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2024 (8) TMI 557
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.... "4. I have considered the submissions of the assessee, reports submitted by the Assessing Officer and the Joint Commissioner of Income Tax, Non- Corporate Range-2, Madurai and the relevant records were perused and carefully considered. The directions of Hon'ble High Court are also followed. A multistory building at Door no.184/2, Bye-Pass Road, Madurai is registered in the name of partners of the firm. Shri K.P. Alagarsamy, Shri K.P. Gopalakrishnan, Shri K.P. Ramachandran, Shri K.P. Esakkimuthukumar and Shri K.P. Srinivasan from Shri V. Muthukrishnan S/o (Late) Shri M. Venkatachala Reddiar and Smt. M. Renganayaki, wife of Shri V. Muthukrishnan for a consideration of Rs. 1,81,00,000/- as per the purchase Deed of the property dated 03.04.2006. As the assessee firm did not file its Return of Income for assessment year 2007-08, a notice u/s 148 dated 23.03.2010 was issued to and served upon the assessee on 26.03.2010. In response, the assessee firm filed its Return of Income for the assessment year 2007-08 on 31.03.2010 admitting taxable income of Rs. 2,05,160/. Subsequently, a notice u/s 143(2) dated 08.11.2010 was served upon the assessee on 09.11.2010 posting the case for h....
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....er relevant details/evidences. The partners of the above firm were summoned and statements were recorded. They produced only memo of total income. None of them has filed their capital accounts and balance sheets for any of the assessment years involved for which they have already filed returns of income. They were asked to explain sources for the purchase of the property for which it was replied that the vendor has taken loan from their father and the partners in cash on various dates and a mortigage deed was entered on 31.08.2005. Shri V. Muthukrishnan had mortgaged the property in favour of all the five partners and Shri K. Paramasivam for a sum of Rs. 101 lakhs, the same was purchased at Rs. 181 lakhs. The loan was raised from ING Vysya Bank for Rs. 100 lakhs in the name of the firm. Out of this loan only Rs. 8,68,923/- was shown as outstanding and the balance Rs. 91,31,978/- was repaid during the previous year itself. When questioned about the sources for mortgage loan and the loan for repayment they could not give any valid explanation before the assessing officer. It was categorically stated by them they do not have any books of accounts and no bank statements were furnished.....
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....t names of the partners and not in the name of the assessee firm, the difference cannot be added in the hands of the firm. As held above in this order, the property is in the hands of the firm and there is not an iota of evidence to show that the partners have invested in this property and no source could be explained by the firm or the partners. Under these circumstances, I find no reason to interfere with the findings of the assessing officer that this takes the character of unexplained investment in purchase of property in the hands of the firm. 6. Unexplained capital expenditure u/s 69C of Rs. 21,98,650/- 6.1. The assessing officer added this amount towards being cost of the lift, furniture and fittings, deposits and loan to K.P. Alagarsamy. There is no dispute that these new assets were acquired however the dispute is about the source. For the detailed reasons discussed above and in the absence of any evidence and after verifying the returns of the partners as well no credible source is forthcoming in any of the return and hence I am convinced about the addition and accordingly the same is confirmed. However, I find strength in the argument of the assessee th....
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.... loan credit as not proved. Rs. 90,00,000/- ADD: Unexplained capital Expenditure u/s. 69C of the I.T. Act, 1961 : # New Lift erected Rs. 5,18,500/- Purchase of Furniture and Fittings Rs. 1,44,000/- Deposits Rs. 2,50,000/- Loan to K.P. Alagarsamy Rs. 12,86,150/- : Rs. 1,11,98,650/- TAXABLE INCOME ASSESSED : Rs. 2,01,85,044/- Total Income assessed : Rs. 2,01,85,044/- Income Tax @ 30% on T.I. : Rs. 60,55,512/- ADD: Surcharge @ 10% on I.T. : Rs. 6,05,551/- I.T. as increased by SC : Rs. 66,61,063/- ADD: Education Cess @ 2% on Rs. 66,61,063/- only. : Rs. 1,33,221/- TAX PAYABLE : Rs. 67,94,284/- ADD: Interest u/s. 234A Rs. 21,74,144/- 234C Rs. 2,319/- 234B Rs. 30,57,390/- : Rs. 52,33,853/- &nb....
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....'s case which cannot be pooh-poohed while dealing with the aggrieved points of the petitioner. 4 Regarding the property at Door No.184/2, Bye Pass Road, Madurai-16 purchased for Rs. 1,81,00,000/-, the petitioner contends that the said property belongs to the partners and hence the same should not be treated as its asset, whereas the purchase deed, other documents, relevant details, the verbal submissions of the petitioner, partnership deed, etc., which I examined testify to the fact that the said property has been jointly purchased by all the five partners for the firm. Hence, the arguments of the petitioner in this regard is not acceptable. 5. The purchase transaction of the above said property has subjected the petitioner to incur further expenditure of Rs. 5,00,014/- and Rs. 1,81,220/- towards stamp duty and registration charges respectively and thus raising the total cost to Rs. 1,87,81,234/-. The petitioner has claimed that the seller of the above said property Shri V. Muthukrishnan had already owed Rs. 1,01,00,000/- through mortgage of the same property in favour of the firm vide mortgage deed dated 31.08.2005. The petitioner further claims that its part....
