At, Income Tax Appellate Tribunal Chennai
By, THE HONOURABLE MR. GEORGE MATHAN
By, JUDICIAL MEMBER & THE HONOURABLE MR. ACCOUNTANT MEMBER
For the Appellant: Sailendra Mamidi, PCIT, D.R. For the Respondent: S. Sridhar, Advocate.
George Mathan, Judicial Member:
1. This is an appeal filed by the Revenue against the order of the Commissioner of Income-tax (Appeals)-VI, Chennai in ITA No. 15/06-07 dated 21.07.2008 for assessment year 2003-04 and correspondingly, the assessee filed Cross Objections against the order of ld.CIT(A), involving identical issues, therefore, the appeal and cross- objections are taken up together for adjudication.
2. At the time of hearing, the ld. Principal CIT, D.R filed an adjournment letter on the ground that the Senior Standing Council, who is representing the matter, is una
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vailable. It is noticed that the appeal has been filed on 18.03.2009 and since the matter has been posted nearly 49 to 50 times, only adjournment has been sought. Consequently, the adjournment application filed by the Revenue stands rejected and the appeal is disposed of on merits.
3. Mr.Sailendra Mamidi, Principal CIT, D.R represented on behalf of the Revenue, and Mr.S.Sridhar, Advocate represented on behalf the of the Assessee.
4. It was submitted by ld.A.R that assessee is an individual. It was a submission that the assessee had received a sum of Rs. 70 lakhs on 01.08.2002 from Smt.S.Gangabai through Shri M.Kanakaraj. It was an allegation that the assessee along with Shri M.Kanakaraj had dishonestly fabricated documents as if one Smt.S.Gangabai was the owner of land in survey Nos.557/1(part) and 557/2(Part) and it had caused the Appropriate Authority of Income-tax due to pre-emptive purchase of the land and had caused payment of Rs. 2.82 crores. It was a submission that the assessee has been discharged from all charges against him. It was a submission that consequently, the receipt of Rs. 70 lakhs, the ld. Assessing Officer treated the sum as unexplained receipt in the hands of the assessee. It was a submission that the Department in the meantime has also filed a Suit before the Hon'ble Madras High Court for the recovery of the said amount of Rs. 70 lakhs from the assessee and the same is pending. It was a submission that consequent to the addition of Rs. 70 lakhs in the hands of the assessee, the assessee had filed an appeal before the Ld.CIT(A), who had deleted the addition wherein he has held as follows:-
"5.2. On merits, regarding taxability of sum of Rs 70 lakhs, the case of the appellant is what was received from by the appellant is pure advance in regard to sale of land by valid exercise of Power of attorney and whereas the stand of the department that it is recoverable from the appellant and others in terms of claim made by the department by filing a Civil Suit in C.S. No. 483 of 2007 in High court of Judicature Madras.
I am of the considered opinion, that the Department had consciously filed a Civil Suit in the Hon'ble High court claiming the entirety of the sum paid to Kanakaraj from the appellant and others. Law is well settled that all receipts are not income. When the payment is disputed in a court of law, the receipt in question partakes the character of "disputed sum" and attains the income character only when the Issue is settled by the High Court. In these circumstances it is difficult to resist the conclusion that the sum in question would not partakes the character of income till the Issue is decided by the Court of law.
I, therefore, hold that the sum of Rs. 70/- lakhs is not an income receipt and it represents a liability to pay to the Government in the light of claim made by the department against the appellant and others and therefore the said sum is not assessable as income. However the Assessing officer is free to take appropriate steps when the High Court holds the said sum did not represent a liability on the part of the appellant by taking recourse to proceedings u/s 147 of the Act. The appellant succeeds on this ground."
It was a submission that against the said deletion by the Ld.CIT(A), the Revenue is now in appeal. It was a submission that till the finalization of Suit filed by the Revenue, this amount of Rs. 70 lakhs cannot be treated as income of assessee in so far as the liability to pay the amount back to the Government still continues. It was a submission that in any case the Ld.CIT(A) has protected the interest of the Revenue by granting the ld. Assessing Officer the freedom to take appropriate steps when the High Court holds the said sum did not represent a liability on the part of the appellant by taking recourse to proceedings u/s 147 of the Act. It was a prayer that the appeal of Revenue is liable to be dismissed as the liberty is available with the ld.
Assessing Officer to initiate the proceedings as and when the said amount becomes the income of assessee.
5. We have considered the rival submissions. A perusal of the finding of the ld.CIT(A) in para 5.2 extracted above clearly shows that on one hand, the ld. Assessing Officer is holding such amount of Rs. 70 lakhs as unexplained amount of the assessee, on the other hand, the Revenue has filed a Civil Suit case before the Hon'ble Madras High Court for return of the said amount. A perusal of the order of the Ld.CIT(A) shows that he has applied his mind, when he has treated the said amount of Rs. 70 lakhs as not the income receipt of the assessee, as such amount represents a liability to pay the Government in the light of claim made by the Department against the appellant and others and therefore the said sum is not assessable as income. This being so, we find no error in the order of the CIT(Appeals), which calls for any interference. Consequently, the appeal filed by the Revenue stands dismissed.
6. At the time of hearing, it was submitted by the Learned Counsel that the assessee wishes to withdraw the Cross Objections in C.O No.137/Chny/2009. After hearing the submission of ld.A.R, the Cross Objections filed by the assessee is permitted to be withdrawn.
7. In the result, the appeal of the Revenue as well as the Cross Objections filed by the assessee is dismissed.