High Court, Shri Kamalesh Kumar Sheth executed the documents for discharge of his liability. Therefore, the CIT(Appeals) is not justified in enhancing the assessment by holding that the assessee has paid only ₹ 1 Crore and it received property to the extent of ₹ 12.5 Crores, therefore, the balance of ₹ 11.5 Crores as income of the assessee. - Decided in favour of assessee. Issues:Enhancement of assessment to the extent of Rs. 11.50 Crores.Detailed Analysis:1. Facts and Background:The appeal pertains to the assessment year 2014-15, where the only issue is the enhancement of assessment by Rs. 11.50 Crores. The assessee entered into a Memorandum of Understanding with land aggregators for the purchase of 50 acres of land. Due to various reasons, a civil suit was filed, resulting in a compromise decree by the Madras High Court.2. Assessee's Contentions:The assessee's representative argued that the CIT(Appeals) ignored the High Court's order directing payment of Rs. 14.5 Crores by the land aggregators. The representative emphasized that the CIT(Appeals) wrongly concluded that the assessee only paid Rs. 1 Crore, whereas the High Court order clearly stated the liability of the aggregators to pay Rs. 14.5 Crores.3. Legal Jurisprudence:The representative cited legal precedents to support the argument that the CIT(Appeals) cannot enhance an assessment beyond what was considered by the Assessing Officer. The representative relied on judgments by the Madras High Court and the Supreme Court to assert that the CIT(Appeals) lacked jurisdiction to include the additional Rs. 11.50 Crores as income.4. Department's Argument:The Departmental Representative contended that the CIT(Appeals) had the authority to assess income not considered by the Assessing Officer. However, the Department's argument was refuted by the assessee's representative, emphasizing the limitations on the CIT(Appeals)'s jurisdiction.5. Tribunal's Decision:After considering all submissions and the relevant material, the Tribunal held that the CIT(Appeals) erred in enhancing the assessment by Rs. 11.50 Crores. The Tribunal emphasized that the High Court's order directing the payment of Rs. 14.5 Crores should be the guiding factor, and the CIT(Appeals) could not surpass this judgment. Citing legal precedents, the Tribunal concluded that the CIT(Appeals) exceeded its authority, leading to the deletion of the additional assessment of Rs. 11.50 Crores.6. Final Verdict:Consequently, the Tribunal allowed the appeal filed by the assessee, setting aside the CIT(Appeals)'s order of enhancing the assessment by Rs. 11.50 Crores. The Tribunal's decision was pronounced in court on 12th November 2018 in Chennai.This detailed analysis highlights the key arguments, legal precedents, and the Tribunal's decision regarding the enhancement of assessment in the mentioned legal judgment.