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....e also denied any financial transaction between him and the petitioner or the partners. The argument of the petitioner that Shri K. Paramasivam is not that literate to understand and answer the questions put to him by the Assessing Officer cannot be accepted as the proceedings and statements had been conducted and taken in simple Tamil language only which is his Mother-tongue. Similarly, each partner has averred before the Assessing Officer that except ING Vysya Bank loan, no other loan has been borrowed from anybody else. Under these circumstances, I do not have any hesitation to concur with the opinion and findings of the Assessing Officer in this regard that all the five partners have invested their unaccounted money to purchase the said property at Door No.184/2, Bye Pass Road, Madurai-16. 6. As regards the addition of Rs. 21,98,650/- being unexplained capital expenditure, the petitioner contends that by allowing the depreciation claimed, the Assessing Officer has accepted the existence of assets. It is true that the Assessing Officer has accepted the existence of new assets acquired as per the statement of depreciation filed by the petitioner with the return of income....
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....age 3) of the impugned order that the property has been jointly purchased by all five partners of the firm. How he arrives at this conclusion is unclear. No doubt, the property could have been jointly purchased. However, that by itself does not make it a partnership asset. The transaction thus ought to have been examined especially in the context of ownership, that is, whether, the same had been purchased using the funds of the firm or the funds of the individuals and whether the ownership vests in the name of the firm or the joint name of the partners. 7. In the light of the fact that the impugned order is bereft of any proper reasoning for confirmation of the order of assessment dated 22.02.2012, I am of the view that this issue be revisted and examined by the Commissioner, after taking into account the submissions of the assessee and any supporting evidences that may be produced before him in this regard." 10. The petitioner thereafter filed a fresh statement before the first respondent which has now culminated in the impugned order. 11. Arguing on behalf of the petitioner, the learned counsel would submit that in respect of the very same property, an Assessment O....
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....me Court and this High Court:- i. Assistant Commissioner of Income Tax Vs. Hotel Blue Moon, [2010] 188 taxman 113 (SC); ii. Commissioner of Income Tax Vs. Alstom T&D India Ltd., [2014] 45 taxmann.com 424 (Madras); iii. Commissioner of Income Tax Vs. P.L.Gandhi, [2009] 315 ITR 110 (Chennai); and iv. Sapthagiri Finance & Investments Vs. Income Tax officer, Ward I(4), Kanchipuram, [2012] 5 taxmann.com 341 (Madras). 17. That apart, the learned counsel for the petitioner would draw the attention to Section 292BB of the Income Tax Act, 1961 with effect from 01.04.2008 vide Finance Act, 2008. It is submitted that the issue stands covered in favour of the petitioner in terms of the decision of the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Laxman Das Khandelwal, [2019] 417 ITR 325 (SC). 18. That apart, the learned counsel for the petitioner would also draw a reference to the Explanatory Notes to the Provisions of the Finance Act, 2008. A specific reference was made to para 42 vis-a-vis Notice under Section 143(2) of the Income Tax Act, 1961 in the light of the insertion of Section 299BB of the Income Tax Act, 1961. 19. A specific re....
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.... and since the amount was not paid, for purchase of the mortgaged property, one of the partners viz., P.Srinivasan had paid a sum of Rs. 16,00,000/- vide two bank cheques drawn on ICICI Bank Ltd and these two cheques were not presented by the said seller Muthukrishnan and were cancelled in lieu of the loan from ING Vysya Bank Ltd, Madurai for a sum of Rs. 80,00,000/- which was paid to the seller Muthukrishnan. 21. It is further submitted that these aspects have not been considered by the respondent, while passing impugned order dated 23.03.2021. It is further submitted that the order has been passed by ignoring the remand order dated 18.06.2019 passed by this Court in the earlier round of litigation in W.P(MD)No.4208 of 2013. 22. The learned counsel for the respondent, on the other hand, would submit that there is no merits in the present Writ Petition. It is submitted that the petitioner had not filed regular Returns under Section 139 of the Income Tax Act, 1961. It is further submitted that there are also no records to substantiate as to how much amounts were borrowed in the name of individuals. 23. That apart, it is submitted that the provisions of the Income Tax Act, 1....
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..... Ltd. Vs. Commissioner of Income Tax, [2011] 11 taxmann.com 291. A reference was made to para 4, wherein, the decisions of the Hon'ble Supreme Court in National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax, [1998] 229 ITR 383 and June Corporation of India Vs. Commissioner of Income Tax, [1991] 187 ITR 688/53 taxmann 85 were referred. 31. By way of rejoinder, the learned counsel for the petitioner would submit that the earlier round of litigation before this Court in W.P. (MD)No.4208 of 2013 was for de nova consideration and therefore, the petitioner was entitled to raise objection regarding limitation under Section 143(2) r/w Section 292BB of the Income Tax Act, 1961. 32. On merits, it is submitted that already during the course of assessment, there is an amount of Rs. 21,98,650/- disclosed in the profit and loss account and balance sheet which has once again been disallowed and thus, the petition is to be double jeo parde. 33. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 34. The impugned order, content of which has been extracted above, does not call for any int....